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COFCO hungry to beef up its presence in global food trade

By Zhong Nan and Ren Xiaojin | China Daily | Updated: 2017-07-20 07:59

China National Cereals, Oils and Foodstuffs Corp, the country's biggest food trader by revenue, will accelerate its pace of building warehouses and logistics facilities in the world's major grain-producing regions this year, said a senior executive on Wednesday.

The State-owned group plans to build new warehouses and processing facilities in countries including Myanmar, Kazakhstan, Ukraine and Indonesia to enhance its ability to acquire global food resources.

COFCO has already purchased and built ports, logistics companies and storehouses in the world's main grain-producing areas such as Australia, South America and the Black Sea region.

Wan Zaotian, COFCO's vice-president, said China has become the world's largest market for food trade. Supported by the Belt and Road Initiative, food trade between China and its partners is expected to grow rapidly. It is critical for the group to build efficient global supply and logistics networks.

"The food industry has gained a growing influence in the country's economy in the past six years. It plays an important role in boosting domestic consumption and accelerating supply-side structural reform," said Wan.

COFCO's revenue amounted to 216.12 billion yuan ($32 billion) in the first half of 2017, up 7 percent year-on-year. Its net profit in the same period also reached 5.51 billion yuan, surging 112 percent from the same period a year earlier.

"Countries and regions involved in the Belt and Road Initiative and China are strongly complementary in agriculture," said Ding Lixin, a researcher at the Chinese Academy of Agricultural Sciences in Beijing.

All of the companies that dominate global grain trading-ADM Co, Bunge Ltd and Cargill Inc from the United States, and Netherlands-based Louis Dreyfus SAS-serve as intermediaries between farmers and buyers. They are proficient in operating bulk ship services or even own a fleet to control the whole industrial chain.

In this regard, COFCO has signed a long-term cooperative agreement with China COSCO Shipping Corp Ltd to safeguard its grain shipping operations worldwide.

COFCO began to import beef from the United States at the end of last month and has so far purchased 2,200 metric tons from Kazakhstan through a freight train service launched in March.

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