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Malaysia's palm oil losses will continue for a third year because of a lack of workers

Image: Reuters Berita 24 English - Malaysian palm oil planters are letting thousands of tonnes of fruit go bad because they don't have ...

Image: Reuters

Berita 24 English - Malaysian palm oil planters are letting thousands of tonnes of fruit go bad because they don't have enough workers to harvest more during the peak season. This is the third year in a row that this has happened.

Palm oil production in Malaysia, which is the second-largest producer in the world, is expected to go down or at best stay the same from last year's 18.1 million tonnes.

The Malaysian Palm Oil Association's (MPOA) Chief Executive Joseph Tek told Reuters that the country's plantations are facing their worst labour crisis since the industry began in 1917. This is because migrant workers, who make up the majority of the industry's workforce, are arriving at a "snail's pace," even though restrictions on hiring were lifted because of the coronavirus.

Companies can't make the most of the peak harvest season, which runs from August to November, because there aren't enough skilled harvesters. This means that recent rains won't help growth as much as they could.

"The plantation industry is no longer at the breaking point; it has been pushed past the breaking point," Tek said.

Malaysian production problems will help prices for benchmark crude palm oil futures, which are the most-traded vegetable oil in the world but have lost half their value since reaching a record high in March.

Because of the COVID-19 pandemic, travel restrictions were put in place in 2020. This left the Malaysian palm oil industry short 120,000 foreign workers who were needed to take care of trees and pick fruit bunches.

After that, oil palm yields dropped to levels not seen in nearly 40 years in the 2020/21 marketing year. This added to a global shortage of edible oil caused by the war between Russia and Ukraine. This caused palm oil prices to hit all-time highs in March, which drove up the cost of food, detergent, and other items made with palm oil.

Since then, though, palm oil prices have gone down. This is because rival Indonesia, which is the world's biggest producer of palm oil, has started sending exports again, and world oilseed production has gone back up, with estimates of all-time high soybean output in the US and Brazil. [GRA/]

Since April, when it hit an all-time high, the price of soybean oil in Chicago has dropped by 25%.


After the government lifted the COVID-19 freeze on recruitment in February, the palm oil industry in Malaysia expected their labour problems to get better. The MPOA expected that 52,000 migrant workers would come to work in the palm oil industry. But only a few hundred workers have come, mostly because government approvals take a long time and people are worried about worker safety.

The MPOA says that only 12% of the approvals for migrant workers that have been given to companies in Malaysia across all industries have led to workers actually showing up. About 80% of the people who work in Malaysian estates are immigrants, mostly from Indonesia and Bangladesh.

Malaysia's Ministry of Human Resources, which is in charge of letting foreign workers in, didn't respond right away when Reuters asked for a comment on the lack of workers. Messages sent to Saravanan Murugan, the Minister of Human Resources, were also not answered.

FGV Holdings, which makes the most crude palm oil in the world, said it has hired 647 migrant workers this year, but only 62% of the jobs it needs to fill have been filled.

FGV told the stock exchange on August 30 that the company thinks it will hire 7,000 people by the end of the year. But any new workers will miss the most important high-crop season.

The MPOA said that farmers are losing up to a quarter of their crops because the time it takes to harvest at some plantations has grown from 10 to 15 days to as long as 90 days. It thinks that unrealized crop and palm products could cost more than 20 billion ringgit ($4.44 billion) in lost opportunities by the end of the year.

($1 = 4.5010 ringgit)

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