Market Integration and the Development of Sustainable Palm Oil
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Palm oil is one of the world's important commodities with a fairly rapid development. However, with its current management, it is feared that the growth would not be sustained. Therefore, a sustainable palm oil management is needed as an alternative. In order to run well, the sustainable management needs to be supported by the palm oil producers and consumer. In fact, the producers’ support is quite good, but the consumers’ support is not optimal yet, including those from European countries that usually insist the implementation of sustainable palm oil. With such conditions, many parties suggest Indonesia to focus more on other markets such as India, China and Bangladesh, as they have high demand but with fewer requirements. However, it is feared that this will not be a solution because nowadays markets among countries tend to be integrated. In this study these arguments will be tested using the Seemingly Unrelated Regression model with quarterly data 2008-2014 from producer countries such as Indonesia and Malaysia, and from consumer countries such as India, China, Bangladesh, the Netherlands, Germany, Italy and EU28. The result shows that the European countries import volumes are mutually influential with India, China and Bangladesh. The European countries’ volume of imports also influence Indonesia’s and Malaysia’s export volume. However, the influences of India’s, China’s and Bangladesh’s import volume to Indonesia’s and Malaysia’s export volume are greater than that of European countries. Although the European market demands can not be ignored, Indonesia and Malaysia need to pay more attention to the demand from India, China and Bangladesh.