Sarawak Plantation recovers more oil palm areas

KUCHING: Sarawak Plantation Bhd has made more headway in the recovery of encumbered matured oil palm areas in Mukah, central Sarawak, from the locals by an additional 500ha in 2022.

With this latest recovery, the size of encumbered matured areas the group has taken back has risen to about 3,700ha or 58% in the past five years, according to group executive director Datuk Wong Kuo Hea.

“As at Dec 31, 2022, the matured areas which remain encumbered were around 2,800ha. Barring any unforseen circumstances, the group remains positive to be able to recover all or at least part of these encumbered areas,” he said in the company’s 2022 annual report.

Wong is also group managing director and CEO of Ta Ann Holdings Bhd, which acquired a 30.39% stake in Sarawak Plantation in early 2018 and emerged as the single largest shareholder.

The Sarawak government, via its investment arm State Financial Secretary of Sarawak, is the second largest shareholder with an equity interest of 25.523%.

Following his appointment as the new executive director in Sarawak Plantation in March 2018, the group formed a dedicated team to engage and negotiate for the recovery of certain areas of the group’s oil palm estates which were encumbered by the locals from previous years.

In 2018, Sarawak Plantation successfully negotiated a win-win deal with the locals involved by resolving the disputes between them with a written mutual agreement on the first 800ha.

Upon recovery of the encumbered areas. the company carried out rehabilitation work or replanting activities to boost future fresh fruit bunch (FFB) production.

Sarawak Plantation group owns 13 oil palm estates spread around northern and central Sarawak with a total land bank of 42,185ha.

In the year under review, the total plantable acreage was 35,656ha. In addition, the group has another 405ha-oil palm estate under a joint venture with one of the Sarawak state agencies. The group also owns and operates two palm oil mills.

Also in 2018, Wong said the group started to identify oil palm areas in need of improvement and enhancement.

“The common issues faced at such enhancement areas include stunted palm growth, inaccessibility due to high weed, flooding and other upkeep issues. These areas are mostly young mature fields in critical need of rehabilitation.

“A total of around 6,000ha were identified for enhancement in prior years. As at Dec 31, 2022, 87% of such areas have been normalised, inclusive of around 400ha normalised in 2022. As at end-2022, around 700ha remained as enhancement areas and are expected to be normalised gradually within these two years,” he added.

Wong said in the past few years, the group had focussed on replanting activities to phase out old mature fields as well as severe ganoderma-infested areas. In 2022, the group replanted about 550ha.

“The replanted areas will lead to production growth when palms attain maturity, yields increase in the long run and enable the group to achieve higher productivity and profitability.

“The group recognised the value and long-term benefits of mechanising its operations. Therefore, it adopts replanting strategies that allow for future mechanisation whilst not compromising potential yields.”

On the age profile of the group’s oil palm estates, Wong said the young and mature areas represent 76% of the total immature, harvestable and enhancement areas of 25,259ha. In 2022, the young mature fields included about 1,500ha of newly declared matured fields.

Wong said despite the labour shortage and inclement weather conditions causing difficulties in harvesting activities and evacuation work, the group managed to achieve a 3% growth in FFB production to 319,999 tonnes in financial year 2022 (FY22) from 328,450 tonnes in FY21. Year-on-year, FFB yields increased by 4%.

Commenting on outlook and prospects for the current financial year, he said as the group has relatively young and prime matured palms fields, there was an upside potential to production abilities and capabilities.

“Replanting activities and efforts in the past and current years are also expected to contribute positively to production growth. Hence, the group is well positioned for continued growth and profitability.

“Whilst the group focuses on maintaining stability of capital and resources for existing core businesses, exploring new business opportunities to diversify into other related businesses remains one of the group’s expansion strategies too.

“Priority is given to downstream activities which can complement or be directly integrated into its core businesses,” he added. In FY22, it posted a group net profit of RM96.7mil on a revenue of RM711mil. The company is also involved in the production of high yielding oil palm seeds.

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