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More than 3 million smallholders and small-scale farmers make a living from palm oil globally. While their farmlands are small compared to industrial plantations, smallholders account for about 40% of total global palm oil production, making smallholders significant contributors towards a sustainable oil palm industry. They often have to cope with inadequate information and knowledge in growing palms and selling oil, while their yields are also typically relatively low.
Smallholders are farmers who grow oil palm, alongside with subsistence crops, where the family provides the majority of labour and the farm provides the principal source of income, and the planted oil palm area are is less than 50 hectares.
Characterised by their freedom to choose how they utilise their lands, type of crops to plant, and how they manage them (being self-organised, self-managed and self-financed). They are not contractually bound to any particular mill or association, and may also receive support or extension services from government agencies.
They are structurally bound by contract, a credit agreement or planning to a particular mill. They do not choose which crop they grow, are supervised in their planting and crop management techniques, and are often organised, supervised or directly managed by the managers of the mill, estate or scheme to which they are structurally linked.