Wednesday, April 15, 2009

CORPORATE SOCIAL RESPONSIBILITY - ALLEVIATION OF HARDSHIP

(Mentored by the blogger himself - planting of labu madu emas of 30 acres with 15 hardcore poor participants - pictures posted are actual preparation works)

Conceptual Framework

Censerv Sdn Bhd (CSB) which is now involved in the oil and gas service sector, will develop another stream of business activity through the ECER’s Agropolitan Development Master-plan. The Company’s expertise specifically in the management, chemical and engineering will be harnessed to provide critical solutions in the immediate agricultural activity that the Company choose to be involved.




The agro-development initiative will be implemented with special focus for the participation of selected individuals within the so-called category of ‘hard-core’ poor alleviation of poverty programs. An integrated model of development will ultimately include processing plants for the farms and plantations produce, animal husbandry and fish farming activities. Fresh produces and the by-products will directly go towards production of packaged processed food and related waste conversion to animal/fish feed and organic fertilisers.

The products development and marketing strategy will be given special focus to ensure projects viability and programs sustainability. The Company will strive to structure the implementation plan towards fulfilling the requirement for national self-sustainability, safety and ‘halal’ production and processing in the food industry.

The final aim of the Company is to develop special niche products from high value added industrial grade agricultural materials or farmed fishes, through the new technology of super-critical extraction (specific pharmaceutical grades). This will then ensure that mass agricultural activities could be carried out, internally or under widespread contract farming agreement, within a well structured implementation plan, involving high investment in the most current farming technology, for internally secured produce purchasing agreement.

Implementation Concept

The focus is to achieve a consistent and reliable supply of “organic” raw materials to support the processing facilities thus spurring the local economy and providing the growers or farmers with a consistent source of income in accordance with Thrust 3 (distribution and growth) under the RMK-9.

The Company will start developing own farms and plantations on rented land, for cash crops and thereto invite participants from the immediate locality as pioneers for the hard-core poor poverty alleviation program. A proper fund support structure with comparable profit-sharing offering currently practiced (now it’s on a 50:50 basis) will be developed. Land owners with some expertise and willingness, but with limited funds or workforce, will then be adopted into the second phase of the programs.

The first few farms will be at a scale which is economically sustainable, used as continuously improved ‘test-plots’ to fine tune the farming technology and direct sourcing of agriculture requirements at better prices. Farm produces will be used as external market building platform. Initial selection of product processing types from the produces, by-products and wastes from universities’, authorities’ and experts’ research will be selected for commercial application (such as animal/fish feed).

Seed capital may be sourced from the authorities (ECER) for separate development of this ‘Community Agro-development’ initiative and as parachute fund for failed crops due to weather and/or crops disease within the test period. Initial fund of RM100,000.00 for the program development and documentation should be enough. Long term lease of land will be requested from the state government and once a truly workable plan, supported by verified progress and viable results with the ‘test-plots’ is established, a further RM400,000.00 should be ‘released’ for a truly commercial scale implementation to
cater for medium-term and long-term plans

Brief

Initiation of the programme stems primarily from discussions regarding utilisation of a three percent commission allocated from each purchase orders received by Censerv Sdn Bhd, of which the sales efforts are made by directors of the company involved.

The proceeds could have been paid directly to the state Baitulmals
[1] as alms or as tithes. The management have however, proposed to utilise the fund by directly assisting the chosen hard-core poor through implementation of well planned agro-developments[2].

Aim

Rationality of the proposal is to ensure that it is better to empower individuals through the provisions of stable business foundations and thereto develop them as entrepreneurs who will then be able to locally build-up further related economic initiatives.

Conceptually, the programmes should be able to change the Malay mindset from merely accepting hand-outs and spending them on their daily needs, to getting seed funds for them to embark on small business initiatives or capital investment to develop a continuous stream of income.

The seed capital will then be paid back to the Company with an agreed percentage of profit from the first venture, to be plough back for use in another round of activity and/or expansion or for a new program by other new participants.

Focus

The focus of implementation is the empowerment participants through project undertakings using the Company’s business plan within a well supported business infrastructure. The initial focus is to develop the community through agro-based development as the majority of target participants will one way or another be involved in the agriculture sector.

As a finality even within the limitation of funding, an environment of ‘hope and chance’ should be created, whereby individuals in need know the locally established group to approach for assistance for any agro-development
[3], other than the government authorities and bodies.

Overall

The company would also develop its fully-own plantation as another new business scope. The plantation could then provide the immediate provider of mass produce to attract buyers and allows negotiation to be based on better long-term contracts. This initial plantation will be the ‘test’ and training base for pioneer participants, at a fixed monthly salary as an immediate relief to their current status. The commitment and ‘drive’ of each participant will be continuously evaluated and ‘talks’ may be undertaken to change their mindset.

Only upon passing strict evaluation criteria, will they be allowed to undertake their own planting on land rented by the Censerv or on their own land, with proper supervision. There should be termination and escape clauses for severe negligence and/or non-performance to avoid either party from being involved in non-harmonious economic relationship.

The CSR program, in itself, will be developed by Censerv, with enough number of participants and viable economic activities and continuous recurrent income for support thereon. Participants will be exposed to the management side through guidance and training attachments
[4] and once they are capable, the overall management of the CSR section will be handed over completely.

Rationality

There exist abundant opportunities for program implementation within the agro-development currently. Furthermore the Prime Minister himself has ‘suggested that the government get big companies and investors to fund large scale agricultural projects’ while at the WIEF conference, stressing the need for Islamic countries to invest in food production.

Funds are also available to support projects that are properly proposed and other support facilities, so long as there seems to be genuine opportunity for the project to be expanded. Communities, if left to themselves may stay as providers of land for rental and labour for wage earners.

Currently, those that could have seen the potential in agricultural developments have started to implement big projects within the area, purely on economic reason due to the low rental, wages and fertility of the land. They will be there not as a party interested to coach those involved to be entrepreneurs, to equip with knowledge to better themselves, but merely as opportunists.

Proposer

Competency of the group of proposer have come from various fields, namely from the background of business development, sales and marketing, audit and accounting, logistic and distribution, custom and management, chemical and engineering etc. This pool of expertise will supposedly expand with expertise from other fields with participation of other companies in this CSR program.

The strength of the proposal is on the speciality of the proposed foliar fertiliser, distributed by Censerv currently. In reference to the previous application of the fertiliser to various types of plants, additional returns from plantations could easily reach upwards from 30% to almost 60% based on the existing types of fertiliser and fertilising method. Relative to the pricing, Censerv will supply the fertiliser at a special rate for this community agro-development, as part of the Company’s social responsibility program (CSR).

Funding

Initial funds may be drawn in a small pre-planned disbursement schedules, from Censerv’s spare fund and/or the allocated % from the Company’s sales. The funds will be based on finely deliberated project paperwork and key performance indexes. Structures of implementation for each program will be properly documented from the inception stages to the end, inclusively of management issues, capital commitments and infrastructural requirements.

Further third party funding partners will be aggressively sought out, with relevant approvals from the authorities requested for this recruitment. Proper documented project briefings, written understandings and approved projects planning/implementation must be given in order to ensure strong and continuous commitments.

Additional funding may also be sourced from state government or federal ministries for allocations under their individual hardcore poor or single mother income development programmes as the seed capital for initial commercial application. Paperwork and application should be made based on successful test plots and viable business models where we act as good integrators.

Return

Point of contention would always be the sustainability of projects implemented and the general well being of participants. Proper management and support budget should always be available within the project duration to ensure continuous project maintenance and monitoring.

Upon finalisation of each identified phases of development, all returns as promised should be properly calculated and returned to the rightful partners and shall not be rolled-over into another phase without approval. Involvement in other phases must be confirmed beforehand in writing to ensure trust and long-lasting cooperation.

Variances between projection and returns should be properly recorded and notes of explanation with relevant data and/or pictures should be kept. These may then be used as future referrals and programme guidance/benchmarking. Proper study for problem solving or programme enhancement could then be undertaken with care. There should be no deviation from the stated objectives
[5], since the funding also involve trust funds[6] from third parties.

Whereupon funding comes from organisations involved in ‘trust’ fund or from third parties that hopes this to develop the funding for them, proper regulation must be implemented and all relevant laws and by-laws be adhered to with avenues for consultation.

Governance

General governance with agreed periodical (weekly/monthly) meetings and discussions may be enough within the first few undertakings. A proper structure should however, be developed through time soonest possible and documentations of operational procedures to be fine-tuned as project-based guidelines. Terms of references will be done with regard to the governing of a non-profit organisation and relevant registration will be done. The procedures and guidelines will be sourced from the authorities for proper adoption into the management structure.

Where appropriate, positions of governance may be filled by representatives of relevant authorities or may be reserved for agents of substantial funders. Projects implemented under this scheme of funding should be kept separate in term of down line management, accounts and disbursements and/or participants.

Project and income distribution must be properly tabled and agreed beforehand within the grouping of funder/integrator/participants since improper and/or unsatisfactory conducts may then not only result in immediate discontinuation of result or breach of trust proceedings, but also severe punishment by Allah swt, without avenue for discourse.

Expertise

Within the early stages of implementation, participation of key persons may be based on voluntary works, within the scope relevant to their current business or simply to explore avenues to get extra income. Others may also wish to be involved on a part-time basis simply to satisfy their hobbies or as a means towards self fulfilment to help others.

Plans should be expanded to get allocation from companies that need to test their products
[7] such as seedlings variations, effectiveness of fertilisers/herbicides, planting and irrigation technology[8], new sprinkler systems, pump and power sprayers, university/college/agency research assignments and others. This may be on a one-off basis, continuous sponsorship or as proper contract/research farmers.

Where there are specific technologies involved or project that varies in implementation with regard to the ordinary, support expertise needed should be supplied by those parties involved themselves. Also, when there is involvement of third party expertise, their scope of work and effort/financial commitment and report preparation schedules should be properly noted and agreed to avoid management duplication and misunderstandings.

Partners

We are already in discussions with a few existing entrepreneurs that are already involved in a few successful agro-based ventures such as goat and chicken breeders, cash crop planters of over 100 acres per planting specific for sweet corn, honey pumpkins and honey melon.

There is also a producer of animal feeds using locally available raw materials and a fish farmer with 400 acres ponds and GMP/HACCP approved fish processing factory (exports of processed fillets and meatballs to the middle east, Europe and South African market), to support our next stage of projects.

Relevant new partners will be invited to participate within the ongoing and future proposed economic initiatives. They might be invited purely on economic reasons or proposed as part of their CSR programme, to be done on whatever capacity applicable towards their own reasoning.

Infrastructure

In order to fast-track the development of this proposed programme, available agriculture land within the Bachok, Besut and Pasir Puteh triangle of agropolitan development blueprint under ECER, will be identified and rented on a yearly basis to start off the selected agriculture section, namely planting of cash crops of seedless watermelon, honey pumpkins and sweet corn.

Request should then be made to ECER for adoption of this initiative into a sub-unit of their overall development and participation supported within their available infrastructure. The programme may then be undertaken on a joint-development status, whereby we act as integrator and programmes implementer, under private initiative, that provide direct link to actual group of participants.

State or government agency’s land
[9] which is suitable for selected programmes, may then be applied for future implementation of programs based on the sustainability and success of earlier undertakings. This may be required once a strong demand for products have been achieved, due to higher requirements of contract farmers and/or establishment of local food processing industries[10].

Community

Each community leaders within the area of project implementation should be involved directly for specific responsibilities in order to ensure overall community support and for immediate reporting and responsiveness towards related development. A person with good rapport within the majority of the community should be selected and coached as an ad-hoc integrator to slowly introduce the basic conceptual framework to those that are targeted as the possible program pioneers.

Effective project development may be initiated through community proposals, specific to the immediately available infrastructure within the community, suitable for immediate implementation and commercially viable with availability of proper land, basic competencies of participants, knowledgeable in technically adaptable technology, healthy local market conditions
[11] and/or possibility of further development for expansionary target.

Strategic

Strategically, the project focus group should be able to follow the development model of developed countries where each and every community have their own core processing and support industry of target products, which is within the country’s overall economic master-plan.

Scale of implementation will be based on effective feasibility studies as done by the government within the RMK-9 development master-plan, the 2009 budget and stimulus package through the well thought-out implementation done by appointed bodies such as the agricultural, entrepreneurs and co-operation, rural development, as well as female and family development ministries.

Specific support and advisory requirement will be sourced from the local authorities, such as Jabatan Pertanian and Jabatan Veterinar. Participation in the ECER programs where relevant should be used as catalyst to push forward parallel projects and modules of implementation be adopted and enhanced based on local requirements..

Project

Types of projects may be divided into several focus groups within specific modules, divided within the integrated agro-development master-plan, namely plantation, fisheries and animal husbandry. The overall aim is towards stepping-up/driving the scale of development from individual stand-alone projects up to a combined strength that will provide the critical mass for contract farming and product processing stages[12]. Thereon the development can be undertaken on a bigger scale.

Macro management and feasibility studies will be done with consultations and cooperation from the immediate authorities and relevant agencies. Their experiences from various programs will be garnered, specifically acknowledging the strategic successes and/or failures of each level of their previous projects implementation.

Guidance

The issues of previous projects shortcomings should be identified, divided into strategic, environment, management or others. Measures for containment should properly be addressed through program checklists. Also, their strengths would also be identified, adopted and aggressively applied within our chosen programs to ensure the full potential (with reference to the economic returns and sustainability and continuation) could be achieved.

Facilities already available from previous projects may be revived, based on the scope of the programs and approval of previous owners, under lease or as participants for our projects. There exist unused ponds, fibre tanks and cement enclosures from previous fish farming programs that could be utilised immediately
[13] and the same is also true for some other facilities.

Target

The target is to develop some small-scale ‘test-plots’ where the planned stages of implementation could be tested. A few cycle of ‘test-plots’ may have to be carried out in order to test the actual process and to record the differential returns. Feasibility studies, once finished should allow a refined, tested and verifiable best-case scenario of program schedules to be converted into well documented plans
[14].

Verifications and validation of test results will be of utmost importance and this could be done through the co-operation with the various authorities for each type of ‘plots’ be it in planting, fisheries or animal husbandries. The first target would have to be based on the availability of market for the produce and the stability of sales prices, then immediately on the variability in term of costs related.

Facilitator

A core group of competent projects facilitators, well versed in specific programs should be immediately developed, parallel with the commercial scale implementation. They should ideally come from within the community adopted for the programs since training will then hands-on and training funds can be kept at a minimum.

Alternatively, training funds and/or candidates could sourced from local training institutes
[15] such as Pusat Giat Mara or University/College graduates seeking practical placements at government’s subsidised monthly training allowances. Retrenched factory workers with some technical and educational competencies may also be a pool of possible facilitators with added advantage of retraining funds provided by the government.

Not considering the risks involved, they may also come from those coming out from Penjara Negeri, Pusat Pemulihan Dadah, Pusat Pemulihan Akhlak, Rumah Anak Yatim, Pusat Latihan Orang Cacat and others. However, special selection has to be made and safety procedures may have to be implemented to ensure any untoward incidents and to prevent relapse.

Participant

The pioneer group of participants should then be mentors for future developments. Economic success of the initial projects will act as catalyst to attract new participants. The presence of close-knit community, social ties and blood relation will in some way ensure selection of new participants could be done safely, as each comes with specific background referrals.

Project funding may also come with conditional attachments, as such selection criteria may depend on other parties, such as, funding from the Rural Development Ministry may come from the hard-core household listing and funding from the Women and Family Development Ministry may come from the single-mothers listing. This will also be true for the drug prevention authorities, prison authorities and moral reestablishment groupings.

Where trans-location of participants is needed, issues of housing and related infrastructure will have to be handled and separate funding for this requirement may have to be sourced beforehand. All these added costs should not be supported through internal funds and thus specific requirement will have to be explained and solved through other funding such as housing allocation for the hardcore poor or subsistence allowance from state baitulmal or welfare department.

Records

Periodical progress in term of all scheduled programme and all relevant data regarding everything such as seedlings and plant development, fertigation system, usage of fertilisers and herbicides, number of fishes per pond and their feedings, rates of output versus target etc need to be collected.

The properly documented success of the first few projects will be the catalyst for future growth and support in term of funding, related authorities’ confidence, effective implementation plan and development of effective marketing strategies
[16] and sales/processing contracts negotiations. Other related costs will also be effectively lower on average including transportation and management.

Outlet

From the registered community association, we proposed to increase the number of participants to a minimum of 25 person and establish a family co-operative or proper cooperative of 100 members with registration of spouses and their children. It is also proposed that the co-operative have their own outlet to handle all the purchases of relevant raw materials and all sales.

The cooperative should also aim to own all the relevant equipment and machineries
[17]. Specific groundwork should be done in term of seminars and strong management by-laws should be implemented, to tackle issues of non-performance of previous co-operatives.

Co-operative loan

There is a shortcoming in term of funding from the Suruhanjaya Koperasi Malaysia, since to qualify for the 2% interest loan, the co-operative should have been registered minimum 18 months to the date of loan application. The advantage would be better participation due to the sense of ownership and better response for application of assistance from the state/federal government and authorities.

Thus before the qualifying period is fulfilled, the outlet will have to use part of the income generated from the returns from whatever project implemented to open up the outlet. The immediate business scope is purchase and supply of the materials and equipment for own projects, with certain percentage going to the co-operative as management fee.

Social

All other fund raising activities should then be handled by the co-operative. Once firmly established, other social support programs may be introduced, such as soft loan for housing improvement, educational support and other facilities
[18], with the guaranteed payment from the expected income from the programs.

Once the income stream has stabilised from the various programs implemented, the co-operative may even be able to adopt orphanages and tahfiz centres. Further income may specifically be sourced from the relevant authorities for this part of social responsibility undertaking.

Ultimate

The co-operative may then extend their support up to a stage that are able to be the catalyst to strengthen the community as a whole. The facilities provided may be an avenue where the family activity will transcend the racial, party, religious and moral barriers.

The common economic activity and source of funding and return re-allocation if handled properly will be the most potent force that can bind the community. The previous racial segregation along the economic activity and each community facing the limited prospects of the economic line, as introduced by the British will forever be broken.

History

Based on the calculations in the pioneer section, the viability of the project will ultimately depend on the two codifying factors which are the resulting output of planting and the stability of the sales price of produces
[19]. The data have been collected and prepared based on the actual result of last planting season, ending in February, 2009. Proof of this current price and demand can be made in person with those that have been planting these cash crops for the last many years. Market study will be done further by visits to factories purchasing the fruits namely in Segamat, Muar, Tangkak and Yong Peng in Johore, and updated separately.

Improvement

Probability of success could safely be assumed upwards of 70% to 75% of the target output, due basically on the additional type of fertiliser
[20] to be introduced to our initial programme. However, to be on the safe side, we only propose a 60% success ratio on planting and prices of produce remain stable in the immediate future.

At this 60% target, the project will still remain stable and income generated will more than alleviate the status of participant, simply through the empowerment of seed capital. With more programs introduce to utilise their remaining free time, more additional income will flow in.

Pioneer

The first few pioneer participants, with program of golden honey pumpkin cultivation already started within the Alor Pulai, Bachok, Kelantan are as below. The program has been fast-tracked using the proposers’ own fund. This have been done according to the established local practices, with only the fertilising method changed according to that advised by the fertiliser blender
[21].

Seed Capital

The initial budget requested is RM60,000 for the above 20 acres. Taking an average of RM2,200/acre of planting cost, an amount of RM44,000.00 will be needed. The additional cash requirement of RM16,000.00 will be utilised for other planting equipments, in order to ensure some paid permanent labourer could be maintained throughout the duration of the cycle of fertiliser/herbicide/pesticide spraying. It could be made on every working day, catering for all the 20 acres, moving from one crop planting to another.

Thus, for every 10% reduction in success factor, the participant’s income drops by RM602.00, they will be encouraged to maintain the plants to ensure the best % of success factor. Being given new opportunities to better their lives, combined with better fund support and job security condition., Further, when they will be allowed higher acreage subject to the success of the first planting, with better prospects in higher profit-sharing percentage, they should be willing to work harder.

Phase One

The above is the land under preparation for the first participant, Wan Harun Wan Deraman, measuring 10 acres, with actual usage of 6 acres due to existence of water catchment at back of plot. Target for 1 June, 2009 planting season, with only 2 acres usable for immediate planting 30 March, 2009

Phase Two

Land preparation works for all the participants have been done on 22 March, 2009, with target planting to be completed before 30 March, 2009. Works on planting have been targeted to be completed within the week. All required preliminary materials have been purchased for this 10 acres 1st phase pioneer participants’ program (relevant receipts attached)

Mohammad Ridzuan Drahman
Daud Bin Deraman
Setopa Bin Deraman
Siti Hawa Binti Daud
Zaleha Binti Che Mat
Mohd Shahidan Bin Ismail

Phase Three

Finalisation of rental agreement for 10 acres is being made and 2nd batch of participants will be selected. The implementation is subject to receiving of additional funding and/or success of 1st planting project. As of 15th April, 2009 the land have been fully cultivated with new participants tilling them.

Future

This phase is still subject to availability of funding from other sources and/or receipt of seed capital from ECER. There exist tracts of government’s land of about 30 acres, earmarked as part of (Universiti Malaysia Kelantan) UMK’s for our immediate planting use, subject to approval of the authorities nearby. The land could be utilised whilst waiting for the project of UMK taking-off.