China food group aims to be global player

The head of Cofco, the Chinese state-owned grains trader, has laid out plans to turn the company into a publicly listed global powerhouse, highlighting Beijing's decision to relax its policy of food self-sufficiency.

Ning Gaoning, Cofco chairman, told an FT conference in Lausanne that China's agricultural imports would rise from about 120m tonnes to 200m tonnes in a decade as its people consumed more meat and milk. "This is a transformation period in China," he said.

The diets of the country of 1.4bn have changed as China's living standards have risen in line with industrialisation. More meat and dairy on tables has strained arable land and water resources, pushing China abroad in search of grain to feed livestock.

Cofco's ambitious plans will put it in competition with foreign suppliers that dominate global flows of agricultural commodities such as US-based Archer Daniels Midland and Cargill.

Mr Ning said: "People ask me: are you going to be a buyer or a competitor in the future? I think we will co-operate, but sometimes we will compete. We will compete in a very, very friendly way."

David MacLennan, chief executive of Cargill, said he thought Cofco's expansion plans were "fantastic".

"It is transformational but it's not surprising," he told the FT. "It's a country of a billion three, a billion four. They need to eat."

Cofco is a leading state-owned grain buyer but also controls a sprawling empire of hotels, shopping malls and vineyards. It already has listed units including soya trader China Agri-Industries Holdings and Mengniu Dairy.

Last year Cofco spent $3bn for a 51 per cent stake in an agriculture joint venture with Noble Group of Hong Kong and control of Dutch agricultural trading house Nidera to extend to regions such as Brazil, the US, Ukraine and Russia. Mr Ning said he would integrate the operations into a "global agricultural company".

He said his company planned to expand in North America, a big surplus grain producer. "We need something there to be a so-called global value chain company."

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Cofco had revenues of Rmb199.1bn ($32.1bn) and net profit of Rmb2.46bn ($400m) in 2014, excluding the Nidera and Noble stakes.

Food security is a sensitive issue in China, where millions died of starvation under Mao Zedong's Great Leap Forward from 1959-62.

Beijing has begun to loosen its policy of self-sufficiency on grain, raising hopes among traders that China will one day become as big an importer of corn as it is of soyabeans. The country currently buys two out of three internationally traded soyabean cargoes.

Mr Ning said Cofco planned to ship agricultural products to multiple countries: "It's not going to be a company that only supplies China," he said.

A former artillery officer in the People's Liberation Army, he said that the Beijing leadership was comfortable seeing Cofco become a listed global company. An initial public offering would help it achieve a "global standard", he said.

Mr Ning noted that Cofco was also the number-one wine company in China, though he downplayed the quality of its vintages. "Not very good, but very large," he said.

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