World Grain - August 2013 - 18

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Sumitomo, CJ CheilJedang form flour joint venture in Vietnam
CHUO-KU, TOKYO — Sumitomo Corp. said on June 26 that it has
signed the relevant agreements with CJ CheilJedang Corp., Seoul,
South Korea, a major food company, on the joint establishment of a
firm that will manufacture and sell flour and baking pre-mix products
in the Vietnamese province of Ba Ria-Vung Tau.
In response to soaring food demands evident in the burgeoning
markets of emerging economies, Sumitomo has been seeking an opportunity to advance into the primary grain-processing sector, focusing its search mainly on Asia. With huge growth potential, Vietnam is
counted among the most promising markets, particularly in Southeast
Asia, given its growing population, which is expected to exceed 100
million in the coming decade from the current 90 million. As Western
lifestyle is likely to become a majority of the Vietnamese diet, the
demand for essential ingredients such as flour and related products
is expected to increase. To enter this rising market, Sumitomo said it
has found an ideal partnership in CJ. Sumitomo brings to the partnership the flour sales know-how it has accumulated in the Vietnamese
market. CJ, meanwhile, with more than 55 years of experience in flour
milling business, provides its operational excellence and know-how
of manufacturing and R&D competence in the state-of-the-art flour

milling technologies for producing high-value-added products with a
primary focus on high-end food ingredients of such as seafood-based
and bakeries products, Sumitomo said.
Following this joint-venture, the two enterprises are enhancing their
partnership by extending the collaboration to diversify to other food
products sectors in Vietnam. To do this, they will bring together their
strength of various areas, which includes the grain harvesting/storage
and frozen dough business, which Sumitomo has established in Australia, and CJ’s animal feed operation in Vietnam.
Furthermore, Sumitomo said it will consider the possibility of introducing primary grain processing projects in other emerging Asian
markets like Myanmar, Cambodia and Laos with CJ.
CJ is a member of the CJ Group, which was originally founded in
1953 as the first manufacturing business of the Samsung Group and
then spun off from the conglomerate in 1993. Starting out as a sugar refinery, the CJ Group has expanded its food business to become the leading player in South Korea’s food industry, manufacturing and distributing a broad range of food ingredients and other related products ranging
not only from flour & flour mix, cooking oil, seasonings, packaged food
and processed meat but also to pharmaceuticals and animal feed.

Blumberg Grain expands investments in Nigeria
LAGOS, NIGERIA — In cooperation with the Government of Nigeria, Blumberg Grain announced on July 18 that it has executed a
letter of intent for a $250 million investment program in the Nigerian
agriculture sector.
The investment includes a large-scale production and distribution
facility for Blumberg Grain’s food security storage warehouses, agricultural processing and packaging facilities, and investments in land
and technology to create high-yield, high-efficiency farms.
After meetings with government officials, including Nigerian Minister of Agriculture Akinwumi Adesina, Philip Blumberg, chairman
and chief executive officer of Blumberg Grain, said, “Nigeria represents one of the largest agricultural markets in the world and provides
a significant opportunity for our company to establish a major presence
in West Africa. We have been encouraged and impressed with Nigerian
Federal and State government officials’ assertiveness in attracting and
supporting our investment program.”

The agreement is in accordance with, and supports, Nigeria’s efforts with regard to the G8’s New Alliance for Food Security and
Nutrition program.
The first phase of the investment includes the establishment of a
production facility for Blumberg Grain’s food storage warehousing
systems, as well as an initial deployment of approximately 340,000
tonnes of crop storage capacity in Nigeria. The project is anticipated
to commence in the third quarter of 2013, and will create 800 to
1,000 new jobs in the agriculture and manufacturing sectors.
David Blumberg, vice-president of Blumberg Grain, remarked
from Lagos, “The Federal Republic of Nigeria has ambitious goals
to increase agricultural production by 15% by 2015. Reducing the
estimated 30% loss in grain and estimated 50% loss in produce
from post-harvest losses, due in large part to inadequate storage,
would serve as the fastest and most efficient way to increase agricultural production.”

CHS earnings decline in third quarter
ST. PAUL, MINNESOTA, U.S. — CHS Inc. on July 10 reported
earnings for the third quarter were down 38% to $250.8 million
from $405.1 million reported in the same quarter last year.
CHS attributed the decline to delayed spring planting in many
areas which affected crop inputs movement, lower grain exports
resulting from a reduced 2012 U.S. harvest and scheduled maintenance at the CHS Laurel, Montana, U.S., refinery. Revenues for
the quarter were $11.9 billion, compared with $11 billion for the
same three-month period in fiscal 2012.
For the first nine months of 2013, CHS reported earnings of
$869.6 million a 3% drop from the $899.7 million reported for
the first three quarters of fiscal 2012. Revenues for nine months
were $33.5 billion, up 13% from $29.6 billion for the same period
a year ago, reflecting increased year-to-date average prices and
grain sales volumes.
Year-to-date, Energy segment earnings decreased slightly due
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to lower margins in refined fuels partially offset by strong performance in propane, lubricants and transportation operations.
Earnings for the CHS Ag segment declined through the third
quarter primarily due to lower margins resulting from reduced
grain exports and the late spring planting season which affected
the company’s wholesale crop nutrients businesses.
Earnings also declined for CHS local Country Operations retail
businesses as the late, wet spring reduced fertilizer movement.
CHS reports results for its business services operations and
its two food processing-related joint ventures under the Corporate and Other category which recorded improved profitability
through the third quarter of fiscal 2013.
Earnings increased largely due to improved performance by the
company’s Business Solutions area, as well as its ownership in
Ventura Foods, LLC, the company’s packaged food joint venture,
and Horizon Milling, a wheat milling joint venture.
August 2013 / World Grain / www.World-Grain.com

http://www.World-Grain.com

World Grain - August 2013

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