Tangible Financial Benefits of Palm Oil Plantations with and without Roundtable on Sustainable Palm Oil Certification in Thailand

Abstract

Thailand has attempted to produce sustainable palm oil by encouraging grower-developed Roundtable on Sustainable Palm Oil (RSPO) criteria with many campaigns, but the target has still not been achieved. Here, we determined the tangible financial benefits of certified and noncertified farmers of 3 groups, namely, those with a large planting area, cooperative members, and small growers supported by palm oil mills, to illustrate the advantage of RSPO certification. The results showed that all certified groups received greater net returns than the noncertified groups, with net return differences of 0.34 baht per kilogram for large planting areas, 0.70 baht per kilogram within the cooperative group and 0.13-1.10 baht per kilogram under the group supported by palm oil mills. However, the increasingly important RSPO certification should provide knowledge to improve agricultural practices because they are affected by increasing net returns and reducing variable costs. The government should provide financial loans for growers who want RSPO certification because of the high costs of certification and develop criteria, and grower integration can increase negotiation power to decrease the cost of production.