Labour shortages slashing Malaysian palm yields

Malaysia is losing up to 25pc of its palm yield because of labour shortages, according to Malaysian Palm Oil Association (MPOA) chief executive officer Datuk Mohd Nageeb Abdul Wahab.

Kuala Lumpur has put a freeze on foreign worker recruitment until December, which is crippling the labour-intensive palm industry where 84pc of the workforce are foreigners from countries such as Indonesia and Bangladesh.

New workers have been scant over the past few months while the country enacted movement control orders but even pre-Covid there was around a 36,000 shortfall in workers resulting in a 10-25pc loss of potential production, Wahab said.

While the lack of employees is the biggest factor in stagnating yields, Malaysia is also contending with adverse weather and degradation in soil quality as ageing farmland enters its fourth plantation cycle.

Producers are reluctant to expand plantations onto new land given international anti-palm sentiment and deforestation concerns, so yields need to be maximised on existing sites.

Wahab also hopes Malaysia will be more aggressive in pushing higher biodiesel mandates, having postponed its rollout of a 20pc (B20) nationwide mandate from 10pc currently because of the coronavirus. Wahab pointed to Indonesia which implemented the 30pc national biodiesel blending mandate (B30) this year and is already discussing B40 and B50.

Malaysia is the world's second largest palm producer behind Indonesia, with an output of 19.9mn t last year.

By Amandeep Parmar