Oil Palm Contract Farming in Brazil: Labour Constraints and Inclusivity Challenges

Figures & data

Table 1. Oil palm planted area in Pará in 2017

		Company-managed plantations		Outgrower plantations
Company	Total area planted (ha)	Total area (ha)	Year of first planting	Smallholders’ total area (ha)	Number of families	Medium and large producers’ total area (ha)	Number of medium and large producers
ADM	7,550	5,500	2012	2,050	268	0	0
Agropalma	50,111	39,042	1982	1,746	192	9,323	49
BBB	41,422	38,021	2010	3,055	310	346	1
Biopalma	63,315	56,487	2007	6,543	657	285	2
Denpasa	4,667	1,109	1974	0	0	3,558	57
Dentauá	7,944	3,554	1980	0	0	4,390	15
Marborges	8,935	7,761	1981	770	78	404	16
Mejer	15,595	11,450	1994	0	0	4,145	1
Palmasa	6,480	3,002	1985	30	3	3,448	40
Others	1,234	1,234		0	0	0	0
TOTAL	207,252	167,160		14,194	1,508	25,899	181

Source: Abrapalma (2017) and Brandão and Schoneveld (2015)

Figure 1. Oil palm contract farming model in Brazil

Source: Authors’ elaboration based on Brandão and Schoneveld (2015)

Table 2. Overview of survey clusters and sampling

Community Cluster	Research Cluster	n
1: Arauaí
BBB	2: SPOPP	30
Non-participants	3: Non-participants	30
2: Calmaria
Biopalma	2: SPOPP	29
Non-participants	3: Non-participants	30
3: Forquilha
Biopalma	2: SPOPP	30
Non-participants	3: Non-participants	30
4: São Domingos do Capim
ADM	2: SPOPP	30
Non-participants	3: Non-participants	30
5: Garrafão do Norte
Marborges	2: SPOPP	30
Non-participants	3: Non-participants	30
Total		299

Source: Household surveys

Note: The number of survey respondents is denoted by ‘n.’

Table 3. Descriptive statistics

Variable	Cluster 1	Cluster 2	T Test
	SPOPP-participants	Non-participants
	(n = 149)	(n = 150)
	Mean (SD)	Mean (SD)
Household characteristics
Household size (n members)	4.490 (2.256)	4.393 (2.030)	−0.3893
Age of household head (years)	45.738 (13.089)͗͑͑͑ͦ	49.000 (13.082)	2.1551**
Gender of household head (male dummy)	0.913 (0.283)	0.893 (0.310)	−0.5657
Highest educational level of household head (from 0 to 5)	1.208 (0.939)	0.860 (0.859)	−3.3433***
Household head migrated (migrant dummy)	0.584 (0.495)	0.660 (0.475)	1.3567
Dependency ratio	0.691 (0.686)	0.924 (0.844)	2.9561***
Household labour (n members)	2.617 (1.298)	2.313 (1.100)	−2.1865**
Economic characteristics
Area of land (in hectares)	48.857 (31.563)	36.473 (34.716)	−3.2051***
Crop Diversification Index (CDI)	0.284 (0.231)	0.277 (0.204)	−0.2889
Livelihood Diversification Index (LDI)	0.388 (0.112)	0.376 (0.092)	−0.9878
Bolsa Família (dummy)	0.523 (0.501)	0.560 (0.498)	0.6318
Welfare index	1.125 (0.132)	1.067 (0.157)	−3.4452***
Member of community association (dummy)	0.523 (0.501)	0.333 (0.473)	−3.3744***
Prior experience (dummy)	0.168 (0.375)	0.133 (0.341)	−0.8312

Source: Household surveys

Table 4. Probit model

Variable	Coefficient	Robust Standard Errors
Dependent variable: participation dummy
Age of household head (years)	−0.009	0.007
Gender of household head (male dummy)	0.006	0.288
Highest educational level of household head (from 0 to 5)	0.193**	0.081
Dependency ratio	−0.239*	0.137
Household labour (n members)	0.136*	0.076
Land area (in hectares log)	1.119***	0.199
Crop Diversification Index	0.519	0.379
Livelihood Diversification Index	0.841	0.818
Bolsa Família	−0.180	0.187
Welfare index	1.027	0.687
Member of community association (dummy)	0.382**	0.167
Prior experience (dummy)	0.121	0.232
Constant	−3.606***	1.046
N	293
Wald chi^2 (12)	65.64***
R^2 (pseudo)	0.11815
Percentage correct predictions	69.62%
*** = signif < 0.01 ** = signif < 0.05 * = signif < 0.1

Note: Land area was log-transformed, so the interpretation of the coefficient should consider that difference.

Table 5. Labour allocation model

Variable	Coefficient	Robust SE
Outcome equation Dependent variable: number of working weeks per ha
Age of household head (years)	0.121*	0.066
Gender of household head (male dummy)	6.015*	3.290
Dependency ratio	−0.848	1.058
Household labour (n members)	0.368	0.632
Land area (in hectares log)	−2.956	3.316
Crop Diversification Index	−0.651	4.156
Prior experience (dummy)	2.430	1.905
Number of formal jobs	0.359	2.130
Member of community association (dummy)	0.250	1.776
Access to trainings (dummy)	3.458	2.019
Welfare index	−3.879	6.889
Hired labour (dummy)	14.786***	3.066
Constant	−0.359	10.709
Selection equation Dependent variable: hiring labour (dummy)
Highest educational level of household head (from 0 to 5)	0.415***	0.109
Age of household head (years)	0.007	0.009
Gender of household head (male dummy)	−0.477	0.452
Dependency ratio	0.493***	0.186
Household labour (n members)	−0.397***	0.090
Land area (in hectares log)	−0.337	0.415
Crop Diversification Index	−0.232	0.491
Prior experience (dummy)	−0.090	0.274
Number of formal jobs	1.068***	0.405
Member of community association (dummy)	−0.478**	0.243
Access to trainings (dummy)	0.076	0.259
Welfare index	−1.253	0.911
Constant	2.603*	0.911
Number of observations	133
Log pseudolikelihood	−524.61484
Wald chi^2(12)	48.10***
Wald test for independent equations (chi^2(1))	16.07**

Note: *** = signif < 0.01 ** = signif < 0.05 * = signif < 0.1

Abrapalma. (2017). Números de produção Agosto 2016 [Data set].

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Brandão, F., & Schoneveld, G. (2015). The state of oil palm development in the Brazilian Amazon: Trends, value chain dynamics, and business models. Bogor, Indonesia: Center for International Forestry Research (CIFOR).

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