Industry captains raised concerns
December, 2016 in Issue 4 - 2016, Markets
At the CEO Forum during the Palm Oil Trade Fair and Seminar (POTS) 2016, organised by the Malaysian Palm Oil Council (MPOC), heads of leading plantation firms shared their thoughts on key challenges ahead. The issues ranged from stagnating yields and the need to integrate technology into operations, to those related to sustainability certification.
Moderated by MPOC CEO Tan Sri Dr Yusof Basiron, the forum saw the participation of Kuala Lumpur Kepong Bhd (KLK) CEO Tan Sri Lee Oi Hian; IOI Corp Bhd CEO Datuk Lee Yeow Chor; Sime Darby Plantation Managing Director Datuk Franki Anthony Dass; and Olam International Ltd Global Head of Plantations Supramaniam R Ramasamy.
Tan Sri Yusof described the forum as a platform for industry captains to share their views and visions. The event, he added, was a fitting end to the two-day POTS held in Kuala Lumpur from Oct 12.
Stagnating yields and labour
KLK’s Tan Sri Lee spoke about stagnating yields in the oil palm industry, saying there is major cause for concern. He contrasted the situation with that of the US soybean industry, which expects a record crop due to yields that have gone up 10%.
“It was not too long ago that 3.6 tonnes of soybean per ha was seen as a reasonably good figure, but this year, the US is producing an average of 4.3 tonnes per ha. This is alarming, as our yields are still stagnating at around 4 tonnes of oil per ha,” he said.
He cautioned that plantations that are unable to achieve 6 tonnes of oil per ha are in for a difficult time, especially when prices collapse.
Lee said it is possible to improve the yield if companies make an effort to understand the basics of agronomy and ways to improve practices.
“There is a lot of technology these days that can tell you, for example, which parts of your fields are yielding lower or not up to expectation. I feel that our industry is not adopting the available technology fast enough to increase productivity,” he said.
Another major challenge, he said, is the increasing cost of labour and the issue of labour productivity.
“There is no magic bullet to increase labour productivity overnight, but this is an area we have to look at. The government is talking about mechanisation, and this is a good move.
“We certainly cannot be working on a ratio of one man to 8 ha, when the soybean industry is working on a ratio of one man to 1,000 ha. We need to narrow this. Even one man to 15 ha will be a very good improvement for us.”
