Palm oil industry in dire need of automation, innovation

Oil palm has seen declining productivity with its oil being more apparent than other edible oils, says expert

By SHAHEERA AZNAM SHAH / Pic By MUHD AMIN NAHARUL

THE local palm oil industry is in dire need of automation and agricultural innovation to cope with declining productivity as plantation companies continue to struggle with massive labour shortages amid the Covid-19 pandemic.

Sime Darby Oils Sdn Bhd MD Mohd Haris Mohd Arshad (picture) said the industry’s high dependency on manual labour is among the main challenges the palm oil industry is currently facing.

“Malaysia is highly dependent on foreign labour as about 77% of the workers in the domestic sector consist of foreign workers who are coming mainly from Indonesia, according to the Economic Outlook Report in 2020.

“The industry is now facing a tough situation where we are not allowed to hire workers outside of Malaysia, and those who have left are not able to come back in light of the pandemic,” he said at the Palm and Lauric Oils Price Outlook Conference and Exhibition 2021 held virtually yesterday.

Mohd Haris added that oil palm has seen declining productivity with its oil being more apparent compared to other edible oils.

“A recent study by economic consulting firm LMC International Ltd showed that soybean oil, for example, has overtaken palm oil in terms of productivity and it is something that the industry needs to address,” he said.

Mohd Haris said the low level of automation adopted by the industry — which was a common practice due to the easy access to the labour force and the abundance of land — has been troublesome for industry players given their current state.

“There wasn’t really a need for automation in the past, but now it has changed.

“The low level of automation and high reliance on labour is now coming back to bite the industry. Now, there is a need to do things differently,” he said.

For agricultural innovation, Mohd Haris said Sime Darby Plantation Bhd (SDP) has been investing in research and development (R&D) for high-yielding palm seed to increase the amount of output in each harvesting cycle.

SDP began its R&D on the seeds, namely Genome Select, in 2016 and conducted a trial planting of 18,000 seeds. It received its first “mother palm” in 2018.

Since 2009, SDP has invested more than RM150 million in R&D and has established one of the largest genotyping laboratories in South-East Asia.

Bursa Malaysia Bhd CEO Datuk Muhamad Umar Swift said the bourse has imposed a regulation that allows only Malaysian Sustainable Palm Oil-certified crude palm oil (CPO) to be physically delivered through its derivative platform, FCPO (CPO Futures).

“Palm oil remains the most widely used vegetable oil globally, thanks to its versatility, affordability and widely acknowledged beneficial properties.

“It is, therefore, important for the entire value chain to meet internationally recognised sustainable standards to fulfil the requirements of global markets,” he said.

Read our earlier report

CPO price peaks into Malaysia’s palm oil industry history