The impact of palm oil prices, biodiesel demand and industrial development on the food prices in Malaysia

Thurai Murugan, Nathan (2025) The impact of palm oil prices, biodiesel demand and industrial development on the food prices in Malaysia. PhD thesis, UTAR.

PDF Download (3092Kb)

Abstract

The palm oil industry plays a critical role in Malaysia's food and fuel production, significantly contributing to the country's economy. However, the industry's impact on food prices is complex and multifaceted. This is mainly due to the diversification of palm oil to cooking oil and biodiesel production. Despite the growing relevance of biodiesel in Malaysia, the structural relationship between palm oil prices, biodiesel demand, industrial development, and food prices remains insufficiently examined. This study investigates the intricate relationship between biofuel demand, palm oil prices, industrial growth, other control variables, and food prices in Malaysia, with the primary objective of assessing how these factors collectively influence food prices in the country. Employing a quantitative approach, the study utilizes ARDL and Toda-Yamamoto methods to identify short- and long-term relationships, and causality among these variables. The asymmetric linear ARDL model is used to investigate the asymmetric effect. Furthermore, the study employs the impulse response function to understand how the system reacts to variable changes and the forecast error variance decomposition to gauge the strength of shocks in the overall model. Data from January 2013 to May 2022 is used for analysis. The major findings of this research reveal that crude oil prices, palm oil prices, biodiesel demand, and industrial iv growth positively impact the food price in Malaysia, and the exchange rate has a negative impact, as expected. These findings align with existing literature and theories, underlining the significance of a well-balanced approach to managing palm oil prices, biodiesel demand, industrial growth, and food prices in Malaysia. The study highlights the necessity for integrated policies harmonising these crucial sectors, urging policymakers to evaluate potential trade-offs and synergies among different policy objectives. The key emphasis is prioritizing sustainability and food affordability in Malaysia's economy, alternative energy sector, and agricultural landscape. Keywords: Biodiesel, Palm oil, Industrial Growth, Malaysia, ARDL, Bioenergy Subject Area(s): TD169-171.8 Environmental protection TD172-193.5 Environmental pollution TD194-195 Environmental effects of industries and plants S589.75-589.76 Agriculture and th

Actions (login required)