Malaysia's palm oil sector faces a significant challenge due to a chronic labor shortage. This issue is exacerbated by the government's ongoing freeze on foreign worker quota applications.
Malaysia's palm oil sector faces a persistent challenge: a shortage of labor. This sector requires approximately 38,000 workers, a number expected to increase due to the government's ongoing freeze on applications for foreign worker quotas since March 2023. The sector heavily relies on foreign labor, particularly from Indonesia. This dependence, coupled with limited local worker participation, has created a chronic labor gap.
As foreign workers' work permits expire, they return to their home countries, leaving a void in the workforce. Malaysia's palm oil sector remains labor-intensive, especially for harvesting and collecting fresh fruit bunches (FFB). This reliance on manual labor, coupled with the ongoing labor shortage, directly impacts the sector's production capacity. The Minister of Plantation and Commodities, Datuk Seri Johari Abdul Ghani, recently assured that the government is committed to ensuring each palm oil plantation has sufficient labor to maintain consistent production. He emphasized that labor shortages could lead to unharvested ripe palm fruit, ultimately affecting overall yield. Despite the challenges, Malaysia's palm oil production recorded a 4.2% increase in 2024 compared to the previous year. However, this growth remains modest due to the lingering labor situation in the sector. Ahmad Parveez Ghulam Kadir, Director-General of the Malaysian Palm Oil Board (MPOB), stated that the continued labor shortage hinders the sector's ability to maximize harvest output. He also pointed out that unpredictable weather conditions in 2023 and 2024 further restricted palm oil production. Looking ahead to 2025, palm oil production is projected to reach 19.5 million tonnes, driven by the anticipated recovery of the labor situation in the palm oil sector and the impact of increased replanting activities in 2024. The price of crude palm oil (CPO) is expected to remain stable within the range of RM4,000 to RM4,300 per tonne in 2025. Several factors contribute to this price stability, including robust demand from international markets, particularly the biodiesel sector in Indonesia, which is projected to absorb an additional 1.2 million to 1.7 million tonnes of CPO. MPOB also anticipates that reduced production in some key competing countries, such as Indonesia, will support higher prices. While recognizing the risks associated with global commodity market fluctuations, Ahmad Parveez highlighted that strategic government measures are in place to ensure that palm oil prices remain competitive
PALM OIL LABOR SHORTAGE MALAYSIA PRODUCTION GLOBAL MARKET PRICES
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