IOSR Journal of Agriculture and Veterinary Science (IOSR-JAVS) e-ISSN: 2319-2380, p-ISSN: 2319-2372. Volume 11, Issue 11 Ver. I (November 2018), PP 44-52 www.iosrjournals.org DOI: 10.9790/2380-1111014452 www.iosrjournals.org 44 | Page Profit Of Smallholder Palm Oil In Nagan Raya Andaceh Tamiang Aceh Province Vivi Silvia (Lecturer, Faculty of Economics and Business, Syiah Kuala University, Indonesia) Corresponding Author : Vivi Silvia Abstract:This study aims to identify and analyze the profit in smallholder farm palm oil in Nagan Raya and Aceh Tamiang Aceh Province.The data used in this study is the input-output data of smallholder palm oil, and other agricultural resources. The secondary data was obtained from the Central Statistics Agency, as well as from several research results and the annual report of the Department of Forestry and Plantation of Aceh Province, also other agencies associated with this research. The primary data of this research was obtained directly from the field, either through a verbal interview to the respondents as well as through questionares. An optimization linear programming technique with resources constraints was used in order to seek the optimal allocation solution to answer the problem which is the Output Unit Price Cobb-Douglass Profit Function Model. Then the model was analyzed using Cobb-Douglass Profits Function Model which are developed by the Cobb-Douglass. Regression estimation of profit or the aggregated profit of the palm oil plantations is affected by factors of land, number of plants, capital, fertilizer, medicine, labor, and experience, as well as the cost of each of these factors. All of these variables influence the profit of palm oil plantation and are sufficient to explain the variations in the profit. By looking at the sensitivity analysis, palm oil farmers need to carefully consider the factors influence profit, which includes land, number of plants, capital, fertilizer, medicine, labor, experience of smallholders (including the cost of resources). This study depart from previous study by exercising farmer experience variable. The latter variable is the most importance variable to contribute the amount of profit, which is the novelty of this research. Failure to use the limited input resourceseffeciently would make the profit has not been maximization. In this case, handle directly by the role of government is needed, especially to intervene in matters which are difficult to reach farmers, for example, the addition of business land, subsidized seeds and fertilizers, as well as improvement to farmers capabilityto manage agricultural resources more optimally through agriculture extension or improvement of experienced partner. Keywords: palm oil, production function, profit --------------------------------------------------------------------------------------------------------------------------------------- Date of Submission: 30-10-2018 Date of acceptance: 15-11-2018 --------------------------------------------------------------------------------------------------------------------------------------- I. Introduction Research Background The economic crisis that hit Indonesia since 1998, has caused a decline in the national economy due to the negative growth in various economic sectors which have been the main contributors to national income. The agricultural sector, one of the economic sectors with a declining contribution to national income, was proven to be more able to withstand the economic crisis than other economic sectors. Investment in the agricultural sector is very expensive, plus the rate of return is sometimes so low that it is not interesting for the private sector. Therefore, the development of irrigation, agricultural extension and various forms of investment in the form of other subsidies must be carried out by the government. However, among the sub-sectors in the agricultural sector, the plantation sub-sector is the promising one because many plantation commodities, such as oil palm, cocoa, and rubber are the main foreign exchange contributors from the agricultural sector. The large number of workers in the smallholder plantation for palm oil commodities will also affect the level of production. The result of the products can be used as a stimulus to increase labor productivity in this sector. If the production increases, the level of labor productivity in the smallholder plantation for palm oil commodities also increases. During the period of 1995 to 2016 it seems that the average area per farmer had increased, as well as the number of farmers who tried on smallholder oil palm commodity farming. However, this did not affect any rising number in the average productivity of tons per hectare. The area of planting and production of smallholder palm oil in Nagan Raya Regency and Aceh Tamiang Regency is the largest area of planting and palm oil production in Aceh Province, but the productivity of tons per hectare has fluctuated (Aceh Forestry and Plantation Service, 2017). The least optimum usage of resources can be the cause of low income. Of course this is a problem with least optimum usage of resources in the smallholder oil palm farming business, that leads to least benefits to the farmer. With the optimum usage of