The oil produced by the Company is of a high quality with the average Free Fatty Acid ("FFA") content of oil sold at 2.35% (2011: 3.90%). The higher level of FFA in 2011 arose from the deterioration of fruit transported from Yaligimba to Lokutu for processing and was a key factor in the decision to cease that practice.
At December 31, 2012, the Company employed 3,541 staff in its palm oil operations (December 31, 2011: 3,669), more than would normally be required for a palm oil business with production at Feronia's current levels. However, the Company recognises the considerable amount of knowledge and skill held within its workforce and believes it is a tremendous asset. While a large proportion of the workforce is currently utilised in Feronia's replanting program, a sufficient portion of the workforce has the skillset to be re-allocated to harvesting operations as the Company's producing hectarage increases.
The Company also has in place a Management Training Programme to develop management capabilities and skills across four areas - agronomy, finance, technical (engineering) and personnel. The Company believes this is essential to ensure the development of skills through the organisation and is a key part of the Company's succession planning.
New plantings of oil palms commenced in March 2012 in line with rainfall patterns, with 1,138 ha planted in the fourth quarter of 2012 and a total of 3,924 ha of oil palms planted in 2012 (2011: 2,110 ha), representing the replanting of approximately 627,000 trees (2011: approximately 337,000 trees). Fertiliser has been applied to palms aged between 4 and 15 years, with 2,469 ha completed by the end of the fourth quarter of 2012. The size of Feronia's workforce has been and will be a key factor in delivering on its objective to replant 5,000 ha each year going forward. Re-planting of oil palm in 2013 commenced in mid-March and, as at March 31, 2013, 422 ha had been completed.
At Yaligimba, the Company's contractor is well advanced on the installation of the CPO mill. Essential work still needs completing, which has been slowed by the onset of the wet season but completion is expected in the near term. Once the new palm oil mill is operational, the Company will have access to an additional 3,903 ha of producing palms. It is expected that the Yaligimba plantation will achieve operating results similar to Lokutu on a per hectare basis.
The Yaligimba palm oil mill will have an initial processing capacity of 30 tonnes per hour of FFB, with the potential to increase to 60 tonnes per hour in a phase 2 expansion. The Yaligimba palm oil mill's commissioning will mean that the Company will have installed processing capacity of 55 tonnes per hour across its entire operations. It is anticipated that under the current planting program and internal forecasts for yield improvement, there will be no requirement for additional processing capacity, other than the phase 2 expansion at Yaligimba, until around 2020.
In April 2013, Benedict Rich joined the Company as Managing Director of PHC. Mr. Rich has extensive experience managing plantation operations in emerging markets and has also been responsible for various aspects of research and development programs in both tea and oil palm. He is ISO qualified and has a keen interest and understanding of sustainability and the environment in the palm oil industry, having helped develop the industry's environmental, social and sustainability standards.
Arable Farm OperationsKey Metrics:Arable As at and for the 12 months ended Dec. 31 2012 2011----------------------------------------------------------------------------Land Available (ha) 10,000 10,000Land Cleared (ha) 2,000 2,000Land Prepared (ha) 1,700 1,500Land Planted (ha) 500 1,200