Written on 06.12.2012 - Industry
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INDONESIA: Palm oil producers to diversify crops

Publicly listed crude palm oil (CPO) producers are looking to expand their other crop businesses next year as part of their diversification plans, which were partly driven by declining prices of palm oil due to oversupply in two of the largest palm producers, Indonesia and Malaysia.

For example, PT Sampoerna Agro (SGRO), part of Sampoerna Group, aims at developing its sago and rubber plantations by increasing the size of their planted areas in 2013, according to Sampoerna Agro corporate affairs director Hadi Fauzan.

In the rubber sector, Sampoerna has planted 150 hectares out of the 100,000 hectares of industrial forest concession (HTI) land that it operates in Ketapang regency, West Kalimantan, said Hadi. Unlike CPO, rubber is a new business for Sampoerna as it only began venturing into the business this year.

Hadi added that, of all plantation projects the company had, rubber was the most difficult to develop. “Its technical procedures are more complicated, its seeds are not that easy to find and the whole process requires a lot of manpower. We will need quite a long time to harvest the results,” he said. However, despite the potential difficulties, Hadi said Sampoerna was optimistic that it
would gain significant results in the long term.

The company will allocate between Rp 500 billion (US$52.11 million) and Rp 1 trillion for next year’s capital expenditures. About 20 percent of the figure, between Rp 100 billion and Rp 200 billion, will be designated for the development of the other plantation crops, including rubber, while the remaining 80 percent will be used by its palm oil business.

Source: Daily "The Jakarta Post", Jakarta; 4 Dec 2012

(Syed Rashid Ali, Karachi, Pakistan)