FGV Annual Integrated Report 2019

48 FGV HOLDINGS BERHAD OPTIMISING OUR NATURAL CAPITAL OUR LANDBANK The Upstream Division has a total landbank of 439,230 Ha, comprising 202 estates, including rubber estates. 416,652 Ha of this landbank are located in Malaysia (252,508 Ha in Peninsular Malaysia and 164,144 Ha in Sabah & Sarawak) with an additional 22,578 Ha located in Indonesia. Of the total landbank, oil palm occupies 338,437 Ha while rubber occupies 11,201 Ha. Other crops make up a small portion of 1,592 Ha of our landbank. Out of the total oil palm planted area, 263,484 Ha consist of oil palms that have matured (more than four years old), while the remaining 74,953 Ha are categorised as immature areas, consisting of oil palms of less than three years of age. FGV continues to execute its replanting programme, which is crucial to maintaining the productivity and sustainability of the Group’s business. We are acutely aware that maintaining the target rate of replanting is vital to ensuring that our age profile stays in the prime range. We will continue our replanting plan until we achieve a normalised average age profile of 12.0 years by 2026. In addition, we will be using high-density planting material to produce greater yields. We have also piloted a self-replanting project that aims to utilise our own manpower to conduct replanting, as opposed to outsourcing it to contractors. FFB PRODUCTION Even while operational and weather factors impacted production numbers, the Group managed to improve FFB production by 6% despite a 3% reduction in harvested area in 2019 when compared to 2018. The increase in FFB production was due to a number of factors including a more stable labour supply, better rainfall distribution in 2017 and 2018 supporting bunch formation in 2019, a higher proportion of planted areas with younger palms and improvements in rehabilitated areas. FFB YIELD Yield improved due to a number of factors including an easing of the labour shortage that affected the market in 2018 and a milder El Nino effect. More labour on hand improved our crop recovery and harvesting productivity, while a milder El Nino effect meant higher FFB production. In addition, areas that the Group rehabiliated showed improvement and consequently, better crop recovery. REPLANTING Due to lower average CPO prices and the draught during the first half of 2019, we decided to reduce the amount of replanting hectarage and completed only 8,251 Ha at the end of 2019. 4.45 Million MT 115,000 Ha 18.44 MT/Ha 74,953 Ha MECHANISATION In 2019, FGV mechanised an additional area of 18,500 Ha and attained its target of mechanising crop evacuation on all 115,000 Ha that had been identified. This initiative helped to improve FFB production and reduce our dependency on manual workers, and we achieved a harvester-to-land ratio of 1:24 in 2019, as compared to 1:23 in 2018. MANAGEMENT DISCUSSION & ANALYSIS STATEMENTS AND ANALYSIS