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aws全区号(www.2km.me)_Analysis-Malaysia's palm oil producers adjust to labour shortages, higher recruitment costs

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The country, second only to Indonesia in palm oil production, has become more competitive in recent months due to higher export levies imposed by its southern neighbour. But mounting employment costs mean Malaysia risks losing that edge and potentially ceding market share to Indonesia.

KUALA LUMPUR: Malaysia's palm oil producers are racing to adjust to an acute shortage of workers due to the coronavirus and sharply higher costs of recruitment as they make changes in response to accusations of forced labour.

The country, second only to Indonesia in palm oil production, has become more competitive in recent months due to higher export levies imposed by its southern neighbour. But mounting employment costs mean Malaysia risks losing that edge and potentially ceding market share to Indonesia.

The increased costs, alongside record-high fertilizer prices affecting both countries, pushed the key commodity to an all-time high in October. That has already forced up the price of the foodstuff worldwide, and is raising the costs of cosmetics and detergents and other products that palm oil is used in. The most pressing problem for palm oil producers such as FGV Holdings and Sime Darby Plantation is a lack of workers to harvest palm trees, a skilled and dangerous task.

"The current issues are an extreme manifestation of the fact that as incomes grow and workers, with greater options of urban employment, become less able or willing to do manual labour, attracting them to the plantations will become more difficult," said Julian McGill, head of South East Asia at LMC International. "Soon there will be no 'cheap' labour."

COVID EXODUS

Up until April last year as many as 337,000 migrant workers, mostly from Indonesia, worked on Malaysian plantations, making up about 80% of the workforce. Thousands of them flew home throughout the pandemic while Malaysia closed borders and stopped issuing new work permits to control the spread of the new coronavirus. Hundreds of undocumented workers were also deported.

As a result, Malaysia's palm oil yields dropped to nearly 40-year lows this year as plantations operated with about 75,000 fewer workers than needed. The steep drop in production pushed palm oil prices to record highs and sparked concerns about food inflation.

To alleviate the situation, Malaysia in September approved the recruitment of 32,000 foreign workers for palm oil plantations, prioritising those from Indonesia. Although even if that many were hired, it would still leave plantations well below full capacity for the next peak harvest season of September to November 2022.

Plantation owners are finding it harder and more expensive to hire workers as they try to repair Malaysia's standing in global markets caused by accusations of using forced labour.

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