FGV Annual Report 2016

ANNUAL INTEGRATED REPORT 2016 49 We expect the seed market in Malaysia to remain flat in 2017 at about 50 million seeds due to the delayed El Nino transition. However, we are confident that we will be able to protect our market share. Nevertheless, the potential overseas seed sales to regional markets such as Indonesia, the Philippines and Thailand amounting to more than 1 million seeds will offset any decline foreseen in the domestic market. Conversely, we expect the sales of rat bait to continue to grow by between 5% and 10% in 2017. Compound fertiliser use by plantations reduced drastically in 2016, and is expected to remain at the same level in 2017. The Cluster's increased sales of fertiliser were made mainly in the open market and we will continue to target this segment in 2017. CLUSTER PERFORMANCE: RESEARCH & DEVELOPMENT AND AGRI-SERVICES (RD&A) The SP20 aims to further enhance the stature of the Cluster, an already internationally recognised research house in the palm oil business, in line with our goal to become a best-in-class agribusiness. The primary focus is to broaden the Cluster's recognition overseas to enhance the Group's standing as a premier palm oil research institution. Our vision for the RD&A Cluster under the SP20 is outlined in the table below. The Cluster will be grouped under the Plantation Sector following the Group's reorganisation in 2017. As a result of the reorganisation, RD&A will become a Cluster under the Plantation Sector and cease to be an independent Business Cluster. KEY RISKS TO THE CLUSTER The Cluster faces a number of challenges ranging from seasonal demand for planting materials and fertilisers, to weather risks that dissuade planting activity. A discussion of the key risks affecting our business is published in our SORMIC. Greater collaboration with Palm Downstream & Sugar Clusters to develop high-value specialty products and green chemicals. Nurturing new technologies, new crops and new products that are synergistic to existing capabilities (e.g. coconut). Developing robust R&D policy and blueprint to regulate the scoping of R&D, appetites, funding, performance monitoring, etc. Maximisation of palm by-products usage to increase earnings. R&D AND AGRI-SERVICES CLUSTER Aspiration: Globally recognised agri-services provider and premier private palm oil research institution CHALLENGES STRATEGIES 2020 TARGETS Managing applied research in collaboration with Upstream, Downstream and Sugar. Enhancing capabilities on plantation R&D. Saturated and competitive local market for fertiliser. The need to have a robust strategy on R&D funding. Seed Volume: 30.0 million MT FFB Yield: 26.0 MT/Ha Fertiliser Volume: 0.73 million MT MANAGEMENT DISCUSSION & ANALYSIS More information about the key risks is available on pages 136-137