Palm oil industry labourers at work. Picture: 123RF/TAN KIAN YONG
Palm oil industry labourers at work. Picture: 123RF/TAN KIAN YONG

Kuala Lumpur — The coronavirus crisis has pushed the Malaysian palm-oil industry into a labour crunch so severe that it is turning to convicts for help.

Producers of the tropical oil are reaching out to prison departments in search of locals for work in the palm industry that is considered dirty, difficult and dangerous, according to the Malaysian Palm Oil Association, a growers’ group that represents 40% of the palm-planted area in the country.

“Our prisons are quite overwhelmed,” group CEO Nageeb Wahab said by phone from Kuala Lumpur. There are thousands of people locked up for small offences. “This is the target group that we’re looking at.”

Malaysian palm growers had employed convicts since 2016, Nageeb said, but the search was intensifying as the coronavirus worsened the labour shortage. Malaysia, the biggest grower after Indonesia, was already short of about 36,000 workers before the pandemic, he said. Now that had risen significantly, which meant the country might see up to a 30% loss in output.

“The bullish prices experienced now cannot be fully exploited and this is going to be a big loss to both the industry and the government,” Nageeb said. Benchmark futures in Kuala Lumpur have surged almost 50% from their low in May.

The lack of workers has plagued Malaysian growers for years. Despite incentives such as free housing, electricity and social amenities, locals shun the labour-intensive process of harvesting palm fruit, pushing the industry to employ migrant workers from Indonesia, Bangladesh and India. Dependence on foreign labour is now more than 80%, according to Nageeb.

But now, as lockdown policies restrict travel in many parts of the region, and the Malaysian government looks to cut back hiring of migrant workers, palm growers are left with little choice. The industry is also reaching out to drug rehabilitation centres for potential workers.

Sime Darby Plantation, the world’s biggest oil-palm planter by acreage, said on Wednesday it could lose as many as 6,000 foreign workers this year as their contracts ended, and had hired only 300 locals. Intensive recruitment drives that began in July had mostly failed and the grower was now looking at prisons and drug rehabilitation centres for workers, according CFO Renaka Ramachandran.

“Like never before, billboards have been erected at estates and mills, advertisements placed in the media, and intense engagement with the authorities to entice locals are done on a regular basis,” Nageeb said. “Response thus far has been lukewarm but we have not given up hope. In absence of any success, we may have to plead to the government for help.”

Bloomberg

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