Harvest Volume or Extraction Efficiency? The Value Relevance of Fresh Fruit Bunch Yield and Oil Extraction Rate to the Stock Prices of Indonesian Palm Oil Plantation Companies Amid the Productivity Crisis
DOI:
https://doi.org/10.59890/ijsas.v4i7.24Keywords:
value relevance; non-financial information; FFB yield; oil extraction rate; stock price; oil palm plantationAbstract
The Indonesian palm oil industry faces a structural upstream productivity crisis: more than half of the national estate area is low-yielding due to ageing palms, smallholder replanting persistently falls far short of targets, harvesting labour is increasingly scarce, and deteriorating fresh fruit bunch quality depresses extraction rates. This study examines whether the capital market directly prices agronomic excellence by positioning harvest productivity (FFB yield) and extraction efficiency (oil extraction rate/OER) as predictors of plantation issuers' stock prices. A balanced panel of ten issuers listed on the Indonesia Stock Exchange over 2023 to the first quarter of 2026 (40 observations) is analysed using fixed-effect panel regression with clustered standard errors. The estimates show that FFB yield has a positive and significant effect on stock prices (β = 0.194; p = 0.004), with one additional tonne of fresh fruit bunches per hectare associated with a price appreciation of approximately 21.4 percent. Conversely, OER is insignificant in the joint model despite being significantly positive when estimated separately; a decomposition analysis indicates that the information content of OER largely overlaps with FFB yield, so the unique component of extraction efficiency earns no incremental valuation reward. These findings extend the value-relevance literature on non-financial information to agronomic metrics and imply that, in investors' perception, harvest volume productivity is the primary signal of estate excellence, while the extraction rate operates as accompanying information already subsumed within it.
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