Execute and measure strategic initiatives (51)
Profitting from the 'Fruits' of Education, Collaboration and Value Creation
Founder of K-Farm, Kit Chan thinks that there are more to contract farming that are often overlooked by eager farming agropreneurs. From his observation of the contract farming model, Kit Chan believes many wrongly assume that growing produce automatically leads to profit. “The truth is, many farmers do not understand that profit comes from income, and income comes from not only the price, but also the quantity of produce that they can supply. Thus, profit is not necessarily derived from price alone. When farmers fail to understand this, many would hop from one buyer or another in the search of an extra 10 cent of revenue. This then leads to an unsteady relationship with buyers whereby trust cannot be developed in the longer term,” says Kit Chan.
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The Sweet Taste of Agropreneurship
MGROW is a contract farmer that supplies its fresh produce to the Federal Agricultural Marketing Authority (FAMA) and to private companies mainly in the northern region of the country. In the international front, it has also brokered exporting deals to China, a promising market for the tropical fruit. Ting shares, “The market here has been very welcoming. We are excited to get an overwhelming enquiry from distributors and exporters, to the point that we had to say ‘no’ to some! It is a good problem and has boosted our confidence in the product. But we recognise the high-demand and we plan to expand our farm soon so we can venture into more contract opportunities.” For MGROW, contract farming is a strategic component of the business growth. “Contract farming provides a set target that allows us to make precise decisions on how many acres of pineapples we are growing, how many the farm will produce, and when it will be harvested. Once the pineapples are planted, the only focus is to ensure we meet the deliverables,” says Ting.
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Contract Farming continues to "Blossom" in Malaysia's Floriculture Industry
Contract farmers reap advantages that allow for a sustainable income and business growth. For instance, Treegrow Orchids engage contract farmers in Cameron Highlands via a standing order. The pre-agreed price ensures that the sell-price will not fluctuate, thus enabling sustainable, stable income for the farmers. Meanwhile in peak seasons, exporters like Treegrow Orchids may also offer to purchase slightly more than the agreed quantity with a competitive price. At the same time, farmers are also keen to improve farming practices to ensure the quality of the crop and attract more business with existing and new exporters. In the case of Treegrow Orchids, farmers also benefit from the transfer of technology and best practices from the company. “Whenever we notice that the crop quality is not up to standards, we take the initiative to visit the farm to identify problems with the farmers and provide free consultation to help tackle any issues,” said Seng Yee.
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Nestlé in Creating Shared Value with Contract Farming
The Nestlé Chilli Club (NCC) is a contract farming model that supports local farmers who are contracted to supply fresh chillies for MAGGI Chilli Sauces. Working closely with Agricultural Services Department and the Farmers’ Association Board, it was first introduced to the local farmers in Kelantan in 1995. For over 25 years since its establishment, NCC has since reached other parts of the country, namely Dungun, Terengganu and Kuala Langat, Selangor. In line with digital transformation in agriculture, Nestlé also appoints Agricultural Services professionals to equip farmers in leveraging technology to produce the highest possible yield, at par with global standards. In particular for Farmer Connect initiatives, Nestlé shares best practices with local farmers through the Sustainable Agricultural Initiative (SAIN) toolkit, specifically designed to train and assist farmers for better crop quality and yield.
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Getting Started: FLFAM President shares advice for Beginner Contract Farmers
With the increasing focus on food security and safety, digitalisation is the way forward for the industry. Tan reiterates that the first criteria to truly benefit from technology is to implement a closed-house farm system. Aside from providing a better system in maintaining the climate, ventilation, watering system and sanitation, it is also the key in improving disease-control.
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Towards a Vision of Shared Prosperity and Sustainability
“Even though Aqina Group is now fully-integrated, we also provide local farmers with the opportunity to participate in contract farming as well. This is in line with the government’s initiative towards shared prosperity and we support this vision wholeheartedly. At the same time, we are proud to contribute to the national economy by supporting local farmers, instead of relying on foreign labour. This ensures shared prosperity throughout the broiler chicken supply chain in Malaysia,” says Wesley Tan Seah Ging, Group Executive Director of Aqina Group.
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From A Humble Chicken Supplier to Large-scale Contract Farmer
When starting one’s own contract farming business, there are a few key factors to consider. One must first have land to operate the farm, whether it is one’s own land, or rented from other farmers – with license to operate a chicken farm. They also need to have the know-how in managing collaborations with integrators to ensure quality of chicks and the chicken feed are not compromised, or at an optimum level that does not negatively affect productivity levels.
Advantages of Contract farming for the Rising Agropreneur
For small farmers, taking the leap to start contract farming come with many advantages. Firstly, the nature of the pre-agreed contract protects agropreneurs from loss of profit in the future. This means that if the open market price goes down – due to cases such as oversupply - this would not impact the take-home income from the chilies sold. At GrasiCili, this arrangement has worked largely because the extra profits from whenever the market price is high, are strategically funneled into the participants’ collective funds. Thus in seasons of low market price, these funds will later be paid out to the participants to match the pre-agreed sale price. This modern business model is agreed by participants and minimizes risks of failing.
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Igniting the “fiery” spirit for Agropreneurship
“There needs to be a shift in a larger scale at the grassroots, to ensure a robust agroindustry. At GrasiCili, we’ve realised that when we combine contract farming, a good business model, and social enterprise into the equation, we will be able to elevate the community of the nation, especially those in the B40 group. This is how we ensure a sustainable agroindustry, while empowering the people behind it,” says Munir as he explains the idea that led to GrasiCili.
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The Three Best Practices for Contract Farmers
“Every day on the job is a process of learning. Raising chickens is an art – thus, contract farming is a great opportunity for farmers to upgrade and perfect their farming techniques, allowing specialization in this line of business.” - Syaizul Syamil, Founder and Farm Manager of Tube Ventures
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Inspiring an Exceptional “Breed” of Contract Farmers
In the 21st century, digital transformation and technology allow business to operate more efficiently. However, this does not necessarily mean a huge investment worth tens of thousands of ringgit. Alternatively, farmers can take the initiative to implement technology in a smaller, more affordable scale. In the case of Tube Ventures, the entire 0.6 farm hectare is installed with 4G Gateway, allowing full access to the Internet of Things (IoT) devices over data network connection. Helping the day-to-day operations, farmers could perform tasks more efficiently – for example, viewing the live-feed of the chickens, and even controlling lighting or watering system simply from their mobile phone devices.
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Environment and Community Conservation
There are lots of other accommodation options in Cameron Highlands. As for adventure tour options, Yusree points out that there are more than 100 companies doing hiking tours all over Malaysia. Competition is tough, thus healthy differentiation is key for everyone’s sustainability. For a start, appreciation of the environment needs to begin with awareness that it exists and is important. Towards this end Hikers Sleep Port has various environmentconscious features; some obvious and needed, some subtle and unique.
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Couple Realises Their Dream Ventures, and The World Enters
“Permit can be obtained from the Forestry Department office by following their procedure such as quotas, guide, ratios and few more things to be full filled before the approval. The best is to contact the Forestry Department at least 14 days before date for inquiries and applications regarding permit.” Mrs. Cik Marina Hamzah, General Manager, ORL Ventures (ORL).
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Safety is Part of Family
Speaking of outdoor adventures especially with mountain trips, the first thing that comes to mind is; how safe would this be? With the background and love for adventure, Ohana prioritises safety first among other important matters complete with its own Standard Operating Procedures (SOPs) based on experience.
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