Palm oil is currently representing one third of the vegetable oil market in the world. An edible vegetable oil used in a wide variety of products ranging from food items to cosmetics and biofuel. The growth of palm oil has largely been driven by the consumption in the emerging markets especially in India and China due to rising populations and standards of living, and demand for biofuels. Malaysia is one of the largest palm oil producers and exporters in the world. Malaysia currently accounts for 33 % (2014) of world palm oil production and 44% of world exports. Palm oil is one of the key commodities contribute 5.1% (2015) of the total Malaysia export. Top three importers of Malaysia palm oil are India, China and Europe Union which accounts …show more content…
Below are some of the key challenges identified: (a). International palm oil prices fluctuation The palm oil price is determined by the supply and demand of international market. The crude palm oil (CPO) price is highly volatile and cyclical similar to others commodities in market. Figure 4 showed the average CPO price as compared to soybean and rapeseed oil. Within 10 years periods (2006 to 2015), the CPO price can be fluctuated as big as USD648 per tonne. There are number of factors affecting the global price of CPO including: • global production and stock level of CPO and others substitute oils • global consumption level of CPO and others substitute oils • price of others substitute oils • foreign exchange rate • import and export duties and others taxes A significant and prolong declination in the price of CPO and palm oil based products would have an adverse effect to the profitability and operation of the enterprise in Malaysia Figure 4: Average price of selected oils & …show more content…
Competition from substitute oils The palm oil industry is facing stiff competition from others substitute oil like sunflower oil, canola oil, rapeseed oil, soy bean etc which are substituted of palm oil. Any reduction in price of substitute oils in global market might lead to consumers to increase the use of the edible oils to replace palm oil, which in turn could affect the demand of CPO and reclining CPO price in the international market. (d). Weather condition, and other factors affecting production and supply of palm oil Due to the El Nino weather phenomenon on year 2015, which brings drought to southeast Asia, the palm oil supply may be impacted due to lower rainfall especially in Malaysia and Indonesia. The lower rainfall coupled with the haze issue in the region (caused by forest fires at Sumatra and Kalimantan) will resulted in weaker palm oil yields and curb CPO output this year (2016). (e). Change of consumer
Rifin, A. (2010). The Effect of Export Tax on Indonesia’s Crude Palm Oil (CPO) Export Competitiveness. ASEAN Economic Bulletin, 27(2), 173–84.
For Piura, price changes in cowpea, maize, sheep and goat meat were considered. In Campo Verde, the analysis focused on production of cassava, rice, maize, plantain, palm oil, cacao and cattle meat. These scenarios were employed in order to see what happens if the price increased or decreased. For the analysis, five levels of the factor (price change) were considered 0.5, 0.7, 1, 1.3 and 1.5.
In 2004, crude oil producers around the world expected a 1.5% growth in the world’s demand for crude oil. The actual growth rate was more than double the projections at 3.3%. This growth was due to rapidly industrializing of foreign countries such as, China and India. Therefore the lack of crude oil affected the supply of gasoline to consumers at the pump.
Caterpillar Inc. also faces the risk of its cash flow and earnings being affected by fluctuations in the exchange rates of currency, commodity prices, and interest rates. To control for this, the company’s Risk Management Policy ensures prudent management of interest rates, commodity prices, and exchange rates of foreign currency by allowing the use of derivative financial instruments. According to the policy, the derivative financial instruments are not supposed to be used for the purpose of speculation. In its pricing strategy, Caterpillar Inc. faces the risk of difficult shipping of its products. This risk can be encountered by offering its products on instalments and lease to its loyal customers (Caterpillar, Inc. (CAT), 2011).
In Thailand, fruit bundles have to be transported from the plantation to the mills and refineries, which are located in Krabi province. The Thailand government is using palm oil biodiesel to become more sustainable. They are trying to reduce the dependence on import and to improve energy security in the country. After analyzing the life cycle production of methyl ester, it was found that the three major energy consumptions is transportation, fertilizer, and methanol. There should be a reduction in the amount of fertilizer. Biodiesel should be used instead of diesel and fossil fuels, which are often used, for a more environmental friendly way. There should be non-fossil fuels to produce methanol. There should be efficient utilization of co-products, including fibers and shells to improve overall energy output (Pleanjai and
Still, there is no permanence in the market price hike above the natural price caused by demand however abundant demand can be. The value will always depend on the expenses of its production, which includes profits to producers. Therefore, the factors that change permanent price in the expenses of production, and their relationship with demand are prime subjects of study.
... its prices (Trefis Team, 2013). Moreover, petroleum price have a significant impact on its gross margin, as petroleum is one of a raw material of apparel product. In the past few years, the company had to face with the high oil price because of global economic that decreased its gross margin (Trefis Team, 2014).
Introduction Palm oil is considered an essential ingredient for the production of foods and other products in which human use. The Orangutan Project (2015) states that ‘palm oil is derived from the fruit of the oil palm tree’, and the ‘palm oil plantations are the main driver for deforestation in Indonesia’. The harvest of the palm trees for the production of palm oil affects the ecosystem as it can affect the environment. This investigation highlights the advantages of the palm fruit providing nutrients, it is essential for the production of products, and this production being that palm oil can reduce poverty. The negatives of how the production of palm oil negatively affects the environment, the habitat of the animals, and social consequences such as the loss of income.
World Growth, 2011. The Economic Benefit of Palm Oil to Indonesia, Palm Oil Green Development Campaign, 1-27
Many companies have turned to sustainable palm oil, palm oil that is produced on plantations that reuse the land for their agricultural purposes, thus supplying more palm oil without the destruction of natural forests. Some choose to boycott palm oil entirely, but this alternative will not significantly change the demand for palm oil. Vegetable oil is used abundantly and oil palm trees are the quickest producing oil crops, concluding them necessary to satisfy the demand for edible oils. Not only is palm oil versatile for its uses and quick to produce, but it is a major component to the economy in Indonesia and Malaysia. Many people living in these countries struggle with poverty, and agriculture of sustainable palm oil is how a great deal of people support themselves and their families. If the boycott of palm oil were successful, a considerable population of people would be unemployed and
(see Figure 4, Zhao Guozhi, 2005) Up to now, as the world's largest importer of sesame seeds, Japan imports an amazing amount every year. It imports almost all its domestically consumed sesame. In 2013, the nation imported 141,573 tons. (Ippei Tanoue, 2014). Its trade accounted 25 percent for the world trade volume. Japan was importing sesame seeds, in the past, mainly from China, followed by Nigeria, Burkina Faso and Tanzania. Sudan and Burma were important souring country to Japan, but due to political instability, they produce and export less. To stabilize supply source, Japan is still looking for more stable supplier, although African countries now export more than half of their sesame seed to Japan. But it is still not enough. Many factors contribute to the variation in market price and supply of sesame. Like in China, who used to be a major exporter of sesame, but the tedious harvesting process, mostly done by hand, discouraged many farmers there from cultivating the crop. Numerous farms have now switched to growing more profitable vegetables. The reduction in domestic yield, along with rising domestic demand for sesame oil, has pushed up sesame
In the year 2005, Malaysia Airlines reported a loss of RM1.3 billion. Revenue for the financial period was up by 10.3% or RM826.9 million, compared to the same period for 2004, driven by a 10.2% growth in passenger traffic. International passenger revenue increased by RM457.6 million or 8.4%, to RM5.9 billion, while cargo revenue decreased by RM64.1 million or 4.2%, to RM1.5 billion. Costs increased by 28.8% or RM2.3 billion, amounting to a total of RM 10.3 billion, primarily due to escalating fuel prices. Other cost increases included staff costs, handling and landing fees, aircraft maintenance and overhaul charges, Widespread Assets Unbundling (WAU) charges and leases. (Malaysia Airlines ,wikipedia)
The article addresses the ecological impact of palm oil plantation in Indonesia and Malaysia. The author conducts a descriptive study of how the increased demand for palm has impacted biodiversity especially indigenous animals such as orangutan. In order to assess the impact of palm oil plantation on orangutan’s habitat, the author conducted a literature review. The author notes that the need to expand land for palm oil expansion has negatively impacted the composition and the size of orangutan’s habitat. These findings imply that sustainable environmental policies and techniques need to be developed and implemented so as to mitigate the negative impact of the palm oil plantation of orangutan’s habitat.
Packaged edible oil is a flourishing sector in India. Many players have entered into this sector due to its high growth potential. However there are a few who are leaders in this segment. Packaged edible oil accounts for 20% of total edible oil sector in India.
Some of the ways we try to combat Climate Change differes from region to region and culure to culture. One of the remedies that seems to be adapting all around the world is the use of biofuels instead of using fossil fuels. People believe that instead of digging up and using oil and petroleum, our best solution to combat greenhouse gases emitted by fossil fuels is to plant soybeans, sugar cane, palm oil and use that as a replacement. More cars are flex fuled, and use ethenol mixed with petroleum to lessen the use of oil since oil prices are only going to increase with the decreasing amount that is