Edible oils have been identified as one of 12 key business areas which Asian food and agribusiness group Olam International plans to invest US$3.5bn in over the next six years.
In its 2019-2024 strategic plan announced on 25 January, Olam identified edible nuts, grains and animal feed, cocoa, coffee, cotton, spices, edible oils, dairy, rice, infra and logistics, packaged foods and commodity financial services as areas it would focus on.
Regarding edible oils, the company plans to increase yield and cost efficiency in upstream palm oil businesses and invest selectively in the midstream refining business. In October 2016, Olam’s palm oil and plantation and mill in Gabon became the first to be certified by the Roundtable on Sustainable Palm Oil (RSPO) in Africa.
According to a 2015 RSPO report, Olam’s palm oil production grew 20 times in four years from 71,000 tonnes in 2011 to 1.53M tonnes in 2015.
Olam said it planned to invest the US$3.5bn in businesses where it had market leading positions and significant potential for further growth, and would free up US$1.6bn by divesting its sugar, rubber, wood products and fertiliser businesses.
“With our focus on farm-gate origination, end-to-end traceability, sustainability, digital initiatives and innovations like AtSource, Olam is already primed to start capturing growth from this fast-changing landscape. Now, following a comprehensive review, our strategy is fully focused on harnessing these health and ethical sourcing trends, as well as changing consumer preferences,” said co-founder and Olam CEO, Sunny Verghese.
As well as its US$3.5bn investment, Olam plans to drive margin improvement; generate additional revenue streams by offering differentiated products and services such as AtSource, the company’s digital traceability dashboard; and explore partnerships and investments in new engines for growth.
“By 2024, we will be a global food and agribusiness that delivers food, feed and fibre along with innovative solutions to support our customers’ growing need for sustainable and transparent supply chains with a clear focus on tomorrow’s consumer preferences,” the company said.