Felda Global Ventures to step up mechanisation efforts

PETALING JAYA: Felda Global Ventures Holdings Bhd (FGV) aims to increase mechanisation in its estates to 115,000ha or 35% of its total planted area by 2020, said group president and CEO Datuk Zakaria Arshad.
“Potential suitable land for implementation of mechanisation is about 115,000ha or 35% of our total planted area. By end of this year, we target to increase mechanised area to 92,000ha compared with only 15,000ha in 2012. We expect to mechanise all 115,000ha by end of 2020,” he told SunBiz via email.
Zakaria said the mechanisation efforts are projected to improve the operation of its estate and reduce the manpower ratio from one person per 10ha to one person per 12ha by the end of 2020. It would also improve labour productivity by 20% to 40%.
“In terms of manpower, we need about 36,000 workers and currently we have 29,000 workers. We expect to neutralise the shortage by the first quarter of 2018. We also have a worker quota surplus that can be used during the year if needed to replace outgoing workers,” he added.
According to Zakaria, FGV’s mechanisation efforts are focused on fresh fruit bunch (FFB) field evacuation, manuring and weeding.
“We focus on machinery and other equipment that has already been established and proven in the industry. We have allocated around RM500,000 annually for mechanisation research and development (R&D) through our subsidiary, FGV Applied Technology (FGVAT) under the R&D cluster,” he said.
He said FGV has a provision of RM30 million to be used within three years until 2020, to mechanise its plantations. Subsequently, the provision will be consolidated to RM10 million a year.
For 2018, Zakaria said FGV will focus more on its core business of plantation by improving FFB production, oil extraction rate and operational efficiencies of mills. Besides mechanisation, other areas of improvement include efficiency, manpower and replanting.
“We plan to have 28 mill complexes to be ready for RSPO (Roundtable on Sustainable Palm Oil) certification (eight mill complexes were already certified in 2017). In the next year, FGV will continue to rationalise non-core businesses, restructure mills, improve governance and optimise administrative costs. The end objective is to bring good returns to shareholders and stakeholders,” he said.
On FGV’s capital market and share price, Zakaria said this is an area of “extraordinary” concern for some parties.
“For me, before we can convince investors, FGV needs to ensure that the current business performance is recovering by recording consistent profit growth and ensuring good governance in every aspect of the business.
“FGV’s performance has begun to decline since 2014 due to several factors but since the beginning of 2017 we have been actively restoring the performance of the company based on the 2020 Strategic Plan,” he said.
He said the initial signs of recovery can be seen through increased financial performance with consistency from the first quarter to the fourth quarter of 2017 and expects this momentum to continue into 2018.