Abstract
Indonesia has become the country with the largest palm oil production. However, the level of productivity of oil palm per land in Indonesia tends to remain stagnant. The main objective of this study is to evaluate oil palm lands of smallholders that experience land inefficiency. In analyzing land efficiency, this study used cross-section data obtained from Statistics Indonesia (BPS). This study uses an input distance function approach with stochastic frontier analysis tools. Our estimation results found that on average, smallholders oil palm plantations face land inefficiency. The land inefficiency of smallholder oil palm plantations is not proportional to the negative impacts it has caused. The intensification of oil palm plantation land is one of the ways to reduce the rate of deforestation and optimize available land. Land intensification can be done through the selection of potential lands, renewal programs for oil palm trees, supporting facilities and infrastructure, and plantation technology development.
Highlights
Indonesia is the world's largest producer and exporter of palm oil
Our study develops an input distance function approach to measure the level of land use efficiency more effectively
This study aimed to evaluate the efficiency of land use for smallholder oil palm plantations in each province in Indonesia
Summary
Indonesia is the world's largest producer and exporter of palm oil. More than fifty percent of the world's palm oil needs are met by Indonesia (FAO, 2017). Throughout 2014 to 2018, the increase in Indonesian palm oil exports reached 2.07 percent to 19.45 percent per year or grew by 24.37 million tons in 2014 and increased to 29.67 million tons in 2018. The increase in world palm oil demand was supported by an increase in the amount of palm oil production. In 2014-2018, oil palm production has increased in the range of 1.35 percent to 10.96 percent. In 2014, palm oil production reached 29.28 million tons, increased to 34.94 million tons in 2017 or increased by 19.34 percent and is estimated to have increased by 4.74 percent to 36.59 million tons in 2018 (BPS, 2018)
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