Labour boost to CPO output

KUALA LUMPUR: The government, along with several major palm oil producers, is working on a plan to elevate the fresh fruit bunch (FFB) harvesting job into a profession with bright prospects and better wages for harvesters moving forward, says newly appointed Plantation and Commodities Minister Datuk Seri Johari Abdul Ghani.

He noted that this would help solve the labour shortage issue, which continues to plague the local palm oil industry.

The move will also help support the industry as it is one of the major contributors to the gross domestic product (GDP) amounting to billions of ringgit, and its potential should not be limited by labour issues, Johari said.

“The main issue this industry faces now pertains to the persistent shortage of harvesting workers.

“Crude palm oil (CPO) and its related exports alone amounted to about RM130bil. When we do not have enough workers on the field, we cannot collect (and monetise) the fruit.

“Anyone can do the other work, but palm fruit harvesting is a special job which requires practice and skill,” Johari told reporters after officiating the Palm Oil Economic Review and Outlook Seminar 2024 organised by the Malaysian Palm Oil Board (MPOB) yesterday.

“I’m suggesting that we introduce a special course for CPO harvesting under the Technical and Vocational Education and Training or TVET scheme to train local workers in this field.

“We have 5.6 million ha of plantations and they can take up this job anywhere (in the country). During Covid-19, FFB worth tens of billions had been wasted and not harvested for profit,” he added.

He said it was unthinkable that FFB harvesters were paid the same level as foreign workers in the country although this was a major economic contributor to the nation’s finances.

“For every 300 workers in an estate, for example, nearly 50% are harvesters. I have heard from Sime Darby Plantation Bhd that the planter is trying to get locals to do this in the future.

“Also, with proper training and potential mechanisation, it will make the job of harvesters much easier.

“It is too volatile to leave this to foreign workers. If we have foreign workers it’s good, but we can’t let all the FFB go to waste when there aren’t enough workers,” Johari noted.

“Perhaps, we can start with a small group of about 50 people in a class and get the industry experts from the MPOB to teach them how to harvest the FFB. Over time, we should also do more research and development to ensure the oil palm trees we have won’t grow too tall so that it is easier to harvest,” he added.

Earlier in his opening speech at the seminar, Johari said labour shortages had become the main limitation to the palm oil industry, resulting in production losses and low yields.

“This had restrained palm oil production from reaching its full potential in 2022 and 2023.

“For instance, the freeze on the hiring of foreign workers had resulted in a shortage of 55,000 workers in the palm oil sector in December 2022,” he said.

“Nonetheless, despite facing some initial obstacles, the labour situation gradually improved with the reopening of the country’s borders, resulting in the slight increase in CPO production in the latter part of 2023,” he added.

On a separate issue, Johari said his ministry will look into the issue of the palm oil windfall profit levy, which had been raised by industry players.

Industry players had said the cost of cultivating and harvesting palm oil had increased to almost RM3,000 per tonne.

“The cost used to be between RM1,500 and RM1,800 per tonne, but now it has gone up to RM2,800-RM3,000 per tonne and it is even higher in certain areas,” he said.

The government will check on these claims and if so, will then look into necessary adjustments in the present windfall tax regime.

A windfall levy of 3% is currently imposed when CPO prices rise above RM3,000 per tonne in Peninsular Malaysia and above RM3,500 per tonne in Sabah and Sarawak.

Commenting on the outlook of the industry, MPOB director-general Datuk Ahmad Parveez Ghulam Kadir said in his presentation at the seminar that the CPO price may average higher between RM3,900 and RM4,200 per tonne this year compared to RM3,809.50 per tonne last year.

This is due to insufficient supply and higher demand from importing countries, he said.

“Another key driver that will influence the price of CPO for this year is the implementation of the B35 biodiesel mandate in Indonesia, which is expected to limit global palm oil supply for the export market.

“We also foresee tight production of soybean at least until April this year,” Ahmad Parveez said.

Ahmad Parveez also noted Malaysian palm oil stocks, which are projected at 1.95 million tonnes for this year, would also help support CPO prices moving forward.

He also estimated CPO production to rise by 1.1% to 18.75 million tonnes this year from 18.55 million tonnes in 2023, given the expected increase in mature areas and the improved labour situation in the industry.