Agri-players suffer FFB production slump in 2016

But expect them to recover this year.

All agri-players registered a slump in fresh fruit bunch production in the past year, with outputs declining in the range of 4.6% to 27.7% due to the lagged impact of the severe drought.

According to a report by UOB KayHian, Bumitama Agri and First Resources reported the smallest drop in production, merely drop -4.6% YoY and -6.4% YoY in 2016 as supported by the new mature areas and young age profile.

However, the report also noted that FFB production is poised for a recovery this year, but it is expected to weaken initially during the first quarter.

"All companies guided that FFB production is expected to increase by double digits in 2017 as the impact of El Nino is weakening... [It will] gradually pick up in 2Q17, while strong recovery and yield normalisation is expected to be seen from 3Q17 onwards," the report explained.

Bumitama and First Resources is foreseen to show a strong 18% recovery as the two will be supported by new mature areas, speedy yield recovery from young trees and strategic estate location.