Felda stretches reach

This is written by my colleague Zaidi Ismail.

Kuala Lumpur: Federal Land Development Auhority (Felda), the world's largest oil palm plantation owner and manager, plans to bolster its rubber operations division by expanding to Cambodia and Myanmar.

Government-owned Felda has a total landbank of over 853,313ha nationwide, of which 11 per cent is planted with rubber while the remaining 89 per cent is planted with oil palm and other smaller crops like tapioca, herbs and fruits.

Felda chairman Tan Sri Mohd Isa Abdul Samad said the venture will be carried out by the agency's international commercial arm Felda Global Ventures Holdings Sdn Bhd.

"Looking at the positive outlook and steady increase in the price of rubber, Felda Global is currently looking into land expansion in Cambodia and Myanmar for this commodity.

"We plan to expand about 10,000ha in Cambodia and 30,000ha in Myanmar, through government channels. The discussions are still in the early stages and therefore it is too soon to disclose other details such as investment," Isa told Business Times recently via e-mail.

Isa said Felda has already expanded its plantations of mainly oil palm to Kalimantan, Indonesia, via Trurich Resources Sdn Bhd, which is a 50:50 joint venture with TH Plantations Bhd, the plantation arm of Lembaga Tabung Haji. The venture owns 40,000ha of land in Kalimantan.

"To date, we have already planted 5,000ha, including the plasma areas and our target is to plant 10,000ha this year," he said.

On its plans this year, Isa said Felda Global is focusing this year on improving efficiency at its upstream operations, strengthening overseas operations, creating more value for its current business and creating new growth areas. This includes establishing strategic alliances, land expansion and expanding downstream activities.

"At the same time, we are enhancing our talent management, to ensure that we have the capabilities and capacity to support and complement our expansion plans and take Felda Global to the next level," said Isa, adding that all these efforts point to additional value creation for the settler community.

Further, more efficient operations and higher profits from the businesses will mean that Felda, being the ultimate shareholder of the businesses, will enjoy higher income and therefore have better financial capability to carry out activities for the benefit of the settlers.

"In our efforts to make Felda a global company, we want to integrate all our businesses and are also looking at forming partnerships with suitable parties to ensure the sustainability of our overseas investments. We are also looking at further exploring downstream activities including niche specialty products," said Isa.

Felda has interests in four continents and over 10 countries including the US, Canada, China, Pakistan, Turkey, South Africa and Australia. These are mainly in the production of specialty fats and oils.

On the oil palm sector outlook, Isa said the industry remains strong despite the unpredictable weather phenomenon and the extreme and prolonged rainy season is affecting harvest and palm oil stocks. Demand for palm oil has increased by five per cent in 2010 compared to the previous year which indicates a steady and uptrend demand for palm oil.

"However, industry players need to be more diligent in managing plantations to increase milling efficiency to enhance crude palm oil production and minimise cost. On its oil palm sector, Felda has aborted plans to operate estates in Brazil and is now doing a feasibility study on expansion efforts to West Africa, in countries such as Cameroon and Liberia, Colombia, southern Thailand and various parts of Indonesia, such as Kalimantan, Sumatra and Sulawesi.

Felda Global Ventures has 46 companies comprising wholly-owned subsidiaries, joint-venture companies and associates, with operations in 11 countries. Felda is the world's largest unlisted plantation agency with over 853,313ha of oil palm estates and other crops as at 2007. About half of Felda's land is owned by more than its 110,000 smallholders and their 1.5 million family members.

Felda, set up in July 1956, manages 317 land schemes nationwide and owns 72 oil palm mills and seven refineries churning RM15 billion in revenue a year and produces one-fifth of the world's crude palm oil output.

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