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Chinese grain giant Cofco airs global ambitions

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Cofco, the state-owned Chinese grain trader, pushed back a little the timescale on its flotation - but not on its ambitions, saying that it wanted to transform itself into a "global agricultural company".

Ning Gaoning, the Cofco chairman and chief executive, highlighted the potential for meeting China's food needs, foreseeing the country's imports rise to some two-thirds to about 200m tonnes over the next decade, boosted by a switch to higher-value products such as meat and dairy.

However, the group was "not going to be a company that only supplies China," he said.

"China is only one destination."

"A global company"

Cofco, which has already bought a controlling stake in Dutch agricultural trading house Nidera, and in the agriculture business of Singapore-based Noble Group, said that was "looking at North America", Mr Ning told the FT Commodities Global summit.

"We need something there to be a so-called global value chain company."

Indeed, Cofco "should be not a Chinese, but a global company", he said, adding that the group's plans for a stockmarket flotation "will help us achieve this standard".

The group has also been diversifying away from grains, buying up meat and dairy production in China, and a portfolio of foreign assets that include sugar cane plantations in Australia and vineyards in France and Chile.

Rethinking self-sufficiency

Mr Ning restated Cofco's aims for a flotation, but in the timescale of three to five years, implying some creep from previous guidance on an IPO. Six months ago, he had said an IPO could take three years.

Cofco's rapid growth has been driven by Ning Gaoning, a graduate of the University of Pittsburgh's business school, but it also reflects a shift in Chinese government policy.

China's state owned enterprises compete commercially, but are controlled entirely or partly by the national or regional government.

China's agricultural state owned enterprises have long focused on ensuring domestic supply, a legacy of the famines China suffered in the 20th century.

Mr Ning also called on the Chinese government "to rethink their self-sufficiency policy", flagging the country's relatively high production costs for many crops.

By Agrimoney.com

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