Malaysian palm oil producers hit by worker shortage

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Malaysian palm oil producers hit by worker shortage

Palm oil producers may lose 20 billion ringgit a year due to a chronic shortage of plantation workers in Malaysia, according to the Malaysian Palm Oil Association, curbing supply and possibly boosting global prices.

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Palm growers hired around 14,000 foreign workers this year through November, just a fifth of the industry's needs and about half of the number approved by the authorities, according to a survey of top 10 planters by the association. The country is the biggest producer of tropical oil after Indonesia.

Malaysia s palm oil sector has struggled to bring in more workers due to the relaxed movement curbs due to the virus, which has made the palm oil sector dependent on overseas labor. The government assured the industry it would speed up worker approval, but planters say progress is too slow and is leading to crop losses. Without enough boots on the ground, many farmers had to leave ripened fruit rotting on trees.

Joseph Tek, chief executive of the association said that the number of foreign workers coming in is small compared to the amount needed. Bottlenecks still persist, he said, despite efforts by various agencies to facilitate worker arrivals.

The Malaysian palm oil output, used in everything from food and cosmetics to biofuels, is expected to drop for a third year, to 18 million tons in 2022, the association said in September.

Concerns over weaker production may support prices of oil. Palm oil jumped earlier in the year due to Russia's invasion of Ukraine, but then declined as the supply situation improved and Indonesia ramped up exports. They have gone up about 20% since September.

Tek said that the palm oil sector is seeking help from Malaysia's new government to speed up the process of bringing in more plantation workers. He said that authorities are taking measures like chartering planes and renewing agreements with governments in source countries to bring in more workers.