China’s largest food company is open to partnering with its competitors as it seeks to meet its biggest challenge: feeding the world’s most populous nation.
“We will make sure we have a strong global supply chain to serve our goal in the China market and food security in China,” China National Cereals, Oils and Foodstuffs Corp (COFCO, 中糧集團) president Patrick Yu (於旭波) said in a Bloomberg Television interview at the state-run firm’s headquarters in Beijing. “Our strength is in China. We have to keep strongly in mind that we’re a Chinese company, we know China’s markets.”
The comments emphasized how COFCO has shifted away from seeking to create a global giant to compete with Archer-Daniels-Midland Co, Bunge Ltd, Cargill Inc and Louis Dreyfus Co, known collectively as the “ABCDs.”
Its ambitions have been scaled back after the departure of Matt Jansen as head of its international trading arm last year and as surprise trading losses were found on the books of Nidera BV, of which COFCO acquired full control last year.
“Going global is never easy and we have learned a lot over the past three years. I think COFCO is now becoming much stronger and much more realistic, with the right approach,” Yu said.
“We would rather be partners with them instead of a competitor,” he said, referring to the ABCDs.
Its subsidiary China Foods Ltd (中國食品) appointed a new management team last year as it merged the operations of Nidera and Noble Agri into the trading arm of the company.
The integration had been held up, in part, by the discovery of a US$200 million loss at Nidera due to a rogue trader and a US$150 million financial hole in the firm’s Brazilian operations.
While COFCO’s focus is on Chinese food security and seeking out partnerships, there is still room for the company to invest in origination and independent supply chains in both Brazil and Argentina, said Yu, who is also a delegate of the Chinese National People’s Congress.
“In the long run, if one day we can build ourselves as ABCDs, that’s our dream. That’s really long term,” he said.
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