Price Stability for Sustainable Development of Palm Oil Industry in ASEAN and World Market: Challenges

Abstract: The price of palm oil fluctuates due to several global, economic, environmental, and political variables, and it is not stable for several reasons. Here are few of the primary causes: changes in supply and demand, governmental regulations, foreign trade, political unrest, difficulties in production, and so forth. Therefore, the research objective of the study is to examine the challenges and factors in price stability for sustainable development of the palm oil industry in ASEAN countries (Indonesia, Malaysia, Thailand) and major world markets (China, India). Panel data from 2014 to 2022 were used in the study. To determine the main factors impacting the palm oil price model, the study used a cross-sectional fixed effect model. Findings indicate that, except for the consumer price index, the price of palm oil is significantly correlated with production, consumption, and world palm oil price in short-term analysis; nevertheless, there is also a long-term correlation between the price and production and consumption. Results demonstrate that the production of palm oil requires a significant amount of both capital and labor, and that problems such as a lack of workers or unfavourable working conditions can interrupt production, impacting supply and driving up prices. Price increases may result from high demand without an accompanying rise in supply. By establishing strategic partnerships with nations to increase the number of palm oil-based products available in their domestic markets and to raise the profile of palm oil globally, producers of sustainable palm oil for the ASEAN and global markets can take a more active role in promoting and expanding the palm oil industry. Keywords: Palm Oil Price, Challenges, Panel Data Analysis, ASEAN, World Market