Abstract
The Malaysian Sustainable Palm Oil (MSPO) Scheme was established by the government of Malaysia to mandate MSPO certification on all palm oil stakeholders within the country by year 2019 as an initiative for sustainable palm oil production. However, independent smallholders (ISH) who account for 16.71% of the total palm oil plantation area in Malaysia have shown a low MSPO registration rate of 24.82% by midyear 2020. Therefore, it is vital to encourage MSPO certification and incorporation of sustainable production practices in ISHs in order to maintain the supply of certified palm oil. The current study has compared the environmental life cycle assessment (LCA) and life cycle costing (LCC) on the uncertified and MSPO-certified fresh fruit bunches (FFB) production among independent smallholders to determine the impacts of MSPO implementation. Based on the LCA findings using ReCiPe 2016 Endpoint (H), a net decline in environmental impacts will result when independent smallholders adopt MSPO certification. With at least 10.116% decrease in all impact categories except the Mineral Resource Scarcity category (18.065% increase), the endpoint results indicate that MSPO implementation in independent smallholders can overall reduce the environmental impacts from Human Health (99.913%), Ecosystem Quality (99.958%), and Resources (90.223%) categories. The study also finds out that certified ISH systems can further improve by replacing mineral fertilizers with organic fertilizers. In terms of LCC, the net present value in MSPO-certified ISHs (127,092.56 USD) for a 3.94 ha plantation and 25-year life cycle was found to be approximately 39% higher than uncertified ISHs (91,017.84 USD), indicating an increased economic profitability in an ISH system when MSPO is implemented.
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