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Cargills (Ceylon) PLC Summary
Sri Lanka: Cargills (Ceylon) Ltd www.cargillsceylon.com
Sri Lankas major supermarket chain Cargills is known to its customer base as a chain which purchases its raw foodstuffs locally. Roughly half of its farmers grow vegetables, and the rest are producing fruit, rice, and milk, and recently began fishing. But Cargills is also a food-product processor and manufacturer with its own lines of meats, dairy products, jams, cordials, sauces, and beverages. It is the only company in Sri Lanka that process dairy, meat, and juice with certified international standards. In early 2008 this certification allowed the company to expand their distribution of processed foods to Australia and export meats to India, the Middle East, and the Maldives.
By guaranteeing its 10,000 farmers a minimum price 20% above their estimated production costs, Cargills ensures an opportunity for steady employment and long-term growth. Dr. Sunil Jayantha Nawaratne, Cargills' Director of Human Capital, Youth Development, and Rural Networks, 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.”
Cargills is able to promise its farmers a good price for their product 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.” The direct connection between the farmer and the market makes for a much more efficient exchange, and Cargills is able to directly support its farmers with technical assistance, helping to reduce the level of food waste from forty to percent to three percent.
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. It actively promotes the adoption of new technologies like solar cells, greenhouses, and better seed varieties. “If the other companies also think like Cargills,” says Dr. 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.”
