A long history in Indonesia …
MP Evans has had interests in Indonesia for more than 100 years. Originally cultivating rubber in Malaysia and Indonesia, and tea in Sri Lanka, the Group is now an Indonesian palm-oil producer. It has established a record of delivering growth benefitting all its stakeholders, underpinned by operational excellence. Plantations have a long-life cycle, 25 years for oil palm, and the Group has a long-term approach to all its operations. The Group produces sustainable palm oil by complying with the standards of the Roundtable on Sustainable Palm Oil (“RSPO”) the industry’s premier independent standard setter. It builds strong relationships with the communities where it operates; sets land aside for conservation; applies a ‘zero-waste’ approach to its operations and minimises the use of inorganic pesticides through the introduction and encouragement of natural predators.
Over its time in Indonesia, the Group has developed detailed local knowledge that has enabled it to operate successfully. A long-term approach, combined with disciplined agronomics and sensitive management of the large labour force needed in its operations have resulted in industry-leading extraction rates from its crop.
… growing as the country has changed
During the last ten years, the Group has developed three new projects, investing more than US$250 million. As a result, the Group’s plantations have a young age profile. The volume of its crop doubled between 2010 and 2016, and is expected to double again by 2020. In conjunction with further investments, this anticipated growth is expected to deliver strongly-rising production of crude palm oil, and hence increasing profits and dividends for the Group’s investors.
When acquiring new land for development, the Group negotiates compensation terms with local people in a fair and transparent manner. The Group has an intensive programme designed to ensure that all individuals giving up rights to land do so freely and only after they fully understand what is being given up, in terms of either legal or customary rights, in return for financial compensation offered by the Group. The Group's process is designed to respect the rights of communities and indigenous groups wherever it operates.
Where individuals choose to give up their rights to land in return for a compensation payment, they become members of a smallholder co-operative which collectively owns at least 20% of new areas developed by the Group since 2005, and may additionally become employed by the Group as workers.
Two ways in which the Group has evolved its operations in response to a changing Indonesia are smallholder co-operatives and electricity generation from biogas.
Smallholder co-operative schemes
Since 2005, the Group has entered into arrangements with local people to provide land planted with oil palms by way of co-operatives schemes. In the early stages, the Group provides loans to plant these areas and additionally for working capital. The Group has a policy that co-operatives should pay a modest dividend to its members once harvesting begins even though the co-operative is not at this point yet profitable. The smallholder co-operative schemes attached to the Group's projects have been developed, operated and certified by the Group to the same high standards applied to the Group's own areas. The Group has a contract to buy crop from the co-operatives at a price set by the Indonesian Government.
The smallholder co-operative schemes are maintained and managed by the Group. This has generated goodwill amongst the local population, as well as providing them with a tangible and remunerative business which is owned by them.
Electricity from biogas
The Group's mills in Kalimantan and Bangka capture methane from mill effluent. This methane is used to fuel a biogas engine which generates electricity for office compounds and housing in workers' villages in the vicinity of the mill, giving rise to a significant reduction in the use of diesel for the generators which would otherwise have been needed. In Bangka, the Group began selling surplus electricity to the state electricity company in May 2017. The Group has recently reached agreement to sell surplus bio-electricity to the state electricity company in East Kalimantan and will undertake a project to build a biogas plant at its Pangkatan Mill in North Sumatra when negotiations conclude with the local state electricity company to buy the surplus power.