The objective of this cost-benefit analysis study is to provide policy options that can be implemented to improve the welfare of smallholder farmers by restructuring the national biodiesel trading system to incorporate them as a formal part of the system. This study focuses on independent smallholders, defined as farmers who own or claim land of less than five hectares, procure seed and fertilizer on their own, and cultivate their own land without the support of a plantation company (Sudaryadi, 2020).

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