The CEO of Dutch dairy giant FrieslandCampina, Roelof Joosten, has held talks with Pakistan’s Prime Minister Nawaz Sharif about “possible opportunities” to jointly develop the country’s dairy industry.
FrieslandCampina said the Islamabad meeting, which followed the group’s acquisition of a majority stake in Pakistan’s second-biggest dairy company, Engro Foods, “highlighted the need to explore partnership opportunities with the government to bring the local dairy industry on a par with international standards and contribute to Pakistan’s dairy sector development”.
Engro Corporation chairman Hussain Dawood also took part in the talks to “jointly discuss possible opportunities to develop the dairy industry in the country through knowledge transfer and provision of nutritious value-added products amongst others”, FrieslandCampina said.
However, Joosten said the development of the dairy sector depended on also having “clear standards and clear legislation”. He added: “It is also important to maintain a healthy balance between locally sourced and imported dairy, otherwise it will be nearly impossible to meet the demands of the Pakistan population. To be honest, we cannot do all this without the support of the government and related authorities.”
Sharif said FrieslandCampina’s involvement in the country would be “instrumental in positioning Pakistan as an attractive investment destination for global companies and encourage others to follow”.
He said: “I am hopeful that this partnership will allow the Pakistani population to enjoy a wider array of affordable, high-quality dairy products for a healthier Pakistan. Improving the well-being of millions of our farmers is a cause that Pakistan has been focused on since its inception. I am convinced that this partnership will create tremendous long-term value for our dairy farmers.”
Meanwhile, the World Bank’s International Finance Corporation (IFC) announced it was providing a US$145m “financing package” to FrieslandCampina to “spur the development of Pakistan’s crucial dairy industry”.
The package includes equity investments of $45m and a senior loan of $100m, the IFC said. Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden, the Dutch development bank, is also providing up to $45m to support the acquisition.
The IFC said the funding would help FrieslandCampina “share its global experience and international best practices with the small-hold farmers who supply Engro Foods and most dairy processors in Pakistan, helping them to boost productivity and cut down on waste”.
According to the IFC, more than 200,000 farmers and 270,000 distributors are expected to benefit from the acquisition of Engro Foods, which will also create more than 1,000 new jobs in the dairy supply chain.
“Pakistan is the third-largest milk consumer in the world and its dairy industry produces 38 billion litres of milk annually,” the IFC said. “The acquisition will help improve food safety standards as supply chains improve productivity.”
In December, FrieslandCampina named its vice president of M&A, Hans Laarakker, as interim CEO of Engro Foods. A spokesperson said Laarakker would continue to hold the post of vice-president of M&A and business development at FrieslandCampina and that “another CEO will be appointed at some point, but we don’t know when that will be.” The spokesperson declined to say if Laarakker himself might be a candidate for the position on a permanent basis.
