Improving the productivity of palm oil industry using system dynamics model

Information Systems Department, Faculty of Intelligent Electrical and Informatics Technology, Institut Teknologi Sepuluh Nopember, Surabaya

^* Corresponding author: erma.suryani@gmail.com

Abstract

This study examines the implementation of sustainable practices in Indonesia's national palm oil industry and investigates how it affects plantation productivity. The Indonesian Ministry of Agriculture launched the Indonesia Sustainable Palm Oil (ISPO) framework to guide both farmers and corporations. Additionally, major palm oil companies have adopted the Roundtable on Sustainable Palm Oil (RSPO) standards throughout their operations to address sustainability challenges. To identify the optimal strategy for boosting fresh fruit bunch (FFB) yield and land productivity, a system dynamics simulation model has been built. The findings suggest that a collaborative governance approach leads to a significant increase in FFB production over time. In this scenario, plantations in Sumatra, the focus of this study, are projected to generate approximately 57 tonnes of FFB per hectare within 20 years. The increase of production will help industry to sustain, increase its competitive advantages, and generate more benefits to labours, farmers, local communities, and government. However, further research is required to incorporate additional factors for a more comprehensive model. This would allow for a more in-depth analysis of return on investment and potentially reveal an even more effective strategy.