June 27, 2018 / 11:05 PM / 5 months ago

RPT-Extended Eid holiday break disrupts Southeast Asia palm oil harvest, mills

(Repeats earlier story for wider readership with no change to text)

By Bernadette Christina Munthe and Emily Chow

JAKARTA/KUALA LUMPUR, June 27 (Reuters) - Palm oil output in the world’s two-biggest producers may decline amid disruptions in the fruit harvesting process because of a backlog of farmers trying to sell fruit to Indonesian mills and as Malaysian planters struggle with a post-holiday labour shortage.

Indonesian smallholder palm farmers have overwhelmed mills as they rush to sell fruit following a longer-than-usual break for the Eid-al-Fitr public holiday, which celebrates the end of the Muslim fasting month of Ramadan, causing a drop in fresh fruit bunch (FFB) prices, said planters and grower associations.

While millions of Indonesian plantation workers typically take off for the Eid celebrations, this year the government extended the break to two weeks from one to ease traffic congestion, increasing the time the workers were away.

“The congestion (at the mills) is caused by planters wanting to sell their FFB at the same time after a long break,” said an Indonesian planter who asked not to be identified, referring to the Eid holiday. “Since there are a lot of FFB ... mills are buying fruits at lower prices day by day because they are (running at) overcapacity.”

“We expect a 5 to 8 percent drop of production due to losses of overripe fruit,” he said.

Crude palm oil prices that are currently near two-year lows, are also weighing on FFB prices.

In Indonesia’s East Kalimantan province, on the island of Borneo, FFB were trading at 800 rupiah ($0.0564) per kilogram, down from 1,500 rupiah three months ago, according to the country’s Oil Palm Farmers Union (SPKS), a smallholders group based in the city of Bogor.

Indonesian state media reported this week that farmers in Bengkulu province, on the island of Sumatra, had decided to stop picking palm fruit as FFB prices were as low as 500 rupiah per kilogram, barely covering their costs.

“A lot of farmers postponed harvests before Eid,” said Kanisius, the head of the SPKS advocacy division for a region in East Kalimantan. “Now it’s overflowing. After Eid, the harvests are overloaded.”

“Many mills are rejecting smallholders’ fresh fruit bunches. They are limiting purchases from farmers,” he said.

MALAYSIAN LABOUR

In Malaysia, Indonesians make up nearly 70 percent of the palm industry’s workforce, a number of which have returned home for the extended Eid holiday, delaying the palm fruit harvest.

Despite the holidays being over, many workers have still not returned to the estates yet, said one Malaysian planter who asked not to be identified, leaving plantation owners with fewer workers to pick ripe palm fruit bunches.

“We are still struggling with our rounds because most of our workers take two to three weeks leave for Eid. Our harvesting intervals are disrupted,” he said.

“There will be some marginal crop losses and the quality will be affected.”

($1 = 14,173 rupiah)

Reporting by Bernadette Christina Munthe in JAKARTA and Emily Chow in KUALA LUMPUR Writing by Fergus Jensen; Editing by Christian Schmollinger

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