Palm oil industry to rethink reliance on foreign workers

Palm oil companies are facing a shortage of 37,000 workers, which makes up nearly 10% of their total workforce.

KUALA LUMPUR: Palm oil producers are beginning to recruit local workers and pursue automation as the industry reels from the foreign worker shortage brought on by Covid-19.

According to a Reuters report, the companies are facing a shortage of 37,000 workers – nearly 10% of the total workforce.

The Malaysian Palm Oil Association (MPOA) believes this figure could balloon to as high as 70,000 when the borders reopen.

As peak production season approaches, companies have begun advertising jobs online and through banners that tout free housing, free water and other perks in a bid to attract local workers.

An estate manager with Sime Darby Plantation said this was the first time the company was making such a big effort to hire Malaysians – but “it is also the first time we are facing Covid-19”.

Producers fear the labour shortage will impact this year’s output by delaying the harvest of the perishable fruit, which would allow rival producers to extend their lead as the number one producer globally.

Malaysia’s production costs are already marginally higher at RM1,700 to RM2,010 a tonne, as opposed to RM1,680 to RM1,880 a tonne in Indonesia.

Companies such as Sime Darby Plantation, IOI Corp and United Plantations currently employ about 85% of their plantation workers from countries like Indonesia and Bangladesh.

These producers worry that while hiring locals may save on recruitment fees and the cost of flying in foreign workers, local workers may not commit to the industry or take on the hardest jobs, which are often seen as dirty and dangerous.

“It’s possible that recruiting more locals could bring down the cost of production, but provided these locals are also as productive as them (migrant workers),” said MPOA chief executive Nageeb Wahab. “That is a big question mark.”

The Sime Darby Plantation estate manager said despite rising unemployment in Malaysia, interest at a recent recruitment drive mainly revolved around roles such as drivers and mechanics rather than harvesting jobs.

Some companies have resorted to poaching workers from rivals, with an official at a mid-size Sarawak estate who declined to be named saying, “I need to do this to survive”, despite unethical concerns.

Advancing mechanisation

The shortage has also seen existing efforts ramped up to mechanise the harvesting process.

Sime Darby Plantation, the largest palm oil producer by land size, said it was accelerating the development and trials of machines that can aid in crop upkeep, harvesting and fertilisation.

It is also looking into using remote sensing and artificial intelligence to improve the efficiency of field workers.

IOI Corp said it had a similar plan in place that aims to mechanise fertilising and pesticide spraying and automate mill operations.

MPOA wants a “quantum leap” in technology that will allow companies to allot one worker per 16ha, doubling the current average land area per worker, to reduce the reliance on labour that amounts to 30% of companies’ costs.

“Imagine inventing a drone that can fly under the canopy of palm trees, with a scanner to detect ripe fruit bunches and a laser attached to cut the bunch,” says MR Chandran, a former industry official turned consultant.

“By totally modernising plantations with drones, artificial intelligence and robotics, we can also make plantation work more attractive for locals.”