KUCHING: Indonesia will continue to be TSH Resources Bhd’s (TSH) key growth engine given its young tree profile, virgin soil as well as the implementation of TSK’s Wakuba tissue culture.
According to OSK Research Sdn Bhd (OSK Research), TSH was shifting its focus to Indonesia while Sabah should see declining production of about 0.5 per cent below peak. The firm noted that with over 21.8k hectares (ha) planted since 2006, 75 per cent of TSH’s trees were below peak production age. Indonesia represented only 42.2 per cent of the company’s planted area at the turn of the millennium but this had risen to 85.5 per cent. The archipelago nation was the driver last year, with fresh fruit bunch (FFB) production surging 59.4 per cent compared to an overall FFB production growth of 43.2 per cent. The Kalimantan mills processing TSH’s own crops achieved an operating expense ratio (OER) of 24.6 per cent last year, which was considered impressive compared with Malaysian mills’ typical 20 per cent to 22 per cent.
The company added that other Kalimantan mills such as those operated by Musim Mas were also achieving similar or even slightly better OER. The key reason for this was the fact that most of Kalimantan was currently in its first generation of commercial planting as opposed to the second generation commercial plants in Sabah showing that Kalimantan soil was thus less weathered and richer for cultivation.
Peninsular Malaysia and Sumatra, meanwhile, had an even longer commercial cultivation history and were presently in their third or fourth planting cycles.
The research firm mentioned that Bumitama Agri, whose estates were also concentrated in Kalimantan, achieved an OER of 24.0 per cent last year (including plasma and third party crops). Given its proximity to mills and better estate management, the OER for the company’s nucleus FFB should thus be higher than that from the typical third party smallholder FFBs.
OSK Research added that after much delay in implementing TSH’s Wakuba tissue culture ‘ramets’ on a large scale due to regulatory red tape, the company said that it would begin planting the ‘ramets’ in Indonesia starting in second half 2012 (2H12).
Under controlled environments in Sabah, the tissue culture was producing FFB yields of 38 tonnes per ha at its peak, which was some 30 per cent higher than the standard DxP. Wakuba’s OER of 26 per cent could potentially produce nearly 10 tonnes of CPO per ha (58 per cent higher than DxP). This gave rise to the question what the FFB yield and OER would be if this tissue culture were planted on Kalimantan soil, where the OER was already higher than 24 per cent with the standard DxP.
Wakuba remained a promise, nonetheless, until it started producing concrete results on a commercial scale. This could occur in 2016 when those planted in 2H2012 start to bear fruit.