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LIST OF ARTICLES

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Article Info

Vol 10 No.2 (2010) p1-16
India’s Oils and Fats Policy: Production of Oilseeds towards Self-sustaining Level
Punia MS

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Abstract


India’s Oils and Fats Policy: Production of Oilseeds towards Self-sustaining Level

India is one of the largest producers of oilseeds in the world with a wide range of oilseed crops grown in different climatic zones. India accounts for an estimated production of about 28 million tonnes of nine cultivated oilseeds during the year 2007/2008, contributing about 6%-7% of the
world’s oilseed production. Domestic vegetable oil production is about 8.2 million tonnes, which is not sufficient to meet local requirements because domestic consumption of edible oils is about 12.5 million tonnes. The deficit is met through imports, mainly refined, bleached and deodorized (RBD) palm oil from Malaysia and Indonesia. The surge in edible oil consumption is due to the increased purchasing power of the middle class, and the removal of the import duty. India has been the biggest driver of consumption growth this year. After the removal of import duty, we can state that the Indian vegetable oil market has integrated with the world market. Vegetable oil imports increased sharply due to a fall in prices of edible oils worldwide, while the zero import duty has encouraged the vegetable oil importers. Importers and traders imported oils in large quantity in anticipation that the government may re-impose the import duty at about 20% from zero percent, perhaps building up stocks with a view to making quick profits. Groundnut, rapeseed/mustard, sesame, safflower, linseed, niger and castor are the major traditionally cultivated oilseeds. Soyabean and sunflower have also assumed importance in recent years. Coconut is the most important amongst the plantation crops. Efforts are being made to grow oil palm in some of the states. Among the non-conventional oils, rice bran oil and cottonseed oil are the most important. In addition, oilseeds of tree and forest origin, which grow mostly in tribal inhabited areas, are also a significant source of vegetable oils.

Keyword(s): OILSEEDS; OILS AND FATS INDUSTRY-India; IMPORT DUTY; SELF-SUSTAINING

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Article Info

Vol 10 No.1 (2010) p35-42
An Analysis of Indonesia’s Palm Oil Position in the World Market: A Two-stage Demand Approach
Amzul Rifin

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Abstract


An Analysis of Indonesia’s Palm Oil Position in the World Market: A Two-stage Demand Approach

Indonesia and Malaysia are the major producers of palm oil in the world. Together they contribute almost 87% of the world production in 2007, while in the export market, they contribute 91% of the world palm oil export. This article analyses Indonesia’s palm oil position in the world market. A two-stage demand equation was constructed. The first equation analysed the world demand without considering the source of the product. Meanwhile, the second equation considered the source of the product using the almost ideal demand system (AIDS) approach. Considering the stationarity of the data, the error correction mechanism (ECM) was employed. The result shows that the increase in the world demand for palm oil is mostly contributed by the increase in world income. In addition, palm oil products from Indonesia and Malaysia are complementary to each other rather than competing.
Therefore, both countries should co-operate in order to increase the world demand for palm oil in the future.

Keyword(s): PALM OIL INDUSTRY-Indonesia; WORLD MARKET; TWO-STAGE DEMAND EQUATION

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Article Info

Vol 10 No.1 (2010) p26-34
Effective Exchange Rate (EER) Effects on Exports of Oil Palm Products to Selected Markets
Ahmad Borhan A Nordin

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Abstract


Effective Exchange Rate (EER) Effects on Exports of Oil Palm Products to Selected Markets

The exchange rate is an important economic variable that influences the sale and purchase of agricultural commodities that are internationally and domestically traded. The study explores the relationship of an effective exchange rate for Malaysia and major importing countries on the export volume of various oil palm products. The result indicates evidence of a relationship between the Malaysian exchange rate and the export of crude palm oil, palm kernel expeller and palm-based finished products. Moreover, the relationship also exists for processed palm oil, processed palm kernel oil and oleochemical products to China, and for processed palm oil to India. However, there is no relationship between the exchange rate of European Union and the export of Malaysian oil palm products to that region.

Keyword(s): OIL PALM PRODUCTS; EFFECTIVE EXCHANGE RATE (EER)

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Article Info

Vol 10 No.1 (2010) p14-25
A Study on the Perceptions of the Supervised Fertilizer Cluster (KBT) Members in the KBT Programme
Roslan Abas ; Mohd Arif Simeh; Ramli Abdullah and Adzmi Hassan

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Abstract


A Study on the Perceptions of the Supervised Fertilizer Cluster (KBT) Members in the KBT Programme

The purpose of this study is to gauge the perceptions of the supervised fertilizer cluster (KBT) members on the KBT programme that was launched six years ago by MPOB. A total of 1508 questionnaires were distributed which comprised 64 questionnaires for oil palm millers, 361 for dealers and 1083 for smallholders. To measure the perceptions, respondents were asked to indicate their level of agreement to various statements related to KBT. Their perceptions were gauged using a fivepoint Likert scale and a reliability test was applied using Cronbach’s alpha. To ensure statements were correctly grouped, factor analysis was applied on the responses from the smallholder sector. The millers and dealers perceived that the smallholders supplied quality fresh fruit bunches (FFB), that they had become more knowledgeable, and that they consistently supplied FFB to the mills and the dealers. Nevertheless, the millers and dealers did not perceive any increase in FFB yield and in fertilizer application as a result of the KBT programme. From the smallholders’ perceptions, the KBT programme had increased their knowledge in field management, fertilizer application, diseases control, the FFB pricing mechanism and also in the functions of MPOB. The programme was able to increase FFB yield and their monthly income. The study concluded that the KBT programme had increased the quality of FFB, improved the understanding of the functions of MPOB and had increased technical knowledge. However, the millers and the dealers observed that the KBT programme was unable to cause an increase in the FFB yield produced by the smallholders.

Keyword(s): SUPERVISED FERTILIZER CLUSTER (KBT); PERCEPTIONS STUDY

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Article Info

Vol 10 No.1 (2010) p1-13
Lessons Learned from Sustaining Remunerative Palm Oil Prices – The Malaysian Experience
Mohd Basri Wahid , Ramli Abdullah and Faizah Mohd Shariff

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Abstract


Lessons Learned from Sustaining Remunerative Palm Oil Prices – The Malaysian Experience

The volatility of the crude palm oil (CPO) prices over the increasing long-term trend in the past has created instability in the earnings for the country and the returns for the industry. The volatility has been caused by the fundamentals – supply and demand factors. Despite this fact, it is important for us to sustain palm oil price at high levels in order to have good returns. It was observed that prior to sustaining high prices, the market was usually bearish with high stock levels. Strategic measures are required to ensure that palm oil stocks are well managed. In this regard, certain measures are undertaken under the stock management programme by the government, including CPO burning as biofuel for power generation, biodiesel usage in the country (called Bx) and replanting programmes which are generally aimed at reducing the stock level in the country. The swift proactive action undertaken by the government should be lauded as it does provide some respite to the palm oil industry with prices firming up and sustained at high levels.

Keyword(s): CPO PRICES; PRICE VOLATILITY; SUPPLY AND DEMAND; STOCK LEVELS ; STOCK MANAGEMENT PROGRAMME

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Article Info

Vol 9 No.2 (2009) p31-40
The Impact of Petroleum Prices on Vegetable Oils Prices: Evidence from Co-integration Tests
Amna Awad Abdel Hameed and Fatimah Mohamed Arshad

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Abstract


The Impact of Petroleum Prices on Vegetable Oils Prices: Evidence from Co-integration Tests

The prices of petroleum and vegetable oils appear to be moving in tandem, a trend which was not observed before. This study seeks to investigate the long-term relationship between the prices of crude oil and selected vegetable oils. To that end, the bivariate co-integration approach using the Engle-Granger two-stage estimation procedure was applied. The study utilized monthly data over the period of January 1983 through March 2008. The results provide strong evidence of a long-run relationship between the two product prices.

Keyword(s): VEGETABLE OIL PRICES; PETROLEUM PRICES; RELATIONSHIP

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Article Info

Vol 9 No.2 (2009) p23-30
The Challenges Facing Palm Oil in the 21st Century
James Fry

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Abstract


The Challenges Facing Palm Oil in the 21st Century

The palm oil sector is facing short-run as well as long-run challenges. The short-run challenges focus on the ability of the sector to counter the economic cycle, whereas the long-run challenges are associated with fundamental issues pertinent to the sector. Both short-run and long-run challenges are products of biological factors of the oil palm and its products, as well as the behaviour of substitute oils, vegetable and/or mineral. The Malaysian palm oil sector has little control over the economic cycle as the cyclical behaviour depends heavily on other substitutes used as vegetable oils or biofuels. The long-run challenges of the sector are the slower rate of improvement in oil palm yields than other oilseeds, low labour productivity mostly due to problems in the mechanization of the harvesting operation, functional obstacles to palm oil usage in temperate countries due to its lipid composition, and the non-tariff barriers against palm oil by the importing nations, particularly the European Union (EU) and USA. Some possible solutions are proposed.

Keyword(s): PALM OIL INDUSTRY; CHALLENGES; ECONOMIC CYCLE; BIOLOGICAL FACTORS

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Article Info

Vol 9 No.2 (2009) p13-22
Networking and Innovation in the Malaysian Palm Oil Industry: Past,Present and Future
Susan Martin

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Abstract


Networking and Innovation in the Malaysian Palm Oil Industry: Past,Present and Future

This article encourages leaders in the oil palm and palm oil industry to think deeply about networking, and to form both informal and formal networking groups so that more innovation can be achieved. It introduces ideas from a range of leading strategic management theorists about the links between three main kinds of networking and three corresponding stages of the process of innovation. Different kinds of networking groups are helpful at different stages of the innovation process. Open and informal social networking within ‘creative networks’ and ‘transformation networks’ supports the development of radically new technologies and new ways of thinking about how to apply them to counter the challenges faced by businesses in a fast-changing global economy. In contrast, once firms reach the final stage of creating new products and markets based on groundbreaking technologies, it makes sense to share ideas less freely. More secretive and closed ‘process networks’, in which the partners are bound by formal contracts, tend to be useful at this stage.
The argument is supported by practical examples from the Malaysian palm oil industry which has a long and successful record of both networking and innovation. The article concludes with recommendations for applying these ideas to a range of challenges currently faced by the industry. Different challenges require different approaches, so managers will need to engage in both co-operative and competitive behaviour at the same time. This can create uncomfortable tension between the need to share technical information to solve problems, and the need to keep commercial secrets. Such tension can be managed more easily when it is clearly understood which kind of networking is needed for each of the various challenges to be dealt with.

Keyword(s): PALM OIL INDUSTRY-Malaysia; NETWORKING; INNOVATIONS; CHALLENGES

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Article Info

Vol 9 No.2 (2009) p1-12
Production Cost of Palm Oil in Malaysia
Mohd Basri Wahid and Mohd Arif Simeh

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Abstract


Production Cost of Palm Oil in Malaysia

The Malaysian oil palm industry is facing rising production cost which is partly due to a stagnation in productivity. This affects business profitability, especially during those times when prices of palm oil are low. A low replanting rate has contributed to an age profile featuring the existence of more old palms which are less productive. There will be larger areas of old palms in the near term if the current low replanting rate continues, and will result in pushing production cost to a higher level.
The article provides an overview of the need to monitor production cost dynamics to mitigate further cost increases. In particular, these include, among others, the prospects of using clonal materials during replanting, addressing the skyrocketing cost of fertilizer application, the approach towards integrated pest and disease management, and the prospects of precision agriculture, good agricultural practices, etc.

Keyword(s): PALM OIL; PRODUCTION COST; REPLANTING; CLONAL MATERIALS; FERTIZERS

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Article Info

Vol 9 No.1 (2009) p29-36
An Overview of Malaysian Palm Oil Market Share in Selected Markets
Mohd Arif Simeh and Mohammad Fairuz Kamarudin

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Abstract


An Overview of Malaysian Palm Oil Market Share in Selected Markets

Palm oil is the leading edible oil traded in the world market. Both Malaysia and Indonesia are the world’s largest exporters of palm oil, commanding more than three-quarters of the world market. In 2007, these countries contributed 83.5% of the production and 89.6% of the world trade in palm oil. Malaysia herself accounted for 47.9% of the production and 57.5% of the trade. However, over the years, Malaysia has been losing her market share to her closest rival, Indonesia. This article attempts to provide an overview of Malaysia’s market share of palm oil in five major markets compared to Indonesia. Apart from describing the share in the various markets in absolute terms, an index was also used as a bench-mark to overview the trend in real terms.

Keyword(s): PALM OIL; PALM OIL-Market Share; MAJOR MARKETS; PALM OIL INDUSTRY-Malaysia

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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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