Research on World Agricultural Economy

Is Policy Greasing the Wheels of Global Palm Oil Trade?

Shweta Adhikari

Department of Agricultural and Applied Economics, University of Georgia, Athens, GA, 30602, USA

Dikshit Poudel

Department of Agricultural and Applied Economics, University of Georgia, Athens, GA, 30602, USA

Munisamy Gopinath

Department of Agricultural and Applied Economics, University of Georgia, Athens, GA, 30602, USA

DOI: https://doi.org/10.36956/rwae.v4i2.859

Received: 17 May 2023; Received in revised form: 8 June 2023; Accepted: 14 June 2023; Published: 19 June 2023

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Abstract

Oil palm is the major source of edible oil and feedstock consumed in the world. This study examined the determinants of global palm oil trade with attention to the effects of trade policies using a gravity model, PPML estimator, and the data from 1988-2020. Palm oil's dramatic trade growth in recent years can be attributed to the economic growth of large countries, the proximity of partners and policies. Trade agreements increased crude and refined palm oil trade by up to 8 and 4 percent of the global import value, respectively. Further, the effects of policy changes due to COVID-19 and the recent export ban in Indonesia are also quantified.

Keywords: Palm oil; Gravity model; Trade policy; COVID-19; Indonesia's export ban

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