TOKYO, JAPAN — Mitsubishi Corp. recently announced plans to acquire 20% of Los Grobo Ceagro do Brasil S.A.(Ceagro) for about 3.5 billion yen through a third-party allocation of new shares. The companies have also agreed on Mitsubishi’s prerogative to purchase grain preferentially from Ceagro.
Mitsubishi said it has been growing a stable supply system of grain for over 30 years by building its own supply chain (from procurement of grain mainly from the U.S. and Australia, to retail of final products in wide areas of Asia), and has concluded a contract with COFCO Limited, a Chinese national food business conglomerate, in June 2011, which would allow Mitsubishi to supply up to 5 million tonnes of soybeans to COFCO per year.
Furthermore in 2015, Mitsubishi is planning to handle approximately 20 million tonnes of grain for customers mainly in Japan and China. The company’s investment in Ceagro allows it to expand its bases for procuring grain beyond North America to Brazil to serve growing demand in Asia. Mitsubishi will send several representatives, including a board member, to Ceagro and is planning to strengthen Ceagro's presence in Brazil.
Ceagro started its agricultural business in State of Maranhao in 1994 and has developed this business mainly in northern Brazil. In 2008, Los Grobo became a partner of Ceagro with the primary goal of strengthening its presence in the region. Later in 2010, it merged with Los Grobo Central, a medium-sized grain trading enterprise, to expand business in central Brazil. Now Ceagro is developing its business in central Brazil (a major grain producing area) and in northern Brazil (an area expected to increase its grain production in the near future).
Ceagro currently operates across the country with a total grain storage capacity of approximately 600,000 tonnes. It has been establishing its own business model and maintains close networks with local farmers by providing "agricultural one-stop services" (services that combine farm consulting, sales of seeds, agricultural chemicals and fertilizers, as well as purchase and storage of grain commodities). Since 2008 it has been participating in grain production business, giving it an edge against its competitors. It now handles and exports grain commodities, especially soybeans, that amounts to approximately 1 million tonnes per year.
The largest shareholder of Ceagro is Los Grobo Agro do Brasil, a joint venture between Los Grobo Group and Vinci Partners. In addition to Brazil, Los Grobo Group is developing its grain business in Argentina, Uruguay, and Paraguay. It handles approximately 3 million tonnes of grain in these four South American countries.