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NTU019

WILMAR INTERNATIONAL LIMITED — MANAGING Publication No: ABCC-2010/12-004

MULTIPLE STAKEHOLDERS IN A GLOBAL Print copy version: 20 Mar 2012
PALM OIL AGRIBUSINESS GROUP

Wee Beng Geok, Geraldine Chen and Ivy Buche

Established in 1991, Wilmar grew rapidly to become one of the largest palm oil companies in
Southeast Asia, with revenue and net profits of US$23.9 billion and US$1.88 billion respectively for
the year ended March 2009. It operated in the entire value chain of the industry, from plantations
to processing, merchandising, shipping and distribution.

As the third-largest listed plantation company in the world, it operated 300 processing plants and
had an extensive global distribution network. Its products sold in more than 50 countries, including
China and India.

As the global demand for palm oil grew, environmental groups were concerned about the impact
of palm oil industry on the social and natural environment, such as loss of forest ecosystems,
environmental damage, soil degradation, pollution, greenhouse gas emissions and climate change.
They were pressuring palm oil producers, including Wilmar, to take action to address these issues.

By late 2010, Wilmar had two strategic initiatives to drive future growth. It was poised to acquire
Sucrogen, Australia’s largest sugar company with operations in sugar milling and refining,
bioethanol production and generation of renewable electricity. It was also expanding into sub-
Saharan Africa, where many governments were keen to support the development of commercially
managed large-scale oil palm projects. However, as in Asia, palm oil producers and governments
could expect to encounter pressure from environmental groups with regard to possible adverse effects.

The challenge was to manage these initiatives and the environmentalists’ demands for more
sustainable operations.

Associate Professor Wee Beng Geok, Associate Professor Geraldine Chen and Ivy Buche prepared this case based on
public sources. The authors would like to acknowledge the research support provided by Rajeev Batra, MBA participant,
Nanyang Business School. As the case is not intended to illustrate either effective or ineffective practices or policies,
the information presented reflects the authors’ interpretation of events and serves merely to provide opportunities for
classroom discussions.

COPYRIGHT © 2012 Nanyang Technological University, Singapore. All rights reserved. No part of this publication may
be copied, stored, transmitted, altered, reproduced or distributed in any form or medium whatsoever without the written
consent of Nanyang Technological University.

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INTRODUCTION in 1991. Kuok started his career in 1973 as a

In July 2010, Wilmar International Limited (Wilmar),
one of the top listed agribusiness companies in
Asia, announced its intention to acquire Sucrogen,
a fully-owned subsidiary of CSR Limited.1 Sucrogen
was Australia’s leading producer of sugar and
renewable energy, accounting for about 40 percent
of the country’s annual raw sugar production. The
deal worth A$1.75 billion (comprising A$1,347 million
in equity and A$403 million of net debt excluding
minority interests) was expected to be completed by
the end of 2010, subject to approval by the Australian
regulators. According to the company:
Wilmar intends to build a significant sugar
business, utilising its proven integrated
agribusiness model to replicate its success
in other agri-commodities. The acquisition
of Sucrogen will jumpstart this strategy to
expand into sugar.2 This strategic acquisition
will form an integral part of Wilmar’s future
Indonesian sugar business, providing
downstream refining and distribution to
complement the company’s announced
plans to develop sugar plantations and
milling operations in Papua.3
With the Sucrogen acquisition, Wilmar, a leader in the
global palm oil4 agribusiness, signalled its strategic
thrust into the production, processing, distribution and
merchandising of another major food commodity – sugar,
and possibly, a step into the global biofuel industry.
commodities trader in his uncle’s grain, edible oil
and oilseed business. His uncle Robert Kuok owned
one of the largest and most diversified multinational
conglomerates in Asia, with interests in trading
agricultural commodities, food industries (packaging,
marketing and distribution), manufacturing (steel
drums, packaging materials, rubber products,
fertilizers and building materials), real estate,5 hotels,
shipping and transportation, leisure and recreation,6
and media.7
After earning a reputation as one of the best traders
in Kuok group,8 Kuok Khoon Hong left in early
1991 to set up WHPL with Martua Sitorus. From an
initial acquisition of 7,100 hectares (ha) in Western
Sumatra, Indonesia, for oil palm cultivation, they
expanded into oil palm crushing, refining and milling
operations. In 1996, the firm expanded the refinery
business into Malaysia through the acquisition of a
palm oil refinery plant and a fractionation plant. In
1995, they bought their first bulk vessel to transport
refined palm oil products to customers. Three years
later, the firm set up its first specialty fats plant,
marking its move into the production of higher value-
added downstream products.9
In mid-2006, WHPL successfully engineered a
reverse takeover of Ezyhealth Asia, a managed
healthcare services provider listed on the Singapore
Exchange. WHPL injected the company’s palm
oil agribusiness into the listed vehicle,10 which on
completion of the takeover was renamed Wilmar
International Limited.

One year later, Kuok group merged its massive palm

WILMAR – BEGINNINGS AND GROWTH PATH plantation, edible oils, grains and related businesses
(PPB Oil Palms Bhd, Kuok Oils & Grains, PGEO
Wilmar Holdings Private Limited (WHPL) was Group Sdn Bhd) with Wilmar, in a deal worth US$2.7
founded by Kuok Khoon Hong and Martua Sitorus billion.

1 CSR Limited was a leading diversified manufacturing company with 6,700 employees and operations in Australia, New Zealand
and Asia. It had two main business units – (1)Building Products, Aluminium and Property and (2)Sugar and Renewable Energy.
2 Wilmar. (2010, July 5). Wilmar International Limited acquires CSR Limited’s Sugar and Renewable Energy business, Sucrogen
Limited [Press release].
3 Wilmar. (2010, August 23). Wilmar International Limited acquires P T Jawamanisi Rafinas [Press release].
4 In this case study, palm oil refers to the final product after processing while oil palm refers to the plantation and the fruit.
5 Kerry Properties Limited in Hong Kong, Allgreen Properties Limited in Singapore and Pelangi Berhad and Taman Molek Development
in Malaysia were Kuok group’s principal property development enterprises.
6 Golden Communications (M) Sdn. Bhd. and Cathay Cinemas Sdn. Bhd. operated a chain of cinemas and modern cineplexes with
a total of 78 screens in major Malaysian cities.
7 The Kuok group. Retrieved September 20, 2010, from http://www.kuokgroupresidences.com/kuokgrp/thekuokgroup.htm
8 Sunita Sue Leng. (2006, December 18). As I Call It: The comeback Kuok. The Edge Singapore.
9 Wilmar – Milestones. Retrieved September 8, 2010, from http://www.wilmar-international.com/about_milestones2.htm
10 Ezyhealth funded the takeover valued at S$1.29 billion by selling 21.5 billion new shares to Wilmar for 6 cents each, 2 cents above
the stock’s closing price of 4 cents.
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This transformed Wilmar from an essentially
Indonesia-based palm oil producer into a leading
Asian agribusiness player. The merger added
approximately 360,000 ha of plantation land,
including over 120,000 ha of planted area. By
combining Wilmar and Kuok group’s China interests,
Wilmar became the largest oilseed crusher,
edible oils refiner, specialty fats and oleochemical
manufacturer and merchandiser of consumer pack
edible oil in China.
Wilmar also acquired the edible oils, oilseeds, grains
and related businesses of WHPL for US$1.6 billion,
including interests in these businesses held by
Archer Daniels Midland (ADM) Asia Pacific, through
the issue of new Wilmar shares.
The impact of the corporate restructuring was
reflected in Wilmar’s first post-merger earnings
results in November 2007, with revenue doubling to
almost US$10 billion and net profit rising to US$346.4
million (for the first nine months of 2007).11 Wilmar
was valued at S$34.4 billion at end-2007, up from
S$6.16 billion a year ago.12 For the financial year (FY)
ended March 2009, the company recorded revenue
of US$23.9 billion and a net profit of US$1.88
billion, consolidating its position as the largest global
processor and merchandiser of palm and lauric oils.
By July 2010, Wilmar was ranked the second largest
company by market capitalisation (US$28 billion) on the
Singapore Exchange.13 Headquartered in Singapore,
Wilmar’s operations spanned more than 20 countries,
with its primary focus on Indonesia, Malaysia, China,
India and Europe. With 300 processing plants and an
extensive distribution network, its products were sold
in more than 50 countries globally.
WILMAR INTERNATIONAL LIMITED - AN
INTEGRATED AGRIBUSINESS MODEL
Wilmar had a vertically integrated agribusiness model
with extensive downstream operations (see Figure
1). Its operations acrossed the entire value chain
gave the group significant bargaining power and cost
efficiencies. Wilmar consistently applied research
and development technologies – from improving
yields and enhancing palm oil extraction rates to
developing new, higher value-added downstream
products such as specialty fats. In 2010, its business
segments were:

Figure 1
Wilmar’s Integrated Agribusiness Model

Origination

Processing

Bulk Consumer Other products:

Oilseeds Specialty Oleo-
Edible Oils Pack Rice, Flour,
Meal Fats chemicals
Edible Oils Biodiesel

Merchandising, Shipping & Distribution

Customers

Source: Wilmar International Limited. Retrieved September 20, 2010, from http://www.wilmar-international.com/
business_index.htm

11 Presentation by Kuok Khoon Hong. (2007, November 14). Wilmar International Limited. Third quarter 2007 Results Briefing.
12 Yang, H. (2008, January 10). Palm oil firm taps into strong demand. The Straits Times, Singapore.
13 Nguyen, L. A. (2010, August 9). Wilmar’s Harvest. Forbes Asia.
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Table 1
Wilmar’s Land Bank (2006-2009)

Figures in hectares

December 2006 December 2007 December 2008 December 2009

Total Land Bank 210,000 500,000 570,000 573,000
Planted Area 66,367 203,683 223,258 235,799
Malaysia – 61,979 Malaysia – 62,453 Malaysia – 63,666
Indonesia – 141,704 Indonesia – 160,805 Indonesia –172,133

• Mature 55,318 129,729 141,407 159,464

• Immature 11,049
Smallholders 32,132 33,238 33,867 33,867

Source: Compiled from Wilmar Annual Reports.

Origination – Oil Palm Plantations Besides processing oil palm fruit, Wilmar’s refineries
(see Table 2) also processed soya bean, rapeseed,
About 85 percent of the global production of palm groundnut, sunflower seed, sesame seed, cotton
oil was accounted for by Indonesia and Malaysia.14 seed and grains (wheat and rice). China contributed
As the peak production period of the crop was from to the bulk of Wilmar’s earnings from this activity. By
years seven to 18 and the typical commercial lifespan end-2009, Wilmar had 39 oilseed crushing plants in
of an oil palm was 25 years, plantation companies India, Malaysia and Russia.
maintained land banks to ensure continued
production. Table 2
Wilmar Refineries (as at Dec 2009)
Based on total land area under cultivation, Wilmar
was the world’s third-largest listed oil palm plantation Country Number
company. At the end of 2009, it had a land bank
of 573,000 ha with a total planted area of more Indonesia 22
than 235,000 ha – 73 percent in Indonesia and the Malaysia 15
remaining 27 percent in Malaysia (see Table 1). These China 42
plantations supplied 42 percent15 of Wilmar’s crude
Europe 5
palm oil requirements (compared to 22 percent in
2006) with the balance sourced from third-party Vietnam 2
growers, including small landholders in Indonesia India (associate) 14
under a government programme.16 In 2006, Wilmar Africa (associate) 2
announced its intention to grow the total plantation
Ukraine (associate) 1
area through greenfield projects and acquisitions.
Russia (associate) 3
Milling and Refining Source: Wilmar Annual Report 2009.

Wilmar owned and operated vertically integrated Processing and Merchandising

processing plants, located in both origin and
destination markets in Indonesia, Malaysia, China, Wilmar was the world’s largest processor and
India and Europe. merchandiser of palm and lauric oils.17 These oils

14 Global area under oil palm cultivation was over 12 million ha – Indonesia accounted for 5.35 million ha while Malaysia had 4.7
million ha of oil palm cultivation areas.
15 Wilmar International Company Report. (2009, June 23). OCBC Investment Research.
16 The Plasma Scheme in Indonesia was a government initiative under which plantation companies helped in the development of
plantations for small landholders.
17 Lauric oils are found in palm kernel mainly from coconuts and oil palms. Oils rich in lauric acid and their derivatives have many
characteristics such as stability to oxidation, quick melting and ability to form stable emulsions and foams which has led to their
use in both food and chemical industries.
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 AsiaCase.com
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were processed into refined palm oil, specialty fats,
oleochemicals and biodiesel. In 2009, the group
processed 19.1 million metric tonnes (MT) of palm
and laurics.
The group also undertook the merchandising of
these processed oils, with the products sold in bulk,
in drums or in branded consumer packs (for edible
oils, flour and rice) to distributors, wholesalers,
feed millers, industrial users and retailers in China.
Besides finished products, the company exported
the by-products of processing – oilseed meal – to
Japan, Korea and Vietnam where these were used
as animal feed and fertilizer.
Logistics, Distribution and Sales
In China, Wilmar established a comprehensive
sales and distribution network spanning traditional
retail outlets, hypermarkets, supermarkets and
convenience stores. In 2009, this network included
over 130 plants located within large-scale integrated
facilities, 200 sales offices, 1,500 sales staff and
4,000 independent third-party distributors.18 On land,
logistics were facilitated by its large fleet of trucks
spanning its distribution network in China.
Through its merchandising operations as well as its
extensive distribution and sales network, Wilmar was
able to secure a substantial share of the consumer
markets in Indonesia, Vietnam, China and India for
its edible oil brands.
Through its shipping subsidiary, Raffles Shipping
Corporation, the group’s 25 vessels managed the
in-house shipping and logistics needs. (See Exhibit
1 – Wilmar’s Business Segments.)
Palm Oil Commodity Trading
Palm oil prices were subjected to short-term
fluctuations. The prices of substitute crops, such
as rapeseed, sunflower and soya bean, also had
a knock-on effect on palm oil. Wilmar was noted
for its ability to ride the highs and lows in trading
of the commodity. This dominant position in the
midstream business allowed Wilmar to better
manage commodity price risks and profit from crude
18 Wilmar Annual Report 2009, p. 7.
19 Ng, J. (2009, October 12). No stopping Wilmar’s expansion path. The Edge Malaysia.
20 Wilmar Annual Report 2008, p. 15.
21 Wilmar Annual Report 2009, p. 23.
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ABCC-2010/12-004
palm oil (CPO) price movements.19 By capturing
the entire value chain of the agricultural commodity
processing business, different segments could
offset each other’s gains or losses. For example, if
lower CPO prices created an impact at the plantation
stage, the loss might be recovered at the refining and
manufacturing stages.
CPO prices averaged US$683/tonne in 2009, 28
percent lower than the US$1,170/tonne average of
2008. In the first half of 2008, record high prices of
crude oil and other oils pushed the price of CPO to a
record high in March 2008.20 Strong import demand,
especially from China and India, plus increased use
of competing oils for biofuels, played key roles in
the price rally. Prices declined sharply during the
second half of 2008, only to rise again in the first
half of 2009 due to the global economic recovery,
higher crude oil prices and lower palm oil production
in Malaysia. Prices fell again from June 2009 as
total production increased and with the prospect of
a larger than expected soya bean harvest in South
America (see Figure 2).21 At the end of 2010, CPO
prices were projected to rise as heavy rainfall in
Indonesia was expected to hamper production as
well as new plantings.
FINANCIAL PERFORMANCE
Rising market demand for palm and lauric oils,
particularly from major consuming countries such as
China and India, and tight supply of other edible oils,
drove up both prices and demand from 2006 to 2009.
In FY2009, contribution to group profit before tax was
led by the Merchandising and Processing division at
64 percent, followed by Plantations and Consumer
products, respectively (see Table 3). That year,
Wilmar’s net profits rose by 23 percent to US$1.88
billion due to its hedging strategy, despite an 18
percent decline in revenue to US$23.9 billion as a
result of a sharp plunge in CPO prices. (See Exhibit
2 for 5-year Financial Summary, Exhibit 3A - Income
Statement and 3B for Balance Sheets for FY2009.)
China, Southeast Asia and India contributed more
than 80 percent of the revenue in 2009. (See Exhibit
4 – Revenue Breakdown by Geographical Segment.)
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Figure 2
Crude Palm Oil Price Movement

Source: Retrieved September 20, 2010, from http://siteresources.worldbank.org

MANAGEMENT People

After the restructuring exercises in 2006, Kuok
Khoon Hong took on the roles of both Chairman
and Chief Executive Officer of Wilmar. All decision-
making on merchandising activities throughout the
various regions was centralised at the headquarters
in Singapore.
Risk management formed an integral part of Wilmar’s
business strategy development, as the firm’s
activities exposed it to different types of markets,
operational and credit risks at each stage of the value
chain, including changes in commodity prices, foreign
currency exchange rates and interest rates. Wilmar’s
global market intelligence enabled the company to
enhance profitability through timely purchase of raw
materials and the sale of manufactured products.
Wilmar’s employee strength grew five times from
14,822 in 2003 to 80,000 in 2009 (see Table 4). In
2006, about a third of the company’s employees were
in the labour-intensive plantation segment. Employee
numbers jumped three-fold in 2007 with the injection
of Kuok Group’s palm plantations and processing
business into Wilmar. Training centres were set up
in the plantations to upgrade skills of agricultural
employees with employee training covering technicial
and supervisory skills; as well as quality control and
ISO certification training. In 2009, to build the global
talent pool to meet its growth needs, Wilmar launched
a Management Trainee Programme to recruit top
graduates from reputable universities worldwide.
A pioneer batch of 30 management trainees was
selected from an application pool of over 3,000
candidates.

Table 3
Contribution to Profit before Tax by Business Segment

Business segment 2007 2008 2009

(%) (%) (%)
Merchandising and Processing 56.6 67.8 64.0
• Palm and laurics 33.0) 35.4) 34.0)
• Oilseed and Grains 23.6) 32.4) 30.0)
Plantation and Oil Mills 20.6 17.9 19.0
Consumer Products 13.4 4.2 11.0
Others and Associates 9.4 10.1 6.0
Source: Compiled from Wilmar Annual Reports.

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Table 4
Wilmar Employee Strength

2003 2004 2005 2006 2007 2008 2009

Employees 14,822 14,880 20,123 23,313 67,000 70,000 80,000

Source: Compiled from Wilmar Annual Reports.

Total number of employees: 23,313 as at 31 Dec 2006

(a) By type of work (b) By country

Source: Wilmar Annual Report 2006, p. 33.

THE GLOBAL DEMAND FOR PALM OIL
(a) As a food product
By 2009, palm oil was the most produced vegetable
oil in the world at 45 million MT. (See Exhibit 5 –
World Production of Palm Oil.) Between 1980 and
2009, palm oil production increased 10 times, while
its major competitor, soya bean oil, increased by
2.7 times.22 Oil palm was also regarded as the most
productive oilseed in the world: it needed a smaller
land area to produce a target quantity of oil. One
hectare of oil palm could yield 3.6 tonnes of crude
oil whereas soya beans generated only 0.36 tonnes
per ha.23
About 80 percent of the global palm oil output
was consumed for food, ranging from cooking oil,
margarine, peanut butter to ice cream, cookies
and chocolates. Income growth was the main
demand driver. In 2008/09, per capita consumption
in developed countries such as the EU and US
was 59.3 kg and 51.7 kg, respectively.24 Per capita
consumption in developing countries such as India,
Pakistan and Nigeria was 13.4 kg, 19.9 kg and 12.5
kg, respectively. Demand in countries such as China,
India and Indonesia was expected to rise as living
standards improved.
Consumption of palm oil in developed countries
was expected to rise due to concerns over health
hazards associated with trans-fatty acids and
genetically modified organisms (GMO). Non-GMO
palm oil needed little or no hydrogenation for the
production of margarine, bakery shortenings and
confectionery fats. However, a 2009 study supported
by the US Agricultural Research Service questioned
whether palm oil was a good substitute for partially
hydrogenated fat.25

22 Teoh, C.H. (2010). Key Sustainability Issues in the Palm Oil Sector. A Discussion Paper for Multi-Stakeholders Consultations,
p. 7. (Commissioned by the World Bank Group).
23 Basiron, Y. (2007). European Journal of Lipid Science Technology, 109, 289–295.
24 Teoh, C.H. (2010). Key Sustainability Issues in the Palm Oil Sector. A Discussion Paper for Multi-Stakeholders Consultations,
p. 7. (Commissioned by the World Bank Group).
25 USDA/Agricultural Research Service. (2009, May 11). Palm Oil Not A Healthy Substitute For Trans Fats, Study Finds. ScienceDaily.
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(b) As a non-food consumer product
In terms of non-food uses, it was estimated that
palm oil was used in 50 percent of all non-food
packaged supermarket products including items
such as laundry detergent, toothpaste, soap bars,
shower cream and shampoo. Global brands such as
Flora, Kit Kat, Dove and Persil contained ingredients
derived from palm oil.
With rising affluence in countries such as China
and India, the market for edible oils was expected
to continue to shift from the consumption of loose
oils to quality branded consumer pack oils. Wilmar
aimed to focus on brand building, increased retail
penetration and product innovation to strengthen its
market presence. (See Exhibit 6 – Wilmar’s Edible
Oil Brands.)

(c) As a biofuel The bulk of Wilmar’s biodiesel capacity was pre-sold

With biofuels increasingly viewed as an alternative to buyers in Europe and the US.
to fossil fuel, and as an oilseed, the palm fruit also
could have potential as a source of renewal fuel. Competitors
Biodisel products derived from palm oil had already
been produced as a source of renewal transport Wilmar competed upstream with other palm oil
fuel. In 2006, Willmar set up three biodiesel plants producers, for land resources needed for cultivation
with a combined production capacity of 1.05 million and production of palm oil, as well as for third-party
MT annually inside its integrated manufacturing suppliers, mainly farmers with small holdings of
complex in Sumatra, Indonesia. In 2009, a new oil palm fruit. The palm oil producer-competitors
large-scale integrated manufacturing complex was were mainly plantation companies in Malaysia and
under construction in Gresik, Indonesia, to further Indonesia, such as Sime Darby, IOI Corp, KL Kepong
expand Wilmar’s production of refined palm oil, and Indo Food Agri (see Table 5).
fertilizer, oleochemicals and palm biodiesel. Wilmar’s
biodiesel production process was based on the In the downstream business, Wilmar’s rivals included
proven technology of its shareholder ADM, a world some of the world’s largest agricultural produce
leader in renewable transport fuel. processors such as Cargill, Bunge, Louis Dreyfus
and ADM (a Wilmar shareholder).
In June 2010, Wilmar announced a joint venture
with US-based Elevance Renewable Sciences Cargill: Founded in 1865, the largest privately held
to build a biorefinery in Indonesia to produce US-based MNC was an international producer and
biofuels and oleochemicals. Elevance’s biorefinery marketer of food, agricultural, financial and industrial
technology was capable of using multiple renewable products and services. The company employed
oil feedstocks, such as palm, mustard, soya bean, 131,000 people in 66 countries. In FY2010, Cargill
jatropha and waste oils.26 earned US$107.9 billion in revenues with net
earnings of US$2.6 billion.27
Customers
Table 5
The major buyers of processed palm oil products Leading Plantation Companies – Land Under Oil
were global multinational companies (MNC) such as Palm Cultivation
P&G, Cargill Inc., Nestle S.A., PT Arnott’s Indonesia,
Company Total Planted Area
Unilever Ltd, Nirma Ltd (India), VVF Ltd (India), China
(hectares)
Grains & Oils Group Corporation, Beijing Heyirong
Sime Darby 530,987
Cereals & Oils Co. Ltd, Beijing Orient-Huaken
Cereal & Oil Co. Ltd, China National Vegetable Oil Golden Agri-Resources 427,000
Corporation and the Savola Group (Saudi Arabia). Wilmar 235,799
Indofood 227,000
Wilmar produced consumer packs of palm and other KL Kepong 170,000
edible oils, rice, flour and grains, marketed under its IOI Corp 150,931
own brands. By 2009, Wilmar had over 100 brands United Plantations 45,494
across the world with leading market positions in Source: Compiled from 2009 Annual reports of respective
China, Indonesia, India, Bangladesh and Vietnam. companies.

26 Wilmar. (2010, June 28). Elevance Renewable Sciences announces joint venture with Wilmar International to build world scale
biochemical refinery [News Release].
27 Retrieved September 15, 2010, from http://www.cargill.com/company/glance/index.jsp
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Bunge Ltd: Founded in 1818, NYSE-listed Bunge
(2001) was a leading agribusiness and food
company with integrated operations stretching from
field to retail shelf, with over 25,000 employees in
30 countries.28 Key businesses included oilseed
origination and crushing for livestock meal and oil for
the food and biofuel industries; sugar cane crushing
for sugar and ethanol, wheat and corn milling, and
the production of bottled oils, margarines and other
food products.
Louis Dreyfus: Founded in 1851, France-based
Louis Dreyfus SAS was a privately-owned company
with a strong presence in North and South America,
Europe, Asia, the Middle East and Africa. Its
commodities business, LDCommodities, was a
world leader in the processing and merchandising
of agricultural products, with offices in more than 55
countries and approximately 34,000 employees. In
addition, LDCommodities was the second-largest
sugar cane crushing and renewable energy group
in the world.29
Archer Daniels Midland (ADM): Formed in 1923,
ADM was a Fortune 100 company listed on the
NYSE. Its primary businesses included oilseed
processing, corn processing and agricultural
services, as well as renewable fuels – ethanol and
biodiesel. Headquartered in Illinois, USA, ADM had
29,000 employees and operated more than 240
processing plants and 330 sourcing facilities in 60
countries. Net sales were US$62 billion for FY2010.30
GLOBAL EXPANSION
region an increasingly important market for tropical
oils. Wilmar established its regional headquarters
and its first refinery in Rotterdam, Netherlands,
followed by a second refinery in Brake, Germany,
in 2009.31
Palm oil was the most consumed oil in West Africa
and annual consumption was expected to grow,
given the low levels of per capita consumption. In
November 2007, Wilmar and Olam International,
a major commodities company in Singapore,
announced the formation of a 50:50 joint venture,
Nauvu Investments (Nauvu), to invest in integrated
palm oil natural rubber and sugar assets in Africa.
As its first major initiative, Nauvu announced three
investments:
• 25 percent stake in SIFCA group,32 the largest
palm oil and rubber company in West Africa and
second largest in the sugar sector in Cote d’Ivoire.
• Majority stake of 50.5 percent in SIFCA’s palm oil
refining business (Newco).
• 16.65 percent stake in SIFCA’s oil palm plantation
and crude palm oil producer (Palm-CI).
Wilmar’s goal was for Nauvu to achieve a leadership
position in geographical niches where there were
natural advantages to produce palm oil. Kuok Khoon
Hong explained:
We see this partnership as a very
promising opportunity to tap into the
economic growth of West Africa and its
growing importance as an agriculture
producing and processing region.33

From its operational base in Asia, in 2007, Wilmar
began expansion into Africa, Russia/Commonwealth
of Independent States (CIS)/Eastern Europe and
Western Europe. In Western Europe, demand for
trans-fat free palm oil was increasing rapidly due
to its competitive price and versatility for food and
non-food uses. In Russia, CIS and Eastern Europe,
growing demand due to rising prosperity made the
In 2009, the company invested US$10 million to set
up oil palm plantations in Uganda over a three-year
period. In June 2010, through its wholly-owned
subsidiary, Wilmar Africa Limited, the company
acquired 58.45 percent of Benso Oil Palm Plantation
Ltd (BOPP) from Unilever Ghana Limited. Listed on
the Ghana Stock Exchange, BOPP was involved in
the growing and processing of oil palm fruits.

28 Retrieved September 15, 2010, from http://www.bunge.com/about.html

29 Retrieved September 15, 2010, from http://www.ldcommodities.com/-About-us-.html
30 Retrieved September 20, 2010, from http://www.adm.com/en-US/company/Facts/Pages/default.aspx
31 Wilmar Annual Report 2009, p. 11
32 Established in Cote d’Ivoire in 1964, the SIFCA Group was one of Africa’s largest agro-industrial business groups. It was the largest
player in the palm oil and natural rubber industry in West Africa and the second largest in the sugar sector in Cote d’Ivoire. In the
palm oil business, SIFCA was a fully integrated player with activities spanning from plantations and CPO production to palm oil
refining and distribution of retail brands with leading market share. SIFCA was privately owned by Ivorian investors.
33 Wilmar. (2007, November 15). Wilmar and Olam to form a 50:50 joint venture, Nauvu investments, to invest in integrated palm
oil, natural rubber and sugar assets in Africa. [News Release].
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In a move towards acquiring downstream facilities
in Ghana, Wilmar also entered into an agreement
with Unilever Ghana to acquire the ‘Frytol’ cooking
oil brand and its oil processing activities in Ghana.34
Although African states had huge tracts of land
suitable for palm oil cultivation, the productivity
of existing methods of palm oil cultivation and
production remained low.35 These countries also
faced pressure from environmental groups due to
the clearing of rainforests to grow oil palm trees.
ENVIRONMENTAL CONCERNS ABOUT PALM
OIL PRODUCTION
Environmentalists were increasingly voicing demands
that agribusiness companies take action to reduce
the impact of palm oil cultivation, production and
processing on the social and natural environment in
Indonesia and Malaysia. Their key concerns were the
negative impacts on both the climate and the natural
ecosystems as a result of the clearing of rainforests
and peatland for oil palm cultivation.
Loss of Forest Ecosystems
According to global environment group, Greenpeace,
Indonesia had the fastest deforestation rate of any
single country in the world.36 Cultivated land under
palm oil grew from less than 2,000 square kilometres
to more than 30,000 square kilometres between 1967
and 2000.37 In 2007, it was estimated that Indonesia
had lost 72 percent of its large intact ancient forest
areas and a United Nations Environment Programme
(UNEP) report stated that most of the forests in
Indonesia could be destroyed by 2022.38
Non-Governmental Organisations (NGOs) saw the
expansion of palm oil cultivation through the clearing
of rainforests as threatening the region’s biodiversity
with major loss of wild life such as elephants, tigers,
rhinoceroses and orangutans that lived in these forests.
Environmental Damage, Soil Degradation and
Pollution
Production of crude palm oil generated tonnes of
solid oil waste, palm fibre and shells as well as
palm oil mill effluents. For every metric tonne of
palm oil produced, 2.5 metric tonnes of effluents
were generated from processing the palm oil in
mills. 39 Much of the waste was often dumped
directly into water bodies, with a negative impact on
aquatic ecosystems.40 Furthermore, after a 25-year
harvest, oil palm lands were left essentially devoid
of vegetation other than weedy grasses that served
as tinder for wildfires.41
Greenhouse Gas Emissions and Climate Change
Greenpeace published a report How the palm oil
industry is cooking the climate which highlighted
how Indonesia’s peatland carbon stocks were
being depleted through development of palm oil.42
According to a 2007 World Bank report, Indonesia
was the third-largest greenhouse gas polluter due
to the destruction of its rainforest and peatlands.43
There were concerns that the drainage of Indonesia’s
stock of peatland, estimated to be 12 percent of
its total land area, could contribute to enormous
greenhouse gas (GHG) emissions and air quality
problems.44
Greenpeace also contended that the liberal use
of petroleum-based pesticides, herbicides, and
fertilizers used in most palm oil cultivation not only
polluted the environment – as the chemicals were
likely to enter waterways and groundwater – but also
contributed to greenhouse gas emissions.

34 Wong, C. (2010, June 1). Wilmar expands operations in Africa. OCBC Investment Research.
35 Although Nigeria was the third-largest palm oil producing country in the world, it was a net importer of palm oil, as it did not produce
enough to meet domestic demand.
36 Indonesia deforestation fastest in the world: Greenpeace (2007, May 3). Reuters.
37 The other oil spill. (2010, June 24). The Economist.
38 Last Stand of the Orangutan: State of emergency. (2007, February). UNEP Report.
39 Palm oil and soil and water pollution. Retrieved September 20, 2010, from http://wwf.panda.org/what_we_do/footprint/agriculture/
palm_oil/environmental_impacts/soil_water_pollution/
40 In 2003, the Jakarta Post reported that palm oil waste dumped by Indonesian company, PT London Sumatera, killed thousands
of fish and contaminated the Itam River. In another reported incident in that year, thousands of fish died in the Kuning River in
Sumatra due to palm oil effluent.
41 Shahid Yusuf and Kaoru Nabeshima. (2009). Tiger Economies Under Threat. World Bank.
42 How the palm oil industry is cooking the climate. (2007). Greenpeace. Retrieved September 15, 2010, from http://www.greenpeace.
org/international/en/publications/reports/cooking-the-climate-full/
43 Indonesia and Climate Change. (2007, March). Working Paper on Current Status and Policies. DFID and World Bank.
44 Delft Hydraulics (Hooijer et al. 2006), cited in Teoh (2010), p. 18.
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Social Issues through the establishment and implementation of

Deforestation also had adverse social effects on
local communities, particularly poor rural people,
dependent on services and products provided by
the forest ecosystem. The expansion of oil palm
plantations acreage increased the incidence of land
conflict among smallholders, local communities and
indigenous peoples, plantation companies and the
government. In Indonesia, the NGO Sawit Watch
documented over 500 land-related conflicts, while
WALHI45 recorded 200 cases of conflict in West
Kalimantan. In Malaysia, there were reports of more
than 150 land disputes in litigation, out of which about
40 cases were related to oil palm plantations.46
TARGETING THE PALM OIL SUPPLY CHAIN
Environmental NGOs targeted consumer goods
MNCs such as Unilever and Nestle as a way to
influence palm oil producers. The prospect of
consumer boycotts and negative publicity forced the
MNCs to examine their supply chains.
The Friends of the Earth’s 2004 report ‘Rainforest
Destruction in your Shopping Basket’ claimed that
one in three products on UK supermarket shelves
was directly contributing to the destruction of the
world’s rainforests.47 Demand for top brand foods
such as Walkers’ crisps, Kellogg’s cereals, Heinz’s
soups and some Cadbury Schweppes’ chocolate
fuelled the use of palm oil (see Figure 3). The report
also alleged that UK companies were involved in the
palm oil businesses as investors, processors and
retailers. WWF published an annual scorecard of
palm oil policies of 59 European companies.48
Setting up the RoundTable for Sustainable Palm
Oil (RSPO)
In April 2004, the RSPO was set up to promote the
growth and use of sustainable oil palm products
credible global standards. The WWF and Unilever
were two founding members. In 2010, RSPO had
more than 360 members consisting of growers,
processors, manufacturers, retailers, banks and
NGOs, representing more than 40 percent of
global palm oil production. In November 2007, the
group agreed on a set of principles and criteria
for Sustainable Palm Oil Production.49 Certified
Sustainable Palm Oil (CSPO) was available for sale
in Europe from December 2007.
Producer members were required to commit to
certifying a portion of their crops to meet these
standards. However, of a total consumption of 45
million MT of palm oil, in 2009, only 1.6 million MT
of CSPO was available, out of which only 380,000
tonnes had been sold between 2008 and 2010.50 As
CSPO palm oil was physically identical to non-CSPO
palm oil, it was not possible to charge a premium for
CSPO although the cost of production was higher.51
Many of the largest producers in Indonesia who
supplied directly to consumer goods MNCs, were
also traders – the palm oil they sold could come
from third parties. Even if their own plantations met
RSPO criteria, this could not be said of all palm
oil purchased from them. As a result, Unilever
acknowledged that it was unable to identify 20
percent of its palm oil supplies.
We found that, in one way or another,
all of our suppliers have technically
infringed either RSPO standards or
Indonesian law. It isn’t as easy as saying
just pick the best, we can’t. We are not in
a position to do that. The industry almost
certainly has to go through fundamental
change.52
Gavin Neath, Senior Vice President
Communications and Sustainability, Unilever

45 WALHI (Wahana Lingkungan Hidup Indonesia, or The Indonesian Forum for Environment) is an Indonesian environmental non-
governmental organisation which is part of the Friends of the Earth network
46 Teoh, C.H. (2010). Key Sustainability Issues in the Palm Oil Sector. A Discussion Paper for Multi-Stakeholders Consultations,
p. 22. (Commissioned by the World Bank Group).
47 Wakker. E (2004). Greasy Palms: The social and ecological impacts of large scale oil palm development in Southeast Asia. Friends
of the Earth.
48 The other oil spill. (2010, June 24). The Economist.
49 Retrieved September 15, 2010, from http://www.rspo.org/sites/default/files/RSPO%20Principles%20&%20Criteria.pdf
50 The Development of the Global Market for Sustainably Produced Oils and Fats led by The Netherlands and the EU – Reality and
Rhetoric. (2010, January 21). Presentation by Jeremy Goon, Group Head for CSR, Wimar International.
51 ibid.
52 The other oil spill. (2010, June 24). The Economist.
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Figure 3
Palm Oil Production process

Source: Wakker. E (2004). Greasy Palms: The social and ecological impacts of large scale oil palm development in
Southeast Asia, p. 8. Friends of the Earth.

Despite this, in 2008, Unilever pledged that 100
percent of its palm oil would be certified sustainable
by 2015. For the palm oil used in Europe, Unilever
pledged to have fully traceable supply chains in place
by 2012. Unilever’s stand was followed by more than
20 big companies, including Nestle, P&G and Mars.
WILMAR AND SUSTAINABLE PALM OIL
In light of such environmental activism, Wilmar took
action to demonstrate its commitment to sustainable
operations:
their supply base of four plantations by December
2008.
• Completed audits for two mills and five estates in
East Malaysia, which were expected to be certified
in 2010.
• Completed the final RSPO assessments for six
plantations and three mills in Sabah and Central
Kalimantan.
• Aimed to achieve certification for all of Wilmar’s
operations over the next 4-5 years.54
Supply Chain Certification: Wilmar took steps
towards increased traceability in its supply chain.

RSPO Initiatives: Wilmar became a member of the
RSPO in 2005 and was a participant in a two-year
trial implementation project to field-test and review
a set of principles and criteria for sustainable palm
oil production.53 It took the following steps:
• Adopted the RSPO Principles and Criteria in 2007.
• Received RSPO certification for three mills and
• In 2009, interim approval was received for the
RSPO Supply Chain Certification for four mills and
refineries in Sabah, East Malaysia and a biodiesel
facility in Riau, Indonesia.
• Use of the ‘Mass Balance Supply Chain Approach’
(approved by RSPO) to track, record and report
the amount of palm oil coming from certified
sustainably managed plantations.55

53 Wilmar Annual Report 2007, p. 39.

54 Wilmar Annual Report 2009, p. 34.
55 ibid.
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Greenhouse Gas Emission Mitigation and Energy
Efficiency: Wilmar commissioned an independent
carbon footprint study in 2008, to assess its
operations in origination, processing and distribution
of palm oil, soya bean and other related products
across 50 oil palm plantations and 80 processing
facilities. The aim was to provide baseline carbon
emissions data and help develop projects to deal
with the issue of emission mitigation.56
Between 2007 and 2009, Wilmar registered six
‘Clean Development Mechanism’ projects with the
UN Framework Convention on Climate Change,
aimed at reducing its carbon footprint. The majority
of projects focused on generating ‘carbon-neutral’
energy for palm milling operations by recycling and
reusing biomass waste products and methane gas
capture. In 2009, Wilmar also embarked on nine
‘Voluntary Carbon Standards’ projects in China and
Vietnam for rice mill operations.
Environment: In 2007, Wilmar became a signatory to
the UN Global Compact,57 the world’s largest voluntary
corporate citizenship initiative, whose principles
spanned human rights, labour, environment
and anti-corruption. In 2009, Wilmar joined the UN
CEO Water Mandate, which aimed to improve the
use and management of water resources. Wilmar
also implemented the practice of conducting high
conservation value forest (HCVF) 58 assessments before
commencing any new plantation development activities.
Reporting Initiatives: Wilmar participated in several
third-party reporting initiatives to enhance its
corporate governance standards. In 2008, Wilmar
started participating in the Carbon Disclosure Project
(CDP), along with over 2,000 of the world’s largest
companies, to promote awareness of business
implications of climate change. That same year,
Wilmar participated in an international project
by Global Reporting Initiative (GRI) to develop
indicators for a reporting framework on sustainability,
specifically for the food processing sector. Wilmar
also began working on its inaugural sustainability
report which was expected to be available by the
third quarter of 2010.
PALM OIL AND ECONOMIC DEVELOPMENT
Oil palm-based agricultural development was viewed
as a major driver of development by policy makers in
developing countries. This was a result of the impact
of the palm oil industry in Indonesia and Malaysia on
improving employment and economic growth.
In 2007, the export value of palm oil and its
derivatives was US$13.8 billion in Malaysia and
US$7.9 billion in Indonesia.59 The labour-intensive
nature of certain processes was a key source of
employment. In Malaysia, employment in the oil palm
sector was 570,000 in 2009, with another estimated
290,000 in downstream operations. In Indonesia, it
was estimated that 3 million people were employed
by the palm oil industry.60
Smallholders played a significant role. In 2008,
about 30 percent of the total oil palm planted area
in Malaysia was by organised smallholders linked
directly to the large plantations under special
schemes. Another 11 percent was managed by
independent smallholders. In Indonesia, it was
estimated that the special scheme smallholders,
together with the independent smallholders,
collectively accounted for 43.8 percent of the total
oil palm planted area in 2009.
From 1965 to 2010, the World Bank committed nearly
US$1 billion to over 35 projects in the palm oil sector
in 12 countries in Africa, Latin America and Southeast
Asia. About 50 percent of this commitment went to
financing a series of projects in Indonesia.61 The
International Finance Corporation (IFC), a member
of the World Bank, invested in plantations, palm oil
refining (Indonesia and Ukraine) and palm oil trading
(Indonesia and Singapore). These investments
resulted in criticism of the IFC for insufficient attention
to supply chain issues with regard to sustainability,
which prompted a re-examination of its investment
strategy for the palm oil sector and a suspension of
lending to palm oil companies.62

56 Wilmar Annual Report 2008, p. 39.

57 Established in July 2000, more than 6,700 participants including over 5,200 businesses around the world endorsed the Compact.
58 HCVF is defined as forests of outstanding and critical importance due to their high environmental, socio-economic, cultural, bio-
diversity or landscape value (as defined by the Forest Stewardship Council).
59 Figures were published by World Bank in 2009, cited in Teoh (2010), p. 8.
60 Roberts, J. M. (2010, June 21) World Bank’s Palm Oil Strategy Should Focus on Economic Freedom. Backgrounder, 2426.
61 Teoh, C.H. (2010). Key Sustainability Issues in the Palm Oil Sector. A Discussion Paper for Multi-Stakeholders Consultations,
pp. 11-14.
62 ibid.
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To some, the palm oil industry offered poor countries
in Africa a similar chance to raise their standard of
living.63 In Sub-Saharan Africa, with 65 percent of
the workforce dedicated to the agriculture sector,
bringing in high yield agriculture was essential to
raising the sector’s productivity. With a growing
population and ample land, oil palm production was
regarded by some as an effective means for ensuring
food security and poverty reduction. The campaign
by European NGOs to restrict palm oil production
worldwide and limit access to European markets
was thus seen as blocking future job creation,
development of higher living standards, and poverty
reduction in the very countries that the NGOs claimed
to be protecting.64
Given this perspective, the defining issues of
development in Africa’s agricultural sector was
perceived not as environmental sustainability but
as poor infrastructure, access to finance, property
rights and low crop yield.65
Prudence must be shown in the
management of all living species and
natural resources, in accordance with the
precepts of sustainable development.
The current unsustainable patterns of
production and consumption must be
changed in the interest of our future
welfare and that of our descendants.68
Others argued that alignment between poverty
eradication and environmental sustainability
was necessary, simply because the effects of
unsustainable practices were more likely to have a
disproportionate impact on the well-being of people in
less developed countries, which had lower capacity
to cope with its effects.69 The challenge then was to
craft policies that would facilitate large-scale poverty
reduction while managing the environmental impact
of economic development, especially as the effects
of climate and ecosystem changes would only be
felt over the longer term.

Both poverty alleviation and environmental

sustainability were at the heart of the Millennium
Development Goals (MDG) established by the UN
in 2002.66 In the 2010 review of progress towards
the MDG, Ban Ki-moon, the Secretary-General of
UN, stated:
Eradicating extreme poverty continues
to be one of the main challenges of
our time, and is a major concern of
the international community. Ending
this scourge will require the combined
efforts of all, governments, civil society
organisations and the private sector,
in the context of a stronger and
more effective global partnership for
development.67
However in eradicating poverty, the UN MDG also
reiterated that:
WILMAR’S STRATEGIC INITIATIVES
Africa – New Land for Cultivation
In 2010, available land for oil palm cultivation in Malaysia
continued to shrink.70 In Indonesia, the government’s
plans to impose a two-year moratorium on new permits
to clear natural forest for oil palm cultivation meant that
Southeast Asia’s major oil palm producers were being
pushed to look further afield for land.
In a bid to increase supply sources, Wilmar turned
its attention to sub-Saharan Africa, in particular,
Cote d’Ivoire, Uganda and Ghana. In 2009, it owned
43,000 ha under joint ventures and managed 125,000
ha of oil palm plantations on behalf of smallholders.
Many African governments were keen to develop oil
palm-based large scale agricultural projects, as these
were regarded as supporting their poverty reduction
programmes.

63 Africa Case Study: Palm Oil and Economic Development in Nigeria and Ghana; Recommendations for the World Bank’s 2010
Palm Oil Strategy. (2010, August). Initiative for Public Policy Analysis.
64 Roberts, J. M. (2010, June 21). World Bank’s Palm Oil Strategy Should Focus on Economic Freedom. Backgrounder, 2426.
65 Africa Case Study: Palm Oil and Economic Development in Nigeria and Ghana; Recommendations for the World Bank’s 2010
Palm Oil Strategy. (2010, August). Initiative for Public Policy Analysis.
66 United Nations Millenium Development Goals. Retrieved September 10, 2010, from http://www.un.org/millenniumgoals/bkgd.shtml
67 ibid.
68 United Nations Millennium Declaration. (2000, September 18). Retrieved September 10, 2010, from http://www.un.org/millennium/
declaration/ares552e.pdf
69 Chua, G. (2010, September 5). You can’t separate climate from economy. The Sunday Times.
70 During the 1990s decade, availability of suitable land for palm oil plantations in Peninsular Malaysia gradually diminished. New
areas for expansion were likely to be in less ideal environments such as hilly to steep terrain or deep peat soils. This resulted in
rapid expansion of oil palm plantation in Sabah and Sarawak. Sarawak had a land area of about 12.4 million ha of which 3.9 million
ha was suitable for oil palm cultivation. By end 2008, a total of 744,372 ha of land had been planted with oil palms in Sarawak.
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However, as in Asia, palm oil producers and
governments could expect to encounter pressure
from environmental groups with regard to possible
adverse effects of land clearing for oil palm
cultivation.
Diversifying into Sugar – Wilmar’s Long-Term
Challenge
In mid-2010, oil palm producers were facing pressure
on their margins. Wilmar’s profits in April-June 2010
fell by 15 percent, despite an increase in revenue of
18 percent,71 as higher CPO prices and uncompetitive
pricing of palm oil in comparison to other edible oils
caused margins in palm oil merchandising and
processing businesses to fall.
Diversification into the sugar value chain could
enable Wilmar to sustain the pace of growth it had
achieved in the past decade. Wilmar expected
demand to increase substantially in the future due
to rising affluence and a corresponding increase in
per capita consumption in countries where Wilmar
had leading market positions.
Australia’s Sucrogen
fertilizers as by-products of sugar milling and ethanol
distillation processes.
In FY2010, Sucrogen reported revenue of A$1.7
billion with a net profit of A$79.3 million. Analysts
expected Sucrogen’s ongoing operations to boost
Wilmar’s earnings by 3-5 percent in the first year of
consolidation and sugar earnings contribution to the
group to double in 10 years’ time.72 (See Exhibit 7A
– Overview of Sucrogen Financials and 7B – CSR‘s
Breakdown of Earnings Before Interest and Tax).
Kuok Khoon Hong believed that Sucrogen was a
good strategic fit with Wilmar’s existing portfolio.
Wilmar saw high potential for growth in Indonesia and
other Asian markets, based on Sucrogen’s proven
expertise across the entire sugar value chain.73
Wilmar followed up with two other acquisitions
in August 2010: the sugar refining company PT
Jawamanis Rafinasi, which owned and operated one
of the leading sugar refineries in Indonesia, as well
as the sugar trading business of Singapore-based
Windsor & Brook Trading Pte Ltd. At the same time,
Wilmar secured a 200,000 ha concession to develop
sugar plantations in Indonesia’s Papua island.

In 2010, Queensland-based Sucrogen was the largest
raw sugar producer in Australia with 142,000 ha of
cultivated land and seven mills, producing 1.2 million
MT of raw sugar per year. It was also the second
largest exporter of raw sugar in the world. It was
the largest sugar refiner in Australia and New Zealand
while it ranked fifth worldwide. Food-grade refined
sugar such as white sugar, brown sugar, caster
sugar and syrups were distributed under flagship
consumer brands CSR™(Australia) and Chelsea®
(New Zealand).
In addition, Sucrogen was Australia’s second largest
producer of sugar-based ethanol from biomass using
waste by-product of cane sugar production. It was
Australia’s largest renewable energy generator from
biomass, generating electricity from cogeneration
operations at the sugar mills (with annual capacity
of 171 megawatts). The company also produced
Sucrogen’s sustainable agribusiness practices
Sucrogen was involved in several major initiatives
to reduce the effects of raw sugar production and
refining activities on the environment. Specific
measures were in place on water conservation,
which was especially important given the high
water requirements of the sugar crop as well as
in refining and ethanol production.74 It had targets
to reduce absolute emissions and established the
Carbon Working Group across its business units to
monitor the setup of systems and processes to move
the group to a low carbon environment. In 2009,
Sucrogen generated enough renewable electricity
which together with a small amount of external fuel,
was sufficient to operate its seven sugar mills. It
reduced packaging waste by moving to recyclable
plastics and minimising packaging materials, and
in so doing, reduced material going to landfill by 80
percent.75

71 Wilmar. (2010, August 13). Wilmar posts 15 percent decline in earnings to US$344 million for 2Q 2010 [Press release].
72 Aw, J. S. (2010, July 27). Wilmar’s Sweet Tooth. Retrieved September 10, 2010, from http://www.stockmarketsreview.com
73 Wilmar. (2010, July 5). Wilmar International Limited acquires CSR Limited’s Sugar and Renewable Energy business, Sucrogen
Limited. [Press release].
74 As a water-intensive crop, sugar cane remained in the soil for 12 months of the year using approximately one million litres of water
to produce 12.5 tonnes of commercial cane. Even where the cane was fed by rainfall, the crop affected river flow by intercepting
run-off from catchments and drawing heavily on underground water supplies.
75 Retrieved January 5, 2011, from http://www.csr.com.au/she/environment/Pages/socialresponsiblity3b24.aspx
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 Page 16
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THE NEXT DECADE
On 22 December 2010, the acquisition of Sucrogen
by Wilmar Australia Private Limited was completed.
With that, Wilmar wrapped up a decade in which
the company grew to become one of the major
agribusiness groups in the world.
At the start of the second decade of 21st century,
Wilmar was poised to move quickly in two new
continents: Africa – a new raw material supply base
as well as huge market potential for palm oil products;
and Australia – its seeding base for a new product
line, the global sugar business.
Increasingly, governments especially in developing
countries were instituting policies to regulate the
distribution and prices of basic food products such
as cooking oil and sugar. For example, in November
2010, the Chinese central government announced
remedial measures including price controls and
relief to poor households to cope with mounting
food prices. Under the proposed policies, China
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would provide subsidies to farmers and release
state reserves of grains, edible oils and sugar on
the market, as necessary, to guarantee adequate
supplies.
With more pressure on food supplies likely in the
future given a fast-growing world population, it was
possible that governments would play a more active
role in regulating prices of essential foods, including
cooking oil in the coming decade.
The coming decade would see more demands
and actions by environmental groups concerned
about global warming and climate change. As
Wilmar’s profile in the global agribusiness grew, the
environmentalists would likely focus more attention
on the group’s operations and activities throughout
the world. How should Wilmar manage its growth
strategies in the light of possible demands and
actions taken by environmental groups for more
sustainable operations in agribusinesses throughout
the world?
 AsiaCase.com Page 17
the Asian Business Case Centre
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EXHIBIT 1

WILMAR – BUSINESS SEGMENTS

Wilmar International Ltd

Merchandising and Processing Other

Plantation Consumer Businesses
Products
Indonesia Fertilizers
Sumatra, West Indonesia
20 percent market One of the largest
Kalimantan fertilizer suppliers
and Central Palm and share, second
Oilseed and in Indonesia.
Kalimantan Laurics largest producer of
Grains
Malaysia consumer pack oils.
Sabah and Largest global India Shipping
China
Sarawak processor and 20 percent market Through its
Largest oilseed
Uganda (JV) merchandiser of share through JV subsidiary,
crusher and
6,000 ha palm and lauric Adani Wilmar Ltd. Raffles Shipping
leading wheat
West Africa (JV) oils. Bangladesh Corporation, a
and rice miller.
37,000 ha 30 percent market fleet of 25 vessels
share. (with a combined
Vietnam tonnage of
50 percent market 857,000 MT)
share, largest catered primarily
producer of to in-house
consumer pack oils. needs.
China

Source: Created by authors.

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EXHIBIT 2

WILMAR FIVE-YEAR FINANCIAL SUMMARY (2005-2009)

Source: Wilmar International Annual Report 2009, p. 14.

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 AsiaCase.com Page 19
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EXHIBIT 3A

WILMAR INTERNATIONAL INCOME STATEMENT

For Financial Year ended 31 December 2009

Source: Wilmar Annual Report 2009, p. 76.

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EXHIBIT 3B

WILMAR INTERNATIONAL BALANCE SHEETS (AS AT 31 DECEMBER 2009)

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EXHIBIT 3B
(CONTINUED)

WILMAR INTERNATIONAL BALANCE SHEETS (AS AT 31 DECEMBER 2009)

Source: Wilmar Annual Report 2009, pp. 78-79.

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EXHIBIT 4

REVENUE BREAKDOWN BY GEOGRAPHICAL SEGMENT

US$
2005 % 2006 % 2007 % 2008 % 2009 %
China 2,300,083 49.4 4,177,200 59.5 8,481,523 51.5 14,325,761 49.2 13,197,166 55.3
India 296,938 6.4 297,980 4.2 793,601 4.8 1,662,287 5.7 1,212,987 5.1
South 1,056,309 22.7 1,358,801 19.4 3,825,593 23.2 7,001,314 24.0 5,492,824 23.0
east
Asia
Europe - - 379,420 5.4 1,379,065 8.4 2,537,367 8.7 1,638,724 6.9
Others 998,230 21.5 802,600 11.5 1,986,369 12.1 3,618,456 12.4 2,343,443 9.7
Total 4,651,560 100.0 7,016,001 100.0 16,466,151 100.0 29,145,185 100.0 23,885,144 100.0

Source: Compiled from Wilmar Annual Reports.

EXHIBIT 5

WORLD PRODUCTION OF PALM OIL (1980-2009)

‘000 tonnes
Country 1980 1990 2000 2009
Indonesia 691 2,413 6,900 20,900
Malaysia 2,576 6,095 10,800 17,566
Nigeria 433 580 740 870
Colombia 74 226 516 794
Cote d’Ivoire 182 270 290 N.A
Thailand 13 232 510 1,310
Ecuador 37 120 215 436
Papua New Guinea 35 145 281 470
Others 768 786 1,699 3,236
Total 4,809 10,867 21,951 45,582

Source: Oil World (various years).

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 AsiaCase.com Page 23
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EXHIBIT 6

WILMAR’S EDIBLE OIL BRANDS

China Indonesia Vietnam

Arowana “䠁嗉劬” Complete range Sania Palm oil Neptune Palm olein
of edible oils blended with
including blended soya bean oil
Koufu “ਓ⾿” oils, soya bean, Fortune Palm oil Simply Soya bean oil,
rapeseed, rapeseed oil,
corn, sunflower sunflower oil,
seed, sesame, rice bran oil
groundnut and
camellia
Orchid “㜑လ㣡” Groundnut oil India Meizan Palm olein
blended with
soya bean oil,
soya bean oil
Gold Ingots “‫ݳ‬ᇍ” Soya bean oil Fortune Assortment of Cai Lan Palm olein
edible oils (soya, blended with
sunflower seed, soya bean oil
cotton seed,
mustard seed,
groundnut, palm,
coconut)
Golden Carp “勔劬” Rapeseed oil Jubilee Shortening
Huaqi “㣡ᰇ” Assortment of Raag Soya bean oil and
edible oils vanaspati
Baihehua “Ⲯ઼㣡” Assortment of Alpha Palm oil and
edible oils vanaspati

Xiangmanyuan Assortment of Aadhar Soya bean and

“俉┑ഝ” edible oils sunflower oil

Source: Retrieved September 10, 2010, from http://www.wilmar-international.com/business_consumerpack.htm

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EXHIBIT 7A

OVERVIEW OF SUCROGEN FINANCIALS

Figures are in A$
Year Ending 31 March 2009 2010 Business Unit EBIT Contribution
Revenue 1,410.7 1,737.30 Year Ending 31 March 2009 2010
EBIT 83.7 135.7 Cane Products 35.2 85.6
EBITDA 140.1 196.9 Sweeteners 44.7 53.2
EBITDA Margin 9.9% 11.3% Bioethanol 11.0 4.0
Profit before Tax 81.9 120.7 Corporate (7.3) (7.1)
Net Profit 1
53.9 79.3 Total EBIT 83.7 135.7
Total Assets 1,425.4 1,549.4 Source: Sucrogen Management Accounts
Total Liabilities 788.2 773.9
Net Asset Value 562.7 696.5
Net Tangible Assets 454.0 580.8
1
Note: Net of minority interests

Source: Presentation by Wilmar. (2010, July 6). Sucrogen Overview. Retrieved October 1, 2010, from http://www.
wilmarinternational.com/investor/20100706%20-%20Wilmar_Sucrogen_Analyst_Presentation_Part2.pdf

EXHIBIT 7B

CSR LIMITED – BREAKDOWN OF EARNINGS BEFORE INTEREST AND TAX

(FINANCIAL YEAR ENDING 31 MARCH 2010)

CSR Earnings Before Interest and Tax

A$364.1 million

Source: CSR Annual Report, p. 2.

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