Production


Oil Palm Plantations

Until December 2016, the Company managed oil palm plantations covering an area of 297,011 hectares consisting of 233,382 hectares of nucleus plantations and 63,629 hectares of plasma plantations under the KKPA model. As with other enterprises in the Indonesian palm oil industry, the Company is also facing the same constraints of limited space for expansion. The Company's palm oil plantation areas are spread across several regions in Indonesia, of which 138,117 hectares are located in Kalimantan, 106,711 hectares in Sumatra, and 52,183 hectares in Sulawesi. To date, a total of 265,866 hectares of plantation acreage owned by the Company is categorized as mature plantations, while 31,145 hectares are classified as immature plantations.

In a situation where the Company encounters constraints in expanding its acreages, it resorts to finding ways and means to improve productivity of existing land in order to maintain business growth.  Therefore, it implemented an end-to-end mechanization program, starting from fertilization, in-field activities, up to FFB transportation. Fertilizing mechanization has improved fertilizer usage effectively, and in-field mechanization combined with transportation ensured effective harvesting and subsequently shipping the FFB to the palm oil mills.

On the matter of sustainability, the Company management has met all aspects of sustainability and complies with all laws and regulations applicable in Indonesia. To ensure that all palm oil products meet sustainability aspects, by the end of 2016, 21 plantations obtained ISPO (Indonesian Sustainable Palm Oil) certifications, while the others are currently in the process of obtaining such ISPO certification.


Production

The prolonged dry season of 2016 has inevitably affected production in major parts of the plantations. However, with the intensification program implemented several years earlier, FFB production during 2016 could still be successfully managed despite a decline of 13.0% from 5.60 million tons in 2015 to 4.87 million tons in 2016. The Company’s FFB is processed into Crude Palm Oil (CPO) and Palm Kernel Oil (PKO), and their derivative products, namely, RBDPO, Olein, Stearin and PFAD. CPO production in 2016 reached 1.55 million tons, representing a decrease of 10.5% compared to 1.74 million tons in 2015. Concurrently production of derivative products reached 118,012 tons of RBDPO, 301,034 tons of Olein, 80,786 tons of Stearin, and 25,079 tons of PFAD.