Revisiting Oil Palm Supply Chain Network Transportation Cost and Carbon Dioxide Emission Using Gravity Location Model
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Grant Category, Year: Research Grant, 2018
Abstract
Ensuring the sustainability of oil palm industry should include a strategic decision which needs to be revisited from time to time as the business grows. Oil palm industry has been a lucrative industry and is regarded as one of the backbones of the Malaysian agriculture sectors for many years. Until recently, stronger competition from neighboring countries such as Indonesia and Thailand can be considered as some serious threats to the Malaysian oil palm industry sustainability. In ensuring sustainability, relying on current competitive advantages and the business, as usual, are no longer sufficient. Since the profit margin getting slimmer due to the competitor’s abundance of resources such as lower labor cost and potential land for development, Malaysia needs to strategize on riding of its industry advantages. Moreover, the decision-making in determining of the oil palm mills was based on the previous condition. In specific, this research aims to investigate the transportation cost of the upstream players in the supply chain. The transportation cost will be examined between upstream players that comprise of the private plantation companies, government-owned entities such as FELDA, government schemes and individual smallholder that producing fresh fruit bunch, and downstream producers such as palm oil refiners. Using the gravity location model, the total cost of transportation will be examined. Other elements on environmental like CO2 emission is also being considered in this research. In addition, the research will provide insights to policymakers and stakeholders on how to reduce the total cost and also how to improve the environmental aspect of the supply chain.
Project Leader
