Palm oil output at risk as lockdown worsens labour shortage

“The crux of the issue is the labour shortage. We have lost of about 20% to 30% of our potential production because of this, ” according to Datuk Nageeb Wahab, chief executive at the Malaysian Palm Oil Association, a growers’ group that represents 40% of palm plantations by area. “That would have gone up more this year especially among smallholders, ” he said in an interview.

MUMBAI: A resurgence of Covid-19 infections in No 2 palm oil grower Malaysia is set to exacerbate a labour shortage and curb production of the world’s most-consumed cooking oil.

The South-East Asian country, which announced it will extend the first phase of its national lockdown to the end of June, has shuttered non-essential industries and is expected to prolong a freeze on the recruitment of foreign workers as it battles with a third wave of the pandemic.

“The crux of the issue is the labour shortage. We have lost of about 20% to 30% of our potential production because of this, ” according to Datuk Nageeb Wahab, chief executive at the Malaysian Palm Oil Association, a growers’ group that represents 40% of palm plantations by area. “That would have gone up more this year especially among smallholders, ” he said in an interview.

That means Malaysian palm oil planters may now miss estimates for yields to rebound in the second half, which were made due to the annual seasonal high cycle that typically begins in July, and the initial assumption that restrictions on workers’ intake would have been eased. The Malaysian Palm Oil Board last week reported January-May production is about 6% smaller than a year ago.

Lower-than-expected supplies from Malaysia are supporting benchmark palm oil futures, which rebounded as much as 2.2% yesterday after tumbling to their weakest level in more than four months a day earlier. ― Bloomberg