Analyzing global competitiveness of Indonesian palm oil

Abstract

Indonesia is the largest producer and exporter of palm oil in the world vegetable oil market. However, Indonesia export share had decreasing trend and there is an emerging competition from South America and African palm oil producer. Another issue is a non-competitive strategy from European countries for limiting palm oil import. This study aims to seek the pricing behavior of Indonesian exporter in the world palm oil market. This study shows Indonesian exporter apply Local Currency Price Stabilization Strategy to European countries but more competitive behavior to other importing countries. The LCPS strategy to European countries might be induced by more elastic palm oil demand on that region. The opposite with India and China that might have less elastic palm oil demand schedule. However, Indonesian exporter should have more awareness of future competition in the palm oil market and its pricing strategy, especially to emerging demand from India and China.