AN EMPIRICAL ANALYSIS OF THE CLIMATE AND PRICE OF COCOA PRODUCTION IN MALAYSIA
Authors: Tee, Y. K.1,Tun, Y. L. and Karunanithi, K.
Journal Issue: Malaysian Cocoa Journal, Volume 14/2022
Keywords: climate and yield, pattern, climate variability, long-run analysis, surplus and demand
Published On: 10/05/2022
Abstract
Considering the demand expansion in downstream cocoa grinding, the feasible factors underlying these existing yield gaps are addressed by evaluating changes and relationships in year pattern of climate and price determinants on regional cocoa yield. Furthermore, study also focused on the impact of climate and price on cocoa productivity by employing an Autoregressive Distributed Lag (ARDL) using time series data for a 18-year period (2001-2018) to explore the association among the variables with the evidence of long-run analysis. Our results showed that all climate variables of sunshine evapotranspiration, wind and temperature had negative and significant association with cocoa productivity in long-run analyses except rainfall. The productivity trend was positive with projected increase in total rainfall by 1 mm and an increase in the number of raining days by one led to an increase of 0.4% and 10% in cocoa productivity, respectively. Price had no significant effect on cocoa productivity in the long run. In concise, climate change would transmute the total cocoa production in the coming decades and the year pattern of climate impact on yield was identified. Cocoa trade price is estimated to rise considerably under the more pessimistic scenario. The rise of the commodity price reduce consumer surplus and thus diminish the benefits from climate change with predicted yield effects would otherwise receive. Intuitively, this study helps the policy makers to identify the causes of the yield in the long-run that will benefit the cocoa sector in particular.