MPOB PUBLICATIONS – OPIEJ

A Study on the Relationship between the Futures and Physical Prices of Palm Oil

mpob_admin — Tue, 28 Aug 2018 05:18:57 +0000

The difference between cash and futures prices is known as basis. It represents the local demand and supply situation as well as the risk factors associated with the physical commodity trade. Forecast basis can be used with the futures prices to predict the cash price of palm oil. In addition, using the expected trends in basis can improve hedging by both buyers and sellers. Forecasts for other crops using basis from simple historical averages compare favourably with the results from more complex forecasting models. This work investigated the behaviour of crude palm oil (CPO) basis and compared practical methods of forecasting CPO basis by regions in Malaysia using multi-year historical averages.

Impact Assessment of Liberalizing Trade on Malaysian Crude Palm Oil

mpob_admin — Tue, 28 Aug 2018 05:16:53 +0000

This study analyses the impact of lifting the export tax on Malaysian crude palm oil. In the first section, the structural equation is developed incorporating Malaysian palm oil products, especially focusing on crude palm oil (CPO) and processed palm oil (PPO). The study deals with the conceptual model and dynamic specification of the Malaysian palm oil market model as regards the oil palm area, palm oil supply, domestic consumption, imports and exports of palm oil products, stocks and domestic price relationships. The model also included the Indonesian palm oil market model as well as world palm oil price relationships due to the significant impact of both factors on Malaysian palm oil in international trade.

Technological Development and New Growth Areas of the Oil Palm Industry

mpob_admin — Tue, 28 Aug 2018 05:14:23 +0000

Technological development has transformed the Malaysian palm oil industry into a strategic and well planned industry that responds to global challenges. In particular, genetic knowledge since as early as 1912 first led the phenomenal growth of the industry through the planting of tenera instead of dura palms. This was complemented by the government allocating land to the poor and landless to plant more oil palm, in great part causing the area to increase from 54 000 ha in 1960 to 1.02 million hectares in 1980 and 2.03 million hectares in 1990. By 2006, there were 4.16 million hectares of oil palm, constituting nearly two-thirds of the national agricultural area (Table 1). Malaysia continues to be the world’s largest palm oil producer with a production of 15.90 million tonnes in 2006. The success of the crop is largely market driven with good longterm price prospects for palm oil making oil palm more attractive than most other crops. Palm oil contributes more than one-third of the national agricultural GDP, generating RM 31.81 billion in export earnings in 2006, making it one of the pillars of Malaysia’s economy. At present, the industry employs more than 1.5 million people in the core and related sectors. This paper provides an overview of the technological developments which have propelled the industry into a strategic and important sector and which will shape the future of the oil palm agro industry.

Labour Constraints in the Plantation Industry

mpob_admin — Tue, 28 Aug 2018 05:12:13 +0000

In the case of modern Malaysian plantation scenario, there is already ample legislation in place to create conducive labour relations environment as well as to enhance industrial and economic growth. Its main functions are: protection of the economic and social interest of workers, assist in enhancing national productivity and in promoting and preserving industrial harmony in the country. It also encourages employers in the private sector to employ disabled persons, promoting activities to facilitate and improve the planting environment so as to enhance the participation of unutilized workforce into the labour market. Certainly, the quality development of human capital will ensure continued progress for the nation. Hence, employers are duty-bound to invest in training. However, with a population of about 25 million and a vast area under cultivation of tropical crops such as oil palm, rubber, cocoa and paddy covering about 6 million hectares and a thriving manufacturing, construction and services sectors, intense competition to recruit suitable and available local workers is the norm. Today, it is evident that through the process of Malaysianization, the ownership of plantation equity is predominantly under Malaysian hands. Thus, conflicting priorities set by decision-makers, both in public and private sectors at times create a challenging situation as well, which may be one of the reasons discouraging the local population from being attracted to plantation life. Overall, there is a shortage of manpower in the plantation sector. In order to sustain economic growth of the country, the government has been pragmatic in their approach to fulfill the manpower needs. Thus, employment of guest workers (generally known as foreign workers) from approved source countries were allowed in order to alleviate the shortage of manpower in certain sectors, including the plantation and construction industry. However, with the influx of migrant workers with various background and disposition, many challenges are encountered. There has been some tension between the local community and guest workers. Cases of abuse and mistreatment attracted the media into reporting them as sensational news and may have influenced policy-makers. Policies change frequently, employer’s dependency on guest workers increases with the area under cultivation. Local workers shun the plantation sector in favour of better working environment in and around urban setting. Over reliance on one particular group of guest workers has proved to bring negative impact. Additionally, of late (05/05/05), the Prime Minister (PM) had just outlined that addiction to cheap foreign labour as being one of the three Malaysian few bad habits, If we are not serious about combating this problem, maybe it is time for us to venture into other businesses which

Blending of Palm Biomass and Coal: An Alternative Fuel for Power Generation in Malaysia

mpob_admin — Tue, 28 Aug 2018 05:09:26 +0000

Palm oil mills in Malaysia generate vast amounts of biomass wastes such as empty fruit bunches (EFB), fibre and shell. The mills burn the shell and pressed fibre to generate their own heat and electricity, but the EFB is surplus to its requirements although a legitimate fuel in its own right. With growing environmental consciousness, ... Read more

Cosmetics and Personal Care Products – Recent Trends in the Asia Pacific Markets

mpob_admin — Tue, 28 Aug 2018 05:07:58 +0000

The cosmetics and personal care product markets of Asia Pacific are growing rapidly. Various players are entering these markets. These markets are the most expanding market among Asia Pacific for the moment. Recent trend of China and ASEAN markets are reported with statistical data of market trend. The largest market of Asia is Japan market. Products of some global players are penetrating into Japanese consumers. Japanese players are fighting against them. Hard competition of this market is reported. There are some product categories in cosmetic and personal care market such as skin care and hair care in general. However, sign of new market trends are observed in more precise product categories. New market trend in skin care field is introduced.

Indonesian Oil Palm Competitiveness: PT Socfindo as a Private Sector Example

mpob_admin — Tue, 28 Aug 2018 05:06:45 +0000

PT Socfindo is a long established, foreign owned, plantation company with operations in North Sumatra and Aceh. This paper provides a brief review of the background situation to the Indonesian oil palm industry, whilst noting the continued rapid expansion of this sector. The paper also provides a detailed example of how, over the past 30 years, PT Socfindo has retained its competitive advantage in terms of production costs and profitability through the twin mechanisms of increased productivity (internal factor) and rupiah devaluation(external factor). Provided the continued improvement in productivity of every hectare of planted land can be sustained by progressive improvements in planting materials and agricultural practices, the future prospects of this company remain extremely positive. Therefore, the experience gained by PT Socfindo over this extended period of increasing competition and a declining trend in palm oil commodity prices, could act as an example for the new players to follow in order to sustain the competitiveness of the Indonesian oil palm sector

The Elasticity of Foreign Demand for Malaysian Palm Oil

mpob_admin — Tue, 28 Aug 2018 05:05:23 +0000

The price elasticity of export demand is expected to receive considerable attention due to the current economic climate of volatile export markets and prices. The export demand elasticity is used to predict the change in demand for an export for a unit change in its price and to model the behaviour of foreign buyers. This project estimated the elasticity of foreign demand for Malaysian palm oil for the major importing countries – China P R, India, Pakistan, Egypt and South Korea. The error correction mechanism (ECM) method was used for the estimation considering its usefulness in quantifying the short-run and long-run effects of explanatory variables on the dependent variables using timeseries data. It was found that the price of palm oil plays a very significant role in its export; thus, the price needs to be stable and competitive with those of its substitutes, especially soyabean oil. From panel data research, the effect of a unit change in the soyabean oil price is greater on the exports of crude palm oil than the effect of the same change in the palm oil price. This means that both oils are highly substitutable.

Production and Price Forecast for Malaysian Palm Oil

mpob_admin — Tue, 28 Aug 2018 05:03:37 +0000

In the oils and fats sector, Malaysia can always be associated with palm oil due to its being the world’s biggest producer and exporter of the commodity. Malaysia produces and exports most of its palm oil due to its small population size and receives quite substantial amount of revenues from this product to support its economy. Thus, in this respect, it is important for the country to monitor the commodity’s production as well as its price that can be used in a way to determine the country’s revenue or in various decision-making processes. It is the objective of this paper then to analyse them econometrically and finally to forecast them. The paper indicates that production of palm oil will increase at a decreasing rate in future due to limited availability of land. By 2020, production is expected to reach 22 million tonnes while in the short term, it will be about 15.9 million tonnes in 2006. Price of palm oil is expected to fluctuate as before but in the near future, strengthening its level by increasing gradually in 2006.

Oil Palm in Indonesian Socio-Economic Improvement – A Review of Options

mpob_admin — Tue, 28 Aug 2018 05:01:04 +0000

The Indonesian Government has used oil palm as a tool of rural socioeconomic improvement, doing this through nucleus estates operated by estate companies and through assisting individual smallholdings. Over 900 000 ha of high yielding oil palm have been established in 2-3 ha settler blocks in nucleus estate plasma, and 250 000 ha have been planted on individual smallholdings. The initiatives have together raised the incomes of over 500 000 farmers, and may be judged successful market interventions which are far superior to laissez faire. Although the average economic and social performances of both initiatives have been reasonable, their outcomes have been variable. The nucleus estates have sometimes suffered from faulty management, bad community rapport and difficult land conversions, and from the mistakes of government agencies and settler cooperatives. They were discontinued in 2001, due to scarce finance. The assistance to individual smallholdings has always had short funding, limiting its scope. Both initiatives were commenced under the New Order, and face fresh challenges in the present era of democracy and otonomi daerah. The analysis of this paper nonetheless shows that these Indonesian interventions should be continued, albeit more capital being provided and their deficiencies being remedied. It denotes that the interventions compare well with official efforts in other countries, strengthening the general case for public action to assist poor rural dwellers.