KUALA LUMPUR: Boustead Plantations Bhd will retain its 9,457 workforce across its operations, despite the ongoing Covid-19 crisis that has severely impacted its harvesting and production of fresh fruit bunches (FFBs) and crude palm oil (CPO).
Chief executive officer Ibrahim Abdul Majid said the oil palm plantation company had not been spared from continuously facing shortages of skilled harvesters, which was an industry-wide problem.
“The border control imposed due to the Movement Control Order (MCO) from March 18 to May 4, while undoubtedly necessary for the collective good of our nation, has unfortunately affected our foreign workers’ movement and recruitment process,” he told the New Straits Times recently.
Ibrahim said Boustead Plantations would redeploy all able-bodied foreign workers from the upkeep portion of the operations into harvesting, as part of its short-term measure.
“Undoubtedly, they (foreign workers) need to be trained, we must ensure that adequate training will be provided so that they become good oil palm harvesters.
“We also try our best to attract locals into the crop evacuation process and are seriously looking into engaging and attracting locals,” he said.
Although the plantation industry was among the selected essential industries permitted to operate during the MCO, he said the rising Covid-19 cases, particularly in the Sabah State, had prompted the state government to impose a shutdown order on palm oil operations in six districts.
“This has affected nine of our plantations’ estates and mills from March 25 to April 14, 2020. All our four mills in Sabah were also not allowed to operate after 5 pm for almost one month until the end of April, which affected our CPO production,” he said.
Although the MCO restrictions in Sabah were lifted in May, Ibrahim said the impact on the group was largely in connection to the foreign labour whom the company employs for its estate operations mainly the delivery of fertilisers and transportation of FFB and CPO.
“The labour shortage to a certain extent has affected harvesting operations and caused delays in manuring, weeding, and other upkeep works at our estates.
“Restriction in terms of logistics operations has also delayed the delivery of fertilisers to our estates and has impacted the transportation of crops to the mills,” he said.
Ibrahim said Boustead Plantations was managing labour shortage by prioritising FFB harvesting and collection.
“We are training general workers to harvest and have successfully redeployed them from upkeep to harvesting operations. At the same time, we have engaged contractors to carry out field works such as circle spraying and palm sanitation,” he said.
Ibrahim said the company would also look at maximising the overall estates’ yield per hectare, minimising production costs, increasing mills utilisation factor, as well as streamlining estate management.
“In terms of our organisational transformation, we will focus on revamping our organisation and increasing operational efficiency and productivity,” he said.
Boustead Plantations aims to transform its mills from being service providers to estates, into stand-alone profit centres, given that CPO is the group’s main revenue earner.
“We have improved structural efficiency by integrating all our estates and mills into strategic business units that are now profit centres.
“Building on our enhanced structure, we look to improve operational performance to boost our bottom line,” Ibrahim said, adding that this would be driven by prudent cost management, including improved work methods complemented by ongoing mechanisation of processes.
Operationally, he said the company had revamped processes to expedite foreign workers recruitment and improve labour retention.
“We increase the purchase of external crops from third parties at competitive and fair prices to increase mills utilisation and productivity. We will also rationalise underperforming assets to trim excess weight,” he said.
The group’s recent land rebalancing exercise enabled it to carve out inaccessible and non-harvestable areas from the landbank.
“Moving forward, we will continuously review and monitor our underperforming estates and mills to better manage capital expenditure and conserve cash flow.
“The second phase which will continue until 2024, will focus on value creation for shareholders by strengthening the group’s net free cash flow and lower gearing,” Ibrahim said.