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LIST OF ARTICLES

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Article Info

Vol 3 No. 1 (2003) p25 - 31
An Economic Perspective of Oil Extraction Rate in the Oil Palm Industry of Malaysia
Chang, L C; Abdul Rahim Abdullah Sani and Zainon Basran

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Abstract


An Economic Perspective of Oil Extraction Rate in the Oil Palm Industry of Malaysia

The national average oil extraction rates (OER) in Malaysia since 1980 until 2002, have fluctuated from a low of 18.48% in 1982 to a high of 19.87% in 1987/1988, although many individual mills
have obtained more than 20% OER.
In times of low prices of crude palm oil (CPO) as seen in the recent period of 2000/2001 and low yield productivity, producers are challenged to improve the performance of OER as this measurement is a management tool in assessing the profitability of a plantation enterprise.
Historical OERs for the past 10 years are used to estimate at the macro level, the quantity and value of CPO loss or gain, arising from the annual change of OER. The differentials of the annual
OERs and the 20% benchmark OER are also used to estimate the loss in revenue, since until now, the benchmark OER of 20% has not been attained. The highest loss of CPO revenue amounted to about RM 255 million in 1999 arising from an annual change of minus 0.31% OER, whilst that arising from the differential of the OER in 1999 and the benchmark 20% OER, or a drop of 1.4%, amounted to an astounding RM 1.15 billion in a single year based on an average CPO price of RM 1449.50 in 1999.
If CPO is considered in the downstream processing, value adding that could have been achieved ranged from RM 21.53 to RM 54.66/t in the five-year period of 1997-2001.

Keyword(s): PALM OIL & OIL PALM INDUSTRY-Malaysia ; OIL EXTRACTION RATE (OER) ; ECONOMIC ANALYSIS ; PRODUCTION FORECASTS ; MPOB PUBLICATIONS

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Article Info

Vol 3 No. 1 (2003) p16 - 24
Zero Burning Techniques in Oil Palm Cultivation: an Economic Perspective
M Mohd Noor

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Abstract


Zero Burning Techniques in Oil Palm Cultivation: an Economic Perspective

Land clearing for oil palm cultivation used to be undertaken by the clean clearing method, which included burning and re-burning of biomass. The method pollutes the air and is costly to the society. The government of Malaysia had imposed a ban on open burning in 1998. A financial and economic analysis of various zero burning techniques of land clearing for oil palm cultivation indicated that the techniques bring higher return compared to the clean burn method. The benefits of
the zero burning techniques, in addition to cost saving from pollution related problems, include faster returns, and savings in fertilizer input from nutrient recycling and soil preservation. Hence, in addition to abiding with the law, zero burning technique of land clearing earns additional financial and economic benefits.

Keyword(s): ZERO BURNING TECHNIQUES ; OIL PALM-Replanting ; LAND CLEARING ; OIL PALM-Cultivation ; ENVIRONMENTAL PROTECTION ; MPOB PUBLICATIONS

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Article Info

Vol 3 No. 1 (2003) p8 - 15
The Indonesian Palm Industry
Colin Barlow; Zahari Zen and Ria Gondowarsito

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Abstract


The Indonesian Palm Industry

This paper reviews the past development and prospects in the 2000s of Indonesian oil palm production, noting the rapid expansion of the sector up to the late 1990s and fast growth of private estates and smallholdings. It examines the organization, performance and constraints of chief
sub-sectors, indicating relatively low costs of production on estates and even lower costs on smallholdings. It considers the nucleus estate and plasma smallholding development as unexpectedly successful, despite needs for further improvement.
The paper views the main current constraints as scarce development capital, inefficient deployment of labour and other resources, poor technological levels, and problems over land acquisition and security. It nonetheless sees a slow improvement occurring, where this could be accelerated by government support with credit and extension, especially for smallholdings. Given such help, the industry should renew its expansion and become the worldís leading oil palm producer.

Keyword(s): PALM OIL AND OIL PALM INDUSTRY-Indonesia ; OIL PALM-Productions ; FORECASTs ; LABOUR ; MPOB PUBLICATIONS

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Article Info

Vol 3 No. 1 (2003) p1-7
The Production Cost of Oil Palm Fresh Fruit Bunches: the Case of Independent Smallholders in Johor
Azman Ismail; Mohd Arif Simeh and M Mohd Noor

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Abstract


The Production Cost of Oil Palm Fresh Fruit Bunches: the Case of Independent Smallholders in Johor

Like in other perennial crops, the Malaysian oil palm smallholding sector can be broadly categorized into organized and independent smallholders. Despite the overall decline in oil palm smallholdings
recently, there has been an expansion of the independent smallholdersí land from 287 000 ha in 1999 to 320 000 ha in 2000. However, due to the unorganized nature of the latter, updated data and information pertaining to the performance of such smallholdings are limited. This paper attempts to overview the economic performance of these smallholders based on a survey in Johor, which has the largest number of independent smallholders (45%) and the largest independent smallholdings (40%) in the country. The paper also discusses the production cost structures of the independent smallholders compared to their counterparts in the organized smallholder sector as well as with estates.

Keyword(s): PALM OIL AND OIL PALM INDUSTRY-Malaysia ; FFB YIELDS ; PRODUCTION COSTS ; OIL PALM SMALLHOLDERS ; MPOB PUBLICATIONS

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Article Info

Vol 2 No.2 (2002) p21-27
US Agricultural Subsidies and their Implications on Oilseeds and, Oils and Fats Trade
N Balu and Nazlin Ismail

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Abstract


US Agricultural Subsidies and their Implications on Oilseeds and, Oils and Fats Trade

Palm oil is today the leading edible oil traded in the world market, accounting for more than 40% of the total export trade of 17 oils and fats. Although oil palm is widely recognized as the highest yielding oil crop, this does not in any way guarantee that it is the most cost competitive. The reality is that trade distorting measures in the form of agricultural production subsidies and export assistance programmes continue to challenge the competitiveness of palm oil and subsequently,
its position as the most competitive vegetable oil.
In highlighting the implications of trade distorting agricultural subsidies, it is clear that farmersí planting decisions in the US are related to the attractive loan rate rather than the market price, thus introducing potential production-influencing effects into the market place.

Keyword(s): OILS & FATS INDUSTRY ; OILSEEDS ; SUBSIDIES ; MARKET DEVELOPMENT ; FORECASTS ; STRATEGIC MANAGEMENT ; ECONOMIC ANALYSIS ; FUTURE TRADING ; MPOB PUBLICATIONS

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Article Info

Vol 2 No.2 (2002) p16-20
Arbitration Issues in the International Vegetable Oil Trade
Smid, J S

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Abstract


Arbitration Issues in the International Vegetable Oil Trade

This paper concerns settling commercial disputes in the oils and fats trade. The usual method is litigation before the courts and commercial settlements. However, between these two extremes are arbitration,coordination and mediations. The FOSFA system of arbitration offers the best for obtaining commercial justice, swiftly and at a reasonable price.

Keyword(s): FOSFA SYSTEM OF ARBITRATION ; VEGETABLE OIL ; MARKET DEVELOPMENT ; STRATEGIC MANAGEMENT ; FUTURE TRADING ; MPOB PUBLICATIONS

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Article Info

Vol 2 No.2 (2002) p10-15
Malaysian Palm Oil Industry at Crossroads and its Future Direction
Khoo Khee Ming and D Chandramohan

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Abstract


Malaysian Palm Oil Industry at Crossroads and its Future Direction

Palm oil accounts for 20% and 46% of the global oil and fats production and trade respectively. Malaysia is the worldís largest producer and exporter of palm oil with a 50% share of world palm oil production and 61% of exports. This paper assesses the growth of the Malaysian palm oil industry and the limitations of land and labour on the future growth of the industry. The industryís competitive edge will continue to be a vital factor for its future development. Thus, in order to remain
competitive, the industry needs to improve on productivity, explore opportunities to diversity the income base, widen the end-use base for palm oil, explore new marketing approaches and intensify vertical integration.

Keyword(s): OIL PALM ; PALM OIL AND OIL PALM INDUSTRY-Malaysia ; OIL PALM ESTATES & PLANTATIONS ; MARKET DEVELOPMENT ; FORECASTS ; STRATEGIC MANAGEMENT ; ECONOMIC ANALYSIS ; FUTURE TRADING ; MPOB PUBLICATIONS

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Article Info

Vol 2 No.2 (2002) p1-9
Prospects of Elevating National Oil Palm Productivity: A Malaysian Perspective
Jalani, B s; Yusof Basiron; Ariffin Darus; Chan, K W and N Rajanaidu

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Abstract


Prospects of Elevating National Oil Palm Productivity: A Malaysian Perspective

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.

Keyword(s): OIL PALM ; PALM OIL AND OIL PALM INDUSTRY-Malaysia ; PRODUCTIVITY ; SUPPLY ; DEMAND ; STRATEGIC MANAGEMENT ; ECONOMIC ANALYSIS ; MARKET DEVELOPMENT ; MPOB PUBLICATIONS

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Article Info

Vol 2 No.1 (2002) p45-49
Counter-Trade: The Malaysian Experience
N.Balu and Norfadilah

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Abstract


Counter-Trade: The Malaysian Experience

A detailed explanation of the various types of counter-trade is presented,
ranging from barter to counter-purchase to buy-back to offset. Apart from
outlining the framework agreement on counter-trade, actual case examples
of counter-trade deals undertaken in Malaysia are also highlighted. In
this respect, counter-trade deals involving government-to-government transactions as well as deals entirely transacted on the basis of private sector
involvement are also elucidated. By doing so, further explanations are
given to explain modifications that need to be done to the existing countertrade models, taking into account the peculiarities of each varying trading
environment.

Keyword(s): PALM OIL ; COUNTER TRADE ; BARTER TRADE ; IMPORT SUBSTITUTION ; MPOB PUBLICATIONS

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Article Info

Vol 2 No.1 (2002) p34-44
A Financial Study of Cattle Integration in Oil Palm Plantations
Jusoh Latif and Mohd Noor Mamat

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Abstract


A Financial Study of Cattle Integration in Oil Palm Plantations

In the context of government efforts at reducing beef imports, integrated cattle rearing in oil palm plantations is a useful method for producing cattle locally. FELDA and ESPEK and some other organizations are recent participants of the cattle-under-oil-palm programme. Oil palm plantations with trees of seven years or older can produce 500 kg per hectare per year of dry matter, which is sufficient to justify grazing by cattle. One animal requires about 2.5% to 3% of its body weight in grass uptake and an animal which is one to two years old, requires about 3 ha of oil palm area for grazing. This animal is controlled from straying about by electric fencing. Each enclosure of about 4 to 6 ha requires two workers to manage.
This study shows that, in the cases of three estates that were studied, cattle rearing under oil palm can be pursued successfully. The average weight gain of cattle aged between one to two years old was 250 g to 300g per head per day. The calving percentage was more than 50%, while the mortality rate was below 5%t. The average cost of maintenance was low. An average price of RM 5.50 per kg live weight was obtained during normal times but increased to RM 6.50 per kg during festive seasons.
Prices of RM 4.00/kg, RM 4.50/kg and RM 5.00/kg live weight were used to account for the final stock value, depending on the age and sex of the animal. The IRRs obtained from integrated cattle rearing in oil palm plantations, ranged from 25% to more than 50% and the reduction in the cost of weeding ranged from 17% to 38%. That was an additional benefit from the production system adopted.

Keyword(s): OIL PALM-Cultivation ; INTEGRATED FARMING ; CATTLE REARING ; OIL PALM ESTATES & PLANTATIONS ; FEASIBILITY STUDIES ; MPOB PUBLICATIONS

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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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