POSCO International looking to grow into Top 10 global food giants
By Jung Suk-yee
POSCO International is adding the food business to its portfolio and promoting its transformation into an eco-friendly general business company.
As part of its growth strategy announced in April, POSCO International laid out a detailed plan for its food business and presented a plan to grow into one of the top 10 global food giants on May 4.
To this end, the company aims to secure 860,000 hectares (ha) of cultivated land, produce 7.1 million tons of grain, and process 2.34 million tons of food by 2030 through bold investments under three strategic directions -- securing a global grain procurement system, building a stable food value chain, and fostering new ag-tech businesses.
Its strategy is to secure grain assets through joint ventures with agricultural companies in major farming countries such as Australia, North America, and South America by securing 850,000 ha of arable land. As part of this, POSCO International established a partnership with Australia’s Hancock in December 2022 to secure 250,000 ha of wheat farming land. It plans to secure additional 500,000 ha of farming assets by acquiring a blue-chip farming company in the Black Sea region.
Establishing a system for an annual production capacity of 7.1 million tons is essential for food security. POSCO International’s strategy is to secure annual production of five million tons from its farming assets in the Black Sea region of the Northern Hemisphere, and to directly and indirectly produce one million tons and 500,000 tons of grain in South America and Australia, respectively, which have opposite harvest seasons compared to the Northern Hemisphere, and 600,000 tons of grain in Central Asia and Southeast Asia. In the United States, the world’s No. 1 grain producer, the company plans to establish a local procurement system with a capacity of three million tons per year through joint ventures with leading companies.
POSCO International will also enter the processing sector to further strengthen profitability by handling 2.34 million tons per year based on grain assets. In February, the company signed a business agreement with Daesang, the largest starch sugar company in Korea, to make a foray into the starch sugar business in Vietnam.
In addition, POSCO International will continue to employ an aggressive investment strategy in food processing by seeking a partner for soybean milking in the United States. The company will advance its food business through preemptive investments in the ag-tech sector such as precision agriculture and smart farms.
POSCO International’s food business portfolio includes palm oil and cotton spinning in addition to grains. In the palm business, based on the success of its Indonesian palm plantation, which generated about 100 billion won (US$75.9 million) in operating profit last year, POSCO International is expanding its palm plantation along with a refinery on Kalimantan Island to connect value chains while complying with environmental standards set by the international community.
The reason behind POSCO International’s entry into the food business, which is monopolized by global giants that all have 150 to 200 years of experience, is that major Korean food companies are needed for the food security of Korea where the grain self-sufficiency rate is only about 19 percent.