Financial Times

Aitken Spence sees good prospects for palm oil
Aitken Spence, which together with John Keells and Agalawatte Plantations has invested over a billion rupees to grow oil palm, expects its joint venture mill to be in operation by September this year and sees booming domestic and overseas demand that is expected to enhance corporate profits.

“Today we’re finding tremendous overseas demand for our production,” said Rohan Fernando, Aitken Spence main board director who is head of plantations and business development in the conglomerate. “The Indian market is very attractive to us under the free trade agreement. Also, there’s a huge domestic market in Sri Lanka. Ninety percent of palm oil consumed here is imported.”

The three regional plantation companies, Elpitiya owned by Aitken Spence, Agalawatte, part of the Mackwoods group, and Namunukula Plantations, operated by Keells Plantation Management Services, have collectively cultivated about 3,000 hectares of oil palm. Elpitiya has planted about 850 hectares of palm oil, Agalawatte 1,000 hectares and Namunukula 1,200 hectares.

These plantations, set up under the companies’ diversification efforts, are in various stages of maturity. The three firms have set up a joint venture under the name AEN Palm Oil Processing (Pvt) Ltd. to process the crude palm oil from their estates. The mill, in which Rs 200 million has been invested, would have a capacity of up to 10 tonnes per hour. “The palm oil mill is only the second to be set up in Sri Lanka in the last 50 years,” Fernando said.

The entire consignment of processed palm oil would be for export and the firms are getting export inquiries from as far as Australia. The joint venture company is expected to take advantage of the booming international demand for palm oil, led by China and India, which has seen prices rebound. Palm oil is an ingredient in many processed foods and is an important crop for South East Asian nations which have big plantations.

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