Researchers say crude oil prices impact rice production

Crude oil prices have a far reaching impact on the costs involved inrice production, as researchers mapped crude oil, rice and soybean oil prices between 1970 and 2008 and demonstrated the implications of world crude oil prices on the agriculture sector, in particular on rice production. The paper, in the Pertanika Journal of Social Sciences & Humanities (JSSH), suggests that soybean oil producers do not face the same problem and they should therefore not worry about the fluctuation of crude oil prices.

The study used data of the world crude oil prices and prices of rice in Malaysia and soybean oil in Rotterdam from 1970 to 2008. The Autoregressive Distribution Lag method was used, which allowed the team to investigate both short and long term dynamics. Their findings show that there is a long-term relationship between the world crude oil price and the agriculture sector, with high production costs cutting into profit margins. The authors said "these situations will worsen if the industry does not receive any subsidies or incentives from the government."