Miller Magazine Issue: 112 April 2019

34 NEWS APRIL 2019 World’s 4 largest agribusinesses and Brazil’s Amaggi mull road, railway venture Archer Daniels Midland Co (ADM), Bunge Ltd, Cargill Inc, Louis Dreyfus Co (LDC) and Amaggi have commissi- oned a study on operating a 968-kilometer stretch of the BR-163 highway for 10 years, according to infrastructure and logistics business development firm EDLP. That hi- ghway is the leading grain artery to northern ports that were responsible for 28 percent of Brazil’s soy and corn exports in 2018, doubling their share in the last eight years, Reuters noted. Roberto Meira, a director at São Paulo-based EDLP, said the plan with a proposed model for handing over the roadway to private investors will be submitted to the government. The plan would involve convincing the go- vernment to offer a 10-year concession on the road, far shorter than the typical 20- to 30-year tenure on projects currently approaching auction. Brazil’s infrastructure ministry previously said it intends to put a concession to operate the BR-163 highway up for bid. Details have yet to be announced. The shorter tenure would account for the fact that grains shipped by truck would gradually be migrated to the proposed Ferrograo rail line that runs a similar route to BR-163 starting in 2025 until eventually the road concession ex- pired, Meira said. The government’s privatization secretary said in Ja- nuary that the Ferrograo rail project could be ready for bidding this year or early in 2020. Meira said the grain traders could invest equity capital in both the road and the rail projects, although the bidding could attract other investors. He said the companies hope making logistical investments will cut costs and remove the uncertainty of trying to move grains up north without a railroad. Every year, long lines of trucks form at certain towns in Mato Grosso and Pará state because of BR-163’s poor condi- tion. REUTERS The world’s big four agriculture traders and Brazilian rival Amaggi could make a joint bid to operate a road connecting the country’s grain belt to northern ports, while also considering an investment in a parallel railway, the firm that conducted a study on the potential venture said. COFCO plans to double grain purchases in Black Sea region COFCO International plans to double its grain purcha- ses in the Black Sea region as part of a global expansion to help serve markets beyond China, the chairman of the Chinese-owned agricultural trading group said. The Bla- ck Sea region has become a major supply hub for staple crops, with Russia now the world’s largest wheat exporter and Ukraine one of the biggest corn exporters. COFCO International aims to double the volume of grains it sour- ces from the region “in the next two to three years”, Jingtao (Johnny) Chi said in a speech to the FT Commodi- ties Global Summit in Lausanne, Reuters reports. COFCO International is controlled by Chinese food group COFCO Corp and became a global commodities trading house following its acquisition of grain trader Nidera and the agribusiness of Noble Group. Chi said the firm traded 106 million tonnes of commo- dities last year, and aims to increase the amount of crops it buys directly from farmers outside China to over 60 mil- lion tonnes by 2022, compared with 40 million last year. Asked at the conference about a potential stock market listing for COFCO International, Chi said this would be a good way to support investor returns. Chi has said pre- viously that a share listing was an objective for COFCO International but the firm would first be combined with some of COFCO’s domestic operations. COFCO Interna- tional’s emergence as an international merchant has chal- lenged the so-called ABCD quartet of farm commodity giants comprising Archer Daniels Midland, Bunge, Louis Dreyfus and Cargill. Glencore Agriculture has also deve- loped into a major global grain merchant, and its chief executive Chris Mahoney told the conference Russia had potential to increases its exports of grain by another 10 million tons by 2025, including 6-7 million tons of wheat.