Cargill sees $1B investment in Indonesia, eyes poultry sector

(Dave Bedard photo)

Jakarta | Reuters — Cargill may invest US$1 billion in Indonesia over the next three to four years, with a focus on entering the poultry sector and expanding its palm business there, the CEO of the top global commodities trader said Tuesday.

Earlier this year, Indonesia entered talks to resume poultry shipments to Japan after a 10-year stoppage, with any agreement likely to be worth an estimated initial $200 million per year (all figures US$). These government discussions followed soon after a food safety scandal involving Chinese meat suppliers.

Cargill, which already has a presence in Indonesian palm oil, cocoa and animal feed sectors, sees great potential in the country’s poultry industry.

“Japan is looking closely at Indonesian chicken and part of it is to replace volume that has fallen off from China through various industry issues that China has had,” Cargill CEO David MacLennan told reporters during a roundtable discussion.

“That is a good place for us to play in Indonesia.”

Poultry demand in Indonesia, the world’s fourth most populous nation, is also growing due to more affluent Indonesians turning away from rice, once the staple diet, towards more bread and meat-based foods.

MacLennan, who met with the new Indonesian President Joko Widodo and other senior government officials on Monday, said part of the future investment in Indonesia would be aimed at expanding Cargill’s palm business in the country.

The firm owns palm oil plantations covering about 40,000 hectares in Indonesia, the top producer of the edible oil.

Cargill has already invested about $700 million in the country over the past four years, the chief executive said. He was speaking to reporters ahead of the official opening of Cargill’s cocoa processing plant in East Java later this week.

Cocoa processing capacity in Indonesia, the world’s third-largest cocoa producer, is rising as new facilities are being built by multinational companies such as Olam International Ltd and top chocolate maker Barry Callebaut.

Cargill has invested $100 million in its cocoa processing plant, which has an initial capacity of 70,000 tonnes.

“It’s early days,” MacLennan said when asked if there is scope to increase capacity at its cocoa processing plant. “Given the demographics of the country, changing trends in chocolate consumption in Asia… I would be optimistic about it.”

— Michael Taylor is Reuters’ senior correspondent for Indonesia, based in Jakarta.


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