Bridging the Gap: Analyzing Fresh Fruit Bunch Price Disparities Between Indonesia and Malaysia and Pathways to Enhanced Smallholder Welfare

This journal discusses the price gap of oil palm FFB between Indonesia and Malaysia and its impact on the welfare of smallholders. Through a qualitative literature review of studies from 2020–2026, industry reports, and policy documents, this study finds that from 2019–2023, Malaysian smallholders on average received an FFB price 58.1% higher than Indonesian smallholders. The main difference is influenced by the pricing system: Malaysia uses a more transparent MPOB formula, while Indonesia still faces the complexity of a K-index that varies across regions. Other factors include infrastructure, farmers' bargaining position, quality grading, cooperatives, and slow replanting. This study recommends reforms in price transparency, strengthening cooperatives, improving logistics, supporting replanting, and financing certification to enhance smallholders' welfare and palm oil sustainability.