China investing in Brazil ag

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COFCO announced it will finance the expansion of more than 60 million acres [24 million ha] of soybean production in Brazil.
Progressive Farmer | 7 Aug 2019

China Investing in Brazil Ag

By Chris Clayton, DTN Ag Policy Editor

OMAHA (DTN) -- While U.S. agriculture faces more problems in the U.S.-China trade dispute, the chairman of China's largest grain, oilseeds and food company told Brazilian agribusinesses on Monday his company, COFCO International, will invest more heavily in Brazilian soybean production.

Specially, COFCO will buy up 25% more soybeans from Brazil over the next five years while also financing the expansion of more than 60 million acres of soybean production in Brazil.

The speech came as the trade dispute between the U.S. and China further escalated with China's government news agency Xinhua announcing Chinese companies will stop buying U.S. agricultural products. The American Farm Bureau Federation later expressed concern over China reducing imports of U.S. ag products even further.

Speaking before the Brazilian Agribusiness Congress, Johnny Chi, chairman of Chinese state-owned commodity company COFCO International, said Monday that COFCO will buy 5% more soybeans each year from Brazil over the next five years.

Reuters first reported on the speech, which was also posted on COFCO's website (https://www.cofcointernational.com/newsroom/johnny-chi-gives-keynote-address-at-brazil-agribusiness-conference/).

COFCO last year exported from Brazil to China more than 13 million metric tons of grain and soybeans, or roughly 477 million bushels.

Chi cited the "bumps along the road" in the U.S.-China trade relationship, but he called the relationship between China and Brazil as very solid. Besides land expansion, Chi listed other areas such as biofuels where COFCO could expand its relationship with Brazilian agriculture.

"In conclusion, Brazil has become a reliable and trusted trade partner for China and COFCO. While we hope to source more from you in the coming years, we also wish to expand the scale and nature of our partnership, including by channeling more financing and investment to benefit Brazilian farms and farmers."

Chi added, "In a turbulent and rapidly changing world, experience teaches us that stability and long-term perspectives are precious assets. We are keen to discuss with you how best to protect our partnership long into the distant future."

To help aid higher production in Brazil, Chi also announced COFCO is creating a program "to facilitate the long-term financing of soy production on open land," Chi said. "Brazil has over 25 million hectares, (61.75 million acres) of such land, which is suitable for farming. We hope our program will offer appropriate incentive for sustainable production. We can all produce more, better and longer."

Farm groups were relatively quiet last week when President Donald Trump announced his administration would place 10% tariffs on $300 billion more in goods from China starting in September.

On Monday, the American Farm Bureau Federation reacted to reports out of China that it will halt the buying of agricultural products. Farm Bureau noted agricultural exports to China are down $1.3 billion compared to a year ago. A $24 billion market in 2014 became a $19.5 billion market in 2017, which became a $9.1 billion market last year. And it appears the numbers will be lower for 2019.

"In the last 18 months alone, farm and ranch families have dealt with plunging commodity prices, awful weather and tariffs higher than we have seen in decades," said Zippy Duvall, president of AFBF.

Duvall added farmers and ranchers are grateful for the Market Facilitation Program payments. Those payments topped $8.6 billion for last year's program. USDA expects to pay out roughly $7 billion in the first tranche of payments under the MFP2 announced last month. But Duvall said that aid cannot last forever. He called on the U.S. and China to return to negotiations.

"We urge negotiators to redouble their efforts to arrive at an agreement, and quickly. Exports ensure farmers will continue to supply safe, healthful and affordable food for families here and around the world," Duvall said.
  •   DTN
  • 07 August 2019

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