CHAPTER 2

 

 LITERATURE REVIEW

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2.1 Factor acceptance and refusal toward implementation of MSPO

Acceptance can be described as the act of consent to bid, plan or invitation. According to Longman Dictionaries fourth edition, 2006, the acceptance can be explained when person agree that an idea, statement, explanations it right or true. Refusal means that when someone says firmly that he or she will not do, give or accept something. This factor of acceptance and refusal become the important variable to indicate that the knowledge of farmers about information and implementation of MSPO in Tangkak, Johor.

 

2.2 Background of Smallholders

Smallholders are one of the most prominent contributors in the oil palm sector. The visions of Malaysian palm oil board (MPOB) are to ensure a balance between development needs for social and economic aspects through ensuring quality environment. However, smallholders are mostly involved in maintaining sustainable processing activities during their operation (Alam, et al 2016). In Malaysia, there is six main ownership of oil palm; the private sector is the main producer (61%) of oil palm ownership while independent smallholder owned 16% (Azian and Nasuddin, 2015). Independent smallholders are defined as financially independent farmers who with autonomy to decide how best to cultivate their land, decide which crops to grow, and how best to manage it. They are not bonded to any particular mill or bodies, although they can receive support or extension services from government agencies (RSPO, 2010).

 

Based on Hashim et al. (2014), from 2003 to 2013, the area cultivated for oil palm increased from 387,998 to 748 292 ha. The average area of land owned by independent smallholders in 2013 was 3.2 ha in Peninsular Malaysia, 5.1 ha Sarawak and 6.7 in Sabah (Aman et al., 2014). Table 1 depicts the increasing number of small farmers and the expansion of areas cultivated for palm oil production. The table shows that this group is a significant contributor to Malaysia’s GDP thereby highlighting the importance to ensure sustainable palm oil production for independent smallholders. Independent smallholders, on the other hand, have the freedom to choose what crop they grow, and to whom they sell their products based on market prices and can therefore potentially receive better income for their products in a competitive market.

 

2.3 Cost

2.4 Income of smallholder

 

The net-farm-income is subject to the tax on farming, gross income from the crop, income from livestock, rate of production, the pattern of cultivation and land size (Ahmed, 2013). Community respondents have polarized views about income-related impacts. While a significant number considers that plantation wages are low and that plasma schemes do not provide sufficient revenue, about a fifth of the respondents think that plasma-related revenues are indeed sufficient. Additionally, several respondents believe that independent oil palm producers receive better income than those involved in plasma schemes or employed by plantations. Local communities often see oil palm as the best option to meet their financial needs (Rist et al., 2010). When compared to other agricultural activities, oil palm agriculture can have higher income returns to land and labor, but the overall livelihood benefits depend significantly within (and across) communities (Rist et al., 2010). For example, wages for permanent plantation workers are regulated and should be at least equal to the provincial minimum labor payments. Even though in some regions plantation jobs are often monopolized by transmigrates (Obidzinski et al., 2012), locals can complement their farm income through temporary work in plantations (Tata et al., 2010). Income from plasma contracts can complement other on- or off-farm activities but is not usually sufficient on its own to sustain a family, unless the family has leased a large area.

While oil palm agriculture can be a significant fraction of the overall income of independent smallholder households in Indonesia, it tends to depend on significantly on the agricultural practices adopted (Lee et al., 2014). Palm oil production provides significant income opportunities for farmers and exerts a positive impact on the economy. In 2011, the sector contributed some 53 billion MYR to Malaysia’s GDP (Oil World, 2013). In terms of employment rates, the sector provided an enormous amount of jobs for the community (World Bank, 2011) with over one million workers engaged in this sector throughout the supply chain in Malaysia.

 

We also found that independent smallholder households receive lower gross monthly incomes compared to scheme and managed smallholder households, whereby independent smallholders received the lowest gross monthly income from oil palm cultivation (2.17 million Indonesian rupiahs). Our results provide quantitative evidence that harvesting rotation and type of smallholder management are important constraints on oil palm yields and incomes of smallholders (Lee et al., 2014).

 

2.5 Knowledge

Knowledge, attitude and practice studies looking at the uptake of innovations have been carried out since the 1980s (Meijer et al.,. 2015). Knowledge, attitudes and perceptions are influenced by the characteristics of the farmer, which include personal characteristics (gender, age, marital status, etc.), socioeconomic characteristics (income, assets, education, etc.), personality characteristics (self-confidence, independence, etc.), position in social networks (network size, connectedness, the frequency of interaction, etc.), status characteristics (control over political power or economic resources) and familiarity with the technology (Meijer et al. 2015). There are three types of knowledge systems: transfer of technology, farm management development and the ecological knowledge system. The most common and conventional knowledge system is the transfer of technology, which views the desirable farming practice as using science-based component technologies, farmer learning as the adoption of external innovations and facilitation as the delivery of these innovations (Meijer et al. 2015). It assumes that farmers are experts on their own farm and take decisions based on knowledgeable interference from observation and analysis through social learning. There are a large number of extrinsic variables which help shape the knowledge, attitudes and perceptions.

 

 

 

According to Rahman, (2015), perfect knowledge about an issue is not always possible, and error will occur despite attempts of corrections. An ‘innovation’ of an integrated agricultural knowledge system embedded with Agri-based vocational education and IT resources would enable extension workers and farmers have high levels of interaction, especially about risks. Studies have shown that technological innovation with information technology is used to boost agricultural knowledge by enabling rural people to gather, store, retrieve, adapt, localize and disseminate a broad range of information needed. Environmental knowledge sharing among community members are highly influenced by the patterns of social networks and knowledge passing from elders (Rahman, 2015).

Nazari and Hassan (2011) stated that mass media offer effective channels for communicating agricultural messages, which can increase knowledge and influence behavior of audience members. Using the mass media has caused an increase in the knowledge level and the output of the educational system in recent decades. Radio and television have been acclaimed to be the most effective media for diffusing the scientific knowledge to the masses. Television is acknowledged as the most important medium for communicating with the rural populations of developing countries. However, the increase of farmers’ knowledge has a different degree of strength. The results demonstrated a significant increase in the level of awareness among farmers, from 3.73 to 6.26, which emphasized the effectiveness of TV to upgrade farmers’ knowledge level, thus the usefulness of television to transfer agricultural knowledge to farmers (Nazari and Hassan, 2011).

 

2.6 Government policy

 

The purpose of an agricultural policy is the development of favorable and sustainable guidelines for the promotion of efficient agricultural practices that will guarantee food security provide employment for the citizens, raw material for all agro-based industries as well as to earn foreign exchange (Akinbamowo, 2013). Ultimately strategic policy recommendations will be proposed for an efficient and sustainable agricultural input supply system. On the other hand, some policymakers would argue that private firms may not be trusted with ensuring the food security of a nation especially when there are no viable economic incentives or are not benevolent enough to serve the less profitable markets (Govere, 2009).