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Felcra a success story in rural transformation


MUCH MORE SCOPE: Felcra has yet to tap on the full downstream potential of the palm oil business

MALAYSIA has many success stories to tell in rural empowerment. This explains why the country's rural economy has witnessed progressive change since independence.

Much have been written about the success of Felda, the country's Federal Land Development Authority, established many decades ago. It was the brainchild of the country's second prime minister, Tun Abdul Razak Hussein. Felda is a scheme in rural development which has become a model many countries have tried to emulate.

Learning from Malaysia's experience, many have implemented similar programmes as part of their nation's poverty alleviation agenda.

Over the years, Felda grew from an experiment in poverty eradication into an international conglomerate in the palm oil business. In fact Felda is now a global brand with the recent public listing of the Felda Global Ventures Holdings (FGVH). As a highly diversified palm oil giant, FGVH has now ventured beyond the country's borders seeking new investment opportunities in the oils and fats business.

Though some question the wisdom of such a move, many applaud such initiatives as a strategic way for Malaysia to tap the global expansion in the lucrative edible oils business. For decades now Malaysia has led the world in palm oil trade. It is now time for palm oil companies to expand into the other edible oils including soya, canola and even sunflower.

Taking on a slightly different path is Felcra, the country's Federal Land Consolidation and Rehabilitation Authority. It is another OF Malaysia's success story in rural empowerment. Instead of opening up new land settlement for agriculture, as in the case of Felda, Felcra empowered existing land owners in rural areas to better manage their crops. The aim is to achieve better returns. Inadvertently, the most popular crop was oil palm. Rubber is a distant second while rice is also grown as another estate crop. Judging by the performance in the many years since it was first established, Felcra can also account for much of the impressive development in rural Malaysia.

Each year, rural households which participate in the Felcra schemes enjoy lucrative dividends, a far cry from the days when they had to fend on their own. What Felcra does is not just to provide professional support in crop management, but also provide market support in terms of processing and distribution. Though there have been other attempts to alleviate rural poverty, both Felda and Felcra must surely count as the two most successful initiatives of the government.

Following in the footsteps of Felda, Felcra recently announced ambitious plans to expand and diversify. Unlike Felda, Felcra has yet to tap on the full downstream potential of the palm oil business.

Admittedly, its annual palm oil production is not as big as Felda. But there is no reason why this cannot be boosted through new plantings. Nowadays, expansion in Malaysia is limited. Many plantation companies are now looking at investment opportunities in West Africa, the original home of the oil palm.

Thanks to recent improvements in the political climate of the region, the risks associated with investments there have been drastically reduced.

The region is also attractive by virtue of being close to the western markets of the European Union and the United States. It may, therefore, be opportune for Felcra to evaluate such investment potential. Admittedly, human capital is one of the key challenges of the palm oil sector. Increasingly the sector has raised concerns over the difficulty in engaging managerial level talents to take over the running of the industry.

Felcra's recent move to invest in a university to train manpower for the plantation sector is seen as wise. It would be prudent for the university to provide courses for the entire value chain of the plantation industry.

There is no reason why, with the right strategies and planning, the university cannot eventually become a global centre for sustainable plantations management.

In order to achieve such acclaim, the university should also give serious attention to investment in Research and Development (R&D) and entrepreneurship.

Over the years, there is no doubting the fact that Malaysia has made impressive progress in rural development. Both Felda and Felcra are testimony to such achievements.

Felcra does not just provide professional support in crop management but also provides market support in terms of processing and distribution.

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