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LIST OF ARTICLES

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Vol 14 No.1 (2014) p1-8
The Effect of Progressive Export Tax on Indonesian Palm Oil Industry
Amzul Rifin

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Abstract


The Effect of Progressive Export Tax on Indonesian Palm Oil Industry

The government of Indonesia imposed export tax on crude palm oil (CPO) and its derivatives since September 1994 and in September 2007, the progressive export tax was implemented. This policy has two objectives, first is to guarantee the availability of domestic CPO as the main raw material of cooking oil which is one of the staple products of Indonesia. Secondly, is to develop the downstream industry of the palm oil industry which has higher value-added compared to CPO. By limiting CPO export, hopefully the CPO will be utilised to produce higher value-added product. The objective of this article is to analyse the effect of export tax
on Indonesian palm oil industry. The results indicate that export tax will decrease domestic CPO price, production, export and competitiveness. The policy will make producers worse off while consumers and cooking oil producers will be better off. On the other hand, the policy is able to increase the refined palm oil export and stabilise the cooking oil price.

Keyword(s): export tax, crude palm oil, Indonesian palm oil industry

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Article Info

Vol 13 No.2 (2013) p38-51
The Impact of La Niña and El Niño Events on Crude Palm Oil Prices: An Econometric Analysis
Ayat K Ab Rahman; Ramli Abdullah; N Balu and Faizah Mohd Shariff

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Abstract


The Impact of La Niña and El Niño Events on Crude Palm Oil Prices: An Econometric Analysis

Both the La Niña and El Niño events are deemed as being strong market sentiments issues that supported crude palm oil (CPO) prices in an upward trend. An analysis carried out was shown that both events have a positive relationship with CPO price movements in the market. This study also reveals that the effect of the La Niña event on CPO prices is greater than that of the El Niño event. Production will normally decline as heavy rainfall usually brings floods that could disrupt harvesting and the collection of fruits in low lying oil palm areas. Palm oil stock levels could also decline due to lower supply availability. In contrast, the effect of the El Niño event is seen on a long-term basis. Hot weather conditions during El Niño could result in less rainfall and have a stress effect on oil palm. This could bring down the yield of fresh fruit bunch (FFB) production in the future. The study revealed that past El Niño events (at lagged 8 to 22 months) can also affect current CPO production. With the incorporation of these two phenomena into the model (La Niña and El Niño events) developed for this study, it was found that the CPO price can be forecast more accurately. By using the model, the direct and indirect impact of La Niña and El Niño events on CPO prices can be determined. The results also showed that when La Niña and El Niño events occur, CPO production in a year will decline by 3.37%, palm oil stock level will decline by 2.5%, while the CPO price is likely to be higher by 10.2% as compared to a situation when the phenomenon did not occur.

Keyword(s): -

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Article Info

Vol 13 No.2 (2013) p27-37
Technical Efficiency of Independent Oil Palm Smallholders (ISH) in Peninsular Malaysia with Respect to Fertiliser and Land Size
Ramli Abdullah

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Abstract


Technical Efficiency of Independent Oil Palm Smallholders (ISH) in Peninsular Malaysia with Respect to Fertiliser and Land Size

Productivity of independent smallholders (ISH) is said to be low. This is partly due to, among others, their lower efficiency level compared to the estates. Although this is a known fact, there is no literature available which measures their efficiency level in producing their fresh fruit bunch (FFB). Hence, this study was carried out on the ISH to assess and determine their technical efficiency (TE) level by considering their effectiveness on using inputs, such as fertilisers and size of their holdings. The results of the study can be used to fill up the missing information pertaining to their level of efficiency. The study used Stochastic Frontier Analysis approach to see the effects of the two inputs. The ISH from Pahang, Perak and Johor were included in this study to represent Peninsular Malaysia region. The two variables, i.e. fertiliser application and size of their holdings had a positive relationship with FFB yield. The study revealed that the estimated average level of TE for the ISH is 0.70 while the maximum and minimum TE are 0.94 and 0.23, respectively. This indicates that the ISH in Peninsular Malaysia are generally inefficient and supports the claim to statement made by various authors on the level of their efficiency. The big difference in TE among ISH in the sample suggests that there is a potential to increase their output or yield by using inputs more efficiently. This can also be inferred that there is an opportunity to improve the ISH productivity, especially the Malays and Indian ethnic groups whose efficiency levels are lower than the Chinese ethnic group.

Keyword(s): -

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Article Info

Vol 13 No. 2 (2013) p15-26
The Effect of Labour Shortage in the Supply and Demand of Palm Oil in Malaysia
Azman Ismail

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Abstract


The Effect of Labour Shortage in the Supply and Demand of Palm Oil in Malaysia

The Malaysian palm oil industry plays an important role in the agricultural development of the country and contributes significantly to the country’s Gross Domestic Product (GDP), foreign exchange and creation of employment opportunities. On average, the industry contributes 5% to 7% of GDP and for the last five years the industry has contributed on average about RM 65.3 billion per year to export revenue. The Malaysian palm oil industry, especially the oil palm plantation sector offers various job opportunities as the sector is highly dependent on manual labour. However, a minimal involvement of the locals (due to the 3D perception - dangerous, dirty and difficult) has provided avenues for foreign workers to work in the plantation sector. In 2012, it was estimated that there were 505 972 employees in the oil palm plantation sector. Out of the total, 386 913 or 76.5% were foreigners. Foreign workers were employed mainly in high labour demand operations such as harvesting, field work and other general work. These days, the main issue in oil palm plantation sector is labour shortage problem especially for fresh fruit bunch (FFB) harvesting and collection. The difficulty of employing local as well as foreign workers especially from Indonesia has caused the oil palm plantation sector to face a labour shortage particularly for FFB harvesting and collection. This situation has affected the supply of palm oil in the domestic as well as world markets.

Keyword(s): -

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Article Info

Vol 13 No.2 (2013) p1-14
An Analysis on Trends of Vegetable Oil Prices and Some Factors Affecting CPO Price
Ramli Abdullah

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Abstract


An Analysis on Trends of Vegetable Oil Prices and Some Factors Affecting CPO Price

Price is determined by market forces of supply and demand, interacting together to produce an equilibrium price. Mismatch of these forces can cause price to change. Frequent and continuous changes in price will lead to volatility which appears to be increasing over time, especially in the oils and fats sector. This gives an indication that the sector has become complicated over time. Not only the volatility increased over time, the prices themselves had up-trended and exhibited the presence of trend factor. Other factors, such as seasonal and cyclical factors were not transparent. This article analyses trends for prices of selected oils and fats, including that of crude oil. It also describes the strategies of the Malaysian government to narrow down the widening gap between soyabean oil and palm oil prices.

Keyword(s): -

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Article Info

Vol 13 No.1 (2013) p35-44
Assessment of the Oil Palm Seedlings Assistance Scheme on Fresh Fruit Bunch Yield and Income of Smallholders
Zulkifli Abd Manaf; Ayat K Ab Rahman; Nurul Aimi Abd Halim; Suboh Ismail and Ramli Abdullah

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Abstract


Assessment of the Oil Palm Seedlings Assistance Scheme on Fresh Fruit Bunch Yield and Income of Smallholders

Yield of oil palm fresh fruit bunch (FFB) of smallholders is generally lower than that of the estates, mainly because of the poor management of their oil palm holdings. It is essential for the smallholders to have adequate knowledge of good management so as their yields and income will increase further. In this respect, they need to adopt good agricultural practices (GAP) which include planting techniques, use of balanced and adequate fertilisers, and the proper maintenance of the oil palms. Also, they need to use high quality oil palm seedlings from reputable nursery operators who comply with the Oil Palm Nursery Competency Certification (OPNCC) standard. To assist these smallholders, a scheme called the Quality Oil Palm Seedlings Assistance Scheme (SBABB) was implemented from 2006 to 2010, which benefited a total of 5697 smallholders, especially in Sabah and Sarawak. Through a survey carried out, it was found that participants of the scheme (or the SBABB smallholders) had achieved a higher first year FFB yield compared to non-participants (or non-SBABB smallholders). The survey also found that these SBABB smallholders had successfully obtained a gross income of RM 7160/ha in the first year of harvest which was due to high FFB yield. Other smallholders should emulate these SBABB smallholders in achieving high FFB yield so that they will also enjoy a better standard of living from the high income generated through this business in the future.

Keyword(s): -

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Article Info

Vol 13 No.1 (2013) p22-34
Measuring Performance Efficiency of Oil Palm Plantations using Window Analysis
Fazeeda Mohamad; Razman Mat Tahar; Cheng Jack Kie and Ahmad Borhan Ahmad Nordin

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Abstract


Measuring Performance Efficiency of Oil Palm Plantations using Window Analysis

Performance of a unit or an organisation is among the issues discussed as a way of helping the decision-making process. This study was aimed at determining and evaluating performance efficiency trends in the
management of selected plantations in the oil palm industry. It took into account the input and output factors using data envelopment analysis (DEA). Relative efficiency was identified to set the benchmark in this case study, and as a way to improve the overall activities related to the use of input as resources by the least efficient plantation. The DEA method was used to calculate the efficiency trend score. Data collected were from the years 2001-2010 for five input and one output variables. Analysis was conducted using the Window Analysis, DEA Solver. The overall result shows significant correlations among the variables and
that the average efficiency score determines efficiency trend. Two out of three plantations studied had highest average efficiency scores while the other one was the less efficient.


Keyword(s): -

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Article Info

Vol 13 No.1 (2013) p14-21
Economic Feasibility Study on Establishing an Oil Palm Biogas Plant in Malaysia
Roslan Abas; Ramli Abdullah and Yahaya Hawari

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Abstract


Economic Feasibility Study on Establishing an Oil Palm Biogas Plant in Malaysia

The processing of oil palm fresh fruit bunch (FFB) primarily for palm oil results in the production of large amount of wastes, particularly in the form of palm oil mill effluent (POME). Production of POME can be estimated at almost three times the quantity of crude palm oil (CPO) produced. It can pollute the environment through the production of biogas which can be captured through a biogas-capturing system in a biogas plant. After capturing, the biogas can be utilised either for fueling the mill boiler, electricity generation, flaring or as cooking gas. This current study was carried out with the objective of assessing the economics of establishing an oil palm biogas plant based on the four different utilisation methods of the biogas. The results indicate that utilising biogas for the boiler gives higher economic returns compared with the other three options, given certain conditions. This study finally concludes with some issues that have an impact on any interested investor in a biogas project.

Keyword(s): -

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Article Info

Vol 13 No.1 (2013) p1-13
Impact of Palm Oil Supply and Demand on Palm Oil Price Behaviour
Ayat K Ab Rahman; N Balu and Faizah Mohd Shariff

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Abstract


Impact of Palm Oil Supply and Demand on Palm Oil Price Behaviour

The article will highlight the impact of supply and demand and market sentiment factors on the Malaysian palm oil price behaviour, and will examine their impact in 2013. The price of crude palm oil (CPO) is dependent on many factors that vary from time to time, such as fundamental factors, i.e. both supply and demand factors in the world market and unpredictable market sentiments, e.g. extreme weather phenomenon, political crisis, new policies or regulations, and impact of natural disasters. The CPO price in 2012 is a good example where it was affected negatively by a combination of both supply and demand factors. From the supply perspective, the CPO stock build-up arising from high carry-over stocks at the beginning of the year and an increase in CPO production had contributed to its bearishness in 2012. From the demand side, it is a weaker export demand from major importing countries, like China, P R and Pakistan. The introduction of Malaysia’s new CPO export tax structure effective 1 January 2013 is likely to result in an increase in palm oil exports and, thus, indirectly to a reduction in the high palm oil stock levels in the country. Moreover, the B5 programme which is to be expanded throughout Malaysia in 2013/2014 will also reduce the level of palm oil stock availability in the country. Besides that, the Malaysian palm oil supply growth in 2013 is expected to increase moderately due to the introduction of the oil palm replanting scheme with a government allocation of RM 100 million for this purpose. The scheme is expected to see the replanting of 100 000 ha of unproductive palms and palms over the age of 25 years. These scenarios will indeed be a positive indication of the firming up of CPO prices in the market place in 2013. The article will also incorporate the use of an econometric modeling method for an analysis of the factors affecting CPO price behaviour.

Keyword(s): -

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Article Info

Vol 12 No.2 (2012) p36-43
An Analysis of Crude Palm Oil Production in Malaysia
Ramli Abdullah

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Abstract


An Analysis of Crude Palm Oil Production in Malaysia

Palm oil is a very important commodity in Malaysia, and as such, it has become one of the 12 economic sectors under the National Key Economic Areas (NKEA) to realise the country’s vision towards attaining a high income nation status in 2020. However, land is a limited resource for future oil palm expansion, thus, land productivity is pivotal in achieving the target of the NKEA. This can also affect future production of palm oil. Thus, it is the objective of this article to understand its behaviour in the past in order to determine its trend in the future. Based on historical data, palm oil production behaviour can be characterised by four components, namely trend, cyclical, seasonal and irregular components. The cyclical component is less obvious due to the nature of the data which is on monthly basis. However, this monthly data is suitable for exhibiting the seasonal and trend components. The seasonal component produces significant monthly indices which show performance of monthly production in a year. The trend component shows that production of palm oil is generally on the uptrend. The last irregular component indicates the production behaviour which is not described by the other three components and is considered a totally random error. Having understood the production pattern which consists of the four components, various key factors (mostly biological in nature) which affect and determine the movement of the palm oil production were also discussed in this article. These factors include rainfall (which affects more on the fresh fruit bunches yield), matured areas and fertiliser application. Coupled with the four components, they give a clearer picture of the production pattern of crude palm oil production in Malaysia.


Keyword(s): PALM OIL; CRUDE PALM OIL PRODUCTION - Malaysia; TRENDS; PRODUCTION PATTERN; BIOLOGICAL FACTORS

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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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