World Grain - February 2013 - 39

FEATURE: GROWING AT A RAPID PACE

Olam has two ﬂour mills in Nigeria
and one in Ghana. “We are working on
a few other mill projects in sub-Saharan Africa (Senegal and Cameroon),”
Suresh said.
Olam’s strategic expansion strategy
is active. “Most recently, we have embarked on expanding the capacity of our
Nigerian mills by 750 tonnes per day.
They will be commissioned between
April and June 2013 and will represent a
step toward our target of increasing our
share of the Nigerian ﬂour market.”
Olam is strategically building mills in
other nations to expand its presence in
the region. “Additionally, we are building two greenﬁeld mills in Senegal and
Cameroon, each with a capacity of 500
tonnes per day, which will be commissioned by June 2014,” Suresh said.
Across all sites, Olam’s wheat processing capacity will soon reach 4,000
tonnes per day. The company’s utilization rate is 70%.
“This expansion will mark another
milestone in our goal to become a major
wheat miller in Sub-Saharan Africa and
indeed we are further evaluating other
options in the region either through
greenﬁeld expansion or acquisition.”
Suresh emphasized that Olam is dedicated to executing its strategy.
“The future depends on how we execute this strategy — making the development work for us but avoiding expanding too quickly,” he said.
“We are optimistic about our wheat
milling business in Sub-Saharan Africa,
one key reason being that we have common customers, sales and distribution
between this and other products such
as rice, sugar and various packaged
food products. On top of this there are
synergies across management and business as well as stakeholder relationship
strengths and common management
costs in these African countries.”
He noted that Olam’s unique experience in Africa and consistent track record of proﬁtable growth throughout its
23-year history gives the company conﬁdence and reason to become a signiﬁcant
player in the wheat market in the future.
www.World-Grain.com / World Grain / February 2013

CHALLENGES & OPPORTUNITIES
Olam closely tracks a number of
global concerns, markets and challenges to stay abreast of issues impacting the world’s grain industry and
its own businesses.
The company closely follows the
weather as changing patterns can have
a major impact on supply. “Changing
weather is one of the global issues that
we are tracking at the moment,” Suresh
said. “We are trying to understand how
changing weather patterns can have a
signiﬁcant impact on the supply side of
grains as well as looking for appropriate solutions.”
Suresh sees a number of challenges
for the global wheat milling industry.
“On the global wheat market the price
has increased by 20% to 30%, and so
our input costs have risen sharply. But
the market offers strong resistance to
any corresponding price increase.”
He noted that while demand for
wheat continues to grow, supply is
restricted. “In particular, government
intervention in producing countries is
increasing, which hinders supplier response,” he said.
“Competition for land from other
crops, such as corn and soy, which are
not just used for food but also biofuel, is
also another challenge.”
On the other hand, Suresh noted
Olam sees a growing demand for
grains globally.
“This is a good opportunity for us,
and we believe we can help meet that
demand. In particular, Asia and Africa
are presenting solid opportunities for
growth and expansion because of their
emerging economies. Incomes are
growing rapidly and there is also increasing demand for convenience food.”
MARKET VIEW
Besides Australia, the Black Sea,
Canada, South Africa and India, Olam
also sources grain from the U.S.,
South America and Europe. Suresh
and Olam see the world’s grain supplying nations into two camps: Old
World and New World.

KC Suresh, president and global head, grains,
Olam International.

“You can divide these country sources
into two distinct groups: the ‘Old World’
(which often refers to U.S., Canada,
Australia and Europe) and the ‘New
World’ (Black Sea and South America),”
he said. “It’s worth highlighting that for
Russia and Ukraine, we are not just a
leader in origination but are also developing farming.”
Suresh noted that the Old World suppliers are known for being well-developed and having good quality control,
“while in the New World, the markets
are usually less mature, and we cannot
be totally sure about the quality.”
The New World’s trading systems
and markets are also not as well established. “This requires increased investment in our supply chains,” Suresh said.
“However, our experience in emerging
markets and the beneﬁts of having diversiﬁed sources outweigh these detractions with the result of mitigating our
overall risk.
“Our strength therefore, is in having
experts on the ground in all the regions
where we operate. Physical presence is
crucial as it increases our ability to react
more quickly to market/local changes and
foresee any potential challenges.”
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World Grain - February 2013

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