Improving Oil Palm Smallholders Participation in Global Market to Strengthening Indonesian Agribusiness Rural Development
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Since 2006 Indonesia is recorded as the highest palm oil producer in the world, in which more than 70% of the production is distributed to global markets, including the European markets that are likely concerned on environmental issues. Therefore, CPO producers require certification to be able to export to European countries. European consumers have relatively high purchasing power, for that reason increasing market sales to European markets would be beneficial for all parties in the system. It is predicted that improving palm oil smallholders’ participation in European markets could improve rural development. To analyze such conditions, data from 131 respondents in Sei Lilin Subdistrict, Banyuasin District, South Sumatra Province are collected and analyzed with independent compare means test and frontier estimation models. The results show that smallholders’ participation in global markets improves the agribusiness rural development. The improvement can be seen in all of the agribusiness subsystems; in the input subsystem the improvement can be seen in the amount and type of fertilizer and herbicide usage and job creation, while in the production subsystem it is seen in technical and cost efficiency. In the processing subsystem, positive changes are seen in the supply certainty, and the same can be felt in quantity and price sales in the marketing subsystem. Similarly, supporting subsystem support is also positively affected, which can be seen in the change of waste container handling and the improvement of facilities and infrastructure.