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LIST OF ARTICLES

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Tel: 603-8769 4928 Fax: 603-8925 4213 Email: palmoils@mpob.gov.my

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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Article Info

Vol 9 No.1 (2009) p20-28
Management of the Malaysian Oil Palm Supply Chain: The Role of FFB Dealers
Ayat K Ab Rahman; Ramli Abdullah; Mohd Arif Simeh and Faizah Mohd Shariff

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Abstract


Management of the Malaysian Oil Palm Supply Chain: The Role of FFB Dealers

The fresh fruit bunch (FFB) dealer sub-sector is part of the Malaysian palm oil supply chain. It is inter-related with other sub-sectors either directly or indirectly. It serves as a intermediary between the smallholders and the millers. FFB dealers need to be efficient so that the FFB sent to the mills within 24 hr after harvesting remain in good quality. Shortfalls may affect the efficiency of the other sectors as well as the whole industry. The study found that the dealers have found ways of making profits and have undergone several structural changes. Despite the challenges, there is still scope for their improvement.

Keyword(s): OIL PALM INDUSTRY-Malaysia; SUPPLY CHAIN; FFB DEALERS; CHANGES AND IMPROVEMENTS

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Article Info

Vol 9 No.1 (2009) p14-19
Recent Developments of Malaysian Palm Oil Stock Level
Ahmad Borhan A Nordin and Mohd Arif Simeh

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Abstract


Recent Developments of Malaysian Palm Oil Stock Level

The level of palm oil stock is a strong indicator of its price and it comprises crude palm oil and processed palm oil. In the past, the palm oil stock has for a long time hovered around 1 million tonnes, and this volume has become the psychological level below and above which prices tend to be bullish and bearish, respectively. The end stock mainly depends on the production and export of palm oil, while imports and local consumption play minor roles. Based on changes in the supply and demand factors, it was estimated that 1.8 million tonnes could be considered as the new level of palm oil stock for the Malaysian palm oil industry.

Keyword(s): PALM OIL INDUSTRY-Malaysia; STOCK LEVEL; PRICES; SUPPLY AND DEMAND

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Article Info

Vol 9 No.1 (2009) p1-13
Palm Oil: Nature’s Gift to Malaysia and Malaysia’s Gift to the World
Mohd Basri Wahid; Chan Kook Weng and Rubaah Masri

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Abstract


Palm Oil: Nature’s Gift to Malaysia and Malaysia’s Gift to the World

For Malaysia, oil palm is the golden crop that has helped to change the scenario of the Malaysia’s agriculture and the Malaysian economy. In 2007 at 4.17 million hectares, the oil palm performance is compared over the last 90 years from 1917 to 2007 and some projections are made over the next 100 years to 2107. The various phases undergone by the oil palm industry from the pioneering work with the determination to nurture the plant into a crop and to create a home for it in Malaysia, have been marked with several important milestones such as diversification from the over dependence on rubber in the 1950s and 1960s, strong support from well thought-out policies involving use of palm oil as food, fuel, fibre and feed in the 1970s and 1980s, through R&D move into processing and value-adding activities to improve the health and food safety aspects and finally in the 1990s and 2000s to tackle the environmental and sustainability development. The broadening of the scope and horizon for export of oil palm and its products into 11 areas of food, oleochemicals, energy, biomass, biotechnologically improved products, nutraceutical, pharmaceutical, farm machinery, research and advisory services, processing, livestock integration and feed production will strengthen the competitiveness of the Malaysian oil palm products that will take centre-stage in international oils and fats businesses. In so doing, the impact of such massive development of the oil palm has helped uplift the rural poverty, enhance social and economic life, and yet protect the very environmental and ecological bases on which the oil palm thrives. Truly the oil palm is a crop that nature gives to Malaysia and now it has evolved into Malaysia’s gift, thanks to continuous R&D with many innovations, to share the new discoveries on the uses of palm oil and its products with the whole world. In the future, the Malaysian oil palm industry will remain a major reliable supplier of vegetable oil for both food and non-food applications. It must be mentioned that the projections made here after deliberation are the views what the MPOB team members have wished for the industry. For a forecast of a hundred years, the reality will be dictated by events and the rate of progress of R&D.

Keyword(s): OIL PALM; GOLDEN CROP; MALAYSIAN ECONOMY; RESEARCH & DEVELOPMENT; OIL PALM INDUSTRY-Malaysia

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Article Info

Vol 8 No.2 (2008) p28-38
Chemical Weed Control in the Oil Palm Sector with Particular Reference to Smallholders and Nursery Operators
Faizah Mohd Shariff and Ayat K Ab Rahman

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Abstract


Chemical Weed Control in the Oil Palm Sector with Particular Reference to Smallholders and Nursery Operators

This article attempts to assess the impact to the oil palm smallholders and the nursery operators when there is a change from using paraquat to other kinds of weed killers in the oil palm and nursery areas. Surveys via face-to-face interviews with independent smallholders and 56 nursery operators were conducted. The study found that the impact of paraquat was insignificant among the smallholders, with only 0.65%, 1.30% and 0.32% having problems related to skin, nose bleeds and nails, respectively. The cost comparison of spraying herbicides in the smallholders’ areas revealed that RM 221/ha/yr was incurred when using paraquat while RM 365/ha/yr was spent with the use of Round-up. At the nursery, annual spraying using paraquat and Basta incurred costs of RM 492.74/ha and RM 763.44/ha, respectively. The study revealed significantly that both the smallholders and the nursery operators were knowledgeable about the danger and handling of herbicides. Paraquat was the most preferred herbicide because it neither reduced the productivity of the oil palms nor affected the growth of the oil palm seedlings. It was also claimed that the use of paraquat helped to improve the texture of the soil. This indirectly led to efficient uptake of fertilizers and hence increased productivity of the oil palms.

Keyword(s): OIL PALM; OIL PALM-Cultivation; WEED CONTROL; SMALLHOLDERS; NURSERY OPERATORS

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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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