Wednesday, March 3, 2010


Malaysia, the world’s No. 2 palm oil producer, will miss its output target of 18.1 million tonnes because of a shortage of foreign labour even as yields recover, a top industry official said today.

Industry regulator Malaysian Palm Oil Board chairman Sabri Ahmad said Indonesian plantation workers make better pay at home as more palm oil estates start up there while employers in Malaysia have trouble hiring because of a stricter work-permit process.

Ahmad added that while concerns about hot weather caused by the El Nino weather phenomenon weigh on the industry, labour is the main issue now.

“The hot weather from El Nino is not the problem now because its effect can be seen 12-18 months later. The bigger issue is the labour shortage and if that is resolved than 18.1 million tonnes is possible,” Sabri Ahmad told Reuters ahead of the Bursa Malaysia Palm Oil Conference next week.
"Historically, Malaysian palm oil output should not be weak for two straight years. Sarawak (state) should contribute to production. We just don’t have enough labour,” he said, referring to one of the key palm oil producing states on Borneo Island.

Sabri said the industry was in talks with the government to get more “flexible work permits” for foreign labourers who make up about two-thirds of the half a million estate workers in Malaysia.

On Malaysia’s plan to replant 200,000 hectares of old oil palms, introduced in late-2008 to shore up slumping palm oil prices, Sabri said the Southeast Asian country has targeted to finish the exercise by end-2010.

Malaysia has 4.67 million hectares of land under oil palms.

But industry sources said only one-third of the 200,000 hectares were replanted as planters and smallholders preferred to maximise their harvesting of the trees rather than replant when palm oil prices started to recover in 2009. -- Reuters

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