62 FGV HOLDINGS BERHAD ABOUT FGV MANAGEMENT DISCUSSION & ANALYSIS VALUE CREATION As CPO prices increased, demand for planting materials, fertilisers and rat baits increased. In 2021, the R&D segment reported an increase in overall sales volume for seed and seedlings by 42% and 30%, respectively. The same trend was spotted in our fertilisers and rat baits products as sales volumes increased by 52% and 3% respectively. We are currently taking extra measures to curb the continuous rise in fertiliser raw material prices that will impact our bottom line in the coming year. One of which is to start procuring a sufficient quantity of raw material for 2022’s requirement to avoid operation disruptions, especially for nitrogen sources and potash. The achievements of the Division included the FGV Geotagger prototype, a solution to assist oil palm replanting activity in improving productivity through precise planting. This machine will provide a pre-lining marking device before felling of old palms and lining marking for new palm planting that could give cost saving of RM2 million and additional revenue of RM6 million for 15,000 Ha replanting area per year. The R&D Division also released a pest management handbook for oil palm industry titled Musuh& Perosak Tanaman Kelapa Sawit. The book provides detailed information with pictures of pests such as rats, bagworms and moths in its step by step guide for sustainable pest management. Ongoing projects include the acceleration of clonal production of high market value and fast growing plants to diversify current FGV’s cloning business. We are currently exploring other crops such as the different variety of vanilla orchid, pineapple, bamboo, jackfruit and tuberous plant species. In addition, we are conducting soil amelioration for inorganic fertiliser reduction for oil palm using bio-fertiliser products. Yangambi Seed Sales Volume (Million units) Seedlings Sales Volume (Million units) Fertiliser Sales Volume (Million MT) Rat Bait Sales Volume (Million boxes) 2019 2020 2021 2019 2020 2021 2019 2020 2021 2019 2020 2021 21.30 3.44 0.64 0.30 18.08 1.91 0.61 0.27 15.00 2.64 0.42 0.29 MARKETING & TRADING Current Strengths • A one-stop centre for the sales of bulk products, providing end-to-end supply chain services • Sells and trades over two million MT of CPO annually • Experienced in managing shipment to an extensive list of ports globally • Ground transport capabilities for local buyers In the Marketing & Trading Division, FGV’s sales and trading of bulk oils business is one of the lead revenue contributors to the Plantation Sector. On this front, we focus on constantly nurturing our long-standing existing markets and venture into new markets to accelerate our growth. Our team comprises experienced Traders in handling edible and non-edible products. We have longstanding relationships with various stakeholders in the industry to provide excellent service to buyers, and have access to specialised services within the Group‘s supply chain functions. These specialities include FFB purchasing, logistics and operations for land transport and shipment, storage and bulking installation, market intelligence and also compliance. We harness these synergies in supply chain and operations to maximise trade margins in our sales and trading of bulk palm and laurics products. In 2021, the Division managed the sale of 2.8 million MT of bulk CPO and Processed Palm Oil (PPO) which accounted for 15% of national production. A higher trading margin was achieved during the year as result of cohesive sales and trading strategy, and supply chain management A key priority moving ahead into 2022 is to further support the Downstream Division by supplying feedstock at destination markets. This is in addition to increasing our profitability in the premium oil segment for CPO and CPKO for RSPO from Mass Balance, CPO International Sustainability and Carbon Certification (CPO ISCC), and high IV olein and PMF as we aim to achieve higher margins for all product segments. Group Business Review Plantation
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