Economic Analysis of Oil Palm Industry a Case Study of Malay Independent Smallholders in Kuala Langat

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ECONOMIC ANALYSIS OF OIL PALM INDUSTRY A CASE STUDY OF MALAY INDEPENDENT SMALLHOLDERS IN KUALA LANGAT

SITI FARHANI BT. AWANG @ BAHARUN

Final Year Project Report Submitted in Partial Fulfillment of the Requirements for the Bachelor of Science (Hons.) Technology and Plantation Management, Faculty of Plantation and Agrotechnology UniversitiTeknologi MARA

JULY 2012

DECLARATION This Final Year Project is a partial fulfilment of the requirements for a degree of Bachelor of Science (Hons.) Technology and Plantation Management, Faculty of Plantation and Agrotechnology, Universiti Teknologi MARA. It is entirely my own work and has not been submitted to any other University or higher education institution, or for any other academic award in this University. Where use has been made of the work of other people it has been fully acknowledged and fully referenced.

I hereby assign all and every rights in the copyright to this Work to the Universiti Teknologi MARA ("UiTM'), which henceforth shall be the owner of copyright in this Work and that, any reproduction or use in any form or by any means whatsoever is prohibited without a written consent of UiTM.

Date:23 luly 2012
Name: Siti Farhani binti Awang @ Baharun

that I have checked this project and in my opinion, this project is adequate in terms of scope and quality for the award of the degree of Bachelor of Science (Hons.) Technology and Plantation Management, Faculty of Plantation and Agrotechnology, Universiti Teknologi MARA.

I hereby declare

Name of Supervisor: Fazleen Binti Abdul Fatah

Position: Lecturer

Date:23 July 2012

ACKNOWLEDGEMENT My special appreciation goes to my supervisor, Madam Fazleen Binti Abdul Fatah for her supervision and constant support. Her invaluable help of constructive comments and suggestions throughout the period of this final year project and preparation of this report have contributed to the success of the whole process.

My grateful thanks is specially dedicated to Tuan Hj. Kandar bin Sadiman, the village headman of Kg. Sungai Lang Tengah, and En. Mohd Saim bin Katiman, the village headman of Kg. Kanchong Darat who had given me the permission to carry out the interview sessions at both locations. I would also like to thank the smallholders of both villages for their support and cooperation to undergo interview sessions.

Not to forget, my great appreciation goes to my research’s partner, Nurul Shafina Hassan which was very supportive and helpful to me all through my research. The experience from the research has really taught me to appreciate the true value of friendship and respect to each other.

Last but not least, my deepest gratitude goes to my beloved parents; brothers and sisters for their endless love, prayers and encouragement. Thank you very much.

SITI FARHANI AWANG @ BAHARUN

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TABLE OF CONTENTS Page ACKNOWLEDGEMENTS TABLE OF CONTENTS LIST OF FIGURES LIST OF TABLES LIST OF ABBREVIATIONS ABSTRACT ABSTRAK CHAPTER 1. INTRODUCTION 1.1 Background of the Study 1.2 Objectives of Study 1.3 Problem Statement 1.4 Hypothesis 1.5 Significance of the Study 1.6 Definition of Terms 1.6.1 Age 1.6.2 Family Size 1.6.3 Size of Land Owned 1.6.4 Capital Invested 1.7 Limitation of the Study iii iv v vi vii ix x

1 4 5 6 7 8 8 8 9 9

2.

LITERATURE REVIEW 2.0 Overview 2.1 Oil palm 2.2 Smallholders 2.3 History of the Palm Oil Industry 2.4 Current Status of Malaysia’s Palm Oil Industry 2.5 Factors affecting the Productivity 2.6 Moving the Palm Oil Industry Forward 2.7 Incentivizing Smallholders to Improve Palm Oil Yields

10 10 11 13 14 15 18 24

iv

3.

MATERIALS AND METHOD 3.0 Introduction 3.1 Research Design 3.2 Research Sites 3.3 Sample of the Study 3.4 Research Instrument 3.5 Data Collection Procedure 3.6 Data Analysis 3.6.1 Descriptive Statistic Method 3.6.2 Multiple Regression Analysis 3.7 Socio Economics Characteristics 3.7.1 Multi Regression Analysis (Tabular Analysis) 3.8 Instrument used to...
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