Malaysia's estate owners' association (MEOA) is urging the Sabah state government to relax new operating restrictions for the palm oil industry intended to combat the spread of Covid-19, warning of output and economic losses.
The MEOA insists that enhanced standard operating procedures (SOPs) rolled out by the industry to combat the spread of the coronavirus since March are adequate to prevent its transmission. But the state has been increasing procedural controls on businesses this month, as part of a state-wide movement control order implemented for 14 days since 13 October in response to a surge in Covid-19 cases.
Sabah ordered palm oil businesses to halve the number of workers on site at any time and restrict working time to 12 hours daily, in updated SOPs for the agricultural and food industries it released on 20 October. The directive is assumed to apply to activities across the palm oil supply chain including upstream oil palm plantations, mid-stream palm oil mills and downstream refineries and supporting services, said the MEOA.
Limiting plantations' workforce numbers and mills' operating hours will reduce palm oil and kernel production during the current peak harvest season, according to the association, although it refrained from forecasting potential lost volumes.
The group warned that current high palm oil commodity prices will exacerbate financial losses for growers and the state treasury if output is curtailed. Malaysian crude palm oil (CPO) values rebounded this week after last week's losses, with spot values surpassing 3,000 ringgit/t ($722/t) on 21 October and topping 3,052 ringgit/t yesterday, its highest level since 21 September, according to the national palm oil board. Gains have largely been supported by supply issues in Sabah, the country's top grower. Sabah collects a 7.5pc tax on sales of CPO from the region.
