Bring in the workers

MANY are not in favour of the government’s proposal to slash crude palm oil (CPO) export tax to between 4% and 6% and also, to slow down its B20 biodiesel programme to boost export earnings from the record high commodity prices.

Malaysia’s capability to increase its palm oil exports is being put to question, particularly when most of its oil palm estates are losing unharvested crops due to the acute labour shortage issue.

There is also no point for Malaysia to slow down its biodiesel mandates when most of the industry players are still struggling to meet up with the mandate requirements.

Hence, for the benefit of the oil palm sector, the government must first prioritise on facilitating the recruitment of 32,000 foreign workers, particularly palm fruits harvesters. This will definitely help to alleviate the plantation companies and the smallholder sector, which are believed to be short of a whopping 100,000 estate workers.

The government also needs to focus more on improving domestic palm oil production, which could further deteriorate if the acute labour shortage continues.

Last year, CPO production dropped to 18.12 million tonnes from 19.14 million tonnes in the previous year.

It would be more critical to quickly bring in the labour workforce to catch up with the harvesting round and productivity for local planters during the period when CPO price is trading above RM6,000 per tonne mark.

Given the latest development, industry observers expect Malaysia’s B20 palm oil biofuel programme due for adoption by the end of this year, to be delayed further.

Having said that, the government has mentioned that it would undertake the B20 programme stage-by-stage depending on its financial capabilities.

The mandate to manufacture biofuel with 20% palm oil and 80% fossil fuel for the transport sector was first rolled out in January 2020, but faced delays following the movement curbs imposed to contain the Covid-19 outbreaks. Analysts opined that its peer, Indonesia will also delay its B30 biofuel programme to help stabilise the shortage in its domestic cooking oil supply.

One thing for sure, all these uncertainties will allow CPO to stay at lofty levels with analysts revising the average price upwards at RM5,200-RM5,500 per tonne for 2022.