Today we are in Beijing to attend a meeting with one of
CBH’s customers COFCO. The meeting was with Madam Yang and the wheat team.
Madam Yang is one of the most experienced in the wheat business with 28 years
in COFCO. The COFCO team explained how
the Chinese wheat industry operated - more than 110 million tonnes produced
this year. The flour milling industry has around 70 million tonnes of capacity
with the remainder for feed and seed.
So why does China import? The majority of China's
production is mid protein (similar to APW/AH) however they require both low and
higher protein wheats to produce different quality products including biscuits,
cakes and bread. COFCO also discussed about the dry conditions on the current
corn crop which may see lower yields and therefore could see an increase in
demand for other products including feed wheat for the animal feed industry.
Subsidies were also discussed - wheat in China currently
has a minimum price which is increased each year to encourage production. A new
system is being trialled with cotton and soybeans which includes a subsidy
direct to growers, rather than a government guaranteed minimum price which
requires the government to purchase the grain. The new system will still allow
the private companies and end users to purchase the grain with the grower
receiving a subsidy.
President Patrick Yu with the COFCO
teams inducing the barley and wheat teams. Patrick Yu provided us with a presentation
on COFCO with a few interesting statistics:
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The organisation commenced in 1949 as a state
owned enterprise
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COFCO has a number of subsidiaries including
seed development, crop production, grain and oilseed processing, dairy, meat,
and consumer’s products as well as financial services, insurance and real
estate
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The company processes and/or trades approx. 100
million tonnes per year
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COFCO has approximately 41 million tonnes of
processing capacity.
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The organisation’s asset value is approx. USD50
billion making it the second largest agriculture company after Cargill
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COFCO's turnover is approx. USD60 billion
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The overarching company strategy is 'field to
plate'
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China is expected to import up to 185 million
tonnes of grain and oilseeds within the next 10 years.
In the afternoon an excellent meeting was conducted with
Mr Zhou the Vice General Manager who explained the history of Beijing Yanjing
one of the top four breweries in China. Trevor Badger provided a good
explanation of each variety as well as each member of the board explaining the
varieties and potential production in their region. The team asked a number of
questions about the quality of the product; alcohol content (most Chinese beers
are between 3.5-4% alcohol); and the growth in the market (approx. 8% per year)
A great tour of the bottling plant preceded and after a
very tough walk in hot conditions it was time to taste the product and provide
our expert opinion in the Beijing Yanjing Brewery Bar.
A few interesting facts about Beijing Yanjing:
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The brewery was started in 1980
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Their total malt consumption 400,000 tonnes
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Yanjing’s beer production 5.7 million
hectolitres
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They have 49 breweries in 19 provinces
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Yanjing’s preferred varieties are Baudin, Gairdner, Hindmarsh and Bass and they
prefer protein to be in the vicinity of 10.5%
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