Currently, some planters are able to cope with harvesting processes with reduced workforce, but with the peak cycle, it may worsen

By SHAHEERA AZNAM SHAH / Pic BLOOMBERG

PLANTATION companies, which have been surviving on a depleting foreign workforce, may be tested to their limit as their current foreign labour capacity is insufficient to provide manpower during the peak harvesting season.

CGS-CIMB Securities Sdn Bhd analyst Nagulan Ravi said while some palm oil producers are currently able to manage the harvesting processes with a reduced number of workers, the comfort level might deteriorate coming to the peak cycle.

“From the companies that we talk to, particularly the bigger planters, we gather that they are facing labour shortage, but it has been manageable, so far.

“They have a massive operation of course, so what they are experiencing might be different from the small-sized planters.

“But, if the planters cannot renew their foreign workers’ contracts as the foreign workers are not allowed to re-enter the country, the companies will eventually face shortage over time and even the bigger players will be affected,” he told The Malaysian Reserve (TMR) recently.

Nagulan added that some of the plantation owners have managed to redeploy their workforce from the less-engaging works to the harvesting during the previous peak season to get around the labour shortage.

“Labour shortage is definitely an issue without a doubt as to when there is a shortage, it will affect the supply.

“Currently, it is manageable, but it will get worse if the foreign worker restriction is not lifted.

What the planters are trying to do is redeploying some of the workers from manuring to harvesting.

“You could argue that this is the time the plantation should digitise, but the truth of the matter is that manual workforce is necessary no matter what,” he added.

Nagulan said for the plantation companies that are under CGS- CIMB’s monitoring, they are currently experiencing a foreign labour shortage of 10% to 15%, which is concerning as the numbers could be widened over time.

Recently, the Plantation Industries and Commodities Minister Datuk Dr Mohd Khairuddin Aman Razali said the plantation industry will be given an exemption in foreign labour hiring as soon as the government has managed to curb the Covid-19 spread.

He added that the government is still coordinating with plantation operators to ensure that the foreign labours are being given proper accommodation that is complied with the Covid-19 standard operating procedures (SOPs).

For January 2021, the palm oil production recorded lower at 1.13 million tonnes, a 15.5% decline compared to December 2020. The production was also the weakest recorded since February 2016.

MIDF Amanah Investment Bank Bhd said in its report that the lower production was contributed by the continued shortage of foreign labour force due to the Covid-19 border closure.

“The lower production was due to the labour shortage in addition to the low fertiliser application, minimal new planting of oil palm globally for the past few years and weaker fresh fruit bunches yields due to the higher frequency of rainfall during the rainy season.

“The planters are currently seeking government’s approval for a safe way to bring foreign workers into Malaysia, where all Covid-19 testing and quarantine costs are borne by employers in order to relieve the shortage of foreign workers in Malaysia,” it said.

The research house expects palm oil production in Malaysia will remain weak in the first quarter of 2021 as the factors which have been dragging the production are likely to prolong.