Financial Assessment of Smallholder Oil Palm Production in Unsuitable Areas of Surat Thani Province, Thailand

  • Suthijit Choengthong Prince of Songkla University
  • Suchart Choengthong Prince of Songkla University
  • Nongnuch Aungyureekul Kasetsart University
  • Saitip Soraj Kasetsart University
Keywords: not suitable area, financial analysis, oil palm, sustainability, self-reliance, Surat Thani

Abstract

This study was conducted to provide information on profitability, social status, occupations, sustainability, self-reliance, and risks in small-scale oil palm production in unsuitable areas of Surat Thani, by planted oil palm area Thailand’s largest province. The data were collected from 25 farmers who have newly grown to 25 years old oil palm trees cultivated in unsuitable areas. The data were subjected to financial investment analysis, switching value test, sustainability, and self-sufficiency analysis. The investments in oil palm cultivation were assessed by net present value (NPV), internal rate of return (IRR), and benefit to cost ratio (BCR). The results show that most growers were senior citizens with primary school education, and the average number of family members was 4.1. They had self-invested and used family members as labor (on average 1.6 men/family). The average oil palm yield in unsuitable areas was 3.60 tons/rai/year. Based on 7% discount rate the NPV was equal to 71,215.17 Thai baht, IRR was 38.72%, and BCR was 2.25. These financial indicators show that the overall performance of oil palm cultivation in unsuitable areas is a worthwhile investment, although with high risks on the revenue side. The oil palm growers had moderate levels of sustainability and self-reliance.

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Published
2020-12-07
How to Cite
Suthijit Choengthong, Suchart Choengthong, Nongnuch Aungyureekul, & Saitip Soraj. (2020). Financial Assessment of Smallholder Oil Palm Production in Unsuitable Areas of Surat Thani Province, Thailand. International Journal of Business and Society, 21(3), 1296-1309. https://doi.org/10.33736/ijbs.3350.2020