BAGAN SERAI, 5 February 2009 - Malaysia’s first fully mechanized paddy farm was launched today, part of a move by Sime Darby Berhad to bring innovation to agriculture in the Northern Corridor Economic Region (NCER). Once fully implemented, the mechanised paddy plantations using superior seeds will result in higher yields and thus help to address the government’s concerns over Food Security issues while expanding Sime Darby’s footprint in food production.

The 200 ha farm set within the Kerian/Sg Manik rice granary area will be a template for other paddy farms which the diversified multinational hopes to operate in other parts of the country. Sime Darby said today that it was also prepared to share its expertise and innovation with smallholders and rehabilitate idle agriculture land in the NCER.

The project was launched by YAB Dato' Seri Abdullah Hj Ahmad Badawi, Prime Minister of Malaysia and witnessed by Sime Darby Bhd Chairman, Tun Musa Hitam. Also present were YB Dato' Mustapha Mohamed, Minister of Agriculture & Agro-based Industries and Dato Seri Ahmad Zubir Murshid, President and Group Chief Executive of Sime Darby Berhad.

Some 168,000 Ha of land within the NCER is currently cultivated with paddy but local farmers mostly operate on a small scale with an average of 1.06Ha per farm with yields of between 3 and 4 MT/Ha annually. In order to facilitate mechanisation and thus greater efficiency, it would be necessary to form larger contiguous parcels of paddy plantations. Sime Darby has proposed a co-operative structure to facilitate the creation of such paddy plantations, which would allow local farmers to participate as shareholders in the venture with the option of working the fields.

“When we announced our intention to venture into paddy cultivation, many were sceptical but the reality is that, for us, this is an extension of our existing core business. We are planters and we are in the food business,” Tun Musa said at the launch event. He added that from the country’s perspective food security is a critical issue and any initiative by the government to address it should receive the support it rightly deserves.

Food Security is an issue that has been raised in recent years and Malaysia’s dependence on rice imports has been viewed as a critical area of concern. Malaysia hopes to achieve self-sufficiency by producing 90% of the country’s rice needs and reducing imports to just 10% by 2010. Currently about 25% of all the rice consumed in the country is imported. “Sime Darby’s venture into paddy cultivation will assist the government in this quest to achieve selfsufficiency,” Tun Musa added.

Sime Darby’s RM12.5 million farm will feature state of the art irrigation systems, a fully mechanized paddy nursery, boom sprayers and a combined harvester designed specifically for paddy. With the improved irrigation system and these other innovations, Sime Darby is confident that not just paddy yields but also harvest cycles will increase. It is projected that the farm will produce yields of 5 to 6 metric tonnes within the first three cycles and 8 to 10 MT from the fourth cycle onwards.

From Sime Darby’s perspective, Ahmad Zubir said that the mechanized paddy farm in Bagan Serai is another step the Group is taking to grow its food production business within the plantations division. Although the cultivation of oil palm is still the mainstay of the Plantation Division and will constitute at least 75% of commercial crop cultivation, the remaining 25% will be used for other commercial crops including paddy.

"This project in Perak is the first and we hope to replicate this across Peninsular Malaysia and in Sabah and Sarawak in the near future," Ahmad Zubir said. "We will extend our expertise and services to smallholders in the area and we hope to work with the state authorities to replicate this model in abandoned paddy farms and idle land across the NCER," he added at the launch today.

Sime Darby was the master planner of the NCER which was launched in mid- 2007. Since then, the implementation of one of the country’s growth corridors has been handed over to the Northern Corridor Implementation Authority (NCIA). Sime Darby, has identified the NCER as the ideal area to spearhead its move into paddy cultivation.

After declaring open the model paddy farm, the Prime Minister opened the Paddy Gallery in Gedong today. The gallery charts the history of paddy cultivation in the country, the processes that have been used as well as a showcase of new mechanization techniques, equipment and irrigation systems.

Meanwhile, Sime Darby Plantation today also signed a collaborative research agreement with the China National Rice Research Institute (CNRRI). The CNRRI is one of the world's leading authorities on rice research and this collaboration is expected to result in the production of superior quality grains that are not only cost efficient but also capable of producing higher yields.