COFCO unit partners with US-based co-op

By Zhong Nan | China Daily | Updated: 2017-08-22 08:53

COFCO unit partners with US-based co-op

Two officials from Shandong Inspection and Quarantine Bureau check imported soybeans at Rizhao port, Shandong province. [Zhu Yuanli/for China Daily]

China National Cereals, Oils and Foodstuffs Corp - the country's biggest food trader by sales revenue, on Monday confirmed that COFCO International Ltd, one of its subsidiaries, has formed a grain supply partnership with the Illinois-based farm cooperative Growmark Inc.

The deal was sealed at Bloomington, Illinois on Aug 15. As part of the deal, they will jointly own and operate a truck, rail and barge terminal in Cahokia, Illinois, on the Mississippi River, the main pipeline that supplies exporters along the US Gulf Coast with corn and soybeans.

The facility can receive about 180,000 bushels (4572.24 metric tons) of corn per hour, delivered by truck and rail, and can load two river barges simultaneously at a rate of about 60,000 bushels per hour.

COFCO also acquired the terminal near the busy inland port of St. Louis as part of its Nidera deal, completed in 2016.

Growmark staff will assist in sourcing grain at COFCO's St. Louis office as part of the partnership, the companies said in a statement.

This partnership will offer China more direct access to ensure food imports, said Ding Lixin, a researcher at the Chinese Academy of Agricultural Sciences in Beijing.

"The food industry has gained a growing influence in the country's economy over the past decade. China also needs more food to boost domestic consumption and facilitate ongoing supply-side structural reform," Ding said.

This also is the latest expansion move by COFCO International since it invested $3 billion to buy Noble Group's agribusiness and a large stake in Dutch grain trader Nidera BV in deals that bolstered its position in the global grain market.

The deal draws a more direct link between a large Chinese food importer and farmers in the world's largest corn exporter and second biggest soybean exporter.

Growmark hopes to solidify ties to a huge market in China, the world's top soybean importer and major buyer of other agricultural goods.

Neither company disclosed terms of the deal.

Eager to enhance its earning ability, COFCO has already increased staff numbers in Geneva, home to COFCO International's headquarters and the center of its grains and oilseeds business. Its Rotterdam office has separately played a core role in trading activities.

The media office of COFCO's headquarters in Beijing said the group will accelerate its pace of building warehouses and logistics facilities in the world's major grain-producing regions this year.

The State-owned group plans to build new warehouses and processing facilities in countries including the United States, Myanmar, Kazakhstan, Ukraine and Indonesia to acquire more food resources at global markets.

Reuters contributed to the story.

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