No reports of FGV involvement in open burning, haze so far

The situation in Indonesia is tricky as there are some small farms around the perimeter of the big plantations


FGV Holdings Bhd (FGV) has not received any reports on its involvement with the open burning which is causing the region-wide haze.

FGV group CEO Datuk Haris Fadzilah Hassan (picture) said the situation in Indonesia is tricky as there are some small farms around the perimeter of the big plantations under the Perkebunan Inti Rakyat and the Plasma Transmigration Programme.

Perkebunan Inti Rakyat is a joint-venture scheme between companies and smallholders, while the latter is for farmers who are taking part in the programme set up by the Indonesian government.

“We have not received any report of such cases. In Malaysia, we do not practice open burning and I am sure all the other companies do not espouse such practices,” he said.

FGV has a joint venture with Lembaga Tabung Haji in Kalimantan Tengah, Kalimantan Utara, Kalimantan Barat and Pontianak.

“Until we have the data, we cannot say if these things are happening or not,” he told reporters on the sidelines after witnessing a distributorship signing agreement between FGV’s subsidiary Delima Oil Products Sdn Bhd and DKSH (M) Sdn Bhd in Kuala Lumpur yesterday.

Haris commented on Indonesian Environment Forestry Minister Siti Nurbaya Bakar’s accusation that Malaysia was not being transparent of its own forest fires, saying that the current haze situation was caused by fires in Sarawak.

According to Reuters, the Indonesian government had sealed off four plantations operated by Malaysian companies’ subsidiaries.

Siti Nurbaya named them as West Kalimantan-based PT Sime Indo Agro — a unit of Sime Darby Plantation Bhd; PT Sukses Karya Sawit — a unit of IOI Corp Bhd; Rafi Kamajaya Abadi PT — a unit of TDM Bhd; and Riau-based PT Adei Plantation and Industry — a unit of Kuala Lumpur Kepong Group.

Meanwhile, FGV COO of plantation sector Syed Mahdhar Syed Hussain noted that the haze is expected to impact FGV’s oil extraction ratio next month.

“The palm oil will always be in a challenging period. It is going to impact us, maybe in the region of between 0.2% and 0.5%, and that is a lot if I am processing about 10,000 tonnes to 12,000 tonnes of crude palm oil (CPO) a day.

“The current price of CPO is about RM2,100 per tonne. If I’m talking about extraction ratio, you need five tonnes of the crop (extraction) to get one tonne of oil, which is about 20%,” he said.

However, this is unlikely to impact FGV’s bottom line, Syed Mahdhar added.

According to a Bursa filing dated Aug 14, 2019, the production figures of FGV for July 2019 were 430,094 metric tonnes of fresh fruit bunches, 287,052 metric tonnes of CPO and 67,377 metric tonnes of palm kernel.