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AMID inflation and soaring food prices, more planters will likely opt for integrated farming ventures. Intercropping oil palm, with other cash crops such as pineapples and bananas, has been proven to be a raving success for some big plantation companies.
United Plantations Bhd, for over two decades, have successfully nurtured cash crops such as bananas and coconuts, making it part of the group’s diversification avenue.
Another plantation giant gradually reducing its 99% dependency on oil palm is IOI Corp Bhd, which is now actively undertaking large-scale pineapple cultivation. With minimal workforce, IOI has intercropped the pineapples between pandan coconut trees and other crops such as bananas and kenaf at its Sagil estate in Johor.
In late 2020, the group had harvested some 125,000 MD2 pineapples. In Malaysia, FGV Holdings Bhd can be seen as a truly big player in integrated farming. It has complete business components of integrated farming that include cash crops, paddy and rice, animal nutrition and protein, livestocks and dairy farming.
To fully realise the value of its 15,000ha of intercropping land available during oil palm replanting each year, FGV has established an MD2 pineapple seed garden in Johor. It also established contract farming agreements with local farmers for the supply of cash crops like Cavendish bananas, while jackfruits and melons are still being tested for demand and viability.
Also, the group’s venture into dairy cattle is a value creation from its acquisition of Red Agri Sdn Bhd that led to developing premium animal feed. It was reported that FGV envisaged its integrated farming will likely generate some 15% of its Ebitda margin by 2023 on an estimated revenue of RM60mil.
On the overseas front, planter United Malacca Bhd is betting big on large-scale commercial cash crops cultivation in Indonesia.
The group is undertaking a joint-venture to develop a 60,000ha land in central Sulawesi, whereby 35,000ha to 40,000ha will be dedicated to planting coconut, cocoa and stevia.
For the planters, many are trying to limit their exposure to the volatility in crude palm oil prices while aiming to grow a field of profitable cash crops moving forward.