Oil Palm Industry Economic Journal Vol. 2 (2) September 2002 p. 21-27

US Agricultural Subsidies and their Implications on Oilseeds and, Oils and Fats Trade

N Balu and Nazlin Ismail
Received:    Accepted:    Available Online:


Palm oil is today the leading edible oil traded in the world market, accounting for more than 40% of the total export trade of 17 oils and fats. Although oil palm is widely recognized as the highest yielding oil crop, this does not in any way guarantee that it is the most cost competitive. The reality is that trade distorting measures in the form of agricultural production subsidies and export assistance programmes continue to challenge the competitiveness of palm oil and subsequently, its position as the most competitive vegetable oil. In highlighting the implications of trade distorting agricultural subsidies, it is clear that farmers planting decisions in the US are related to the attractive loan rate rather than the market price, thus introducing potential production-influencing effects into the market place

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