On April 19-23, COFCO Group chairman Frank Ning visited Switzerland to attend FT Commodities Global Summit 2015 held in Lausanne, where he delivered an opening keynote speech titled “Overview of COFCO and its Positioning in Global Farm Produce Market” and engaged in dialogues.
In response to concerns about the impact of China’s slowing economic growth on domestic agricultural products market, Mr. Frank Ning pointed out that since China is a country with market-oriented economy the development of its agricultural products market has been bolstered by Chinese government and its policies. In addition, Chinese consumers’ demand for nutrition- and protein-rich products is gradually on the rise with the shift of eating habits to Western food. The prospect of China’s agricultural products market as a whole is bright due to dual effects of market economy and rising demand.
According to Mr. Frank Ning, although China enjoys 11 years in a row of grain output growth, the production cost keeps increasing and the environment is polluted due to the shortage of land and water resources. Under the new situation, China’s agricultural policy insists on giving priority to self-reliance based on domestic supply supplemented by moderate import. With the increasing consumption demand for meat and dairy products, China’s import of agricultural products will increase from the present 120 m tons to 200 m tons in a decade.
In 2014, COFCO Group obtained controlling right to shares of Netherlands-based grain trading company Nidera and Noble Group’s subsidiary Noble Agri through overseas acquisitions. The strategic cooperation with these two enterprises has enabled COFCO to extend its global supply chain to Brazil, the U.S., Ukraine and Russia. According to the introduction given by Financial Times at the Summit, COFCO Group has appeared on the world stage as one of the most important forces in the world’s agricultural products market upon its takeover of Nidera and Noble Agri.
Mr. Frank Ning highlighted his hope to integrate Nidera and Noble Agri and achieve synergy by connecting agricultural production regions with agricultural products consuming regions so as to purchase and sell on a global scale in its effort to build a globalized company with internationalized talents supported by industrial value chain in compliance with international standards.
Mr. Frank Ning noted that these businesses will be integrated into one “global agricultural company” in the future. He also added that IPO will help achieve this objective but the integration still takes time. He didn’t reveal the timetable for the potential listing.
When asked about whether COFCO will compete with four major international grain traders ADM, Bunge, Cargill and Louis Dreyfus in the future, Mr. Frank Ning replied: “Someone asked me: ‘Do you plan to become a buyer or a competitor in the future?’ I think we will conduct cooperation but sometimes we will also compete with each other in a very, very friendly way.”
The theme of the 3-day Summit is “Navigating the ‘New Normal’ in Resources”. The Summit focused on the challenges and opportunities faced by commodities industry and discussed topics including global oversupply of goods and the trend of sliding prices, slowing global economic growth and inflation, China’s rise in global agricultural products market. Those attended the Summit included senior executives of global leading commodities company such as Noble Group CEO Yusuf Alireza, Cargill president and CEO David MacLennan, Olam International CEO Sunny Verghese and their top-notch brokers.