AGRICULTURAL GROUP OF COMPANIES

The Chinese holding company will invest almost 10 billion rubles in Russian agriculture.

06.06.2019
News

The Chinese company “Joyvio Beidahuang Agricultural Holdings” (JBA) will invest almost 10 billion rubles in Russian agriculture. General Director of the Far East Development Fund Alexei Chekunkov spoke about JBA's desire to engage in agriculture in Primorye to “Vedomosti”, and confirmed Dmitry Savenkov, director of one of the Russian structures of the Chinese company, Legendagro Primorye. According to the data on the national unified legal person list, " JSC Legendagro Holding" was registered at the end of 2018.

JBA, according to the list, is a joint venture of the agricultural division of the Chinese investment holding Legend Holdings - Joyvio Group, one of China’s largest agricultural group Beidahuang (its land bank exceeds 6 million hectares) and the Chinese state-owned company Jiusan Grain and Oil Industry Group, specializing in soybean processing beans.

In Primorye, good natural and climatic conditions for growing grain and legumes are in many respects similar to the climate of border areas of China, and Chinese technologies make it possible to cultivate land efficiently, explains the choice of the region JBA Director General Jianchao. And there is also support from local authorities and the Ministry of Eastern Development. “So the project has great potential” he concluded.

Legendagro has already leased 3,500 hectares land in the Khorolsky of Primorsky Krai, where grows rice, soybeans, and corn, Savenkov says. In the future, the company wants to increase the land bank in the region to 50,000 hectares and build a plant for deep processing soybean with a capacity up to 240,000 tons per year. Soy concentrate, soybean oil, lecithin, molasses will be produced here. The main consumers of this product, as planned, will be Asian producers of feed for farm animals, fish, and domestic animals. The business is export-oriented - the company will export grain and plant products to China, South Korea, Japan, etc., Savenkov notes. Therefore, the agricultural holding also plans to acquire a fleet of grain carriers and create a port terminal for the export of agricultural products. It makes sense to build such an enterprise with an export orientation - the population of the Far East is relatively small, about 8 million people, and there are large Asian importers nearby, director of the Sovekon analytical center Andrei Sizov agrees.

Investments in the project - 9.7 billion rubles., Of which up to 2 billion rubles. invest FDVV. The fund and the JBA signed a corresponding agreement at the St. Petersburg International Economic Forum. As a result of the transaction, the fund will subsequently receive a minority stake in the Legendagro agricultural holding, Savenkov noted.

Many Chinese entrepreneurs who rent land in the Far East, mainly Amur Region, Khabarovsk Territory, Primorye, they grow soybeans and corn, says Vladislav Novoselov, managing director of BEFL consulting company. Russia has more free land and it is much cheaper than in China, he explains. Usually, these are small Chinese entrepreneurs from provinces close to Russia, there are no large well-known agricultural holdings among them, Sizov said. Chinese enterprises work at such enterprises, Chinese equipment is used, Novoselov continues, most of the products will sell to China.

But large agricultural holdings from other Asian countries have been investing in Russian agriculture for a long time, recalls Sizov. The Vietnamese TH Group is already building dairy farms in the Moscow region and Kaluga region, Singapore's Olam International owns a controlling stake in Rusmolco, a large milk producer, the expert lists.

50,000 hectares is a large agricultural bank for Primorye, says Sizov: the current leader in land allotments in the region is Vadim Moshkovich Rusagro group with 96,000 hectares, according to the company’s report of 2018. 

Source: https://www.vedomosti.ru/business/articles/2019/06/06/803577-holding-vlozhit