Sector News

Cargill Seeking Poultry Play, Building Palm Oil Mills In Indonesia

April 21, 2015
Consumer Packaged Goods
Cargill Inc. is seeking to enter the Indonesian poultry sector and is investing in mills for its growing palm oil business there, part of its plans to pour $1 billion into Southeast Asia’s largest economy in the coming years.
 
The Minnesota-based company is “in active discussions” to enter the poultry sector in Indonesia, which will include building a new facility and likely partnering, Alan Willits, Cargill chairman for Asia-Pacific, said in an interview.
 
“We’ll most likely partner with someone that is an integrated poultry producer, and we’ll do the value-added piece, the same thing we do in Thailand and China,” Mr. Willits said on the sidelines of a World Economic Forum event in Jakarta.
 
He said Minnesota-based Cargill, one of the world’s largest privately held companies, is also building mills to follow investments it made earlier this year in palm oil. He declined to specify the amount of that earlier investment, but said it was “very significant” and part of efforts to reach “critical mass” in the Indonesian palm oil sector, the world’s largest.
 
Last year, Cargill announced plans to invest $1 billion in Indonesia in various sectors over the next three to four years. In the four years before that, the company invested $700 million, including $120 million in a cocoa processing plant, its first in Asia, to meet growing demand across the region.
 
The company is now looking to grow its sweetener and starch business, Mr. Willits said, and is currently building a $70 million factory in West Java that will produce sweeteners for infant formula for domestic and regional sales.
 
He also said the company is “very interested” in entering aquaculture in Asia, something it has yet to do anywhere else. “We’ll most likely buy a global company that” could have a presence in Indonesia, he said.
 
Mr. Willits said Indonesia remains a good long-term bet despite weaker economic growth, with five million people joining the consuming class every year and raising demand for meats and safer food.
 
He said the investment climate appears to be improving under new President Joko Widodo, with the current government “saying all the right things.”
 
Still, new rules to limit foreign ownership plantations to minority stakes, currently under legislative discussion, “would dramatically change our appetite for investing in plantations.”
 
He also said the company could consider investing hundreds of millions in building a large-scale corn-processing facility, but would likely need assurances that importing some amount of corn to feed it wouldn’t conflict with the new government’s food self-sufficiency goals.
 
By Ben Otto 
 

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