Connect with us

Hi, what are you looking for?


Labor dearth set up Malaysia for 3rd year of palm oil losses


KUALA LUMPUR — Malaysian palm oil planters are letting thousands of tons of fruits rot as the third year of a worker shortage has left companies unable to increase their harvesting during the peak production season.

Palm oil output in Malaysia, the world’s second-largest producer, is forecast to decline, or at best remain unchanged, from last year’s 18.1 million tons, according to planters and analysts.

Plantations across the Southeast Asian nation are facing their worst labor crisis since the industry began in 1917, with the arrival of migrant workers that are the core of the industry’s labor force at a “snail’s pace,” the Malaysian Palm Oil Association’s (MPOA) Chief Executive Joseph Tek, told Reuters, despite the lifting of coronavirus-related hiring restrictions.

A lack of skilled harvesters means companies cannot fully capitalize on the peak harvest season that spans from August to November, forgoing a boost of growth from recent rains.

“The plantation industry is no longer at the breaking point, it has been pushed beyond the breaking point,” Mr. Tek said.

Production shortfalls in Malaysia will support prices for benchmark crude palm oil futures, the most-traded vegetable oil in the world, which have lost half their value after hitting a record in March.

Travel restrictions enacted in 2020 to fight the COVID-19 pandemic left the Malaysian palm oil industry short of 120,000 foreign workers needed to maintain trees and harvest fruit bunches. After that, oil palm yields plummeted to near 40-year lows in the 2020/21 marketing year, adding to a broader global edible oil shortage triggered by the Russia-Ukraine war.

That pushed palm oil prices to record highs in March, inflating prices of foodstuffs, detergent and other palm oil-based products.

Since then, though palm oil prices have slid lower following the resumption of exports from rival Indonesia, the world’s biggest palm oil producer, and a rebound in world oilseed production, with estimates of all-time high soybean output in the US and Brazil.

Chicago soybean oil has fallen 25% since hitting its all-time peak in April.

Malaysia’s palm industry expected their labor woes to ease after the government lifted the COVID-19 freeze on recruitment in February, with the MPOA expecting the entry of 52,000 migrant workers.

However, only several hundred workers have arrived, largely because of slow government approvals and concerns over worker protections.

The MPOA estimates only 12% of approvals for migrant workers granted to companies across all industry sectors in Malaysia have successfully translated into boots on the ground.

Migrants, mainly from Indonesia and Bangladesh, make up around 80% of the workforce in Malaysian estates. Malaysia’s Ministry of Human Resources, which is responsible for approving the intake of foreign workers, did not immediately respond to Reuters queries for a comment on the labor crunch.

Messages sent to the Minister of Human Resources Saravanan Murugan were not replied to as well.

FGV Holdings, the world’s largest crude palm oil producing firm, said it has received 647 migrant workers this year and it has only filled 62% of its required workforce. The firm is optimistic it will receive 7,000 workers by the end of the year, FGV said in a stock exchange filing on Aug. 30.

However, any incoming workers will miss the crucial high crop season. As harvesting time at some plantations extends to as much as 90 days from the usual 10 to 15, producers are losing up to a quarter of their crops, the MPOA said.

It estimates opportunity losses from unrealized crop and palm products could exceed 20 billion ringgit ($4.44 billion) by the end of the year. — Reuters

Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!



PHILIPPINE STAR/ MICHAEL VARCAS WASHINGTON D.C. — The United States is seeking to form a coalition of countries to drive negotiations on a global...


Buildings are seen along EDSA in Quezon City. — PHILIPPINE STAR/ MIGUEL DE GUZMAN By Diego Gabriel C. Robles  THE WORLD BANK (WB) upgraded...


Heavy traffic is seen on the southbound lane of EDSA in Cubao, Quezon City. — PHILIPPINE STAR/ MIGUEL DE GUZMAN THE PHILIPPINE auto industry’s...


REUTERS THE BANGKO SENTRAL ng Pilipinas (BSP) may deliver a second off-cycle rate hike in early November when the US Federal Reserve is expected...


Vendors arrange their goods at a public market in Manila. — PHILIPPINE STAR/ RUSSEL A. PALMA THE ASIAN Development Bank (ADB) is planning to...

Editor’s Pick

With the reversal of the 1.25% rise in National Insurance Contributions happening on the 6th of November, employers across the nation have an opportunity...

You May Also Like


BW FILE PHOTO GROSS BORROWINGS by the National Government reached P2.6 trillion as of end-September as it continued to raise funds to respond to...


KARASOLAR.COM TENA, Ecuador — Ecuador’s rainforest Achuar people say their ancestors long dreamed of a “fire canoe” or “electric fish” that would let them...


REUTERS By Luz Wendy T. Noble, Reporter The country’s foreign exchange buffers slightly increased as of end-October as the value of the central bank’s...


COVID-19 has had a significant impact on the mental health of Filipinos across different groups all over the archipelago. From frontline workers, parents balancing...

Disclaimer: Respect, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2022 Respect Investment. All Rights Reserved.