COFCO Planned to Acquire Russian Southern Port with 2.6 Billion RMB, Which Would be a Win-Win for China and Russia

By CnAgri2018-07-18 16:17:48 Print Recently, COFCO planned to invest 2.6 billion RMB in acquiring one of three southern ports in Russia, which would be a transshipment point for grain. Besides, it was reported that COFCO was inclined to increase the investment in Russia, including the building of grain industrial chain, local logistics and warehouses and soybean further processing companies, etc. BOABC’s analysts think COFCO’s investment in Russia not only meets the current demands of both parties but also has far-reaching significance, which would be a win-win.  
 
For China, first, the vast demand on agricultural products such as cereals and oil-seeds in China can’t be met totally by the domestic and must be satisfied with global agricultural resources. In 2017, grain and oilseed imports exceeded 130 million MT, of which soybean imports reached 95.54 million MT, which needs 760 million mu of land that is one third of total land areas. Second, influenced by China and U.S. trade war, the resources of agricultural products in China are further expanded. It is establishing close relationship with the countries with rich land and grain resources, such as Russia, which can offset the influence of American agricultural product imports on the domestic. Third, COFCO can further control local grain resources by investing in ports, which cuts down the costs of logistics.  
 
For Russia, thanks to a vast territory with a sparse population and rich agricultural resources, Russia is one of important agriculture exporting countries in the world. However, due to backward infrastructure construction in inland and at the ports of Russia, the efficiency of grain exports is low and lots of grain is piled up and wasted. COFCO’s investment would be good for improvements in infrastructure construction and an increase in grain exports.