This segment comprises oil palm plantation and sugar milling activities, which includes the cultivation and milling of palm oil and sugarcane.
As at 31 December 2021, our total planted area stands at 230,480 hectares (ha). Through joint ventures, we own plantations in Uganda and West Africa totalling approximately 46,000 ha. Wilmar also directly manages 35,682 ha under smallholder schemes in Indonesia and Africa, and another 157,515 ha under smallholders schemes through associates in Africa.
In recent years, we stepped up our re-planting programme and thus maintaining the average age of our plantations at a relatively young 12 years. This will support the medium to long-term growth of our plantation operations. Around 58% of the plantations are at the prime production age of seven to 18 years and 26% are at age six years and below.
We operate sugar cane and sugar beet mills in Australia, India, Myanmar, China and Morocco. We are Australia’s largest raw sugar producer accounting for more than half of Australia’s raw sugar. Each year we crush about 15 million tonnes of sugarcane to make more than two million tonnes of raw sugar. About 80% of the raw sugar we produce is shipped to overseas markets.
We own 62.5% of Shree Renuka Sugars Limited (SRSL), the leading sugar company in India. SRSL has a cane crushing capacity of 8.4 million MT and ethanol distillery capacity of 160 million litres per annum.
Our associate in Morocco, Cosumar S.A., operates sugar cane/sugar beet mills and a sugar refinery. Cosumar is the sole sugar producer in Morocco and the third largest in the African continent. In Myanmar, we have a total sugar production capacity of 1.4 million MT and a bioethanol plant. In China, we process sugar beet in Inner Mongolia.
Sustainability
As one of the world’s leading sugar players, we understand the importance of including our sugar supply chain in our sustainability approach. In September 2021, we launched our No Deforestation, No People Exploitation Sugar Policy which is aligned with and serves as an extension of our original No Deforestation, No Peat, No Exploitation Policy that was first launched in 2013 and focuses on the palm oil supply chain.
We recognise the critical role we play in driving change and transformation in the industry. In November 2021, we issued a joint statement at the World Leaders’ Summit on Forests and Land Use at COP26 pledging our commitment to a sectoral roadmap for enhanced supply chain action that is consistent with a 1.5°C pathway to be achieved by COP27.
For more information on our sustainability efforts, please refer to the Environmental, Social and Governance chapter.
Our Performance
In 2021, the Plantation and Sugar Milling segment’s pre-tax profit increased by more than five times, from US$104.8 million to US$564.1 million on the back of firmer palm oil and sugar prices and absence of impairment of sugar milling assets in India.
In palm plantations, unfavourable weather conditions impacted oil palm production during the year and production yield decreased by 4% to 19.6 MT per hectare in 2021. This led to a 1% decrease in fresh fruit bunches production to 4.0 million MT for the year.
Sales volume for sugar milling operations decreased by 6% to 3.3 million MT in 2021, affected by weaker demand in first half of the year. Nevertheless, our sugar milling business in Australia had a record year, benefiting from high international sugar crop pricing and record Far-East premium. Overall, 2021 was a strong year for this division.
Outlook & Strategy
With expectation of palm oil stocks remaining low as global palm oil production is projected to recover only in the second half of 2022, coupled with the announcement of export restrictions by the Indonesian government, palm oil prices are expected to remain supported in 2022.
The sugar milling business is expected to benefit from the Indian ethanol programme and production expansion in SRSL as well as firm sugar prices. We will also continue to expand in renewable energies.
With strong crude oil prices, we expect ethanol demand to increase globally, especially in Brazil. We will continue to monitor the Brazil sugar crop allocation between sugar and ethanol as we expect it to be the crucial driver determining final sugar supply and demand.ucial driver determining final sugar supply and demand.
