09/04/2012 (New Straits Times) - In its 56 years of existence, the Federal Land Development Authority (Felda) has evolved with time to support the needs of its smallholders and the nation. Throughout this time, its culture of striving to continuously improve the economic well-being of rural citizens has been its driving force. Today, it is not only Felda settlers who reap the benefits, but also their children and the whole nation.

Felda settlers complement Malaysia’s palm oil industry and ensure the vibrancy and growth
of the sector.

Prior to the establishment of Felda in 1956, land development was commercial undertakings by mostly foreign private plantation companies. With the formation of Felda, settlers who made the sacrifice of moving into largely remote, undeveloped land were rewarded with ownership of their respective parcels of land and empowered to manage and generate an income from it.

In all, a total of 112,635 settlers settled down in land schemes scattered throughout Malaysia together with their dependents. Thus, a burgeoning pioneer settler community was created. Their dedication and perseverance in cultivating their land was matched by the enthusiasm by Felda to provide all the technical and monetary assistance required to ensure the success of the settlers and the scheme.

In 1990, the declining rate of rural poverty resulted in a loss of interest in becoming a Felda settler. The authorities then made the decision to re-look the model of the Felda scheme.

Felda took on the task of developing the remaining 350,000ha of land -- 225,000ha in Peninsular Malaysia and 125,000ha in Sabah and Sarawak -- on its own as commercial estates, in the process becoming a diversified and self-funded organisation.

As more land was cultivated and commercialised, various services were needed, which were provided by corporations set up by Felda. Over time, these corporations were incorporated as companies. Eventually, in 1995, Felda Holdings Bhd was incorporated to be the umbrella holding company to rationalise the various business activities, which by now included upstream and downstream palm oil as well as other agri-based activities.

One of the unique features of Felda's development model is that the settlers, as the primary beneficiaries, are not merely planters who own their agricultural holdings. Collectively, they also have an indirect interest in the commercial enterprises of Felda Holdings Bhd, through their membership in the Felda Investment Cooperative or Koperasi Permodalan Felda Malaysia Bhd.

Looking ahead to the next 50 years, Felda formed Felda Global Ventures Holdings Sdn Bhd (FGVH) in 2007 to undertake new activities to create more value to the business and to accelerate expansion overseas, in upstream and downstream businesses as well as other agribusinesses.

Today, FGVH spearheads the group's drive to become a globally integrated and diversified multi-crop agribusiness multinational corporation. FGVH has adopted a vertically integrated approach, preferred by many palm oil industry players, to pursue future growth and expansion plans. It remains vigilant in selecting specialty downstream businesses where not only are the long-term benefits high but also in order to protect its upstream business activities.

FGVH has also diversified from the traditional monocrop approach by moving into other crops such as sugar cane, soya, canola and edible oils, thus spreading the risks inherent in being dependant on a single crop. To complement its core activities, FGVH, through its 49 per cent interest held in Felda Holdings Berhad, has support businesses that includes logistics, engineering, hospitality, research and development, and green technology initiatives.

With increasing population and economic growth driving rising worldwide demand for food and non-food products coupled with various supporting government initiatives to facilitate the growth of these industries, FGVH is well-positioned to tap into the projected growth of global commodity markets.

While Felda's original objectives have brought tremendous benefits for its settlers and the nation at large, it cannot stop there. As the world progresses, so is FGVH. The settler communities form a formidable complement to Malaysia's palm oil industry and ensure the vibrancy of the sector. The proposed listing of FGVH will ensure the sustainability of the business, continue Felda's vision and will provide an opportunity to the general public and investors to invest in the businesses of FGVH.