Is contract farming in the Indonesian oil palm industry pro-poor?
AbstractThis paper assesses the impact of contract farming in the oil palm industry in Indonesia on smallholders’ well-being and investigates its implication for poverty reduction. Data were collected randomly from 245 smallholders in the province of Jambi, Sumatra. A treatment effects model was applied in order to capture endogeneity and selection bias. Results show that participation in contract farming is significantly associated with type of household, age of household head, size of oil palm plot, and the time of plantation establishment. While overall, contract farming has a significant positive effect on smallholder income; it discriminates against the poorer smallholders. It is recommended that agro industry and government should review contractual arrangements in order to increase the chances of the poor to benefit from oil palm expansion in Indonesia.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by International Association of Agricultural Economists in its series 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil with number 126327.
Date of creation: 27 Jul 2012
Date of revision:
contract farming; oil palm; treatment effect model; poverty; Agribusiness; Agricultural and Food Policy; O13; Q13;
Find related papers by JEL classification:
- O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
- Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
This paper has been announced in the following NEP Reports:
- NEP-AGR-2012-07-23 (Agricultural Economics)
- NEP-ALL-2012-07-23 (All new papers)
- NEP-SEA-2012-07-23 (South East Asia)
You can help add them by filling out this form.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search).
If references are entirely missing, you can add them using this form.