Oil Palm Industry Economic Journal Vol. 19 (1) March 2019 p. 35-42

Impact of Economic Stimulus Package II Incentive Scheme (PRE2) on Yield and Income of Oil Palm Smallholders in Peninsular Malaysia

Mohd Haidhar Abdul Hamid*; Ainul Shazwin Sahidan* and Ramle Moslim*
Received:    Accepted:    Available Online:


Oil palms more than 25 years old are no longer productive and high cost to harvest, thus affecting the income of the smallholders. These old palms need to be replanted using high quality planting materials obtained from nursery operators who meet the Code of Practice for Nursery (CoPN). Since smallholders in Peninsular Malaysia have limited land holding and capital, government has introduced the Stimulus Economic Package II Incentive Scheme (PRE2) to help smallholders to replant their old palm between 2009 and 2010. This replanting scheme provides a grant amounted to RM 6000 per hectare for covering the cost of land clearing, purchasing of oil palm seedlings, fertilisers, pesticides and herbicides. The early impact of the replanting program, especially on the first year of fresh fruits bunches (FFB) yield and the gross income among the PRE2 participants was assessed. The influence of participant background, particularly age, level of education and status of smallholders on FFB yield was also determined. Research method involved face-to-face interview assisted by pre-prepared questionnaires and field observations to a total of 248 samples of smallholders. Descriptive statistics were used to analyse FFB yield and income for the first year. Cross tabulation and correlation analysis were used to evaluate the relationship between respondents background and their FFB yield. The study found that the participants of the PRE2 incentive scheme produced 9.28 t/ha/yr of FFB in the first year of harvest, with a total estimated income of RM 4344/ha/ yr. The study also found that there was no significant relationship between FFB yield and the background of PRE2 incentive scheme participants. Other factors that may affect the FFB yield among the participants could be the adoption of good agriculture practices.

Keywords: oil palm replanting, FFB yield, independent smallholder, assistance scheme

About Post Author


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

E-mail: mohd.haidhar@mpob.gov.my