Taking a new direction

PALM oil companies have had it good for years. The golden crop has brought fortune and fame to many entrepreneurs over the decades with companies diversifying into that segment reaping huge returns along the way.

While the future for palm oil companies is still intact, some have started to veer away from solely growing that side of the business.

Abundance of supply plus negative connotations in the western world on the product have seen the price of the commodity come under pressure in recent times.

A cash crop is still a cash crop and the ongoing Covid-19 crisis has shown that food security and that side of the business will be part of the transformation that will see other segments of business change as the world adapts going forward.

For FGV Holdings Bhd, the planter recently moved into dairy farming.

It is a small part of their business now but with self-sufficiency of milk in Malaysia still at a low percentage, at best in the teens now – there is ample room for import substitution in that business and revenue to be reaped.

Now it has signed a joint venture with its India partner where the subsidiary of FGV will take a 70% stake in the business of participating directly in the food business in India.

While palm oil will still remain the mainstay of FGV’S operations in India, the recent deals show the new direction charted by the company.

There is also the possibility of FGV getting into the importation of food crops from India into Malaysia as a result of the deal.

FGV said it was 82% dependent on palm oil and wants to look at integrated farming and renewables as a new business pillar.

There is money to be made in the food crop business and look no further than Thailand’s largest company CP Group.

Its revenues are huge and it recently bought Tesco’s Malaysian operations.