November 18, 2010

 

Sojitz plans to produce soy in Argentina

 

 

Sojitz Corp., a Japanese trading company, will begin producing soy and other crops in Argentina for export to Asia to take advantage of increasing demand, the company said.

 

Sojitz has established a venture to produce 30,000 tonnes of staples. Sojitz intends to increase production to as much as one million tonnes of soy, corn, and wheat by 2017 with sales of about 1.5 billion yen (US$18 million), Kuniyuki Wada, deputy director of Sojitz's agribusiness department said.

 

Sojitz, together with other Japanese trading companies including Marubeni Corp. and Mitsui & Co., are expanding into agriculture in South America as demand for staples increases in China and other Asian countries. World food production has to rise by 70% by 2050 in order to cater to the needs of an expanding population, according to a UN forecast in September 2009.

 

Corn futures increased by 26% this year whereas wheat and soy have risen 23% and 12% respectively.

 

Sojitz shares decreased by 0.7% to close at JPY148 (US$1.78) on the Tokyo Stock Exchange on November 17 while the benchmark Nikkei 225 stock average increased by 0.2%.

 

The company marked agriculture as a key area in its mid-term business plan announced in April 2009. The Argentine investment will be the first project for the new agribusiness department it began in the previous year.

 

Sojitz's venture, Sojitz Buenas Tierras del Sur S.A., will lease 11,000 hectares of farmland growing soy, corn, wheat and other crops in the Pampas region in central-eastern Argentina, according to the company. Sojitz has invested about JPY500 million (US$6 million) in the venture.

 

The company will export produce to Asian countries, mainly China, India, and Vietnam, Wada said.

 

It may enlarge the area under cultivation to 200,000 hectares in Argentina, Brazil and other South American countries by 2017, Wada said. Sojitz may also purchase farmland, he said.

 

State-backed Nippon Export and Investment Insurance will provide insurance for Sojitz to cover overseas investment risks, according to the statement.

 

Soy imports to China, the world's most populous nation, may increase by 27% to more than 54 million tonnes this year, the National Grain and Oils Information Center said today.

 

Processors increased purchases of new-crop South American soy by 25% from a year earlier, the grain centre said on October 25.

 

Marubeni, Japan's fifth-biggest trading company by market value, and Molino Canuelas of Argentina last year came to a consensus to cooperate in exporting soy and grains.

 

Mitsui, Japan's second-largest trading house by market value, invested US$124 million in Multigrain AG to increase its stake in the world's second-largest grower of soy in October 2008.