Cargill is considering making a $1 billion investment in Indonesia over the next three to four years, with a focus on entering the poultry sector and expanding its palm business there.
The company is eyeing its potential place in the poultry industry as Indonesia has the potential to serve the Japanese market. Earlier in 2014, Indonesia entered talks to resume poultry shipments to Japan – a market that had been closed for 10 years. Should an agreement to resume poultry trade materialize, it is expected to be worth an estimated initial $200 million per year.
"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."
Talks between Japan and Indonesia got started after a food safety scandal hit in China in July. Husi Food Co., which supplied chicken and other meats to many Chinese and Japanese restaurant chains, had allegedly repackaged expired meats and printed false expiration dates. Among Husi’s buyers were McDonald’s KFC, Pizza Hut, Dicos, Burger King, Starbucks and Papa John’s.
Cargill could also benefit from an investment in the poultry industry as poultry demand in Indonesia is growing due to more affluent Indonesians turning to more bread and meat-based foods.
Cargill already owns palm oil plantations covering about 40,000 hectares in Indonesia, and a portion of the potential $1 billion investment would be placed in expanding its palm operations.