PALM OIL INDUSTRY-Malaysia – OPIEJ

Networking and Innovation in the Malaysian Palm Oil Industry: Past,Present and Future

mpob_admin — Tue, 28 Aug 2018 06:41:49 +0000

This article encourages leaders in the oil palm and palm oil industry to think deeply about networking, and to form both informal and formal networking groups so that more innovation can be achieved. It introduces ideas from a range of leading strategic management theorists about the links between three main kinds of networking and three corresponding stages of the process of innovation. Different kinds of networking groups are helpful at different stages of the innovation process. Open and informal social networking within ‘creative networks’ and ‘transformation networks’ supports the development of radically new technologies and new ways of thinking about how to apply them to counter the challenges faced by businesses in a fast-changing global economy. In contrast, once firms reach the final stage of creating new products and markets based on groundbreaking technologies, it makes sense to share ideas less freely. More secretive and closed ‘process networks’, in which the partners are bound by formal contracts, tend to be useful at this stage. The argument is supported by practical examples from the Malaysian palm oil industry which has a long and successful record of both networking and innovation. The article concludes with recommendations for applying these ideas to a range of challenges currently faced by the industry. Different challenges require different approaches, so managers will need to engage in both co-operative and competitive behaviour at the same time. This can create uncomfortable tension between the need to share technical information to solve problems, and the need to keep commercial secrets. Such tension can be managed more easily when it is clearly understood which kind of networking is needed for each of the various challenges to be dealt with.

An Overview of Malaysian Palm Oil Market Share in Selected Markets

mpob_admin — Tue, 28 Aug 2018 06:38:53 +0000

Palm oil is the leading edible oil traded in the world market. Both Malaysia and Indonesia are the world’s largest exporters of palm oil, commanding more than three-quarters of the world market. In 2007, these countries contributed 83.5% of the production and 89.6% of the world trade in palm oil. Malaysia herself accounted for 47.9% of the production and 57.5% of the trade. However, over the years, Malaysia has been losing her market share to her closest rival, Indonesia. This article attempts to provide an overview of Malaysia’s market share of palm oil in five major markets compared to Indonesia. Apart from describing the share in the various markets in absolute terms, an index was also used as a bench-mark to overview the trend in real terms.

Recent Developments of Malaysian Palm Oil Stock Level

mpob_admin — Tue, 28 Aug 2018 06:34:35 +0000

The level of palm oil stock is a strong indicator of its price and it comprises crude palm oil and processed palm oil. In the past, the palm oil stock has for a long time hovered around 1 million tonnes, and this volume has become the psychological level below and above which prices tend to be bullish and bearish, respectively. The end stock mainly depends on the production and export of palm oil, while imports and local consumption play minor roles. Based on changes in the supply and demand factors, it was estimated that 1.8 million tonnes could be considered as the new level of palm oil stock for the Malaysian palm oil industry.

The Malaysian Palm Oil Supply Chain: The Role of the Independent Smallholders

mpob_admin — Tue, 28 Aug 2018 06:30:28 +0000

The Malaysian palm oil industry is made up of interrelated sectors that produce various palm products for their end-users. To ensure an efficient supply chain, all sectors should operate efficiently; this includes the independent smallholders. An efficient production system by the smallholders is deemed necessary in producing quality fresh fruit bunches (FFB) which can then produce quality palm oil for meeting the rising global demand. Inefficiencies can affect the whole supply chain. This article investigates the efficiency level of this sector and the structural changes that it has undergone. It was found that there is plenty of room for improvement among independent smallholders to increase their FFB yield and income so that their future can be sustained.

Price Volatility Spill Over in the Malaysian Palm Oil Industry

mpob_admin — Tue, 28 Aug 2018 05:20:11 +0000

This study examines volatility spill over between the domestic prices of selected palm oil products and the major causative factors of the volatility. Empirically, it was found that palm oil has moderate price volatility and a short-term effect in unidirectional and bi-directional price volatility spill over to the domestic prices of selected palm oil products. Since crude palm oil (CPO) is a price leader among the other selected palm oil products, an effort should be made to stabilize its price to minimize volatility in all the other prices. Using the major causative factors of price volatility, a model was developed to forecast domestic prices for the selected palm oil products. The prices for CPO and RBD palm olein (POL) were forecast and found to be good with error of less than 2% with all the directions for prices correct. Stabilizing the palm oil price can be done through market power by a monopolistic producer or forming a producer cartel or through international commodity agreements between buyers and sellers. It is believed that creating an alliance between Indonesia and Malaysia should boost the bargaining power of both countries in setting the CPO price and control output, thereby reducing the volatility of all palm oil products in the future.