Agalawatte Plantations to boost oil palm in Sri Lanka

May 04, 2014 (LBO) - Agalawatte Plantations, a unit of Sri Lanka's Mackwoods group said it will expand its oil palm cultivation which had become a key contributor to gross profits in 2013, amid declining rubber prices and weather affected tea.

Palm oil crop had increased to 7.4 million tonnes in 2012 up from 6.8 million tonnes a year earlier.
International oil palm prices had declined and moved between 720 to 810 dollars per metric tonnes, the firm said.

But with the price of a fresh fruit bunch moving to 32.77 rupees a kilogram t he firm had earned 124 million rupees in gross profits from the crop, up from 96.5 million in 2012.

According to audited accounts, at company level gross profits were 265 million rupees in 2013.

"Given the success of oil palm, the company is in the process of increasing its oil palm extent which currently stands at 1,247 acres," Chairman Chris Nonis told shareholders.

The firm also has a joint venture company AEN Oil Palm Processing (Pvt) Ltd. The processing firm had paid 42.4 million in dividends.

The firm was also continuing to invest in re-planting tea and rubber.

In 2013 national rubber production had dropped 12 percent but the company had produced 2,816 million kilograms, a drop of 1.6 percent from a year earlier.

The rubber net sale average had dropped to 356.70 rupees a kilo from 394.70 rupees a year earlier. The firm said it had spent 125 million rupees in maintaining immature plantations.

The company had also invested in a centrifuged latex plant and in improving effluent treatment.

Agalawatte Plantation's tea production had dropped 16.5 percent due to heavy rains and gale force winds in the Western High region where most of its estates were located.

At company level, total profits were only 15 million rupees, partly due to a wage hike which cost 120 million rupees, amid weak rubber prices and lower tea output.

The firm was also expanding its Taprospa Resorts with the growth of tourism. Hydro power generation was expected in partnership with Mackwoods Energy Plc, in a further diversification to revenues.

Agalawatte Plantations is one of two dozen firms privatized from state ownership in the 1990s.
At the time monthly subsidies were given by the Treasury from taxes collected fro the people to meet salary expenses.

The firms are now paying land lease rentals to the state and also income tax, when making profits.

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