* Lack of staff could delay harvests, curb output
* Malaysia palm sector relies on Indonesia workers
* Ringgit has plunged in value in recent years
By Emily Chow
KUALA LUMPUR, April 7 Malaysian palm oil
planters say they are bracing for a severe labour shortage, with
workers who typically stream over the border from neighbouring
Indonesia to harvest crops staying away due to the weaker
ringgit and increased opportunities at home.
A dearth of workers in the world's No.2 producer could delay
harvests and curb output as extraction rates fall when palm
fruit is picked late, hurting the country's top commodity export
industry but potentially offering some support to prices
that have dropped nearly 15 percent this year.
Malaysian palm oil planters estimate about 70 percent of the
industry's workforce comes from Indonesia, with staff
traditionally drawn by the chance to earn higher wages in a
culture with many similarities to their own.
But Malaysia's ringgit currency has plunged in value over
the last few years as weaker energy prices hit one of the
world's top gas producers, falling 15 percent against the
Indonesian rupiah since the start of 2015.
That, along with increased demand for labour in Indonesia as
new plantations open there, is cutting the number of Indonesians
prepared to head for Malaysia, planters said. Some also cited
tighter employment regulations in Malaysia as it brings in
stricter immigration procedures for foreign workers.
"This year, output will be impacted by (the shortage of)
workers," said Zakaria Arshad, chief executive of Felda Global
Ventures Berhad, one of Malaysia's largest palm
"Workers are more difficult to get now, especially from
Plantation workers usually make little more than minimum
wage, which is around 1,000 ringgit ($225.48) in peninsular
Malaysia and 3.35 million rupiah ($251.18) in Indonesia.
"The fluctuation of the ringgit is not encouraging
Indonesian workers to come to Malaysia," said a Malaysian
planter, who declined to be identified as he was not authorised
to speak with media.
"The situation now is very bad compared to a few years ago,"
he said, adding that recruiting workers from other countries
such as Bangladesh would take months to arrange.
And, with palm output due to peak between the third and
fourth quarters, the impact of the labour shortage is set to
"Ideally we have to speed up labour intake before the high
crop season towards the end of the year," said the director of
another Malaysian palm oil operator, who also wished to remain
Indonesia is the world's top producer of palm, churning out
31.8 million tonnes last year. Malaysia produced 17.3 million
tonnes of the tropical oil, used in everything from cosmetics to
chocolate and biofuels.
"We certainly recognise that the Malaysian plantations are
finding it much harder to source field hands," said Nicholas J.
Whittle, chief financial officer at Indonesian palm firm PT
Sawit Sumbermas Sarana Tbk.
"We expect this to add to pressures on the supply side ...
which may have some knock on effect (on palm prices)."
($1 = 13,337.0000 rupiah)
($1 = 4.4350 ringgit)
(Reporting by Emily Chow in Kuala Lumpur; Additional reporting
by Bernadette Christina Munthe and Eveline Danubrata in Jakarta;
Editing by Joseph Radford)