Today our group traveled by bus from Shanghai to Nantong, a port city where we visited the Noble Grain company, the largest global supply chain manager in Asia. Noble's grains and oilseeds business focuses on South America, Europe and Asia. The company accounts for 10% of soy exports from South America and owns 10% of the soybean crushing capacity in China.
Henry Wang (left, with visiting American farmers), Executive Vice President at Noble Grain China, says soybeans crushed here come mostly from South America. Noble operates an extensive network of warehouses and elevators across Brazil, Argentina, Uruguay and Paraguay sourcing oilseeds and grains directly from farmers and producers for further inland transportation. Output is shipped directly to Noble's processing facilities in Asia and Europe.
The company's strategy is to source soybeans from "cost-efficient locationsbCrLf to sell in "high-growth environmentsbCrLf like Asia. Wang said they source beans from both North and South America, but the company brochure focuses entirely on S. America as their source for beans.
According to Noble's website, U.S. farmers can't compete with Brazil and Argentina. Their soybean production costs are about $30 per metric ton lower than ours. Likewise, Noble's figures show it costs about $7.89 per metric ton to crush soybeans in China compared to $16.75 per metric ton in the United States.
Noble's growth is a symbol of how the grain processing industry has exploded in China. "China is now the largest crusher in the world,bCrLf Wang notes. "At one point it was the U.S. but China takes the lead when you factor in seeds other than just soybeans.bCrLf
China's annual laundry list of crops crushed is impressive: 40 million tons of soybeans, 12-13 million tons of rapeseed, 4 million tons of peanuts and 11 million tons of cotton seed, for starters.
This growth has come in just 10 years, Wang adds. A decade ago, China barely crushed 20 million tons a year. Several years of double-digit GDP economic growth has increased demand for processing, and Noble is one of several companies to exploit these opportunities.
Despite global recession, Noble still sees about a 2-3% increase in protein meal demand this year; they expect 4% growth for soybean meal while demand for sunflower and fishmeal is expected to drop.
In the U.S. soybean meal demand is off at least 5 to 6%, Wang says, while the European Union is expected to see an even bigger drop in demand. Total vegetable oil demand is projected flat in China this year. About 25 million tons of vegetable oil is consumed in China each year.
Above: soybeans are bagged by hand for domestic use; left, Noble's general manager Kevin Wu grabs a handful of beans off the processing line.
To hear an audio report from China by Mike Wilson, click HERE.