Vol. 17 (2) September 2017 – OPIEJ https://opiej.mpob.gov.my Oil Palm Industry Economic Journal Wed, 20 Mar 2019 23:58:01 +0000 en-US hourly 1 https://wordpress.org/?v=7.0 Monitoring and Reporting of Oil Palm Fresh Fruit Bunch (FFB) Transactions among Independent Smallholders and Dealers: An Analysis of a Case Study in Selangor, Malaysia https://opiej.mpob.gov.my/monitoring-and-reporting-of-oil-palm-fresh-fruit-bunch-ffb-transactions-among-independent-smallholders-and-dealers-an-analysis-of-a-case-study-in-selangor-malaysia/ Wed, 29 Aug 2018 00:33:17 +0000 https://opiej.mpob.gov.my/?p=408 Read more]]> Most oil palm smallholders do not practice consistent and accurate farm record-keeping. Thus, it is difficult to provide effective extension services without knowing the actual production of the smallholders in relation to cost and profit. Currently, there is no specific system in place to capture records of fresh fruit bunch (FFB) yield and price received by individual oil palm smallholders in Malaysia. Therefore, a new system known as the Oil Palm Smallholder Information Card or Kad Informasi Pekebun Kecil Sawit (KIPS) has been developed to capture the FFB transactions by smallholders using dealers as the intermediary. This study aimed to assess the adoption, challenges and effectiveness of the proposed KIPS system. Apart from that, the study aimed to identify the current record-keeping practices and FFB transaction practices among smallholders and dealers. The study was carried out among oil palm smallholders who are selling FFB to three FFB dealers in the Sepang and Kuala Langat districts in Selangor, Malaysia. Proportionate and simple random sampling was employed in this study to determine the respondents for each dealer while interview-administrated questionnaires were employed to obtain the relevant data. The adoption level of the KIPS system among smallholders was found to be poor. One of the challenges of the KIPS system is the difficulty for smallholders to be present during every FFB transaction. The study revealed that the proposed KIPS system needs to be improved to include an online-based web portal for data entry in addition to the use of the card prior to implementing this system all over the country.

Keyword: oil palm smallholders, oil palm dealers, farm record-keeping system, monitoring and recording system

]]> The Impact of Prolonged Low Brent Crude Oil Prices on CPO Price Movement https://opiej.mpob.gov.my/the-impact-of-prolonged-low-brent-crude-oil-prices-on-cpo-price-movement/ Wed, 29 Aug 2018 00:32:13 +0000 https://opiej.mpob.gov.my/?p=406 Read more]]> The article highlights the movement of crude palm oil (CPO) price in the world market and seeks to find various significant factors affecting it. Focus is given to Brent crude oil (BCO) price and the impact of BCO’s prolonged low price on CPO price movement. Both prices of CPO and BCO have moved in tandem ever since the introduction of palm-based biodiesel and the implementation of the Envo Diesel programme in March 2006, indicating that BCO affects the development of CPO price. In addition, due to the complexity of the oils and fats sector, CPO price is also found to be affected by other time-varying factors, such as soyabean oil (SBO) prices, palm oil (PO) supply and exports. SBO is a strong competitor of CPO due to the substitutability factor and competes for the same markets of the global edible oils sector. Meanwhile, from the supply perspective, any increase in PO supply can cause its price to be bearish in the market. In addition, any decline in PO exports to major importing countries, especially India, China and European Union (EU), can also depress CPO price. The results of the bound test for the CPO price model indicate the existence of a long-run relationship between CPO price and SBO price, BCO price, CPO production and PO export. At the same time, the short-run analysis found that BCO and SBO prices have a positive relationship with CPO price. The results indicate that in the short-run, CPO price will increase when BCO and SBO prices increase. BCO price is able to have a high impact on CPO price, especially during the high BCO price regime. However, when BCO price declines and remains stable below USD 50/barrel, its impact on CPO price movement becomes weak. As a result, the impact of prolonged low BCO prices on CPO price movement will only be marginal; thus, CPO price can still be bullish in the market place if SBO price increased, if PO supply availability declines and export increases in the market place.

Keywords: crude palm oil, Brent crude oil, biodiesel, time-varying factors, bound test and supply availability

]]> Determinants of Bilateral Trade between Malaysia and the United States of America: An ARDL Analysis https://opiej.mpob.gov.my/determinants-of-bilateral-trade-between-malaysia-and-the-united-states-of-america-an-ardl-analysis/ Wed, 29 Aug 2018 00:31:10 +0000 https://opiej.mpob.gov.my/?p=404 Read more]]> Trade balance, exchange rate, domestic income and foreign income are among the factors which determine a country’s economic growth. In this study, an empirical analysis was conducted to investigate the determinants of the Malaysian bilateral trade balance with USA in the short- and long-runs by using the Autoregressive Distributed Lag (ARDL) framework. This study used quarterly data from 1997 to 2016. The study found that domestic income, foreign income and real effective exchange rate affect the bilateral trade balance in both the short- and long-terms. This shows that these variables are strongly significant in determining the trade balance. The study concluded that encouraging exports and controlling imports are deemed important. This is also important to increase the inflow of money to contribute to a positive trade balance in the long-term so that we can boost the domestic economy.

Keywords: trade balance, economic growth, real effective exchange rate, USA, ARDL

]]> Competitiveness of the Soyabean Industry in Argentina and its Implication to Malaysian Palm Oil Trade https://opiej.mpob.gov.my/competitiveness-of-the-soyabean-industry-in-argentina-and-its-implication-to-malaysian-palm-oil-trade/ Wed, 29 Aug 2018 00:30:10 +0000 https://opiej.mpob.gov.my/?p=402 Read more]]> Soyabean and palm oils are two agricultural commodities that have similar characteristics and are substitutable in many applications. Whenever there is an increase in soyabean oil price, palm oil price follows suit. SWOT (strengths, weaknesses, opportunities and threats) analysis was used to evaluate Argentina’s soyabean industry. Data for soyabean were from secondary sources. Nevertheless, not all data were the latest because of the difficulty in sourcing the information. Argentina is the main producer and exporter of soyabean oil. Although the availability of Argentina’s soyabean oil supply is high, palm oil imports from Malaysia are also increasing to satisfy rising local demand by the food industry. In view of that, most of Argentina’s soyabean oil is used mainly for export purposes and for the country’s local biodiesel industry; thus, palm oil usage in Argentina is expected to remain significant.

Keywords: Argentina, soyabean, competitiveness, SWOT

]]> An Analysis of Malaysian Palm Oil Exports to Selected TPPA Member Countries https://opiej.mpob.gov.my/an-analysis-of-malaysian-palm-oil-exports-to-selected-tppa-member-countries/ Wed, 29 Aug 2018 00:29:03 +0000 https://opiej.mpob.gov.my/?p=400 Read more]]> Malaysia officially signed the Trans-Pacific Partnership Agreement (TPPA) in February 2016. The trade partnership between Malaysia and 11 other participating countries is expected to enlarge Malaysian trade volume and consequently help the country leap-frog towards becoming a high income nation. A study to assess the potential economic impact of TPPA on the Malaysian economy has been done, but none on an in-depth empirical analysis of its impact on the Malaysian palm oil industry. This ex-ante study shows that the Malaysian palm oil industry will gain via TPPA. The elimination or reduction of trade barriers offered under TPPA will allow Malaysia to expand her palm oil market share internationally. The largest export increment due to TPPA was found in the study to be in the palm oil exports to Mexico, followed by Canada. However, no significant change was found in the exports of palm oil to Peru and the United States of America as both countries have currently imposed zero import duties on processed palm oil from Malaysia.

Keywords: TPPA, economic impact, Malaysian palm oil

]]> Factors Affecting Palm Oil Demand in India https://opiej.mpob.gov.my/factors-affecting-palm-oil-demand-in-india/ Wed, 29 Aug 2018 00:27:49 +0000 https://opiej.mpob.gov.my/?p=398 Read more]]> India is the world’s leading importer of edible oils and is likely to remain a prominent importer in the future. Her large population and steady economic growth are important contributing factors for her increasing consumption and imports. In the late 1980s and early 1990s, India pursued self-sufficiency in vegetable oil production. However, domestic production was then stagnant and unable to meet the growing demand. This caused the government to allow the import of edible oils under open general license (OGL), particularly of palm oil due to its price competitiveness. With the increasing demand for imported oils and fats, especially palm oil, a study on India’s palm oil demand is deemed important. This study aimed to determine factors influencing the demand for palm oil in India by using the Autoregressive Distributed Lag (ARDL) models over the period 1980- 2015. The result of the bound test indicates that there is a long-run relationship between the studied variables and palm oil demand. The empirical result reveals that population has a significant positive relationship with palm oil demand in India in the long-run. However, domestic income measured by gross domestic product (GDP) and the price discount of palm oil over soyabean oil was found to have a significant negative relationship with palm oil demand in India. The negative relationship between GDP and palm oil demand shows that palm oil is perceived by Indians to be an inferior goods. Meanwhile, the negative relationship between the difference between soyabean and palm oil prices and palm oil demand shows that not only are soyabean and palm oils close substitutes, but also that palm oil has the characteristic of a giffen goods.

Keywords: palm oil, demand, India, ARDL, bound test

]]> Competitiveness of the Rapeseed Industry in China https://opiej.mpob.gov.my/competitiveness-of-the-rapeseed-industry-in-china/ Wed, 29 Aug 2018 00:26:44 +0000 https://opiej.mpob.gov.my/?p=396 Read more]]> The purpose of this article is to discuss the competitiveness of the rapeseed industry in China by focusing on the current situation of rapeseed and developments covering production, yield, crop area, trade, consumption pattern and infrastructure as well as government policy. The method of SWOT (strengths, weaknesses, opportunities and threats) analysis was used to gain an understanding of the strengths, weaknesses, opportunities and threats of the Chinese rapeseed industry. The information in this article was collected from various secondary sources. China was chosen for this article based on the fact that this country is one of the largest rapeseed producers and the world’s largest importer of rapeseed. In 2016, rapeseed production continued to decline in response to a further reduction in planted area for the fifth consecutive year due to limited arable land and policies that favour grain crops, thus affecting domestic crushing volume and rapeseed oil production. The situation of palm oil in China was also discussed as palm oil continues to dominate China’s vegetable oil imports. In such a scenario, palm oil has an advantage in gaining more share in China’s vegetable oils market. China will continue to be the world’s major importer of oilseeds, particularly soyabean and rapeseed, in view of the limited oilseeds production in the country and growing domestic demand.

Keywords: rapeseed, production, imports, consumption, policy, competitiveness, China

]]> Labour Productivity of Harvesters by Country of Origin: A Case Study in Peninsular Malaysia https://opiej.mpob.gov.my/labour-productivity-of-harvesters-by-country-of-origin-a-case-study-in-peninsular-malaysia/ Wed, 29 Aug 2018 00:25:49 +0000 https://opiej.mpob.gov.my/?p=394 Read more]]> This study aims at estimating labour productivity in the oil palm harvesting activity in Peninsular Malaysia among workers from different source countries. This study used a case study approach, which involved three estates. This study also utilised a qualitative research approach which is primary exploratory research. The information gathered was used to better understand the underlying reasons, opinions and motivation of the estate management in their decision to employ foreign labour for the harvesting activity sourced from various countries. In Peninsular Malaysia, most of the foreign workers employed for harvesting and fresh fruit bunch (FFB) collection are from Indonesia, Bangladesh and Nepal. Based on the study, there is no significant difference in productivity among workers according to source country.

Keywords: labour productivity, source country, harversters, foreign labour

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