Cargill already controls around 10 per cent of Romania's silo capacity after the acquisition of Comcereal earlier this year gave it a comprehensive network of grain storage facilities in the Romanian grain belt in the Teleorman, Giurgiu, Ialomita and Galati regions. The acquisition of Olpo Podari allows it to move into the local market for oilseed crushing and refining.
Olpo is currently completing construction of a new crushing line that will increase the factory's processing capacity to about 1,200 tons per day, making it the one of the largest oil factories in south-east Europe. Olpo can currently process up to 600 tons of seeds daily, the vast majority of which are sunflower seeds. Most of the oilseeds are sourced locally.
Rod Sanderson, Cargill manager in Romania, told CEE-foodindustry.com that the company would benefit from its ties with Cargill, as the US group's network of silos across Romania would facilitate the supply of raw materials. Furthermore, Cargill has a wealth of experience in crushing, refining and bottling of oils which would help improve productivity at the Romanian firm.
Olpo already has state-of-the-art facilities in Podari and Craiova and produces two main brands of edible oil - the premium Bunica and standard Olpo.
With the Romanian edible oil market topped only by Russia and Ukraine in the CEE region, Cargill is keen to take an even larger share. Press reports suggest that the US group is mulling a joint bid, with Norway's Orkla Foods, for the country's second-largest sunflower oil producer, Argus, whose main shareholders are currently fighting over their stakes.
A local investment fund SIF Oltenia recently took a 10 per cent stake in Constanta-based Argus, a move which lifted the company's share price by around 50 per cent, and the fund has made no secret of its intention of lifting its stake even further. This would almost certainly make it the biggest single shareholder in the company, overtaking the company's general manager Vasile Leu who currently holds 11.4 per cent.
Around 50 per cent of the company's shares are owned by its employees, but none of them has a stake in excess of 2005. Argus is expected to go ahead with a share split in 2005 to make its shares more attractive to international investors, such as Cargill and Orkla.
Cargill began its activities in Romania in 1996 and is active in the domestic wheat market as well as trading feed barley, maize, sunflower seeds and soybeans. Romania is the world's eighth largest sunflower producing countries, with 926,000 tons of sunflower seeds produced annually, and 144,000 exported, according to PS&D Database, FAS/USDA. Worldwide production of sunflower reaches on average 24 million tons, according to the same source.