Opportunities for Increasing Productivity & Profitability of Oil Palm Smallholder Farmers in Central Kalimantan

This report evaluates four oil palm smallholder models in Central Kalimantan, Indonesia. It finds that cooperative and company-managed plasma models significantly outperform individual partnerships and independent smallholders in terms of yield and profitability. Cooperative models are highlighted as the most beneficial for sustainable livelihoods and risk mitigation, provided there is transparency and accountability. Independent smallholders are the most vulnerable, facing systemic barriers to finance, quality inputs, and market access.

• The cooperative plasma model is the most successful in managing production and market risks, achieving the highest yields in the survey sample at 95% of yield potential.
• The company-managed plasma model produces high yields (85% of potential) and strong profitability per hectare due to efficient operating cost management, though it may not contribute to the original goal of improving smallholder farming practices.
• The individual partnership model is the least productive and profitable of the partnership models, achieving only 52% of its potential yield and exhibiting the highest sensitivity to price and yield fluctuations.
• Independent smallholders consistently have lower yields than plasma farmers—up to 50% lower—and face significant systemic risks including limited access to finance, quality seeds, and markets.
• Transparency and accountability are critical for the success of cooperative models; support from company partners in building management capacity and oversight from lending banks through audits are key success factors.
• Independent smallholders suffer from supply chain inefficiencies, often relying on intermediaries who charge fees reaching 13% of production value, and frequently use low-quality seedlings that result in up to one-third of trees failing to produce fruit.
• The Government of Central Kalimantan plans to triple the oil palm production area to over 3.5 million hectares by 2020 to support a national target of 40 million tonnes of crude palm oil (CPO) annually.
• There is a regulatory requirement under Article 58 of the Plantation Act Law Nr. 39 of 2014 that 20% of oil palm should be managed by smallholders.

APA

MP, D., Dehen.,SP.,MP, D. A., & Barbara,SP.,Msi, D. (n.d.). Opportunities for Increasing Productivity & Profitability of Oil Palm Smallholder Farmers in Central Kalimantan. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2015/04/Opportunities-for-Increasing-Productivity-Profitability-of-Oil-Palm-Smallholder-Farmers-in-Central-Kalimantan-Full-Report1.pdf

Chicago

MP, Dr.Ir.Suharno,, Dr.Yuprin Abel Dehen.,SP.,MP, and Dr.Betrixia Barbara,SP.,Msi. Opportunities for Increasing Productivity & Profitability of Oil Palm Smallholder Farmers in Central Kalimantan. Climate Policy Initiative, n.d. https://www.climatepolicyinitiative.org/wp-content/uploads/2015/04/Opportunities-for-Increasing-Productivity-Profitability-of-Oil-Palm-Smallholder-Farmers-in-Central-Kalimantan-Full-Report1.pdf.

Wikipedia

{{cite report |last1=MP |first1=Dr.Ir.Suharno, |last2=Dehen.,SP.,MP |first2=Dr.Yuprin Abel |last3=Barbara,SP.,Msi |first3=Dr.Betrixia |title=Opportunities for Increasing Productivity & Profitability of Oil Palm Smallholder Farmers in Central Kalimantan |publisher=Climate Policy Initiative |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2015/04/Opportunities-for-Increasing-Productivity-Profitability-of-Oil-Palm-Smallholder-Farmers-in-Central-Kalimantan-Full-Report1.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{mpndopportunities, author = {MP, Dr.Ir.Suharno, and Dehen.,SP.,MP, Dr.Yuprin Abel and Barbara,SP.,Msi, Dr.Betrixia}, title = {{Opportunities for Increasing Productivity \& Profitability of Oil Palm Smallholder Farmers in Central Kalimantan}}, institution = {Climate Policy Initiative}, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2015/04/Opportunities-for-Increasing-Productivity-Profitability-of-Oil-Palm-Smallholder-Farmers-in-Central-Kalimantan-Full-Report1.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }