Felda needs to rejuvenate settlers to relive its glorious past - chairperson

 

The Federal Land Development Authority (Felda) needs to rejuvenate the settlers in order to return to its glorious past.

Its chairperson, Idris Jusoh said the effort is in line with the demographics of the settlers, most of whom have reached the golden age and it was time for the tasks to be taken over by the second generation.

He said among the initiatives highlighted in the reform process was to appoint 15 percent of new block leaders among the second generation of settlers aged below 50 years.

"Usually the leaders of these blocs are in the range of 60 years or 70 years and above, and they will not make way to young people and they are difficult to accept change, especially on new technologies related to agriculture," he told Bernama.

Felda is embarking on an effort to create smart and integrated agriculture in order to increase the income of settlers in conformity with the goal of turning them into an exemplary and high-income community.

The smart and integrated agriculture programme will be conducted in collaboration with the Malaysian Technology Development Corporation (MTDC), the Malaysian Global Innovation and Creativity Centre (MaGIC) and Universiti Putra Malaysia (UPM).

"This programme is designed to suit the capabilities and abilities of the younger generation who are more exposed to the latest technology, especially in agriculture," he said.

Besides that, he said Felda is aspiring to raise the income of settlers to more than RM5,000 per month by 2023 and producing up to 1,000 millionaire entrepreneurs, including 3,170 other entrepreneurs by 2025 through various programmes involving participation from the second, third and fourth generations of settlers.

"Felda is providing an allocation of RM1 billion for the Settlers Development Programme (PPP) which is expected to provide high income to the settlers," he said.

The agency, which is now 64 years old, boasts 112,638 settlers in 317 land schemes nationwide. It has also produced many great figures among the younger generation, thanks to a school education system provided in every land scheme.

He said the land schemes have produced many professionals like doctors, engineers and lecturers.

Among notable figures are Puncak Niaga Holdings founder Rozali Ismail from Felda Gedangsa, Kuala Kubu Baru, Selangor, preacher Muhammad Kazim Elias (Felda Besout 3, Perak), celebrity Asmawi Ani (Mawi) (Felda Taib Andak, Kulai, Johor), and Farm Fresh chief operating officer Azmi Zainal (Felda Kelemah, Gemas, Negeri Sembilan).

“Not many know people about Felda’s success stories,” he said.

Felda needs to rejuvenate the settlers in line with the goal of returning the agency into a 'gold mine' it used to be.

Hence, Idris, who was appointed Felda chairman on May 1, together with the Felda Special Task Force, has conducted a study to improve the Felda White Paper that was tabled in Parliament in April. The task force, led by Abdul Wahid Omar, has obtained feedback from all stakeholders to formulate a new business model for Felda.

“We have now identified the way forward by understanding where we are now and the past and had come up with a new business model to make the agency more sustainable, profitable and independence.

“The task force had also proposed financial restructuring, how a management system can be improved, which include digitalisation of the financial system, changing the mindset of settlers, gearing them to achieve high income, as well as a cost-cutting exercise,” Idris said.

On the new business model, Idris said Felda believed the right business model for the agency moving forward is to have a complete supply chain from farms, mills to downstream.

“Before FGV Holdings Bhd was listed on Bursa Malaysia, we already have our own mills, whereby Felda during that time registered profit amounting over RM1 billion, of which in 2011 it posted about RM1.85 billion in profit.

“However, after the listing of FGV Holdings Bhd in June 2012, Felda’s earnings obviously declined as the returns from FGV investment did not commensurate with what was expected from them,” he said.

FGV was listed on the main board of Bursa Malaysia on June 28, 2012, at RM4.45 a share, making it the world's second-largest IPO after Facebook, raising about RM10.5 billion.

According to the white paper, Felda made a net profit of between RM200 million and RM1.1 billion annually between 2007 and 2011. This was against a net loss of RM4.9 billion recorded by the troubled plantation giant in 2017.

Under the Land Lease Agreement (LLA) between Felda and FGV, Felda should receive a payment of RM248 million per year and profit share of 15 per cent for a lease of its commercial land for a course of 99 years.

To achieve the goal of returning Felda to profitability, Idris said the agency clearly intends to take back 350,000 hectares of Felda-owned land leased to FGV under the LLA.

He said the wish had been discussed with the government and Felda was still awaiting the answer.

"When the LLA was entered into, there were conditions stating that Felda can take back the land at any time by giving them (FGV) 18 months’ land acquisition notice.

“We want to take back the land to re-empower Felda. The income derived from profits from Felda plantations before the listing exceeded RM1 billion, making a billion is no big deal... it can be made, however, the income dwindled since 2012 following FGV’s listing," he said.

On the compensation to be paid to FGV with the termination of the LLA, Idris said it had not been discussed in detail, but what was clear Felda's priority at this time was to take back the leased land and create a complete supply chain.

Idris said Felda’s lack of income after the listing of FGV had also forced the agency to take loans from financial institutions in 2014.

Felda's debt currently amounts to RM10 billion, which was incurred to provide cash advances to settlers and for replanting purposes.

As an alternative to debt restructuring, Idris said Felda intends to issue Sukuk and this will be discussed with the government as the guarantor and the amount to be issued will be announced later.

He said the new Felda model also touched on reducing the repayment period of the replanting loans for settlers from eight to four years.

This measure has been implemented to reduce the debt burden of the settlers and make them more sustainable and competitive, he added.

“We have identified new seeds that can be harvested within 35 months and are able to produce a yield of 25 tonnes per hectare, as well as increase the oil extraction rate (of 23 percent).

"This will help shorten the loan repayment period, as well as subsistence aid to the settlers," he said.

Idris said Felda also intends to encourage settlers to engage in cash crop cultivation on their farms to diversify their income streams, which will indirectly increase their income.

As for Felda’s financial restructuring, he said Felda is also looking at liquidating its non-core assets locally and abroad, particularly hotels, which has been put on hold due the current low price and will continue the exercise once the price is right.

On Felda’s 37 percent stake in PT Eagle High Plantations TPK (Eagle High) valued at RM2.3 billion, he said Felda intended to exercise its put option in May 2022 to get back its investment.

“Besides that, we will also increase the capacity of Koperasi Permodalan Felda (KPF) by placing Walmart Inc and Fonterra Co-operative Group Ltd as benchmarks,” he said.

Walmart Inc is an American multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores, headquartered in Bentonville, Arkansas, while Fonterra is a multinational New Zealand-based cooperative owned by 10,500 farmers and their families.

“KPF, in the previous year, was able to pay dividends and provide high income to its members and paid dividends of more than 15 per cent in 2011.

"We want to return to this kind of capability to continue to improve the socio-economic status of each of its members," he added.

- Bernama