Ageing smallholders and passive successors in Indonesia’s oil palm sector

Smallholders play an important role as producers of cash-crops in developing countries and are often responsible for land clearing and agricultural expansion into pristine environments where productivity is low. Closing yield-gaps of smallholders to industrial plantations as well as diversifying production systems has been identified as a mean to prevent further environmental degradation. At the same time, developing and emerging economies are beginning to struggle with an ageing farmer population, potentially hindering advances in land productivity. In Indonesia, increased income from oil palm cultivation has led to rapid educational attainments within one generation. While this opens job opportunities for children of oil palm smallholders, it inhibits farm succession and thus contributes to ageing among smallholders. Using primary data from a random sample of 417 oil palm smallholders in Indonesia, we investigate trends of farm succession and test, how these moderate possible effects of ageing on plantation investments and outcomes. Our results suggest, that older farmers are associated with lower productivity levels generally and are less likely to replant mature plots. These trends are moderated by succession plans of households. Succession generally moderates negative effects on productivity – indifferent of the successor’s involvement. Households with a successor are generally more likely to replant. We argue that these results hint towards strategic decision- making in ageing smallholders and that observed trends of lower productivity and technology adoption in ageing farmer populations are likely a mix of both decreasing ability and strategic decisions by the farmer.