Oil Palm Production in the 20th Century and Beyond: The Impact of Climate Change in Malaysia
DOI:
https://doi.org/10.18196/agraris.v10i1.33Keywords:
Oil palm, Climate change, Autoregressive distributed lags, ForecastingAbstract
The widespread concern about the devastating impact of climate change, especially in the agricultural sector, has become severe. This paper aims to explore and predict the impact of climate change on oil palm production using future climate conditions projected by the National Water Research Institute of Malaysia (NAHRIM). An error correction model (ECM) and autoregressive distributed lags (ARDL) cointegration approach were applied to assess the short-run and long-run impact of climate change on oil palm production. The estimated short-run coefficients disclosed that the oil palm own price and fertilizer use positively affected oil palm production in the second lag period, and increased acreage benefited oil palm production in the long run. The rainfall variable negatively affected the second lag period but positively rose oil palm production in the long run. The results of forecasting analysis revealed that SN1 (minimum climate variability), SN2 (maximum climate variability), and SN3 (average climate variability) would increase oil palm production by 5%, 1%, and 2%, respectively. Meanwhile, the oil palm yield would rise from 16.73 t/ha in 2020 to 16.89 t/ha in 2030 under SN1. However, with maximum rainfall, the yield would drop to 16.41 t/ha in 2030. Overall, climate change would likely reduce oil palm yield. This research could serve as empirical guides for policymakers and oil palm stakeholders in terms of practical and policy implications to adapt to climate change-related risks and uncertainties. The practical cover investments in technologies, such as developing drought-tolerant and early-maturity crop varieties, boosting water saving, and reducing evapotranspiration.
References
Ahmad, K., Chin, A., & Heng, T. (2012). Determinants of Agriculture Productivity Growth in Pakistan. International Research Journal of Finance and Economics, (95), 163–172.
Alam, M. M., Chamhuri, S., Murad, M. W., & Toriman, M. E. (2011). Impacts of Climate Change on Agriculture and Food Security Issues in Malaysia: An Empirical Study on Farm Level Assessment. World Applied Sciences Journal, 14(3), 431–442.
Alam, M. M., Siwar, C., Talib, B., & Toriman, M. E. bin. (2014). Impacts of Climatic Changes on Paddy Production in Malaysia: Micro Study on IADA at North West Selangor. Research Journal of Environmental and Earth Sciences, 6(5), 251–258. https://doi.org/10.19026/rjees.6.5767
Arshad, F. M., Shamsudin, M. N., Mohd, N. K., Abdulrahim, K., Mohd, Z. A., Ismail, M. M., & Sadique, S. F. A. (2012). Malaysian Agricultural Policy Analysis Model (MAgPA): User Guide. nstitut Kajian Dasar Pertanian dan Makanan (IKDPM), Universiti Putri Malaysia.
Chamhuri, S., Ahmed, F., & Begum, R. A. (2013). Climate change, agriculture and food security issues: Malaysian perspective. Journal of Food Agriculture and Environment, 11(2), 1118–1123.
Chizari, A., Mohamed, Z., Shamsudin, M. N., & Seng, K. W. K. (2017a). Economic Climate Model of the Oil Palm Production in Malaysia. International Journal of Horticulture, Agriculture and Food Science, 1(3), 27–32. https://doi.org/10.22161/ijhaf.1.3.6
Chizari, A., Mohamed, Z., Shamsudin, M. N., & Seng, K. W. K. (2017b). The Effects of Climate Change Phenomena on Cocoa Production in Malaysia. International Journal of Environment, Agriculture and Biotechnology, 2(5), 2599–2604. https://doi.org/10.22161/ijeab/2.5.42
Department of Statistics Malaysia Official Portal. (2022). Selected Agricultural Indicators, Malaysia, 2022. Retrieved December 13, 2022, from https://v1.dosm.gov.my/v1/index.php?r=column/cthemeByCat&cat=72&bul_id=b2M4QlpZamFlN2w5ZjFPRlY4TElSUT09&menu_id=Z0VTZGU1UHBUT1VJMFlpaXRRR0xpdz09
European Commission Report. (2019). Oil Palm is The Most Productive Vegetable Oil. Retrieved September 26, 2022, from https://goldenagri.com.sg/wp-content/uploads/2019/01/Oil-palm-is-the-most-productive-vegetable-oil.pdf
Ganjehkaviri, A., Mohd Jaafar, M., Hosseini, S., & Musthafa, A. (2016). Performance Evaluation of Palm Oil-Based Biodiesel Combustion in an Oil Burner. Energies, 9(2), 97. https://doi.org/10.3390/en9020097
Global Climate Change Impacts in the United States, Karl, T. R., Melillo, J. M., & Peterson, T. C. (2009). Global Climate Change Impacts in the United States. Cambridge: Cambridge University Press.
Haq, S., & Larsson, R. (2016). The dynamics of stock market returns and macroeconomic indicators: An ARDL approach with cointegration (KTH Industrial Engineering and Management, Sweden). KTH Industrial Engineering and Management, Sweden. Retrieved from https://www.diva-portal.org/smash/get/diva2:950080/FULLTEXT01.pdf
Jabatan Pengaliran dan Saliran Malaysia. (2018). Laporan Banjir tahunan bagi Tahun 2016/2017. Selangor. Retrieved from http://h2o.water.gov.my/man_hp1/Banjir_Tahun1617.pdf
Kamil, N. N., & Omar, F. (2017). The Impact of El Nino and La Nina on Malaysian Palm Oil Board. Oil Palm Bulletin, 74, 1–6.
Khor, J. F., Ling, L., Yusop, Z., Tan, W. L., Ling, J. L., & Soo, E. Z. X. (2021). Impact of El Niño on Oil Palm Yield in Malaysia. Agronomy, 11(11), 2189. https://doi.org/10.3390/agronomy11112189
Kushairi, A., Loh, S. K., Azman, I., Hishamuddin, E., Ong-Abdullah, M., Izuddin, Z. B. M. N., … Parveez, G. K. A. (2018). Oil palm economic performance in Malaysia and r&d progress in 2017. Journal of Oil Palm Research, 30(2), 163–195. https://doi.org/10.21894/jopr.2018.0030
Kwan, M. S., Tangang, F. T., & Juneng, L. (2013). Projected Changes of Future Climate Extremes in Malaysia. Sains Malaysiana, 42(8), 1051–1059.
Lam, M. K., Tan, K. T., Lee, K. T., & Mohamed, A. R. (2009). Malaysian palm oil: Surviving the food versus fuel dispute for a sustainable future. Renewable and Sustainable Energy Reviews, 13(6–7), 1456–1464. https://doi.org/10.1016/j.rser.2008.09.009
Malayasian Palm Oil Board. (2023). Overview of The Malaysian Oil Palm Industry 2022. Retrieved from https://bepi.mpob.gov.my/images/overview/Overview2022.pdf
Malaysian Meteorological Department. (2009). Climate Change Scenarios for Malaysia 2001-2099. Selangor. Retrieved from https://nanopdf.com/downloadFile/climate-change-scenarios-for-malaysia-2001-2099_pdf
Malaysian Palm Oil Promotion Council. (2005). Malaysian palm oil : a success story: Touching the lives and hearts of millions. Selangor: Malaysian Palm Oil Promotion Council.
Malaysian Palm Oil Promotion Council. (2020). Oil Palm Planted Area 2020. Retrieved from https://bepi.mpob.gov.my/images/area/2020/Area_summary.pdf
Narayan, P. K. (2005). The saving and investment nexus for China: evidence from cointegration tests. Applied Economics, 37(17), 1979–1990. https://doi.org/10.1080/00036840500278103
National Hydraulic Research Institute of Malaysia. (2006). Study of the Impact of Climate Change on the Hydrologic Regime and Water Resources of Peninsular Malaysia: Final Report. Selangor: National Hydraulic Research Institute of Malaysia.
Nkoro, E., & Uko, A. K. (2016). Autoregressive Distributed Lag (ARDL) cointegration technique: application and interpretation. Journal of Statistical and Econometric Methods, 5(4).
Omoniyi, L. G., & Olawale, A. N. (2015). An Application of ARDL Bounds Testing Procedure to the Estimation of Level Relationship between Excange Rate, Crude Oil Proce and Inflation Rat in Nigeria. International Journal of Statistics and Applications, 5(2), 81–90.
Parveez, G. K. A., Tarmizi, A. H. A., Sundram, S., Loh, S. K., Ong-Abdullah, M., Palam, K. D. P., … Idris, Z. (2021). Oil palm economic performance in Malaysia and R&D progress in 2020. Journal of Oil Palm Research, 33(2), 181–214. https://doi.org/10.21894/jopr.2021.0026
Paterson, R. R. M., & Lima, N. (2018). Climate change affecting oil palm agronomy, and oil palm cultivation increasing climate change, require amelioration. Ecology and Evolution, 8(1), 452–461. https://doi.org/10.1002/ece3.3610
Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289–326. https://doi.org/10.1002/jae.616
Raza, A., Razzaq, A., Mehmood, S., Zou, X., Zhang, X., Lv, Y., & Xu, J. (2019). Impact of Climate Change on Crops Adaptation and Strategies to Tackle Its Outcome: A Review. Plants, 8(2), 34. https://doi.org/10.3390/plants8020034
Sarkar, M. S. K., Begum, R. A., & Pereira, J. J. (2020). Impacts of climate change on oil palm production in Malaysia. Environmental Science and Pollution Research, 27, 9760–9770. https://doi.org/10.1007/s11356-020-07601-1
Shanmuganathan, S., & Narayanan, A. (2012). Modelling the climate change effects on Malaysia’s oil palm yield. 2012 IEEE Symposium on E-Learning, E-Management and E-Services, 1–6. IEEE. https://doi.org/10.1109/IS3e.2012.6414948
Shrestha, M. B., & Bhatta, G. R. (2018). Selecting appropriate methodological framework for time series data analysis. The Journal of Finance and Data Science, 4(2), 71–89. https://doi.org/10.1016/j.jfds.2017.11.001
Simeh, M. A. (2010). Impact of increases in fertilizer prices on long term-term economic vialibility of palm oil production. 2Oil Palm Bulletin, 60, 1–16.
Sing, C. C. (1992). The Effect of Season, Rainfall and Cycle on Oil Palm Yield in Malaysia. Elaeis, 4(1).
Thong, K., Goh, K., Leong, C., Nawi, C., & Yew, C. (1990). Yield trends of cocoa on inland soils of Peninsular Malaysia. Proceedings of the MCGC-Malaysia Cocoa Board Workshop in Cocoa Agricultural Research.
United Nations Development Programme China. (2020). Mapping the Palm Oil Value Chain: Opportunities for Sustainable Palm Oil in Indonesia and China. United Nations Development Programme China. Retrieved from https://www.undp.org/sites/g/files/zskgke326/files/migration/cn/Palm_oil_report_EN.pdf
United States Department of Agriculture. (2015). Malaysia: 2014/15 Palm Oil Production Affected by Flooding. Retrieved from https://ipad.fas.usda.gov/highlights/2015/03/Malaysia/Index.htm#:~:text=The government estimated that total,rain and flood-related problems.
Unjan, R., Nissapa, A., & Chiarawipa, R. (2017). Climatic considerations which support the choice between natural rubber and oil palm in Nakhon Si Thammarat, southern Thailand. Kasetsart Journal of Social Sciences, 38(3), 273–281. https://doi.org/10.1016/j.kjss.2016.07.006
Verma, R. (2007). Savings, Investment and Growth in India. South Asia Economic Journal, 8(1), 87–98. https://doi.org/10.1177/139156140600800105
Zainal, Z., Shamsudin, M. N., Mohamed, Z. A., & Adam, S. U. (2012). Economic Impact of Climate Change on the Malaysian Palm Oil Production. Trends in Applied Sciences Research, 7(10), 872–880. https://doi.org/10.3923/tasr.2012.872.880
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 AGRARIS: Journal of Agribusiness and Rural Development Research
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
