An Overview of the Fully Integrated Value Chain

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