Can palm oil exports reach RM100 billion despite labour shortages?

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Palm Oil Exports Projected to Reach RM100 Billion Despite Labour Shortages in 2021

The Malaysian palm oil industry is anticipated to achieve an export value of RM100 billion in 2021, a significant increase from the RM73.3 billion recorded in the preceding year. This projection is largely attributed to the sustained high prices of crude palm oil (CPO). However, the sector faced a substantial shortfall, with estimates suggesting a potential RM20 billion loss in export value due to a critical labour shortage and consequently lower palm output.
Strong CPO Prices Bolster Export Revenue

The performance of CPO prices has been a key driver for the increased export value. On November 3, 2021, the price of CPO reached a historic high of RM5,404 per tonne. For the period of January to October 2021, the average CPO price saw a substantial surge of 65 per cent, reaching RM4,276.50 compared to RM2,583.50 in the same period of the previous year. This favourable price environment has largely compensated for production challenges.
Labour Shortages Impacted Potential Output

Despite the strong export value, the industry's full potential was constrained by a significant shortage of workers, exacerbated by the Covid-19 pandemic and a freeze on new foreign worker intake. Production of CPO was expected to fall below 18 million tonnes in 2021, representing a 20 per cent decrease from a potential 20 million tonnes. This deficit is directly linked to an estimated shortage of 75,000 workers across the sector.
Initiatives Underway to Address Labour Dependence

In response to these challenges, the Mechanisation and Automation Research Consortium of Oil Palm (Marcop) was established with an allocation of RM60 million. This initiative aims to research and commercialise agricultural mechanisation technologies within the Industry Revolution 4.0 framework, incorporating tools such as drones, robots, and sensors. The primary objective is to reduce the industry's reliance on labour, particularly in the critical area of fresh fruit bunch harvesting, which currently depends on nearly 80 per cent foreign labour, with a target to achieve this reduction by 2024.

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Can palm oil exports reach RM100 billion despite labour shortages?

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