Strong palm oil prices a blessing to replanters

production at the estates nationwide is also expected to stay low going forward.”

According to Haris, “It is indeed exciting to see CPO trading above RM2,500 per tonne, I believe many planters will now be able to make some profits.

“This is in contrast when CPO is trading below RM2,000 per tonne, where most plantation companies will find it difficult to make a decent profit given their rising cost of production (COP).”

He concurs that the good old days are gone, when CPO price used to fetch RM3,000 per tonne.

“But when we (planters) are slowly coming to terms to accept the price of CPO at RM2,000 per tonne as the new normal, suddenly the prices spurted to RM2,500 per tonne,” he adds.

According to Haris, when he stepped in to start the transformation for FGV about 10 months ago, the CPO prices were already at its all-time low.

“It is wise to have a low expectation (CPO prices), so that the focus would be more on improving the productivity on the estate yields, oil extraction rate (OER) and other cost cutting measures.

“We believe that once the CPO prices started to climb back then FGV will be in a better position to capitalise on it, rather than to stop on the activities such as replanting, manuring and applying fertilisers that will drag our yields to come down.”

So far this year, FGV has applied about 40% fertiliser to its estates but “I believe that some other companies are applying lower than ours.”

Unlike other oil palm planters, FGV does not have the flexibility to curb on replanting activities at its vast estates nationwide.

“This is because after FGV’S initial public offering (IPO) back in mid2012, we inherited unacceptably high number of old palm trees from Felda’s Land Lease Agreement (LLA) with FGV,” explained Haris.

Under the LLA, Felda transferred 355, 864ha to FGV to pave the way for the latter’s listing exercise. However, more than 40% of the plantations which FGV received under the LLA were over 25 years old.

Hence, FGV will need to take replanting seriously – about 15,000ha per year – since 2012, says Haris.

For this year, FGV has replanted ahead of the 4% recommended replanting requirement.

“We believe that we have done beyond the requirement because FGV so far has managed to bring down the average tree age profile from 16 years (at that time) to 13 years currently.”

Haris quips that the palm trees (under the LLA) were so old and tall that even the harvesting pole had to be extended by three times in order to harvest the fresh fruit bunch (FFB) from the trees.

Furthermore, it requires highly skilled manual workers to undertake such harvesting feat on challenging hilly terrains.

This came at the time when FGV itself is facing a labour shortage situation.

“Personally, FGV is 20% short of our total labour requirement. We currently have about 32,000 field workers.

“But then this (labour shortage) in the oil palm plantations is an industry-wide issue, which still remain unresolved,” he notes.

According to Haris, labour issue is an important element to FGV Group’s ongoing transformation exercise.

To counter the labour shortage issue, FGV is putting more emphasis on mechanisation in the estates.

Haris says that FGV is putting up 18,000ha per year to be placed under mechanisation.

Of the group’s over 350,000ha, he says “We have about 125,0000ha which are suitable for mechanisation.

“The benefits of mechanisation is that FGV can extend the coverage area for one harvester. With mechanisation, the ratio is 1 harvester: 25 hectares compared with 1:20 without the mechanisation,” he adds.

On the other hand, the group’s estates located at challenging hilly terrains in some parts of Sarawak and Sabah are still using the selambit (shoulder basket) and bullock carts to collect the harvested palm fruits.

Haris also believes that replanting and mechanisation goes handin-hand.

He adds that “by replanting, it will also provide FGV with the opportunity to fix the landscape i.e. constructing proper roads for better transportation access and allows mechanisation to come in, particularly in the challenging remote areas.