3/4/06 (The Star)  -  IT was a clear-cut message from the Government to position the agriculture sector as the country's third economic growth engine in the Ninth Malaysia Plan (9MP).

The plan has outlined New Agriculture programmes for industry players, with emphasis on supply-chain management and cultivating higher value-added activities in their respective industries.

This is by utilising information and communication technology, and exploiting the full potential of biotechnology.

Independent smallholders would also benefit from the 9MP through new sources of growth, especially in the rural areas. This would certainly help reduce the poverty level of some smallholders. 

 
Datuk Sabri Ahmad
National Smallholders Association (NASH) president Datuk Mazlan Jamaludin said: “I believe NASH members can look forward to better income levels upon the implementation of the 9MP proposals.”

He said NASH has over 100,000 members nationwide with an estimated one million ha of land to-date. 

“Our members are independent smallholders who are not tied to the schemes under the Federal Land Development Authority (Felda), Federal Land Consolidation and Rehabilitation Authority (Felcra) and Rubber Industry Smallholders Development Authority (Risda),” Mazlan told StarBiz in Kuala Lumpur recently.

He said NASH would soon be seeking the assistance of the Agriculture Ministry to solve the “idle land” problems among its members for the purpose of planting new cash crops like the Jetropha Curcus for the production of biofuel.

Jetropha is a durable plant, which produces “unedible” fruits with higher oil yield than oil palm fruits and is suitable for biofuel.

Mazlan said: “NASH plans to fully exploit the value of its members' idle land under the 9MP as part of its efforts to revolutionise and maximise the earnings of independent smallholders.”

Plans are afoot to set up a professional cooperative body to monitor the activities of newly-commercialised cash crops, he added.  

 
Worker at oil palm plantation
Mazlan said: “The 9MP, which in the past had only focused on rubber, paddy and tobacco planting, promises brighter days for smallholders.” 

Meanwhile, plantation and agriculture-based companies contacted by StarBiz were more driven to expand their businesses overseas under the 9MP.

Top Glove Corp Bhd executive chairman and managing director Datuk Dr Lim Wee Chai said Top Glove was looking at aggressive expansion to boost earnings and maintain its position as the world's largest rubber glove manufacturer.

“Our group is targeting to set up two new factories per year as well as continue to add new production lines to our existing factories both in Malaysia and overseas,” he added.

To-date, Top Glove has nine factories in the country – eight in Klang and one in Ipoh – as well as two factories in Thailand and one in China.

Lim is confident of the prospects for rubber gloves worldwide, which he described as a “recession-proof” business.

The global demand for rubber gloves is estimated at 112 billion pieces and has a 12% annual growth rate.

Top Glove currently produces about 18.5 billion pieces representing 16.5% of the world market share.

“We hope to increase our global market share to 25% next year through new production capacity and new markets,” added Lim.

Going forward, he expects further consolidation within the rubber glove industry in Malaysia through mergers and acquisitions (M&A). 

“M&As are inevitable given the current hike in latex prices,” he said, adding that the commodity represented about 50% of the total production cost of rubber gloves. 

At present, there are 42 local rubber glove manufacturers in operation.

Lim said: “Due to the rise in the cost of production, Top Glove had to increase its rubber glove prices three times last year. I believe prices so far have gone up by about 15%.”

Plantation giant, Golden Hope Plantations Bhd (GHope) aims to be a leading manufacturer of biodiesel within the next few years.

“We are in various stages of setting up four biodiesel plants – three in Malaysia and one in The Netherlands,” said group chief executive Datuk Sabri Ahmad. 

 
Datuk Lim wee Chai
“This will involve a combined cost of about RM260mil. By the end of next year, these plants will be producing 390,000 tonnes of biodiesel,” he added.

He hoped the Government would consider channelling a portion of the subsidy for fossil fuel to biodiesel so that the price of biodiesel would be attractive to consumers. 

“It will be difficult for biodiesel to compete at current fossil fuel prices,” said Sabri.

In Europe, for instance, biodiesel is tax-free. 

Petroleum products, however, are heavily taxed. For example, in Britain, diesel is sold at 90p per litre while in Germany it is sold at ?1.05 per litre. 

“This is far higher than the petroleum prices in Malaysia,” Sabri said.

“Palm oil for fuel will be the in-thing in the industry but there is tremendous potential in turning the oil palm biomass into sustainable energy. 

“We are currently researching this potential and will need a window of five to 10 years before the research can be commercialised. In the meantime, biodiesel as a source of energy will have to come in.”

GHope foresees oleochemicals to be one of the group's growth areas through its joint venture with Cognis Deutschland GmbH & Co. 

“We plan to increase our speciality fats production to 50% by 2010 from 30% currently,” Sabri said.

In plantation, Sabri said GHope planned to gradually increase fresh fruit bunches (FFB) production to 30 tonnes per ha and oil extraction rate (OER) to 25% in the next four years. 

The Group has succeeded in improving OER from 19.50% in 2001 to 21.52% in 2005 and its FFB from 22.38% in 2001 to 22.74% in 2005. This marks the fourth consecutive year that GHope has improved its OER rate.