Sabah Agriculture and Agro-based Industry Minister Abdul Rahim Ismail is confident that the state will become Malaysia's main producer of mushrooms in five years.

He said this followed an agreement signed between Koperasi Pembangunan Desa (KPD), the country's main producer of high quality Shiitake (edible mushrooms), and DXN Holdings Berhad (KLSE:5074) to collaborate and exchange expertise to carry out farming on a commercial scale.

Under the agreement, Sabah, which now produces 60 metric tonnes of mushrooms annually, is expected to increase its production to 500 metric tonnes a year within the next five years.

"Sabah, especially Kundasang, has a suitable climate for a year-round mushroom farming, especially the Shiitake type," he told reporters after witnessing the signing of the joint-venture agreement between KPD and DXN Holdings Berhad here Thursday.

He said for a start, KPD and DXN Holdings Berhad would plant two types of mursrooms, the Shiitake and Ganoderma (medicinal mashroom) before expanding to other types of mushrooms.

Abdul Rahim said the agreement would also involve building of a mushroom processing factory in Sabah.

He believed that the mushroom farming project would benefit local residents and help the government to reduce the state's poverty rate.

Meanwhwile, DXN Holdings Berhad Chief Executive Officer Dr Lim Siow Jin said products by the company were exported to 86 countries, including India, the Philippines, countries in Central Asia, the United States of America and Mexico.

"I have visited many places in Malaysia and find the place here most suitable to carry out tropical and temperate mushroom farming all-year round," he added.