China's largest agricultural trading and processing company, COFCO, has enlisted Japanese trading house Itochu Corp to help it prepare for possible increases in demand for grains and other food from around the world.
Itochu, Japan's fourth-biggest trading company, said on Monday it and the Chinese company were discussing joint purchases of grains, dairy products and meat to boost their buying power in the international market, after signing a strategic alliance last month.
"China wants to increase purchases of food on the global market as domestic demand is getting pretty tight," Itochu Executive Vice President Yoshihisa Aoki told a news conference. China's exports of key grains such as corn and rice are fast shrinking on the back of growing demand at home. Rapidly increasing wealth in China has also opened the way for sales of high quality farm produce from Japan, as tastes in the world's most populous nation turn to meat, dairy products and imported food.
At the same time a rally in international grain prices, such as corn and soybeans and higher fuel and freight costs have made it difficult for food importers to find stable supplies at reasonable prices. COFCO is expanding its food-processing business as part of an effort to diversify away from grains trading, which is losing importance as China's economy opens up.
It is the largest edible oil producer in China and is increasing its processing of sugar, rice, meat, wine and canned goods, while in supermarkets its "green foods" are promoted as healthier, better quality food. Japanese trading houses, which handle grain trading and own equipment such as large grain elevators in exporting countries, are strengthening ties with major global grain companies and looking for chances to invest in farmland.
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