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ABSTRACT |
Vision 2020 - The Palm
Oil Phenomenon
Predicting the future performance of an export oriented commodity like
palm oil is no easy task. The prediction has to take into account the
long run past performance, resource constraints and challenges faced
by the commodity at both the domestic and international fronts. This
paper attempts to overview the palm oil industry; what it was in the
past, its situation today and its likely development in the future.
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Supply Response of
Malaysian Palm Oil Producers: Impact of Interest Rate Variations
This paper examines the long run relationship between the supply of
Malaysian palm oil and its determinants using Johansen multivariate
cointegration analysis. The supply response of Malaysian oil palm
producers is investigated using annual data from 1967 to 2002. An
error correction model is proposed to investigate the short run response
of supply to its determinants. Supply of palm oil is postulated to be a
function of expected price of palm oil relative to the expected price of
rubber (the substitute crop); government expenditure, a proxy for
government policy; a time trend variable to represent technological
change or preference and interest rate to represent the cost of borrowing.
Previous studies have not included the interest rate variable. Naïve
expectations model is used to model price expectations. Structural
information, in particular, the gestation period for oil palms from first
planting is used in the specification of the long run relationship.
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Environmental Issues
in an Age of Regional Autonomy: The Case of Pollution in the Plantation
Sector of North Sumatra
Discussion of the agro-industry sector to date has largely neglected the
significant impact of Indonesia’s extensive plantation sector on the rural
environment. This article discusses this problem in North Sumatra, the
historical centre of Indonesian agro-industry, examining the underlying
factors leading to the failure of legal and economic instruments to control
agro-industrial and plantation activities before and during
decentralisation. It examines the reasons for the failure of bureaucratic
regulation, arguing that the underlying problems of political
accountability of state officials continue to undermine law enforcement.
As well as improving the accountability of state officials, a policy to
mitigate the large-scale pollution associated with the sector needs to be
better crafted to suit the characteristics of the industries concerned and
address the wider socio-economic realities within which the problems
are embedded and where any policy tool must be applied. The sector
can be profitable without having to harm the environment through both
self-motivated changes and government support.
Although the government of Indonesia has created a legislative
framework for pollution control, rubber factories and palm oil mills
across the country continue to generate large quantities of solid waste,
air and water pollution. A key factor behind this is that many institutions
and interpersonal relations are involved apart from the legislative
framework, and are often beyond the reach or even knowledge of the
policy makers and legislators (Eckersley, 1995).
While scholars and activists have widely addressed the problems of
deforestation, forest fire and haze associated with plantation expansion,
they have largely neglected the environmental issues of air pollution
and effluent in the rivers (Kantor Menteri Negara Lingkungan Hidup,
1998; IFFM/GTZ, 1998; Gonner, 1998; Gellert, 1998; Down to Earth,
1998; Casson, 2000; Alwy, 1998; WRM, 1998; Wakker, 1999). The
latter are major problems affecting the quality of life of local
communities living around crumb rubber factories (CRFs) and oil palm
mills (OPMs), and are crucial in the environmental context.
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Palm Kernel Cake Marketing:
Constraints and Prospects
Standardization or product specification is an important measure to
ensure that only high quality product reaches the market place. The
formation of palm kernel cake (PKC) trade specifications and the
requirements of quality testing plus regular inspections had assured
the quality of PKC was under control throughout the years. The
changing preferences by customers and the advancement of technology
validate the revision of such specifications. The study reviews the quality
performance of PKC within its trade specifications in the previous years
and the possibility of improving its quality to a higher level. Moreover,
it reveals the economic significance of elevating the quality of PKC
through innovative processing system that produces its raw materials
i.e. palm kernel.
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| Impact of Commercialization
of Biofuel on Prices of Related Commodities
This paper examines the use of vegetable oils and sugar for biofuel in
selected countries, as a price stabilization mechanism in the EU, USA
and Brazil. Two scenarios; one before and the other after the advent of
the biofuel programme were analysed for soyabean, rapeseed, sugar
and corn prices. Correlations between the price and production of biofuel
for the selected vegetable oils were high and showed positive relationship
after commercializing of the biofuel. This means that the biofuel
programme had improved the prices for the selected vegetable oils. The
index from the ARCH and GARCH models were much higher and the
linear trend of selected vegetable oil prices showed a downward trend
prior to commercialization. However, after their use as biofuel, the index
became much lower and the linear trend of selected vegetable oil prices
showed an upward trend. This means that, after commercializing the
biofuel, prices stabilized and slowly increased. The findings indicate
that the biofuel programme can remove excess production to new uses
and improve prices. Hence, it can be deduced that removal of palm oil
from the market and put to new uses (biofuel) could improve palm oil
price. Therefore, it is strongly suggested that Malaysia should
commercialize biofuel from palm oil.
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