In Kota Kinabalu, Malaysia the problem in finding suitable land to increase Sabah's oil palm hectarage necessitated Sawit Kinabalu to embark on a consolidation strategy to double the yield on the existing areas.
Sawit Group Managing Director, Salim Mohammad, said this was among the focus in their "Visionary Goal of 2535". This would entail replanting low yield aging plants with high quality seed from Sawit's own seed production complex, incorporating the latest systems and technologies in operational processes and investing in human resources development. He was speaking at Sawit's 10th anniversary celebration which took place recently.
He said the number "2535" meant achieving 25 per cent oil extraction rate (OER) from fresh fruit bunches (FFB) and 35 per cent tonnes FFB yield per hectare. "Currently we are only producing four tonnes oil per hectare. If we manage to get 25 per cent OER it would mean we will be producing to develop eight tonnes oil per hectare, in line with the national target."
Sawit Kinabalu originally started from the corporatisation of the Sabah Land Development Board (SLDB) on Nov 26, 1996 with 48,000 hectares.
Today a total of 75,000 hectares have been planted, out of which 65,000 hectares have fully matured, he disclosed.
Ideally, their vision is to expand the planting area to 150,000 hectares by 2014. "Production-wise, last year we produced 330,000 tonnes of crude palm oil (CPO) compared to 10 years ago, which was only 230,000 tonnes. That is a significant increase in both areas in terms of hectarage planted and also volume produced." According to him, Sawit Kinabalu made a total turnover of RM4.2 billion over the years, at the same time yielding a profit of RM1.2 billion, ie. an average of RM120 million per year before tax.
"During the same period because of the good turnover and good returns, Sawit Kinabalu managed to pay RM330 million off its loan to the Government. Last year we contributed a total of RM120 million in terms of sales tax to the State Government." He said Sawit Kinabalu has also created jobs for 12,200 workers and 800 staff. To overcome dependency on foreign workers, they have built up a pool of skilled local workers.
On its aspiration to be Sabah's leading integrated agro and land-based development corporation, Sawit Kinabalu has indulged in downstream activities such as in oleo-chemical and biodiesel industries.
"All the while we have only been producing CPO. We have eight mills all over the State, which are capable of milling 440 metric tonnes (MT) per hour of fresh fruit bunches. Previously our milling capacity was 250 MT per hour."
The Sawit Group has invested RM100 million in the first wholly State-owned refinery complex in Kunak, which consists of a refinery and a kernel crushing plant. Commissioned just this month, the refinery can refine the crude palm oil with a capacity of 1,500 metric tonnes (MT) per day and the crushing plant has a capacity of 450 MT per day to produce crude palm kernel oil.
The complex is also equipped with storage tank capacity of 70,000 MT and expandable to 100,000 MT in the immediate future.
Salim said the Sawit Group has also been entrusted by the State Government to handle the Sawit Palm Oil Industrial Cluster to be marketed as Sawit POIC to be based in Sandakan.
The group will play the role of an infrastructure developer whereby it provides the land, with modern infrastructure. He said this would cost RM1/2 billion, which would have to be sponsored by the Government.
"POIC itself would be spending RM70 million or so. This would be for the power, electricity for factories to operate within the complex connecting the POIC."
In terms of renewable fuel, Sawit Kinabalu plans to build a biodiesel plant by year 2008. Salim said it would have to be in Lahad Datu as the present refinery is in Kunak. The Sawit Group's biomass steam generation plant in Kunak will be commissioned next year.
Sawit Group has also embarked on cattle farming in response to the State Government's halatuju to reduce food product imports.
"The prospect is great. We tried it three years ago in Lahad Datu, Tawau and a few other estates with 3,000 heads of Brahman Cross cattle. Now the number has increased to 6,000."
The Group plans to increase production further to 10,000 heads by 2008. "This is a smart way to value add the plantations. We help the Government to increase beef production and at the same time we reduce on weeding costs in the plantations." Sawit Group is also collaborating with the Malaysian Agricultural Research and Development Institute (Mardi) to set up an animal feed factory which utilises oil palm fronds (OPF) and palm kernel cakes. The Sawit Group plans to become a major local supplier of animal feed by year 2007.