C01 - Smallholder productivity, market access, and international linkages in rubber and palm oil production in Jambi Province
Transformation processes in Jambi continue rapidly, with expanding land use change mainly towards oil palm and –more limited – towards rubber. In the past years, smallholders were confronted with volatile and often extremely low prices for palm oil and rubber. These trends triggered effects along the value chain, in particular on management practices of smallholders, and on structural change at the trader level. At the farm level, this project will analyse the dynamics of technical and environmental efficiency, while at the trader level, changes in trade networks will be in the focus. Synthesizing both aspects will allow us to derive recommendations for a better functioning of the value chains for rubber and palm oil.
The dynamics in the transformation of smallholders’ land-use systems in Jambi province continue at unprecedented pace. Still, the heterogeneity in economic and environmental outcomes, power relations, and value chain functioning lead to large differences in the net effects on household incomes and environmental outcomes. Furthermore, results from Phases 1 and 2 indicate that there is considerable variation among the traders in both oil palm and rubber value chains. Only about a third of the traders from the first survey round has been continuously active throughout the years; both exits and entries of traders are common, in addition to switches in the product focus (i.e., going from rubber trading to trading in fresh fruit bunches). Possible determinants of these developments include differing price trends for rubber and palm oil, as well as structural and institutional changes, including certification requirements. In work package 1, the existing plot level data from the first three rounds will be updated once more, and will be used to conduct a total resource productivity growth decomposition. We will decompose the observed rates of change into efficiency change, technical change, and structural change (scale and scope) related components.
In work package 2, the results on value chain for palm oil and rubber will be expanded and synthesized. The analysis will be based on the three rounds of data collection (already collected in Phases 1 and 2), and will be complemented by a fourth round that will be conducted in Phase 3. The dynamics in the functioning of these value chains will hence be the core of the synthesis that will not only focus on product but also on the input markets, in particular the access to capital through credit by matching household data and small-scale trader data. For rubber, alternative marketing channels will be analysed with respect to their potential for limiting the abuse of existing market power, e.g., auction markets, or direct marketing.
