Cofco Plans to Expand Globally to Secure Corn and Wheat Supplies for China
By Bloomberg News - Oct 21, 2011
Cofco Ltd., China’s largest grains trader, said it is seeking overseas acquisitions to help secure supplies of commodities including soybeans, wheat and sugar as rising domestic incomes spur faster food demand growth.
The state-owned company is looking for investments in the U.S., South America, Australia and Russia, Frank Ning, company chairman, said in an interview in Beijing. He did not identify which companies were being considered.
“I’m trying to connect the Chinese consumer market with outside sources,” Ning said yesterday. “Whatever Chinese consume more of, need more supply of from outside, this is our area,” he said. The company may be engaged in farming, logistics, processing, and trading ventures in supplier countries, Ning said.
Securing external food supplies is becoming increasingly important after urban household incomes in China more than tripled in the past decade, fueling consumption of meat, poultry and dairy. China, which last year became a net corn importer for the first time in more than 10 years, may have bought as much as 3.5 million metric tons in the first half, researcher Grain.gov.cn said on Oct. 13.
China may have to increase imports because its dependence on the use of ground water for grain production “isn’t going to be sustainable indefinitely,” said Arthur Kroeber, managing director of Beijing-based GaveKal Dragonomics Research, a financial advisory firm.
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