KUALA LUMPUR: Shortage of labour, high reliance on foreign workers and acreage limitation are among the challenges facing the oil palm subsector.
According to the Economic Outlook 2020 report released by the Ministry of Finance today, fluctuating global commodity process coupled with protectionist measures imposed by major markets, have affected the performance of the subsector.
“The subsector is highly labour intensive with low adoption of technology and mechanisation, especially in harvesting and collecting fresh fruit bunches (FFB).
“It is also dependent on foreign workers, constituting about 77 per cent of 431,000 workers, of which the majority are from Indonesia (63 per cent), Nepal (19 per cent), Bangladesh (seven per cent), Philippines (five per cent) and India (four per cent).
“The heavy reliance on foreign workers poses a threat to the sustainability and stability of the industry, especially during harvest seasons,” said the report.
It said the subsector now faced land limitation for future expansion due to extensive land use in the past and the government’s commitment to cap oil palm planted areas to 6.5 million hectares by 2023 to ensure forest conservation.
“As a result, many local companies especially government-linked companies, seek investment in other countries such as Brazil, Indonesia and Papua New Guinea that have an abundance of affordable land with similar soil and climate,” according to the report.
Meanwhile, the oil palm crop is facing intensified scrutiny from environmental groups and consumers amid allegations of indiscriminate land clearing for the crop resulting in deforestation, despite the crop utilising only 0.4 per cent of world agricultural land compared with other agricultural produce.
Furthermore, the report stated that since 2006, commodity prices including crude palm oil (CPO) had been recording high fluctuation mainly due to uncertainties in the world demand and supply, which dampens its production.
The report, however, stated that despite facing the problem of limited land for agriculture, boosting productivity through the usage of digital technology and mechanisation would increase palm oil yields.
According to the report, acknowledging the importance of oil palm subsector to the economy, the government has undertaken various measures to boost production and expand the market for palm oil which include introducing mechanisation, diversifying export markets, endorsing biodiesel and complying with international standards. - Bernama