SUPPLY – OPIEJ

Supply Response of Malaysian Palm Oil Producers: Impact of Interest Rate Variations

mpob_admin — Tue, 28 Aug 2018 04:50:28 +0000

This paper examines the long run relationship between the supply of Malaysian palm oil and its determinants using Johansen multivariate cointegration analysis. The supply response of Malaysian oil palm producers is investigated using annual data from 1967 to 2002. An error correction model is proposed to investigate the short run response of supply to its determinants. Supply of palm oil is postulated to be a function of expected price of palm oil relative to the expected price of rubber (the substitute crop); government expenditure, a proxy for government policy; a time trend variable to represent technological change or preference and interest rate to represent the cost of borrowing. Previous studies have not included the interest rate variable. Naïve expectations model is used to model price expectations. Structural information, in particular, the gestation period for oil palms from first planting is used in the specification of the long run relationship.

Prospects of Elevating National Oil Palm Productivity: A Malaysian Perspective

mpob_admin — Mon, 27 Aug 2018 08:27:13 +0000

The expansion of oil palm plantings has been phenomenal: from 60 000 ha in 1960 to 3.50 million hectares in 2001 and an expected 5.10 million hectares in 2020. The increase in palm oil production has accordingly reflected the pattern of the planted area, i.e. 91 793 t in 1960 to 11.80 million tonnes in 2001 and an expected 18.81 million tonnes in 2020. The national oil yield average does not seem to increase in step with the advances made in science and technology. The national oil yield average was 3.63 t/ha from 1975 to 2001, while the last 10-year average (1992-2001)was only 3.50 t/ha. This is very low indeed with no significant difference from other competing countries. Oil palm breeding has improved the planting materials. The oil yield of duras has improved from 2.8 to 4.5 t/ha after four selections. The oil yield of teneras from subsequent dura selections and introgression with selected pisiferas has improved from 6.3 to 11.2 t/ha in the last four decades. Why then is the national oil yield average still low? There can be many macro-reasons. Some reasons can be that with the rapid expansion of oil palm area, the limited areas of Class 1 and 2 soils have been used up and plantings have extended to Class 3 (marginal) and 4 (unsuitable) soils. Some other reasons may be inadequate agronomic inputs (especially fertilizer, field maintenance, etc.), shortage of skilled labour, ineffective and inadequate estate management, low replanting rate, and imbalance of extension service capability vis-‡-vis increases in oil palm plantings. These factors can lead to a combination of low fresh fruit bunch (FFB) yield and oil extraction rate (OER) which will eventually lead to low oil yield. There is a need to have strategies and a plan of action to overcome these constraints in order to increase the national oil yield average to the target of 8.8 t/ha by 2020. Implementation of short-term strategies can lead to an immediate increment in oil yield. However, it would need the implementation of medium- and long-term strategies to eventually lead to achieving the target. The incentive for the industry to follow these strategies will be an increase in yield with a sustained cost of production, thus making the industry more profitable and competitive.

Palm Oil and Its Global Supply and Demand Prospects

mpob_admin — Mon, 27 Aug 2018 08:01:30 +0000

The paper outlines the global palm oil situation and highlights the developments in the Malaysian and Indonesian palm oil industry. Palm oil has played a positive role in the world oils and fats supply and demand equation largely due to its techno-economic advantages and versatility as well as some of the developments in the world in relation to security of supply, health and environment. The paper will also discuss the various challenges confronting palm oil in the world market, namely self-sufficiency policies by developing countries, crop subsidies by developed countries, stringent standards and quality for trade, non-tariff technical barriers and effects of exchange rate variations.