Monday, 8 July 2013

Improve efficiency to face low CPO price

The current low crude palm oil (CPO) price has been a major challenge to the plantation companies. profitability, with their operational margins being pressured by higher production costs this year. Rabobank International, in its latest industry report, said although the CPO prices were still higher compared with the cost of production, companies would still need to seek efficiencies through better farming practices to gain the competitive edge and prevent margin errosion.

It pointed out that plantation companies which have better yields with operations in the region as well as lower labour costs would be better placed to manage the current challenges. The CPO cost of production both in Indonesia and Malaysia have increased at an annual rate of 6% and 9% respectively, between 2008 and 2012. The cost of CPO production is estimated to range between US$300 and US$500 per tonne of CPO last year although it varies widely due to differences in farming practices, age of the plantations, application of inputs and certifications. (Starbiz)

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