Some Best Practices in Some Best Practices in Thailand’s Oil Palm IndustryThailand’s Oil Palm Industry

UnivanichUnivanich Palm Oil PCL, Palm Oil PCL, KrabiKrabi, , ThailandThailand9Sept11

100

Best Oil Palm Growing RegionsBest Oil Palm Growing Regions

10

100

Best growing areas are within100

of the equator

Oil Palms are now spreading to dryer areas up to 150 from the Equator

using drought tolerant hybrid seeds

Planted area of oil palms in ThailandPlanted area of oil palms in Thailand

400,000

500,000

600,000

700,000 671,700 hectares(4.20 million rai)

(Hectares)

Source : DOA 2010

0

100,000

200,000

300,000

1968 1973 1978 1983 1988 1993 1998 2003 2008

1969 First plantings at Univanich

1973 First factory at Univanich

Five Five factors driving growth in factors driving growth in Thailand’s supply Thailand’s supply & demand& demand

2- Agronomic Research is increasing crop yields

1- Oil Palm Breeding is improving drought tolerance

3- Small farmers are driving expansion of the planted area

4- Domestic biodiesel policy and new export markets are creating new demand growth

5- Energy policies are creating new investment opportunities for the industry

3- Small farmers are driving expansion of the planted area

Topi Factory

Locations Locations in in KrabiKrabi ProvinceProvince

Topi Factory

UnivanichUnivanich Palm Oil PCLPalm Oil PCL

Siam Factory Lamthap Factory

AOLUK Siam Factory

UnivanichUnivanich Business StructureBusiness Structure

Own PlantationsOwn Plantations

4 Estates

6,200 ha

Outside Outside GrowersGrowers

approx 4,000 small growers

Oil Palm Research Centre (OPRC)

Seedlings for replanting

Seedlings for new planting

Seed Exports customers in 10 countries

,

approx 40,000 ha

3 Crushing mills

(135 tonnes fruit per hour)

CPO PKO PKC

146,000 tonnes

21,500 tonnes

17% Raw material

150,000 tonnesFFB

83% Raw material

718,000 tonnesFFB

24,000 tonnes

30% to 80% exported

Carbon Credits Carbon Credits Target 100,000 CERs90,000 CERs annually

Electricity SalesElectricity SalesBiogas capacity of 5.7 Megawatts

UnivanichUnivanich export export facilities at facilities at LaemphongLaemphong Port, Port, KrabiKrabi

Developing new overseas markets for Thai palm oil

Exporting CPO/PKO to Asia and Europe

Oil Oil Palm Research Palm Research Centre Centre (OPRC)(OPRC)

Established in Established in 19831983

Thailand’s leading centre for oil palm research

���� Economic sustainability

���� Environmental sustainability

UnivanichUnivanich OPRC has focus on sustainability ;OPRC has focus on sustainability ;

���� Environmental sustainability

���� Social sustainability

- Oil Palm Breeding and Seed Production

- Fertiliser Trials

- Irrigation Research

- Planting Density Trials

- Methods of Replanting Trials

OPRC Activities ;OPRC Activities ;

- Methods of Replanting Trials

- Oil Palm Tissue Culture

- DNA Marker Research (with Kasetsart University)

- Methane Biogas Capture

- Round Table on Sustainable Palm Oil (RSPO)

- Farmer training. Oil palm extension.

Objective : To produce World Class Tenera hybrids especially suited to dry growing conditions

UnivanichUnivanich Breeding Breeding ProgrammeProgramme

Selections based on : -- High Oil YieldsHigh Oil Yields

-- Drought ToleranceDrought Tolerance

-- Low height incrementsLow height increments

UnivanichUnivanich Collection of Genetic MaterialCollection of Genetic Material

Combined Combined Breeding Breeding ProgrammeProgramme

Harrison & CrosfieldDami (Papua New Guinea)

Deli Duras and AVROS

Unilever & SIPEF Joint Research Scheme (JRS)

Binga (Congo) Yangambi and other origins

Unilever Plantations GroupLobe (Cameroon) Ekona and others

Unifield PCLTissue Culture Laboratories (UK)

Clones of selected Duras, Teneras and Pisiferas, 1991

Unilever Plantations GroupYaligimba (Congo)

Deli Duras, ex-Damiand others, 1997

Guthrie PlantationsChemara (Malaysia) Deli Duras, 1970

UnivanichUnivanich

Oil Palm Research Centre Oil Palm Research Centre

ThailandThailand

ProgrammeProgramme(CBP)(CBP)

1988 - 1991

Progeny testing of new Progeny testing of new hybrid crosseshybrid crosses

Field testing of more than 900 progeny crosses

Producing a new generation of palmsProducing a new generation of palms

Deli x Deli x YangambiYangambi hybrid palm hybrid palm 24 24 months after plantingmonths after planting

A A new generation of palmsnew generation of palms

Selected for high yields in Thailand’s dry climateSelected for high yields in Thailand’s dry climate

IndiaMyanmarCambodia VietnamPhilippinesIndonesiaNigeria Ethiopia ColombiaBrazil

UnivanichUnivanich Oil Palms now growing in Oil Palms now growing in

Seed Exports from ThailandSeed Exports from Thailand

Quality Certification Quality Certification

Current production 10 million seeds

Also supplying local farmers with quality seedlingsAlso supplying local farmers with quality seedlings

Supplying local farmers more than Supplying local farmers more than 11,,000000,,000 000 certified seedlings each year certified seedlings each year ISO ISO 9001 9001 certification of seed production and nurseriescertification of seed production and nurseries

Thailand’s new generation of hybrid palms Thailand’s new generation of hybrid palms are achieving production records around Asiaare achieving production records around Asia

Univanich Deli x Yangambi hybrid growing in Philippines

Economic sustainability (continued) Economic sustainability (continued)

Tissue Tissue Culture : the next innovation Culture : the next innovation in in oil palm breedingoil palm breeding

Producing Thailand’s first oil palm clonesProducing Thailand’s first oil palm clones

Tissue CultureTissue Culture

Developing a new generation of high Developing a new generation of high yielding yielding clonalclonal palmspalms

Cloning and field testing Cloning and field testing of elite palms from the of elite palms from the UnivanichUnivanich breeding breeding programmeprogramme

Economic sustainability (continued) Economic sustainability (continued)

Irrigation research: to overcome the effects Irrigation research: to overcome the effects of of Thailand’s dry seasonsThailand’s dry seasonsof of Thailand’s dry seasonsThailand’s dry seasons

Monthly Soil Water Deficit Monthly Soil Water Deficit (mm) (mm) at at UnivanichUnivanich

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Total

2004 25 94 94 26 0 0 0 0 0 0 0 15 2602005 112 146 22 31 0 0 0 0 0 0 0 0 3112006 0 0 5 36 0 0 0 0 0 0 0 0 49 2007 73 109 3 0 0 0 0 0 0 0 0 0 185

Thailand suffers an annual dry seasonThailand suffers an annual dry season

2007 73 109 3 0 0 0 0 0 0 0 0 0 1852008 41 24 3 2 0 0 0 0 0 0 0 4 74

2009 123 140 1 2 0 0 0 0 0 0 0 7 2732010 43 76 98 37 22 0 0 0 0 0 0 0 276

Southern Thailand usually has four or five months of soil water deficit

Thousand Tonnes

Thailand’s monthly CPO Production Thailand’s monthly CPO Production 2010 2010 -- 20112011

Severe dry seasons in Thailand create large differences between low production and high production months

Oil Palm Irrigation ResearchOil Palm Irrigation Research

Automated irrigation trials to test (a) palm’s water requirements and (b) best methods of application

Trial Period Objectives

Three Three UnivanichUnivanich Irrigation Trials Irrigation Trials 1990 1990 -- 20062006

Drip Irrigation Trial 1990 – 1999 To compare 150 litres/palm.day300 litres/palm.day

1

Methods of Irrigation 1996 – 1999 To compare 4 methods- Drippers- Sprinklers- Microsprayers- Contour furrows

2

Drip Irrigation Trial 2000 – 2006 To compare 225 litres/palm.day(Phase II) 450 litres/palm.day3

Irrigation amount Normal Fertiliser Double Fertiliser

0 17.6 18.2

Summary of Summary of Irrigation Trial Yields Irrigation Trial Yields (old (old generation oil palms planted in generation oil palms planted in 19851985))

TonnesTonnes FFB/ha/yearFFB/ha/year

(litres/palm.day)

0 17.6 18.2

225 24.3 24.1

450 25.0 28.1

Irrigation will increase yields by approximately 10 tonnes fruit per hectare

Oil palms respond to 450 litres/palm/day provided fertiliser is also increased

FFB Yields of FFB Yields of UnivanichUnivanich HybridsHybrids

(Deli x Yangambi mixed commercial crosses)

Yield Yield Profiles Profiles of new generation of new generation hybrid hybrid palmspalms

Irrigated Blocks

Non-irrigated 20

25

30

35

40

45FFB mt/ha

(Deli x Yangambi mixed commercial crosses planted in 1999 )

Irrigated Blocks

Non-irrigated

40

30

20

New generation hybrids with irrigation produce up to 40 mt FFB per hectare

Irrigation will add about 10 mt FFB per hectare

Non-irrigated

Blocks

0

5

10

15

20

1 2 3 4 5 6 7Year of harvesting

Months from Planting 25 - 36 37 - 48 49 - 60 61 - 72 73 - 84 85 - 96 97 - 108

Non-irrigated Blocks 20

10

Water Supply

2011 2011 Irrigation Irrigation & & FertigationFertigation TrialTrial

���� To compare fertilizer applied by manual and fertigation methods

���� 21.5 hectares 8 treatments and 6 replicates

���� 4 fertilizer rates with two application methods

���� 8 drippers / palm 450 litres / palm / day

���� Trial period 2011 - 2017

Developing sustainable Developing sustainable replanting techniquesreplanting techniques

Environmental sustainabilityEnvironmental sustainability

replanting techniquesreplanting techniques

Developing new techniques for replanting old palmsDeveloping new techniques for replanting old palms

Routine replanting of 3% to 4% of Univanich area each year

Terracing in hill estatesTerracing in hill estates

Developing environmentally sustainable planting practices to Developing environmentally sustainable planting practices to conserve moisture and protect the soilconserve moisture and protect the soil

New New underplantingunderplanting techniques on flat landtechniques on flat land

Phased felling of the old palms in avenues

UnderplantingUnderplanting techniquestechniques

Underplanting spreads the economic cost of replanting and optimises benefit of biomass nutrients from the old stand of palms

Economic sustainability Economic sustainability

UnderplantingUnderplanting trials at trials at UnivanichUnivanich have also indicated have also indicated the potential for Integrated the potential for Integrated Cattle Cattle & Oil & Oil PalmPalm

: to : to diversify diversify farmer incomefarmer income

Economic sustainability Economic sustainability

TwoTwo--tier planting trialstier planting trials

UnderplantingUnderplanting trials at trials at UnivanichUnivanich have also indicated the potential have also indicated the potential

for twofor two--tier planting of different ages of palmstier planting of different ages of palms

-- increasing yields and reducing the economic impact of replantingincreasing yields and reducing the economic impact of replanting

TwoTwo--tier planting trials tier planting trials ( 97 hectares planted in 1993 & 2007)

18 year old palms with avenues of 4 year old palms-- increasing yields and reducing the economic impact of replantingincreasing yields and reducing the economic impact of replanting

Economic sustainability Economic sustainability

Planting density Planting density and thinning trialsand thinning trialsand thinning trialsand thinning trials

NormalNormal plantingplanting densitydensity inin ThailandThailand143143 palmspalms /hectare/hectare ((99..00 mm triangle)triangle)

HigherHigher plantingplanting densitydensity ofof160160 palms/hectarepalms/hectare ((88..55 mm triangle)triangle)

���� Higher planting density gives higher

early yields in first 8 years from planting

���� At 9 years, reduce to 120 palms/ha by

���� Univanich trials of this treatment gave

15% higher crop yield over first 16 years of production (+36 t FFB / ha) compared to conventional 143 palms/ha density

���� At 9 years, reduce to 120 palms/ha by

removing 25% of palms

160160 palms/hectarepalms/hectare ((88..55 mm triangle)triangle)

withwith systematicsystematic thinningthinning toto 120120 palmspalms /hectare/hectare

X 25% of palms removed at age 9 years

EvenEven higherhigher plantingplanting densitydensity ofof180180palms/hectarepalms/hectare ((88..00 mm triangle)triangle)

givesgives similarsimilar resultsresults

X 33% of palms removed at age 9 years

Biomass byBiomass by--products as products as substitute for chemical substitute for chemical fertilisersfertilisers

Environmental sustainability Environmental sustainability

substitute for chemical substitute for chemical fertilisersfertilisers

Mg

NutrientNutrient equivalentequivalent ofof biomassbiomass replacingreplacingchemicalchemical fertilisersfertilisers (kg equivalent)

(SOA) (GRP) (MOP) (Kieserite)

EFBEFB 1 ton = 17.5kg 2.9kg 18.3kg 4.7kg

N P K

TrunksTrunks/hectare = 1,616kg 92kg 707kg 281kg

at replanting

FrondsFronds 1 ton = 52.1kg 5.6kg 15.9kg 11.2kg

annual pruning

Returning EFB biomass to the fieldReturning EFB biomass to the field

Reducing the need for chemical fertilizers

Mulching young palms with chipped Mulching young palms with chipped palm palm trunks at replantingtrunks at replanting

Conserving moisture, recycling nutrients to the next generation

Frond stacking and EFB mulching under mature palmsFrond stacking and EFB mulching under mature palms

Improving soil structure and moisture retention Reducing soil and nutrient erosion

Methane capture and Methane capture and renewable energy from renewable energy from factory waste waterfactory waste water

Environmental sustainability (continued) Environmental sustainability (continued)

factory waste waterfactory waste water

PalmPalm oiloil millmill effluenteffluent (POME)(POME) isis traditionallytraditionally treatedtreated inin deepdeepanaerobicanaerobic pondsponds whichwhich emitemit largelarge quantitiesquantities ofof methanemethanebiogasbiogas toto thethe atmosphereatmosphere

AA sourcesource ofof potentpotent greenhousegreenhouse gasgas emissionsemissions

Year commissioned 2007 2008 2009

Three Three UnivanichUnivanich CDM Methane CDM Methane Capture Capture ProjectsProjects

�Siam Project

�LamthapProject

�TopiProject

Total Capital Investment US$ Total Capital Investment US$ 66..8 8 millionmillion

Construction of Construction of Biogas ReactorsBiogas Reactors

2007- Univanich Lamthap Project

First Project2006/2007 - Univanich Siam Project

Second Project

Completed CIGARSCompleted CIGARS®®

(Covered In-Ground Anaerobic Reactors)

Commissioned December 2007

Commissioned June 2008

First Project - Siam

Second Project - Lamthap

Commissioned August 2009

Third Project - Topi

Capturing the methane emitted from factory waste waterwaste water

Biological ScrubbersBiological Scrubbers using using bacteria to clean the gasbacteria to clean the gas

Two designs of bio-scrubbers both reduce Hydrogen Sulphide from above 2,500 ppmto below 100 ppm

Horizontal Scrubber

Vertical Scrubbers

UtilisingUtilising the Methane Biogasthe Methane Biogas

Gas engine generators fueled by biogas supply electricity to the national grid

Surplus biogas is burnt in flares to also qualify for Carbon Credits

(CERs)

Increasing Increasing economic economic and environmental sustainabilityand environmental sustainability

Three biogas engine generators at the 60t Topi palm oil mill

Biogas power houses are now attached to each Biogas power houses are now attached to each UnivanichUnivanich factoryfactory

Supplying renewable electricity to Thailand’s national grid

12 12 months Electricity Sales from POME Biogasmonths Electricity Sales from POME Biogas(January (January –– December December 20102010))

�

Siam Project

�LamthapProject

�

TopiProject

TOTAL

Electricity generated 6,397 7,991 16,028 30,416(MW hrs)

Sales value to grid (Baht) 16.3 mil 23.3 mil 37.2 mil 76.9 mil(US$ 2.5 mil)

Sales value own use (Baht) 8.5 mil 5.1 mil 27.5 mil 41.2 mil(US$ 1.4 mil)

�

Siam Project

�

LamthapProject

�

TopiProject

Estimated annual CERs 20,500 25,000 42,000 87,500

12 12 months Carbon Credits from Captured Methanemonths Carbon Credits from Captured Methane(January (January –– December December 20102010))

TOTAL

(Certified Emission Reductions)

CERs received (to date) - 4,346 * - 4,346(since start of projects)

* The first POME biogas CERs to be issued to the Palm Oil Industry in Asia

Conclusions about Methane Capture ProjectsConclusions about Methane Capture Projects

11.. The CIGARThe CIGAR®® or modified covered lagoon technology is achieving ouror modified covered lagoon technology is achieving ourdigestion and capture targetsdigestion and capture targets- the right choice of technology

22.. The gas engines are mostly achieving generation targetsThe gas engines are mostly achieving generation targets

33.. CER revenue targets have CER revenue targets have not yet been achievednot yet been achieved- the most difficult feature of all three projects

22.. The gas engines are mostly achieving generation targetsThe gas engines are mostly achieving generation targets- Supplying the electricity needs of more than 2,000 households around Krabi Province

44. Our environmental and sustainability objectives have been achieved . Our environmental and sustainability objectives have been achieved

- a large reduction of greenhouse gas emissions

- a renewable energy source has replaced fossil fuels

- waste water treatment has improved with reduced odoursaround the factories

- factory efficiencies have improved with reduced processing costs

- new skilled jobs have been created in three rural communities- new skilled jobs have been created in three rural communities

- Sharing technology and creating new employment opportunities in rural areas

Social sustainabilitySocial sustainability

rural areas

Social SustainabilitySocial Sustainability

Creating good jobs and good housing for

Univanich plantation workers and their families

Social SustainabilitySocial Sustainability

Plantation workers are encouraged to own their Iron-buffalo machines.

Many become transport entrepreneurs

Social SustainabilitySocial Sustainability

55S Programs in S Programs in UnivanichUnivanichCrushing MillsCrushing Mills

1. Seiri : Sort

2. Seiton : Set in order3. Seiso : Shine4. Seiketsu : Standardise5. Shitsuke : Sustain

Improving the working environment for factory workers also improves factory efficiencies

5. Shitsuke : Sustain

Farmer Field Days at Farmer Field Days at UnivanichUnivanich

Social SustainabilitySocial Sustainability

Sponsored in co-operation with GIZ

Farmer Field Farmer Field DaysDays

More than 1,000 farmers attending a Univanich field day

Sharing the technologySharing the technology

Sharing results of research trials with local farmers

Training programs for Training programs for farmers at farmers at UnivanichUnivanich OPRCOPRC

Increasing efficiencies and improving

sustainability

Sponsored in co-operation with GIZ

Oil palms are transforming the lives of small farmers and their families

Happy farmersThe miracle crop of our times The miracle crop of our times

www.univanich.comUnivanich Palm Oil PLC

9 SEPT2011