This article first appeared in The Edge Financial Daily on February 23, 2018

KUALA LUMPUR: Sime Darby Plantation Bhd said it has no plans to continue planting in Liberia in the near future as it is taking a wait-and-see approach to yield patterns.

Its deputy executive chairman and managing director Tan Sri Mohd Bakke Salleh said the group wants to move progressively in its Liberian operations and “not just ramp up” planting in the African country.

“There is no plan to increase the planted hectarage for now,” Mohd Bakke said, adding that its next step would depend on the yield patterns of the trees planted on an existing 10,508ha.

“We do not foresee any further impairments from Liberia,” he said, noting the group had made a RM202 million impairment for the financial year ended June 30, 2017.

Of its current planted area, the group has 10,401ha of oil palm trees and 107ha or about 1% of rubber trees.

However, the group has a 63-year concession agreement signed in 2009 with the Liberian government to develop as much as 220,000ha of land in the country.

A recent Reuters report said new rules against deforestation are a hindrance to any further planting, adding that no seeds have been laid in two years.

The report cited the head of Sime Darby Plantation in Liberia, David Parker, as saying the group’s operations in the country are losing money and that it has to balance its books “or there is no future”.

In the second quarter ended Dec 31, 2017, the group’s net loss from its Liberian operations widened 33% to RM20 million, attributed to higher amortisation charges due to a larger matured area.

However, the group posted a fivefold increase year-on-year in the production of fresh fruit bunches to 15,000 tonnes due to an increased age profile of trees and innovations in water management, said Mohd Bakke.