plantation review palm & rubber - listed...
TRANSCRIPT
The Plantation Division manages and cultivates IndoAgri's oil palm,
sugar cane, rubber and other estates, and derives its revenue
primarily from the sale of crude palm oil (CPO), palm kernel (PK)
and related by-products. As at 31 December 2013, the Group
has a total planted acreage of 276,709 hectares in Indonesia,
comprising 239,921 hectares of oil palm, which occupied 87%
of total planted area, followed by 21,759 hectares of rubber, and
11,645 hectares of sugar cane. We also manage approximately
86,215 hectares of oil palm estate and 3,999 hectares of rubber
estate under the government's plasma programme.
The Division’s 21 palm oil mills across Sumatra and Kalimantan
have a combined FFB processing capacity of 5.2 million tonnes
per annum. We also operate four crumb rubber processing
facilities, three sheet rubber processing facilities, two sugar mills
and refi neries, a cocoa factory and a tea factory.
Supporting efforts to enhance estate quality and output, the
Division operates two advanced research and development
centres, SumBio and PT SAIN, based in Bah Lias, North Sumatra
and Pekanbaru, Riau respectively. In 2013, these centres
produced a combined output of 26.5 million premium seeds,
aided by their sophisticated in-house seed breeding programmes
and cultivation techniques.
In achieving sustainable low-cost production, the Plantation
Division maximises yields and reduces operational costs through
the following agronomy and crop protection best practices:
• Performing block-by-block analyses to provide specifi c
recommendations on crop management and planting densities,
fertiliser and herbicide usage, as well as predictions on yields and
oil extraction rates.
• Optimising crop management and harvesting practices to
maximise production and collection of FFB.
• Leveraging biological methods to improve pest and palm tree
disease control.
• Improving mechanisation to increase effi ciency and reduce costs.
• Utilising organic fertilisers and all by-products while reducing
reliance on inorganic fertilisers.
2013 REVIEW
The global economic slowdown affecting major markets like China
and Europe, coupled with slower biodiesel demand in Europe
have put sustained pressure on commodity prices. CPO prices
(CIF Rotterdam) averaged US$857 per tonne in 2013, signifi cantly
lower than 2012’s US$1,006.
Plantation Division’s total revenue grew 1% to Rp8.5 trillion in
2013 over the previous year. Likewise, EBITDA margin came in
lower, in line with lower average selling prices of CPO and PK of
2% and 4% respectively, as well as higher production costs.
PLANTATION REVIEW
PALM & RUBBER
20 INDOFOOD AGRI RESOURCES LTD • ANNUAL REPORT 2013
Taking a step towards diversifi cation, the Group acquired a 79.7%
interest in MPM for Rp330 billion through its subsidiaries, PT
SIMP and Lonsum. MPM owns the SAL Group, which holds three
industrial forest plantation concessions totalling 73,330 hectares
in Berau and East Kutai, East Kalimantan.
Palm
As at 31 December 2013, the Division’s South Sumatra and
Kalimantan estates achieved 9,791 hectares of nucleus oil palm
new plantings, compared to 13,383 hectares in 2012. Mature
estates covered 177,099 hectares versus 176,105 hectares in
2012, while immature estates which will boost CPO production
and volume growth when they become productive in the next few
years, occupied 62,823 hectares or 26% of total planted palm
area. The average age of our oil palms is about 12 years.
With lower nucleus production and plasma purchases, FFB
production decreased by 8% from last year’s 4,107,000 tonnes
to 3,761,000 tonnes in 2013. Correspondingly, CPO production
declined by 8% from 880,000 tonnes in 2012 to 810,000 tonnes
in 2013. Oil extraction rates increased slightly to 22.1% versus
21.7% in 2012, while internal CPO sales to the Edible Oils & Fats
Division reduced by 7% to 510,000 tonnes from 548,000 tonnes
in 2012 as the purchase of external CPO from Kalimantan estates
lowered transportation costs.
In total, IndoAgri’s certifi ed CPO production of 248,000 tonnes
(roughly 31% of 2013’s total CPO output) is comparable to 2012
− a refl ection of the continued commitment towards sustainable
agriculture.
239,921 Ha 150,076 Ha 89,845 Ha
23%
42%
9%
26% 32%17%
9%
9%
28%64%
10%
31%
Group SIMP Lonsum
> 20 years> 7-20 years> 4-6 years> Immature
Oil Palm Plantation Age Profi le
Soy Oil Premium Over CPO
CPO (CIF Rotterdam)
Soy Oil (CIF Rotterdam)
CPO vs Soy Oil Price
US$ / tonne
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
Jan ’06
Jun ’06
Nov
’06
Apr
’07
Sep ’07
Feb ’08
Jul ’0
8
Dec ’08
May
’09
Oct ’0
9
Mar
’10
Aug ’10
Jan ’11
Jun ’11
Nov
’11
Apr
’12
Sep ’12
Feb ’13
Jul ’1
3
Dec ’13
21INDOFOOD AGRI RESOURCES LTD • ANNUAL REPORT 2013
PLANTATION REVIEW
PALM & RUBBER (Cont’d)
Rubber
The Division’s rubber estates are spread across North and South
Sumatra, East Kalimantan and Sulawesi. As at end 2013, nucleus
rubber estates occupied 21,759 hectares, of which 22% are
immature. The average age of our rubber trees is about 14 years.
With higher production in Thailand and Indonesia as well as weaker
demand from major rubber consuming countries particularly
China, US and Europe, rubber prices (RSS3 SICOM) fell by over
20% since beginning of last year and averaged US$2,795 per
tonne in 2013 compared to US$3,384 a year ago. The declining
prices have also affected rubber sales and earnings at Lonsum,
the subsidiary owning most of our rubber estates.
Sheet rubber, crumb rubber and cup lump remain the Division’s key
rubber products. Notwithstanding, growth in rubber production for
2013 was fl at at 18,500 tonnes due to holdbacks on land expansion
and some replanting activities.
During the year, the Group sold 84% of its rubber in export
markets including Singapore, the United Kingdom and the United
States. The rest were sold domestically.
FFB Production (Nuclues)
’000 mt
2,613 2,564
2,797
2,9732,8953,000
2,500
2,000
1,500
1,000
500
2009 2010 2011 2012 2013
CPO Production
’000 mt
763 740
838
880
810
1,000
800
600
400
200
0
2009 2010 2011 2012 2013
RSS3 (Sheet) TSR20 (Block Form)
Rubber Prices
US$ / tonne
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Jan ’06
Jun ’06
Nov
’06
Apr
’07
Sep ’07
Feb ’08
Jul ’0
8
Dec ’08
May
’09
Oct ’0
9
Mar
’10
Aug ’10
Jan ’11
Jun ’11
Nov
’11
Apr
’12
Sep ’12
Feb ’13
Jul ’1
3
Dec ’13
22 INDOFOOD AGRI RESOURCES LTD • ANNUAL REPORT 2013
Palm
Looking at consumption growth trends in emerging economies like
India and China, the outlook for the palm oil industry is expected
to remain positive. With its growing population base, Indonesia has
become one of the largest consumers of palm oil together with China
and India. We also expect the higher biodiesel blending mandate of
10%, announced by Indonesia's government in September 2013,
to sustain domestic demand growth for palm oil products.
In terms of CPO production growth, we are well supported by younger
estates that have not reached peak maturity, and this represents
nearly 35% of our total oil palm planted area. We will continue to
expand our oil palm acreage by achieving 10,000 to 15,000 hectares
of new plantings annually to sustain production outputs.
Anticipating higher FFB production from immature plantings, we
are progressively increasing capacities by constructing new palm
oil mills. These include an 80MT/hour facility in South Sumatra in
end December 2013 and a 45MT/hour facility in East Kalimantan
scheduled for Q1 2014, and two 45MT/hour mills in Kalimantan
scheduled for 2015.
In 2013, we expanded an existing mill in West Kalimantan from
40 MT/hour to 80 MT/hour, while another mill in South Sumatra
is being upgraded from 40 MT/hour to 60 MT/hour by Q3 2014.
We are also constructing a PKO plant in Riau with a capacity of
150 MT/day scheduled for Q1 2014. The additional capacities,
coupled with their logistically advantageous locations, are in line
with the growth strategy for our cooking oil and margarine business.
Looking ahead, the Plantation Division aims to improve yields per
hectare and optimise labour costs through innovative agronomy.
This will entail conscientious efforts, such as the introduction
of SAP platform to all plantations in 2013 that have allowed the
Division to tap into real-time operational and agronomy data for
better plantation management and results. We will also develop
comprehensive and robust management systems to realise the
genetic potential of our premium seed material for different
breeding environments.
The Group continues to be guided by the Principles and Criteria
of the Roundtable of Sustainable Palm Oil (RSPO) in furthering
sustainable agriculture, as demonstrated by its North Sumatra
and Riau estates that achieved RSPO certifi cation for sustainable
palm oil.
Rubber
The long-term outlook for rubber remains upbeat, supported by
healthy demand from tyre-makers, automotive industries and rubber
goods manufacturers in developing markets. China in particular, will
continue to contribute to this demand, given its large population
and status as the world's largest natural rubber consumer.
2014 OUTLOOK
23INDOFOOD AGRI RESOURCES LTD • ANNUAL REPORT 2013
OVERVIEW
In 2008, the Division diversifi ed into sugar cane cultivation and
production in Indonesia as a key strategy for business expansion.
In Indonesia, our sugar investments are strengthened by domestic
shortfalls, coupled with positive drivers such as population growth,
a fl ourishing food and beverage sector, and the expansion of
sugar-based industries such as ethanol processing which utilises
molasses as a basic raw material.
Indonesia remains a net importer of sugar. Sugar prices in Indonesia
are relatively shielded from global fl uctuations by policies aimed
at protecting the local industry, and particularly the smallholder
farmers. Currently, the domestic sugar price in Indonesia is above
the international market due to restrictions on import quotas
when domestic prices fall below Rp8,100 per kg, a government-
mandated fl oor price that was introduced in May 2013.
The Group's sugar operations in Brazil and the Philippines are
covered in the next section.
2013 REVIEW
For the year in review, revenue contributions from the sale of sugar
and molasses rose 13% to Rp706 billion compared to Rp625 billion
in 2012. We expect this to improve with estate expansions and new
plantings, and when both our sugar mills and refi neries in South
Sumatra and Central Java are operating at full capacities.
PLANTATION REVIEW
SUGAR: INDONESIA
In South Sumatra, our 8,000 TCD sugar mill and refi nery in
Komering has an annual processing capacity of 1.44 million
tonnes. We harvested 758,000 tonnes of sugar cane from our
own estates in 2013 compared to 588,000 tonnes in 2012,
producing 53,200 tonnes of sugar. The acreage for planted
sugar cane in South Sumatra was 11,645 hectares in 2013
compared to 12,333 hectares in 2012. In addition, this sugar
refi nery also produced 15,700 tonnes of sugar from imported raw
sugar. Our sugar are bagged into 50kg packs and sold mainly to
the domestic market.
In Central Java, our newly upgraded 4,000 TCD sugar mill and
refi nery has an annual processing capacity of 720,000 tonnes.
In 2013, we processed 438,000 tonnes of sugar cane (versus
420,000 tonnes in 2012). We harvested the sugar cane from
5,600 hectares belonging to over 700 local farmers and a small
area of our own estates. Total sugar production was 28,000 tonnes
in 2013, compared to 31,000 tonnes in 2012.
We have a win-win strategy with the local smallholders in Central
Java by way of supply contracts − an arrangement where we offer
agricultural advice and credit for seed cane, planting costs and
fertiliser purchases with repayment being deducted from their
sales proceeds. As such, the Group's share of the sugar produced
was 9,400 tonnes in 2013 compared to 11,500 tonnes in 2012.
24 INDOFOOD AGRI RESOURCES LTD • ANNUAL REPORT 2013
2014 OUTLOOK
In Indonesia, the sugar industry continues to be relatively robust
due to strong domestic demand. While sugar imports continue to
be the mainstay, intervention efforts from the government, aimed at
increasing the production capacity of sugar factories, enhancing the
productivity and yield of sugar cane and encouraging the expansion
of sugar cane plantations, have been positive for industry players.
In the year ahead, we expect to step-up our sugar cane planting
programme and production at our 8,000 TCD sugar factory in
South Sumatra to optimise our facilities and achieve the vertical
integration required for full-scale operations and growth.
We are also researching into the breeding of new generation seed
cane varieties to improve yields. Complemented by our large-
scale plantation management experience, we will progressively
streamline operations for higher outputs and profi tability.
MANUFACTURING PROCESSFOR SUGAR
CANE HANDLING& MILLING
JUICE CLARIFICATION& EVAPORATION
FILTER CAKE
SUGAR BOILING & CURING
SUGAR DRYING& HANDLING
FINISHED SUGAR PRODUCT END CUSTOMERS
BAGASSE
BOILER
FINAL MOLASSES
FINISHED SUGAR PRODUCT
Sugar Prices
US$ / tonne
CSCE No.11 (Raw Sugar) LIFFE No.5 (White Sugar)
900
800
700
600
500
400
300
200
100
0
Jan ’06
Jun ’06
Nov
’06
Apr
’07
Sep ’07
Feb ’08
Jul ’0
8
Dec ’08
May
’09
Oct ’0
9
Mar
’10
Aug ’10
Jan ’11
Jun ’11
Nov
’11
Apr
’12
Sep ’12
Feb ’13
Jul ’1
3
Dec ’13
25INDOFOOD AGRI RESOURCES LTD • ANNUAL REPORT 2013
26 INDOFOOD AGRI RESOURCES LTD • ANNUAL REPORT 2013
EXPANDING INTO BRAZIL
Brazil is a leader in the global sugar and ethanol industry due to
its unique advantages such as high productivity levels, favourable
climate and the abundance of suitable land for future expansion.
Over the last 10 to 15 years, Brazil’s global sugar production and
exports have been steadily increasing, making the country the
world’s largest sugar producer and exporter today with a 40% to
50% share of the global sugar export market, as well as the lowest
cost producer due to its ideal growing conditions. In the long run,
production growth in Brazil is likely to be key growth in the overall
world sugar supply.
PLANTATION REVIEW
SUGAR: OUTSIDE INDONESIA
27INDOFOOD AGRI RESOURCES LTD • ANNUAL REPORT 2013
However, recent declines in global sugar prices had been driven
by physical sugar surpluses around the world. While Brazilian
sugar production has increased strongly due to its advantages,
aggregate growth in production for the rest of the world was slow
especially amidst volatilities and cyclical factors such as weather,
pests and diseases.
Global consumption in the season October 2012 to September
2013 grew at 2.7% this year from increased demand due to lower
prices. This translates to a global growth of 4.4 million tonnes. Asia
has been the dominant region of sugar consumption growth since
1985, and is projected to maintain a dominant share of the global
sugar import market with its growing population, rising incomes
and greater urbanisation.
ACQUIRING A 50% STAKE IN CMAA
IndoAgri announced the decision to expand into Brazil’s sugar and
ethanol industry, and to acquire a 50% stake in CMAA for a cash
consideration of BRL143.4 million (approximately US$66.6 million),
on 28 January 2013.
By offering access to 42,517 hectares of planted sugar cane
in Brazil, the acquisition has enabled IndoAgri to extend its
geographical presence into the sugar and ethanol industry in Brazil,
while strengthening its diversifi ed plantation business model.
Established in 2006, CMAA is principally engaged in the cultivation
and processing of sugar cane for the production and marketing of
ethanol and sugar, as well as co-generation of electric power from
sugar cane bagasse. It operates one modern, state-of-the-art sugar
mill in Vale do Tijuco, Brazil, with a total crushing capacity of 3 million
tonnes per year, expanding to 3.8 million tonnes in early 2014.
To structure the acquisition, the Group incorporated a wholly
owned subsidiary in Singapore, IFAR Brazil, which has in turn
incorporated a wholly owned subsidiary in Brazil, known as
IndoAgri Brazil. The acquisition of CMAA was completed on
25 June 2013, following which it has become a 50%-owned joint
venture entity under the Group.
World Sugar Production 2012/13
23% Brazil
15% India
9% EU
8% China
6% Thailand
4% US
4% Mexico
3% Russia
3% Pakistan
2% Australia
23% Others
PLANTATION REVIEW
SUGAR: OUTSIDE INDONESIA (Cont’d)
TOTAL
182.7million
tonnes
28 INDOFOOD AGRI RESOURCES LTD • ANNUAL REPORT 2013
2013 REVIEW
In 2013, international sugar prices sustained
pressure from a sizeable global sugar production
surplus in 2012/13 and the global economic
slowdown. Sugar prices on the London International
Financial Futures and Options Exchange (LIFFE)
averaged at US$385 per tonne in 2013, down from
US$588 per tonne in 2012.
As at 31 December 2013, CMAA has a cane
planted area of 42,517 hectares, of which 49% is
company-owned while 51% belong to third parties.
In 2013, CMAA processed 3 million tonnes of
harvested sugar cane, producing 187,000 tonnes
of sugar, 137,000 tonnes of ethanol and 196,000
M3 of electricity.
Our 50% share of profi ts from CMAA for the period
of July to December amounted to Rp64billion
(approximately US$5 million)
The Group’s share of the contributions from RHI
will be accounted for from January 2014.
2014 OUTLOOK
As a Group, IndoAgri intends to tap into the
technology, know-how and knowledge that it has
gained from its investment in CMAA, and to apply
the advanced methodologies and operational
improvements across its plantations in Indonesia.
The Group will also continue to evaluate potential
acquisitions or joint ventures in a bid to expand its
operations in the international market.
Moving forward, we expect that the direction for
global sugar prices will be strongly infl uenced by
production levels in Brazil and India, together with
the Brazilian government policies on ethanol.
EXPANDING INTO PHILIPPINES
With 24.0 million tonnes of sugar cane production in 2012, the
Philippines’ sugar industry is the third largest in Southeast Asia after
Thailand (96.5 million tonnes) and Indonesia (26.3 million tonnes).
Around 80-85% of this production is used domestically. The
remaining 15-20% is exported, primarily to the United States,
which allocates a sugar quota for the Philippines, and to Japan.
The Philippines exports about 500,000 MT of raw sugar per year.
The Philippines currently implements an 18% tariff on all sugar
imports. From 2015, this tariff will decline to 5%. The tariff has
allowed domestic producers to sell sugar at a price that is 30-40%
more competitive than the wholesale price of imported sugar from
Thailand. When the tariff drops to 5%, Filipino sugar producers
will no longer have this advantage.
ACQUIRING A STAKE IN RHI
In December 2013, we further expanded our international
footprint following the investment of a 30% interest in FPNRL for
a cash consideration of US$17.4 million. FPNRL in turn has a
34% interest in RHI, the largest integrated sugar business in the
Philippines.
As the biggest sugar miller in the Philippines, RHI has a processing
capacity of 38,500 TCD, and supplies nearly one-fi fth of the country’s
total sugar production. It is also the third biggest sugar refi ner in
the Philippines with a capacity of 18,000 Lkg/day at its Batangas
refi nery (one Lkg is a unit of measurement equivalent to one 50-kg
bag of sugar). The company has three sugar mills, one in Batangas
and two in Negros Occidental. It also has an ethanol plant in Negros
Occidental with a production capacity of 100,000 litres/day.
Unit 2011/
2012
2012/
2013
YTD
Dec13
12 Mths 12 Mths 9 Mths
Planted Area Ha 24,907 37,909 42,517
Harvested Area Ha 19,647 22,546 31,627
Crushing ’000 MT 1,662 2,218 3,026
Production Volume:
VHP ’000 MT 77 152 187
Ethanol ’000 M3 93 96 137
Energy ’000 Mwh 72 123 196
Sales Volume:
VHP ’000 MT 77 151 156
Ethanol ’000 M3 93 91 110
Energy ’000 Mwh 72 123 196
Operational Highlights
29INDOFOOD AGRI RESOURCES LTD • ANNUAL REPORT 2013
OVERVIEW
Research and development (R&D) is a critical aspect of our
plantation operations. Through innovative R&D, we aim to
reduce production constraints, increase yield potentials and crop
resilience, while improving management practices. In many ways,
our success and competitiveness as a low-cost producer have
been borne out of R&D. As a key enabler, R&D enhances our
goals for environmental sustainability and maximises our profi ts
in the long run.
The Group’s R&D Activities Are Centred On Five Key Areas:
• Plant breeding: The development of top quality seed and
planting materials through traditional and advanced breeding
methods, a diverse germ-plasm base and biotechnology,
supported by fi eld trials that test progenies across a range of
planting environments.
PLANTATION REVIEW
R&D
30 INDOFOOD AGRI RESOURCES LTD • ANNUAL REPORT 2013
• Soils: The detailing of soil survey maps that support site-
specifi c, agronomic block management.
• Agronomy: The evolvement of site-specifi c soil management
and crop cultivation techniques that provide our estates with
optimal recommendations on crop management and planting
densities, and block-by-block fertiliser and herbicide usage.
• Crop protection: The implementation of integrated pest
management with strong emphasis on biological pest control
systems to monitor, prevent and eradicate pests and diseases
that lead to crop losses.
• Field data capture, management and analysis: The
deployment of GPS ground surveys and remote sensing
technologies that enable timely and detailed 2D and 3D
topographic maps; as well as Geographic Information System
(GIS) tools that provide analysis and support for management
decision making and optimum plantation management. An
integrated software system provides visibility of data across
subsidiaries, refi neries and plantations on a daily basis.
Modern laboratories, comprehensive facilities and a strong R&D
heritage have equipped IndoAgri to perform extensive research
in plant breeding, tissue culture, soil science, soil and water
conservation, plant nutrition and biological crop protection,
entomology, and pathology. The aim is to continuously improve the
productivity of seed breeding and cultivation using methodological
frameworks for farming operations, ensuring best practices in
plantation management.
The Group has two advanced agricultural R&D centres: Sumatra
Bioscience (SumBio) in Bah Lias, North Sumatra, and PT SAIN in
Pekanbaru, Riau. SumBio is an established name and a sought-
after producer of premier oil palm seeds in Indonesia. Annually,
SumBio has a production capacity of 25 million superior and
high-yielding oil palm seeds. PT SAIN became a certifi ed seed
producer in 2011, and currently produces up to 8 million seeds
per year.
In terms of product development, we have an extensive R&D facility
dedicated to improving our range of cooking oils, margarine and
shortening products. For example, we leverage R&D to develop
specifi c formulations of edible oils catered to the requirements of
our industrial customers and retail consumers.
31INDOFOOD AGRI RESOURCES LTD • ANNUAL REPORT 2013
Our R&D Activities For Sustainability Cover:
• Fertilisers recommendations: Site-specifi c formulations are
prepared annually for each block on the basis of yield targets
and yield statistics, annual foliar analysis, soil characteristics,
established yield response curves from relevant fertiliser
trials and predicted nutrients release from soils and plant
residues, to maintain optimum palm nutrition and plantation
sustainability.
• Organic fertilisers: We optimise the use of mill effl uent and
by-products as organic fertilisers. In Riau, empty fruit bunches
(EFB) are utilised as soil mulch, while palm oil mill effl uent
(POME) are used in land application. This has reduced our
need for inorganic fertilisers by 14% annually. We are also
PLANTATION REVIEW
R&D (Cont’d)
moving towards the co-composting of EFB and POME, which
has the potential to replace up to 30% of inorganic fertiliser
use per year.
• Integrated pest management: Biological control agents have
helped us achieve effective pest and disease control. Barn
owls have been an effective rat-control measure in our Riau
estates, which has had a zero-rodenticide practice since
2001. Around 10,000 new birds are bred annually at 2,500
nest boxes distributed throughout the Riau estates. We have
introduced the use of barn owls to our South Sumatra estates
where around 1,800 new birds were bred in 2013. This in
turn will reduce rodenticide use across all plantations.
32 INDOFOOD AGRI RESOURCES LTD • ANNUAL REPORT 2013
2013 REVIEW
Increased high-yield seed sales: The Group produced 26.5
million high-yielding oil palm seeds in 2013, a decrease over the
28.6 million seeds produced in 2012. Part of the high-yielding
seed material were for the Group’s new planting of 9,791 hectare
and replanting of 365 hectares during the year, which required
approximately 200 oil palm seeds per hectare of land. Most of
our high-quality seeds are sold to external parties, generating
additional revenue and profi tability for the Group. In 2013, sales
of oil palm seeds fell by 27% from 24.7 million to 18.1 million
seeds, as a result of the slowdown in new plantings.
Pest and disease control: In 2013, efforts to promote the use of
natural predators and biological agents were intensifi ed so as to
reduce the use of pesticides and our chemical footprint. To control
major leaf-eating caterpillars, we cultivated entomopathogenic
agents of viral origin that were sprayed across all estates. In addition
we continue to rear natural predators, such as barn owls, which
are released to critical areas as proven measures against pest and
rodent attacks.
On-time responsiveness: With the aid of aerial photography,
satellite technology and Geographic Information System (GIS) tools,
we were able to monitor plantation blocks and harness timely and
accurate information on the health condition of our crops and land/
water drainage characteristics in the estates. This has improved
resource and manpower deployment, and allowed us to prevent
rather than react to potential agronomic issues.
Improved processing: We leveraged R&D to enhance and develop
new products catering to different customer needs. For example,
a speciality fats simulation laboratory has enabled the Edible
Oils & Fats Division to improve the quality and consistency of its
products, and to develop specialty fat products for use in cakes,
bread, confectioneries and other bakery products. We are also
investing in new technology to develop new packaging materials
and designs to reduce costs.
2014 OUTLOOK
With greater affl uence, higher populations and a growing
dependency on palm oil and palm oil products, the demand
for premium, high-yielding seeds is likely to remain robust
supported by new plantings in 2014. Our seed breeding team will
continuously conduct trials aimed at identifying next generation of
proven parental genotypes.
In the year ahead, we will further intensify the use of bio-
control methods against major pests, streamline existing work
processes and strive towards higher mechanisation in order to
drive productivity. Supported by 3D maps, GPS technology and
aerial photography, we expect to further delineate the topographic
landforms of our estates in South Sumatra in relation to productivity
and soil and water management.
As we reap the results of best practices in plantation management,
we expect to improve yields and yield forecasts using statistical
methods, and enhance the monitoring of leaf production rates.
At the same time, an integrated, software system will offer
greater visibility of the fi eld data across all subsidiaries, refi neries
and plantations on a daily basis; while an Enterprise Resource
Planning system equips us with professional tools for managing
our diverse operations.
We will be developing further the use of unmanned aerial vehicles
for acquiring topographical visuals, as well as near infrared
(NIR) and IR photography of crop biomass and conditions. The
objective is to monitor and improve plant health status, and to
make estimates of leaf area for forecasting yields.
Detailed soil fertility mapping will help characterise physicochemical
properties across different breeding environments, enabling site-
specifi c fertility management to produce the maximum economic
crop response.
Other R&D enhancements in 2014 will involve disease management
as well as precision agronomy through improved strategies for crop
management, planting densities, fertiliser and herbicide usage. We
are confi dent that these initiatives will underscore higher and more
profi table yields per hectare, reduce production costs and maintain
a balance nutrient programme for sustainable growth. For our Edible
Oils & Fats Division, continued investment in R&D will ensure that our
products meet evolving customer requirements.
33INDOFOOD AGRI RESOURCES LTD • ANNUAL REPORT 2013