ROBE Founder interview with SBS Radio

ROBE Founder, Mr DD Saxena shares his thoughts

Photograph courtesy of SBS

On 10 November 2014, Riverina Oils and Bio Energy (ROBE) Founder, Mr DD Saxena, was interviewed on SBS Hindi radio. The interview was a curtain raiser to the India Prime Minister’s visit to Australia. Mr Saxena addressed a range of topics, starting by explaining what ROBE does.

“We crush canola oil seeds which are grown in abundance in Australia; 65-70% of what we crush is exported,” Mr Saxena said. “When you crush and refine the seeds you get edible oil and vegetable protein meal. The secondary products you get are animal proteins, which are a fundamental building block in the animal food industry.”

Mr Saxena then went on to explain that the ROBE plant is located in Wagga Wagga, New South Wales, halfway between Melbourne and Sydney. “The reason for locating it there is because there is a lot of raw material which is grown there,” he said. “In terms of market accessibility, it is one of the best places to locate such a product.”

ROBE meets the need of the Australian market and a number of select export markets. “Export is very selective in the sense that we have to have some kind of proposition,” Mr Saxena explained. “We are the only Australian company that is certified non genetically-modified. We export our edible oil to the US to food manufacturers who make children’s and neo-natal products, and other manufacturers who want to make non genetically-modified products. We are also selling selected oil blends into markets like Korea, and we are planning to open up the New Zealand market. These are our major markets for export.”

Mr Saxena also explained the value ROBE delivers to the Australian market. “We have three segments in Australia that we sell to,” he said. “One is the food manufacturing segment, because everywhere you look they are using edible oil. We sell to Mars. We sell to McCain. We sell to potato chip manufacturers. That is about 40% of our business.”

“The second segment is restaurants, hotels, clubs, and airlines – the food service market. The third market we supply our oils to is people who sell oils in retail. We don’t do retail directly ourselves because we would be competing directly with them.”

“In the food service market we do have some brands where we sell 20L tins into fish and chip shops, or a certain blended product, or to the restaurant trade, but as far as the retail market is concerned, we provide oil to people who make margarine and also make home brands.”“Oil by itself is not a product, it’s basically a medium. So by using the oil you’re creating value in the end product you’re making. Most of the brands prefer our oil because it is a very good, consistent quality product. In fact, our qualities are the best in the market.”

Having established a successful business in Australia, Mr Saxena spoke of the challenges he faced in getting things up and running. “The first challenge is that the approval process is detailed,” he said. “Australia is a far more complex country to put up a Greenfield project than in India, or in many other countries of the world.”

“After an initial approval we got modified approval, which took three years. I had a significant amount of assets lying in the ground for nearly two years.”

“Some of the conditions placed on us didn’t always make sense,” Mr Saxena added. “Where we are located, there is not a single house in a three-kilometre radius but our emission and water treatment requirements were perhaps the most stringent in the world. It added significant cost and it added significant time. The problem is, there are too many silos in which various departments operate. It’s not one single cohesive group so those challenges were quite huge for us.”

“The second challenge was caused by the delays; of course the financial estimates of the project costs went significantly higher. So there were overruns on time and overruns on costs.”

“At the time we were building the project, mind you we were constructing from 2011 which was the boom period in the economy, in a place like Wagga Wagga, to get 250 specialists, like welders and fitters for example, on site was not very easy. But more importantly, the wage rates we had to pay were exorbitant. They were four or five times higher than the US, and the productivity wasn’t flash, so it took longer for us. We were taken by surprise when looking at international benchmarking standards. In fact, the costs of putting up a project in Australia is one of the highest in the world.”

“I must say though, I am sure every country has its own challenges, but these challenges, to some extent, were avoidable. Also, since we were putting up a project of this magnitude for the first time, we were on a bit of a learning curve too.”

Mr Saxena sees a very bright future ahead for ROBE in Australia. “Looking to the future we would like to expand, and expansion is partly through a range of products as well as capacity expansion,” he said.

“We want to double, or perhaps even more than that, our capacity, because obviously we can’t remain at this level forever. But that would require more exports. There is a significant movement to Japan and the Middle East, where all countries import edible oils. Even Indonesia and Malaysia import soft oils, as we call them. So we certainly have a footprint to expand in Asia; as a matter of fact I am in advanced discussions with a company in India to set up a strategic alignment and with a very large group in Singapore.”

Turning his thoughts to India and China, Mr Saxena shared his views on sustainable agricultural practices in those two countries. “India and China are different in the sense that in India the farming enterprise has always been in capital hands, from family to family,” he said. “The real issue is the fragmentation of land has made the land holding sizes very small so that presents the challenge of making a sum of money that makes the business viable to feed yourself.”

“I think the issue basically in India is to improve productivity. Indian productivity at the farm-gate level is fairly low, and that’s for various reasons. It’s difficult to translate technology, water availability, it also has a lot to do with feed quality and agriculture protocol.”

“I think in India, the scope and potential is huge because of the number of people engaged. In a business sense, it’s not an industry that attracts a lot of attention at the primary production level. That paradigm has to change. We all like talk about world steel plants, we all like to talk about power plants, we all like to talk about car manufacturers, but in a country like India, food safety and food security are fundamental building blocks, particularly when you have a nation of 1.2 billion people.”

“So my view is, as far as India is concerned, there will have to be a serious program which will have to be taken by the government which will increase productivity at the farm-gate level. So instead of subsidising imports like fertiliser and electricity, the government has to start looking at educating the farmers for better practices.”

“In China, land was owned by state enterprises,” Mr Saxena continued. “So the whole ethos of agriculture is very different. The whole model is more or less towards urbanisation. People are moving away and farmland is going towards housing colonies and urbanised places. I have a feeling China will, long-term obviously, look at food security, but I have a feeling they will necessarily have to import a large amount of food in the future. China is putting in the effort but I have a feeling that India has a far better chance of achieving sustainability in the next 20 years. I think China will become more dependent upon importing protein.”

When asked what he thought of the Indian Prime Minister’s upcoming visit to Australia, Mr Saxena explained that he saw it as a good thing and something that was likely to act as a catalyst for business. However, he also said that he believes that real business is done by real business people.

“The fact that he is pro-business, the fact that he wants to encourage investment and development in India, the fact that he is wanting to engage the world in a much more constructive manner is all very positive,” Mr Saxena said. “I have a feeling that the problem is not that it’s not so much bilateral; it’s one way trade right now in Australia with export 90-95% of the bilateral part.”

“I personally feel from a trade point of view, selling into this market from India is going to be limited, but I certainly think that a lot of segments, and with a certain amount of investment in Australia, should come from India.”

“Food and agriculture is one of those sectors where you can add value and market the Australian image of brand Australia and food safety and security globally. But I think, more importantly, from an investment point of view, in a number of sectors – in aircraft, in biotechnology, in education – I think easily the sectors have been identified, now it’s a question of people in India wanting to take the plunge of investing. I think it will have to be through very structured partnerships because doing it alone in any country, unless it’s an acquisition, is a difficult task.”