Farmer heterogeneity and differential livelihood impacts of oil palm expansion among smallholders in Sumatra, Indonesia

The study examines the heterogeneous livelihood impacts of oil palm expansion among smallholder farmers in Jambi Province, Sumatra. Per-capita annual consumption expenditure (PACE) is chosen as a quantitative measure of livelihood status of farm-households. Its determinants are estimated using standard treatment-effect and endogenous switching regression models. After controlling for self-selection bias, adopters of oil palm are found increasing their PACE significantly in comparison to the counterfactual. On the other hand, most of the non-adopters are better-off without oil palm, presenting a strong case of comparative advantage. Differential consumption impacts of observed variables are evident across adoption and non-adoption regimes. In general, farm-households with higher opportunity cost of family labour benefit disproportionately more with oil palm adoption.