August 5, 2019 / 6:17 PM / 18 days ago

UPDATE 2-COFCO plans to boost Brazil ops, sees improving business outlook

(Adds chairman’s comments on environment)

By Marcelo Teixeira and Ana Mano

SAO PAULO, Aug 5 (Reuters) - Chinese commodities trader COFCO plans to increase investments in Brazilian operations as the business environment in the country is likely to improve after approval of economic reforms, the company’s chairman, Johnny Chi, said on Monday.

Speaking at Brazil’s 2019 Agribusiness Congress, Chi said COFCO is looking at investments such as new warehouses and improving transportation systems in Brazil.

“We expect to have a business environment that is more predictable and safe. It is a good moment to think how we can deepen this partnership,” said Chi in a presentation.

China is Brazil’s largest trading partner and the No. 1 buyer of Brazilian commodities. COFCO is a major soybean and corn trader in the country, as well as a large producer of sugar and ethanol.

The Brazilian government is seeking to enact several reforms, including one on pensions and taxes, to improve fiscal balance and boost investor interest.

Chi, speaking in Mandarin through a translator, said that the company, which bought rival traders Nidera and Noble Agri in 2014, is still looking for opportunities to expand further, but he did not specify areas or potential targets.

He said he expects the business ties between COFCO and Brazilian farmers to strengthen in coming years.

COFCO has sharply increased the amount of soybeans it sources in Brazil, exporting almost 11 million tonnes last year, nearly 20% more than in 2017. The trade dispute between the United States and China was a large factor behind that increase.

Asked by reporters about his views related to the trade war, the chairman declined to comment.

The executive said COFCO expects to buy 5% more Brazilian soy by volume each year for the next five years.

ENVIRONMENT

Chi said the Chinese commodities trader aims to favor the sustainable growth of Brazilian agriculture production. His remarks happen in a moment when criticism over the Brazilian government regarding deforestation grows.

“We see great potential for growth in Brazilian agriculture. Meanwhile, your country is well-known for its natural beauty and resources, particularly the Amazon rainforest. These two are not contradictory,” he said.

The chairman said COFCO is establishing a programme to facilitate long-term financing of soy production on open land in Brazil.

“Brazil has over 25 million hectares (62 million acres) of such land, which is suitable for farming. We hope our programme will offer appropriate financial incentive for sustainable production,” he said, adding that the company plans to boost its operations in renewable energy in Brazil, where it operates four ethanol plants. (Reporting by Marcelo Teixeira and Ana Mano; Editing by Marguerita Choy and Steve Orlofsky)

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