Cargills (Ceylon) PLC

Most publicly traded companies, with shares that can be bought and sold by anyone on the planet, cannot be considered community food enterprises. Cargills, however, is still largely owned by the Page family in a country with a land mass roughly the size of the U.S. state of West Virginia. Only about 10% of the company is publicly traded, so the company remains local under our study’s definition.

Sri Lankans know Cargills as a major supermarket chain that purchases its raw foodstuffs locally. Roughly half of its farmers grow vegetables, and the rest are producing fruit, rice, milk, and—just recently—engaged in fishing. But Cargills also is a food-product processor and manufacturer, with its own lines of meats, dairy products, jams, cordials, sauces, and beverages. According to Ranjit, “We are proud to say that we are the only dairy company, the only meat company, and the only juice processing company in the country which has been certified with international standards.” Cargills also operates the Kentucky Fried Chicken franchises in the country. And starting in January 2008, the company began exporting processed foods to Australia and meats to India, the Middle East, and the Maldives.

According to Ranjit, Cargills’ purchasing networks are the largest in the Sri Lankan agriculture sector. The company employs directly 5,605 employees—more than 10 times the number in 1984. Its Food City brand is considered the third most valuable in the country and was a finalist for the Most Responsible Retailer of the Year award at the World Retail Awards 2009 in Barcelona. Sales have doubled every four years, and consolidated profits in 2007 were 62% higher than they were the previous year.

A key feature of the Cargills business model is that it guarantees its 10,000 farmers a minimum price 20% above estimated production costs. Cargills Director of Human Capital, Youth Development, and Rural Networks, Dr. Sunil Jayantha Nawaratne, explains the model this way: “Our farmers are living in rural areas, and they are in poverty. They lack market access. If we can bring the market to them with a guaranteed price for the whole year, we are working towards poverty alleviation, we are working with rural development, and we are training the next generation of leaders.”

Ranjit points out other services Cargills offers its farmers: “We take the market to them, we give them technical inputs, we drastically reduce the cost of finance to them. We do value addition, we innovate, we create new products from what we buy from them, and then we sell these products not only to local customers but now to international customers as well.”

Cargills can guarantee a higher price by eliminating the middleman. As Haridas Fernando, a deputy general for the company explains, “In a conventional supply chain, the farmer and customer are very far away from each other. There are five or six intermediaries involved....We have freed the farmers from the intermediary.” Through better coordination, efficiency, and integration, along with technical assistance to its growers, Fernando says that the company has been able to bring “the level of wastage of fruits and vegetables down from forty percent to three percent.”

Sri Lankan farmers eagerly embraced the model. “Before getting involved with Cargills,” says R.P.N.L. Premathilaka, a smallholder farmer, “I managed to cultivate only two times per year. But after getting involved, I cultivate throughout the year, and always get a better profit....At the time of getting involved with Cargills six years ago, I used to cultivate in a half-acre area. Now I cultivate fifteen acres, and I can send my children to school from the money I earn.”

One way Cargills has grown is by carefully matching its products to the needs of lower- and middle-income customers. “In Sri Lanka,” says Ranjit, “the consumers pay close to sixty percent of the monthly income for food and food related expenses. How could we make a difference with this sixty percent? That’s what we focused on.”

With 80% of its employees in their 20s, Cargills has devised several programs to engage, train, and “skill-up” young workers. Its human resources department is called “Human Capital.” Every employee goes through its Albert A. Page Institute of Food Business, an in-house certificate program that offers free classes to employees at all levels. “After joining us,” says Sunil, “they become experts in retail, food marketing, supply chains, ice cream manufacturing, meat processing, and food processing. We even allow them to go abroad, and work as skilled laborers or professionals.”

The recruitment process is all about finding young people committed to lifelong learning and serving. “When they come here for employment,” says Sunil, “we give our mission statement, vision, and our values, serve lunch for them, and ask them to go and work at the Cargills supermarket or factory for three days. Then they learn for themselves what’s happening. They get two days off, and come back and make a presentation in front of us saying why they want to work at Cargills.”

Word about Cargills’ commitment to being a learning company has spread. “Earlier,” reports Sunil, “the graduates did not come to Cargills to seek employment, because they thought it was an English-speaking high class company, and they would not be able to find jobs here. Now, if we put an advertisement in newspapers to recruit 100 Management Trainees, we get 1,000 applications.”

Cargills aims to be an exemplary triple bottom line company. It works with farmers and small-scale suppliers, alongside universities and government agencies, to recycle water and increase energy efficiency. “When you know that billions are starving on this earth, billions of people who are getting less than a dollar per day,” says Ranjit, “food waste is a crime.” Cargills actively promotes the adoption of new technologies like solar cells, greenhouses, and better seed varieties. And it’s the only dairy company in the country to get all three relevant international certifications (ISO 9001, 14001, and 22000).