The US has blocked imports of palm oil and palm oil products from Malaysias FGV Holdings Bhd., one of the world’s largest producers.
Shipments from the company and its subsidiaries will be held back at all ports of entry effective Wednesday, the US Customs and Border Protection said in a statement. The order is based on what American authorities say is information that reasonably indicates the use of forced labour.
The move is the latest blow to the palm oil industry after the spread of the coronavirus shuttered restaurants, curbing demand for cooking oil. Malaysia, the second-biggest shipper of palm oil to the US and the world’s second-largest producer, is also grappling with a chronic worker shortage after the pandemic restricted travel.
The order is the result of a year-long investigation that revealed labour abuse of vulnerability, deception, restriction of movement, isolation, intimidation and physical and sexual violence, according to the customs statement.
FGV on Thursday said it has been in communication with US customs since August last year and will continue to engage with them to clear its name. The planter also said it had already submitted evidence of its compliance to labour standards, and had taken several, publicly documented steps to correct the situation.
FGV is disappointed that such decision has been made when FGV has been taking concrete steps over the past several years in demonstrating its commitment to respect human rights and to uphold labor standards, it said in a statement. The companys shares tumbled as much as 7.8% on Thursday to the lowest since July.
The global palm oil deficit is only likely to amplify after 2025 due to inadequate replanting in recent years and bio-diesel mandates in Malaysia and Indonesia, according to Rabobank research.
In 2019, $441 million worth of tropical oils were imported to the US from Malaysia, much of that being refined palm oil, according to US Department of Agriculture data. Through the first seven months of 2020, the volume of such shipments was down 15%.