Palm oil output expected to drop due to acute labour shortages

PETALING JAYA: The palm oil industry is expecting a major hit in production as it’s pushed to a “breaking point” due to severe labour shortages.

The industry’s opportunity losses could reach more than RM20bil by year’s end if workers do not come in soon, said an industry source.

“The industry is still reeling from the shortage of workers, which has now further increased to around 120,000 workers,” the source told The Star.

This, of course, has a severe impact on the industry where the opportunity losses until today could be around RM15bil or more – and could reach more than RM20bil by year end if workers do not arrive at the earliest.

The source said that in addition to economic losses, harvesting operations will also be affected because it will take some time to get the current longer harvesting intervals back to normal and improve the quality of crops.

Although the government has given approvals to bring in foreign workers in batches, the actual intake process may still be slow due to administrative issues, the source said.

According to the source, accelerating worker arrivals will be a huge boon not only to the plantation industry but also to all other industries.

Defining the situation on the ground, Datuk Carl Bek-Nielsen, chief executive director of United Plantations Bhd, said most plantations across the country are facing the “worst labour shortages ever”.

“Losses are rising fast as we have all been pushed over the breaking point,” says the co-chair of the Roundtable on Sustainable Palm Oil (RSPO).

“In this context, I estimate that the total crop losses for the Malaysian palm oil industry this year will translate into just over six million metric tonnes of fresh fruit bunches, equal to over one million tonnes of vegetable oil rotting in the fields,” said Bek-Nielsen, who is also a council member of the Malaysian Palm Oil Association.

He also stated that labour shortages will have a negative impact on production in the third quarter.

Malaysian Estate Owners’ Association president Jeffrey Ong said the palm yields are expected to increase and start ripening in the third quarter.

“The high yield would be fully realised in the fourth quarter stretching into the beginning of first quarter 2023,” he said.

“The question is whether the plantations would have sufficient harvesters to take full advantage of recovering these high yields, that is, harvest all the ripe fresh fruit bunches on time as they ripen and not when they are rotting.

“The country’s production figures will show an increase, but it will not reflect the palms’ actual yield. The production figures recorded would be the country’s yield recovery,” he added.

He also noted that Indonesian workers are better at harvesting.

“The plantation industry is still suffering severely from the shortage of workers despite acquiring some workers from other source countries such as India and Bangladesh instead of Indonesia.

“In this industry, Indonesian harvesters are better adapted physically and far more efficient in harvesting the fresh fruit bunches from the palm tree, whilst other nationalities, even with training, are at best half as efficient as Indonesian harvesters.

“This means one needs many more other nationality harvesters if one does not have Indonesians to do this task,” he said.

Human Resources Minister Datuk Seri M. Saravanan recently said that the amendments to the Employment Act 1955, which were supposed to have come into effect yesterday, were postponed due to a shortage of workers.