Sarawak Plantation Bhd reports that despite recent global fertiliser cost hikes, the effect on its plantation operations this year has been fairly modest. Although sector-wide nutrient prices have climbed sharply, the company’s total fertiliser spend has increased at a much slower rate—primarily due to early buying, large-scale purchase agreements and stricter on-field nutrient management.

The plantation division’s half-year statement indicates fertiliser expenses rose by around 15% in absolute terms. However, with stronger crop yields and enhanced milling efficiency boosting total revenue, fertiliser costs as a share of turnover only inched up by two percentage points. This allowed the division to preserve its margins while many peers saw their cost ratios expand.

Management attributes the limited impact to three key factors:
• Forward contracts arranged before last year’s price spike, securing bulk supply at set rates.
• Use of precision farming methods—including routine soil analysis and GPS-guided applications—to fine-tune nutrient deployment.
• An internal fertiliser distribution system that removes intermediaries and secures more competitive pricing.

In the first half, the group’s crude palm oil (CPO) production rose by 6% year-on-year, while palm kernel output climbed 8%. As a result, Sarawak Plantation recorded a core profit of RM102 million, matching last year’s figure despite the higher cost base. The board has proposed an interim dividend of 2.0 sen per share.

Looking ahead, management expects fertiliser markets to stay volatile amid ongoing supply-chain pressures, but believes its hedging strategy and efficiency measures will continue to cushion price swings. With several new plantings maturing over the next 18 months, the group remains confident in its ability to increase production and protect margins.

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