COFCO, a giant that continues to grow in Argentina

Date:10-11-2016

COFCO, China's main food producer, recently acquired 49% of Nidera’s remaining shares, after the initial purchase of 51% made 2 years ago. The next step is to become a producer and marketer of agrifood, so it can compete with Cargill. Authorities explained that their goal is to create an integrated food chain and global enterprise.

COFCO is already one of the 5 world-leading companies, along with Cargill, Archer Daniels Midland / ADM, Bunge and Louis Dreyfus, and now seeks to be first, based on its status as a market leading provider in China, where per capita income grows above the nominal GDP of 8% / 6.5% per year.

This goal has been validated by the integration of COFCO with the sovereign fund of China Investment Corp. / CIC with reserves of US$ 678,000 million. This is the body set up by the Chinese government to fund investments abroad.

The new international holding COFCO (CIH), as an integrated global company ranging from primary production in the surplus countries (United States and Argentina) to direct marketing in the main market in the world, which is China. For the new company, funding for expansion and production is no longer a limiting factor, and has become a budget item, a term that boasts the productive equation.

The background of the appearance of this entrepreneurial phenomenon during the last two years is as follows: In 2015, China imported 90 million tons of soybeans and 5 million tons of corn, which is expected to increase to 200 million tons of grain purchased by year 2025, according to projections by the United States Department of Agriculture (USDA).

Further, within 10 years more than 70% of imports will be grains for animal feed (soybean, soybean meal, corn) used in the production of meat. China is undergoing a transition in diets, with a massive shift of the population consuming meat protein.

Grain imports for animal feed needed in China are to become the main agrifood trend in the world food market in the next 10 to 20 years; and 90% of the three grains used in animal feed are produced in three countries: the United States, Brazil and Argentina.