Vietnam doing the right things for increased foreign investment flows: Cargill exec

The U.S.-based agribusiness giant Cargill inaugurated its 11th Vietnam factory in the southern province of Dong Nai province a few days ago. The $28 million Provimi Premix plant, located in Trang Bom district, has an area of 30,000 square meters and a capacity of 40,000 tons per year.

Pham spoke to The Investor at length about Cargill’s operations in Vietnam and larger investment issues. He said his company remained bullish about the nation’s livestock industry.

Please tell us about the 11th and latest plant Cargill has opened in Vietnam and the role that all the plants play in your global operations.

The Provimi Premix plant that we opened on September 25 plays an important role in a few ways. Firstly, higher quality products made by the plant will provide optimal nutrition for animals in Vietnam, and thus nourish people in Vietnam safely and sustainably.

Secondly, the plant will contribute to reducing the nation’s dependency on exports, thus bolstering the local economy. Thirdly, larger output means that we can look to export our products, increasing the role Vietnam plays for customers in the region

It is also our most advanced Provimi Premix plant in the region with around 95% automation - meaning that this will serve as a model for future investments around the region and around the world, as it is one of our most technologically advanced premix facilities in the region.

Does Cargill use local ingredients and components in the manufacturing process?

We do use local ingredients like broken rice (tấm), rice brans (cám gạo), corn, cassava and fish meal (bột cá); accounting for about 20% of our raw materials for feed production. We are prioritizing high quality ingredients that can be sourced domestically through our certified suppliers.

You spoke about using advanced technology being used at the latest plant. Can you elaborate?

The new plant is designed with capability to produce sophisticated products of highest quality, consistency and safety standards. More importantly, to support this, we have a wide network of nutrition experts in Vietnam and in Cargill R&D centers around the world that design the best nutrition products & solutions to meet customers’ needs. Our technical experts and commercial consultant team will work closely with customers, as farmers and feed mills to understand specific needs.

Beside physical products, we have a wide range of advance software tools that help our farmers and feed mills run their operations with greater efficiency and efficacy.

Many businesses focus on green development these days. What about Cargill?

As a responsible global organization, we are working towards finding solutions to complex challenges, especially around environment, climate and sustainability. We’re reformulating how we fuel the fleets that move the world’s grain, investing in farmers who are regenerating the soil our crops depend on, accelerating efforts to eliminate deforestation and enabling our customers to achieve their sustainability goals through our supply chains.

Particularly in Vietnam, Cargill has set up a dedicated team of environmental, health and safety professionals at each of our facilities across the country to manage and accelerate continuous improvement in safety and sustainability initiatives. For example, Cargill’s commitment to environmental responsibility echoes throughout the new facility.

Capabilities like advanced water treatment, smart lighting and natural lighting optimization systems ensure energy efficiency and minimize the plant's carbon footprint. The use of eco-bags throughout the plant will reduce polyethylene (PE) use compared to other methods, in alignment with Cargill's plastic waste reduction initiatives.

In recognition of our corporate responsibilities and sustainability credentials, Cargill Vietnam was conferred the prestigious Nhip Cau Dau Tu magazine's Top 50 Corporate Sustainability Award (TOP50 CSA) for two consecutive years, 2022 and 2023. This prestigious accolade validates our ongoing efforts to make a positive impact on the lives of farmers, communities and the environment in Vietnam, and is central to our commitment to sustainable practices, community empowerment and our mission to nourish the world in a safe, responsible and sustainable manner.

The prices of feed ingredients and materials have fluctuated a lot recently due to a number of reasons, including diseases and the Russia-Ukraine conflict. How does this affect Cargill Vietnam?

We remain bullish on Vietnam and its rapidly growing animal farming and agriculture sector. Global headwinds aside, this nation has a large population, a population that has a rapidly increasing and rapidly urbanizing middle class, and ultimately, that increased market sophistication is reflected in food choices.

The people of Vietnam are more and more discerning about the quality of the proteins they demand, and farmers in turn need to service that market. They do that by providing better nutrition for their animals in their pens and in their ponds - and we facilitate this with the highest quality feed for those stocks. Vietnam continues to offer solid potential in the short, medium and long terms for the animal nutrition market and we are committed to the success of our customers including farmers and feed millers.

What are some of the main factors behind Cargill’s prolonged presence - almost three decades - in Vietnam?

Vietnam’s dynamic environment, reflected in solid economic growth, competitive manufacturing, a young population, growing purchasing power, evolving consumer demands, a growing middle class representing a large consumer base, greater mobility and urbanization, and continued positive legislative reforms, is pushing the country through a period of great change.

Vietnam’s success in continuing to attract investment in combination with other compelling market forces such as a rising middle class and further opening up of the economy also opens access to exciting new sectors and opportunities including those in agriculture. Thanks to its open-door policy, Vietnam has been successful in transforming itself into a middle-income country and is on the way upwards.

We were one of the first U.S. companies to enter Vietnam upon normalization of ties in 1995. We have seen enormous leaps forward in virtually all areas over those years. There have been major watershed developments in those years - WTO status comes to mind - but then ongoing and consistent incremental changes to make doing business here progressively easier for foreign enterprises. These span everything from infrastructure investment, to increased mechanization, to legislative steps forward.

Vietnam has been a great partner to us over almost 30 years, and we’d like to think we've been a trusted, long-term partner to it too, as someone who can help connect farmers with markets, customers with ingredients and families with daily essentials.

What, in your opinion, should the country do to attract more U.S. investors?

We can say that the success of Vietnam in continuing to attract investment from foreign enterprises not only depends on economic factors but also on the business environment in general, and how easy it is to do business here.

Vietnam is on the right path for increased foreign investment with its ongoing investments into infrastructure in roads, waterways and ports to help the economy become even more efficient, including the businesses that Cargill is participating in. The country’s ambitious digital transformation initiatives, better bandwidth and internet connectivity, new airports and so forth are all part of this. These physical and digital infrastructure investments serve to better bind Vietnam to the economies of the world and should be lauded.

In parallel with this, the efforts of the government to streamline processes also make the nation more FDI friendly, and we look forward to continued reforms and ever-increased transparency on this front as well.

How do you assess the growth potential of the animal nutrition market (including poultry and aquaculture) and specialized feeds that Cargill produces? What is your strategy for Vietnam and the international market in the near future?

Today we are here to celebrate one of our largest investments in Vietnam, and so let’s focus on that. Beyond today’s announcement, we have nothing to share on future investment plans. However as a growth company we are always evaluating the needs of farmers and ways in which we will be better able to contribute to their businesses and support the nourishment of Vietnamese people through our work.

Can you comment on the latest upgrade in bilateral relations between the U.S. and Vietnam to a strategic comprehensive partnership, and its impacts on the areas that Cargill is involved in?

We were one of the first U.S. companies to enter Vietnam in 1995, and we have seen the relationship between the two nations flourish over the last few decades - and indeed, we like to think we have played our role in bringing the two nations together as well.

We have witnessed many breakthroughs in the bilateral relationship during high-level visits made by leaders from both countries. During President Biden’s visit, Vietnam and the U.S. upgraded its bilateral relationship to really reflect the ongoing deep partnership between both countries. The previous 10-year comprehensive partnership saw an array of rapid developments across sectors including animal farming and agriculture and food; and it’s time to further the collaboration.

In agriculture, the U.S.-Vietnam bilateral relationship saw ongoing success during 10-year comprehensive partnership. Agricultural trade has increased year by year and now accounts for a big portion of the total annual trade between the two countries. Many Vietnamese products like seafood, furniture, nuts, coffee, spices and fruits have gained access to U.S. markets. Major U.S. products exported to Vietnam include cotton, wood, soybean, dairy products and fresh fruits. Upgrading the bilateral relationship will certainly serve to continue this upward trajectory.