Custom and Capital: A Financial Appraisal of Alternative Arrangements for Large-Scale Oil Palm Development on Customary Land in Sarawak, Malaysia

Author

Rob A. Cramb and Deanna Ferraro

No 59072, 2010 Conference (54th), February 10-12, 2010, Adelaide, Australia from Australian Agricultural and Resource Economics Society

Abstract: The oil palm boom in Southeast Asia has increased demand for institutional arrangements facilitating large-scale plantation development on customary lands. A financial model of an oil palm plantation in Sarawak, Malaysia, is used to explore six project types, including managed smallholders, three different joint-venture arrangements, renting, and (for comparison) a private plantation on state land. Benefit-cost analysis is used as basis for project, private (shareholder), and stakeholder analyses. There is a trade-off between the efficiency and equity outcomes of the alternative arrangements. While joint venture projects provide higher aggregate net benefits, managed smallholder projects provide more benefits to landholders. When the actual performance of the alternative schemes is taken into account, the managed smallholder approach is superior on both efficiency and equity grounds. The joint venture approach could be improved by combining a fixed rent with a share of dividends to reduce the income risk faced by landholders. In all cases, improved management is needed for the schemes to achieve their developmental potential.

Keywords: Malaysia; oil palm; plantation development; customary tenure; managed smallholders; joint ventures; benefit-cost analysis.; International Development (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-sea
Date: 2010
References: View complete reference list from CitEc
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