Gregory R Page, chairman and CEO of Cargill, spoke to NDTV's Namrata Brar on the sidelines of the annual World Economic Forum meeting in Davos, Switzerland.
Here's full transcript of the interview:
NAMRATA BRAR: Here with me is Gregory Page, chairman and CEO of Cargill. Cargill is one of the world's biggest commodity traders and commodity processors. Thank you so much for spending the time with us.
GREGORY PAGE: Good to be with you.
NAMRATA BRAR: So how is Davos for you? I believe it's not that cold knowing where you come from.
GREGORY PAGE: It's a beautiful city a beautiful town for someone who is from Minnesota. It's great to be here.
NAMRATA BRAR: Absolutely, everything is relative; Indians would differ (on that). Anyway, let's get back to serious business. In terms of opportunities, how is the global commodity marking and processing marking looking to you?
GREGORY PAGE: I think the signal that is going to the producers and farmers is that they need to produce more. So that's one positive effect and the praise that we witnessed last year is that there is a great amount of opportunity for the farmers around the world and to respond to those prices and to produce the additional food that we need, to think all the elements were in place, to give the world the sense that the farmers can respond (and) provide the food security that we all want to have...
NAMRATA BRAR: That's been a real big problem because even in 2012 there was this fear of impending food prices that got a little converted but nonetheless people are saying that consumption, agricultural patterns have changed so things are not going to be same when you talk about food supply.
GREGORY PAGE: Yes but if you look back to 15th June, 2012, the prices of commodity of virtually all the exchanges around the world are in a downward trend. As a result of very good weather and a promising crop in North America, the rains stopped particularly in the area where I live, Illinois, and that small change in global production probably amounted to less than one and a half per cent of total grains, oil seeds and the basic building blocks of the food system. That modest change is a result of food pattern which is quite severe in the Midwest. It led to 25-30 per cent of increase in prices of the food commodity and put the world back on edge in terms of its food security. The same thing, in reverse, can happen this year. If we get the kind of weather that we expect with the kind of price signal that the farmers are receiving.
NAMRATA BRAR: So you feel that there will be a better crop production this year and therefore prices will actually come down?
GREGORY PAGE: Yes, and they have moderated since the prices we saw last September-October. The world's carry over stock is in a precarious situation, so people do need to mind that we need good production and that we do have very low stocks, which causes us to be cautious and alert. We also have all other elements in terms of price signal that the farmers are receiving to raise, I think, the biggest crop production in the history of mankind. Again is the weather issue.
NAMRATA BRAR: Absolutely, it's a big issue for them and it's only the God's mercy many would say. But when you talk about commodities, which commodity do you think are the most important in 2013? Three commodities that you think benefit the most this year...
GREGORY PAGE: Certainly soybean and the oil seeds. We have raised a very good palm oil crop and consumers in India are benefitting from that. There has been reduction in the price of imported palm oil which benefits consumer costs. So we see that also happening in Brazil. A very good crop (palm oil crop) and that's going to get harvested at this time in Brazil and soybean, which will provide protein as well as vegetable oil. So we see that as quite promising. The US is the world's largest corn producer and supplier to the world. And we are not going to be planting our crop for another 90 days or so. I think those two crops are going to be critical. I do not think that the rice has such low stock-use ratio that we see in crops like corn.
NAMRATA BRAR: In Indian context palm oil has a big impact. We are the world's largest importer of the world. A lot of investment in India is geared around it. You are buying edible oil here; you are investing over Rs 500 crore in Karnataka's Bangalore facility. So are you going to up the ante on palm oil or are you going to explore other commodities in India? What's you India's expansion plan?
GREGORY PAGE: Clearly, we have major investment in vegetable oil. We would like to grow that with additional regional brands so we can have products on the store shelves. The customer's trust is with the brand that they know. You know, Cargill has 65 business units, so we would like to build corn-wheat mill that will provide baby food, starches, glucose and confection industries. So we would like to broaden the portfolio- food ingredients that we bring now to the food manufacturer in India. These are some commodities that we understand well and with the technology we need to bring them to India to meet the growth expectations.
NAMRATA BRAR: Is FDI in retail a healthy plan for you? Are you going to pump up the ante as far as Cargill is concerned?
GREGORY PAGE: I think it's too soon to say that for an ingredient supplier like us who supply consumer package goods. Consumer good companies, which are our immediate customers, are dependent on really vibrant and modernising distribution system to reach many consumers at a cost as effective as possible. I think that the innovation that would come with more companies benefits consumers inevitably. It would benefit us and to the people whom we sell to, such as the fast moving consumer good companies.
GREGORY PAGE: Certainly, some of them would like to go. I know Wal-Mart has made an effort there. Wal-Mart is a very important customer to us.
NAMRATA BRAR: Have they been speaking to you?
GREGORY PAGE: Yes.
NAMRATA BRAR: About potentially expanding the India business?
GREGORY PAGE: In many countries; multiple countries.
NAMRATA BRAR: Specifically in India?
GREGORY PAGE: I have not specifically done it myself but I will be very surprised if our team in India has not had that conversation in India.
NAMRATA BRAR: So, a lot happening in the global retail landscape is also coming into India but you are not going to make huge dives straightaway and you want to wait?
GREGORY PAGE: We have to grow along the growth in consumption. So we are a responder to the consumers' demands. If those (demands) grow we are prepared to invest the money, provide the ingredients to the clients, especially retailers with their private labels.
NAMRATA BRAR: I am going to ask two quick questions: first the Indian government's policy- are you happy with all that? Are you happy with the regulations?
GREGORY PAGE: I think in every country there is an opportunity for conversation about how to move forward with the consumer well-being, with their income improved as their expectations change. We do not operate in any business where we don't have a perfect business environment. The ways in which we go about it is going to be something which we are going to talk about for many years. And the sincere desire for us is to reach the same outcome as they want, which is affordable food, safe food, delivered as fast as possible. We want it the same way.
NAMRATA BRAR: Final question: where are you going to put India in your global financial priorities?
GREGORY PAGE: I have to be careful because we are in 67 countries. So, yes, if I rank you 5th that makes 62 countries upset. It's clearly important with 1.2 billion people in a country that has an agriculture that has proved its capacity to grow a lot of food, in some cases to be an exporter to other countries and regions. So if you take the economic growth in India combined with the population and the demographic of the population and then with the agriculture products that we see can be developed and emerge there, those are the three ingredients that we have in the upper part of the league table for Cargill.
GREGORY PAGE: Thanks.