Priorities for Eradicating the Extreme Poverty of Smallholder Palm Oil Farmers: An Analytical Network Process Approach

Palm oil is a leading and mainstay crop in the regional economy. Rokan Hulu Regency contributes 42.7% of Indonesia’s national palm oil production, which is higher than that of other regions; however, it is also an area with high poverty levels. The potential for abundant natural resources is not in line with the ability of smallholder farmers to optimally manage their oil palm plantations. This research aims to develop priorities for alleviating extreme poverty among smallholder palm oil farmers by using economic, socio-cultural, technological, and management variables. Primary data were collected from 245 smallholder palm oil farmers and 20 expert informants. Data analysis using the ANP model, a multi-criteria decision-making method with value measurements that reflect priorities. The novelty of this research is the determination of priority strategies for alleviating extreme poverty by increasing farmer capabilities. Capability refers not only to the ability to produce large quantities of fresh fruit bunches but also to the growth and development of farming management patterns with the consistent and sustainable use of technology. The research findings show that farmer capability development is the basis for increasing productivity, income, and freedom from poverty. The results stated that the priority of extreme poverty alleviation focuses on favorable prices according to the quality of fresh fruit bunches to strengthen farmers’ bargaining position, organic and environmentally friendly farming to optimize land use and production, providing farming capital, and implementing oil palm cultivation techniques according to official standards. Increasing capabilities in social interaction, resource management, technical training, access to market information, and commitment to implementing innovation are major demands for farmers to be competitive. Government policy is the most important factor in achieving extreme poverty alleviation.