NON-LINEAR EFFECT OF TEMPERATURE ON OIL PALM YIELD: A NOTE BASED ON PANEL THRESHOLD ANALYSIS

Abstract

The effect of climate change on agriculture and food production has emerged as one of the major concerns of major global economies, especially given that the global population is projected to reach 10.9 billion people by the end of the 21st century (United Nations, 2019). Crops react differently to climate change and hence it is crucial to understand its effect on specific agricultural plants. Specifically, the impact of climate change on agriculture yield may not be linear. As such, this study investigated the impact of climate factors on oil palm yield using state level data from Malaysia. The results suggested that temperature and oil palm yield have a non-linear inverted U-shaped relationship. In addition, rainfall has a positive impact on oil palm yield.