11/22/2010

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THAILAND: Rice, rubber and palm outlook buoys CP - Quality seeds and saplings in demand

Charoen Pokphand Group's farm and innovation businesses are expected to be bullish next year on robust demand for high-quality rice seeds and rubber and oil palm saplings with abilities to combat plant diseases and drought.

As a big supplier of rubber and oil palm saplings, CP's Crop Integration Business Group should also enjoy the upward trend of oil prices, which are expected to drive sales of the young trees substantially.

"The global trend is that farm sizes will be smaller due to urbanisation and farmers would be looking for better seeds to utilise tiny plots," said Montri Congtrakultien, chief executive officer of the Crop Integration Business Group.

The positive fuel outlook is encouraging the group to pursues two new investment projects: a plant to produce crude palm oil to supply oil companies to make biodiesel, and a rubber-processing plant.

He said the seed and plant business now represented less than 20% of the group's sales revenue, or 2.2 billion baht, but sales were projected to rise to 2.5 billion next year.

The group is also upbeat about selling 700,000 of its developed para rubber saplings next year, up from 450,000 sold this year.

According to Mr Montri, the rise in rubber prices, above 100 baht a kilogramme for ribbed smoked rubber sheets this year, has pushed up sapling prices to about 60 baht a unit now, compared with 35 baht early this year.

Every year, the industry needs to replant rubber trees on around 300,000 rai (one rai=1,600 sq m). Next year, demand will be even higher to replace those that were hit by floods. An average of 76 rubber trees are needed for one rai of land.

CP also bred and distributed about 2 million units of saplings from varieties developed by the Agriculture Ministry.

The company also plans to set up either crepe rubber or block rubber processing plants at sites near plantations that grow its JVP80 rubber.(Syed Rashid Ali, Karachi, Pakistan)

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