Sime Darby Bhd continues to innovate, pushing the palm oil agenda to the fore.

  • Nation
  • Wednesday, 17 May 2017

‘R&D has always been the cornerstone of Malaysia’s leading position in the palm oil industry,’ says Franki. — ART CHEN/The Star

 AMONG the pioneering plantation companies in Malaysia, Sime Darby Bhd still remains at the forefront of developments in the industry, particularly in research and development (R&D), sustainability and agro-management practices.

It was the first Malaysian firm to make the foray overseas to open plantations in Indonesia, and various innovations by the company over the years have been accepted as industry standards.

Today, Sime Darby is the world’s largest listed plantation company and the world’s largest producer of certified sustainable palm oil (CSPO).

It manages close to one million hectares of land, and has planted over 640,000ha. It also runs close to another 100,000ha for smallholder programmes.

The diversified conglomerate has seen many changes since 1917, when the first commercial planting of oil palm was conducted in its Tennamaram estate in Selangor, which is now managed by its plantation subsidiary, Sime Darby Plantation Sdn Bhd.

“We were one of the pioneers in developing key milestones the industry has achieved in terms of agro-management and sustainability practices that have now become industry standards.

“The zero-burning technique, and the integrated pest management systems, for example, are all now industry standards which we have set,” says Sime Darby Plantation Managing Director Datuk Franki Anthony Dass.

Sime Darby Plantation’s R&D Centre of Excellence has contributed to many of these developments, with its large pool of scientists, technocrats and agronomists.

Sime Darby can trace its roots from as early as the 19th century, when pioneering British planters set up rubber plantations in Malaya.

Sime Darbys first commercial planting of the Genome Select Oil Palm at Carey Island, Klang.
Sime Darbys first commercial planting of the Genome Select Oil Palm at Carey Island, Klang. 

Among those pioneers were Alexander Guthrie, Daniel & Smith Harrison, Joseph Crosfield, Willliam Sime and Henry d’Esterre & Herbert Mitford Darby - founders of three big companies that today make up Sime Darby Bhd.

Franki points out that the Sime Darby that exists today is the result of mergers and acquisitions involving many companies.

“It wasn’t just Golden Hope Plantations Bhd, Kumpulan Guthrie Bhd and Kumpulan Sime Darby Bhd, but along the way, there was also Carey Island, Seafield Amalgamated Estates, Austral Amalgamated Bhd, Highlands & Lowlands Bhd, Uniroyal Malaysian Plantation Sdn Bhd, and most recently, New Britain Palm Oil Limited (NBPOL) which was acquired in 2015.”

The current Sime Darby group, which has a market value of over RM61bil was created in 2007 via the merger of Permodalan Nasional Bhd.’s plantation companies - Golden Hope Plantations, Kumpulan Guthrie and Kumpulan Sime Darby.

After the merger, the company was listed on Nov 30, 2007, creating the world’s largest listed palm oil producer by planted area.

“If we take stock of all the expertise and knowledge that came together through the merger of these companies that today make up Sime Darby, it is clear how the company played a critical role in the development of the industry,” he said.

It was also the first to venture overseas into Indonesia, as Kumpulan Guthrie at the time, after which other plantation companies followed suit.

Today, Sime Darby Plantation employs 102,000 people across 17 countries. The Company is actually 106 years old.

“Many other companies look towards Sime Darby for its leadership and we hope to continue working with government agencies like MPOB and other companies to lead the industry as we step into the next century of oil palm in Malaysia,” he said.

While much has been accomplished over the past 100 years, Franki says Malaysia has much more to achieve in terms of the advancement in digital technology, automation and mechanisation.

“R&D has always been the cornerstone of Malaysia’s leading position in the oil palm industry,” he says.

Earlier this month, the company became Malaysia’s first to bag the prestigious Edison Award for its genome initiative to develop oil palms with higher yields, reducing the need for more land. The Edison Awards is one of the world’s most sought-after accolades in innovation, new product and service development.

In May 2009, Sime Darby announced its success as the first company in the world to completely sequence, assemble and annotate the oil palm genome. In April 2016, the company commenced its first large-scale planting of the Genome Select high-yielding oil palm.

The Genome Select oil palm is capable of delivering at least a 15% increase in oil yield over Sime Darby’s current best planting material, the Calix 600.

Sime Darby’s innovation was selected from among 400 nominations received from around the world, by 3,000 panelists comprising the world’s top senior business executives, academics, and innovation professionals.

Franki says that the accomplishment showed the advanced development in the R&D of Malaysia’s palm oil industry. Moving forward, he says, the company will continue to find other traits using the genome.

“We will develop shorter palms and find ways to make them drought and disease resistant, as well as continue to increase yields,” he says.

He says Sime Darby’s research team was already working towards shorter palms, which will result in an easier harvesting process.

The role of research and development

Franki stresses that R&D plays a critical role in the future of the palm oil industry. The breakthrough Sime Darby had with Genome Select means the new palms will be able to produce yields of about 11 tonnes oil yield per hectare using the same land.

This is in line with the move towards more effective use of land, further reducing the need to expand agricultural land to cultivate more oil palm.

“The industry oil yield average is about 4.5 to 5 tonnes per ha, and the current materials that are being produced have potential yields of about eight to nine tonnes of oil per ha.

“The genome has the potential to bring this figure up to 11 tonnes per ha. When we commercialise this product post 2025, it will help even the smallholders and farmers to improve their oil yields,” he says.

The company’s R&D team is also shifting its focus to the downstream business, looking at specialty products and creating palm oil-based super food.

“Palm oil-based foods will have various elements of health including anti-obesity and longevity. No other oil can match palm oil in its nutritional value,” he says.

Palm oil is a rich source of antioxidants, including vitamin E such as tocotrienols, and carotenoids including beta-carotene and lycopene.

The company recently also made another breakthrough in innovation – the launch of the country’s first successful system to use palm kernel expeller, a by-product of the palm kernel crushing process, to generate an ingredient to be used in chicken feed.

Called Purafex, the ingredient has the potential to save the country millions of ringgit as it can be used as a substitute for maize or corn, which is currently imported into Malaysia.

The country spent US$736mil in 2015 to import maize and soy from Argentina and Brazil as the main ingredient for animal feed.

Livestock farming is a billion ringgit industry in Malaysia, whereby feed and nutrition constitute over 25% of the total livestock production cost.

While the palm kernel oil industry has been contributing to the animal feed production sector for years, the by-product called palm kernel cake (PKC) has been used mainly in the feed for cattle, as it is unsuitable for poultry due to its high fibre content.

Innovation and transformation as the way forward

Moving forward into the next 100 years, the industry will surely need further innovation and transformation, Franki points out.

The world is dramatically changing in line with globalisation and rapid advances in technology, but the plantation industry, he says, has not been keeping up.

“What we need is the right business model that links new technology with evolving market trends and challenges,” he says.

In order to meet these future demands in a more sustainable and competitive way, Sime Darby Plantation is looking into technology-based innovative solutions that will dramatically change the way it operates.

Just producing palm oil as a commodity is no longer enough, he says.

“We need to find better ways to produce nutritious food to feed the world’s growing population and even the animal industry.,” he says.

Another issue the industry is currently grappling with is the lack of interest among young people to enter the industry. Franki says automation and mechanisation in the industry is the answer to this problem as well. As the industry transforms itself and brings more digital technology into the plantations, he says this will make it more attractive to the younger generation.

“If we can find a way to mechanise the harvesting process- this will be the next big breakthrough for us,” he says.

He adds that the perception was that living conditions in the plantations are not good, and that there is a lack of facilities.

“We have to change this perception as well,” he says.

Sime Darby has already embarked on the mission to improve living conditions and facilities for communities and workers living in its plantations. This began in 2012, at its historic Tennamaram estate when its Central Housing Complex initiative was launched to provide upgraded housing facilities and other amenities within a mini township to create a better environment for its plantation workers.

“At Sime Darby we are improv­ing the standards of housing for our workers at our estates, creating best-in-class facilities and setting up a small township for those living in the plantations,” he says.

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