Analysis of the Sustainability Level of Smallholder Oil Palm Agribusiness in Labuhanbatu Regency, North Sumatra

Abstract

Palm oil is a leading export commodity for Indonesia and the country’s highest foreign exchange earner. This commodity also has a fairly important role in the economy in regions in Indonesia, especially in Labuhanbatu Regency as one of the centers of oil palm production in the Sumatran Archipelago. This study aimed to analyze the level of sustainability of smallholder oil palm agribusiness in Labuhanbatu Regency. The study was designed using quantitative methods and a proportionate stratified random sampling approach with 249 oil palm farmers as research respondents. The data were analyzed using the multi dimensional scaling (MDS) method assisted by the Rap—Palm Oil (RAPPO) software (version 1.0). The results showed that the multidimensional sustainability of the smallholder oil palm agribusiness in Labuhanbatu Regency was in the “fairly sustainable” category. This illustrates that the oil palm agribusiness needs stakeholder support to improve its sustainability status. The highest value is the economic dimension because it is the main source of livelihood for oil palm farmers, while the lowest value is the environmental dimension. The value obtained was influenced by the use of production inputs that were not in accordance with the recommendations.