The key take-away from this conference are highlighted below.
Farm Fresh Berhad: Nurturing Dairy Excellence Sustainably
FFM is one of Malaysia's largest and fastest-growing integrated producers of dairy products. With over 4,000 milking cows, 6 dairy farms, and 3 processing facilities, the company supplies locally and exports to three countries, namely: Australia, Singapore, and Brunei. FFM is renowned for its innovative approach to dairy farming and processing, incorporating advanced technology and sustainable practices to guarantee the freshness and quality of its products. Their dedication to sustainable practices, renewable energy, and community engagement establishes FFM as a prominent player in the Malaysian Fast-Moving Consumer Goods (FMCG) industry.
Upholding TOYYIBAN Principles in Product Integrity
FFM places a strong emphasis on food quality, from farming to distribution, with a particular focus on animal welfare. The company shares its expertise with partner-farmers to maintain top-notch standards. FFM has expanded its product line to cater to evolving consumer tastes, offering a range of products such as organic A2 milk, date milk, lactose-free milk, oat milk, and almond milk in Malaysia, all free from preservatives and filled with natural goodness. For instance, their yogurt allows customers to relish the pure smoothness of dairy due to its unadulterated milk content and the absence of thickeners. This commitment to using pure ingredients sets them apart from other brands and aligns seamlessly with the principles of TOYYIBAN, emphasizing cleanliness, purity, and adherence to Shariah standards.
In 2023, the company demonstrated its commitment to transparency by launching FFM Grow, a healthy kids' milk without unwanted additives. They have plans to expand this line with a powdered version later in the year, maintaining their dedication to using top-quality ingredients throughout their product range.
Rural Employment and Talent Development
FFM's 'local first' policy highlights their dedication to hiring from rural communities near their Malaysian operations, prioritizing local candidates over urban ones. Presently, 72% of their workforce hails from these rural areas, including 11 individuals from the indigenous Orang Asli community. FFM actively supports local talent through initiatives such as internship programs in collaboration with renowned universities and colleges. Since 2019, these programs have benefitted 223 high-achieving students, many of whom have since become valuable team members within the organization.
In addition, FFM's collaboration with the East Coast Economic Region Development Council (ECERDC) has led to the FFM Scholarship Program. Launched in 2021, it provides educational and financial support to Orang Asli children, assisting 20 students from local schools in the Rompin district with RM30,000 in support thus far. Their goal is to inspire at least 80% of these students to pursue higher education and offer them job opportunities upon graduation. These initiatives highlight FFM's commitment to the local community, simultaneously bolstering economic growth and sustainability.
Solar and Biofuel for Sustainable Farming and Energy
FFM's commitment to integrating renewable energy sources into their operations focuses on two practical choices, namely: solar power and biogas production. They have successfully implemented photovoltaic (PV) systems at two Malaysian farms, i.e., Muadzam Shah and Larkin, with peak power outputs of 1,025.07 kWp and 689.02 kWp respectively. Additionally, plans are underway to introduce a 525.03 kWp PV system at their Taiping facility, set to commence operations in 2024.
Moreover, FFM is advancing sustainable agriculture by employing regenerative practices at their Muadzam Shah farm, creating an on-site biogas plant in collaboration with Green Lagoon Technologies Sdn Bhd. This facility will convert animal manure into biofuel, providing eco-friendly solutions while yielding a 25% cost benefit on fuel purchases compared to industrial diesel rates. Expected to be operational by the end of 2023, the plant aims to reduce annual CO2 emissions by 9,800 tons and cut diesel use by 670,000 liters. Furthermore, the company is considering a similar biogas project at their Taiping farm, aligning with their gradual shift to renewable energy sources, reducing their dependence on the national power grid, and contributing significantly to the renewable energy sector.
Pioneering Milk Sold in Reusable Bottles
In September 2022, FFM, in partnership with Jaya Grocer, introduced 'Milk on Tap,' a pioneering fresh milk distribution system that uses reusable glass bottles, offering a sustainable alternative to plastic packaging. The initiative currently consists of four operational stations, with plans to add three more by late 2023. Its primary goal is to reduce single-use plastic waste and alleviate landfill pressure. This eco-friendly approach has been enthusiastically embraced by consumers and has resulted in the reduction of 140,000 plastic bottles, saving over 7,300 kilograms of plastic between September 2022 and June 2023. This initiative aligns perfectly with FFM's commitment to sustainability.
Furthermore, since 2018, the company has been using Tetra Pak paper packaging for their UHT products, made up of 75% paper, 20% plastic, and 5% aluminium. This packaging, fully recyclable, is sourced from responsibly managed forests and is FSC certified, supporting sustainable forest management, indigenous rights, community welfare, and environmental conservation.
Looking forward, FFM remains dedicated to their sustainable practices. They plan to collaborate with environmentally conscious packaging suppliers, establish sustainability criteria for both ingredients and packaging, and assess key suppliers thoroughly. This proactive approach ensures that FFM's packaging supply chain seamlessly aligns with their overarching sustainability objectives, showcasing their unwavering dedication to responsible and environmentally friendly practices.
BIMB’s ESG Score for FFB
We have assessed FFM ESG’s initiatives based on our framework which evaluate its overall ESG risk. Our final ESG rating score summarizes how well a company’s ESG risks are being managed.
We have assigned FFM an overall ESG rating of 3.1 of 5 which falls in the rating band of “Good”.
Source: BIMB Securities Research - 23 Oct 2023
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