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Factors Affecting the Indonesian Palm Oil Market in Food and Fuel Industry: Evidence from a Time Series Analysis

Author

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  • Deborah Bentivoglio

    (Department of Agricultural, Food and Environmental Sciences (D3A) Universit Politecnica delle Marche, Via Brecce Bianche, 60131 Ancona, Italy,)

  • Adele Finco

    (Department of Agricultural, Food and Environmental Sciences (D3A) Universit Politecnica delle Marche, Via Brecce Bianche, 60131 Ancona, Italy,)

  • Giorgia Bucci

    (Department of Agricultural, Food and Environmental Sciences (D3A) Universit Politecnica delle Marche, Via Brecce Bianche, 60131 Ancona, Italy.)

Abstract

Nowadays, the demand for palm oil has been increasing worldwide. The multipurpose use combined with a market price below makes palm oil an attractive product. Since 2006, Indonesia has been the biggest producer of palm oil in the world, replacing Malaysia as a chief producer. This study develops a simple theoretical model that integrates some of the factor that could influence the production of palm oil in Indonesia in order to establish the issue of cointegration and causality patterns. This analysis examined the relationships among Indonesian palm oil production, soybean oil price, area harvested for palm oil production in Malaysia and palm oil consumption. The finding shows that all variables positively and significantly affect Indonesian palm oil production. However, the ascent of the Indonesian palm oil industry is the result of a combination of several factors, some of which are relating to the palm oil plant itself, others to policy.

Suggested Citation

  • Deborah Bentivoglio & Adele Finco & Giorgia Bucci, 2018. "Factors Affecting the Indonesian Palm Oil Market in Food and Fuel Industry: Evidence from a Time Series Analysis," International Journal of Energy Economics and Policy, Econjournals, vol. 8(5), pages 49-57.
    • Handle: RePEc:eco:journ2:2018-05-7
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    References listed on IDEAS

    as
    1. Nik Muhammad Naziman Ab Rahman & Abdol Samad Nawi & Yusrina Hayati Nik Muhd Naziman, 2012. "The Price Discovery of the Malaysian Crude Palm Oil Futures Markets," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 2(4), pages 1-3.
    2. Banerjee, Anindya & Dolado, Juan J. & Galbraith, John W. & Hendry, David, 1993. "Co-integration, Error Correction, and the Econometric Analysis of Non-Stationary Data," OUP Catalogue, Oxford University Press, number 9780198288107.
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    More about this item

    Keywords

    Palm oil; Time series analysis; Indonesia;
    All these keywords.

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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