KUALA LUMPUR: The Federal Land Development Authority (Felda) is projected to save around RM1 billion in fertiliser consumption per year following its joint venture with Russian potash producer Uralkali.

The joint venture (JV) is expected to start operations from Jan 1 and will focus on securing potash deliveries to Felda’s and other governments’ plantations locally and internationally. The JV is for five years, with a mechanism of prolongation. Uralkali and Felda will have equal participation in the capital and management of the JV.

Felda chairman Tan Sri Isa Samad said the joint venture was a great opportunity for the authority to grow its agriculture production and make it more efficient.

“Uralkali is a very dynamic partner and it is progressing in Southeast Asia. We see this project as a challenge for both companies to further expand their reach in the region,” he told reporters after signing a memorandum of understanding with Uralkali yesterday.

Isa said potash is one of the main components in the manufacture of fertiliser, and this collaboration will facilitate Felda’s procurement of the product. The collaboration will also enable Felda to become the sole supplier of potash in Southeast Asia, he added.

“We already have buyers such as Sime Darby, IOI … all the plantation companies, they all need potash, so I’m not worried marketing-wise.”

Meanwhile, Felda director-general Datuk Faizoull Ahmad said the initial capital of the JV is RM5 million to RM10 million, with an expected return of three times, in terms of income, within a year.

“All the farmers use fertilisers and potash accounts for about 60% of the total components in fertiliser. If we do not grab this opportunity, we might be paying more by buying the potash,” he added. — Bernama

This article first appeared in The Edge Financial Daily, on December 10, 2013.