04/12/2012 (Jakarta Post) - Publicly listed crude palm oil (CPO) producers look to expand their other crop businesses next year as part of their diversification plans. The diversification plans were partly driven by declining prices of palm oil due to oversupply in two of the largest palm producers, Indonesia and Malaysia.

PT Sampoerna Agro (SGRO), part of Sampoerna Group, aimed at developing its sago and rubber plantations by increasing the size of their planted areas in 2013, Sampoerna Agro corporate affairs director Hadi Fauzan said.

The company currently has 21,600 hectares of land on Meranti Islands regency, Riau province, for its sago plantations. Of the total sago area, Sampoerna has planted around 8,000 hectares since 2009. It will plant another 2,000 hectares next year and expects to finish planting the entire area by 2015.

Sago cultivation is relatively easy compared to palm oil because it does not need to go through the fertilization process, according to Hadi. “We have exported 320 tons of our sago to Japan. We see the potential of marketing the sago to China in the future, India and Malaysia as well,” he said.

In the rubber sector, Sampoerna has planted 150 hectares out of the 100,000 hectares of industrial forest concession (HTI) land that it operates in Ketapang regency, West Kalimantan. Unlike CPO, rubber is a new business for Sampoerna as it only began venturing into the business this year.

He added that, of all plantation projects the company had, rubber was the most difficult to develop. “Its technical procedures are more complicated, its seeds are not that easy to find and the whole process requires a lot of manpower. We will need quite a long time to harvest the results,” he said. However, despite the potential difficulties, Hadi said Sampoerna was optimistic that it would gain significant results in the long term.

The company will allocate between Rp 500 billion (US$52.11 million) and Rp 1 trillion for next year’s capital expenditures. About 20 percent of the figure, between Rp 100 billion and Rp 200 billion, will be designated for the development of the other plantation crops, while the remaining 80 percent will be used by its palm oil business.

Meanwhile, PT PP London Sumatra Indonesia (LSIP) plans to expand its cacao plantations and cooperate with parent company PT Indofood Sukses Makmur to develop its cacao business.

According to London Sumatra vice president director Sonny Lianto, it will be easier for London Sumatra’s cocoa products to enter the consumer goods industry since its parent company already operates in the industry.

“The current size and contribution of the cacao plantations to the company’s total business is still small if compared to CPO because 99 percent of our revenues come from CPO, rubber and palm oil seeds. However, cacao remains a business opportunity for us,” Sonny said.

Combined with tea, the size of cacao plantations reached 3,553 hectares as of September 2012.