'Any venture that offers good returns within a shorter time frame is something we are keen to pursue,' says FGV Holdings Bhd group chief financial officer Datuk Mohd Hairul Abdul Hamid. (Photo by Sam Fong/The Edge)
KUALA LUMPUR (Feb 28): FGV Holdings Bhd (KL:FGV) is considering alternative options to expand its dairy farming business, after its RM4.5 billion plan to develop an integrated dairy farm in Chuping, Perlis, lapsed two months ago.
“Dairy is a promising business. We are constantly exploring opportunities to expand, and will consider other options, as the land in Chuping is quite good in terms of terrain and so on,” said group chief financial officer Datuk Mohd Hairul Abdul Hamid during a press briefing on Friday, following FGV’s fourth-quarter earnings announcement.
“Any venture that offers good returns within a shorter time frame is something we are keen to pursue," he added.
In December, FGV informed Bursa Malaysia that the integrated dairy farm plan had lapsed, due to the expiration of the deadline for meeting key conditions precedent under the shareholders’ agreement signed two years ago. This came after the termination of a conditional shareholders' agreement, originally signed in August 2022, between FGV’s wholly owned subsidiary FGV Integrated Farming Holdings Sdn Bhd, Qatar-based Baladna for Trading and Investment WLL, and Touch Group Holdings Sdn Bhd.
When asked about the unmet conditions, Mohd Hairul said: "The partners, particularly Baladna, required stricter enforcement of the definition of fresh milk. Baladna wanted only 'pure fresh milk' produced in this farm. Without the necessary support for this requirement, we couldn’t proceed further."
Under the agreement, the parties had planned to form a joint-venture company, with FGV Integrated Farming and Baladna each holding a 40% stake, while Touch Group would hold the remaining 20%. The project was intended to be developed on a 3,259-hectare site within the FGV Chuping Agro Valley, with an estimated investment of up to RM4.5 billion.
FGV had projected that the project would be commercially operational by 2025, aiming to produce 100 million litres of fresh milk annually within the first three years, with production potentially reaching 300 million litres within 10 years.
For the dairy farming segment, FGV also has a plant in Linggi, Negeri Sembilan, which specialises in producing top-quality dairy products, including fresh and ultra-high-temperature (UHT) milk, cheese, yoghurt, and kefir under the Bright Cow brand. It has a daily capacity of 30,000 litres, according to the latest annual report.
Shares of FGV fell two sen or 1.72% to close at RM1.14 on Friday, giving the group a market capitalisation of RM4.23 billion.
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