Vol. 20 (1) March 2020 – OPIEJ https://opiej.mpob.gov.my Oil Palm Industry Economic Journal Tue, 24 Mar 2020 10:50:38 +0000 en-US hourly 1 https://wordpress.org/?v=7.0 Obstacles of Waqf Institutions vis-à-vis Sustainable Oil Palm Management in Malaysia https://opiej.mpob.gov.my/obstacles-of-waqf-institutions-vis-a-vis-sustainable-oil-palm-management-in-malaysia/ Tue, 24 Mar 2020 10:47:32 +0000 https://opiej.mpob.gov.my/?p=1385 Read more]]> The total area of waqf land in Malaysia reached 11 091.82 hectares comprising general waqf and special waqf. The total land area of general waqf covered 4836.5 ha and the remaining 6255.32 ha were special waqf land as recorded by JAWHAR. In Malaysia, the administration and management of waqf property fall under the jurisdiction of the respective State Islamic Religious Council (SIRC). Realistically, to become a high- income nation by 2025, Malaysia requires waqf land in the context of the oil palm industry through the Shared Prosperity trajectory. The main problems facing the oil palm industry are the declining condition of the economy, nutritional deficiencies, decreasing productivity levels, and the unstable financial position of smallholders. To address these challenges, it is necessary to identify the obstacles faced by the waqf institutions in preserving the role of waqf as an Islamic financial instrument that provides financial assistance to those who are qualified. The question here is whether the government is only responsible to care for the oil palm industry in Malaysia. Hence, the objective of this study is to assess the strategy of waqf institutions in the development of the oil palm industry in Malaysia and to propose the methods of implementation. The findings showed that governance and sharing of responsibilities between the waqf institutions and the government are able to preserve the management of waqf land in Malaysia, especially in the care of their oil palm plantations.

Keywords: oil palm, waqf, management, plantation, smallholder.

]]> A Comparative Analysis of Agricultural Practices, Costs and Yields of Pre- and Post-Malaysian Sustainable Palm Oil (MSPO) Certification for Independent Smallholders in Malaysia https://opiej.mpob.gov.my/a-comparative-analysis-of-agricultural-practices-costs-and-yields-of-pre-and-post-malaysian-sustainable-palm-oil-mspo-certification-for-independent-smallholders-in-malaysia/ Tue, 24 Mar 2020 10:43:43 +0000 https://opiej.mpob.gov.my/?p=1380 Read more]]> The study aims to assess the monetary costs borne by independent smallholders associated with Malaysian Sustainable Palm Oil (MSPO) certification and the benefits of MSPO certification for these smallholders, specifically with regard to yield improvement and good agricultural practices. Ensuring a supply of sustainably produced palm oil is essential as palm oil contributes significantly to the social and economic development of Malaysia. The contribution by independent smallholders is very significant because they account for 0.99 million hectares (16.7%) of the total oil palm planted area in the country. Based on the findings of this study, it was observed that MSPO certification resulted in an increase in fresh fruit bunch (FFB) yield from 17.88 t/ha/yr before certification to 21.24 t/ha/yr after MSPO certification. Also, MSPO certification led to an improved adoption of good agricultural practices and increased fertiliser use from 4.18 kg/ha/yr before certification to 6.53 kg/ha/yr after certification. Even though the increase in fertiliser use increased costs for the independent smallholders after MSPO certification, the FFB yield was also improved, resulting in a net additional income of RM489/ha. Nevertheless, these findings were based on a limited number of samples, taking into consideration that the number of independent smallholders who were MSPO-certified at the time of the study (2017/18) was very small, i.e., less than 1% of the total number of independent smallholders in Malaysia.

Keywords: MSPO certification, independent smallholders, FFB yield, good agricultural practices, cost of sustainable palm oil production

]]> Maximising Smallholders’ Income through Agro-tourism https://opiej.mpob.gov.my/maximising-smallholders-income-through-agro-tourism/ Tue, 24 Mar 2020 10:38:31 +0000 https://opiej.mpob.gov.my/?p=1373 Read more]]> In Malaysia, there are about 650 000 oil palm smallholders who rely on the oil palm industry for their livelihoods. The fluctuation in world palm oil prices directly affects the oil palm industry in Malaysia, especially the smallholders. At the moment, the government promotes the integration of oil palm plantation with crops and livestock through MPOB to improve the oil palm smallholders’ income. Nevertheless, some smallholders integrate their oil palm farm with agro-tourism. Smallholders’ involvement in integration involving other crops has long been studied; however, the integration between oil palm smallholdings with agro-tourism has yet to be studied. Therefore, this study aims to examine the extent to which the integration between oil palm smallholdings and agro-tourism would increase the smallholders’ income by using a cost-benefit analysis. This study which focuses in Perak had showed that whether smallholders integrate their farm with agro-tourism or concentrate on oil palm farming alone, both options have the potential to provide smallholders with consistent returns. The cost-benefit analysis conducted showed a positive net present value (NPV) and high internal rate of return (IRR) for both options. This study also revealed that for the oil palm-based agro-tourism model, although the occupancy rate was reduced to between 70% and 50% of the current level, the agro-tourism model was still viable. Nevertheless, if the occupancy rate was reduced to 20% of the current level, this study showed that the NPV and IRR for the model with agro-tourism were lower than that of the model without agro-tourism. Therefore, to ensure the maximisation of their income, the oil palm smallholders should diversify their activities to include other activities, such as agro-tourism.

Keywords: agro-tourism, cost-benefit analysis, smallholder, income, price

]]> World Palm Oil Supply Forecast https://opiej.mpob.gov.my/world-palm-oil-supply-forecast/ Tue, 24 Mar 2020 10:31:28 +0000 https://opiej.mpob.gov.my/?p=1367 Read more]]> Due to the oversupply of palm oil in the year 2018-2019, the market price of crude palm oil (CPO) went to a historic low. The governments of world’s two major palm oil producers, Malaysia and Indonesia, try to lift up the price at this moment by using policies such as biodiesel mandate and a moratorium on expanding the oil palm plantations. However, this article explains that a structural palm oil shortage may come in the near future. In order to analyse the reasons for this structural palm oil shortage and when it will occur, this article employed the age profiles of Malaysian and Indonesian oil palm plantation as well as the yield profile of oil palm. Using these age profiles and yield profile, this article can infer the palm oil production in the near future. According to the method used in this article, even without any weather effects, the supply of palm oil will decline in the future.

Keywords: palm oil, replanting, supply outlook, price outlook, Malaysia, Indonesia

]]> Influence of Knowledge, Attitude and Skill on Good Agriculture Practices of Seedling Assistance Scheme Participant toward Oil Palm Production in Sabah and Sarawak https://opiej.mpob.gov.my/influence-of-knowledge-attitude-and-skill-on-good-agriculture-practices-of-seedling-assistance-scheme-participant-toward-oil-palm-production-in-sabah-and-sarawak/ Tue, 24 Mar 2020 10:23:39 +0000 https://opiej.mpob.gov.my/?p=1362 Read more]]> Oil palm industry has contributed significantly to the Malaysian economy. In both Malaysia and Indonesia, about 35%-40% of oil palms were planted by the smallholders, which produced an average of 33% from the total production of crude palm oil. Under the 9th Malaysian Plan (2006- 2010), a grant amounted RM37.6 million in the form of good quality of oil palm seedling have been allocated to 5697 smallholders through Oil Palm Seedling Assistance Scheme (SBABB) implemented by Malaysian Palm Oil Board (MPOB). Previous study showed that only 10% of SBABB participants produced fresh fruit bunch (FFB) up to 10 t/ha/yr, while others produced less than this yield. Thus, this study was to investigate the level of Knowledge, Attitudes and Skill (KAS) towards GAP among the SBABB participants. This study was carried out in Sabah and Sarawak and the data were collected from a total of 180 respondents selected through Simple Random Sampling Method. They were interviewed using five section structured questionnaires. Most smallholders were between 48-59 years old and they had medium knowledge and skill in operating their farms. Majority of them owned between 1-7 ha of farm. In term of yield, majority respondent produced FFB between 10-20 t/ha/yr, which was lower than the average production of 20 t/ha/yr. The results also showed that 65% change in FFB production was affected by seven factors, five of which were positively correlated with production. These five factors were farm size, followed by farm management knowledge, farm operation skills, perception towards SBABB itself and perception toward MPOB as implementer agency. These factors were important determinants to enhance the farmers’ yield. The study indicated that farm size, knowledge and skill were important determinants affecting the implementation of GAP among the participants of SBABB.

Keywords: good agriculture practices, oil palm, FFB, attitude knowledge, skills

]]> Effect of the Granting of EU’s Generalised System of Preferences (GSP) to Indonesia on the Export Performance of Malaysian Palm-based Oleochemicals https://opiej.mpob.gov.my/effect-of-the-granting-of-eus-generalised-system-of-preferences-gsp-to-indonesia-on-the-export-performance-of-malaysian-palm-based-oleochemicals/ Tue, 24 Mar 2020 10:03:43 +0000 https://opiej.mpob.gov.my/?p=1350 Read more]]> Under Regulation (EU) 2016/330, Indonesia’s palm-based oleochemical manufacturers receive an import duty advantage under the Generalised System of Preferences (GSP) scheme for selected oleochemical products exported to EU. Malaysian producers do not enjoy the scheme as Malaysia is now classified as an upper middle-income economy. This has resulted in decreasing imports of Malaysian oleochemical products to EU, shown by a negative compound annual growth rate (CAGR) of 4.68% (-4.68%) for the period from 2010 to 2017. This development will put Malaysian oleochemical manufacturers at a disadvantage when competing in the EU market. The study therefore aims to examine the impact of the granting of EU’s GSP to Indonesia on the export performance of Malaysian palm-based oleochemicals. Employing the gravity model in this study, it was confirmed that this granting of EU’s GSP to Indonesia’s palm-based oleochemicals has caused a negative impact on the export performance of Malaysia’s palm-based oleochemicals to EU. For every 1% increase in import tax difference in EU between Malaysia and Indonesia, Malaysia’s palm-based oleochemical exports to EU will be reduced by 0.6%. With Indonesia enjoying this advantage, Malaysia will lose her competitiveness. Thus, it will be more profitable for Malaysian oleochemical manufacturers to shift their operation to Indonesia to gain the GSP advantage when exporting to EU.

Keywords: gravity model, generalised system of preferences (GSP), palm-based oleochemicals, export performance, the European Union (EU)

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