Palm planters go into agri-related ops to diversify income streams

IOI Corp Bhd is expected to harvest pineapples and other cash crops in early 2022 at its Sagil estate in Tangkak, Johor. (File pic shows Sagil Estate planted with oil palms.)

PETALING JAYA: More oil palm plantation companies are venturing into agriculture-related businesses, from dairy farming to pineapple and coconut cultivation, on a large-scale basis in their efforts to further diversify income streams.

On Tuesday, it was reported that IOI Corp Bhd is expected to harvest pineapples and other cash crops in early 2022 at its Sagil estate in Tangkak, Johor.(pic)

The group said some 25,000 MD2 pineapples have been planted each month since August 2020.

“By December 2020, a staggering 125,000 MD2 pineapples had been successfully planted with the minimal workforce.

“These pineapples were intercropped between rows of aromatic green dwarf/pandan coconut trees and other crops such as bananas and kenaf at the Sagil Estate, ” IOI Corp noted.

Instead of relying solely on oil palm, IOI Corp’s strategic priority to diversify to other crops was envisioned by its group managing director and chief executive, Datuk Lee Yeow Chor, in the group’s five-year plan, which was introduced in March 2020.

“As we diversify our crops from 99% reliance on oil palm, we will be limiting our exposure to the volatility in palm oil prices as we grow and yield a field of profitable cash crops.

“Inter-cropping pineapples with other fast-growing crops will also improve our soil conservation and increase our land output.”

Another planter, United Malacca Bhd, has also diversified into large-scale cash crops cultivation starting with stevia, coconut and cocoa in Sulawesi, Indonesia.

Meanwhile, United Plantations Bhd expanded into banana and coconut plantations as part of its diversification efforts.

Others joining the bandwagon include FGV Holdings Bhd, which is also going big into pineapple cultivation and dairy farming.

Fraser & Neave Holdings Bhd and Rhone Ma Holdings Bhd had diversified into fresh milk and dairy business to tap into the growing demand.

Rabobank, in its report on “Dairy Export Boom Beckons in Asean-6 – With a Push or Pull”, has projected the combined annual milk deficit of the Asean-6 – Malaysia, Singapore, Indonesia, the Philippines, Thailand and Vietnam – to grow to 19 billion litres in 2030 – up from an estimated 12.9 billion litres in 2020.

Juwai IQI chief economist Shan Saeed (pic below) said there has been under-investment in the agriculture sector for the last 25 year to 30 years.

“If you analyse the agriculture market, food prices are rising amid the Covid-19, global economic bedlam and supply chain concerns.

“It is a perfect timing to move into agriculture. This will become a trophy investment for sophisticated and smart investors looking for long-term gains, ” he told StarBiz.

He also pointed out that many investors in the US are taking positions in agricultural farmland.

In Malaysia, Shan said, many investors were going into durian plantation due to the higher demand from China, given that local durian will normally fetch higher prices due to its superior quality.

The Economist magazine also reported that the world’s food prices have surged to a six-year high in December and will likely keep rising going into 2021.

Food prices had jumped 18% since May last year following the adverse weather and government measures to safeguard supplies while robust demand has helped fuel rallies across agricultural commodities from grains to palm oil.

The prices will likely climb further, said the United Nation’s Food and Agriculture Organisation.S

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