(Bloomberg) -- China has kicked off a long-anticipated overhaul of its massive state-owned agriculture companies to help secure food supply for the world’s most populous nation.
Food giant Cofco Corp. will set up an oilseed crushing and processing venture, and national stockpiler Sinograin will form a grain storage business as part of an “equity cooperation.” The move will play to the strengths of the respective firms and contribute to China’s broader goal of improving food security.
The revamp has been considered since at least 2019 and is part of President Xi Jinping’s drive to streamline industrial capacity among state-owned companies. It will take Cofco closer to its ambition of rivaling the storied ‘ABCD’ group of international commodity traders who dominate flows of agricultural products -- Archer-Daniels-Midland Co., Bunge Ltd., Cargill Inc. and Louis Dreyfus Co.
The government could transfer Sinograin’s trading assets and oilseed crushing capacity to Cofco, Bloomberg reported in 2019. For Sinograin, the restructuring will allow it to fulfill its role of “managing the granary of a big country,” the State-owned Assets Supervision and Administration Commission said Thursday.
“For a long time, Sinograin and Cofco have maintained a good and extensive cooperative relationship,” the commission, which oversees China’s state-run companies, said in a WeChat statement. The move will improve the efficiency of resource allocation and better maintain national food security, it added.
Transferring Sinograin’s crushing capacity would make Cofco China’s top crusher of soybeans. Cofco has nine listed units in Hong Kong, and six trade on mainland Chinese stock exchanges, according to its website.
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