Malaysian Palm Oil Industry Research Articles

Does farmer’s institution matter for sustainable certification? case in Indonesia and Malaysian oil palm smallholders

Abstract Smallholders are a crucial part of the Indonesian and Malaysian palm oil industry. However, both lack economies of scale ownership individually. Therefore, institutions have become a crucial aspect. Sustainable certification is one of the most relevant aspects of managing economies of scale. This study was conducted to analyse the institutional aspect of sustainable certification. Data were collected from 1080 smallholders in 18 districts in Indonesia and Malaysia. This data was then analysed through nine business model components, namely key resources, cost structure, revenue stream, value proposition, channel, customer segment, customer relationship, key partners, and key activities. Institutions were grouped into non-groups, non-economic groups, and economic groups of smallholders. The results show that economic groups appear to have the highest certification percentage. They receive higher prices from direct sales to the ramp or mills and better FFB quality. Non-economic groups are competitive in economies of scale, as 3 out of 4 types of group institutions are in merged forms. The non-grouped smallholders strengthen the needs of institutions for smallholders to be certified and enjoy the economic benefits through good partnerships, which could be improved by achieving economies of scale and reaping its benefits.

Macroeconomics Factors Affecting Net Exports of Oil Palm Industry in Malaysia

This quantitative study investigates the impact of oil palm production, oil palm pricing, inflation, and GDP growth rate on the net exports of Malaysia's oil palm industry. This research is aimed at analyzing how the net export of oil palm relates to certain macroeconomic variables. This study has employed multiple regression analysis through Ordinary Least Squares for 26 years of time series data from 1996 to 2020 in Malaysia. The findings from this study improve our understanding of the major factors contributing to net exports in the oil palm industry. Palm oil production, price, as well as GDP growth, drive net export of palm oil in Malaysia found during this research. An increase in production leads to the reduced amount of palm oil exported, all other things remaining constant. Conversely, inflation and GDP growth are major drivers behind the increased net export of palm oil.

Treatment of wastewater from oil palm industry in Malaysia using polyvinylidene fluoride-bentonite hollow fiber membranes via membrane distillation system

Membrane distillation (MD) is gaining increasing recognition within membrane-based processes for palm oil mill effluent (POME) treatment. This study aims to alter the physicochemical characteristics of polyvinylidene fluoride (PVDF) membranes through the incorporation of bentonite (B) at varying weight concentrations (ranging from 0.25 wt% to 1.0 wt%). Characterization was conducted to evaluate changes in morphology, thermal stability, surface characteristics and wetting properties of the resulting membranes. The resulting membranes were also tested using direct contact membrane distillation (DCMD) with POME as the feed solution, aiming to generate high-purity water. Results indicated that the PVDF-0.3B and PVDF-0.5B membranes achieved the highest water vapor flux. The finger-like structure and macrovoids present in these membranes aid in minimizing mass resistance during vapor transport and enhancing permeate flux. All membranes demonstrated exceptional performance in removing contaminants, eliminating total dissolved solids (TDS) and achieving over 99% rejection of chemical oxygen demand (COD), nitrate nitrogen (NN), color, and turbidity from the feed solution. The permeate water analysis showed that the PVDF-0.3B membrane had superior removal efficiency and met the standards set by the local Department of Environment (DOE). The PVDF-0.3B membrane was chosen as the preferred option because of its consistent flux and high removal efficiency. This study demonstrated that incorporating bentonite into PVDF membranes significantly enhanced their properties and performance for POME treatment.

THE ROLE OF EXTENDED VALUE CHAIN ACTIVITIES IN ENHANCING ECONOMIC VALUE ADDED PLANTATION COMPANIES IN MALAYSIA

The palm oil industry in Malaysia has faced issues of lower palm oil price and limited land area, and these issues have created a challenging environment for plantation companies to operate in. Plantation companies are constrained in maximizing their profits. Thus, this paper aims to examine the Economic Value Added (EVA) and the factors that influence the EVA of different value chain activities. The dynamic generalized method of moments (DGMM) estimators were adopted for the analysis and the focus was on the -40 Malaysian plantation companies that were listed in the Bursa Malaysia from 2010 to 2018. The results revealed that both downstream integrated activities, namely oleo-chemicals/biodiesel and refineries activities had a significant influence on the plantation companies’ EVA, with the coefficient value 1.12 and 0.09 respectively. Other factors such as the gross margin, crude palm oil price, and exchange rate also significantly influenced the plantation companies’ EVA. The empirical results which were based on the plantation companies’ EVA were influenced by different value chain activities as expected. The findings show that the downstream integrated activities like refineries, and oleo-chemicals/biodiesel activities have played a significant role in increasing the EVA of plantation companies.

THE EUROPEAN UNION DEFORESTATION-FREE REGULATION (EUDR): ASSESSING IMPACTS AND STRATEGIES FOR MALAYSIAN AND THE GLOBAL OIL PALM INDUSTRY

The European Union Deforestation Regulation (EUDR) is an EU initiative that limits deforestation and forest degradation caused by forestry and agricultural activities worldwide. The EUDR entered into force on 29 June 2023 and will generally apply on 30 December 2024 and 30 June 2025 for micro or small businesses. This study focused on exploring the probable impacts of the EUDR on the palm oil market and later specifically focused on the Malaysian palm oil industry. By integrating the findings from a PESTLE analysis, which evaluates the political, economic, social, technological, legal, and environmental factors that impact the global palm oil market, and a SWOT analysis, which categorises the strengths, weaknesses, opportunities, and threats of the Malaysian palm oil industry, this study delivers a holistic understanding of the challenges and opportunities brought forth by the EUDR. The findings showed that implementing the EUDR in the oil palm industry has wide-ranging consequences. The analysis sheds light on the multifaceted impacts of sustainability regulations on a crucial global commodity and offers valuable insights for policymakers, industry stakeholders, and researchers.

Assessing the Negative Impact of Palm Oil Industry in Malaysia through a Systemic Method

This research paper studies the life cycle assessment of palm oil production and the impact on the environment due to palm oil production. A life cycle assessment includes a life cycle inventory and a life cycle impact assessment. The life cycle inventory accounts for all the parameters of the milling process of palm oil production, such as kernels, shells, etc. The life cycle impact assessment includes all the impacts on the environment and human health, such as global warming, ecotoxicity, radiation, the ozone layer, and more. This research paper will also include the opportunity to overcome the impacts due to palm oil production.

Physicochemical characterisation and kinetic modelling of wet torrefied oil palm trunk in pyrolysis condition

AbstractOver 218 million tonnes of oil palm trunks (OPT) waste is produced annually by Malaysian oil palm industry, which can be converted to biofuels via wet torrefaction. This study assessed the fuel characteristics of wet torrefied OPT (WT‐OPT) using proximate analysis, higher heating value (HHV) analysis, Fourier transform infrared spectroscopy (FTIR), and scanning electron microscopy–energy dispersive X–ray spectroscopy (SEM–EDX). Increasing wet torrefaction temperature and residence time increased the fixed carbon content and HHV of OPT. SEM–EDX revealed the presence of microspheres of 5‐hydroxymethylfurfural (5‐HMF) in OPT wet torrefied at 180 and 220°C for 72 h, an intermediate compound that can contribute to the HHV enhancement in WT‐OPT. FTIR and EDX results revealed that higher temperature and residence time concentrate the carbon content of OPT. Wet torrefaction at 180°C for 72 h decreased the activation energy and pre‐exponential factor of OPT from 301.88 to 171.70 kJ mol−1 and from 4.43 × 1028 to 3.25 × 1012 s−1, respectively, during pyrolysis. The estimated thermodynamic parameters, particularly the change in entropy which generally decreased by more than 140 J mol−1 K−1, indicated increase in stability of certain WT‐OPT.

Analysis of Malaysia's Export Potential of Palm Oil and Its Products to RCEP Member Countries

This study explores the export potential of the Malaysian palm oil industry to RCEP (Regional Comprehensive Economic Partnership) member countries based on the regional economic framework. The panel data from 2018 to 2022 were analyzed using the Trade Gravity Model, RCA (Revealed Comparative Advantage), and TCI (Trade Complementarity Index) indices. The results categorize the fifteen RCEP member countries into three potential classes based on the type of potential. In addition, it was found that the trade complementarity of RCEP member countries showed a significant positive correlation with the export size of Malaysian palm oil and its products. The study provides insights into the trade pattern of palm oil in the region and provides a valuable reference for future trade policy formulation and industry development and provides a basis for research related to the sustainable development of the Malaysian palm oil industry.

A holistic mitigation model for net zero emissions in the palm oil industry

Achieving net zero emissions to ensure a sustainable future has become increasingly urgent in light of climate change. The palm oil industry in Malaysia plays a significant role in the country's economy but has faced criticism for its environmental impact, particularly in terms of sustainability and greenhouse gas emissions. While the government has implemented policies and initiatives to promote sustainable palm oil production and reduce emissions, there remains a need for a comprehensive and integrated mitigation strategy to help make an informed decision to improve the performance. To address the limitations of the current framework, this study proposes an Integrated Mitigation Strategy Model which incorporates established frameworks of Palm Oil Mill Carbon Accounting (POMCFA) and Sustainability Index (POMSI). This model has been developed based on the superstructure approach, considering a set of mitigation options to improve weak indicators identified through assessments. The selection of these options is informed by a theoretical review of existing literature on factor changes and their impact on emissions reduction. The model is further validated through case studies, ensuring its robustness and reliability. Based on the case study, it reveals that palm oil mill effluent, diesel consumption, and water consumption contribute the most to carbon dioxide equivalent emissions. In terms of sustainability scoring, the environmental aspect obtains the lowest scores compared to social and economic aspects. Weaknesses identified include dust concentration, palm oil mill effluent, and boiler emissions. Using the heuristics of factor changes equation, the mitigation model suggests implementing high-technology boilers as the optimal solution for these weaknesses. With the theoretical and empirical support behind the choice of variables, our model provides a valuable tool for decision-making in achieving net-zero emissions and sustainable palm oil production.

Trade Competitiveness and Sustainability Policies of Malaysian Palm Oil in the European Union: Strategic Responses by Stakeholders Agencies

The Malaysian palm oil industry is a significant contributor towards national development and economic growth. However, the industry has been facing rising tension to ensure sustainable development, as global demand for palm oil continue to grow in the coming years. The necessity for producing and trading sustainably produced palm oil is amplified with the European Union’s stringent requirement for importing responsibly sourced commodities into its market, with the aim to achieve climateneutral by 2050. The palm oil industry is also inundated with anti-palm oil campaigns and agendas, which emphasize allegations of unsustainable agricultural practices as large-scale plantations damage the natural ecosystem in producing countries. Collectively, these challenges could pose a formidable impact on the trade of palm oil between Malaysia and the European Union. Therefore, the article seeks to examine the strategic responses undertaken by Malaysian stakeholder agencies to address the regulations pertaining to sustainable production of palm oil. Using a qualitative approach, a total of ten sessions of in-depth interviews were held with expert informants in stakeholder agencies, both in Malaysia and the European Union. Among the key findings were the formulation and implementation of the National Agricommodity Policy, deployment of various missions to the European Union, implementation of Malaysian Sustainable Palm Oil (MSPO) certification as the national sustainability scheme, dissemination of accurate information on sustainable and certified palm oil, and continuous engagement through bilateral and multilateral platforms. Based on the findings, this study suggests that inclusive and transparent engagement must be conducted continuously. Constantly held dialogue sessions will help to promote better understanding and fruitful collaboration among stakeholder agencies in Malaysia and the European Union to balance environmental concerns with trade interests.

Sustainability risk management: Are Malaysian companies ready?

The sustainability issues resulting from Malaysian palm oil production have garnered much interest in the palm oil industry. Consequently, Malaysian palm oil industry is indirectly exposed to sustainability risks, including boycott and reputational and regulatory risks. Hence, the industry encounters intense pressure from numerous stakeholders to address sustainability issues. Prior studies propounded that sustainability risk management (SRM) could minimise the adverse impact of sustainability risks by addressing sustainability issues. Nevertheless, the implementation of sustainability risk management in Malaysia remains low as numerous companies are not ready for it. Drawing on contingency theory, the objective of this study is to investigate the influence of contextual factors that can influence companies' readiness in implementing sustainability risk management. Data was collected through the distribution of questionnaires between July and December 2020. A total of 407 questionnaires were distributed, with a response rate of 29 %. Resultantly, sustainability strategy, business size, top management support, and regulatory pressure positively and significantly influenced sustainability risk management implementation. The findings also expanded the current theoretical knowledge with valuable insights for policymakers regarding the factors influencing to companies’ readiness in implementing SRM.

The Economics of the Malaysian Palm Oil Industry and Its Biodiesel Potential

The Economics of the Malaysian Palm Oil Industry and Its Biodiesel Potential

The Initiative to Further Enhance Technology Adoption in the Malaysian Oil Palm Industry

The oil palm industry is facing highly severe labour shortages where most labourers involved in the plantation consist of foreign workers. The usage of manual labourers revealed several negative drawbacks which has caused lower productivity in the oil palm industry. Hence, the Malaysian Palm Oil Board (MPOB) has made continuous efforts to enhance the efficiency of oil palm plantations by providing assistance in mechanisation and engineering technologies. This covers from the early stage of oil palm cultivation such as land preparation, fertiliser deployment, fresh fruit bunch (FFB) harvesting, FFB evacuation and up to the clearing of old palm trees. This article aims to highlight the strategies of the Mechanisation and Automation Research Consortium of Oil Palm (MARCOP) through collaborative efforts and engagements with all relevant parties and agencies for the development of technical and economically viable mechanisation technologies to be adopted by the industry. The consortium's goal is to investigate mechanisation and automation technologies for oil palm plantations in order to increase productivity, with a particular emphasis on the operation of harvesting FFBs, and to reduce reliance on manual harvesters. Furthermore, the consortium provides a technology development fund to eligible applicants for the development of cost-effective and versatile FFB harvesting technologies.

Biogas Production from Palm Oil Mill Effluent at Low pH

The palm oil industry in Malaysia has aided our economy, but with any thriving industry comes the baggage of industrial waste. This paper focuses on palm oil mill effluent (POME), a waste product formed by palm oil milling operations. The objective of this paper is to evaluate the ability of POME to generate biogas through acid and heat pre-treatment methods. The feasibility of producing biogas at pH levels lower than 5 was investigated. The inoculum is effective microbe 1 (EM1), and the substrate is a liquid POME. Hydrochloric and phosphoric acid were used in this study, and the effect of low initial pH on biogas generation was investigated. The results show that POME alone produced the highest biogas volume (20.1 Nml). However, POME incubated with activated EM1 inoculant at low pH (3.74) generated consistent biogas during 57.75 hours of digestion. In conclusion, the EM1 is a good source of inoculum for POME treatment at low pH, with no pre-treatment required. The pre-treatment methods proposed in this study could have opened new doors for bio-renewable energy research, particularly in agricultural biomass, since substrate pre-treatment can enhance biogas production.

The influence of biofuel energy production on the exports of the palm oil industry in Malaysia: A panel GMM and robust standard error approach

In recent years, there has been a consistent and significant increase in the consumption of biofuels by countries across the globe. Numerous governments have implemented distinct quotas and objectives aimed at promoting and governing the augmented utilization of biofuels. The demand for biofuel is growing in European countries, which increases the export of biofuel energy in parent countries such as Malaysia. The Malaysian government has suggested receiving different sustainability certifications that are relevant to the biofuel industry. The Malaysian government has made it compulsory to attain environmental sustainability for oil-producing certification. The purpose of this article is to examine the role of biofuel energy production on the exports of the palm oil industry in Malaysia. This study uses the annual data of Malaysian palm oil exporters from 2009 to 2018 and employs the generalized method of moments (GMM) and the robust standard error methodologies. The findings showed that the production of palm oil plays a positive role in the exports of Malaysia’s palm oil industry. This study will serve as a guide for future research in this area and for the authorities when formulating policies regarding exports. It is recommended that these authorities should put extra emphasis on the productivity of the palm oil industry to further enhance Malaysia’s exports of biofuel, and the government needs to implement regulations to protect the environment.

An industry 4.0 adoption in the circular economy application hierarchical model: driver, enable and barrier aspects

PurposeThis paper aims to contribute significantly to the empirical investigations on adopting Industry 4.0–circular economy in the Malaysian palm oil industry. The paper also aims to theorise and empirically assess a comprehensive model incorporating three aspects and 51 criteria.Design/methodology/approachA two-stage methodology is proposed using the fuzzy Delphi method and the fuzzy-based analytical network process. Twenty-seven criteria on adoptability of industry 4.0–circular economy were selected for the first-stage methodology, followed by identifying each criteria's intersection with the overall objectives.FindingsThe findings indicate that financial constraints, the lack of a collaborative I4.0–CE model, laws and policy, low management support and the training of dedicated employers in I4.0–CE-application are the top five criteria requiring critical attention from the POI.Practical implicationsThe overall sustainability advantages of the POI are identified and discussed in depth to establish criteria for industry 4.0–circular economy applications.Originality/valueThis study fills the previous research gap by theoretically explaining POI's industry 4.0 adoption–circular economy from the perspective of two underpinning theories. Due to the pressure towards sustainability, the industry must be ready to adopt industry 4.0–circular economy applications, and resources must be managed appropriately and effectively by sharing and integrating. Advanced industry 4.0 technologies and pragmatic practices such as a circular economy are needed to achieve optimal sustainable development while retaining commercial success.

Issues of Human Resource in Malaysian Palm Oil Industry

Issues of Human Resource in Malaysian Palm Oil Industry

EFFECTS OF EXTENDED VALUE CHAIN ACTIVITIES ON PROFIT EFFICIENCY IN MALAYSIAN PLANTATION COMPANIES

The palm oil industry in Malaysia is the main driver of Malaysia’s agricultural sector due to its significant contribution. High demandand attractive earnings of palm oil have attracted high participation from plantation companies in this industry. Therefore, this studyaimed to assess the level of profit efficiency of plantation companies involved in different value chain activities, as well as the factors that influence the profit efficiency of these plantation companies. A total of 40 Malaysian plantation companies listed in Bursa Malaysia from 2000 to 2018 with different value chain activities were examined using panel data. The evaluation of profit efficiency was based on data analysis, which included working capital costs, labour costs, and property, plant, and equipment (PP&E) costs that affect the plantation companies’ profit function. The parametric approach, also known as Stochastic Frontier Analysis (SFA), was used to assessthe profit efficiency of these plantation companies empirically. The results revealed that the average profit efficiency of 40 plantationcompanies was 60.3 percent, implying that an estimated 39.7 percent of profit was lost due to a combination of technical inefficiencies and allocative inefficiencies in plantation companies. Other findings were based on value chain activity categories (pure upstream plantation companies and downstream integrated plantation companies), whereby downstream integrated plantation companies had the highest profit efficiency (76.6%) when compared to the pure upstream plantation companies (54.2%). As a result, the study showed that plantation companies engaged in extended value chain activities were more profit efficient than plantation companies that did not extend their value chain activities (referring to pure upstream plantation companies).

Assessing Forced Labor and Standards in Malaysian Palm Oil Industry

The Malaysian palm oil industry has been subject to criticism for its unsustainable practices and the prevalence of forced labour. To address these concerns, Malaysia has implemented the National Action Plan on Forced Labour (NAPFL) in accordance with international standards. This study evaluates the implementation of NAPFL and international standards in the Malaysian palm oil industry through a literature review. The findings suggest that although progress has been made, there are still gaps in compliance within the industry. In particular, the issue of labour in smallholder palm oil plantations requires a community-based management approach, whereby smallholders can work together to enhance efficiency, productivity, and resource utilization while addressing common challenges. This approach may be supported by training and education, infrastructure development, financial and credit support, technology adoption, and cooperative farming. To comply with the Roundtable on Sustainable Palm Oil (RSPO) labour requirements and attract workers, this study recommends offering competitive wages, providing decent working conditions, implementing fair labour policies, investing in worker training, engaging with the local community, promoting sustainability, and collaborating with local employment agencies. These measures can help address the challenges of recruitment and retention of labour in the industry. The study underscores the significance of addressing these gaps in order to promote sustainable practices and prevent forced labour in the Malaysian palm oil industry.

Promoting Compliance with Sustainability Standards in Malaysian Palm Oil Industry through a Collection Centre Model

This paper examines the development of a collection centre model for smallholders in the Malaysian palm oil industry. The model aims to ensure compliance with sustainability standards and improve the quality of palm oil production. The model involves several parties, including smallholders, contractors, collection centres, and mills. The requirements for compliance with the model are outlined, with an emphasis on labour regulations, traceability, and pre-grading of fresh fruit bunches. The Malaysian Palm Oil Board (MPOB) plays a crucial role in regulating the industry and issuing licenses for various activities. Several studies have been conducted on the environmental, financial, and innovative aspects of implementing no-deforestation, no-peat, and no-exploitation (NDPE) policies in the industry. The findings suggest that environmental performance and innovation are key drivers of economic value creation that promote NDPE policies. Attitude and awareness also play a significant role in supporting NDPE and engaging with ecopreneurial businesses. Increased awareness of sustainability has a positive effect on NDPE implementation but may also increase costs. Finally, the impact of palm oil on health, social and economic aspects, environment, and biodiversity has been reviewed in the Malaysian context. The collection centre model is a crucial step in ensuring compliance with sustainability standards and improving the quality of palm oil production. Further research is needed to explore the potential of this model for enhancing the sustainability of the palm oil industry.