Ta Ann reaping fruits of labour as palms mature

Kuala Lumpur: Ta Ann Holdings Bhd's move to aggressively plant more oil palms in the last five years is literally bearing fruit now.

"The palms are maturing and bearing more fruit bunches. This year, we are aiming to harvest 380,000 tonnes of fresh fruit bunches, about 25 per cent more than previously," said group managing director and chief executive officer Datuk Wong Kuo Hea.  "Currently, about half of our total planted area is of matured profile," he told Business Times in a recent interview.

The group will be investing RM50 million in 2011 to plant another 8,000ha with oil palms. "We've already secured our hybrid seeds for the year. We need to maintain the planting momentum to ensure Ta Ann's growth for the next decade," Wong added. 

Headquartered in Sibu, Sarawak, the group ventured into oil palm planting in 2000. Within 11 years, it has planted some 30,000ha or two thirds of its plantable landbank.

With cash reserves of more than RM100 million, Wong said Ta Ann is keen on expanding its oil palm business within the state. It is working with state-owned Land Custody and Development Authority (LCDA) to gradually build up its landbank to become a medium-sized oil palm player.

"Our first concern is Sarawak. We're working with LCDA and native customary rights landowners to help develop oil palm plantations by profit-sharing. Through regular consultations, the landowners gain a better understanding of the business and they're more than happy to extend full cooperation in the development," he said. 

Ta Ann has worked with Kuching Specialist Hospital's community outreach programme and sponsored health screening and care to villagers in Pulau Bruit, Daro.

A firm believer in sustainable agriculture and forestry, Ta Ann carries out high value conservation  assessments for its oil palm development and reforestation before entering a new endeavour - Riparian zones have been set aside for conservation and wildlife corridors.

As early as 15 years ago, Ta Ann had already been investing substantially in forest plantations. "As our business expanded, we needed more sustainably-produced wood. We've invested in forest plantations to reduce the need to source from the natural forest," Wong said. 

The Forestry Department defines forest plantations as being populated with specially-bred timber species that are of high commercial value. They are fast-growing, thick-trunk, tightly-grained and cylindrical.

This year, RM15 million has been allocated to plant up 4,000ha with fast growing timber species. To date, about 30,000ha have been planted with Acacia Superbulk, Acacia Hybrid, Sawi, Benuang and Kelampayan. In the long run, Ta Ann targets to plant up to 70,000ha in order to achieve a sustainable harvest cycle of 15 years at 4,500ha per year. 

"Wood output from forest plantations is more productive because the trees are specifically bred for opti-mum use," Wong said. "This year, we're harvesting 500ha of our trial plots," he added. 

Asked on Ta Ann's outlook for the year, Wong said should the current crude palm oil price continue to trade in excess of RM3,000 per tonne and plywood prices rise more than the current US$750 (RM2,265) per cu m, the company can expect a reasonably fat profit margin.

Last year, Ta Ann paid out 8 sen a share in dividends to shareholders. Asked if investors could look forward to more dividends this year, he said: "Of course. The higher our earnings, the more we'll pay out to shareholders".

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