FGV inks conditional shareholders agreement for RM4.5b dairy farming biz 


FGV Holdings Bhd unit, FGV Integrated Farming Sdn Bhd (FGVIF), entered into a Conditional shareholders’ agreement (SHA) with Baladna for Trading and Investment WLL, a subsidiary of Baladna QPSC, and Touch Group Holdings Sdn Bhd for the development of an integrated dairy farming business in Chuping, Perlis.

The project, which is to be developed within an area comprising 3,259ha in FGV Chuping Agro Valley (FCAV), is expected to involve an investment of up to RM4.5 billion.

FGV said in a statement today that the parties’ corresponding shareholding will be FGVIF (40%), Baladna (40%) and Touch Group (20%).

“This joint venture (JV) will be a springboard for FGV to become one of the world’s leading integrated and sustainable agribusinesses. As an organisation which is already involved in the food industry, our latest venture into this integrated dairy farming business strongly positions us in a growing milk and dairy industry, thus strengthening our presence in the food industry,” said FGV CEO Datuk Mohd Nazrul Izam Mansor.

With an aim to strengthen the National Food Security Agenda, he said that this project is also aligned with FGV’s long-term plan to position FCAV as one of the leading agro-valley hubs in Malaysia, delivering sustainable value for its stakeholder and better living conditions to the local community as well as addressing food security concerns of the country, under the supervision of the Northern Corridor Implementation Authority. The establishment of the integrated dairy farming business is expected to create more than 2,000 job opportunities.

Expected to be commercially operational by 2025, the project aims to produce 100 million litres of fresh milk per annum within the first three years and is expected to reach 300 million litres of fresh milk in 10 years.

“Malaysia’s dairy market grew at a compounded annual growth rate of 4.5% from 2015 to 2020. The outlook for the dairy sector is positive, and FGV is optimistic that this strategic direction will support national goals to gain 50% self-sufficiency levels for liquid milk and 100% for fresh milk by 2028, doubling the production of fresh milk in Malaysia, reducing imports and providing fresh milk to consumers,” he added.

The conditional shareholders agreement was signed between Mohd Nazrul, Baladna CEO Piet Hilarides and Touch Group CEO Raja Datuk Idris Raja Halid.

Based on the “grass to glass” concept, the JV will be fully integrated, operating from animal feed, milking cows and milk processing, to the sale, marketing and distribution of dairy-related products, especially fresh milk.

“As a partner, Baladna will use its extensive experience in fresh milk production and brand development to substantially improve Malaysia’s self-sufficiency in milk. We are delighted to be able to partner with FGV and Touch Group,” Hilarides said in the same statement.

Prior to the economic blockade imposed on Qatar by neighbouring countries in 2017, Qatar was 90% import dependent. Today, Baladna is the largest dairy company in Qatar with over 250 SKUs and has achieved a remarkable 100% self-sufficiency for fresh milk in Qatar.

Meanwhile, Touch Group is a Malaysian holding company involved in various business activities including telecommunications, renewable energy, property management, agriculture, security services, hospitality, construction, tourism, food and beverages, and ICT.

“We hope that our participation in this JV would strengthen and add value to the composition of the shareholders of the JV, in line with the National Food Security Agenda,” Raja Datuk’ Idris said.

The Conditional SHA is tied to several terms, among others, satisfactory results of the financial viability study on the project and the obtainment of respective approvals from the board of directors of the parties to proceed with the proposed investment in the project.

Also present during the signing of Conditional SHA last Saturday were Prime Minister Datuk Seri Ismail Sabri Yaakob (centre), Ambassador of the State of Qatar to Malaysia Fahad Mohammed Kafoud, Felda chairman Tan Sri Idris Jusoh, and FGV chairman Datuk Dzulkifli Abd Wahab along with representatives from the board and senior management of FGV, Baladna, Touch Group and Northern Corridor Implementation Authority.