The government should allow plantation companies to hire more foreign workers to harvest oil palm so as not to crimp the country's palm oil export earnings, a top industry executive said.
Malaysia's palm oil output is expected to stagnate at 17.6 million tonnes for the third straight year, according to industry observers.
The Malaysian Palm Oil Association, Malaysian Estate Owners Association and Sarawak Oil Palm Plantation Owners Association have been complaining of acute shortage of harvesters for the past three years. They blamed it for the lower palm oil output and export opportunity loss of some RM10 billion a year.
"The trees are fruiting, but there's acute shortage of harvesters and this is affecting the country's palm oil export earnings.
"The industry has been finding ways to mechanise for the last 40 years and the reality is it is difficult to mechanise. If it were that easy, we would have done it a long time ago," Lee said.
He was speaking to reporters after IOI's shareholder meeting in Putrajaya. Also present was his son, Datuk Lee Yeow Chor, who is IOI's executive director.
The older Lee sees palm oil prices rising further, possibly topping RM3,400 a tonne by the first quarter of next year, as global consumption exceeds supply. "Global palm oil consumption is going up, even in developed nations like the US, Europe and Japan. It is not just in China and India," he said.
Lee also sees CPO prices trending higher if the current floods in Asia worsen. "The current RM3,000 per tonne level does not take into account the prospects of La Nina. If you did, then the RM3,300 to RM3,400 level is not a dream but a reality." Yesterday, palm oil futures on Bursa Malaysia Derivatives fell RM24 to close at RM3,061 a tonne.
Four months ago, Indonesia signed a US$1 billion (RM3 billion) climate deal with Norway, under which it agreed to impose a two-year ban on new permits to clear forests. While the Indonesian government has not defined which type or location of forests come under the moratorium, it was reported that oil palm expansion could continue on some six million hectares of degraded and abandoned agricultural land across the country.
Yeow Chor said IOI will continue to invest in Indonesia. "The moratorium is said to limit new concessions, not existing permits," he remarked. On IOI's capital expenditure, he said the group had allocated RM150 million for new plantings and replanting of oil palms.
Some RM30 million has also been set aside for a potential 30:70 joint venture with China's Zhong Seng Oil & Grains Co Ltd to set up a refinery in Kuantan.