Value Creation Is The Bedrock Of Our Business 58 FGV HOLDINGS BERHAD Group Business Review During the year under review, we achieved total FFB production of 3.99 million MT, representing a slight increase from the previous year, while our FFB yield improved from 14.40 MT per Ha to 14.57 MT per Ha. The improvement was contributed by the better yield from our old and prime areas and increased labour productivity as a higher number of workers arrived at the end of 2022. The yield was also calculated based on the mature area after completing rehabilitation. FFB processed during the year jumped by 9% to 14.25 million MT, contributed by higher crop production from Federal Land Development Authority (FELDA) settlers and external sources. Of the total FFB processed of 14.25 million MT, 28% was produced internally, while 45% and 27% were sourced from FELDA settlers and third parties, respectively. This led CPO production to increase by 8% to 2.90 million MT in 2022. Although production improved, our CPO cost ex-mill stood at RM2,182 per MT, an increase of 21% mainly due to the global increase in material costs such as fertiliser, as a result of the Russia-Ukraine conflict, the implementation of minimum wages in May 2022 and additional costs associated with the recruitment of new migrant workers. The Oil Extraction Rate (OER) for 2022 experienced a slight decline, dropping to 20.35% caused by the labour shortages in the early part of the year, resulting in longer harvesting intervals and inadequate collection of loose fruits. This also led to an increase in overripe bunches. Nevertheless, it was still above the industry average of 19.70%. Meanwhile, our Kernel Extraction Rate (KER) increased slightly to 5.06% from 5.04% recorded in the previous year. Replanting continues to be the Group’s main priority as it helps to maintain productivity at an optimal level and the sustainability of our plantations. During the year under review, the Group completed felling of 10,858 Ha. The total replanted, however, stood at 3,232 Ha only due to the rescheduling of planting to match seedling readiness and the retendering of the contract to new vendors for a long-term replanting project. The labour shortages faced by the estate and contractors further exacerbated the situation. In improving our replanting programme, we will use new planting materials and implement new technology and modernisation in replanting during the immature stage. Mechanisation is a key component in FGV’s productivity improvement initiatives as it helps to reduce costs and dependency on migrant workers. In 2022, 21,403 Ha were mechanised using Mechanical Assisted Collection Transport (MACT) which were originally under the contract area and managed by external transports. This year, we expanded the Mechanical Assisted Infield Collection (MAIC) programme to cover the hilly terrace area, which spans 4,309 Ha by implementing the use of a power barrow to assist the carriers in crop evacuation, in contrast to the previous year when we focused on flat and undulating areas. FGV continues to intensify its recruitment of plantation workers as labour shortages remain a key risk in plantation operations. Our Recruit, Retain and Repatriate labour strategy will focus on expanding our recruitment hubs in Indonesia for migrant workers, ensuring better livelihoods for our plantation workers and striving for stronger retention rates. In 2022, the Group’s efforts to recruit plantation workers were fruitful, with an influx of more than 10,000 workers of whom 8% were local recruitment. This brought the plantation workforce to 29,929 workers at the end of 2022 in comparison to the requirement of 34,000 workers, bringing our labour shortage down to 13% from 32% the year before. Oil Palm Area by Age Profile 24% (79,377 Ha) 34% (115,088 Ha) 15% (51,268 Ha) 8% (25,325 Ha) 19% (63,016 Ha) Old (21-25 years) Immature (0-3 years) Prime (9-20 years) Young (4-8 years) Very old (>25 years) Total Replanted Area 3,232 Ha 2021: 5,342 Ha Average Oil Palm Age Profile 13.65 years 2021: 14.25 years MACT Total Areas: 21,403 Ha 2021: 7,320 Ha Mechanisation Areas 4,309 Ha MAIC Total Areas: 2021: 30,391 Ha
RkJQdWJsaXNoZXIy NDgzMzc=