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Cargill Seeks Indonesian Poultry Play, Building Palm Oil Mills

After investing $700 million in Indonesia between 2010 and 2014, including $120 million for the company’s first cocoa processing plant in Asia, Minnesota-based Cargill announced last year that it intends to invest a further $1 billion in the country across various sectors over the next three to four years.

Under its plan, Cargill is investing in mills as it seeks to expand its palm oil business in the country, to reach its goal of achieving ‘critical mass’ in the Indonesian palm oil space. The company is also in active dialogue about the building of a new poultry facility and partnering likely partnering as a way to gain a foothold in the sector, according to Cargill chairman for Asia-Pacific, Alan Willits.

"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 to Dow Jones Business at the World Economic Forum event in Jakarta.

Mr. Willits adds that despite slowing economic growth, long-term growth prospects in Indonesia are positive given that the population is gaining 5 million consumers per year, and when taking into consideration the rising demand for meat and safe foods.

The company is also working toward growing its sweetener and starch business in the country, and is currently building a $70 million factory that will produce sweeteners for infant formula for both the domestic market and regional exports.

In addition, the company has expressed a sharp interest in expanding into aquaculture in Asia and has stated that it would probably do so through the acquisition of a global company that would have a presence in the market.

The fruition of these investments is not guaranteed, however. If new regulations restricting foreign ownership of plantations currently under discussion by the government pass, Mr. Willits states it "would dramatically change our appetite for investing in plantations."

The company’s plans to invest hundreds of millions of dollars to construct a new corn processing plant in the country remain in question as well as the company would need assurance from the government that their importing of some of the corn to supply the plant would not conflict with the government’s new food self-sufficiency program.

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Lynda Kiernan is Editor with HighQuest Group Media and of the Oilseed & Grain News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@highquestgroup.com.

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