Malaysia Sees Higher Palm Oil Output in 2022 as Workers Return
(Bloomberg) -- Malaysia will likely relax cross-border restrictions on foreign workers in the second half of 2022, a move that will ease the severe labor crunch in palm oil plantations that’s contributed to a global edible oil rally.
Crude palm oil output is expected to increase with improved production of fresh fruit bunches and a better oil extraction rate, the finance ministry said in a report released alongside the state budget Friday.
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Palm, the most consumed edible oil, has been a leading driver of this year’s stunning rally in global vegetable oil markets. Malaysia’s production is set to drop to its weakest in five years as planters grapple with the worst-ever labor shortage in the second-biggest grower. A industry group representing 40% of palm plantations by area estimates that the low yields will last through March.
The continuation of the nation’s B20 biodiesel program for the transport sector, coupled with higher demand from India and China, will further support palm oil production, the finance ministry said. Malaysian palm oil futures have rallied about 70% in the past year after hitting a record high this month.
Other highlights from the report:
- Rubber output is forecast to expand as strong prices encourage tapping activity
- World demand for natural rubber is expected to climb and stimulate domestic rubber production
- Development of East Coast Latex Corridor and adoption of digitalization in the industry will also boost the sector
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- Livestock and other agriculture sub-sectors are expected to see an uptick due to higher demand for food
- Government policies that emphasize sustainability of agro-food and agri-commodities industries will help boost food security
- Malaysia’s agriculture sector is forecast to expand 3.9% in 2022, underpinned by commodities.
- Collection from windfall profit levy jumped to 900 million ringgit ($217 million) this year from 200 million ringgit a year ago due to higher crude palm oil prices
- Total export duty collection from crude palm oil may drop to 650 million ringgit in 2022 from an estimated 700 million this year
- Collection from crude petroleum export duty seen at 850 million ringgit in 2022 versus 626 million ringgit this year
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