Palm oil investments by RPCs show high returns

The Planters' Association of Ceylon says diversification by Regional Plantation Companies (RPCs) into non-traditional areas such as palm oil cultivation and processing, is showing good results.

The AEN palm oil processing mill, a joint venture between Agalawatte, Elpitiya and Namunukula Plantations, is one such project that has shown impressive results in terms of high productivity, improved value addition and export capability and higher ROIs for the plantation companies while also benefiting domestic consumers.

This local production of palm oil has also reduced import dependence for vegetable oils and has helped consumers by stabilising prices of vegetable oil,' explained Ruwan Goonewardene, the General Manager of AEN Oil Palm Processing Pvt Ltd. The AEN oil palm mill is one of two factories in Sri Lanka that produces palm oil from locally grown oil palm plantations.

AEN says the palm oil venture is a win-win operation for both the cultivator and the palm oil mill, as seen in countries such as Malaysia and Indonesia, where economies have grown due to such cultivation. The AEN oil palm cultivation project was initiated in 2000 by the three RPCs Agalawatte, Elpitiya and Namunukula. The 3 plantation companies began the cultivation of palm trees by bringing down seedlings from Papua New Guinea. The area between Kalutara and Akuressa was selected to farm palm trees, due to more conducive rain fall patterns. At the moment about 3,000 hectares have been planted in oil palm.

As a strategic step in crop diversification and based on the trends observed in the South Asian plantation industry, Agalawatte, Elpitiya and Namunukula plantations embarked on an Oil Palm Cultivation and Processing Project. The joint venture agreement was signed in 2000 and a BOI agreement, to set up the palm oil processing facility, was signed in 2003,' said Goonewardene.

The AEN palm oil mill was commissioned in 2007, in a 4 hect land in Mohameddi Estate in the Kalutara District belonging to Agalawatte Plantations PLC, using Malaysian technology. Malaysia is one of the world's largest producers of palm oil.

The AEN mill, purchases palm fruit from the cultivating estates and manufactures crude palm oil and crude palm kernel oil for export as well as for local consumption.

The mill also produces palm kernel meal, which is used as an animal feed ingredient.

'The crude palm oil is sold to refineries, to manufacture vegetable oils that are used for cooking purposes. Crude palm kernel oil, which is derived from the seed of the oil palm fruit, is used for manufacturing soap. The kernel meal is also sold as an animal feed ingredient,' said Goonewardene.