Risk Management Literacy Level among Oil Palm Smallholders in Malaysia
Article Sidebar
Issue
Vol. 30 No. 1 (2024)
Accepted
8 February 2024
Published
1 April 2024
Keywords:
-
risk management, literacy level, oil palm smallholders, palm oil sustainability, Malaysia
Abstract
Risk management literacy is very important in influencing an individual's decision-making when taking preparatory steps to handle the anticipated risks. This includes oil palm smallholders who are constantly exposed to various types of risks. Therefore, this study aims to analyze the level of risk management literacy among oil palm smallholders in Malaysia. The data of the study was obtained from the online questionnaires distributed to oil palm smallholders using a random sampling method. The data obtained from the final sample of 200 smallholders were analyzed to examine the level of risk management literacy among palm oil smallholders using mean score analysis. The results found that the risk management literacy level among oil palm smallholders in Malaysia is at a moderately high level. Furthermore, mean score for the preference of saving instead of expenditure was the highest i.e. 4.40, indicating that smallholders possess high awareness on the importance of saving as one of the tools for risk management. The study’ findings allowed relevant authorities to formulate new programs such as training and awareness campaign of risk management, on continuous basis. It could assist smallholders to prepare for any potential risks and subsequently be able to create sustainable sources of income.
References
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Ajah, E. A., Ofem, U. I., Effa, E. B. & Ubabuko, L. I. (2022). Analysis of risk management practices among cassava farmers in Ideato South Local Government Area, Imo State, Nigeria. African Journal of Food, Agriculture, Nutrition and Development, 22(3), 19871–19885.
Ali, M., Man, N., & Muharam, F. M.. (2019). Perceptions of farmers about their motivation to manage agricultural risk in Malaysia. Pakistan Journal of Agricultural Research, 32(2), 282–286. https://doi.org/10.17582/journal.pjar/2019/32.2.282.286
Ankrah Twumasi, M., Jiang, Y., Osei Danquah, F., Chandio, A. A., & Agbenyo, W. (2020). The role of savings mobilization on access to credit: A case study of smallholder farmers in Ghana. Agricultural Finance Review, 80(2), 275–290. https://doi.org/10.1108/AFR-05-2019-0055/FULL/XML
Awang, A. H., Hashim, K., Ramli, Z. & Ibrahim, I. (2017). Agriculture technology transfer and productivity of independent oil palm smallholders. International Journal of Management and Applied Science 3(2), 19–23.
Ayompe, L. M., Schaafsma, M., & Egoh, B. N. (2021). Towards sustainable palm oil production: The positive and negative impacts on ecosystem services and human wellbeing. Journal of Cleaner Production, 278, 1–11. https://doi.org/10.1016/j.jclepro.2020.123914
Azhar, B., Saadun, N., Prideaux, M., & Lindenmayer, D. B. (2017). The global palm oil sector must change to save biodiversity and improve food security in the tropics. Journal of Environmental Management, 203(1), 457–466 https://doi.org/10.1016/j.jenvman.2017.08.021
Azima A. M., Er, A. C., Lyndon, N., & Yew, V. W. C. (2018). Mendepani kekangan inovasi dan teknologi dalam kalangan pekebun kecil sawit di Sabah. Geografia. Malaysian Journal of Society and Space, 14(2), 56–67. https://doi.org/10.17576/geo-2018-1402-05
Birthal, P. S., Hazrana, J., & Negi, D. S. (2021). Effectiveness of farmers’ risk management strategies in smallholder agriculture: Evidence from India. Climatic Change, 169, 30. https://doi.org/10.1007/s10584-021-03271-1
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Hansen, J., Hellin, J., Rosenstock, T., Fisher, E., Cairns, J., Stirling, C., Lamanna, C., van Etten, J., Rose, A., & Campbell, B. (2019). Climate risk management and rural poverty reduction. Agricultural Systems, 172, 28–46. https://doi.org/10.1016/J.AGSY.2018.01.019
Hua, W. Y., & Choy, E. A. (2019). Kelestarian penanaman kelapa sawit dalam kalangan pekebun kecil di Sri Aman, Malaysia. Jurnal Wacana Sarjana, 3(1), 1–16.
Hussain, M. Y., Affendi, M. A. M., Ishak, S., & Ramli, Z. (2018). Strategizing risk management in oil palm plantation: Experience by middleman in District of Kluang, Johor, Malaysia. International Information Institute, 21(6), 1843–1856.
Ilieva, J., Baron, S., & Healey, N. M. (2002). Online surveys in marketing research. International Journal of Market Research, 44(3), 1–14. https://doi.org/10.1177/147078530204400303
Ishak, S., Che Omar, A. R., & Abdul Manaf, A. (2022). Faktor mempengaruhi pendapatan sawit: Perspektif pekebun kecil. e-Bangi: Journal of Social Sciences & Humanities, 19(6), 1–14. https://doi.org/10.17576/ebangi.2022.1906.01
Ishak, S., Che Omar, A. R., Md Sum, S. & Othman, A. S. (2021). Identiti koperasi pekebun kecil sawit di Malaysia: Satu deskripsi awal. Geografia. Malaysian Journal of Society and Space, 16(4), 84–101.
Mohanty, C., Radhakrishnan, R., & Jain, M. (2020). Re-exploring the online surveys: Research tools in COVID times. Journal of Anaesthesiology Clinical Pharmacology, 36(3), 414–415. https://doi.org/10.4103/JOACP.JOACP_401_20
Mohd Hanafiah, K., Abd Mutalib, A. H., Miard, P., Goh, C. S., Mohd Sah, S. A., & Ruppert, N. (2022). Impact of Malaysian palm oil on sustainable development goals: co-benefits and trade-offs across mitigation strategies. Sustainability Science, 17(4), 1639–1661. https://doi.org/10.1007/s11625-021-01052-4
Mohd Suib, N. A., Mohd Salleh, N. H,. Shukor, M. S., Chamhuri, N., Shahimi, S., Mohamed Salleh, K., & Hashim, K. (2023). The influence of good agricultural practice (GAP) on the productivity and well-being of Malaysian sustainable palm oil (MSPO)-certified independent smallholders in Malaysia. Agriculture, 13(5), 990. https://doi.org/10.3390/agriculture13050990
Mulyasari, G., Djarot, I. N., Sasongko, N. A., & Putra, A. S. (2023). Social-life cycle assessment of oil palm plantation smallholders in Bengkulu Province, Indonesia, Heliyon, 9(8), e19123. https://doi.org/10.1016/j.heliyon.2023.e19123
Murphy, D. J., Goggin, K., & Paterson, R. R. M. (2021). Oil palm in the 2020s and beyond: Challenges and solutions. CABI Agriculture and Bioscience, 2(1), 39. https://doi.org/10.1186/S43170-021-00058-3
Murrja, A., Ndregjoni, A., Kapaj, I., Maloku, S., & Kapaj, A. (2022). Financial risk analysis in the intensive poultry growth in the Republic of Kosovo. International Journal of Economics and Finance Studies, 14(3), 366–387.
Nikiforidou, Z., Pange, J. & Chadjipadelis, T. (2012). Risk literacy in early childhood education under a lifelong perspective. Procedia - Social and Behavioral Sciences, 46, 4830–4833. https://doi.org/10.1016/j.sbspro.2012.06.343
Nunnally, J. C. (1978). Psychometric theory (2nd ed.). New York: McGraw-Hill
Nunnally, J. C., & Bernstein, I. H. (1994). Psychometric theory (3rd ed.). New York: McGraw-Hill.
Nur Nadia, K., & Nur Ain, M. H. (2022). Risk response strategies of Malaysian oil palm estates for the downturn in CPO prices. Oil Palm Industry Economic Journal, 22(1), 11–20. https://doi.org/10.21894/opiej.2022.02
Rahman, S. (2020). Malaysian independent oil palm smallholders and their struggle to survive 2020. ISEAS Perspective, 144, 1–16.
Redzuan, H., Yakob, R., & Abdullah, M. H. S. B. (2022). Prinsip pengurusan risiko dan insurans. Bangi: Penerbit UKM.
Roscoe, J. T. (1975). Fundamental research statistics for the behavioral science. International series in decision process (2nd ed.). New York: Holt, Rinehart and Winston, Inc.
Safriyana, Marimin, Anggraeni, E. & Sailah, 1. (2018) Operational risk evaluation and mitigation for palm oil supply chain: A case study at x co. IOP Conference Series: Earth and Environmental Science, 335, 012013. https://doi.org/10.1088/1755-1315/335/1/012013
Samsuddin, H., Omar, A. J., & Omar, S. S. (2020). Personal financial management among oil palm independent smallholders in Batu Pahat. Research in Management of Technology and Business, 1(1), 756–766. https://doi.org/10.30880/rmtb.2020.01.01.057
Sekaran, U., & Bougie, R. (2013). Research methods for business: A skill-building approach (6th ed.). Wiley Publishers.
Senawi, R., Rahman, N. K., Mansor, N., & Kuntom, A. (2019). Transformation of oil palm independent smallholders through Malaysian sustainable palm oil. Journal of Oil Palm Research, 31(3), 496–507. https://doi.org/10.21894/JOPR.2019.0038
Siti-Dina, R. P., Er, A. C., & Cheah, W. Y. (2023). Social issues and challenges among oil palm smallholder farmers in Malaysia: Systematic literature review. Sustainability, 15(4), 3123. https://doi.org/10.3390/SU15043123
Sürücü, L., & Maslakçi, A. (2020). Validity and reliability in quantitative research. Business & Management Studies: An International Journal, 8(3), 2694–2726. https://doi.org/10.15295/BMIJ.V8I3.1540
Taber, K. S. (2018). The use of Cronbach’s alpha when developing and reporting research instruments in science education. Research in Science Education, 48(6), 1273–1296. https://doi.org/10.1007/S11165-016-9602-2/TABLES/1
Todor, M., Željko, K. & Stevan, V. (2020). Area revenue insurance as a risk management instrument in Serbian agriculture. Ratarstvo i Povrtarstvo, 57(2), 4348. https://doi.org/10.5937/ratpov57-24962
Ugwuja, V. C., & Onwuachu, O. E. (2020). Assessment of farm financial literacy levels among poultry farmers in Anambra State, Nigeria. Nigerian Agricultural Policy Research Journal (NAPReJ), 7(1), 43–48. https://doi.org/10.22004/AG.ECON.314138
Wongmonta, S. (2023). Financial capability and saving behavior: Evidence from industrial workers in Thailand. Journal of Financial Counseling and Planning, 34(2), 251–265. https://doi.org/10.1891/JFCP.34.2
Yovi, E. Y., Nastiti, A. & Kuncahyo, B. (2023). Heat-related knowledge, risk perception, and precautionary behavior among Indonesian forestry workers and farmers: Implications for occupational health promotion in the face of climate change impacts. Forests, 14(7), 1455. https://doi.org/10.3390/f14071455
Abu Bakar, W., & Md. Sum, R. (2021). Agricultural risk management: A case study on rock melon farm in Sepang, Selangor, Malaysia. Economic and Technology Management Review, 17(1), 75–82. https://doi.org/10.26480/fabm.02.2020.75.82
Ahmad, A., Osman, L. H., Che Omar, A. R., Rahman, M. R., & Ishak, S. (2020). Contributions and challenges of oil palm to smallholders in Malaysia. International Journal of Scientific & Technology Research, 9(6), 269–273.
Ajah, E. A., Ofem, U. I., Effa, E. B. & Ubabuko, L. I. (2022). Analysis of risk management practices among cassava farmers in Ideato South Local Government Area, Imo State, Nigeria. African Journal of Food, Agriculture, Nutrition and Development, 22(3), 19871–19885.
Ali, M., Man, N., & Muharam, F. M.. (2019). Perceptions of farmers about their motivation to manage agricultural risk in Malaysia. Pakistan Journal of Agricultural Research, 32(2), 282–286. https://doi.org/10.17582/journal.pjar/2019/32.2.282.286
Ankrah Twumasi, M., Jiang, Y., Osei Danquah, F., Chandio, A. A., & Agbenyo, W. (2020). The role of savings mobilization on access to credit: A case study of smallholder farmers in Ghana. Agricultural Finance Review, 80(2), 275–290. https://doi.org/10.1108/AFR-05-2019-0055/FULL/XML
Awang, A. H., Hashim, K., Ramli, Z. & Ibrahim, I. (2017). Agriculture technology transfer and productivity of independent oil palm smallholders. International Journal of Management and Applied Science 3(2), 19–23.
Ayompe, L. M., Schaafsma, M., & Egoh, B. N. (2021). Towards sustainable palm oil production: The positive and negative impacts on ecosystem services and human wellbeing. Journal of Cleaner Production, 278, 1–11. https://doi.org/10.1016/j.jclepro.2020.123914
Azhar, B., Saadun, N., Prideaux, M., & Lindenmayer, D. B. (2017). The global palm oil sector must change to save biodiversity and improve food security in the tropics. Journal of Environmental Management, 203(1), 457–466 https://doi.org/10.1016/j.jenvman.2017.08.021
Azima A. M., Er, A. C., Lyndon, N., & Yew, V. W. C. (2018). Mendepani kekangan inovasi dan teknologi dalam kalangan pekebun kecil sawit di Sabah. Geografia. Malaysian Journal of Society and Space, 14(2), 56–67. https://doi.org/10.17576/geo-2018-1402-05
Birthal, P. S., Hazrana, J., & Negi, D. S. (2021). Effectiveness of farmers’ risk management strategies in smallholder agriculture: Evidence from India. Climatic Change, 169, 30. https://doi.org/10.1007/s10584-021-03271-1
Bond, T. G., & Fox, C. M. (2015). Applying the Rasch model: Fundamental measurement in the human sciences (3rd ed.). L. Erlbaum.
[DOSM] Department of Statistics Malaysia. (2022). Selected agricultural indicators Malaysia 2022. Retrieved from https://v1.dosm.gov.my/v1/index.php?r=column/cthemeByCat&cat=72&bul_id=b2M4QlpZamFlN2w5ZjFPRlY4TElSUT09&menu_id=Z0VTZGU1UHBUT1VJMFlpaXRRR0xpdz09www.dosm.gov.my
Felipe, I. J.S. (2019). Economic crisis and saving behavior. In W. Mendes-Da-Silva (Ed.), Individual behaviors and technologies for financial innovations (pp. 47–67). Springer.
Gigerenzer, G. (2008). Rationality for mortals: How people cope with uncertainty. Oxford University Press.
Hansen, J., Hellin, J., Rosenstock, T., Fisher, E., Cairns, J., Stirling, C., Lamanna, C., van Etten, J., Rose, A., & Campbell, B. (2019). Climate risk management and rural poverty reduction. Agricultural Systems, 172, 28–46. https://doi.org/10.1016/J.AGSY.2018.01.019
Hua, W. Y., & Choy, E. A. (2019). Kelestarian penanaman kelapa sawit dalam kalangan pekebun kecil di Sri Aman, Malaysia. Jurnal Wacana Sarjana, 3(1), 1–16.
Hussain, M. Y., Affendi, M. A. M., Ishak, S., & Ramli, Z. (2018). Strategizing risk management in oil palm plantation: Experience by middleman in District of Kluang, Johor, Malaysia. International Information Institute, 21(6), 1843–1856.
Ilieva, J., Baron, S., & Healey, N. M. (2002). Online surveys in marketing research. International Journal of Market Research, 44(3), 1–14. https://doi.org/10.1177/147078530204400303
Ishak, S., Che Omar, A. R., & Abdul Manaf, A. (2022). Faktor mempengaruhi pendapatan sawit: Perspektif pekebun kecil. e-Bangi: Journal of Social Sciences & Humanities, 19(6), 1–14. https://doi.org/10.17576/ebangi.2022.1906.01
Ishak, S., Che Omar, A. R., Md Sum, S. & Othman, A. S. (2021). Identiti koperasi pekebun kecil sawit di Malaysia: Satu deskripsi awal. Geografia. Malaysian Journal of Society and Space, 16(4), 84–101.
Mohanty, C., Radhakrishnan, R., & Jain, M. (2020). Re-exploring the online surveys: Research tools in COVID times. Journal of Anaesthesiology Clinical Pharmacology, 36(3), 414–415. https://doi.org/10.4103/JOACP.JOACP_401_20
Mohd Hanafiah, K., Abd Mutalib, A. H., Miard, P., Goh, C. S., Mohd Sah, S. A., & Ruppert, N. (2022). Impact of Malaysian palm oil on sustainable development goals: co-benefits and trade-offs across mitigation strategies. Sustainability Science, 17(4), 1639–1661. https://doi.org/10.1007/s11625-021-01052-4
Mohd Suib, N. A., Mohd Salleh, N. H,. Shukor, M. S., Chamhuri, N., Shahimi, S., Mohamed Salleh, K., & Hashim, K. (2023). The influence of good agricultural practice (GAP) on the productivity and well-being of Malaysian sustainable palm oil (MSPO)-certified independent smallholders in Malaysia. Agriculture, 13(5), 990. https://doi.org/10.3390/agriculture13050990
Mulyasari, G., Djarot, I. N., Sasongko, N. A., & Putra, A. S. (2023). Social-life cycle assessment of oil palm plantation smallholders in Bengkulu Province, Indonesia, Heliyon, 9(8), e19123. https://doi.org/10.1016/j.heliyon.2023.e19123
Murphy, D. J., Goggin, K., & Paterson, R. R. M. (2021). Oil palm in the 2020s and beyond: Challenges and solutions. CABI Agriculture and Bioscience, 2(1), 39. https://doi.org/10.1186/S43170-021-00058-3
Murrja, A., Ndregjoni, A., Kapaj, I., Maloku, S., & Kapaj, A. (2022). Financial risk analysis in the intensive poultry growth in the Republic of Kosovo. International Journal of Economics and Finance Studies, 14(3), 366–387.
Nikiforidou, Z., Pange, J. & Chadjipadelis, T. (2012). Risk literacy in early childhood education under a lifelong perspective. Procedia - Social and Behavioral Sciences, 46, 4830–4833. https://doi.org/10.1016/j.sbspro.2012.06.343
Nunnally, J. C. (1978). Psychometric theory (2nd ed.). New York: McGraw-Hill
Nunnally, J. C., & Bernstein, I. H. (1994). Psychometric theory (3rd ed.). New York: McGraw-Hill.
Nur Nadia, K., & Nur Ain, M. H. (2022). Risk response strategies of Malaysian oil palm estates for the downturn in CPO prices. Oil Palm Industry Economic Journal, 22(1), 11–20. https://doi.org/10.21894/opiej.2022.02
Rahman, S. (2020). Malaysian independent oil palm smallholders and their struggle to survive 2020. ISEAS Perspective, 144, 1–16.
Redzuan, H., Yakob, R., & Abdullah, M. H. S. B. (2022). Prinsip pengurusan risiko dan insurans. Bangi: Penerbit UKM.
Roscoe, J. T. (1975). Fundamental research statistics for the behavioral science. International series in decision process (2nd ed.). New York: Holt, Rinehart and Winston, Inc.
Safriyana, Marimin, Anggraeni, E. & Sailah, 1. (2018) Operational risk evaluation and mitigation for palm oil supply chain: A case study at x co. IOP Conference Series: Earth and Environmental Science, 335, 012013. https://doi.org/10.1088/1755-1315/335/1/012013
Samsuddin, H., Omar, A. J., & Omar, S. S. (2020). Personal financial management among oil palm independent smallholders in Batu Pahat. Research in Management of Technology and Business, 1(1), 756–766. https://doi.org/10.30880/rmtb.2020.01.01.057
Sekaran, U., & Bougie, R. (2013). Research methods for business: A skill-building approach (6th ed.). Wiley Publishers.
Senawi, R., Rahman, N. K., Mansor, N., & Kuntom, A. (2019). Transformation of oil palm independent smallholders through Malaysian sustainable palm oil. Journal of Oil Palm Research, 31(3), 496–507. https://doi.org/10.21894/JOPR.2019.0038
Siti-Dina, R. P., Er, A. C., & Cheah, W. Y. (2023). Social issues and challenges among oil palm smallholder farmers in Malaysia: Systematic literature review. Sustainability, 15(4), 3123. https://doi.org/10.3390/SU15043123
Sürücü, L., & Maslakçi, A. (2020). Validity and reliability in quantitative research. Business & Management Studies: An International Journal, 8(3), 2694–2726. https://doi.org/10.15295/BMIJ.V8I3.1540
Taber, K. S. (2018). The use of Cronbach’s alpha when developing and reporting research instruments in science education. Research in Science Education, 48(6), 1273–1296. https://doi.org/10.1007/S11165-016-9602-2/TABLES/1
Todor, M., Željko, K. & Stevan, V. (2020). Area revenue insurance as a risk management instrument in Serbian agriculture. Ratarstvo i Povrtarstvo, 57(2), 4348. https://doi.org/10.5937/ratpov57-24962
Ugwuja, V. C., & Onwuachu, O. E. (2020). Assessment of farm financial literacy levels among poultry farmers in Anambra State, Nigeria. Nigerian Agricultural Policy Research Journal (NAPReJ), 7(1), 43–48. https://doi.org/10.22004/AG.ECON.314138
Wongmonta, S. (2023). Financial capability and saving behavior: Evidence from industrial workers in Thailand. Journal of Financial Counseling and Planning, 34(2), 251–265. https://doi.org/10.1891/JFCP.34.2
Yovi, E. Y., Nastiti, A. & Kuncahyo, B. (2023). Heat-related knowledge, risk perception, and precautionary behavior among Indonesian forestry workers and farmers: Implications for occupational health promotion in the face of climate change impacts. Forests, 14(7), 1455. https://doi.org/10.3390/f14071455
Authors
AbdullahM. H. S. B., AzmiA., YakobR., & RedzuanH. (2024). Risk Management Literacy Level among Oil Palm Smallholders in Malaysia. Jurnal Manajemen Hutan Tropika, 30(1), 129. https://doi.org/10.7226/jtfm.30.1.129
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