Boustead banks on 'super trees'

KUALA LUMPUR:  BOUSTEAD Holdings Bhd, which derives 40 per cent of its group profit from planting oil palms, is banking on "next generation super trees" and clonal materials to raise its oil yield by at least 15 per cent to 300,000 tonnes in three years, says deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin.

"We're unlocking the value of our oil palm plantations through strategic breeding of hybrids and clones," he told reporters after the company's shareholders meeting here yesterday.

At prime fruit-bearing age, these next generation super trees, grown under good management and environment, are capable of producing more than 35 tonnes of fresh fruit bunches with over 23 per cent oil extraction rate. That works out to be about nine tonnes of oil per hectare in a year, or more than two times higher than the country's average yield.

Lodin said his plantation team will now accelerate replanting of aging trees with these super hybrids and clones supplied by its associate, Applied Agricultural Resources Sdn Bhd (AAR). 

AAR, an equal joint venture between Boustead Plantations Bhd and Kuala Lumpur Kepong Bhd (KLK), had started breeding the hybrids on experimental plots in the last 25 years.

What separates AAR from its bigger and financially stronger rivals, like Felda Agricultural Services Sdn Bhd and Sime Darby Seeds & Agricultural Services Sdn Bhd, are its super-oily fruits and compact oil palms that allow for higher density planting. "Previously, we have been planting 136 trees per hectare. Now, when we replant, we'll increase that to between 148 and 160 trees." 

At the AAR tissue culture laboratory in Ijok, Selangor, scientists carry out cloning where shoots of the chosen oil palm trees are spliced, cultured and grown in test tubes. These shoots grow up to be identical to the "parent" tree.

"Over the years, KLK and our group have invested heavily in oil palm breeding and cloning," Lodin said. The semi-clonal seed production technology ensures consistent quality in every seed. 

"We've started high density replanting in 2008. As the first planting batch bear fruits this year, we expect to harvest and mill 260,000 tonnes of oil. As we engage AAR's expertise in best agronomic practices and fertiliser optimisation, we're quite optimistic of harvesting 300,000 tonnes of oil by 2015 from the same planted area," he added.

At the same time, Boustead is also improving harvest productivity by providing its workers with motorised sickles and pocket-sized diamond blade sharpeners. 

"We're hopeful of good profits again this year if palm oil prices continue to trade at buoyant levels," Lodin said. Yesterday, the third-month benchmark crude palm oil futures on Bursa Malaysia closed RM28 lower at RM3,576 per tonne.

Boustead also expects higher contribution from its shipbuilding division, he said. According to a filing to Bursa Malaysia yesterday, the group's unit, Boustead Naval Shipyard Sdn Bhd, has awarded Boustead Heavy Industries Corp Bhd RM1.53 billion worth of jobs on littoral combat ships. The contracts entail engineering and integration works in connection with the DCNS Setis Combat Management System, procurement of the CMS and the Rheinmetall Fire Control System.

On Boustead's capital expenditure for the year, Lodin said the group has set aside RM1.3 billion, of which the bulk of it, amounting to some RM400 million, will go to land acquisition for property development.

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