Expert calls for 5-year plan to beat labour shortage in oil palm estates

 

A recent study says labour shortage is more detrimental to Malaysia’s palm oil industry than a global price drop.

PETALING JAYA: A palm oil analyst says Putrajaya needs to rectify its labour market policy to address the manpower shortage faced by the palm oil industry.

Sathia Varqa, owner of Singapore-based Palm Oil Analytics, called for a systematic five-year plan to adequately address the labour shortage faced by the industry for the long term.

He told FMT the industry was not the only one facing manpower shortage, and pointed out that Malaysia faced a labour market policy issue and “not a labour shortage one”.

“This is particularly acute in the oil palm sector because of the dependence on foreign workers, to the tune of nearly 80%, mainly in harvesting and field-related work.

“Malaysia is not unique in this problem. Middle-income countries often fall into the middle-income trap, where a certain level of income is achieved but then the economy gets stuck there for some structural reasons.

“A lack of steady investment in skills, productivity and technology slows down growth in general unless we hire and pay lower wages to workers from low-income countries,” he said.

Malaysian Palm Oil Board (MPOB) director-general Ahmad Parveez Ghulam Kadi said Putrajaya should allow more migrant workers to be hired as a short-term measure, adding that firms would bear the cost of testing them for Covid-19.

He told FMT there should also be increased efforts to attract more Malaysians, such as the Orang Asli, by spreading the word on the benefits of the industry as well as the labour shortage it faces.

“Estate owners and the plantation industries and commodities, and human resources ministries should work together to organise roadshows to disseminate information to local workers, especially youths, and organise career days in the rural areas,” he said.

Ahmad Parveez said more funds could be allocated for the Oil Palm Industry Mechanisation Incentive Scheme (OPIMIS) to encourage estate owners to further embrace mechanisation and automation.

He said there should also be continuous research and development into reliable machinery that would increase productivity and reduce labour reliance and production costs.

“We recently introduced the idea of forming a mechanisation, automation and research consortium for oil palm, to brainstorm and come out with a practical and affordable mechanisation in the industry, especially for oil palm harvesting, which is labour-intensive,” he said.

Khazanah Research Institute had said in a study that labour shortage was more detrimental to both estates and smallholders in Malaysia’s palm oil industry than a global price drop.

The study said a 30% reduction in labour from the current level would see production fall by half, and an 80% drop would lead to a system collapse with production at only 20% of the business as usual level.

In July last year, Malaysian Palm Oil Association CEO Mohamad Nageeb Wahab said the industry had lost up to 25% of its potential palm oil yield because of a shortage of labour.

He warned that losses would increase if the government’s freeze on foreign labour recruitment was not lifted, noting that the country was already short of about 36,000 workers before the pandemic.

In an effort to address this, Putrajaya announced in November that it would run an Illegal Immigrant Recalibration Plan until June 30 this year to “regularise” undocumented migrant workers. - FMT