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Jakarta Post

Astra Agro to venture into cattle farming

  • Tassia Sipahutar

    The Jakarta Post

Jakarta   /   Wed, April 15, 2015   /  08:41 am
Astra Agro to venture into cattle farming

Good job: Astra Agro Lestari president commissioner Prijono Sugiarto (center) packs his copy of the company'€™s annual report and prepares to leave the venue flanked by president director Widya Wiryawan (right) and director Bambang Palgoenadi (left) after the company'€™s annual shareholders meeting in Jakarta on Tuesday. The company posted a net profit of Rp 2.5 trillion (US$192.54 million) last year, a 39 percent increase from Rp 1.8 trillion in 2013. JP/Ricky Yudhistira

Major plantation company PT Astra Agro Lestari (AALI), part of diversified conglomerate PT Astra International (ASII), is set to venture into cattle farming in an effort to diversify its business, according to its top boss.

Astra Agro president director Widya Wiryawan said on Tuesday that the publicly listed company '€” whose major commodity is crude palm oil (CPO) '€” was assessing in more detail the possibility of entering the cattle-breeding business.

'€œIt may go hand-in-hand with our existing palm oil plantation, creating a business synergy. We have many flat plantation sites that may suit the cattle'€™s needs,'€ he said in a press conference after the company'€™s annual general shareholders'€™ meeting.

At present, Astra Agro'€™s plantation sites are scattered across the country, but most of them are located in Kalimantan and Sulawesi. In addition to palm oil, the company also has a rubber plantation in Banten.

Widya acknowledged that cattle farming would provide a new business opportunity for the company, citing the government'€™s ambition to achieve national beef self-sufficiency.

'€œBut we will need more clarity from the government on the program before we move on to more concrete action,'€ he said.

The previous administration initially targeted 2014 as the year of beef self-sufficiency, but it had failed to reach the target by the time then president Susilo Bambang Yudhoyono ended his term last year.

The idea was picked up by the new regime and Vice President Jusuf Kalla has expressed the government'€™s intention to realize the beef self-sufficiency target within the next two years.

If the cattle farming plan is realized, it will be Astra Agro'€™s latest business diversification since it began olein production in 2014, producing 258,985 tons of the CPO derivative from its refinery in North Mamuju, West Sulawesi.

According to Widya, Astra Agro has the potential to produce further CPO derivatives. '€œWe have not really done anything with our palm oil kernels. The end product may be in the form of an oil that resembles coconut oil, but further study is needed,'€ he said.

Astra Agro finance director Rudy said that his firm had allocated around Rp 3 trillion (US$231.14 million) to finance its expenditure this year.

'€œAbout one third of the figure will be used for various plantation purposes, one third to upgrade existing plants or build new ones and the rest to improve infrastructure in areas around our plantations sites,'€ he explained.

Of the funds earmarked for plants, the company will use $20 million to $24 million to construct two new palm oil mills in Central Sulawesi and South Kalimantan.

Each mill will have the capacity to process 45 tons of fresh fruit bunches per hour and construction will take between 12 and 18 months. '€œThey will be up and running in 2016,'€ Rudy said. By then, Astra Agro will have a total of 31 palm oil mills.

Meanwhile, the company'€™s shareholders approved during the meeting the payment of Rp 1.13 trillion in dividends generated from 2014 net profits. The total represents 45 percent of its profits and is equal to Rp 716 per share.

The dividend payout includes the interim dividend that Astra Agro paid in October, with final payment slated to be made on May 15.

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