Impact of COVID-19 pandemic on the economy of oil palm smallholder's household income

Abstract

PurposeThis study aimed to determine the impact of the COVID-19 pandemic on the oil palm smallholders' income, which includes both on-farm and off-farm resources.Design/methodology/approachThis study used a simultaneous equations system for arranging the oil palm household economic model.FindingsThe results showed that the negative effect of demand disruption (decreasing of household income) is more than supply disruption (production declining). Declining household income due to COVID-19 caused farmer households to have no access to both basic need and other goods.Research limitations/implicationsThe samples for before-pandemic data differed from the situation during COVID-19 in both the location and the person due to technical constraints in research sites.Originality/valueThe main contribution of this study was providing an empirical understanding of how the COVID-19 pandemic influences the economic behavior of the most vulnerable entities in the Indonesian palm oil industry (oil palm smallholder farmers' households). This study would provide baseline information on the impact of the COVID-19 pandemic on the economy of oil palm smallholder's household income.