Palm oil output affected

Sector hit by floods and scarce labour.

KUALA LUMPUR: Palm oil production in Malaysia is being dealt a double blow from a shortage of workers to harvest the crop and torrential rains that have triggered floods in key growing areas of the world’s No 2 supplier.

Relentless heavy rain and thunderstorms have led to flash floods in parts of Sabah, Sarawak, Johor, Pahang and Perak – the biggest palm oil-producing states in the country. While palm trees are typically water-loving and resistant to wet weather, prolonged floods could prevent harvesting – leading to overripe fruit and poor oil quality – and disrupting the transport of fruit to mills.

Also deepening output woes is Malaysia’s re-imposition of lockdowns from Jan 13, and a state of emergency that may last until August, which complicates the recruitment of foreign labour that the palm industry is so in need of.

“Certain states including large oil palm-growing areas have been affected in Johor, Pahang and Perak. Here, crop losses have been unavoidable as many sections of the fields have been under two to three feet of water for two to three weeks,” said Carl Bek-Nielsen, chief executive director of United Plantations Bhd. “This adversely affects the ability to enter the fields and harvest the crop, let alone bring out the crop as fields are under water.”

In Sarawak, Malaysia’s second-biggest palm growing state, the drop in yields may be more severe than the 15% to 20% initially estimated over the next two months, according to Andrew Cheng, chief executive officer of the Sarawak Oil Palm Plantation Owners Association. That’s as the worker shortage compounds production problems caused by floodwaters which have inundated plantations and interrupted harvesting, he said.

“I believe many oil palm plantations in Sarawak’s lower-lying areas will be affected, especially with the King Tide coming in,” Cheng said, referring to an especially high tide, which may lead to prolonged flooding.

“Due to the Covid-19 pandemic and movement control order, we are unable to assess the overall situation.” Sarawak makes up about 21% of the country’s total palm oil output.

Malaysia’s shortage of palm oil workers has become “much worse” compared with six months ago, Bek-Nielsen said. To relieve the shortage of foreign workers, planters are seeking government approval for a safe way to bring guest workers into Malaysia, where all Covid-19 testing and quarantine costs are borne by employers, he added.

Meanwhile, FGV Holdings Bhd, one of the country’s biggest producers, said despite the floods, there is no serious impact to field operations and mills are running as usual despite a drop in daily volumes. ─ Bloomberg
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