Fauji Foundation and Cargill partner to strengthen agricultural supply chain in Pakistan

Cargill acquires minority stake in the grain terminal at Port Qasim

06:51 PM | 9 Dec, 2020
Fauji Foundation and Cargill partner to strengthen agricultural supply chain in Pakistan
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ISLAMABAD – Cargill and Fauji Foundation have entered a long term strategic partnership in Pakistan.

With this investment, Cargill has taken a minority equity stake in Fauji Akbar Portia Marine Terminal Limited (FAP), Pakistan’s leading bulk terminal, and will handle grains, cereals, rice, oilseeds and fertilizers at Port Qasim. Fauji Foundation, through this partnership with the world’s leading agriculture company, will transform FAP’s supply chain to enhance overall value for all stakeholders including suppliers, customers, employees and shareholders.

This is Cargill’s first investment into Pakistan, after the strategic intent announced in January 2019 and reflects its long-term commitment to the country. Cargill is already a leading soybean and palm supplier in Pakistan andwill further strengthen its presence as a significant agri-importer, while enabling FAP to leverage Cargill’s extensive experience in bulk handling, port operations and its technical know-how. Combining Cargill’s customer centric approach with FAP’s operational excellence will help support customers better. Going forward, both partners aim to build a safety culture that will create a world class, safe and sustainable environment for FAP’s employees and customers.

Fauji Foundation Chairman, Waqar Malik stated: “We are excited to have Cargill join hands with us at FAP Terminal, Port Qasim. To conclude this transaction at this point in time is a clear signal and validation of the Pakistan opportunity seen by the world’s leading player in agriculture commodities.  With its global port experience, Cargill will help drive greater operational efficiencies for the port to reach its potential of handling agri-cargo safely and efficiently. Fauji Foundation is building on its agricultural and infrastructure sector presence to help solve the pressing needs of our country for efficient and affordable nutrition through enhanced farmer productivity.” 

“We are proud to partner with Fauji Group in this venture. Fauji Foundation, along with other shareholders, have grown FAP into a key terminal for agricultural commodities over the last decade. We will, together, position the Company for its next stage of growth and profitability. This further adds to our global port operation’s footprint and strengthens our agricultural trading and supply chain operations in the region. It is a demonstration of our commitment to partner in the economic growth of Pakistan by bringing in our global expertise and investment. In future we will also look at opening doors for other sectors where we can add value, besides exploring business synergies with our existing partners,” said Imran Nasrullah, country president, Cargill Pakistan.

FAP is a joint venture between Fauji Foundation, Akbar Group of Companies and National Bank of Pakistan (NBP) operating a state-of-the-art grain and fertilizer marine terminal at Port Qasim, Karachi. FAP started operations in 2010 and provides complete Supply Chain Management solutions for ship berthing, unloading, storage and bagging of all types of grains, cereals, oilseeds and fertilizers. This terminal operates with international standards and has helped build efficiencies in dry cargo handling in Pakistan.

Anticipated Media Queries

1. Cargill made an announcement in 2019 regarding investing US$200 million in the country. Is this investment a part of that initiative?

Yes, we announced our strategic intent to expand our presence in Pakistan and we remain committed to it. This investment is the first announcement towards that objective. 

2. What other initiatives are in the pipeline to bring forth Cargill’s global expertise and investment into the country?

Cargill has been present in Pakistan for more than 30 years and we remain committed to the country’s future through investment and business expansion. Cargill is exploring several opportunities in the agricultural space as Pakistan is an important market for us. Cargill’s global expertise, other than in commodity trade, lies in areas including farming, feed milling, meat processing, oilseed crushing etc. We aim to leverage our strengths to help address the needs of the Pakistani market, whether through a greenfield investment or collaborating with alocal partners. We will be ready to announce more details as and when we have finalized all the details. Until then lets focus on the port announcement made today with Fauji Foundation.

3. We didn’t hear any buzz in the media after the initial announcement, why did it take Cargill more than a year to execute and accelerate its investment plans?

We have been carefully assessing various business opportunities in the market. This includes surveying and analyzing the market and industry dynamics, determining what are the needs of the local market, the opportunities that add value to our existing portfolio and what benefits we can bring to our stakeholders in the country. Having completed all the due diligence and the necessary regulatory approvals, we are happy to announce our investment in Port Qasim. We continue to explore future growth opportunities and will keep you informed about our plans. 

4. Can you share the monetary breakdown of this investment?

The monetary details of this investment are confidential and thus we do not wish to disclose it.

5. Can you elaborate on the role played by Fauji Foundation in this initiative?

Fauji Foundation, along with other shareholders, have grown FAP into a key terminal for agricultural commodities over the last decade. Through this partnership with Cargill, Fauji Foundation is building on its agricultural and infrastructure sector presence to help solve the pressing needs of Pakistan. 

Fauji Foundation will still remain the majority owner of the FAP terminal but will work in collaboration with Cargill to help improve the port operations.

6. How will this initiative help the overall economy flourish, from agri-imports point of view?

FAP is the only modern grain terminal in the country and handles around 2.5 MT of imports annually. These imports are expected to further grow in tandem with the demands of a large population. A large portion of these imports include Soybeans, which are crushed locally and have resulted in a large domestic oilseeds processing industry. It is therefore imperative that the port runs its operations as efficiently and effectively as possible. 

Cargill has a lot of experience in handling port operations and can help Fauji Foundation improve the efficiencies at the port and further modernize the operations using learnings from ports around the world. 

7. Can you elaborate on Cargill’s experience in bulk handling and port operations? 

Cargill owns and operates (either wholly or partly) more than 30 ports around the world, of which 4 are in Asia. These includes both sea ports and river ports.With immense technical experience in managing port operations, we have been able to improve the efficiencies of ports (berth utilization, discharge rates, lay-times etc.) in several ports and strongly believe we will be able to improve the operations at FAP as well.

8. What global best practices for safety and security measures is Cargill implementing in its port operations?

Cargill has strict safety and security measures that it implements in all of its projects around the world, to ensure the well-being of the workers and also the environment. 

This includes the functioning of our EHS (Emergency, Health and Safety), and FSQ (Food Safety and Quality) teams that make sure proper equipment and protocols are in place that would help make the workplace safer. Besides, Cargill inculcates a culture of safety at every step of the business to ensure these protocols are taken seriously. We will follow the same principles in the operations of the FAP terminal.

9. Since how long is Cargill operating in Pakistan? Can you share highlights of Cargill’s presence in the country?

Cargill has been operating in Pakistan since 1984 and has been involved in trading commodities such as wheat and cotton. Today our operations comprise of refined oils, trading and handling of animal feed, grains & oilseeds, cotton, sugar and metals. Our animal health business is based in Lahore, which is involved in selling specialty premixes, additives and other nutrients to feed mills in the Punjab region.Our head office is situated in Karachi.

10. Which sectors do you prioritize for growth and investment in Pakistan in the years to come? 

Cargill is growth company and always exploring a wide variety of options in the agricultural space. Due to our global experience in different verticals, we are interested in exploring options in commodity trading, feed milling, dairy and poultry processing, oilseed crushing etc. The decision to invest in a particular area is only made after each option is studied thoroughly.

11. What’s the future outlook for the company?

Cargill is committed to expanding its operations around the world to help achieve its goal of nourishing the world in a safe, responsible and sustainable way. Therefore, Pakistan, which is not only a large consumption center but also a strategic location connecting the global markets, is an important market.

Pakistan is a big market with a large population that is consumption focused. The middle class growth and the ease of technology has changed the consumption patterns of the population and a whole new consumer has emerged in Pakistan. Many industries in Pakistan like the dairy, poultry and edible oils are at the cusp of expansion and we believe our global experience will add value to these industries making them more competitive.

Cargill has a long history in Pakistan and has an established brand with strong customer base. We want to partner with them in our growth plans. Our intent is to learn and understand the needs of the country and to build a vision for future growth. We will continue to find the right opportunities in the country in which can add value and significantly improve our presence in the country. 

12. How did the company cope with the Covid-19 situation in Pakistan? 

Cargill proactively worked to ensure the safety of our workers during the Covid-19 pandemic. Along with safety of the employees, it was imperative that we continued to run our operations smoothly. We implemented proper SOPs in our office and most of our employees worked from home. Besides this, we also ensured we provided them with essential supplies such as masks and sanitizers. 

We worked closely with our partners and through close communication, ensured there were no major impediments in our operations. This pro-active, flexible approach has been helping us handle the situation effectively.

13. Did the pandemic affect Cargill’s operations and internal processes?

The Covid-19 pandemic has affected every business around the world. We have not had any business disruptions due the pandemic. Cargill Pakistan team has been working from home since the start of the pandemic. Due to implementation of remote operations, we have had to ensure that new protocols and equipment are in place that would allow the employees to work effectively from home. There are also new procedures in place that must be followed when dealing with the customers and other external personnel to ensure safety for all.  

14. Was there any downsizing or cost cutting due to the pandemic?

There wasn’t any downsizing or cost cutting in Cargill that resulted from the Covid-19 pandemic. Having said that, we are keeping a close eye on all aspects of business.