Malaysian farms face tight labour squeeze

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  • Sunday, 14 Jun 2020

LABOUR shortages have plagued palm oil growers for years, though never this acutely, Bloomberg reports.

Malaysia’s plantations have been competing with higher wages offered by the growing industry in Indonesia, the world’s biggest producer.

Automation meanwhile has offered little relief said the business news network.

Palm fruit is fragile, growing in bunches that can weigh as much as 45kg, 18m off the ground. Most of it is still harvested by hand. Compared with soya or rapeseed, harvesting palm fruit requires 25 times more workers.

The sudden and rapid outbreak of the coronavirus has turned long-term challenges in the Malaysian palm oil industry into short-term ones, said Aurelia Britsch, head of commodities at Fitch Solutions.

“The sector is currently recording labour shortages, as ongoing lockdown measures mean palm oil estates are generally unable to recruit new foreign workers at a time when some employees have been repatriated to their origin countries due to the pandemic.”

In better times, the farmers might have raised wages to attract more workers. Not now, with global economies in free-fall and commodities prices growing more volatile. Even with a shortage of labour and, potentially, supply, the tropical oil on course for its biggest annual drop since 2012.

Stopping production is an option for rubber and other crops, a way to use less labour and eat into stockpiles, forcing prices to rise. Palm isn’t that flexible.

Without enough workers to harvest the crop in a timely way, palm fruit will rot. The fruit that is harvested also has to be sent quickly to crushing mills or it’ll start to oxidise, increasing acidity levels and reducing oil quality. Manual labour’s also required to keep trees pruned and healthy for future seasons.

For migrant workers, the virus outbreak and the lockdowns that followed have been been gruelling.

Those who left may not be able to return, losing a steady, if modest, source of income.

Those that stayed faced other problems, said Glorene Das, executive director of Tenaganita, a Malaysian NGO that promotes rights of migrant workers and refugees.

The government requires employers to provide workers with adequate social distance and protective gear, as well as routinely disinfected work environments. That applies to plantation operators too, but “the remoteness of these locations and the lack of labour inspectors contribute to difficulty in enforcement, ” according to the International Labour Organization.

During the lockdown, some plantation workers struggled to get enough food and other basic supplies.

Documented and undocumented Indonesian workers are the biggest contingent among Malaysia’s immigrant palm labourers.

When the country imposed its nationwide lockdown, many workers on short-stay visas returned to Indonesia, said Zana Amir, programme officer at Migrant Care, a Jakarta-headquartered group.

“They feared having no income in Malaysia, as the government conducted raids on illegal workers, ” Zana said.

The labour shortages are likely worsen, analysts predict, as governments try to combat the coronavirus-induced recession and rising unemployment.

“In Malaysia, this is likely to lead to stricter immigration regulations, ” said Fitch’s Britsch.

“Given plantations’ large reliance on foreign labour, these regulations will aggravate further the rising labour challenges palm oil companies have been facing in recent years.”

When and if Malaysia eases restrictions on travel or work visas, workers may not return en masse, said Oscar Tjakra, Singapore-based analyst at Rabobank.

“It will take some time for migrant workers who had left the country to travel back to Malaysia, ” he said.

“These migrant workers will monitor the coronavirus outbreak situation and economic situation in Malaysia before deciding to come back.” – Bloomberg

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