PERTANIKA JOURNAL OF SOCIAL SCIENCES AND HUMANITIES

Domestic palm oil consumption in Malaysia increased to about 3.37 million metric tons in 2022. This number is expected to increase further due to population growth and consumer preferences for palm oil cooking oil. However, in 2016, the government withdrew its subsidy on palm cooking oil, increasing its price by 48.9%. Recently, the government proposed to use a floating price for palm cooking oil. These changes have left direct and indirect impacts on food producers and consumers. Therefore, this paper examines the impact of an increase in the price of palm cooking oil on food producers (directly) and consumers (indirectly). This study applied the Leontief price modelling technique and simulated a scenario for the price changes in the production cost. The simulation results indicated that costs and prices changed. The results found that the most significant cost change came from restaurants, 52.0%, while other price changes were from oil palm (29.6%) and restaurants (17.4%). This study also used the profit index to calculate the profit food producers and services gained. Based on this scenario, food producers should revise their prices of goods and services since they still gain profit. It was recommended that the government revise the price of palm cooking oil by providing subsidies or incentives to the food producer or consumer. The fluctuation in palm oil prices impacts the price of palm cooking oil in the market. If the government does not revise cooking oil prices, it will affect food consumers and producers.

• Abdul Manan, A. F., Baharuddin, A., & Chang, L. W. (2014). A detailed survey of the palm and biodiesel industry landscape in Malaysia. Energy, 76, 931–941. https://doi.org/10.1016/j.energy.2014.09.007

• Abdullah, A. Z., Salamatinia, B., Mootabadi, H., & Bhatia, S. (2009). Current status and policies on biodiesel industry in Malaysia as the world’s leading producer of palm oil. Energy Policy, 37(12), 5440–5448. https://doi.org/10.1016/j.enpol.2009.08.012

• Ali, A. A. M., Othman, M. R., Shirai, Y., & Hassan, M. A. (2015). Sustainable and integrated palm oil biorefinery concept with value-addition of biomass and zero emission system. Journal of Cleaner Production, 91, 96–99. https://doi.org/10.1016/j.jclepro.2014.12.030

• Badrun, M. (2011). Milestone of change: Developing a nation through oil palm “PIR”. Ministry of Agriculture of the Republic of Indonesia. https://catalogue.nla.gov.au/catalog/6151478

• Bakeri, A., Ramli, Z., Choy, E. A., & Awang, A. (2020). Rising property price: The effects and the preparations of the Malay people in the suburbs. The Malaysian Journal of Social Administration, 14(1), 39-59.

• Basiron, Y. (2008). Malaysia’s oil palm-hallmark of sustainable development. Global Oils and Fats Business Magazine, 5(4), 1–7.

• Bekhet, H. A., & Abdullah, A. (2010). Energy use in agriculture sector: input-output analysis. International Business Research, 3(3), 111-121. https://doi.org/10.5539/ibr.v3n3p111

• Chik, N., Saari, M. Y., & Utit, C. (2017). Decrease in domestic petroelum prices on Malaysian industries-input output price model. Global Advanced Research Journal of Management and Business Studies, 6(1), 001–009.

• Danial, W. (2023). Palm oil exports by country. World’s top exports. https://www.worldstopexports.com/palm-oil-exports-by-country

• De Mesnard, L. (2007). A critical comment on Oosterhaven–Stelder net multipliers. The Annals of Regional Science, 41(2), 249–271. https://doi.org/10.1007/s00168-006-0093-3

• Department of Statistics Malaysia. (2010). Malaysia input-output tables. https://statsdw.dosm.gov.my/malaysia-input-output-tables/

• Department of Statistics Malaysia. (2017). Consumer price index malaysia may 2017 [Press release]. https://www.dosm.gov.my/v1/index.php?r=column/pdfPrev&id=UUh1RkRiSk9naVVSVXhab0djbUp5dz09

• Department of Statistics Malaysia. (2020). Selected Agriculture Indicators, Malaysia [Press release]. https://v1.dosm.gov.my/v1/index.php?r=column/cthemeByCat&cat=72&bul_id=RXVKUVJ5TitHM0cwYWxlOHcxU3dKdz09&menu_id=Z0VTZGU1UHBUT1VJMFlpaXRRR0xpdz09

• Dietzenbacher, E. (1997). In vindication of the Ghosh model: A reinterpretation as a price model. Journal of Regional Science, 37(4), 629–651. https://doi.org/10.1111/0022-4146.00073

• Dauda, S., Sidique, S. F., Sheng, T. Y., & Djama, M. (2021). Consumer preference for certified sustainable palm oil with environmental sustainability attributes: A choice experiment approach. Studies of Applied Economics, 39(4), 1-13. https://doi.org/10.25115/eea.v39i4.4570.

• Filipski, M., Aboudrare, A., Lybbert, T. J., & Taylor, J. E. (2017). Spice price spikes: Simulating impacts of saffron price volatility in a gendered local economy-wide model. World Development, 91, 84–99. https://doi.org/10.1016/j.worlddev.2016.10.018

• Ismail, N. (2013, October 31). Minyak masak kitar semula [Recycled cooking oil]. Shafie Nor. http://shafienor.blogspot.com/2013/10/minyak-masak-kitar-semula-oleh.html

• Nasir, I.S.M., Rani, N.A., & Choy, E.A. (2015). Faktor pemilihan minyak sawit dalam kalangan pengguna: Kajian empirikal di Putrajaya, Malaysia [Palm oil selection factors among consumers: An empirical study in Putrajaya, Malaysia]. Malaysian Journal of Society and Space, 11(8), 66–77.

• Hamid, K. A., Rashid, Z. A., & Mohammad, R. Z. R. (2011). Effect of energy price increase on east asian region’s food industries’ interconnectedness and integration. https://ideas.repec.org/h/era/chaptr/2010-rpr-25-10.html

• Jaafar, A. H., Salleh, N. H. M., & Manaf, Z. A. (2015). Intersectoral linkages in oil palm industry between Malaysia and Indonesia. Jurnal Ekonomi Malaysia, 49(1), 25–35. https://doi.org/10.17576/JEM-2015-4901-03

• Jones, R. W., & Kierzkowski, H. (2018). The role of services in production and international trade: A theoretical framework. World Scientific Book Chapters.

• Kumaran, M. P. (2023). Consumer awareness and perception towards edible oils. EPRA International Journal of Research and Development (IJRD), 8(7), 33-37.

• Lieke, S. D., Spiller, A., & Busch, G. (2023). Can consumers understand that there is more to palm oil than deforestation? Sustainable Production and Consumption, 39, 495-505 https://doi.org/10.1016/j.spc.2023.05.037

• Liew, C. J., & Liew, C. K. (1988). A comparative study of household interactive variable input-output (HIVIO) model and the conventional input-output models. Journal of Urban Economics, 24(1), 64–84. https://doi.org/10.1016/0094-1190(88)90047-2

• Lim, S.-Y., & Yoo, S.-H. (2013). The impact of electricity price changes on industrial prices and the general price level in Korea. Energy Policy, 61, 1551–1555. https://doi.org/10.1016/j.enpol.2013.06.129

• Ling, T. S., Hanani, M. S. S., & Aliya, H. N. (2022). Effects of adulterated palm cooking oil on the quality of fried chicken nuggets. Foods and Raw Materials, 10(1), 106-116. https:/doi.org/10.21603/2308-4057-2022-1-106-116

• Logar, I., & van den Bergh, J. C. (2013). The impact of peak oil on tourism in Spain: An input–output analysis of price, demand and economy-wide effects. Energy, 54, 155–166. https://doi.org/10.1016/j.energy.2013.01.072

• Malaysian Palm Oil Board. (2021). Overview of the malaysian oil palm industry 2021. https://bepi.mpob.gov.my/images/overview/Overview2021.pdf

• Malaysia Productivity Corporation. (2017). Productivity Report 2016/2017. https://irp.cdn-website.com/9c99ef26/files/uploaded/Productivity%20Report%202016-2017-6cd22e58.pdf.

• Mankiw, N. G. (2007). Principles of economics (7th ed.). Cengage Learning.

• Mayada, I., & Juwita, E. (2023). The impact of increasing cooking oil prices on food consumption patterns in various household income groups in Aceh Province. International Journal of Economic, Business, Accounting, Agriculture Management and Sharia Administration (IJEBAS), 3(1), 289-295. https://doi.org/10.54443/ijebas.v3i1.686

• Miller, R. E., & Blair, P. D. (2009). Input-output analysis: Foundations and extensions (2nd ed.). Cambridge University Press. https://doi.org/10.1017/CBO9780511626982

• Noor, N. A. M., & Hua, A. K. (2016). Cooking oil management in cafeteria operator: A review. International Research Journal of Humanities & Social Science, 1(4), 29-39.

• Oosterhaven, J. (1996). Leontief versus Ghoshian price and quantity models. Southern Economic Journal, 62(3),750–759. https://doi.org/10.2307/1060892

• Peng, C. Y., Lan, C. H., Lin, P. C., & Kuo, Y. C. (2017). Effects of cooking method, cooking oil, and food type on aldehyde emissions in cooking oil fumes. Journal of Hazardous Materials, 324(Part B), 160-167. https://doi.org/10.1016/j.jhazmat.2016.10.045

• Saari, M. Y., Dietzenbacher, E., & Los, B. (2016). The impacts of petroleum price fluctuations on income distribution across ethnic groups in Malaysia. Ecological Economics, 130, 25–36.

• Sarjadi, M. S., Ling, T. C., & Khan, M. S. (2019). Analysis and comparison of olive cooking oil and palm cooking oil properties as biodiesel feedstock. Journal of Physics: Conference Series, 1358, Article 012007. https://doi.org/10.1088/1742-6596/1358/1/012007

• Sharify, N. (2013). Input–output modelling of the effect of implicit subsidies on general prices. Economic Modelling, 33, 913–917. https://doi.org/10.1016/j.econmod.2013.06.011

• Sharify, N., & Sancho, F. (2011). A new approach for the input–output price model. Economic Modelling, 28(1), 188–195. https://doi.org/10.1016/j.econmod.2010.09.012

• Taghizadeh-Hesary, F., Rasoulinezhad, E., & Yoshino, N. (2019). Energy and food security: Linkages through price volatility. Energy Policy, 128, 796-806. https://doi.org/10.1016/j.enpol.2018.12.043

• Taylor, J. E., & Filipski, M. J. (2014). Beyond experiments in development economics: Local economy-wide impact evaluation. Oxford University Press. https://doi.org/10.1093/acprof:oso/9780198707875.001.0001

• Yaakob, Z., Mohammad, M., Alherbawi, M., Alam, Z., & Sopian, K. (2013). Overview of the production of biodiesel from waste cooking oil. Renewable and Sustainable Energy Reviews, 18, 184-193. https://doi.org/10.1016/j.rser.2012.10.016

• Yasin, M. H. M., Mamat, R., Najafi, G., Ali, O. M., Yusop, A. F., & Ali, M. H. (2017). Potentials of palm oil as new feedstock oil for a global alternative fuel: A review. Renewable and Sustainable Energy Reviews, 79, 1034–1049. https://doi.org/10.1016/j.rser.2017.05.186

• Zen, Z., Barlow, C., Gondowarsito, R., & McCarthy, J. F. (2016). Interventions to promote smallholder oil palm and socio-economic improvement in Indonesia. In Cramb, R. and McCarthy, J.F. (Ed.), The oil palm complex: Smallholders, agribusiness and the state in Indonesia and Malaysia (pp. 78–108). NUS Press, Singapore. https://doi.org/10.2307/j.ctv1xz0km.8