F&N Allocates RM1.8 Billion to Transform Dairy Sector in Malaysia
KUALA LUMPUR: Fraser & Neave Holdings Bhd (F&N) embarks on an ambitious RM1.8 billion investment in its high-tech integrated dairy farming project, F&N AgriValley, located in Gemas, Negeri Sembilan. CEO Lim Yew Hoe expressed the company's commitment to achieve profitability within a three to five-year timeline.
The initial phase strives to boost the number of milking cows to 10,000, aiming to lessen Malaysia's dependency on imported dairy products. This venture reflects F&N's long-term strategy to enhance self-sufficiency in raw milk supply and position itself as a competitive player in the regional dairy market.
The capital expenditure involves around RM600 million for facility infrastructure and less than RM100 million for cow procurement. Further expenses are allocated for manufacturing, equipment, and dairy processing enhancing capabilities.
The project encompasses approximately ten barn units. Currently, the first 2,500 cows have been accommodated, marking the beginning of operational scaling. Full operational capacity is anticipated over a three-year period, contingent on cow delivery cycles and milk production progressions.
Feed cost control stands as a pivotal factor for reaching profitability. By 2026, F&N targets 40% self-sufficiency in feed via corn silage production, leveraging Malaysia's favorable climate for multiple crop cycles per year, potentially lowering production costs compared to the US.
Innovative technology, such as noise-dampening fans and rubber mattresses, underlines the project's focus on animal welfare, aiming to enhance productivity and reduce mortality rates.
Despite prior complications with US cattle sourcing, Lim confirmed the strategic switch to Chilean cows, credited with milk yields comparable to American breeds. He also mentioned utilizing incentives from the Finance Ministry for tax offsets aligned with their substantial capital investments.
F&N plans to expand its operations with a dairy processing facility in Cambodia under its Thai subsidiary, driven by an existing strong market base. This expansion aims to capitalize on fewer entry barriers present compared to larger neighboring markets.
Financial results reflect a 4.3% year-on-year increase in operating profit to RM434.8 million for the first half of 2025, with revenue slightly up by 1.4% to RM2.72 billion. However, challenges such as festive sales drop and inventory adjustments led to a dip in quarterly revenue and profit before tax.
