Oil Palm Industry Economic Journal Vol. 17 (1) March 2017 p. 16-31

An Economic Study on Technical Efficiency among Independent Oil Palm Smallholders in Sabah and Sarawak

Ali Zulhusni Ali Nordin*; Siti Mashani Ahmad*; Ainul Shazwin Sahidan*; Norhidayu Abdullah* and Ain, H*
Received:    Accepted:    Available Online:


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 holistic strategy is charted to maintain her premier position in the industry. Rapid development and the increasing trend in the number of smallholders planting oil palm have posed another challenge to maintaining high productivity of fresh fruit bunch (FFB) production. Therefore, studies on social perception and factors affecting efficiency among the independent oil palm smallholders are deemed important. The present study found that the FFB yield achieved by independent smallholders in Sabah and Sarawak can be further improved. Among the factors that contributed to inefficiency among these independent smallholders are inadequate fertiliser application, Ganoderma disease, high pest infestation, deficiency of nutrients in the oil palm, increasing cost of production and the unpredictable extreme weather conditions. The study focused only on Sabah and Sarawak as it is an extension of a previous study which had been carried out on smallholders in Peninsular Malaysia. It is recommended that the government continues its policy of assisting independent oil palm smallholders in order to maintain or increase their productivity.

Keywords: technical efficiency, independent oil palm smallholders, productivity

About Post Author

* Malaysian Palm Oil Board,
6 Persiaran Institusi,
Bandar Baru Bangi,
43000 Kajang, Selangor,

E-mail: alizulhusni@mpob.gov.my