sustainaBility oF sustainaBle PalM oil: a MarKet integration analysis
Abstract: Crude Palm Oil (CPO)
is the biggest consumed vegetable oil in the world. The increase in CPO
production raises concern on the environmental impact even outside the
producing countries. As a response to this matter, the EU has made a
requirement to only import certifed CPO (CSPO). India and China, the two biggest
importers in the world, are less restrictive to the environmental issues, and
their demands are more influenced by CPO price levels. These countries are the
main export markets for Indonesia and Malaysia, the two biggest CPO exporters
in the world. This research using monthly price data from the Netherlands, Germany,
Italy, EU28, India, China, Indonesia and Malaysia. Market integrations are
tested with Cointegration Test, Vector Error Correction Model and Seemingly
Unrelated Regression. The results show that these markets are integrated, but
European countries are unlikely to lead the price movement. Therefore, the
concern on sustainable certifcation from the European countries still slowly
spreads to other main importers, resulting in low absorption of CSPO.
Keywords: market integration;
sustainable palm oil; seemingly unrelated regression; vector error correction
model
Author: Diana chalil
Journal Code: jppertaniangg160008