30/4/05 (The Star) - FELCRA Bhd, a low-profile plantation-based government-linked company (GLC), is playing catch-up with its more prominent peers the Felda Group, Golden Hope Plantations Bhd (GHope) and Kumpulan Guthrie Bhd.

Chief executive officer Datuk Abdul Rahman Daud said Felcra was actively exploring joint-venture opportunities to set up biodiesel plants as well as palm oil mills and refineries, both locally and overseas, particularly in Indonesia.

The group is also keen to export its plantation management expertise and rehabilitation services and expand its oil palm plantations to strengthen its upstream activities.

Rahman told StarBiz that Felcra expected its strategic investment plans in upstream and downstream activities to help place it in the same league as its GLC counterparts over the next five years.  

 
Datuk Abdul Rahman Daud
On the overseas front, Rahman said: “We are looking at Indonesia, particularly Sumatra, for downstream activities in the oil palm processing and milling activities”.

Felcra's maiden foray overseas was via its joint venture with a Sumatran co-operative body and another private Malaysian company to set up RM30mil palm oil mill.

“We plan to start with a mill and perhaps acquire more plantations in Sumatra,” he said.

He added that for economies of scale, the group would need at least 10,000ha to 12,000ha planted oil palm plantation to justify the need for a 60-tonne-per hour mill.

Closer to home, Rahman said Felcra was seriously looking at collaborating with a technology provider interested to venture into a biodiesel project with an Australian group.

“We are looking at setting up a small scale biodiesel plant producing about 50,000 tonnes annually,” he said.

Rahman added that the plant would be built next to Felda's existing oil palm mill. He declined to reveal the location.

“Our cost to set up this biodiesel plant is not too high as we already have the feedstock and the facility,” he said.

To date, Felcra has seven palm oil mills producing about 200,000 tonnes of CPO per year. 

A new mill is being built in Samarahan, Sarawak, while another is in the pipeline in Marang, Trengganu, Rahman said.

Felcra, formerly the Federal Land Cooperative and Rehabilitation Agency, was set up as a Government agency in 1966. 

The Government corporatised Felcra in 1997, signifying its major switch from a Government agency to Government-owned company.

“We are a plantation GLC with a difference, unlike GHope and Guthrie,” said Rahman. 

He said Felcra had a dual-function - it had the social obligation towards its 90,000 members, which it terms as “participants”, and must manage itself as a “well-oiled” corporate entity.

“In Felda, their members are called settlers because farmers are brought into Felda schemes and re-settled.  

 
“In Felcra, these farmers came to participate in our rural development rehabilitation programmes,” Rahman explained.

Since becoming a corporate body, Felcra had been invited to invest or set up joint ventures with foreigners seeking to tap its expertise in oil palm plantations and help rehabilitate the rural areas of Colombia, Myanmar and Cambodia. 

Rahman said Felcra was working hard to improve on its revenue growth annually. 

“Our revenue has been growing at not less than 10% per year over the past five years,” he added. 

Last year, Felcra's group revenue stood at RM1bil. 

“We are targeting for a turnover of RM1.2bil for the current financial year ending Dec 31.

“Plantations remain our major contributor and this will continue to grow with the opening of more areas for oil palm cultivation and the setting up of new mills, locally and overseas, in the near future,” Rahman said.

He said Felcra had consistently distributed dividend amounting to RM200mil to its members over the past three years. 

“We look forward to maintaining this performance, especially if the crude palm oil (CPO) and rubber prices remain stable this year,” he added.

Rahman said Felcra was most comfortable with an average CPO price of RM1,400 per tonne, as the group's cost of production was RM600 to RM700 per tonne.

In total, Felcra has 135,000ha planted with oil palm and 48,000ha with rubber.

“Despite the smaller rubber hectarage, both rubber and palm oil contributed the same amount of revenue in the first two months of this year,” he added.