Investment Model for Independent Oil Palm Plantation Development Using Cost Efficiency and Discounted Payback Period
DOI:
https://doi.org/10.22437/proca.v2i3.59981Keywords:
Independent oil palm plantation, Investment model, Cost efficiency, Discounted payback period, Smallholder agricultureAbstract
Investment Model for Independent Oil Palm Plantation Development Using Cost Efficiency and Discounted Payback Period. Background: The conversion of rubber plantations into independent oil palm plantations has expanded rapidly in Jambi Province. However, smallholder investment decisions are often made without adequate information on plantation establishment costs, cost efficiency, and capital recovery. Objective: This study aims to develop an investment model for independent oil palm plantation development by integrating cost efficiency analysis with the Discounted Payback Period (DPP) approach. Methods: A quantitative survey was conducted among 55 independent smallholder farmers who converted rubber land into oil palm plantations in three villages of Muara Bulian District, Jambi Province. Data on land preparation, planting, basic fertilization, seedling procurement, transportation, and plantation cash flows were analyzed using descriptive cost analysis and investment appraisal. Results: The average plantation establishment cost was approximately IDR 13.10 million ha⁻¹. The cumulative cash flow remained negative during the establishment and immature stages but became positive by the sixth year of the investment period. Using a 10% discount rate, the estimated DPP was approximately 5.52 years. Conclusions: Integrating cost efficiency and DPP provides a practical framework for evaluating capital recovery and supporting financial decision-making in independent oil palm plantation development. The resulting investment model can support more efficient and evidence-based planning of smallholder plantation development.
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Copyright (c) 2026 Karina Rahmah, Ulidesi Siadari, Gina Fauzia, Mirawati Yunita
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