KUALA LUMPUR: Malaysia's palm oil production is expected to improve this year as a labour shortage eases, though challenges remain as planters seek to comply with European and U.S. regulations targeting links to deforestation and forced labour in the commodity's supply chain, industry officials said at a seminar on Thursday.
The country's palm oil sector, which relies on foreign workers for 70% of its plantation workforce, has seen a severe labour crunch in recent years, in part due to the COVID-19 pandemic.
Ahmad Parveez Ghulam Kadir, Director-General of the Malaysian Palm Oil Board (MPOB), said on Thursday that output in Malaysia should come in at 18.75 million metric tons this year while stocks were seen at 1.95 million metric tons amid a recovery in labour supply.
Exports for the year are seen at 15.6 million tons versus 15.1 million tons last year, while the price of crude palm oil should range between 3,900 ringgit-4,200 ringgit per ton, he added.
"For 2024, the labour situation is expected to improve but the concerns on availability are still there," the official said, adding that while 2023 showed a mixed performance, most key indicators were expected to improve this year.
Malaysia's Plantations and Commodities Minister Johari Abdul Ghani said the government was committed to addressing labour issues, including on workers' welfare, as well as improving its sustainability measures.
The EU passed a law last year banning imports of commodities linked to deforestation, while the U.S. in recent years has suspended shipments of some Malaysian palm oil companies, citing allegations of forced labour.
Indonesia and Malaysia, the world's largest producers of palm oil, have criticised the EU law as discriminatory and aimed at protecting the bloc's oilseeds market.
The two countries have also sought to persuade buyers that its sustainability certifications, known as ISPO and MSPO, respectively, already met international standards.
"Malaysia must continue to position its palm oil industry as a global leader in sustainability," minister Johari said, adding that MSPO certification had reached about 94.2% of oil palm planted areas in Malaysia.
(Reporting by Danial Azhar; Writing by Rozanna Latiff; Editing by Kanupriya Kapoor, Jacqueline Wong and Mrigank Dhaniwala)