Growmark is an agricultural cooperative with annual sales of $7bn (FY 2016 data) in agronomy, energy, facility planning, and logistics products and services, as well as grain marketing and risk management services in 40 US states and in the Province of Ontario in Canada.
Its arrangement with global grain trader, COFCO International Limited (CIL), which is part of China's COFCO group, was announced earlier this month. The deal includes joint management and ownership of a grain storage and transport facility in Cahokia, Illinois and a grain origination agreement.
The two organisations said they expect that facility to play key role in originating grain for the international markets, in particular the largest demand market, China.
CIL was formed by COFCO's acquisition and merger of Nidera and COFCO Agri. It has a supply chain in six continents, and is attempting to establish a vertically-integrated ag supply chain. CIL said it sees this alliance as giving it access to the growers of the largest grain exporting region in the US.
Bob Rasmus, executive director of the grain division at Growmark, told FeedNavigator that it already had a working relationship with Nidera, a factor that paved the way for this deal:
“As we continued to grow, we’ve wanted to go upstream, closer to final destinations for the grains. We were actively seeking [companies] we could partner with, and in industry conversations with Nidera, we knew they bought a facility in Cahokia with access to the Mississippi and they [said] what they needed was origination to bring grain to that facility.”
Chinese market
The agreement is expected to expand global reach for the co-op, said Rasmus.
“It doesn’t mean that something you load won’t be sold somewhere else, but the focus is certainly COFCO’s demand in China,” he said. “We didn’t go into this and say we have to build upstream to get to China, but it is such a big, big piece of US grain exports – particularly in soybeans, they buy a lot of soybeans – you can’t ignore that demand.”
However, as the company found a way to move upstream it would have been looking to China, he added.
“Even though there are other large markets for US grains, the growth anticipated in China outpaces those,” he said. “Those are markets we want to continue to serve, but if you want to look at where will our crops be going in the future, China would be the big customer.”
Grain handling
Growmark will have a grain merchandiser in the office related to the grain handling facility, he said. However, the day-to-day management of the jointly-owned facility will be done by COFCO.
The site offers about 34,500 feet of rail track, which allow it to hold four unit trains, he said. Having so much track space available mean the facility will have a larger range in origin options than if it only relied on truck transportation, he added.
There also are six truck-receiving lanes, two rail pits so that two shuttle trains of grain or grain products may be unloaded at the same time and the site offers the ability to load two river barges at one time, he said.
The facility is served by the Alton & Southern railroad but also has the ability to receive grains from other class I railroads, said Growmark.