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3 Things You Should Know About Wilmar International

PalmTrees Founded in 1991, Wilmar International (SGX: F34) is Asia’s leading agribusiness group.

Wilmar’s business covers everything from crop production to merchandising – what’s more it’s the world’s largest processor and merchandiser of palm and lauric oils, with sizeable plantations in Indonesia, Malaysia and parts of Africa.

Wilmar is amongst the top 10 raw sugar producers in the world, and owns CSR and Chelsea, leading sugar and sweetener brands in Australia and New Zealand.

It produces fertiliser and biodiesel, has 450 manufacturing plants throughout Asia and is one of the largest listed companies by market capitalisation on the Singapore Stock Exchange.

But did you know…

  1. Cheap and durable palm oil, which is produced from the fruits of the oil palm, is the world’s most-used edible vegetable oil. Its uses are diverse – not only could you find it in your margarine and ice cream, it may also be lurking in your shampoo, washing powder, plus it’s commonly used for bio-fuels. Growing demand has made it a lucrative farming option.
  2. In 1884, palm and olive oils were used by Lever Brothers to make Sunlight  – the world’s first, packaged laundry soap.
  3. Wilmar International was ranked 223rd in size in the 2012 FORTUNE Global 500 largest corporations in the world, and took first place in the 2012 FORTUNE magazine’s World’s Most Admired Companies in the Food Production Industry.

Joint ventures

Wilmar’s subsidiary, Newbloom Pte Ltd has recently announced it will buy a 53.7% stake in Noble Plantations Pte Ltd, which is owned by natural resource management company Noble Group (SGX: N21) to produce and sell palm oil and its by-products in the Papua region of Indonesia.

Wilmar has also gone into partnership with another agribusiness giant, Archer Daniels Midland (NYSE: ADM) to sell and market vegetable oils and fat in Europe.

Palm oil controversy

Of course, palm oil production is not without its problems and producers are facing criticism for often not taking environmental and social best practices into account. Palm oil cultivation can devastate rainforests, destroy habitats of endangered species, such as the Sumatran orang-utan and forest conversion can contribute hugely to climate change.

Haze

Closer to home, the record levels of thick smoke or ‘haze’ that recently polluted Singapore and Malaysia are largely attributed to errant companies using the ‘slash and burn’ technique (cutting and burning forests or woodlands) to clear land in nearby Sumatra to plant, amongst other things, oil palm.  While the technique allows fast land clearance, the fires can quickly rage out of control, particularly when carbon-rich peat catches hold.

ROSP

While Wilmar says it abides by its commitment to the Roundtable on Sustainable Palm Oil (RSPO) and bans burning on its own plantations, it admits, like many producers it relies on third parties for the crude palm oil for its refineries, and has said it plans to cut ties with any Indonesian suppliers that clear land with illegal fires.

Palm oil production is certainly always going to be a sensitive subject and it’s up to the big producers like Wilmar International to lead the way and show zero tolerance to those flouting the ROSP guidelines.

ROSP Certified Sustainable Palm Oil

But interestingly, even shareholders can have their say. Starbucks (Nasdaq: SBUX) and Dunkin’ Donuts have both committed to source only 100% RSPO certified palm oil in direct response to shareholder pressure.