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Wilmar International Limited: Managing Multiple Stakeholders in a Global Palm Oil Agribusiness Group

By Wee Beng Geok, Geraldine Chen & Ivy Buche



Publisher Ref No: ABCC-2010/12-004 Pub/Rev Date: 2012
Industry: Commodities/Agribusiness Case Length: 24 pages
Teaching Note Ref: ABCC-2010/12-004(TN) Teaching Note: 12 pages
Organisation: Wilmar International Period Covered: 1991 - 2010
Country: Singapore Level: Undergraduate/
Postgraduate
Additional: Background note available
Publisher: The Asian Business Case Centre, Nanyang Technological University


Abstract


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.

Issues:
Global agribusiness and sustainable growth; Stakeholder management; Environmental NGOs

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