KUALA LUMPUR: The government’s move to allow the palm oil industry to operate at optimal capacity during the lockdown is positive as the industry would not be impacted from disruptions to its operations and supply.
According to CGS-CIMB Research, the palm oil mills and refineries, which were subjected to workforce capacity of 60%, will now operate at optimal capacity.
However, the persistent Covid-19 situation continues to affect the rising crude palm oil (CPO) yields of the palm oil producers in the country due to labour shortage.
“The labour shortage issue remains unresolved and is getting worse, resulting in production losses, ” said the research house.
To-date, there has been a freeze on the intake of foreign workers since the first movement control order was imposed on March 18 last year.
During this period, foreign workers who have returned to their home country are not allowed to re-enter Malaysia.
CGS-CIMB Research pointed out that Sime Darby Plantation Bhd’s workforce in Malaysia hovers between 75% and 80% of its total requirement.
Meanwhile, FGV Holdings Bhd’s workforce stands at only 75% of requirement, which is a significant decline from 90% at the end of the third quarter last year, it added.
According to a pre-MCO survey by the Malaysian Palm Oil Board, there was a shortage of 31,021 harvesters among its respondents, which represents 76% of the industry players.
CGS-CIMB Research said it was estimated that the shortage of workers translated into a production loss of 3.4 million tonnes and 0.86 million tonnes of CPO and palm kernel, respectively.