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LIST OF ARTICLES

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Vol 12 No.2 (2012) p1-13
The Growth and Prospects for the Oil Palm Plantation Industry in Indonesia
Helena Varkkey

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Abstract


The Growth and Prospects for the Oil Palm Plantation Industry in Indonesia

This article provides a historical political economy perspective of the Indonesian oil palm plantation sector. It aims to shed light on the process of how Indonesia took over from Malaysia in becoming the world’s current largest producer of palm oil. This article argues that the regional trend of state-led development that relied on agribusiness as a major sector played a major role in the development of oil palm as an important crop in the region, especially in Malaysia and Indonesia. Indonesia specifically promoted and encouraged the expansion of oil palm as a way to fulfill state developmental aims; identifying it as a lucrative source of revenue, foreign exchange, and rural employment. With oil palm playing such an important role in the Indonesian economy, the state has outlined plans for rapid area expansion, to maintain its world dominance in the sector. Malaysian and Singaporean companies are currently major players in the Indonesian oil palm plantation sector, and continue to reap the benefits of this lucrative crop alongside local firms.

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Vol 12 No.1 (2012) p24-30
Economic Impact of Ganoderma Incidence on Malaysian Oil Palm Plantation – A Case Study in Johor
Roslan Abas and Idris Abu Seman

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Abstract


Economic Impact of Ganoderma Incidence on Malaysian Oil Palm Plantation – A Case Study in Johor

Crop losses due to pest and disease infestations are major threats to agricultural development. For export oriented commodities such as palm oil, the problem of pests and diseases (P&D) cannot be viewed in isolation because it can affect international cost competitiveness as well as revenue losses. The objective of this article is to estimate revenue losses due to FFB yield reduction as a result of Ganoderma attack. From the study, it was found that Ganoderma attack can lead to fresh fruit bunches (FFB) yield reduction between 0.04 t and 4.34 t/ha on 10 years to 22 years of planting respectively. Based on annual growth of Ganoderma incidence rate, it was estimated that in 2020, a total of 400 thousand hectares could be affected.

Keyword(s): OIL PALM PLANTATIONS-Malaysia; GANODERMA; ECONOMIC IMPACT; PESTS AND DISEASES

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Vol 12 No.1 (2012) p14-23
The Impact of Renewable Fuel Standard (RFS2) on Palm Biodiesel’s Market Access to the United States of America
Rosidah Radzian

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Abstract


The Impact of Renewable Fuel Standard (RFS2) on Palm Biodiesel’s Market Access to the United States of America

On 26 March 2010, the Environmental Protection Agency (EPA) published final changes to the RFS2 programme as required by the Energy Independence and Security Act (EISA) of 2007. EISA has targeted 117 million tonnes (36 billion gallons) of renewable fuel to be blended into transportation by 2022. The Act also introduced new eligibility of volume requirements for the four categories of renewable fuel. The most significant aspect of the RFS2 programme is the inclusion of life cycle analysis for greenhouse gas (GHG) emissions to qualify as a renewable fuel. The life cycle analysis of GHG emissions must be lower than the 2005 baseline average for gasoline or diesel fuel that it replaces. Four different levels of reductions are required for the four different renewable fuel standards. These include 20% for conventional renewable fuels, 50% for advanced biofuel, 50% for biomass-based diesel and 60% for cellulosic biofuels. RFS2 regulation came into effect on 1 July 2010. For 2012, the statutory volume requirement is 3.25 million tonnes (1.0 billion gallons) and a minimum of 3.25 million tonnes/year (1.0 billion gallons) of biomass-based diesel is targeted from 2013 through 2022. The proposed volume for 2013 is 4.02 million tonnes (1.238 billion gallons). Currently, feedstocks for biodiesel already approved by EPA included soyabean oil, algal oil, biogenic waste oils/fats/yellow grease, corn oil from DGS and canola oil. Palm-based biodiesel, wood pulp ethanol and grain sorghum ethanol are still under review by EPA. Notice of Data Availability (NODA) for palm oil was published on 27 January 2012. Based on EPA’s analysis, palm-based biodiesel fails to meet the minimum requirement of GHG emission saving of 20%, thus, does not qualify as renewable biofuel under RFS2; palm-based biodiesel and renewable diesel only reduce GHG emission by 17% and 11% respectively. For palm-based biodiesel to be categorised under biomass-based diesel (D4 RIN), it must comply with 50% GHG saving compared to 2005 baseline of petroleum diesel. Malaysian government and other interested parties must submit their comments during the rule-making process to influence EPA on their modeling of palm pathway. Only one pathway will be approved for palm-based biodiesel regardless of its origin in the final rule-making process. If palm NODA is approved by EPA in the final rule-making process, the future for palm-based biodiesel and renewable diesel in the US renewable energy market are non-existence. The reinstatement of USD 1/gallon tax credit for 2011 has given a boost for the biodiesel industry in the US and the production of biodiesel in 2011 exceeded 3.25 million tonnes (1.0 billion gallons). The extension of biodiesel tax credit for 2012 is being debated after it expired on 31 December 2011 and the prospect of US biodiesel industry in 2012 will be more challenging without the extension of the tax credit.

Keyword(s): PALM BIODIESEL; ENVIRONMENTAL PROTECTION AGENCY (EPA); RENEWABLE FUEL STANDARD (RFS2); MARKET ACCESS-United States of America

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Vol 12 No.1 (2012) p8-13
Internationalisation of Malaysian Palm Oil-based Multinationals
Anuar Md Nor

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Abstract


Internationalisation of Malaysian Palm Oil-based Multinationals

This article highlights the internationalisation strategies of selected Malaysian palm oil firms. These Malaysian palm oil multinationals which we call palm oil-based multinationals (POB MNE) are undertaking foreign direct investments (FDI) in developing as well as developed countries. The motives of their FDI are explained using the internationalisation theory. The internationalisation of POB MNE will require new roles for key institutions supporting the Malaysian palm oil industry. This is especially in the case of MPOB which undertakes research activities which are funded from cess levied on the palm oil industry.

Keyword(s): OIL PALM INDUSTRY-Malaysia; INTERNATIONALISATION; FOREIGN DIRECT INVESTMENTS (FDI)

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Vol 12 No.1 (2012) p1-7
A Study on Inventory Management of Malaysian Palm Oil Products
Ahmad Borhan A Nordin

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Abstract


A Study on Inventory Management of Malaysian Palm Oil Products

Inventory management is important to balance organisational objectives, particularly on the appropriate level of stock for raw materials and production outputs as well. The amount of inventory has a direct impact on the responsiveness and efficiency of operations of a company. In general, it can reflect also on the performance of an industry. In the Malaysian palm oil industry, most of the processing activities are well-planned or geared towards fulfilling order as demanded or known as ‘back-to-back’ approach. Hence, the movements of palm products along the supply chain are rather fast to reach respective buyers on time. As a result, the inventory levels of palm products should be low but enough to meet the demand of processing activities.

Keyword(s): PALM OIL PRODUCTS; INVENTORY MANAGEMENT; STOCK LEVEL; PRODUCTION OUTPUTS

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Article Info

Vol 11 No.2 (2011) p36-48
An Examination of Sources of Instability in Export Earnings of Malaysian Palm Oil
Ramli Abdullah

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Abstract


An Examination of Sources of Instability in Export Earnings of Malaysian Palm Oil

Malaysian export earnings from the animal and vegetable oils and fats sector had been fluctuated in the past. The major component of this sector is obviously that of palm oil which is also highly volatile and in tandem with the total earnings from the animal and vegetable oils and fats sector. It is the aim of this article to assess the instability of the Malaysian palm oil export earnings by using one of the latest techniques in modeling called generalized autoregressive conditional heteroskedasticity (GARCH). The model shows that palm oil export earnings is really instable. Sources of the instability were then sought through literature and the key determinants of the instability are prices of crude palm oil (CPO) and soyabean oil, exchange rate, palm oil export volume and production, and gross domestic products (GDP) of Malaysia’s major trading partners. These key determinants were linked in a multivariate regression model with the export earnings. Results showed that the most significant factors are prices of CPO and soyabean oil. Thus, price of palm oil had played a major role in causing the instability of the Malaysian palm oil export earnings. To stabilise the earnings, one needs to stabilise first the price of palm oil in the market which is exposed to the vagaries of market forces of supply and demand.

Keyword(s): PALM OIL; EXPORT EARNINGS-Malaysia; GENERALIZED AUTOREGRESSIVE CONDITIONAL HETEROSKEDASTICITY (GARCH); SUPPLY AND DEMAND

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Vol 11 No.2 (2011) p26-35
Free Trade Agreement – The Way Forward for the Malaysian Palm Oil Industry
N Balu and Nazlin Ismail

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Abstract


Free Trade Agreement – The Way Forward for the Malaysian Palm Oil Industry

Free Trade Agreements (FTA) have gained prominence in recent years arising from the long delayed conclusion of the World Trade Organisation (WTO) Agriculture and Non-agriculture Negotiations (NAMA). However, member countries of the WTO are keen on fostering greater trade liberalisation with their major trading partners, either bilaterally or regionally to enhance greater market access opportunities. In this context, although Malaysia is a late starter to FTA, it has picked up rather aggressively of late. Malaysia thus far has been involved in the successful completion of five bilateral and regional FTA respectively, both of which have proven to a large extent increased trade dealings and the removal or reductions of trade impediments, especially high tariffs, coupled with increased market access opportunities through flexible rules of origin (ROO). This article will attempt to provide the importance of FTA, features of FTA and the involvement of Malaysia in FTA, both concluded and currently under negotiations.

Keyword(s): FREE TRADE AGREEMENT(FTA); TRADE LIBERALISATION-Malaysia; MARKET ACCESS

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Vol 11 No.2 (2011) p13-25
World Palm Oil Supply, Demand, Price and Prospects: Focus on Malaysian and Indonesian Palm Oil Industries
Ramli Abdullah

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Abstract


World Palm Oil Supply, Demand, Price and Prospects: Focus on Malaysian and Indonesian Palm Oil Industries

The oils and fats sector had shown that both its production and consumption had increased at almost the same rate in the past. Any differences between them will indicate either an oversupply or shortage situation of oils and fats in the world; oversupply occurred when production exceeded consumption and shortage when the situation was reversed. Thus, world production and consumption of oils and fats in 1976 were 45.9 and 47.3 million tonnes respectively (shortage) while in 2010 both were at about 171.2 million tonnes (almost equilibrium). Among the 17 oils and fats, palm oil has expanded the most in the production and consumption of the oils and fats. It began as one of the
minor oils being produced and consumed in 1976 (1.6% and 6% of the world production and consumption of oils and fats respectively) and gradually surged to become the largest produced and consumed oil in 2010 (both at about 28% of the world production and consumption of oils and fats). Palm oil will continue to be the main oil produced and consumed due to its high productivity, cheaper price and healthiness. Its production in Malaysia is expected to be about 18.33 million tonnes while Indonesia will produce about 24.91 million tonnes in 2011. As Malaysia has a constrain to expand its oil palm area due to lack of suitable land, increase in future production is expected to be through increase in its productivity. Palm oil price is associated closely with its main competitor, soyabean oil, and lately crude petroleum price also had an influence. However, there are other factors that need to be considered in evaluating price of palm oil. Taking them into consideration, price is projected at RM 3217 t in 2011 with the first half of year being higher than the second half.

Keyword(s): PALM OIL; SUPPLY AND DEMAND; PROSPECTS; OIL PALM INDUSTRY-Malaysia; OIL PALM INDUSTRY-Indonesia

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Vol 11 No.2 (2011) p1-12
Labour Requirements in the Malaysian Oil Palm Industry in 2010
Ramli Abdullah; Azman Ismail and Ayatollah Khomeini A Rahman

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Abstract


Labour Requirements in the Malaysian Oil Palm Industry in 2010

Malaysian oil palm industry is labour intensive especially in the oil palm plantations. This article estimated the total number of workforce in the Malaysian oil palm plantations in 2010 by carrying out a census in all the plantations. It is estimated that there were 446 368 workers in 2010. This number consists of mainly foreigners of about 69% and locals of about 31%. The small number of local participation indicates their lack of interest to work in the industry and this urged the industry to resort to employing foreigners. Foreign workers worked for various critical jobs which are labour intensive, particularly field jobs such as harvesting and collecting fruits, weeding work and other general work. Majority of them are Indonesians, in addition to other nationalities such as Bangladeshi, Thais, Myanmars, etc. The labour land ratio is 1:9.95 which means that one worker can cover about 10 ha. The study also shows that oil palm plantations in Sarawak and in Peninsular Malaysia appeared to face critical shortage of labour as compared to Sabah. As an ideal situation, the oil palm plantations as a whole would require a total of 493 512 workers for the 4.19 million hectares of planted areas under oil palm in 2010.

Keyword(s): LABOUR; HARVESTING; LABOUR LAND RATIO; OIL PALM PLANTATIONS-Malaysia

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Article Info

Vol 11 No.1 (2011) p28-41
A Study on the Malaysian Oil Palm Biomass Sector – Supply and Perception of Palm Oil Millers
Roslan Abas; Mohammad Fairuz Kamarudin; A Borhan A Nordin and Mohd Arif Simeh

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Abstract


A Study on the Malaysian Oil Palm Biomass Sector – Supply and Perception of Palm Oil Millers

From 379 palm oil mills in Malaysia that responded to the survey, about 30% or 120 of them were involved in utilising biomass [either empty fruit bunches (EFB) or palm oil mill effluent (POME)] by turning this biomass into EFB fibre, bio-fertiliser or biogas. Nevertheless, some of the millers who have not been involved in utilising biomass actually returned the EFB to plantation as mulching. Most of the millers agreed that policy related to biomass needs to be firm up. Environment sustainability is a concern of the millers. Study suggested that policy on biomass need to be provided as well as economic evaluation on biomass projects to the millers.

Keyword(s): OIL PALM; OIL PALM BIOMASS; PALM OIL MILLERS; EFB; POME; OIL PALM BIOMASS SECTOR-Malaysia; USES AND BY-PRODUCT UTILIZATIONS

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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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