Market Risks

The prices of output products from the cultivation and livestock sectors of the Company such as rubber, sugar, palm oil, beef, and milk are sensitive to the global market and under an ongoing movement. The drop in price of rubber, palm oil or crude oil has a direct impact on the financial backup plan and profit potential of the Company. In addition, being a new corporation in the agriculture sector, HAGL Agrico must bear the risk of competition from the competitors in domestic and in Southeast Asia such as Thailand, Malaysia, and Indonesia which already have the breadth of experience in cultivation of rubber tree, sugarcane and oil palm. Especially, when the TPP (Trans-Pacific Partnership) agreement is put into action, the pressure on price competition is one of the most difficult problems with which the Company must deal.

Risk management measure:

By applying the low cost strategy consistently in all sectors, the Company could always control the investment expenses and price at the lowest rate. At the same time, the Company also makes use of the large and inter-regional land bank and abundant water source that bring the convenience for mechanization and application of the high technology to achieve the optimal efficiency in production, high outputs and competitive products.