How does COVID-19 Impact Oil Palm Management Practices in Indonesia?

Abstract

Disrupted economy due to COVID-19 pandemic has been spilled to multifaceted sectors. Agriculture, more specifically oil palm sector was also hit by the impact of the catastrophe. This study is aimed to decipher the effect of COVID-19 pandemic to the management of oil palm plantation. The pandemic has caused the mobility and morbidity of people in such a way that exacerbated distribution of input factor, harvesting process, and transporting activities. Through online survey to 59 farmers consist of smallholder, government, and private estates, the study indicated that there was salient change of limiting activities particularly during immature and mature stages. Hence, the production of fresh fruit bunch (FFB) also decreased by 15% compared to business as usual as measured on monthly bases. Although the magnitude of production change was not statistically significance, planters still suffered from declining FFB farm gate price. On average, they received 5% lower selling price of FFB as a consequence of contracted CPO demand from prominent importing countries such as China, India, and Italy. The lower selling farm gate price has caused the income shocks to the farmers. Thus, quite large number of them experienced either turn-over or cost efficiency at the expense of fertilizer input. It is perpetuating the vicious cycle of lower smallholder attainable FFB yield. For a group that is at the high risk of infections as well, this circumstances has bring about concerns to Indonesian palm oil development, especially in terms of replanting realization and biodiesel blending progress in the long run

COVID-19 in Southeast Asia: Insights for a Post-pandemic World

“…There were concerns that the associated unemployment and economic pressures will drive smallholders as well as some plantation companies to shift to cheaper and less sustainable practices. Smallholders surveyed in Indonesia reported an average 5% decline in selling prices of fresh fruit bunches (FFB), which affects turnover cost efficiency and fertiliser input expenses, with probable long-term knock-on effects for attainable FFB yield (Nurkhoiry and Oktarina 2020).…”

The Effect of Pandemic Covid 19 Towards Operational Activities in Oil Palm Production

“…The management will determine the good operation that needs to operate such as new standard operating procedure (SOP). According to [12], some operations need to be fully utilized and care for to avoid any disturbance happening in the field. When the oil palm grower did not follow good management practices, they should anticipate the decreasing productivity and yield of their oil palm.…”

“…Oil Palm production during pandemic COVID-19. Based on the [12], it states that the management of field operation might differ during the pandemic. This is due to the new norms and legislation of standard operating procedure (SOP).…”

“…When there is limited access for the company to get the input, there will be a delay in scheduling the operation activity. The smallholder was the most affected because they faced difficulties accessing input like fertilizer and other chemicals compared to the other estates [12]. Thus, access to input supply has a significant difference with the oil palm production.…”