Palm Oil Production in Malaysia: An Analytical Systems Model for Balancing Economic Prosperity, Forest Conservation and Social Welfare

Abstract

Since the late 1950's, the Malaysian human population has nearly quadrupled, increasing pressure on natural resource exploitation to meet domestic needs and to earn foreign exchange from exports. Global demand for Malaysian palm oil in particular had steeply increased since the mid-1970s and by 2013, the commodity was the leading foreign exchange earner. To fulfill and sustain this demand, the country's economy has steadily shifted bias towards production and associated value addition of palm oil products for export. However, as a consequence, many of Malaysia's natural tropical forests have been converted to palm oil farming resulting in loss of approximately 10,000 km² of forest cover over the past twenty-five years, and biodiversity has been displaced or lost. To provide a deeper insight into the interplay amongst key interrelated environmental and socio-economic variables, and a forecast of possible future balance, we used a systems dynamism modeling tool, STELLA R (structural thinking, experiential learning laboratory with animation), to simulate and project how Malaysia could achieve a medium-term sustainable balance or optimization between palm oil production and forest conservation without compromising on human social welfare. The model consisted of four main modules (environmental, economic, social development and human welfare) each with component parameters, and interconnected by input and output loops. Model calibrations, testing and pre-runs involved existing official 30-year time-series datasets. Subsequently, four scenarios: Environmental conservation; Economic growth under increased global palm oil demand; Economy decline under decreased palm oil demand; and Control condition with little or no change, were selected for simulated projections of future possibilities. Simulation results showed that scenarios and variable interactions that reduce environmental N. E. Otieno et al. 56damage would offer the best chance for optimizing the palm oil economy while also minimizing forest loss and promoting citizen social welfare.

A Review of the In-Field Transporting Machines Currently Used in Oil Palm Plantations in Malaysia

“…Vegetable oil plays an essential role in food consumption and economic growth, In this context, the increase in human consumption of expansion of economic growth of developing countries, leading to the increasing global demand for vegetable oils (Mahat, 2012). The accelerated expansion in oil palm cultivation led to a total production of 17,200 metric tons of crude palm oil in 2014 (Otieno et al, 2016).…”

A Comparative Study Between Univariate and Bivariate Time Series Models for Crude Palm Oil Industry in Peninsular Malaysia

“…Although many studies related to the crude palm oil industry were carried out, but forecasting was not considered in those studies. Some recent examples of the studies include the Life Cycle Assessment (LCA) (Andarani, Nugraha, Sawitri & Budiawan, 2018, Subramaniam et al, 2010and Vijaya, Ma, Choo & Sulaiman, 2008, an activity based costing method (Sembiring, Wahyuni, Sinaga & Silaban, 2018), a system dynamic tool called structural thinking, experiential learning laboratory with animation (STELLA) based on simulation (Otieno et al, 2016) and the Cobb-Douglas (C-D) production function that fulfilled the C-D assumptions (Norhidayu, Syazwani, Radzil, Amin & Balu, 2017) as well as the time series analysis method which included Johansen cointegration technique, error correction model and Granger causality tests (Asari et al, 2011). Since time series is a sequence of data points collected over time, the use of time series analyses is very crucial in order to obtain an understanding of the underlying forces and structure produced by the data, which would eventually be used in forecasting or monitoring (Farrelly, 2017).…”

Genetic Algorithms and Artificial Neural Networks for Optimization Palm Oil Production Models Based on Various Parameters

“…Particularly, a high percentage of the area is devoted to agriculture, and a large proportion of this area is used for oil palm cultivation. Currently, oil palm is planted in 5.23 million hectares, constituting 15.8% of the total land area and more than 70% of farmlands in the country (Otieno et al, 2016). Malaysia produces up to 19 million tons of oil palm, with the export of nearly 89% (Shanmuganathan et al,2014;USDA Foreign Agricultural Service, 2015).…”