A Study of Farmers' Perceptions of Business Risks Amid Fluctuating Palm Oil Commodity Prices in Bengkulu Province

Abstract

Farmers' perceptions of oil palm farming risks are influenced by various socioeconomic characteristics that determine how they assess and respond to business uncertainty amidst commodity price fluctuations. This study aims to analyze farmers' perceptions of oil palm farming risks and identify socioeconomic factors that influence these perceptions. Data were analyzed using quantitative descriptive methods and multinomial logistic regression. The results showed that perceptions of production risks were dominated by the moderate category with an average score of 30.3, reflecting farmers' relative ability to manage production disruptions because oil palm, as an annual crop, has a stable production pattern. Perceptions of price risks were dominated by the high category with an average score of 22.2, indicating that fluctuations in FFB prices are the most dominant threat due to farmers' position as price takers who lack bargaining power over CPO price dynamics in the global market. Perception of income risk is dominated by the moderate category with an average score of 43.8, reflecting that although farmers feel significant income pressure, they still possess a certain adaptability to maintain household economic stability. Multinomial logistic regression analysis revealed that land area, primary source of income, access to credit or capital, and age are factors that significantly influence farmers' risk perception. Income diversification outside of oil palm has been shown to reduce farmers' sensitivity to farming risks, while larger land holdings, involvement in financing, and older age actually increase farmers' awareness of risk.