Filling a need
January 01, 2008
by Arvin Donley
China has long been the world’s largest rice producer, with an annual output of more than 180 million tonnes (paddy basis) per year. But despite this massive output, only a small amount of the crop is exported. In 2005-06, for instance, only 1.2 million tonnes out of a 180.5-milliontonne crop was exported, according to the U.S. Department of Agriculture.
In an attempt to fill the void, the state-owned China National Cereals, Oils and Foodstuffs Corp. (COFCO) recently built the COFCO Jiangxi Rice Processing Ltd. facility, which produces parboiled rice, primarily for export.
The plant, located in the city of Wenzhen in the southern province of Jiangxi, was completed in November 2004 and began with an annual production capacity of 220,000 tonnes — 180,000 for parboiled rice and 40,000 for white rice. In 2007, COFCO, a global Fortune 500 company that ranks as the largest grains, oils and foodstuffs processing corporation in China, converted its white rice production line into parboiled rice production, increasing parboiled rice production at the plant to more than 220,000 tonnes this year.
Yang Hong, general manager of COFCO’s rice division, said the target for 2008 is to "optimize the production capacity in order to further increase the production volume based on 2007." The company is also considering building another parboiled rice plant in one of China’s other provinces.
"After two years of production, we found out that parboiled rice has a high market value," Yang said.
IN GREAT DEMAND Yang said there were essentially three factors that led COFCO to its decision to build China’s first parboiled rice production facility, which the company says is the largest in Asia.
First, the company saw an opportunity to enhance the overall level of the domestic rice processing industry by making use of a significant surplus of long grain paddy in the Jiangxi region. Jiangxi, the second-largest long grain paddy producer in China, has historically had the largest long grain paddy surplus of any province due to a lack of rice processing facilities with high technology, which Yang said results in a low transforming utilization rate.
Secondly, COFCO found that parboiled rice has a huge market potential and expansive development perspective. Yang said that before construction of COFCO Jiangxi, the company conducted a survey which showed that the world’s trade volume of parboiled rice was increasing every year. The survey has proven to be accurate as COFCO has increased its exports each year.
In 2007, Yang said COFCO exported an estimated total of 223,000 tonnes of parboiled rice to the following regions: Africa (150,000 tonnes), the United States (50,000 tonnes), the Middle East and Eastern Europe (13,000 tonnes) and Central Asia (10,000 tonnes). In 2006, COFCO’s parboiled rice export volume was 180,000 tonnes, with 155,000 going to Africa, 10,000 shipped to the Middle East and Eastern Europe, 13,000 going to Central Asia and 2,000 being exported to the United States (U.S.).
The final factor that persuaded COFCO to proceed with construction of the parboiled rice facility were tests that showed Chinese long grain paddy was suitable for parboiled rice processing. Yang said the experiments, which were conducted by the Uruguayan engineering company, CSI Ingeneros S.A., determined that the quality of parboiled rice using Chinese long grain paddy was similar to that of U.S. parboiled rice.
Yang also noted that domestic demand for parboiled rice is also growing, in part because the standard of living in China is rising thanks to its fast-growing economy. And as per capita income in China increases, so does the desire for healthier, more expensive food.
"Nutritious, healthy staple-food products such as parboiled rice are gaining popularity," Yang said. "The domestic demand for parboiled rice is increasing every year."
FROM THE GROUND UP The parboiling facility was built from the ground up in a rice basin known for growing excellent quality paddy.
COFCO chose Uzwil, Switzerland-based Buhler AG to coordinate the project based on its experience as the architect of similar facilities in other major rice exporting countries in the region such as India, Thailand and Pakistan.
Besides overseeing the project, Buhler supplied the equipment for the cleaning and grading installation, the bulk storage system (total capacity of 51,000 tonnes) and the rice mill (see production process, Figure 1).
COFCO also choose parboiled technology specialist CSI Ingeneros to design the facility’s parboiling processing section and boiler house. The parboiling plant is equipped with a separate warehouse and a system for burning the rice hulls for steam generation.
"We have maintained a consistent quality in our total supply chain — from paddy to customer to consumer," Yang said. "Our quality is strictly controlled to customer specification and all the regulations set by the government. We have ISO 9001 and HACCP Certification. We have controlled and maintained consistent yields through our entire process."
Before construction began on the parboiled rice facility, COFCO signed a joint venture agreement with Jiangxi Jinjia
Rice Co. Ltd., a major regional grain and vegetable oil processor, to form COFCO Jiangxi Rice Processing Co. Ltd.
Under terms of the joint venture, Jiangxi Jinjia holds a 16.5% share of the company and COFCO holds an 83.5% share through its controlled subsidiary, China Agri.
"As the main export channel of Chinese rice, COFCO is endowed with advantages in capital, customers and channels, and has good knowledge of the trend of international demand and capability to promote Chinese rice to the world market," Yang said. "Jiangxi Jinjia, which is a subordinate corporation of Jiangxi Provincial Grain Bureau, has built a planting base of 400 million hectares in the Poyang Lake area, and it has numerous grains warehouses and strong control of paddy resources in Jiangxi."
Once the facility was built and the equipment installed, there were still challenges that needed to be met.
"Producing parboiled rice in China was new and there was a lack of experienced and skilled personnel," Yang said. "CSI and Buhler trained our staff in the total operation of all the equipment, and with that experience our staff has gained all the experience in the years of running the plant."
The end result has been everything COFCO had hoped.
"The parboiled rice produced at Jiangxi can compete with the best in the world," Yang said.