Agri Business

Global food major Cargill sees India emerging a ‘strategic market’ for its growth

Subramani Ra Mancombu Chennai | Updated on April 08, 2021

Indian arm chief Simon George views the country as a focus region

Cargill India Pvt Ltd, a unit of the privately held US-based global food company Cargill, sees Asia as the biggest growth region in the coming decade with China and India being the “growth-centric” ones, the company’s top official has said. 

“China accounts for a substantial percentage of Cargill’s global business which has a turnover of $115 billion. And India is equally important with its economy set to become $8 trillion by 2030,” said Simon George, President, Cargill India.  

The Indian market would witness a significant change in size in next 3-4 years and has become a focus market for the US global food corporation, he said.  

Cargill, which had begun its operations in India in 1987 by setting up a liaison office in New Delhi, has made rapid strides since then. Currently, the US firm has a mix of business in India spanning across commodities trade, agricultural supply chain, edible oils and fats, animal nutrition, bio industrial, starches and sweeteners and trade financing.  

Cargill’s journey in India has been one of learning a lot and understanding the local market needs, having to do business “significantly different”, George told BusinessLine in an exclusive interview. 

“The business-to-consumer presence in India is unique model Cargill has adopted for the Indian market, different from other worldwide markets where it is present. Of course, local and global acquisitions have helped us grow in India,” he said. 

For Cargill, India is a long-term strategic market, and the company is looking at the changes in government reforms and laws in India on the basis of which we will plan our future strategies. “India is a huge consumer market and a strategic one in perspective of our global operations,” he said.   

Bangladesh, a key market 

The Cargill India President said that Bangladesh has become a strategic market for Indian companies. “Bangladesh, as a country, is doing well and its economy has done well in the last 10 years,” George said. 

A lot of Indian companies are doing business in the neighbouring nation. India could become a manufacturing destination for Bangladesh, which is emerging to be an exciting market, he said. 

Last year, Bangladesh imported significant volume of non-basmati rice, corn and wheat from India.  “Now, Bangladesh has emerged as a biggest buyer of Indian corn,” the Cargill India President said.  

Grain business 

To a question on how the company’s grain business was shaping up, George said that the company had been procuring corn (maize) in Rajasthan, Bihar, Madhya Pradesh, Maharashtra, Karnataka, Tamil Nadu, Andhra Pradesh and Odisha.  

Cargill has become one of the biggest sources for corn and value-added products produced from corn. The company is also exporting corn to South-East Asian countries such as Vietnam and Malaysia. 

“Cargill is primarily in the domestic grain business and this year we handled approximately eight lakh tonnes of commodities which includes grains, wheat, soyabean meal and oilseed meal. Of this, a small percentage constitutes the export business. Cargill exports non-genetically modified corn and soyameal, besides registering its presence in the domestic wheat market,” he said. 

The way the wheat market operates is that the commodity’s exports and imports are guided by the Union Government’s policies. “Since the Government has a role to play in the trade besides the minimum support price being a factor, Cargill plays a role whenever an opportunity arises. Our role depends on the Government policies,” George said. 

Corn storage, starch  

The US multinational firm had set up a storage for corn, a first in India for Cargill, in September 2019 with a capacity of 60,000 tonnes at Davanagere in Karnataka.  This has been set up next to the corn processing plant started in 2016.  

“We have brought the best of global knowledge for storage, so that the corn is chilled and has the right aeration to ensure a longer shelf-life. We want to support farmers by helping them store their produce in best-in-class conditions and getting better prices,” he said.  

Cargill has also begun producing starch derivatives in three centres across India. Starch and its derivatives play a key role in food processing industry. “We buy corn from local farmers and are processing it to take finished goods to global customers across Asia,” George said.  

A key sustainability feature of Cargill’s operations in Davangere is that 85 per cent of the plant’s power requirements are met through solar and wind energy, says the Indian arm chief proudly.  We are looking at similar initiatives across our plants in India as well.

Entering B2B biz in cocoa 

Cargill’s latest venture in India is its entry into the cocoa and chocolate business, announced last year. “India is one of the fastest growing chocolate markets, among the top three globally witnessing a high growth rate. Consumers here are seeking unique flavours, taste and textures, yet per capita consumption of chocolate is still low in India compared to global markets. We want to cater to this growth potential in India,” George said.  

Towards this end and fulfilling Indian Prime Minister Narendra Modi’s objective of Atmanirbhar Bharat (self-sufficient India), the US firm will collaborate with Indian industry. “In India, we have built a different model and are building this business in collaboration with a local manufacturer to accelerate our speed to market,” the Cargill India President said. 

“In collaboration with our Indian partner, we will produce 10,000 tonnes of compound chocolate and enter the business-to-business (B2B) market by July-August this year. World-wide, we are a B2B company,” George said, adding Cargill’s chocolate business in India will also focus on this segment. “We will help our B2B customers operating in the business-to-consumer segment deliver premium chocolates to consumers in India.”

“We will provide compound chocolates to large confectionery customers, bakeries and ice cream manufacturers. Cargill will also help customers tap into its research and development network of food scientists and experts for product innovation,” he said. 

Asked if the company was working with Indian growers, the Cargill India chief said that it may happen at a later stage. India is not among the top producers of cocoa. Currently, it imports cocoa powder.

Edible oil

George said that Cargill’s edible oil business both as a bulk importer and leading branded cooking oil player in the country, forms a significant part of the company’s business.  

“We established our edible oil business 20 years ago and created a brand. We have expanded in well in the north and west. During Covid-19, we witnessed good consumption at homes. With a health focus, our brands like Gemini and Leonardo olive oil are doing well,” he said.  

Even during bad times when the economy registered a negative 23 per cent growth, Indian agriculture witnessed positive growth mainly since the global food supply chain was maintained.

Animal nutrition 

“We have a pretty large presence in the animal nutrition sector. We have plants in many States including Punjab, Haryana, Andhra Pradesh and Karnataka. Our focus is on bringing in the right innovation and feed products and solutions to farmers,” the Cargill India President said. 

Cargill is present in fish, dairy and poultry sectors of the animal nutrition business and it is “doing extremely well” in all the three. 

Last year, animal nutrition business was “pretty encouraging” and along with edible oils emerged as one of the best performing ones.  

Entry into cotton sector 

Cargill has entered the cotton business, too, recently as part of its plan to expand its agri-business.  The company sees good prospects in the export market.  

“Cargill India been present in cotton business for a few years now. We serve the domestic customers and also cater to export demand of Indian cotton,” George said. 

China, Bangladesh and Vietnam are the three biggest export markets this year. “We will be scaling up the opportunity in the coming years,” he said.  

For now, the US-headquartered firm’s Indian arm has 4,500 employees out of Cargill’s worldwide staff strength of 1.55 lakh with its presence expanding to 12 manufacturing locations. It owns six consumer brands, three animal nutrition brands and is present across 100 locations in India. It also has a global capability centre in Bengaluru.  

During the previous financial year (June 2019-May 2020), Cargill India earned a revenue of $1.3 billion and India is among the top 20 countries that Cargill operates in. 

Published on April 08, 2021

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