To diversify its product line, Seprod [JSE: SEP] is now looking to produce palm oil in Jamaica. This production will be facilitated by a new processing plant which is expected to be built starting September 2018. This will be of great benefit to local farmers as they will be needed to plant palm trees for commercial purposes which will then be sold to the company for the mass production of palm oil. Seprod plans to spend JA$5 billion on this new venture.
Despite a JA$3 billion owed in loans, Seprod will be seeking to borrow the majority of the funds to offset the cost of production. The company wants to have at least 1,000 acres of land planted with palm trees to supply the processing plant.
Seprod is, however, not in a rush to get the product on the market as there is a three years’ time gap between the times of planting the crop to getting the oil ready to be sold. The palm oil production will be similar to that of production in Central America as the company will be sending a team to Central America soon, to view how it is being done there.
Most of Seprod’s revenue comes from its Serge Island Diaries subsidiary, but with this new project, Seprod is looking to grow its brand not only by producing palm oil but also through other milk processing, grains and edible oil production. The company hopes that with innovation and exportation of Seprod brands such as Supligen to countries such as the U.S and U.K and maybe Canada and Panama shortly, it can consolidate the business while also adding value.
Regardless of some segments of the business underperforming, such as its Golden Grove Sugar segment, Seprod’s revenue increased by 15% with a JA$1.6 billion in profits from 2015 to 2017.
If everything goes according to plan, Seprod’s business is expected to thrive in the coming years. Seprod now trades at JA$28.81 on the Jamaica Stock Exchange market.
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