PT Astra Agro Lestari is preparing a capital expenditure of around IDR 1.5 trillion (about US$96 million) this year, with the majority allocated for replanting 5,000 hectares of oil palm trees.

President Director of Astra Agro Lestari, Santosa, stated that the budget for capital expenditure is not significantly different from the previous year and takes into account dividend distribution to shareholders.

"The capital expenditure budget is not too far from before," Santosa said while addressing the Talk to The CEO 2024 event on Friday, February 16, 2024.

He mentioned that the production volume of fresh fruit bunches (FFB) of oil palm grew by 4.8 percent year on year (YoY) to 3.31 million tons last year.

The company, with the code AALI, projects that FFB production in 2024 will not differ significantly from 2023.

Santosa explained that the growth in FFB production last year was due to the normalization after the export ban in 2022.

"Even though it was only for a month, the impact was long-lasting. So, the normal production volume was in 2023," said Santosa.

He noted that FFB production in 2022 was disrupted because AALI's palm oil mills had to absorb FFB from outside the core plantations.

As a result, the FFB harvest rotation in the company's core plantations had to be extended and only returned to normal in 2023.

Meanwhile, Astra Agro Lestari's production this year is stagnant as one-third of its oil palm trees enter a period of declining productivity. One-third of AALI's oil palm trees were planted in 1994-1997, making them 27-30 years old.

Santosa mentioned that the productivity of oil palm trees generally peaks at the age of 12-14 years and stabilizes at the age of 20-22 years. Replanting of oil palm trees is typically done when they reach the age of 25-27 years.

"There are still oil palm trees aged 30 years in the plantation. Their productivity will definitely decline. At that time, we will certainly have replanting," he said.