Chongqing Grain Group Co CGG is setting up a soybean base in Brazil

Chongqing Grain Group Co Ltd (CGG), one of China's largest SOE (State Owned Enterprise) grain corporations, said it will invest 500 million USD to build a soybean industrial base in Brazil.

 The planned industrial base is to be built in the north-eastern Brazilian state of Bahia, which will require a series of infrastructure projects focusing on the processing, warehousing and logistics of soybeans.

"Establishing a high-quality soybean base with Brazilian farmers, to whom we gladly offer financial support and services, including storage and logistics, is our main goal in the Brazilian market. With the establishment of a comprehensive industrial chain, our purchasing cost for soybeans will be greatly reduced," Hu Junlie, CGG president, told the China Daily News.

"As our first step, $100 million will be devoted to setting up a soybean pressing plant, which will be completed by the end of next year," Hu said.

The plant, which will start production in 2013, will have an annual capacity of 1.5 million tons of cooking oil, to be sold in the Chinese and Brazilian markets.

After the pressing plant, CGG will set up a soy refinery and processing plants for bio-diesel fuel and soy lecithin products within a few years according to Hu.

China Radio International Online reported that the Chongqing-based group plans to invest 5.8 billion yuan ($914 million) to plant 600,000 tons of soybeans on 200,000 hectares in Brazil annually.

The project will be the biggest overseas investment made by a Chinese agricultural enterprise and China's largest overseas production base for cooking oil.

Currently, nearly 80 percent of agricultural oil producing crops in China are imported, mostly from the US and Brazil. Last year, China imported 54.8 million tons of soybeans, and the volume this year will hit 60 million tons, according to the China Nation Association of Grain.

"Most Chinese companies import soybeans through the four largest international grain dealers - ADM Co, Cargill Inc, Bunge Ltd and Louis Dreyfus SAS. However, if importers can purchase from the producers, 18 to 24 percent of the profit could be saved," Hu of CGG said.

Brazil is the second-largest soybean-producing and processing country after the United States. And I am sure they will continue to see Chinese Direct Investment into their nation as China moves to secure food sources for their growing sophisticate demand.