Vol. 22 (2) September 2022 – OPIEJ

Operating Model for Partnership between Smallholders and Mills: A Study in Perak and Johor, Malaysia

mpob_admin — Fri, 30 Sep 2022 07:58:20 +0000

There is an important need to sustainably increase food production across the supply chain amid the expected population growth in the future. However, most related researches in the past dealt mostly on the agricultural production aspect rather than the structure of the existing agricultural business models. In the context of oil palm, smallholders often do not have a direct relationship with mills resulting in low bargaining power and limited access to other benefits. The purpose of this study is to assess the willingness of smallholders to establish a partnership with oil palm mills. The assessment was made on smallholders located at two sites in Perak and Johor by means of questionnaire survey and interviews. Besides that, this study also looked at possible operating models for partnership. In addition, desk research and interviews were carried out among stakeholders along the supply chain. Majority of respondents indicated their interests to establish a partnership with oil palm mills with most of them favoured services related to land management. Based on the study, four potential operating models were proposed for a partnership establishment between smallholders and mills such as the extension services model, modular services, plantation management (fee model) and plantation management (lease model). The value proposition on each operating model was discussed as well as the strategy to increase the scale of the operating model. This study is likely to be in the interest of investors, company and policymakers who are seeking an alternative approach in connecting smallholders within the supply chain especially in the developing countries.

Bioeconomic Model for Decision-Making on Staying in Business for Colombian Oil Palm Crops Attacked by Lethal Wilt

mpob_admin — Thu, 28 Jul 2022 06:48:00 +0000

In addition to bud rot, lethal wilt (LW) can also be considered as one of the most challenging diseases for the Colombian oil palm agro-industry. In fact, in December 2020, 7693 ha out of 560 000 ha planted with oil palm trees in Colombia were eliminated due to LW. This study provides an economic model intended to help growers deciding the moment at which oil palm business ceases to being profitable due to LW epidemic breakthrough. The developed model ultimately proposes an interaction between the incidence of LW disease and, the expected net cash flow for oil palm operations. Its purpose is to determine when the disease incidence is so high that revenue is not attained. This model allows for testing different alternatives of disease control, such as planting LW resistant cultivars, as opposed to planting susceptible cultivars, which is the case presented here. Results indicate that if one has planted LW susceptible cultivars and the LW attack occurs before the 10th year of the crop, the decision should be to exit business. On the other hand, if there are cultivars with some degree of resistance to LW, then LW may attack in any year and although the profitability of the business decreases, it is possible to coexist with the LW. This model resulted in a powerful tool for growers to consider their choice on cultivars when planning an oil palm plantation in Colombia.

The Impact of The European Union (EU) Renewable Energy Directive (RED II) on Palm Oil to the Malaysian Economy

mpob_admin — Thu, 24 Mar 2022 08:01:18 +0000

The oil palm industry has contributed significantly to the Malaysian economy and forms its agricultural industry pillar. Malaysia’s total export earnings from palm oil and other palm-based products increased significantly from only RM11.70 billion in 1996 to RM73.25 billion in 2020. The oil palm industry generates income for Malaysia and has also played a key role in improving its citizens’ quality of life. However, over the past decades, the oil palm industry has been the subject of conflicting claims, especially from the European Union (EU), which has criticised the oil palm industry’s reputation and affected the marketability of Malaysian palm oil globally. In May 2019, the EU adopted the Delegated Regulation (EU) 2019/807 of 13 March 2019 supplementing Directive (EU) 2018/2001 (EU Red II) in which defines palm oil as a high indirect land-use change (ILUC) risk, therefore unsustainable feedstock for biofuel production for the EU Member States market. Consequently, the palmbased biofuel feedstock could not be counted towards the EU renewable energy targets. This study has determined the implication of EU RED II on the Malaysian economy via the input-output (I-O) analysis. The findings illustrate that the reduced palm oil export to the EU due to its plan to phase out palm oil from 2021 gradually affects the Malaysian economy and its other sub-sectors. These findings will be helpful to policymakers and industry players as reference resources to assess the influence of the anti-palm oil campaign and the EU policy measures on the Malaysian economy.