INDOFOOD AGRI RESOURCES LTD
ANNUAL REPORT 2015
25.
2016 OUTLOOK
With the slowdown in plantings in Indonesia over the last five
years, coupled with El Nino in 2015, incremental CPO supply
is likely to fall. We also expect the higher biodiesel-blending
mandate of 20% starting January 2016 to sustain domestic
demand growth for palm oil products over time, as its effect
will not be achieved immediately. For rubber, the long-term
outlook remains optimistic, with China’s intention to half
the purchase tax on smaller cars and growth in the US auto
industry stimulating healthier demand for rubber.
The Plantation Division will continue to expand through new
planting, while commencing on progressive replanting of its
older palm trees in North Sumatra and Riau. CPO production
growth is well supported by the Division’s younger estates.
To cope with higher FFB production, we are expanding our
milling capacities by constructing a 30 tonnes per hour mill in
South Sumatra and a 45 tonnes per hour mill in Kalimantan,
with target completion in 2016.
We have also initiated action plans and measures to improve
yield and productivity, tighten costs and review the supply
chain to improve efficiencies. These initiatives include
conducting 30-hectare block analyses to enhance crop
management and planting densities, optimising fertiliser and
herbicide usage, adopting crop management and harvesting
best practices to maximise FFB collection and production,
leveraging biological methods to improve pest and palm tree
disease control, and improving mechanisation to increase
efficiency and reduce costs.
