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Palm oil firm Sime Darby favours increasing yields over new plantations

[KUALA LUMPUR] Malaysia's Sime Darby Bhd plans to focus on improving the yields at its current palm oil plantations rather than relying on planting new areas to grow, the world's top oil palm planter by land size said on Monday.

Palm oil plantations have been accused of starting widespread forest fires due to slash-and-burn land clearing activities in the Sumatra and Borneo islands of Indonesia, leading to choking smoke and haze across Southeast Asia in recent months. "The age of expansion is going to be very difficult and is going to get more difficult," Simon Lord, Sime Darby's group chief sustainability officer, told Reuters in an interview on Monday ahead of a Roundtable Conference on Sustainable Palm Oil in Kuala Lumpur. "We have to increase productivity and efficiency on the ground as a way of growth, rather than simply looking at green fields."

Palm companies also have other reasons to improve productivity. The El Nino weather event is expected to lower fresh fruit bunch yields across the world's largest palm producer, Indonesia. "The drought is going to have a more significant effect than the haze itself, and prolonged water stress will affect yields," said Lord. "Severe heat will also stress the ability of the weevil insect to pollinate (the palm fruit)." Sime Darby's Lord said there was room to expand in Africa and in Asia, such as in the Philippines and Papua New Guinea. "There is potential to expand there, but it's about wise and sustainable expansion," he said.

REUTERS