The Chinese government’s giant food company COFCO has begun negotiations to buy shares at a grain terminal at the Russian port of Novorossiysk as part of its growth move in Europe. If the agreement is reached, COFCO will have the capacity to export larger quantities of Russian grain to major Middle Eastern markets.
The Chinese government food trade company COFCO wants to buy a 25 percent stake in KSK, Russia’s third largest grain terminal. According to the Vedomosti newspaper and Reuters, the terminal’s owner, DeloPorts, confirmed the start of negotiations on this issue, but did not provide any details. “The agreement will provide attractive opportunities for COFCO to export Russian grain in large quantities to the Middle East markets, Re Reuters told. Novorossiysk is especially important for exports to Egypt . ” Corn is the number one recipient of Russian grain.
A possible agreement will form a new link in Chinese investments in the Russian agricultural sector. Agriculture is a highly strategic sector for the Kremlin administration. Therefore, large investments were made in the sector and both production and exports were increased. For Russia, which has earned more than $ 20 billion in annual revenue from grain exports in recent years, these products mean ‘new oil’. Grain products, which have become the biggest export item after raw material for Russia, have passed the arms export. Russia, which has been the world’s largest grain exporter for the last few years, is in a rivalry with Ukraine, but does not seem to lose its title.
KSK, a deep water terminal, exported 4.8 million tons of grain last year. The commodity trading company Cargill also holds a 25 percent stake in the terminal. However, Cargill will not be a party to the COFCO agreement. Due to the welfare of the middle class in China, the Beijing administration began to need more imports. Russia is also observing the Chinese market and especially wants to make a profit by exporting agricultural products to the Far East border. Following state-level energy agreements between China and Russia, the fact that Chinese companies are partners in companies operating in non-energy strategic sectors is part of the process of linking the economies of the two countries. These are financial investments aimed at making a profit as well as supplying the products China needs. In 2015-2016, COFCO acquired the Noble Agri and Nidera companies operating in Russia. Last year, COFCO became the 16th largest importer of grain from Russia.
Credit: Millermagazine.com
