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UNIVERSITI PUTRA MALAYSIA SIMULATIVE IMPACT OF ENVIRONMENT-FRIENDLY PRODUCTION METHOD OF SARAWAK PEPPER ON DOMESTIC AND EXPORT SUPPLY WONG SWEE KIONG FEP 2007 4

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UNIVERSITI PUTRA MALAYSIA

SIMULATIVE IMPACT OF ENVIRONMENT-FRIENDLY PRODUCTION METHOD OF SARAWAK PEPPER ON DOMESTIC AND

EXPORT SUPPLY

WONG SWEE KIONG

FEP 2007 4

i

SIMULATIVE IMPACT OF ENVIRONMENT-FRIENDLY PRODUCTION

METHOD OF SARAWAK PEPPER ON DOMESTIC AND

EXPORT SUPPLY

By

WONG SWEE KIONG

Thesis Submitted to the School of Graduate Studies, Universiti Putra Malaysia,

in Fulfilment of the Requirement for the Degree of Doctor of Philosophy

February 2007

ii

Dedicated To:

My Caring, Understanding and Beloved Dad and Mum,

My Dearest sisters, Swee Min, Swee Hui and Swee Ching,

My Dearest and Only Brother, Selamat Wong,

My Brothers-in-Law, Kwong Lee and Simon, and

My Loving and Cute nephews, Timothy and Matthew.

iii

Abstract of thesis presented to the Senate of Universiti Putra Malaysia in fulfilment

of the requirement for the degree of Doctor of Philosophy

SIMULATIVE IMPACT OF ENVIRONMENT-FRIENDLY PRODUCTION

METHOD OF SARAWAK PEPPER ON DOMESTIC AND

EXPORT SUPPLY

By

WONG SWEE KIONG

February 2007

Chairman: Professor Khalid Abdul Rahim, PhD

Faculty: Economics and Management

The need to protect the environment and utilize natural resources in more sustainable

ways is gaining greater importance worldwide. Firms of any industry that do not

keep abreast with this on-going trend of development in the global economy might

sooner or later be swept away from the current highly competitive international

market regime.

Malaysia is an open economy that depends greatly on international trade for its

national economic development. Pepper (Piper Nigrum L.), the King of spices, is

grown in Malaysia predominantly (about 90%) for export market. To retain a

significant market share for its pepper export, enhancing competitiveness in its

pepper industry is a must. Hence, the objective of this study is to examine and assess

the economic effects of cost of environmentally sustainable pepper production

techniques and agricultural practices on production and export volumes in Malaysia.

iv

One of the major findings of this study is that chemical cost of pepper production

has a significant negative effect on the domestic supply of both black and white

pepper in Malaysia. Thus, to discourage farmers from using chemical inputs

indiscriminately, increasing the chemical cost is suggested as a policy option. The

simulation analysis reveals that environmental regulation to increase the chemical

cost would enhance export market competitiveness of both black and white pepper

in Malaysia. In fact, driven by the higher price incentive fetched for better quality

environmental-friendly pepper produced, farmers start to produce more and thus the

volumes of production and export would increase. In addition, welfare analysis also

indicates that the welfare of pepper farmers will improve by adopting low cost

sustainable pepper production methods.

In short, promoting environmental-friendly pepper production in Malaysia should be

given high priority. This is crucial to continue making Sarawak Pepper products

marketable in the increasingly competitive international market. Moreover, by

enhancing the competitiveness of the Malaysian pepper industry through the

adoption of environmental-friendly pepper production methods will also help pepper

farmers to meet a more stringent food safety, environmental and basic humanity

requirements imposed in the international arena. This will ultimately help to improve

the welfare of the Malaysian pepper farmers. This is particularly important so that

pepper industry will continue to play its vital role as a major source of foreign

exchange earnings besides being an important source of employment for some

74,710 households in the state of Sarawak.

v

Abstrak tesis yang dikemukakan kepada Senat Universiti Putra Malaysia sebagai

memenuhi keperluan untuk ijazah Doktor Falsafah

IMPAK SIMULASI BAGI CARA PENGELUARAN LADA SARAWAK

YANG MESRA-ALAM KE ATAS PENAWARAN DOMESTIK

DAN EKSPORT

Oleh

WONG SWEE KIONG

Februari 2007

Pengerusi: Profesor Khalid Abdul Rahim, PhD

Fakulti: Ekonomi dan Pengurusan

Keperluan untuk menjaga alam sekitar dan menggunakan sumber-sumber asli

dengan cara yang lebih mapan (lestari) kini menjadi semakin penting di dunia.

Firma-firma bagi mana-mana industri yang tidak mengikut perkembangan berterusan

dalam ekonomi dunia semasa seterusnya akan ketinggalan daripada rejim pasaran

antarabangsa semasa yang semakin kompetitif.

Malaysia adalah sebuah ekonomi terbuka yang banyak bergantung kepada

perdagangan antarabangsa untuk pembangunan ekonomi negara. Lada (Piper

Nigrum L.), Raja rempah ratus, ditanam di Malaysia kebanyakannya (lebih kurang

90%) adalah untuk pasaran eksport. Bagi mengekalkan agihan pasaran yang penting

untuk eksport lada, adalah wajib untuk Malaysia meningkatkan kepersaingan

industri ladanya. Jadi, objektif kajian ini adalah untuk mengkaji dan menilai kesan

ekonomi bagi kos teknik pengeluaran lada yang mapan (lestari) atau mesra-alam ke

atas kuantiti pengeluaran dan eksport lada di Malaysia.

vi

Salah satu penemuan utama bagi kajian ini ialah kos kimia bagi pengeluaran lada

didapati mempunyai kesan negatif yang penting dalam mempengaruhi penawaran

tempatan kedua-dua lada hitam dan lada putih di Malaysia. Dengan itu, untuk tidak

menggalakkan pekebun menggunakan input-input kimia secara tidak berhemah atau

tidak cermat, peningkatan kos kimia adalah dicadangkan sebagai satu pilihan polisi.

Analisis simulasi menunjukkan undang-undang alam sekitar untuk menaikkan kos

kimia akan meningkatkan kepersaingan pasaran eksport untuk kedua-dua lada hitam

dan lada putih di Malaysia. Sebenarnya, akibat daripada dorongan harga istimewa

yang diperolehi bagi lada yang mesra-alam yang lebih baik kualitinya, petani mula

menambahkan pengeluaran dan sebab itulah kuantiti pengeluaran dan eksport akan

meningkat. Tambahan pula, analisis kebajikan juga menunjukkan bahawa kebajikan

bagi pekebun-pekebun lada akan meningkat dengan mengamalkan cara-cara

pengeluaran mapan lada berkos rendah.

Kesimpulannya, mempromosikan pengeluaran lada cara mesra-alam di Malaysia

patut diberi keutamaan. Ini adalah penting supaya Lada Sarawak masih dapat

dipasarkan di pasaran antarabangsa yang semakin kompetitif. Lagipun, dengan

meningkatkan kepersaingan industri lada Malaysia melalui amalan-amalan

pengeluaran lada yang mesra-alam juga akan membantu pekebun-pekebun lada kita

memenuhi keperluan yang lebih tegas mengenai keselamatan makanan, alam sekitar

dan kemanusiaan asas yang ditetapkan di arena antarabangsa. Ini akhirnya akan

membantu untuk meningkatkan kebajikan pekebun-pekebun lada Malaysia. Ini

terutamanya penting supaya industri lada akan terus memainkan peranan yang

penting sebagai sumber pendapatan utama bagi pertukaran wang asing negara di

vii

samping sebagai satu sumber pekerjaan penting untuk lebih kurang 74,710 isi rumah

di negeri Sarawak.

viii

ACKNOWLEDGEMENTS

Praise to the Lord, our Mighty God as He has been guiding me all the way through to

complete my PhD studies in Universiti Putra Malaysia (UPM). Though the journey

to earn a PhD degree is long and not easy, He has never forsaken me from

conception to completion. May all the glory be to Him!

Along the PhD research journey, I would not have succeeded without the guidance

and assistance of a group of very dedicated, caring and excellent supervisors. First

and foremost, I would like to extend my utmost gratitude to my main supervisor,

Professor Dr. Khalid Abdul Rahim. His continuous support, generosity and

willingness to share with me his precious time and astounding knowledge, ideas,

comments and even patience are highly appreciated. Besides that, Professor Dr. Mad

Nasir Shamsudin, my co-supervisor with a very sharp analytical skill, is indeed very

brilliant and intelligent. Despite being very busy as the Dean of the Faculty of

Environmental Studies in UPM, he was ever ready to spare his valuable time to

assist me to improve and to accomplish my PhD thesis. In addition, Associate

Professor Dr. K. Kuperan Viswanathan, though is far away from UPM who has a

very tight schedule working with the World Fish Centre, his willingness to serve as a

member in my supervisory committee is indeed highly appreciated. Dr Kuperan is

never stingy in giving me his continuous support, encouragement, advice, and in

sharing with me his great knowledge and experience while working at the

international scientific research organization. All of my supervisors have indeed

contributed enormously in motivating me in one way or another to excel in my

studies.

ix

On the other hand, I am indeed very lucky to be in UPM to pursue my PhD studies

as I am surrounded by a pool of outstanding senior professors and lecturers who are

always generous in providing me with constructive advice and guidance. The credit

of my success in getting my PhD degree should concurrently go to my beloved

professors and lecturers particularly in the Faculty of Economics and Management,

UPM. Your relentless spirit in teaching and educating me, encouraging and inspiring

me to think and solve problems has given me a good foundation to move forward in

research and teaching. You are all very wonderful. I would like to convey my sincere

appreciation to you all.

Besides that, I would also like to express my gratitude to all of the officers and

librarians at the Pepper Marketing Board, Sarawak both from the headquarters as

well as at the branch offices, Department of Agriculture Sarawak, Agriculture

Research Centre in Semonggok, Sarawak, Department of Environment, Sarawak

Branch, Department of Statistics Malaysia, Natural Resources and Environment

Board (NREB), Sarawak, Universiti Putra Malaysia, Universiti Malaya and

Universiti Kebangsaan Malaysia for willingly and generously providing me with all

the necessary means, information, references and data. In addition, sincere thanks are

also extended to all respondents who have shown great co-operation to participate in

the interviews to provide me with the useful information necessary in this research.

Without your help, I would not be able to accomplish my PhD thesis.

Many thanks should also go to a vast number of my friends, church members and my

dear pastors who have played a vital role particularly for your never-ending

encouragement and prayer support throughout the course of my PhD thesis

x

preparation till completion. Your support in some ways has enlightened me and thus

is warmly acknowledged here!

Taking this opportunity, I would also like to express my special thanks to the

examination committee chaired by Professor Dr. Mohd Shahwahid Haji Othman and

comprising of Professor Dr. Zakariah Abdul Rashid, Associate Professor Dr Tai

Shzee Yew and Professor Dato’ Dr. Jamalludin Sulaiman for your constructive

criticism and recommendation to improve my final thesis product. Your precious

time devoted in reading my thesis and giving invaluable ideas, comments as well as

guidance, support and encouragement are greatly acknowledged.

I must also thank my dean, Associate Professor Dr. Abd. Mutalip Abdullah and the

faculty members in the Faculty of Social Sciences, Universiti Malaysia Sarawak

(UNIMAS) for your valuable support and the wisdom you imparted to me.

Last but not least, my family members are the most crucial persons in giving me all

the necessary resources either financially or the prayer and moral support to enable

me to accomplish this significant milestone in my life. Thank you so much for your

love and everything that you have done for me particularly in transporting me to and

back from the various departments and places to get the data/information/references

that I needed for my research studies. You are all too great for me. Thank you very

much everyone and may God continue to shower you with abundant blessings!

xi

I certify that an Examination Committee has met on 26 February 2007 to conduct the

final examination of Wong Swee Kiong on her Doctor of Philosophy thesis entitled

“Simulative Impact of Environment-Friendly Production Method of Sarawak Pepper

on Domestic and Export Supply” in accordance with Universiti Pertanian Malaysia

(Higher Degree) Act 1980 and Universiti Pertanian Malaysia (Higher Degree)

Regulations 1981. The Committee recommends that the candidate be awarded the

relevant degree. Members of the Examination Committee are as follows:

Mohd. Shahwahid Hj. Othman, PhD

Professor

Faculty of Economics and Management

Universiti Putra Malaysia

(Chairman)

Zakariah Abdul Rashid, PhD

Professor

Faculty of Economics and Management

Universiti Putra Malaysia

(Internal Examiner)

Tai Shzee Yew, PhD

Associate Professor

Faculty of Economics and Management

Universiti Putra Malaysia

(Internal Examiner)

Dato’ Jamalludin Sulaiman, PhD

Professor

School of Social Sciences

Universiti Sains Malaysia

(External Examiner)

________________________________

HASANAH MOHD GHAZALI, PhD

Professor/Deputy Dean

School of Graduate Studies

Universiti Putra Malaysia

Date: 22 MARCH 2007

xii

This thesis submitted to the Senate of Universiti Putra Malaysia and has been

accepted as fulfillment of the requirement for the degree of Doctor of Philosophy.

The members of the Supervisory Committee are as follows:

Khalid Abdul Rahim, PhD

Professor

Faculty of Economics and Management

Universiti Putra Malaysia

(Chairman)

Mad Nasir Shamsudin, PhD

Professor

Faculty of Environmental Studies

Universiti Putra Malaysia

(Member)

K. Kuperan Viswanathan, PhD

Associate Professor

World Fish Centre Global Headquarters

Bayan Lepas, Penang

(Member)

____________________________

AINI IDERIS, PhD

Professor/ Dean

School of Graduate Studies

Universiti Putra Malaysia

Date: 12 APRIL 2007

xiii

DECLARATION

I hereby declare that the thesis is based on my original work except for quotations

and citations which have been duly acknowledged. I also declare that it has not been

previously or concurrently submitted for any other degree at UPM or other

institutions.

__________________________

WONG SWEE KIONG

Date: 1 MARCH 2007

xiv

TABLE OF CONTENTS

Page

DEDICATION ii

ABSTRACT iii

ABSTRAK v

ACKNOWLEDGEMENTS viii

APPROVAL xi

DECLARATION xiii

LIST OF TABLES xviii

LIST OF FIGURES xx

LIST OF ABBREVIATIONS xxii

CHAPTER

1 INTRODUCTION 1

1.1 An Overview 1

1.2 Challenges Facing Pepper Industry in Malaysia 6

1.3 Problem Statement 10

1.4 Objectives of the Study 13

1.5 Significance of the Study 14

1.6 Definitions 22

1.6.1 Environmental-friendly Production 22

1.6.2 Competitiveness 24

1.7 Organization of the Study 25

2 BACKGROUND OF THE STUDY 26

2.1 Country Background 26

2.1.1 Country Overview 26

2.1.2 Overview of the Malaysian Economy 26

2.1.3 Agriculture Sector in Malaysia 32

2.1.4 Pepper Policy under Third National Agricultural

Policy 1998-2010 34

2.1.5 Malaysia’s Domestic and Trade Policies 36

2.1.6 Brief Introduction to Sarawak Economy 37

2.1.7 Environmental Consciousness in Malaysia 43

2.1.8 Related Institutions 45

2.1.8.1 Pepper Marketing Board Malaysia 45

2.1.8.2 Department of Agriculture, Sarawak 47

2.1.8.3 Department of Environment (DOE) Malaysia 50

2.1.8.4 Natural Resources and Environmental Board

(NREB) Sarawak 53

2.1.9 Some Scenarios on the Existing Pepper Industry in

Malaysia 55

2.1.9.1 Environmental, Health and Social Impacts of the

Existing Pepper Industry 55

xv

2.1.9.2 Environmental, Health and Sustainability Costs

of Existing Pepper Industry 59

2.2 Commodity Background 60

2.2.1 The History of Pepper 60

2.2.2 The Uses of Pepper 62

2.2.3 World Pepper Industry 63

2.2.3.1 International Pepper Community (IPC) 64

2.2.3.2 World Pepper Production and Export 65

2.2.3.3 World Pepper Demand and Consumption 70

2.2.3.4 World Pepper Prices 72

2.2.4 Sarawak Pepper 72

2.3 Environment Related Issues and Concepts 74

2.3.1 Trade Liberalization 74

2.3.2 Economic Growth and the Environment 76

2.3.3 Sustainable Development 78

2.3.4 Agriculture and Its Environmental and Social Impacts 79

2.3.5 Sustainable Agriculture 82

2.4 Research Imperative 85

3 LITERATURE REVIEW 91

3.1 An Overview 91

3.2 Sustainable Development, Trade Competitiveness and

Welfare Effects 91

3.2.1 Empirical Evidence on Environmental Policies and

Trade Competitiveness 97

3.2.2 Sources of International Competitiveness 99

3.3 Supply Response 102

3.4 Cointegration Test 105

3.5 Measuring Welfare Change 109

3.6 Triangulation 113

3.7 Related Empirical Studies on Pepper Industry in Malaysia 115

4 METHODOLOGY 117

4.1 Theoretical and Analytical Framework: A Brief Methodological

Overview 117

4.1.1 The Fundamental Partial Equilibrium Approach 122

4.1.2 Analysis Incorporating Efficiency Improvements 130

4.1.3 Quality Products and Export Premium Price Adjustment 132

4.1.4 Measuring Economic Surplus 134

4.2 Model Specification 138

4.2.1 Domestic Supply for Black Pepper and White Pepper 138

4.2.1.1 Domestic Supply of Pepper Production 142

4.2.1.2 Average Local Price of Black Pepper and White

Pepper 144

4.2.1.3 Government Allocation and Government

Expenditure 148

4.2.1.4 Area of Pepper Farms 150

4.2.1.5 Cost of Pepper Production 151

xvi

4.2.1.6 Local Price Differentials between Black Pepper

and White Pepper 153

4.2.1.7 Dummy Variables for the Uncontrolled Factors of

Disease and Weather (D2) 154

4.2.2 Export Supply of Black Pepper and White Pepper 155

4.2.2.1 Export Supply of Pepper 158

4.2.2.2 Average FOB Price of Black Pepper and White

Pepper 159

4.2.2.3 International Price Differentials between Black

Pepper and White Pepper 162

4.2.2.4 Stock of Pepper Stored 162

4.2.2.5 Dummy Variable 163

4.2.2.6 Trend Variable 164

4.3 Estimation Techniques and Methods 165

4.3.1 The Unit Root Test 165

4.3.2 Model Selection and CUSUM and CUSUMSQ Tests 169

4.3.3 Cointegration Test 172

4.3.4 Autoregressive Distributed Lag (ARDL) Method 173

4.4 Triangulation 183

4.5 Data Collection 184

5 RESULTS AND DISCUSSION 186

5.1 A Summary of the Description of the Variables Used 186

5.2 The Unit Root Test 189

5.3 Cointegration Test 191

5.3.1 Empirical Results for the Domestic Supply of Black

Pepper Production and the Domestic Supply of White

Pepper Production Models 191

5.3.2 Empirical Results for Export Supply of Black

Pepper and Export Supply of White Pepper Models 205

5.3.3 A Summary on the Empirical Results of Domestic Supply

and Export Supply of Pepper and their Policy

Implications 221

5.4 Simulation on the Effects of Adopting Environmental-Friendly

Pepper Production Method 237

5.5 Welfare Analysis 249

5.6 Field Survey 250

6 SUMMARY AND CONCLUSION 261

6.1 An Overview 261

6.2 A Summary 267

6.3 Policy Implications 272

6.4 A Concluding Remark 276

6.5 Limitations/Shortcomings of the Study 281

6.6 Recommendations for Future Studies 284

xvii

REFERENCES 290

APPENDICES 310

BIODATA OF THE AUTHOR 318

xviii

LIST OF TABLES

Table Page

2.1 Basic Economic Statistics of Malaysia, 1980, 1985, 1987-2004 29

2.2 Domestic Product Value for the Major Economic Sectors and

Their Percentage to Total GDP in Malaysia 30

2.3 Number of Employed Persons by Major Industries and Their

Percentage in Malaysia 31

2.4 Distribution of Employed Persons (and its Percentage) by

Industry in Sarawak 39

2.5 Principal Exports of Sarawak 1991-2004 40

2.6 Distribution of Sarawak Land Area by Major Crops (in Hectare

and its Percentage) 41

2.7 Export Value (in RM‘000) and Its Percentage of Major

Agricultural Products in Sarawak for 1991-2004 42

2.8 World Pepper Production (in metric ton) 68

2.9 World Pepper Export (in metric ton) 69

2.10 Percentage of Domestic Consumption of Pepper over Production

and Per Capita Consumption of Pepper 70

2.11 Calendar of Pepper Farm Operations in Sarawak 74

5.1 Data Set: Key Variables, Description and the Source 188

5.2 Augmented Dickey-Fuller (ADF) and Kwiatkowski-Phillips-

Schmidt-Shin (KPSS) Unit Root Test Results 190

5.3 Results of Long-Run Significance Tests for Domestic

Supply of Black Pepper Model 193

5.4 Long-Run Coefficient Estimates of the Domestic Supply of

Black Pepper 194

5.5 Error Correction Representation (Short-Run Estimates) for

Domestic Supply of Black Pepper 195

5.6 Results of Long-Run Significance Tests for Domestic

Supply of White Pepper Model 199

xix

5.7 Long-Run Coefficient Estimates of Domestic Supply of

White Pepper 199

5.8 Error Correction Representation (Short-Run Estimates) for

Domestic Supply of White Pepper 200

5.9 Results of Long-Run Significance Tests for Black

Pepper Export Supply Model 208

5.10 Long-Run Coefficient Estimates of Black Pepper Export Supply 208

5.11 Error Correction Representation (Short-Run Estimates) for

Black Pepper Export Supply 209

5.12 Results of Long-Run Significance Tests for White

Pepper Export Supply Model 215

5.13 Long-Run Coefficient Estimates of White Pepper Export

Supply 216

5.14 Error Correction Representation (Short-Run Estimates) for

White Pepper Export Supply 217

5.15 Long-Run and Short-Run Supply Elasticities of Domestic

Supply and Export Supply of Pepper in Malaysia 222

5.16 Simulation Results for Malaysian Black Pepper Case Study 241

5.17 Simulation Results for Malaysian White Pepper Case Study 242

xx

LIST OF FIGURES

Figure Page

4.1 Impacts of Environmental and Food Regulations on Export

Performance of Pepper in Malaysia 120

4.1a Impacts of Environmental and Food Regulations on Domestic

And Export Markets of Pepper in Malaysia 121

4.2 Consumer Surplus and Producer Surplus with Different

Supply Intercepts 137

4.3 Local Prices for Black Pepper and White Pepper (RM/tonne) 146

4.4 The Relative Local Price for Black Pepper 146

4.5 Government Allocation and Government Expenditure on

Pepper Projects and Pepper Subsidy Scheme 149

4.6 International Prices for Black Pepper and White Pepper

from 1980 to 2004 161

4.7 Relative International Price of Black Pepper 161

5.1 Plots of CUSUM and CUSUMSQ Statistics for Coefficient

Stability in the Domestic Supply of Black Pepper Model 196

5.2 Plots of CUSUM and CUSUMSQ Statistics for Coefficient

Stability in the Domestic Supply of White Pepper Model 203

5.3 Plots of CUSUM and CUSUMSQ Statistics for Coefficient

Stability in the Black Pepper Export Supply Model 210

5.4 Plots of CUSUM and CUSUMSQ Statistics for Coefficient

Stability in the White Pepper Export Supply Model 220

5.5 Farmer Respondents by Race 252

5.6 Farmer Respondents by Age Group 253

5.7 Farmer Respondents by Division 253

5.8 Farmer Respondents by Income Brackets 254

5.9 Farmer Respondents by Educational Levels 254

xxi

5.10 Percentage of Farmers Currently Producing Special Quality

Pepper 256

5.11 Farmers' Current Cultural Practices at their Pepper Farms 256

5.12 Farmers' Perception on the Effects of the Use of Chemical

Inputs 257

5.13 Farmers' Options if Given Chance to Use Chemical Inputs 258

5.14 Farmers' Response towards Government Policies 258

xxii

LIST OF ABBREVIATIONS

ADF Augmented Dickey-Fuller

AFTA ASEAN Free Trade Area

AIC Akaike Information Criteria

ARC Agriculture Research Centre

ARCH Autoregressive conditional heteroscedasticity

ARDL Autoregressive Distributed Lag

ASEAN The Association of South-East Asian Nations

BOD Biochemical oxygen demand

CEPT Common Effective Preferential Tariff

CO Carbon Monoxide

CS Consumer surplus

CV Compensating variation

DOA Department of Agriculture

DOAS Department of Agriculture Sarawak

DOE Department of Environment

DOS Department of Statistics

DSM Department of Standards, Malaysia

ECM Error Correction Model

ECT Error Correction Term

EKC Environmental Kuznets Curve

EV Equivalent variation

FAO Food and Agriculture Organization of the United Nations

FAQ Fair Average Quality

xxiii

GATT The General Agreement on Tariffs and Trade

GDP Gross Domestic Product

GMP Good Manufacturing Practices

HACCP Hazard Analysis & Critical Control Point

IEC International Electotechnical Commission

IOSTA International Organization of Spice Trade Association

IPC International Pepper Community

IPPC Integrated Pollution Prevention and Control Bureau

ISO International Standards Organization

KPSS Kwiatkowski-Phillips-Schmidt-Shin

LM Lagrange Multiplier

LNG Liquefied natural gas

MARDI Malaysia Agricultural Research and Development Institute

MITI Ministry of International Trade and Industry

MR Malaysian Ringgit

NAP National Agricultural Policies

NAP3 The Third National Agricultural Policy

NREB Natural Resources and Environment Board

OECD Organization for Economic Co-operation and Development

OLS Ordinary least Squares

PMB Pepper Marketing Board

PPMs Process and Production Methods

PS Producer surplus

RM Ringgit Malaysia

xxiv

SALM Skim Akreditasi Ladang Malaysia

(Malaysian Farm Accreditation Scheme)

SAMM Skim Akreditasi Makmal Malaysia

(Laboratory Accreditation Scheme of Malaysia)

SBC Schwartz Bayesian Criteria

UECM Unrestricted Error Correction Model

UNCED United Nations Conference on Environment and Development

UNCTAD United Nations Conference on Trade and Development

UNEP United Nations Environment Programme

UN-ESCAP United Nations Economic and Social Commission for Asia and the

Pacific

US The United States

UVAR Unrestricted vector autoregressive

VAR Vector Autoregressive

WCED World Commission on Environment and Development

WHO World Health Organization

WSSD World Summit on Sustainable Development

WTO World Trade Organization