KUALA LUMPUR (March 9): After a dismal performance last year, Malaysia's palm oil production is set to recover this year, but labour issues must be resolved first, said ISTA Mielke GmBH (Oil World) executive director Thomas Mielke (pictured).
During the 2022 Palma & Lauric Oil Conference (POC2022) on Wednesday (March 9), Thomas said a pick up in production is dependent on the assumption that labour shortage issues ease this year.
“Labour shortage is expected to ease in 2022, and this is also one of our assumptions for the recovery in palm oil production for the rest of the season.
“But will it really, and when? If this is not solved, then the production losses will again increase on the plantations in the seasonally high production months after June.
“Immigration must be relaxed to solve the labour problem in Malaysia, to reduce costs, and increase production."
Mielke noted that in recent years, global palm oil production has been on the decline, and this is another reason for the current high price of crude palm oil (CPO).
“Lower than expected palm oil production worldwide has resulted in year-on-year declines in consumption during the past two seasons, this is unprecedented.
“During October 2021/2022, production in Indonesia and Malaysia was again below expectation. Palm oil has lost its growth dynamics, this is very critical.
“Declining yield, insufficient replanting in the last couple of years, lack of new plantings, shortage of workers, harvest losses, and several other factors have resulted in the loss of growth dynamics,” he added.
He said current Malaysian and Indonesian production levels cannot cope with the global levels of palm oil consumption, and noted that the governments have to come up with a solution to solve the labour issues of the plantation sector.
“If we look at the development of annual yields, it is a disaster. Malaysian average yields of palm oil fell to the lowest level in more than 20 years in 2021.
“A decline has also been observed in Indonesia — this is one of the reasons for the slowdown of palm oil production and tightness we have at the moment in world supplies of palm oil,” he said.
Prior to this, on Feb 22, Plantation Industries and Commodities Minister Datuk Zuraida Kamaruddin said Malaysia will increase its palm oil production in 2022 by hiring 32,000 foreign workers to make up for the shortfall in labour.
Malaysia’s palm oil production last year dropped to 18.1 million tonnes from 19.1 million tonnes in 2020 as Covid-19 border controls disrupted labour recruitment.