Economic Climate Model on the Palm Production: Empirical Evidence for Malaysia and Indonesia

• Published in: Malaysian Journal of Consumer and Family Economics
• Main Author: Samsuddin N.S.; Aziz N.F.A.; Balachandran B.; Ali J.
• Format: Article
• Language: English
• Published: Malaysian Consumer and Family Economics Association 2024
• Online Access: https://www.scopus.com/inward/record.uri?eid=2-s2.0-85211100888&doi=10.60016%2fmajcafe.v33.17&partnerID=40&md5=2f058a53df2920fae67c8dea9f9442db

Rising temperatures and shifting precipitation patterns affect the growth and yields of oil palm trees, leading to reduced productivity and increased costs for producers. Climate change is expected to make the land less suitable for oil palm cultivation in many regions, including Malaysia and Indonesia, the world's largest palm producers. This study uses the Autocorrelation and Normality Test and Autoregressive Distributed Lag (ARDL) cointegration technique to examine how climate change impacted Fresh Fruit Bunch (FFB) yield-producing Malaysia and Indonesia from 1981 to 2021. The ARDL technique reveals that the influence of climate change on FFB is more significant in the short term compared to the long term for both countries. In Malaysia, all variables are statistically significant except for Minimum Temperature, which is shown to be statistically insignificant yet positively correlated. The highest temperature in Indonesia is an important characteristic that positively correlates with FFB. © 2024, Malaysian Consumer and Family Economics Association. All rights reserved.