Factors that Influence the Welfare of Palm Oil Farmers in Musam Village, Bahorok District, Langkat Regency

Abstract

This study was designed to examine the extent to which fresh fruit bunch (FFB) prices, farm productivity, business capital availability, education level, landholding size, and rural infrastructure conditions contribute to the welfare of oil palm smallholders, positioning household income as an intervening variable, using the case of Musam Pembangunan Village, Bahorok District, Langkat Regency. A quantitative-associative design was applied through a structured questionnaire distributed to the entire population of 67 oil palm farming households using a saturated sampling technique. Data were processed through path analysis assisted by IBM SPSS Statistics version 25. The findings indicate that landholding size is the only predictor that has a positive and significant effect on income, while education and infrastructure are proven to have a positive and significant effect on farmers' welfare. Palm oil price, productivity, business capital, and infrastructure were not proven to significantly affect income, and income itself did not significantly affect welfare, so its mediating role could not be statistically confirmed. The study concludes that improvement in farmers' living standards is not solely determined by the economic dimension, but is also reinforced by strengthening human resource quality and infrastructure development as pillars supporting rural regional development.