Have the courage to fix Felda, expert urges politicians

 

Palm oil expert Ahmad Ibrahim said one of Felda’s major past mistakes was allowing settlers to own land.

PETALING JAYA: 

Politicians have been urged to “be brave enough” to overhaul Felda, at the risk of losing votes, in order to make the federal land development agency profitable.

Palm oil expert Ahmad Ibrahim said political will and an overhaul of Felda’s business model was needed to solve the problems plaguing the agency.

Ahmad, a professor of chemical engineering at UCSI University, said any changes to Felda would result in settlers enduring hardship, at the cost of votes for the government.

Ahmad Ibrahim.

“The settlers will suffer, for a while, and political parties will worry about losing votes. But they (the politicians) must be brave enough to change Felda’s business model,” he told FMT.

His comments came in response to a one-month deadline set for Felda to submit to the government a proposal outlining its new direction, after Prime Minister Anwar Ibrahim said last week that Felda cannot continue in its current form as the government has to inject nearly RM1 billion a year into the agency.

80% wastage

Ahmad said one of the biggest problems affecting Felda was that only 20% of the oil palm fruit harvested is used, while 80% is wasted.

“This waste can be converted into valuable materials like wood-based products, which could boost settlers’ earnings by 80%,” Ahmad, who worked with Felda in the 90s, told FMT.

Empty husks could be processed for fertiliser, and processed husks fed to black flies, which produce larvae that can be used for animal feed, while the husks could also be used to produce synthetic graphite, a crucial material for lithium-ion batteries.

Land ownership a mistake

Ahmad said one of Felda’s major mistakes was in allowing settlers of its resettlement schemes to own land, which ended up being subdivided for the second generation, causing a reduction in yield and efficiency.

When Pakatan Harapan came to power in 2018, a minister suggested that the second generation lease their land to allowing plots to be combined to ensure better profits, but settlers rejected the idea.

“But since the mistake (of allowing ownership) has been made, we now need to focus on increasing yield through biomass production,” Ahmad said.

He said settlers in Indonesia work the land but do not own it, ensuring that the land is cultivated productively.

Felda’s massive debts

Veteran politician Zaid Ibrahim said one month was not enough for Felda to chart a new direction, given the deep-rooted issues plaguing the agency.

He said Felda’s financial troubles stemmed from years of mismanagement and mounting debt.

Zaid Ibrahim.

Its purpose had also shifted over time, from its initial goal of creating Malay entrepreneurs. “It was well-managed in the past, and some settlers have done well. But many handed their land to others to run businesses,” he said.

Modernising Felda would be difficult due to its massive debts, Zaid said.

“Even if operational efficiency improves, Felda is still in debt. It won’t be profitable unless drastic measures are taken, including privatising certain parts,” he said.

Zaid suggested that the government encourage young Malays in the civil service to take up business opportunities with Felda. “The government sector employs 1.4 million civil servants. Why not offer opportunities to the younger ones with entrepreneurial ambition?” he said.

A better model for settlers

Fatimah Arshad, a professor of agricultural and food policy studies at Universiti Putra Malaysia, said Felda had not kept up with the times, especially in access to data and apps that can empower smallholders to go beyond primary production.

She said Felda’s 112,000 settlers must collectively adopt co-operative principles similar to those used by India’s Amul dairy co-operative and New Zealand’s Fonterra.

Fatimah Arshad.

She said India’s dairy industry had been transformed by empowering small-scale farmers through a co-operative model that ensures fair prices and stable incomes by directly connecting them to the market and eliminating intermediaries.

New Zealand’s Fonterra, a farmer-owned co-operative, controls every stage of dairy production, from milk collection to global distribution.

Fatimah proposed a “new-generation co-operative” be set up led by young settlers and entrepreneurs, incorporating digitisation, smart mills and e-business strategies.

“Felda must return to its core mission of empowering settlers. It should liberalise the input market so that settlers can participate in high-value activities such as farm management, palm oil processing, fertiliser production and even futures trading,” she said.

She said sectors where settlers could take charge included security services, engineering and construction, the processing of palm oil, rubber and cocoa, as well as retail and transport businesses.

“These activities are currently controlled by Felda’s subsidiaries. Instead, they should be run by the settlers themselves,” she said. - FMT