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Palm oil industry in Sarawak reeling from acute workers shortage which has further deteriorated during the last 8 months of Movement Control Order

Friday, 20 November 2020

The palm oil industry in Sarawak is the highest contributor of revenue to the state under the agriculture sector; it is also severely handicapped by the severe shortage of harvesters during this peak crop season and current good CPO prices fetching RM 3000 and above which otherwise could have generated more revenue to the state and help the planters to survive better during this COVID 19 pandemic.

“The palm oil industry over the years in Sarawak has invested billions of ringgit of hard-earned money in the state through development and setting up of estates, palm oil mills and refineries. This industry in Sarawak has grown to be the biggest oil palm growing region in Malaysia with 1.6 million hectares planted. This has also provided businesses and investments for other spin-off related industries like machine spare-parts & hardware, fertilizers, equipment and food, non-food manufacturers, traders and other services,” cited Andrew Cheng Mui Fah, CEO of Sarawak Oil Palm Plantation Owners Association (SOPPOA). The industry has consistently provided stable employment to thousands of locals and also foreign workers contributing to the wealth and prosperity of the state and enabling many native landowners and their families to become smallholders and majority of them enjoying self-employed livelihoods from oil palm cultivation.

“Over the past years, Sarawak has progressed economically and many locals have ventured to the cities and overseas for opportunities, leaving our rural settings almost devoid of workers. Furthermore, for locals currently employed in the palm oil industry in Sarawak, about 60-80 % of them are in the skilled and semi-skilled categories,” he added. Due to the Covid-19 pandemic, the country has stopped new foreign workers entering to work in Sarawak since March 2020 and thus has aggravated the already acute shortage of workers situation here rendering the industry to heading towards an almost certain business closure for most plantation businesses, big or small which are now cripple by the severity of this critical worker shortages. This situation has caused hardships and sufferings to the local plantations’ operators especially during this economic crisis caused by the COVID 19 pandemic.

“What really happens is that there are simply not enough workers to harvest the fruits which are the only source of revenues for estates and these has turned to unrecoverable financial losses for the company due to late or partial harvesting. These unharvested perishable crops are being rotted away gradually leading to lower crop yields and quality of palm oil which contributes to further loss of overall income. Worst, in many instances, these fruits which are left unattended due shortage of harvesters render the earlier high investment costs and efforts incurred for agronomic inputs as fertilizing and husbandry to generate these valuable products are just being wasted. With less income from the lower crops being harvested due to workers shortage, the companies are curtailing overall spending to survive and this will directly and indirectly impact the value chain and subsequent shrinking of the state’s agro-commodity economy,” he explained. For those estates that are forcefully abandoned, it will take about 2 to 3 years duration to turn around to become productive again and this is also another reason why shortage of workers could lead to worsening of the situation already in Sarawak.

The palm oil industry here is urgently appealing to the State and Federal Governments to allow for a consignment of `relief’ foreign workers to come with conditions of full compliances to the SDMC regulation and Standard Operating Procedures, SOP to inspect and verify on the employee health status and only admitting those workers free of any symptoms of Covid-19 infection after mandatory quarantine of 14 days and Covid 19 testings. It should be noted that since the Movement Control Order (MCO) in March 2020, oil palm estates in Sarawak have resorted to own strict SOPs apart from SDMC such as self-locked down in the rural areas which is proven to be effective so far. Allowing new recruits to come in for plantation work during this peak crop season with good CPO prices of more than RM 3000 per m/ton will provide relief to the industry which had suffered much over the last 2 years where CPO prices were only hovering about RM 2000 per m/ton and companies still suffering financial losses and still finding difficulties to pay bank loans, other borrowings and vendors.

The survival of the industry lies squarely in the hands of the government and surely can make a difference if government help comes in timely before the industry again to appeal to the government to help keep the industry afloat.

In comparison with the agro-commodity sector of Europe and USA, the vegetable oil growers are much protected by the government and are subsidized and incentivized in many ways to encourage them to thrive. Here in our country, oil palm industry is undisputedly the most taxed industry as compared to all other industries in the country by the government in billions of ringgits and yet when we appeal for relief workers to survive, we are just not reciprocated and plantation companies one by one will be forced to close down gradually due to the lack of support from the government.

SOPPOA is most willing to listen and cooperate with the government to forge a win -win solution. The agriculture sector in Malaysia, especially the agro-commodity section plays a very important role not only to the nation economy but the survival of thousands of farmers and their families who depended on this industry for a decent living. Unless the government want the industry to go into bankruptcies and farmers flooding to the cities for jobs leaving the countryside behind, please `ACT ‘now before it is too late as the oil palm industry here is in a state of ` Intensive Care Unit, ICU ‘now.