The central axis of COFCO's entire industrial chain

September 15, 2009, the golden sunshine of Beijing in autumn reminds people in the city that this is the harvest season. Yu Xubo, president of COFCO, has just returned to Beijing from Ningxia, and he is full of dust. COFCO has built a tomato base in Shizuishan City, Ningxia, with a daily processing capacity of 6,000 tons of tomatoes, unprecedented in the history of tomato processing in China.

The large-scale planting of 60,000 mu in the first phase was unimaginable before mechanized and intensive production. Today, COFCO has built tomato bases in Inner Mongolia and Ningxia. The production of rice, noodles, oil, meat, etc. has realized the production of the whole industry chain.

On Xubo's tight schedule, after the press conference, he will meet with the secretary of the Fengyang County Party Committee in Anhui and a county Party Secretary in a certain county in Heilongjiang to discuss the possibility of introducing the COFCO production model locally. On the afternoon of the previous day, he and Ning Gaoning, chairman of the group, and Guo Shengkun, secretary of the Guangxi Provincial Party Committee, discussed cooperation with the government to build modern agriculture in Guangxi.

Yu Xubo said that there are two main points for COFCO to build the entire grain, oil and food industry chain. The first is intensive production. This year, COFCO has invested 400 million yuan in agricultural machinery production facilities, and has built a number of planting bases for tomatoes, rice, wheat and grapes. However, the intensification of agricultural product planting and animal husbandry in China is still in its infancy, and COFCO cannot do everything alone. COFCO's base construction is supported by the grass-roots government. It organizes farm workstations on the original village-level system, and the village head directly becomes the workstation head, which effectively organizes farmers. Another major point of the whole industry chain is to set standards. COFCO should implement a standard system internally and call on major companies in the industry to work together.

Intensive production allows farmers to become workers, and COFCO establishes a venture fund to allow farmers' cooperatives to become shareholders of farms, sharing the benefits of land as raw materials for agricultural products. From farmers to workers to shareholders, behind this change is the process of agricultural industrialization and agricultural marketization, and the catalyst for this process is COFCO.

About the different voices about whether China is suitable for intensification, Yu Xubo answered one starting point, one persistence, and one improvement, that is, taking the ultimate food safety of consumers as the starting point, insisting that farmers benefit, and using advanced production methods to drive the entire agricultural productivity level up.

"Sixty years ago, COFCO was a grain trade import and export company. The group continued to go downstream, from trade to processing, from processing to branded food production. Today, the proportion of policy business does not exceed 5%. If it only stayed at the stage of a trading company, COFCO would not have what it is today, and it would not be able to achieve sustainable development." Yu Xubo said that COFCO under the trading model plays a policy role in macro-control, and solves the overall problem of food security. quantity issue. In the era of the whole industry chain, COFCO can better achieve food security and food safety, which is also the requirement of COFCO's own development.

Guarantee of food security

The first dimension of food security is quantity, that is, whether there is enough food, and the price is stable and unstable. In the first half of 2008, the price of domestic edible oil rose. Yu Xubo said that this is a more complicated concept than before. In the past, it was about the total amount, which reflected the shortage and surplus of raw materials. COFCO serves the national grain macroeconomic situation through grain import and export. regulation. What we are looking at now is the category, which is reflected in the rise and fall of consumer prices. In terms of categories, the domestic gap in recent years is mainly in oilseeds and oils. Since the early 1990s, COFCO has continuously invested in rice, flour and oil to develop downstream processing industries of rice, flour and oil.

The new positioning of COFCO, which started from trading, is to be the most professional agricultural product, food manufacturer, food raw material, food product and service provider. Agricultural products processing provides food raw materials, and going downstream, the stability of consumer prices is guaranteed by the supply of food products. To effectively play the role of macro-control in the new era, it is imperative to be a food supplier. The old trading company is turning into a branded food producer.

Another aspect of food security is food safety. To this end, COFCO proposes to build a grain, oil and food enterprise with a whole industry chain of "from field to table", which is intended to start from the source, from planting and seed selection, from field management to mechanized picking, and to control pesticide residues, quality and processing throughout the process. , transportation logistics, packaging, and ultimately provide consumers with safe, nutritious and healthy food. In the long chain, COFCO hopes to do as much as possible, and even if it cannot be achieved, it must effectively control every link. "It may be difficult to control if there are too many links. Only after you can control each link can you let external partners join in." Yu Xubo said.

The Food Safety Law came into effect on June 1 this year, and downstream food manufacturers have come to COFCO to understand the development layout of the group's entire industrial chain and what requirements they need to meet to become a food supplier in the entire industrial chain.

Intensification of the village-level system

The whole industry chain strategy starts with tomatoes.

Heinz and Unilever have been buying large quantities of tomatoes from COFCO as raw materials for making tomato sauce. They put forward strict requirements on the taste, processing technology and pesticide residue control of the tomatoes supplied by COFCO.

To solve the problem of pesticide residues in tomatoes, COFCO must control the production process and control it from the source. Purchasing tomatoes from retail investors, it is almost impossible to control pesticide residues, and it is impossible to talk about the next production control.

COFCO Tunhe's tomato base in Shizuishan City, Ningxia is the beginning of exploration, where industry is developed, many farmers go out to work, and a lot of land is idle. Through land transfer, COFCO has leased 60,000 mu of land, and farmers on these land can get 400 yuan per mu from COFCO, and the government will subsidize another 150 yuan per mu. At first, the enthusiasm of some farmers to participate was not high, so the municipal government organized farmers to participate in farmers' cooperatives and cultivated on COFCO's farm bases. Later, everyone took the initiative to ask to participate. Next, COFCO plans to expand the tomato planting base in Ningxia by 200,000 mu.

Mechanization and intensification not only improve production efficiency, but also increase farmers' income. Farmers can obtain land rent, farm wages and equity income.

Equally important, intensive production solves the problem of seed selection. Taking the tomato base as an example, COFCO introduced tomato varieties required by customers. This tomato is high in content, firm and suitable for tomato sauce. Ordinary tomato varieties are grown in traditional planting methods, with a yield of three or four tons per mu, while the tomato planted in COFCO’s farms generally produces six or seven tons per mu, with a maximum yield of 12 tons. As far as the income of farmers from farming is concerned, in the past, the income of a piece of land was 2,000 to 3,000 yuan, but now it averages 6,000 to 7,000 yuan, and the yield of 12 tons per mu is 12,000 yuan.

For wheat production, COFCO signed production orders with Shandong and other prefecture-level and village-level governments this year. This order is of great significance. The village can obtain financing from financial institutions by virtue of the order contract. In other words, mechanized production realizes the industrialization of agriculture, and the introduction of financial institutions realizes the marketization of agriculture and makes intensive production sustainable. Farmer cooperatives that have signed contracts with COFCO implement soil, variety, fertilization standards, and pesticide residue control as required by COFCO.

The same is true for the production of rice. A professional household communicated with Yu Xubo that according to the seeds and cultivation methods provided by COFCO, he had no worries about selling them first, secondly, the quality of the products was guaranteed, and thirdly, due to the scale, the cost dropped significantly. This professional household rents 10,000 mu of land and has hundreds of harvesters. COFCO's purchase price is slightly higher than the market price, and this professional household can earn 200 yuan more per ton of rice.

Last year the World Tomato Conference was held in China, and the general manager of COFCO Tunhe was elected as the vice chairman of the conference. Yu Xubo said that this is because the status of China's tomato industry in the world has been greatly improved, which is the world's affirmation of China's tomato industry. "Last year, the case of Harvard Business School wrote about Tunhe, and there is a section about pesticide residues. We can pat our chest and say that we can guarantee that pesticide residues meet international standards."

Intensive production is also conducive to improving the planting environment . The raw material grapes for COFCO's Great Wall wine production are suitable for sandy land cultivation. However, sandy land is mostly located in drought-stricken areas, which brings irrigation problems. In the planting bases in Yantai, Shandong, Changli, Hebei, and Shacheng, Hebei, COFCO has built drip irrigation systems, transformed the planting environment, and plans to open up new grape planting bases.

To this day, COFCO has expanded its entire industrial chain including tomatoes, rice, noodles, oil, and wine.

There are rules to follow and traceability

Another key point of the whole industry chain is to set standards. In this, COFCO works closely with suppliers. In the end, what kind of product is given to consumers, COFCO needs to pass the standards and requirements to the upstream. In addition to establishing internal standards and improving internal processes, COFCO is also committed to promoting the establishment of industry standards. COFCO hopes to play an exemplary role and integrate various partners.

In addition, the intensification of livestock products is also a direction of COFCO. In Hubei, COFCO is exploring the "COFCO 600 Model". A farmer raises 200 pigs, and if they are slaughtered three times a year, there will be 600 pigs. The difficulty in promoting this company + farmer model is that COFCO has high requirements on the breeding environment, such as no industry or pollution within ten kilometers. This is not easy to do in rural areas. However, just like the intensification of agriculture, the intensification of animal husbandry is also imperative, so as to control the upstream raw materials. At present, COFCO has established bases in Shandong and Tianjin, and the chicken raising project in Suqian, Jiangsu is also developing on a large scale.

The whole industry chain is a quality assurance. With it, the products have a traceability system. There are hundreds of thousands of upstream companies engaged in planting, breeding, and processing, but no company can string them together. COFCO needs to use its existing business foundation and capabilities to build the system to a certain extent. On the other hand, if the upstream integrated management is not established, it will not only be difficult to trace the source of food, but even the production capacity will not keep up with the needs of COFCO's well-developed nationwide sales channels. Yu Xubo said that the vitality of COFCO's entire industrial chain lies in the introduction of marketization. In this way, you can know how the tea sold upstream is made, how the processing of agricultural and medicinal materials is controlled upstream, and how microorganisms are controlled. This system should be refined to the point that each product has an internal serial number, and the serial number corresponds to all information on suppliers, bases, and production modes.

Yu Xubo still remembers that not long ago, he represented COFCO as a supplier to Unilever's board of directors in Shanghai. The president of Unilever and the general manager in charge of the global supply chain repeatedly told him that COFCO has done a great job it is good. In the future, COFCO will be able to achieve sustainable development in terms of environment and energy conservation.

In July this year, COFCO acquired a 20% stake in Mengniu, becoming the single largest shareholder of Mengniu. Yu Xubo remembers that this time he returned to Beijing from Ningxia and passed through a milk station in Mengniu. The owner has grown from supplying 300 kilograms of milk to Mengniu a day to seven to eight tons of milk a day, raising nearly 600 cows. Impressed by her pride, Yu Xubo said that even during the melamine period, her milk was fine because she was produced and quarantined in strict accordance with the standards. Yu Xubo said that the first thing COFCO needs to do is to build the source of Mengniu, and the second is to improve the security system.

“One bag of milk can ruin a piece of business. If one link is not done well, the entire chain will be affected.” Yu Xubo said that COFCO’s biggest mission is to satisfy consumers’ demand for food quantity and quality through the entire industry chain. Requirements, from the market point of view to provide people with more products, more quality assurance.