COFCO and China Grain Reserves Group, also known as Sinograin, are forming a joint venture to integrate the 2 state-owned grain giants’ oil seed and edible oil processing businesses, in their 2nd major pooling of resources in the last 6 months.
The JV will start operation in January and is 51% owned by COFCO and the rest held by Sinograin. This follows another JV formed in July by both parties to manage the country’s huge grain reserves.
COFCO is China’s largest grain enterprise focusing on the processing and trade of rice, wheat and edible oils at market prices, while Sinograin is the main body that manages central grain reserves and underpins the market price of grain by buying in bulk from farmers at the government guidance price.
Over the years, their business started to overlap and there is no longer a definite boundary line between their non-profit and commercial operations. As such, the consolidation of assets through the JVs will help more clearly delineate business boundaries between the 2 giants, improve the allocation of resources and reduce risk.
The JVs will help promote partnership between COFCO and Sinograin in the industrial chain, promote their market shares and ensure sustained development.