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An Overview of the Fully Integrated Value Chain

China Agri fully integrated oilseeds, corn, paddy, wheat and barley spans from farming to final distribution. We have developed comprehensive capabilities in logistics, processing, R&D, branding, marketing and sales that allow us to streamline our business and develop value-added products for consumers around China.

 

To meet the demands of and satisfy all stakeholders in our business, we have helped farmers by introducing higher quality and more varieties of crops, promoted cultivation efficiency and supported agricultural industrialisation. We have created a low-cost and efficient supply chain system by carefully developing our logistics and processing facilities. And we have cultivated our brand by providing the highest quality products that our end customers demand.

 

As a highly interconnected and integrated industry, agri-industry is related to many fields such as agriculture, processing, manufacturing and circulation, etc. Under the system of the integrated value chain, we are able to manage and organise the whole industry by means of investments, acquisitions, alliances, upstream and downstream integration and cooperation.

 

The Fully Integrated Value Chain
Raw Material Procurement

China Agri actively helps to bridge agricultural supply and demand by connecting farmers directly with major markets. We own a rice cultivation base of approximately 400,000 acres in Heilongjiang, Jilin, Jiangxi and other high quality rice producing areas. We have established bases in rapeseed production in Hubei, Anhui and Chongqing, and started giving support to farmers by providing crops, production data and more effecting planting methods to improve the quality of domestic rapeseed. We have adopted a “factory + farm” order-based mode in Inner Mongolia to purchase barley directly from farm, which make Inner Mongolia one of the main barley producing areas in the country. We cooperated with the Shandong Provincial Academy of Agricultural Science to jointly develop a “COFCO 6” wheat variety that has an average output of 512.2 KG per mu, which is 6.8% higher than traditional wheat varieties as demonstrated by a comparison test over three successive years. We are able to monitor and evaluate the agricultural environment of food ingredients, and control the conditions of food sources using models such as “self-owned production base” and “contract farming”.

Warehousing and Logistics

We constantly seek to expand our storage capacity, and optimise our logistic system layout and build supporting logistics facilities, and strengthen our resource control by procuring raw materials near the location of our factories. Our factories are primarily located near important ports, raw material producing areas, and other key markets. We have established a convenient, safe, efficient, intelligent and low-cost logistics system to ensure that we are able to provide the best products and services to our clients. Every year, through a long-term cooperation with local farmers, agents and local governments in both Shandong and Xinjiang province, our company has been able to obtain a large number of oil plants in a short period of time. Since we expanded into the domestic small pack rice market, we have set up a modern logistics distribution system by means of self-construction and leasing. We now own wheat storage capacity of 294,000 tons and finished product storage capacity of 525,000 tons. We have also installed an advanced management system to oversee and control the storage process to ensure the quality and safety of both our raw materials and finished products.
 

Production and Processing

China Agri has a strategically located and large-scale network of production facilities. The oilseeds processing plants are located in major food consumption markets in Tianjin, Jiangsu, Shandong, Guangdong, Hubei and Xinjiang etc. Our rice processing and trading business emphasises “Producing area + marketing area + coastal regions” layout, with processing plants located in China’s main rice producing and marketing areas, as well as coastal regions. Our wheat processing business is based in the best wheat producing areas in northeast and northern China, the Yangtze River Delta and central China.
 

We are also China’s leading supplier of biochemical and biofuel products. All of our factories have introduced world-class processes and adopted advanced production technology. Most processes are now controlled by computer programs to ensure that our products maintain the highest possible quality.
 

Quality Control

We constantly work to strengthen the development of our food safety management system. We have been standardizing risk controls throughout our production and processing by building closer ties with farmers and improving resource management. We have also tried to start catching food safety problems much earlier in the process by installing better control procedures throughout the supply chain.
 

First, we have reinforced and standardized production processes throughout our company by using the latest equipment, techniques and production technology. This has laid a great foundation for quality and safety. All of our food processing subsidiaries have established comprehensive food safety management systems that have been certified as ISO22000 and ISO9000 compliant.
 

Second, we perform quality and safety risk inspections throughout our value chain. This allows us to identify food safety hazards early, and to formulate risk assessments during the production of all of our products, including oilseeds, corn, rice, wheat, and malt. This has reduced risks across our business and helps ensure overall food safety.
 

Third, we have launched a series of activities related to food quality and safety. For instance, we attempt to detect hidden food safety dangers and risks at all levels by strengthening food safety management and controls. We have also increased our staff’s overall awareness of the importance of food quality. Our training teaches staff to detect hidden dangers, inspect for food additives, conduct and practice recall drills, and trace food safety issues.
 

Fourth, we are also strengthening the monitoring and inspection of our outputs. China Agri places great importance on inspecting and testing all products. We have established laboratories at all of the company’s key subsidiaries to inspect for food safety. Labs of COFCO East Ocean Oils & Grains Industries (Zhangjiagang) Co.,Ltd. and COFCO Bio-Energy (Zhaodong) Co., Ltd. have been approved by national labs for third party inspections. Each subsidiary throughout our business has made plans to construct labs and standardize lab management based on our food safety standards. Through regular communication and standardized inspection procedures, we are able to make sure that our testing data is accurate. In addition, all of our professional inspection staff is certified, and quality and safety standards are tied to international standards, and all products passed the random testing conducted by regulatory authority.

 

Strategic Objective

China Agri's goal is to build a world-class integrated agri-industries enterprise, a leading processor of domestic agricultural products, and a major supplier and service provider of diversified high-quality food, food ingredients, feed ingredients and bio-energy. 

 

Roadmap to achieve the strategic objective: 

1. To extend our business upstream and downstream
We aim to ensure food safety and quality through upstream expansion, and produce more value-added products in our downstream business.
 

2. To focus on organic growth
To maximize the utilization of company assets by enhancing management efficiency and reducing operational and management costs.
 

3. To strengthen internal and external synergies
By closely collaborating with our customers, we aim to provide a one-stop solution to our customers with our diversified food ingredients. We feature specialized and customized products and services that cater to our customers’ needs.
 

4. To lower costs
We aim to lower costs and improve product competitiveness by strictly controlling costs at all levels of our business, from new project construction, to raw material procurement, product processing, warehousing and logistics, marketing and more.
 

5. To enhance product and technology R&D
We are maximizing the use of internal and external resources in the area of R&D to develop new products and technology and to keep in close contact with our customers and the overall demands of the market. This should help us improve our efficiency and satisfy customer needs as we develop new products.
 

6. To improve our human resource management
By recruiting and training the best people, we believe we can cultivate a corporate culture of integrity, cooperation, professionalism and innovation. This should help us build a great corporate culture and develop a high-caliber team, all while producing great products for society and maximizing value for our shareholders.