SD Plantation not affected by cut from India

By NG MIN SHEN / Pic By RAZAK GHAZALI

SIME Darby Plantation Bhd (SD Plantation) is not expected to be affected by India’s plans to increase soybean production that could result in the reduction of the country’s import of Malaysia’s palm oil.

SD Plantation deputy MD and COO of upstream Mohamad Helmy Othman Basha said the company has a very long-established relationship with India.

“Even if they cut down their imports, we think we have a competitive edge,” he told reporters at the launch of the company’s supply chain tracking platform, Crosscheck, in Kuala Lumpur yesterday.

He added that an import cut on India’s part is normal for the country, as it “always plays with import cuts and duty structure” as one of the means to protect its own producers of vegetable oil.

Citing an industry official and dealers, Reuters reported earlier this week that India is planning to grow soybeans on more land in the 2019 crop year, as high soybean prices are compelling farmers to shift towards the oilseed away from cotton and pulses.

The step could also allow the world’s largest importer of edible oils to reduce its imports and also boost its exports of animal feed ingredient soymeal.

Earlier this month, India also raised its base import price of crude palm oil by US$5 to US$545 (RM2,289) per tonne. It has levied a 49% duty on imports of crude palm oil.

Malaysia and Indonesia are two of India’s biggest palm oil import markets. India was also SD Plantation’s third-largest market by sales for the second half of last year with sales of RM1.5 billion.

“Whatever we export from Malaysia, between 60% and 70% of it goes to India. No, we have not (seen a cut in import orders from India). We don’t foresee a cut at this stage,” Mohamad Helmy said.

He said part of the group’s edge over its competition comes from its sustainability efforts, with the latest being Crosscheck — an open access online tool that allows anyone to trace the sources of SD Plantation’s palm oil supply down to the mill level.

The platform allows users to check if palm oil is being sourced from high-risk areas by navigating through the group’s supply chain, which involves a large number of players with a network of refineries sourcing from hundreds of mills, supplied from thousands of plantations and hundreds of thousands of smallholders.

Speaking at the launch of Crosscheck yesterday, the group’s executive deputy chairman and MD Tan Sri Mohd Bakke Salleh (picture) said major global customers require confidence that their purchases of palm oil are not associated with deforestation amid worldwide concerns that palm oil production causes deforestation.

“We believe the frontier to halting deforestation is traceability. Tracking supply back to its source will make it possible to identify where problems may exist, so that people can raise the alert for action to be taken,” he said.

The launch of Crosscheck is just the beginning for the group, as the platform is designed to develop further, add new information and support new functionality over time.

Throughout 2019, the group plans to work with various stakeholders including customers, investors and international non-government organisations to explore potential new applications for Crosscheck and to gather feedback for further improvement.

While the cost of investment into the platform was not revealed, Mohamad Helmy said the group allocates about RM30 million to RM40 million for sustainability expenditure every year, which includes the development of Crosscheck.

“A lot that’s said about the palm oil industry is based on perception rather than facts. But you can’t go against perception unless you have some facts to counter it. So, by having this (platform), these facts, we hope the perception will be changed,” he said.

On whether the platform would attract more customers to SD Plantation, Mohamad Helmy said it would not happen immediately.

“Over the medium to long term, obviously it will translate to some benefits for us — I’m definitely not ruling that out. The customers have confidence in us, so either they will buy more from us or those other customers could be attracted,” he said.

Speaking at the launch of Crosscheck yesterday, Mohd Bakke Salleh says major global customers require confidence that their purchases of palm oil are not associated with deforestation