Feeding the world

Feeding the world

Helping farmers improve productivity and earnings is at the heart of what Cargill does, says its Asia Pacific chief. By Nareerat Wiriyapong

SOCIAL & LIFESTYLE
Feeding the world

Alan Willits has been a busy man since he arrived in Singapore in mid-2014 to oversee the continued expansion in Asia Pacific of Cargill, one of the world's biggest agribusiness and commodities trading businesses.

ALAN D WILLITS

Chairman, Cargill Asia Pacific

Born: February 26, 1958

Education: Bachelor of Science, University of Illinois, College of Agriculture

Career Highlights

1980: Joined Cargill as a merchant in the grain division

1991: Managed Cargill's international wheat trading activities in Geneva, Switzerland

1995: Managed Cargill's grain business in Argentina

2000: Joined Cargill AgHorizons in the US, later led the specialty oils business

2008: President of Cargill Corn Milling North America

Other positions: Asia Pacific leader for Cargill Agriculture Supply Chain (CASC) with responsibility for several businesses including Cargill Grain & Oilseed Supply Chain divisions in Asia, Australia, Greater China and Korea, and Cargill Tropical Palm

Family: Married with two children

Last year, for example, the US-based conglomerate announced an investment of US$50 million to double its cooked poultry capacity in eastern Anhui province of China. As well, it teamed up with local players New Hope Group and Hebei Bohai Investment Group for a $100-million oilseeds processing plant with a yearly capacity of 1.3 million tonnes in Cangzhou in Hebei Province.

And with completion of its new $50-millon poultry processing facility in Nakhon Ratchasima, Cargill is now the largest exporter of cooked poultry products in Thailand. Over 50 years of relatively low-profile operations in the country, Cargill has grown to employ 17,000 people at 14 locations with a cumulative investment of $1 billion, says Mr Willits, chairman of Cargill Asia Pacific Holdings Pte.

His own passion for agriculture dates back to childhood, and he shares the same deep midwestern roots as the company he works for. Mr Willits, who turns 60 this year, grew up on a family farm in Illinois in the heartland of the United States.

"I came from a farm in Illinois, driving a tractor and that kind of stuff. So I have a real passion about agriculture. My brother and my nephews still farm in Illinois but the business has changed a lot," he tells Asia Focus during a recent visit to Bangkok.

"And I have real passion about Cargill's noble purpose of nourishing the world. For me it's very impactful knowing that when we do our job well, we improve the livelihood of consumers and producers."

Founded in 1865 and headquartered in Minnetonka, Minnesota, Cargill is the largest privately held corporation in the United States in terms of revenue. If it were a public company, it would rank 15th in the Fortune 500. Last year it earned a net profit of $2.8 billion on revenue of $109.6 billion. Its total assets are $55.8 billion.

Globally, Cargill operates in 70 countries and employs 155,000 people. Asia Pacific, where it has 55,000 employees working at 250 locations in 16 countries, contributes about 27% of Cargill's revenue worldwide and Singapore has been the regional headquarters since 1981. Its first office in the region was established in the Philippines in 1948.

Cargill's reach across the world of agribusiness is substantial. For example, it is responsible for 25% of all grain exported from the United States. It also supplies about 22% of the US domestic meat market, and imports more products from Argentina than any other company. All the eggs used in McDonald's restaurants in the US pass through Cargill plants.

Cargill remains a family-owned business, with descendants of founder William Cargill still controlling more than 90% of its shares.

The company's main businesses include trading, purchasing and distributing grain and other agricultural commodities, such as palm oil; trading in energy, steel and transport; raising livestock and producing feed; and producing food ingredients such as starch and glucose syrup, vegetable oils and fats for processed foods and industrial use. It also has a large financial services arm that manages financial risks in the commodity markets for the company.

For Mr Willits, farmers are at the heart of what Cargill does.

"Certainly one of our core activities is working with farmers to help them to be more efficient," he explains. "So we utilise new technologies and new ability to improve their productivity, help them to get markets for their products, and if they can improve their productivity, we will be more successful as well."

Asia Pacific, he says, is home to 50% of the world's population and over the next 20-30 years, more than 60% of the increase in food demand globally will come from Asean and Asia Pacific. "So for us to ultimately fulfill our purpose in nourishing the world, we cannot do that without a significant presence in Asia and the Pacific," says Mr Willits.

"There are tremendous growth opportunities in Asia. Cargill is a private company that is very committed to growth and so we continue to invest our cash flow in the region where we see a lot of opportunity."

Apart from Thailand, Cargill's footprint in Asean includes businesses in Indonesia, Malaysia, the Philippines, Singapore and Vietnam. It also has a representative office in Myanmar. Its facilities in the region cover most of the businesses in which it is active, including food ingredients and bio-industrial products, agricultural supply chain, animal nutrition and protein. Its metals and shipping business also has a presence only in Singapore.

Mr Willits notes that Thailand is an important growth market for Cargill. The company has affirmed its strong commitment to continue investing in the Thai economy and contributing to the development of the country's agriculture sector.

"Every time we have visitors coming over to Singapore, we bring them to Thailand," he says. "We love exposing our friends to Thailand with the islands in the South, culture and countryside in the North, and the energy of Bangkok, so certainly Thailand is one of our favourite countries in the region."

TRADE EVANGELIST

At a time when concern is growing globally about protectionism, Mr Willits says Cargill stresses the importance of free and fair trade to help improve food security.

"We see an increase in protectionism not only by the US but also other countries and that is a concerning sign," he says.

"When you start unilaterally imposing tariffs, unsurprisingly other countries will retaliate. And when you start retaliation, there could be some type of trade war. That could lead to unintended consequences which could have spillover effects on agriculture."

Cargill is a very active proponent of trade and a significant supporter of the World Trade Organization (WTO), the Trans-Pacific Partnership (TPP), as well as the Regional Comprehensive Economic Partnership (RCEP) and the North American Free Trade Agreement (Nafta), which are critical for Asian and North America markets, respectively.

"We think trade is good for everyone and certainly good for consumers, because when you have tariffs and quotas, it artificially increases the price of food and ultimately that penalises poor people the most. It also attacks farmers," he points out.

"When you impede trade, it has negative impacts on smallholder farmers who are important for Asia Pacific. Ultimately, trade is good for producers and consumers, and it secures food security for Asia Pacific which is critically important."

The revived TPP, without the United States, and other multilateral agreements should continue to increase trade. Australia, for example, is currently a $10-billion exporter of food products to Japan and Japan is Australia's second largest trading partner after China.

"With (the new) TPP being signed, Australia will have a competitive advantage going into Japan over time as agricultural tariffs will be reduced and impact Japanese consumers and Australian farmers. The country that is losing out on that is the US (which is no longer part of the TPP)," says Mr Willits. "We would like to see the US being a part of it. We are still encouraging the US to engage."

He offers a compelling example to buttress his argument for the importance of more open trade. "This year, drought in Argentina has impacted soybean production which is unfortunate for Argentine soybean producers. But at the same time, there is significant soybean production in Brazil and the United States so we can export the soybeans needed into Asia and China from other parts of the world so there is no impact on consumers in this part of the world.

"That wouldn't happen without free trade. That's why we are a big proponent of trade because ultimately it will ensure food security for the world.

"The case of Argentina shows that when you have localised drought, because of free trade there is no food security problem since the impact of localised weather is offset by having a global food system. Once you have a chopping up of the global food system, then the impact of weather can dramatically increase the impact on prices and that's bad for everybody."

Looking at other big markets, Mr Willits says he's encouraged by what he is seeing in India, which recently undertook its biggest tax reforms in seven decades. The national Goods and Service Tax (GST), which came into effect in July last year and replaces numerous state and local levies, improves transparency and helps strengthen food security, in his view.

"From a Cargill perspective, it's encouraging for us because we think that we'll increase the overall level of transparency in the marketplace," he says.

Historically India has had a bewildering array of different tax schemes between various states which impeded flows of products, including agricultural goods, from one state to another. That system is now history and the country has a harmonised national standard for tax, he says.

"India is a country where you have surplus agricultural products in the North and a deficit in the South, so with the harmonised GST, you can move products between North and South which improves self-sufficiency and ultimately reduces the frictions, reduces the cost for consumers, increases the price of food paid to farmers, which is good for everybody. That is an example of a country making changes in law that ultimately enhance food security."

HIKING AND HEALTH

During the interview, Mr Willits makes clear that he greatly values his personal time away from the job, sharing many enthusiasms with his wife, including reading and a love of the outdoors.

"My wife and I both like to read." He says. "That's one way to relax a little bit. So I read a combination of fiction and non-fiction. Recently I read a couple of interesting books on behavioural economics: one by Danny Kahneman and the other one by Michel Lewis."

When I ask him about countries he has not visited but would like to, he says he has probably been to every country in the region, though there are some regions he still wants to see. When he does travel, chances are a lot of it will be on foot as he and his wife are avid hikers and trekkers.

"The next adventure for my wife and me, we're planning to hike in Tibet. We haven't been to that part of China before," he says.

When he was responsible for Cargill business in Indiana, Missouri and Minnesota, Mr Willits says the couple hiked in many places in their home country, and they continued to hit the trail in Switzerland when he was based in Geneva.

"We've hiked up Mount Kilimanjaro in Tanzania in East Africa. My wife wants to have a big adventure and I go along," he says with a smile.

"My wife and I like to hike and so last year we did a trek in Nepal. This year we will go to Tibet including Everest Base Camp, probably in May or June. We've been many times in other parts of China but not Tibet. It's very high … about 5,000 metres. You need to train."

One reason the couple is passionate about hiking is that it gives them the opportunity to see a beautiful landscape from the top.

"I love hiking because it's beautiful. We get a chance to meet the local people, and have informal conversations with them. And because you have loads of exercise, when you have good food, you feel no guilt," he says.

"Normally we hike for a week or 10 days and we will have a guide or someone [who knows the area well]. We have to get in shape. We have to exercise."

And even though Mr Willits is celebrating a milestone birthday this year, he says it's fine to be hiking into one's sixties and beyond if one exercises regularly. "My wife and I exercise three to four times a week. Whenever we have time, we hike. Normally, we normally do a hike once a week in Singapore but there are no mountains in Singapore … only hills.

"When I get stressed, I go for a hike. That's right, it's a good exercise. You want to join us?" he asks, followed by a big laugh.

Do you like the content of this article?
COMMENT