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LIST OF ARTICLES

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Article Info

Vol 18 no.1 (2018) p41-49
Labour Requirements in the Independent Oil Palm Smallholder Sector in Peninsular Malaysia
Azman, I; Ali Zulhusni; Norhidayu, A; Siti Mashani; Khairuman, H; Ainul, S and N Balu

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Abstract


Labour Requirements in the Independent Oil Palm Smallholder Sector in Peninsular Malaysia

The Malaysian oil palm industry is labour-intensive, especially in the plantations. Activities such as harvesting and fresh fruit bunch (FFB) collection require more labour than the other activities. Currently, estate owners including independent smallholders report that they are facing labour shortages for those afore mentioned activities in particular. This study aims to estimate the labour requirements and shortage in the independent oil palm smallholder sector in Peninsular Malaysia, and to formulate a solution for reducing the labour shortage problem. For data collection, face-to-face interviews using close-ended questionnaires were employed, involving a total of 385 independent smallholders throughout Peninsular Malaysia who were randomly selected. The study found that, on average, the age of the respondents was 58 years and 92% of the respondents hired workers for harvesting and FFB collection. The majority of the workers (65%) were foreigners, mostly from Indonesia. Total labour and labour shortage for harvesting and FFB collection operations in the independent oil palm smallholders sector in Peninsular Malaysia are estimated at 25 014 and 3715 respectively. In order to reduce the dependency on foreign workers and labour shortage problem, graduates from ‘Kursus Operasi Mekanisasi Ladang’ organised by MPOB should be encouraged to be contractors, so that they can manage the independent smallholders, especially for harvesting and FFB collection. For that, the government can provide incentives in the form of soft loans or discounts to enable them to purchase harvesting tools and evacuation machines at a lower price.

Keyword(s): independent smallholders, labour requirement, labour shortage, foreign workers

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Vol 18 no.1 (2018) p31-40
Impact of International Food Standards on Market Access for Palm Oil and Palm Oil Products
Fauziah Arshad; N Balu and Azman Ismail

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Abstract


Impact of International Food Standards on Market Access for Palm Oil and Palm Oil Products

Increasing global trade has led to the development of international food standards, codes of practice, guidelines and recommendations under the Joint FAO/WHO Codex Alimentarius Commission (CAC). The objectives of CAC are to develop standards, codes of practice and guidelines for foods moving in international trade in order to protect the health of consumers and to facilitate trade by ensuring fair trade practices. The standards developed by CAC have become even more important after 1st January 1995 with the implementation of the World Trade Agreement on the Application of Sanitary and Phytosanitory Measures (the SPS Agreement) and the Technical Barriers to Trade (TBT) Agreement. Both of these agreements recognise the international standards, guidelines and recommendations of Codex Alimentarius as the reference points for facilitating international trade and resolving trade disputes. In view of the fact that more and more countries are aligning their national standards with those of Codex Alimentarius, Codex standards have serious implications on exports of palm oil and palm oil products. This paper highlights the Codex system and reveals how the Codex standards impact international trade in palm oil and palm oil products.

Keyword(s): international food standards, Codex Alimentarius Commission, SPS agreement, TBT agreement

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Article Info

Vol 18 no.1 (2018) p25-30
Indonesia’s Palm Oil Market - Outlook and Future Trends
Said Achmad Kabiru Rafiie

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Abstract


Indonesia’s Palm Oil Market - Outlook and Future Trends

This paper looks at the domestic market for Indonesian palm oil in the light of Indonesia’s position as the biggest producer of palm oil in the world as well as being the most populous country in Southeast Asia with 260 million people. In Indonesia, domestic consumption of palm oil is rising steadiliy. This paper examines the current consumption of palm oil in Indonesia and addresses the key factors pertaining to domestic consumption. It is the culmination of a study using primary and secondary data, which is explanatory in nature and adopts a content analysis approach. The findings aim to help the palm oil industry in Indonesia to further penetrate her domestic market and to expand in the country. The study found that population expansion, economic improvement and government policy have triggered a rise in the domestic consumption of palm oil. The study also provides an inside marketing perspective of Indonesia’s consumer demographics.

Keyword(s): Indonesian domestic consumption, palm oil, key comsuption drivers

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Article Info

Vol 18 no.1 (2018) p16-24
Managing Exchange Rate Risk: Practices of Malaysian Exporters of Palm Products
Nur Nadia Kamil; N Balu and Azman Ismail

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Abstract


Managing Exchange Rate Risk: Practices of Malaysian Exporters of Palm Products

This paper investigates the practices of Malaysian exporters of palm products in managing their exposure towards fluctuations in exchange rates and the level of awareness towards this exposure. The study was conducted on the 261 companies that were registered with the Malaysian Palm Oil Board for exporting palm products. Data related to exchange rate risk exposure and the risk mitigation strategies were collected by distributing a survey form via e-mail and facsimile as well as through random telephone interviews. The results show that the Malaysian exporters of palm products are commendably aware on their exposure towards exchange rate risk. However, not all of them manage their exchange rate risk by using the available hedging instruments. The Malaysian exporters of palm products are found to favour the use of forward contracts over the options contracts to minimise their risk.

Keyword(s): exchange rate risk, risk mitigation, forward contract, palm products

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Article Info

Vol 18 no.1 (2018) p9-15
Demand for Palm Oil in Turkey
Kalsom Zakaria; N Balu; Norhanani Mohd Baharim and Norrafidah Mohd Rapiee

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Abstract


Demand for Palm Oil in Turkey

This study attempts to examine the short- and long-run relationships between Turkey’s palm oil imports, palm oil prices, sunflower oil prices and domestic income, using the Autoregressive Distributed Lag (ARDL) method with data collected for the period 1980 to 2015. The bound test indicates that there is a long-run relationship between the studied variables. The empirical results show that domestic income, measured by the Gross Domestic Product (GDP), and sunflower oil prices have positive significant relationships with palm oil demand in Turkey in the long run. At the same time, palm oil prices show a significant negative relationship with palm oil demand in Turkey.

Keyword(s): palm oil, Turkey, ARDL, GDP, unit root test, error correction models

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Article Info

Vol 18 no.1 (2018) p1-8
Relationship Between Severe El Niño Phenomena and Malaysia’s Palm Oil Production – A VECM Approach
Nur Ain Mohd Hassan; Siti Mashani Ahmad and N Balu

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Abstract


Relationship Between Severe El Niño Phenomena and Malaysia’s Palm Oil Production – A VECM Approach

The palm oil sector has faced various challenges throughout the past decade. Climate variability is one of the major challenges to the Malaysian oil palm industry. In order to achieve higher production, oil palm needs an average maximum temperature of 29oC-33oC and an average minimum temperature of 22oC-24oC. Variability in climate leading to the development of El Niño and La Niña events, thus, affects the production of palm oil. This study focuses only on the prolonged dry and hot weather phenomenon known as El Niño. So, the following question was considered: What is the relationship between the El Niño phenomenon and Malaysia’s palm oil production? Variations in crude palm oil (CPO) production, fresh fruit bunch (FFB) yield and Ocean Niño Index (ONI) from January 2007 to December 2016 (n= 120) were analysed, based on a multivariate co-integration approach called the Vector Error Correction Model (VECM). The study found that in a long run, FFB yield and ONI influenced total palm oil production. A significant error correction term (ECT) and negative coefficient value (-0.233) show that an adjustment is needed in a short-run disequilibrium towards achieving a long-run equilibrium. The higher the value, the quicker is the adjustment needed towards a long-run equilibrium. The value of ECT showed that an adjustment of 23.3% is needed each month towards achieving a long-run equilibrium. It can be concluded that in order to gain higher CPO production, a longer time is needed because it is influenced by FFB yield and ONI. Hence, the results from this study will be able to help policymakers be aware that owing to extreme weather and its implications on palm oil production. A better irrigation system or in-depth R&D on the advance technologies need to be implemented to offset the negative effects of this phenomenon.

Keyword(s): El Niño, CPO production, FFB yield, Ocean Nino Index (ONI), error correction term (ECT)

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Article Info

Vol 17 no. 2 (2017) p68-81
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
Parthiban Kannan*; Nur Hana Basaruddin*; Khairuman Hashim*; Hamdan Abu Bakar*; Wahid Omar*; Shahrun Nadzree Khairil**; Zamri Mohd Salleh* and Nur Hanani Mansor*

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Abstract


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

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(s): oil palm smallholders, oil palm dealers, farm record-keeping system, monitoring and recording system

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Article Info

Vol 17 no. 2 (2017) p60-67
The Impact of Prolonged Low Brent Crude Oil Prices on CPO Price Movement
M Ayatollah Khomeini Ab Rahman*; Kamalrudin Mohamed Salleh*; Balu N*; Norfadilah Hashim*; Kalsom Zakaria*; Jariah Md Jidin*; Loo Yuen May*; Bakri Hussein*; Rahimah Thamby* and Horhasnita Ramli*

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Abstract


The Impact of Prolonged Low Brent Crude Oil Prices on CPO Price Movement

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.

Keyword(s): crude palm oil, Brent crude oil, biodiesel, time-varying factors, bound test and supply availability

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Article Info

Vol 17 no. 2 (2017) p54-59
Determinants of Bilateral Trade between Malaysia and the United States of America: An ARDL Analysis
Nadia Afita Dahrijah* and Ain, H**

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Abstract


Determinants of Bilateral Trade between Malaysia and the United States of America: An ARDL Analysis

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.

Keyword(s): trade balance, economic growth, real effective exchange rate, USA, ARDL

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Article Info

Vol 17 no. 2 (2017) p44-53
Competitiveness of the Soyabean Industry in Argentina and its Implication to Malaysian Palm Oil Trade
Khairina Ahmad Khir*; Balu, N* and Ain, H*

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Competitiveness of the Soyabean Industry in Argentina and its Implication to Malaysian Palm Oil Trade

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.

Keyword(s): Argentina, soyabean, competitiveness, SWOT

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© Malaysian Palm Oil Board (MPOB). All Rights reserved.
No part of this publication may be reproduced, stored in a retrieval system,
in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the publisher.

This online publication is electronically compiled by Palm Information Centre, Malaysian Palm Oil Board (MPOB)
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