Palm Oil Production Prospects Continue Dwindling in Malaysia

Malaysian palm oil production continues to lower. Already the lockdown affect has forced the industry persons to revise the production 25% year on year. Now there are reports of production of palm trees in the region of Sabah to fall by nearly 50% every month from now.

According to plantation owners Sabah’s palm oil production could fall by approximately 3 Lakh tonnes a month roughly under the conditional movement control order. The state produces five million tonnes of crude palm oil annually, accounting for one fourth of the nation’s output. As per the Malaysian Estate Owners’ Association (MEOA) palm oil mills have reduced their operating hours to 12 hours from 6am to 6pm, which has increased the risk of sharp falling production in the state of Sabah. The mills earlier used to operate up to 22 hours a day during the peak production season, which is between September and January.

The situation has emerged following Sabah government to recommend the National Security Council to extend the CMCO in the state as it was still recording a high daily number of new Covid-19 cases. The statewide CMCO was imposed on Oct 13 and was scheduled to end on Oct 26. The CMCO or the Conditional Movement Control Order is a plan for relaxation of regulations regarding the MCO, with its main goal to reopen the national economy in a controlled manner. Under this one of the regulations is that most economic sectors and activities will be allowed to operate while observing the business standard operation procedures such as social distancing etc.  

The ongoing pandemic has already enhanced the risk of production loss of Malaysian palm oil. The economy of this nation is heavily dependent on palm oil trade, as it is the most important agricultural commodity in terms of earning export revenue. In Malaysia, workers in palm plantation are mostly migrant workers from Indonesia, Bangladesh and India rather than the locals. Earlier in March-April, as countries in Southeast Asia struggled to get the Covid-19 outbreak under control, the Malaysian government tightened restrictions on both sided travel for workers. As a result the country continues facing the acute labor shortage. Manual labor is required to keep trees pruned and healthy for future seasons. Therefore lack of adequate manpower to manage all these operations shall be influential in enhancing the production loss threat.  

According to present MPOB data, around 80-85% of the plantation workforce comprises more than 265,000 mainly from Indonesia, Philippines and Bangladesh, and the industry was already short of around 31,000 workers before the pandemic. It may be noted that overseas hiring practices have come under repeated scrutiny following numerous reports, highlighting foreign workers’ increasing risk of exploitation in the plantation sector.