May 11, 2022
KULA LUMPUR – The prolonged labour shortage in the oil palm plantation sector remains unresolved, as the government has yet to fulfil its promise of bringing in 32,000 foreign workers.
The labour crunch, especially for fruit harvesters in the oil palm estates, is currently still critical, said Malaysian Palm Oil Association (MPOA) chief executive officer Datuk Nageeb Wahab.
Many plantation companies have been waiting in vain for the arrival of foreign workers since late last year.
“While I don’t see this happening soon, I believe that the approval (for foreign workers) has been expedited by the government.
“The onus now is for the plantation companies to start sourcing for their estate workers,” he said.
MPOA represents about 70% of the privately-owned oil palm-planted areas in Malaysia, which makes up about 40% of the total planted oil palm area.
Its members include major plantation companies such as Kuala Lumpur Kepong Bhd, IOI Corp Bhd, Sime Darby Plantation Bhd and FGV Holdings Bhd.
Last year, Plantation Industries and Commodities Minister Datuk Zuraida Kamaruddin said the ministry had approved 32,000 foreign plantation workers who have been fully vaccinated to be brought into Malaysia in stages starting in mid-October 2021.
They were expected to become harvesters, as most locals were not yet ready to take on that task, she added.
United Plantations Bhd recently warned that the acute labour shortage in the sector has now reached a breaking point in several plantation companies.
“If the government does not provide an urgent yet safe avenue to recruit guest workers, it will become impossible to avoid serious crop losses in 2022,” said an official of the top planter.
Although the government has introduced the recruitment of guest workers into Malaysia, United Plantations said the main challenge is expediting the process, including providing them with work permits, vaccinations and meeting other important pre-conditions.
“It is therefore not a measure that will create relief in the second quarter of 2022 and, in the best case, the industry will only likely feel the positive impact of this by the end of the first quarter of next year,” said the official.
MPOA’s Nageeb said most plantation companies are at risk of losing some 15% to 25% of production this year and are likely to revisit last year’s production shortfall.
Malaysia recorded lower crude palm oil (CPO) production at 18.12 million tonnes in 2021, compared with 19.14 million tonnes in 2020.
He added that most local planters’ 30-day to 40-day harvesting intervals were now the norm versus the 10-day to 15-day intervals previously.
The labour shortage has impacted planters’ yields and output in their estates, said Nageeb, adding that this has stopped many plantation companies from fully optimising the record-high CPO prices averaging at RM6,300 per tonne in the first four months of this year.
The plantation sector reaped RM106.5bil in revenue in 2021, compared with RM73bil in 2020, thanks to the soaring CPO prices.
“Actually, the sector could have reaped an additional RM30bil in revenue (in 2021) if not for the acute worker shortage,” said Nageeb.CGS-CIMB Research in its recent report said the planned intake of foreign workers to address the labour shortage appeared to have been delayed by a few months.
“We expect the labour shortage problem to only be partially alleviated in the first half of 2022,” it said.
Industry consultant MR Chandran said that the foreign worker shortage in the sector has taken a turn for the worse, particularly in the past six months.
He claims that the shortage in the sector has increased to over 100,000 so far, affecting mostly estates.
This is in comparison to the sector’s worker shortage of 62,000 in 2021 and 31,000 prior to the Covid-19 outbreak in 2020.
Chandran pointed out that the local palm oil sector is heavily dependent on foreign workers, who make up about 70% of the total workforce.
“Many will stand to lose nearly 15% of their crop this year or equivalent to about three million tonnes of palm oil,” he said.