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I am in agreement with Annville, you need to fix the breather pipe on the engine side of the filter otherwise the filter will clog up with oil. Also in doing this you will get the negative pressure (partial vacuum) in the crank case as you should do.
I am quite amazed that engine did not have the breather pipe connected to the air intake when it was supplied. Breathing that stuff is harmful to health and it makes a right mess of your engine bay if left un remedied.
Although the circumstances are different ( petrol and a 60 year old engine, Freeman/Watermota Seawolf) it has a crankcase breather that runs through an oil separator and into the inlet manifold. I, and many more have modified the rocker filler cap with a short pipe to the air filter, the amount of oil in the foam filter over a season is minimal and can be washed out. This solution has put paid to any oily crankcase fumes with no ill effect from a possibly slightly worn engine !
I have routed the breather pipe into the air filter housing. As you look at the picture there is a pipe on the inside of the housing with the inlet on the left side, so the intake will not be sucking the air directly out of the rocker cover pipe.