Plantation and Commodities Minister Datuk Seri Johari Abdul Ghani envisioned Federal Land Development Authority (Felda) settlers to organise their land into large clusters, and to fully operate their assets to produce downstream products. (Photo by Shahrin Yahya/The Edge)

KUALA LUMPUR (Feb 6): The Federal Land Development Authority (Felda) has an important role in ensuring the sustainability of Malaysia's oil palm industry, so that the fate that befell the country’s rubber industry will not be repeated here, Plantation and Commodities Minister Datuk Seri Johari Abdul Ghani said.

He said Felda, being the largest owner of plantation land in the country at 800,000 hectares (ha), needs to fully utilise its strength by increasing production and focusing on the downstream sector.

"Try to imagine. If we are not focused on the downstream industry for the next 15 to 30 years, the oil palm industry will go down the same path as the rubber industry. I don't want to see that.

"We were the largest rubber producer in the world at one time. Today, we are the main producer of rubber products, but we import natural rubber from Vietnam and Thailand, because we do not have enough of it. The strange thing is, we have 420,000 ha of rubber trees belonging to 290,000 smallholders," he said in his keynote speech at the Felda 2024 Symposium here.

Malaysia produced 19.5 million tonnes of oil palm in 2013, while Indonesia produced 26 million tonnes. Malaysia’s production dropped to 18.5 million in 2023, while Indonesia grew its output to 46.5 million, he said.

Johari said Indonesia uses half of it for biodiesel production, while Malaysia exports 15 million tonnes. He said the country's main oil palm players produced an estimated 20 tonnes of fresh fruit bunches (FFB) on a per hectare basis, and suggested that Felda raise its production to more than its 2023 production of 16.49 tonnes per hectare.

Therefore, he said it is important for Felda to consolidate its land assets, and complete its infrastructure as best as possible.

As an example, if Felda were to produce 18 tonnes of FFB per hectare, its total yield would rise to 14.4 million FFB, and the agency could become the largest producer with 2.8 million tonnes of crude palm oil, he said.

"Imagine if the price of palm oil is RM4,000 per tonne, and the estimated cost is RM3,000, we make a RM1,000 profit. Overall, we will make a profit of RM2.8 billion.

"So, we have to learn from Felda's success first, and we put together a strategy for the next 20 to 30 years. I believe that for the 800,000 hectares belonging to Felda, if we are good at it, the fifth and later generation will be proud to be part of Felda," said Johari.

He also envisioned Felda settlers to organise their land into large clusters, and to fully operate their assets to produce downstream products.

"So, this oil palm industry is very important to the country. If Felda wants to be socially responsible, it is only 'sustainable' if it can make a large profit. No [company] can make a social contribution to society if it does not generate income," he said.