Technical efficiency of oil palm production among independent smallholders at Jengka / Yusmielia Ngadenin @ M Yusman

Malaysia was once known as the largest producer and exporter of palm oil until its
position was taken over by Indonesia. The limitation in Malaysia in terms of land
availability for new planting of oil palm has pushed the focus on technology and
resources to efficiency and productivity in oil palm cultivation. At present, Malaysia
is the second largest palm oil producer in the world and may well be the third in future
if no strategy is charted to maintain the position. In 2016, the yield of oil palm had
decreased from 98,344,073 tonnes to 86,325,309 tonnes while the area harvested
increase. One of the issues of low productivity is caused by independent smallholders
that work in less efficient manners and below the economic scale compared to the
estate sectors. Thus, there is urgent need to investigate the productivity of the
independent smallholders in Jengka. This research aims to study the technical
efficiency and socioeconomic factors affecting oil palm production among
independent smallholders in Jengka. Data was collected from questionnaires that were
distributed at Jengka district in 2017 to 97 respondents were then analysed using DEA
to evaluate the technical efficiency. Research found that the smallholders are
inefficient with a TE score VRS = 0.77 and only 11 smallholders were fully efficient.
The variables that are affecting the smallholder’s technical efficiency are labour
utilization, fertilizers application, herbicides, training and farming experience while
education level had no significant on the technical efficiency. It is recommended that
the government continues its policy of assisting independent oil palm smallholders in
order to maintain or increase their productivity