Chapter 410 The Initial Formation of the International Food Trade Framework

"The impact of weeds and red imported fire ants on U.S. agricultural production is longer than expected. The unit production costs of most agricultural products have increased as a result. However, as the yield per unit increases in China, the cost is on a downward trend."

Over the past year, Chen Yanqiu, who took over as president of Golden Harvest International, has been traveling around the world on business.

Mainly do three things.

The first is to prepare for the establishment of an overseas food supply chain system, cooperate with host countries to build food port hubs, and open up the chain of "food purchasing station-port transit warehouse-port terminal warehouse-loading and transportation."

The second is to coordinate the layout of domestic and foreign grain channels. He has been doing this work since he joined Jiahe. Since Jiahe has seized the opportunity to shift domestic grain imports to self-sufficiency and exports, it is ahead of other major grain traders in this regard, so his work this year is mainly overseas.

The third is to establish an overseas grain logistics information platform to keep abreast of international grain product transactions and logistics.

None of these three tasks is easy.

Fortunately, China's large-scale corn exports have brought new opportunities to Jiahe.

This is a virgin land. All the major international grain traders, including Guoliang, only regard China as a grain importing country.

The sudden increase in corn exports caught everyone off guard. Only Jiahe and Guochuliang had relatively complete purchasing, warehousing and logistics systems in the main producing areas in China.

The national grain reserves are more responsible for the task of regulation, so Jiahe has emerged as a dark horse in the global corn and wheat trade in the past two years.

In January, he traveled to Southeast Asia.

In the market in Manila, Philippines, it is difficult to buy rice even if you have money, so women and children can only look for food in garbage dumps.

In Indonesia, food is also extremely scarce. People have taken to the streets to protest and various riots are ongoing.

The Philippines' corn gap also reached a record high of 180 million tons, wheat gap of 410 million tons, and rice gap of 230 million tons.

Indonesia is no exception.

During this period, all major grain-producing countries restricted grain exports, making it difficult to import grain.

The Philippines has remittances from overseas Chinese and good relations with Western countries, but the gap is large. In addition, the corn production in the United States has decreased and the transportation distance is still long. In comparison, the cost-effectiveness of the grain in Jiahe's hands is quite high.

Indonesia has even less choice. The only way to buy food at a critical moment is to maintain domestic statistics.

This year, Jiahe International traded millions of tons of corn and a small amount of wheat, as well as corresponding processed products in Southeast Asia and other countries, with revenue exceeding US$3 million.

In addition, Chen Yanqiu also took advantage of the two countries' urgent need for food and established transit stations in the ports of Manila, Jakarta and Medan to export food and import palm oil.

In March, he went to Egypt again.

Egypt is a major grain producer and consumer in Africa, and also an important rice exporter in the world. However, it is a major importer of corn, wheat and soybeans.

During this financial crisis, the lower-class people in Egypt are also having a hard time.

As early as two years ago, Jiahe's corn trade was expanded to Egypt, but its main sources of grain imports are still mainly Argentina, Brazil, North America, Russia, Ukraine and other countries.

This time, given that Egypt will continue to import grain for a long time, Chen Yanqiu wants to take the opportunity to acquire shares in two terminals at the Port of Alexandria in Egypt.

Jiahe had previously been using these two docks on a lease basis.

Today, the Egyptian government is facing foreign exchange and funding difficulties, and is also interested in selling the terminal in exchange for funds, but the negotiations were not smooth at the beginning.

It wasn't until April that large-scale demonstrations broke out in Egypt.

Demonstrators attacked the local government, burned tires on the streets, smashed shop windows, and stole computers. In addition, at least two local schools were deliberately set on fire and several banks were damaged.

Egypt realized the seriousness of the "food shortage" and introduced measures such as banning rice exports and canceling tariffs on some food imports.

Jiahe can only export a small amount of rice and wheat raw materials, but it has extremely considerable resources of corn, wheat flour and food.

Under such circumstances, negotiations on the equity sale of the two terminals were quickly launched, and finally Gaode signed the agreement as the representative.

This year, Egypt imported more than 120 billion US dollars of agricultural products and food, of which Jiahe took 3.2 million US dollars. At the same time, the overseas grain transit base made breakthrough progress.

In June, Chen Yanqiu arrived in Santos, Brazil.

Santos is a famous port city in Brazil, only 70 kilometers away from São Paulo, the largest city in the southern hemisphere, and has railways connecting to all parts of Brazil.

São Paulo State is also the most important agricultural and animal husbandry production area in Brazil and the world's largest production base of citrus, sugarcane and potatoes.

The states of Mato Grosso, Paraná, Rio Grande do Sul, Goiás, Mato Grosso do Sul and Minas Gerais surrounding São Paulo are Brazil's main corn and soybean producing areas.

Brazil's total corn production exceeds 1 million tons, of which about 4000 million tons are exported, and its soybean production is about 5800 million tons, of which 2500 million tons are exported.

No major grain trader will give up this important global grain producing area.

Jiahe has a large gap in overseas resources compared with China National Grain and Foodstuffs Corporation, and is even a beginner compared with traditional international grain traders.

But this does not prevent Jiahe from having lofty ambitions.

Golden Harvest established an office in South America three years ago and has since developed step by step.

During these three years, the four major grain traders have demonstrated their presence everywhere. The Chinese market not only makes them resentful, but also full of fear.

Now that they have arrived in South America, one of the bases of the four major grain traders, they have begun to restrict Jiahe's actions everywhere.

Once Jiahe Grain and Oil sets its sights on some large targets and prepares to launch an acquisition, these grain merchants will jump out of the layers of obstacles and use extremely difficult means such as maliciously raising prices, provoking shareholders, and inciting farmers.

The purpose of Jiahe Grain and Oil is to make profits, not to be taken advantage of.

For this reason, for a long time, Jiahe Grain and Oil did not achieve much success in Brazil, with only some scattered trade volumes.

On the contrary, major grain traders in the island country, such as Marubeni, Itochu, and Wilmar International, have completed several acquisitions of considerable size.

However, two to three years is enough time for the enterprise team to improve and optimize and understand the market situation.

After Jiahe International was established and Chen Yanqiu officially took up the post, he reached an investment agreement with the Santos Port Group to invest in the construction of warehousing facilities and terminals in the port, which is expected to be officially put into operation next year.

At this point, Jiahe International’s transit base in Santos has taken shape, and the cumulative grain trade volume this year has reached 30 tons, taking the difficult first step.

The next step is to go deep into the soybean producing areas in the Brazilian plateau and the corn producing areas in southwestern Brazil to establish cooperation with the majority of farmers.

Jiahe International provides the platform, followed by Tianhe Seeds and Quanwang Bio.

After Brazil, it's Argentina.

The transit base established by Golden Harvest International is in Rosario, the central city of the Pampas.

The third largest city in Argentina, the hometown of football king Messi and Cuban revolutionary leader Che Guevara.

This is a river port located along the Paraná River. It is an important bulk cargo port in South America, and its grain exports account for 70% of Argentina's total exports.

This year, Argentina was affected by severe drought and its soybean production dropped sharply, but it was still 3300 million tons, and corn production was 1870 million tons, far lower than Brazil.

Similarly, in Argentina, Jiahe was targeted by international grain traders and two acquisition targets were destroyed in succession.

But Golden Harvest International still made a breakthrough in Argentina.

The financial crisis and the Argentine government's increase in tariffs on grain exports from the port of Rosario have sparked unrest among farmers and local businesses.

Some companies have encountered operational difficulties.

Finally, Chen Yanqiu seized the opportunity and successfully acquired an exclusive grain terminal in the Port of Rosario in July that could provide loading and unloading services for cargo ships of more than 7 tons.

The Port of Rosario is an inland port deep in the grain-producing area, surrounded by vast farmlands.

Although the throughput is smaller than that of Santos, it is suitable for the work of Jiahe International, which has just arrived.

This has also become a key area that Chen Yanqiu focuses on. Through the work of the local employee team in Rosario, the first shipment was sent out in August this year.

This is a bulk carrier loaded with 7 tons of barley worth about US$1500 million, destined for the domestic port of Jinmen.

It takes about 3 to 5 days for the port to complete the loading and unloading of a 6-ton ship. About 40 bulk carriers can be dispatched per month, carrying about tons of grain.

Since the acquisition, the terminal has maintained a workload of 60% every month.

From barley, corn, and soybeans at the beginning to wheat now, the grain transportation volume of Jiahe International Rosario Company has reached 140 million tons.

It even took the opportunity to open up the Mexican market and found partners in the Port of Veracruz on the Gulf of Mexico and the Port of Manzanillo on the Pacific coast.

This is a huge step forward.

When the work in South America got on track, Chen Yanqiu returned to East Asia, which is the main battlefield of grain trade.

Last year, domestic corn production exploded to 2.5 million tons, exceeding domestic demand by million tons, and more than million tons were satisfied through exports.

Of this, 2000 million tons were exported to island countries, South Korea, and Formosa Province.

Of the 2000 million tons, in addition to several million tons of corn exported from the National Grain Reserve to South Korea in Northeast China, the remaining approximately million tons flowed out from Jiahe.

However, there are not many feed processing plants that export directly to the terminal. Most of them are transferred from Jiahe by trading companies such as Marubeni and Itochu in the island country.

This year, not only the four major grain traders and Wilmar International have increased their investment in domestic grain-producing areas, but also grain traders such as Marubeni, Itochu, and Quanmin from the island country and CJ from South Korea are all rushing to seize China's new granary.

Compared with last year, the domestic corn planting area has decreased again and the soybean planting area has increased again, but the domestic grain output still did not disappoint.

Since late August, corn and soybeans in the Huanghuai and Haihe regions have entered the harvest season first, with abundant results and high yields emerging one after another, and the average yield per unit area has increased again.

In early September, corn and soybean harvests also began in Northeast China, and more farmers and regions reported the good news.

The National Grain and Oils Information Center also released the latest production forecast.

The corn planting area decreased by another 3000 million mu to 3.2 million mu, with an estimated output of 2.24 million tons.

The soybean planting area increased to 2.35 million mu, and the estimated output was 5052 million tons, an increase of 600 million tons compared with last year, but the estimated consumption increased to 6085 million tons, and the self-sufficiency rate dropped by two percentage points.

In addition, the growth rate of unit output of wheat and rice has also increased, and the total output has increased significantly.

Regardless of whether this estimate is accurate or not, the mere release of this data has boosted confidence in domestic food security.

When people read the newspapers, and then use the fact that domestic prices of rice, flour, grain and oil have been low for nearly a year as evidence, and then look at the news about riots, marches and riots abroad caused by a piece of cake, the comparison of the national happiness will be clear.

International grain traders have also increased their investment in this new grain production area. Some early investors, such as Wilmar International, have already put factories into production in the northeastern production area.

Those with background advantages, such as China National Grain and Oils Corporation, have also initially developed purchasing and warehousing capabilities.

Some of the companies that invested late, such as the four major grain traders, are still building their production capacity.

Grain traders in consumer countries such as Marubeni, Itochu and CJ are also eager to purchase grain directly from Chinese farmers or import feed directly. For example, Marubeni and New Hope have established a joint venture feed company in Shandong Province.

The domestic grain market is full of excitement, but Chen Yanqiu knows that there is a domestic team to handle all of this.

Jiahe Grain and Oil has opened up grain logistics channels including seeds, agricultural materials, planting bases, procurement, warehousing and processing, and logistics in China, and has the strongest competitiveness in purchasing grain in production areas.

No matter how hard Marubeni, Itochu, and CJ try, they cannot purchase grain cheaply enough, and thus have no cost advantage.

No matter how high and mighty and powerful the four major grain traders are, they still have to start from scratch in China.

All he needs to do is stabilize and expand external markets.

Therefore, Chen Yanqiu went to the island country's three main grain loading and unloading ports, Tokyo, Nagoya and Yokohama, and visited feed and breeding companies.

After reaching a verbal agreement, we went to South Korea again and the same routine happened again.

Residents of these two countries have also had a hard time since the financial crisis, with prices soaring and people reluctant to consume grain, oil, rice, noodles, vegetables and fruits.

When Chen Yanqiu talked with people in Busan, he found that even the most common kimchi has become a scarce daily item in South Korea.

There is no doubt that China can feed 13 billion people. On the contrary, the island countries and South Korea seem to be experiencing a food crisis.

Oh, this is also thanks to their American daddy.

Under the pressure of food shortage, although Chen Yanqiu's work in East Asia encountered setbacks, most companies and farms would not refuse high-quality and low-cost products.

The only concern is official supervision and interference from grain traders such as Marubeni.

Chen Yanqiu believes this is not difficult to solve.

Jiahe can also interfere with Marubeni and Itochu’s grain purchases in the country, so that you cannot get grain, or can only get grain from me.

In one year, Jiahe International has stabilized its markets in corn importing areas such as Southeast Asia, North Africa, East Asia, the Middle East, and Mexico. At the same time, the establishment of transit stations has laid the foundation for further in-depth market links such as processing and sales.

According to Chen Yanqiu, it is impossible for Americans to be stuck in the quagmire of weeds and red fire ants forever.

Once its production capacity is restored, the world food trade pattern will become even more intense, and competitiveness in consumer countries will be particularly important at that time.

Currently, Jiahe Grain & Oil's global grain trade volume is just over 20 million tons, and it still has some distance to go before becoming a truly large international grain trader.

But this year, we have also laid anchor in two grain-producing areas, Brazil and Argentina, taking a more solid step towards global trade.

...

Half a day had passed since listening to Chen Yanqiu's report, and Guo Yang had also finished a pot of tea.

He was extremely satisfied with this result, but Chen Yanqiu still felt a little unsatisfied.

"Back then, the boss had circled out eight major regions, 21 seaports, river ports and railway stations in 80 countries on the map. What has been completed now is just a drop in the bucket."

"I'm content." Guo Yang smiled. He also remembered the logistics system strategy meeting.

“I just drew it casually at first.”

Chen Yanqiu took a sip of tea and said, "There is Matadi Port in Africa, where Yu Honghai has laid a foundation. Yu Xiaochuan is also active in the Middle East. The only areas that are completely blank are the grain-producing areas in Eastern Europe and the consumption areas in Western Europe."

"What about North America?"

"We already have bases in New Orleans and St. Louis, so at least we won't be caught off guard when needed. North America will also be one of our priorities next year."

Guo Yang nodded.

New Orleans is a seaport on the Gulf of Mexico.

St. Louis is an inland port on the upper Mississippi River, located on the border of Missouri and Illinois. It is a major agricultural production area in the United States, but it has suffered in the past two years.

In addition, Tianhe also has a branch in Illinois.

Guo Yang thought for a moment and asked, "If Jiahe establishes a port group, will it be able to grow and develop?"

"It's very difficult, very difficult." Chen Yanqiu pondered: "First of all, Jiahe lacks a home port."

Guo Yang asked doubtfully: "Home port? Aircraft carrier?"

Chen Yanqiu was stunned. Aircraft carrier? It seems that China doesn't have such a thing yet. How dare she think so? "No."

“For example, Hutchison Port Holdings Group initially developed with Hong Kong Island as its home port, and later acquired the largest port in the UK, Port of Felixstowe. After entering the 1990s, it used Yantian Port in Pengcheng as its second home port.

Similarly, the Port of Singapore Authority also uses the Port of Singapore as its home port.

These two major port groups are based on high-quality home ports, which is why they have become the top five port groups in the world today.”

Guo Yang knew that Hutchison Ports Group was the port department of Cheung Kong Holdings, which is Li Ka-shing's company.

But I didn't expect it to be so strong.

After thinking for a while, Guo Yang asked: "Does Matadi in the Democratic Republic of the Congo have the potential to become a home port?"

"Impossible." Chen Yanqiu shook his head without hesitation. "The economy and politics around the Democratic Republic of the Congo are poor and chaotic. It may not develop for decades or even hundreds of years."

Guo Yang did not deny it either.

The Democratic Republic of the Congo is one of the most chaotic regions on the planet, and he is now letting Yu Honghai do what he wants.

The dividends you deserve will be distributed to you, but how much money you can earn in the end depends on your efforts.

But he feels there is still opportunity for oil palm plantations to develop in the Democratic Republic of the Congo.

But Matadi as a home port is indeed a bit far-fetched. It’s not as good as the Beibu Gulf, huh?
"What about the Beibu Gulf?" Guo Yang asked anxiously, but he felt that this idea was very promising.

There are three ports in the Beibu Gulf: Fangchenggang Port, Qinzhou Port and Beihai Port. The Pinglu Canal opens to the sea from Qinzhou Port.

If the Pinglu Canal is open to traffic in the future, it will connect to the southwest; if the Hongqi River concept is realized, or if the Lanzhou-Yinchuan Railway currently under construction is opened to traffic.

The entire Northwest and Southwest are connected together, which is part of the future Belt and Road Initiative.

Moreover, once the bioenergy industry develops, the cargo throughput of the Beibu Gulf Port will increase, and it should be qualified to serve as a home port.

Chen Yanqiu thought for a while and said, "Beibu Gulf may have this potential, but it may not be easy to intervene. It is difficult for private enterprises to get involved in this kind of investment."

"It's okay." Guo Yang smiled. "I've had so much dealings with the Guangxi Province, so I'll just brag and chat."

Thinking of this, Guo Yang couldn't wait to take out his mobile phone and call Ma Biao to chat about Beibu Gulf Port.

Ma Biao also said that it was difficult for Golden Harvest to participate, but he did not say it was a sure thing, only saying that it would be discussed.

In Ma Biao's opinion, Jiahe refused to invest in the Pinglu Canal but wanted to invest in the port, which was a bit of putting the cart before the horse. If the canal was not accessible, where would the potential of the port come from?
Guo Yang could only say that he hadn't thought about this at the time.

At the same time, he also said that if Jiahe could participate in the construction and operation of Beibu Gulf Port, Jiahe would be willing to contribute to the Pinglu Canal.

The force behind this is naturally money.

At this point, things can be discussed.

After ending the call, Guo Yang looked at Chen Yanqiu and said, "Look, this is almost done. It doesn't seem that difficult."

Chen Yanqiu was also surprised that such a big thing was resolved in just a few words. But after thinking about it carefully, he found it not difficult to understand.

Beibu Gulf Port has unique conditions, but suffers from the lack of inland waterways and insufficient cargo throughput. Jiahe can contribute in both areas, so in exchange, it is not too much to ask for its participation in port construction!
If Hutchison Ports can establish a joint venture with Yantian Port, why can’t Jiahe establish cooperation with Qinzhou Port?

There are traces of this.

After spending the whole morning in Chen Yanqiu's office, Guo Yang went to Jiahe Grain and Oil on the other side in the afternoon.

Gaode was not there, but there happened to be a center manager in the office of Jiahe Grain and Oil Trading Company, a subsidiary of Jiahe Grain and Oil.

This man is called Bao Nianchun, a serious middle-aged man.

Jiahe Grain and Oil Trading Company is also the most important part of Jiahe in the domestic agricultural and grain supply chain.

It consists of six parts in total.

They are the business units: Corn Center, Soybean Center, Grain Center, and Logistics Center;
Business departments: Asset Management Department, Business Information Department, Futures Hedging Department, Agricultural Industrialization Department, Warehousing Management Department;

Regions: Northeast Region, Yangtze River Region, Coastal Region, Inland Region, each region has 2 to 4 branches;

Port platform companies;

Directly affiliated enterprises;

Functional departments: office, finance, human resources, audit, legal and other departments.

Bao Nianchun is mainly responsible for the business of the corn center. After entering December, the corn in the Huanghuaihai and Northeast China has been harvested.

Through various models such as contract farming, comprehensive agricultural services, and land trusteeship, the corn center's storage and purchase tasks have long been exceeded.

The main task at this stage is to connect with downstream feed, breeding, food processing and industrial processing companies.

According to Bao Chunlai, the pressure on corn sales this year is also considerable.

Especially the corn in the northwest. In the past, the excess production was supplied to the southwest. However, with the continuous promotion of improved varieties, the gap in corn in the southwest is also decreasing, so naturally there is more corn in the northwest.

Bao Chun went back and forth to Jiuquan because the corn center in the northwest had exceeded its storage quota and needed to find a way to solve the problem.

"I didn't expect that a good harvest would be a problem now."

(End of this chapter)