Economic Times: January, 2017
New Delhi: Alan Willits,, Chairman of Cargill’s Asia-Pacific Region, is upbeat about demonetisation in India, which he says will lead to more transparency and long-term gains. In an interview with Nishtha Saluja, he said Cargill plans to invest more in India. Excerpts.
How has 2016 been for Cargill and the agriculture trade?
We've recently reported our earnings, so we’re off to a reasonable start. We're feeling some positive tailwinds and number of things are driving them. If you look at what's going on in India and the rest of Asia, specifically SE Asia, we're continuing to see growth in demand. In India, we are seeing a 6-8% growth in poultry, 4% in starch consumption, 4% growth in dairy.
Where does India stand in the Cargill's Asia-Pacific plan?
Cargill's global vision is around being a leader in nourishing the world and doing it in a way that's safe, sustainable and responsible.
And so certainly we can't reach that inspiration if we are not significant in Asia, and India is a big part of that. Overall in APAC we have about 16% of Cargill's gross investment. Given the size of the population in this part of the world, and the increasing size of its economic influence, we think it's a bit small related to what it should be. So we're certainly looking for opportunities to grow.
Are you looking for more investments in India?
Certainly, we will invest more in the country. I’m not positioned to make any announcements at this point in terms of numbers or timing. There's certainly a lot of growth in the feed sector, and so we have recently announced the new feed mill for the dairy market in Punjab. We're seeing increased demand for agriculture products, so we'll have a need for investment and infrastructure to serve those customers.
Coming to demonetisation, how does it affect the way global market looks at India?
I came here with a great deal of uncertainty, but taking sense from the customers I have met with, the demand is rapidly increasing and interestingly the transformation from a cash market to a cashless market seems to be happening very, very quickly. From a Cargill perspective, it's encouraging for us because we think that we'll increase the overall level of transparency in the marketplace. It shouldn't have any impact whatsoever on Cargill's investment portfolio. We do not get too worried about shortterm variability. I think coming in from an external perspective, it seems to me it's going to have some very positive outcomes in the longer term, once we get through this short-term blip.
How do you think GST will change the market?
We welcome the indirect tax reform in the form of GST with an objective to create one market. We would be glad to see state levies on agriculture produce also getting subsumed in the GST tax slabs. This would truly ensure One Nation - One Market, thereby helping farmers to sell their produce across the country.
What are your observations on India importing wheat next year?
I think it's a bit too early to make bold projections on what the ultimate temperatures and rainfall would be in the next 60 days. But certainly there has been a draw down in the stocks which has created need for the country to import wheat. My sense is that Indian production continues to look for ways of improving productivity and so overall arable land in the country is not increasing, so the only way India is going to increase production is to improve productivity through technology and better farming practices. So there's a room for companies to bring that capability.
There does seem to be a bit more protectionism going around the world, and that's a big problem when it comes to the shared global food system. Hopefully countries can move beyond that and understand that free trade is good for everyone