Cargills (Ceylon) PLC

Cargills has reinvented itself several times in the past 25 years. Its leadership and staff are understandably excited about their accomplishments but also keenly aware of the challenges they have had to overcome:

• Investing for the Future: Cargills has resisted pressures to pay out higher returns to shareholders and has instead reinvested in the company. In recent years, for every rupee of profit paid to owners, the company has invested two back into itself. Says Ranjit, “We do this so we can keep increasing the opportunity for the consumer, for the farmer, and for the youth of this country.”
  
  
• Price Fairness: To offer a higher-than-market price to farmers while keeping prices for customers low enough to serve lower- and middle-income groups, Cargills has had to expand to a scale unimaginable by many CFEs. It has been able to cuts cost by increasing volume and gaining full control over the supply chain. By eliminating middlemen, the company can pass along to farmers and consumers the savings in transaction costs. Reflects Ranjit, “It’s difficult most of the time, but we managed to do it because of our better supply chain.”
  
  
• Inexperienced Workers: That a very high percentage of Sri Lanka’s workforce is under 25 years of age presents a challenge to every company in the country. Cargills took this problem and transformed it into an opportunity. By becoming a company with huge in-house training opportunities, it is now especially attractive for young people.
  
  
• Technological Innovation: To maintain all of the national and international certifications and stay on top of its markets, Cargills has needed to “skill up”. One successful strategy has been to partner with universities to solve food processing problems. Another has been to bring in industry leaders from competitor countries like India to help learn about their innovations. The company has also started a food-business incubation program with the Chemical and Process Engineering Department of the University of Moratuwa, Sri Lanka.
  
  
• Expanding into Agribusiness: To date, Cargills has been in the business of purchasing agricultural products for processing and retailing. It has not engaged directly in farming or supplying farm inputs like seeds, agrichemicals, and farm machinery. Since these inputs are fundamental to profitable agriculture, Cargills has recently set up an Agri-business Center. The new Center aims to improve the standard of farming through production of quality inputs and through technology transfer.

A testament to Cargills’ impact is that other Sri Lankan companies are incorporating some of its practices. Cargills’ “graduates” are now in high demand in other food companies, particularly in the developing world. Ranjit himself is not content to see his model stay in Sri Lanka. He’s begun speaking at international conferences and has hosted a number of international research delegations.

“If the other companies also think like Cargills,” says Sunil, “we can meet the need of the hour which is to serve the nation. The private sector is the engine of the open economy. Public sector, private sector, and people’s sector need to work together for the prosperity of the community and country. ‘Peace and Prosperity through Public, Private, and People’s Participation,’—this is our slogan.”