Agricultural giant since 1983

Chapter 444 The Real Bidding

"Ronnie, it's not just about planting soybeans. Even if I have customers with strong demand, I have to ship these soybeans to them, and this route must be in my own hands!" Li Lei told Ronaldo Explains, "In the field of food production, power is often concentrated in the hands of a few people in the distribution chain from the farm to the table. If it is represented graphically, this process is often funnel-shaped!"

Li Lei took out a pen and paper and explained to Ronaldo in detail, "At the bottom are the farmers or producers. Their number is the largest, and it can reach tens of millions in Brazil; then they are provided with agricultural machinery, seeds, fertilizers, pesticides, etc. There are far fewer suppliers and producers of necessary materials and equipment for agricultural production, perhaps only a few hundred thousand people; at least they are processors who process grain into food and purchasers of grain, because this requires a lot of capital. There may be only a few thousand powerful companies in Brazil; then at the other end of the funnel, food and grain distributors, the number of people engaged in this industry is about the same as that of agricultural material suppliers and manufacturers; the last is the largest number consumers."

Following Li Lei’s description, a funnel-shaped pattern appeared on the paper, and the structure of the grain field from arable land to the dining table is very clear. The number of consumers and producers at both ends is the largest, while the number of producers and large buyers is the least. , so it is clear which link is most likely to form a monopoly.

Of course, these data will be different in different countries. For example, the number of agricultural material suppliers in the United States is much smaller than that of food manufacturers; but generally it still follows the funnel-shaped principle. It's just that link; but no matter which country it is, the thickest part of the funnel is the consumer and the producer.

From this, the situation is very simple and clear, because large-scale acquisitions, transportation, processing and other processes require a lot of capital, you must have strong strength to be eligible to participate in this game, and this game is still an economy of scale. The bigger they are, the more profits they can make, so in the field of agricultural production and sales, you can still see relatively small mom-and-pop stores, but in the international grain trading market, it is difficult to see such small companies, because these small businesses Has long been annexed by agricultural giants,
And when there are fewer and fewer companies in the channel from growers to consumers, these companies have dual powers to control growers and consumers. They can lower the purchase price of agricultural products and increase the price of food sales, so as to Realize high profits.

This is why it will often be exposed in the future that the fruit in a fruit grower’s orchard in a certain place is so cheap that it can’t be sold for a few cents a catty, while the fruit in the supermarket is often turned into an assassin, and consumers’ wallets will be destroyed if they don’t pay attention. The assassin was stabbed and suffered heavy losses.

"Brazil's current large-scale grain transactions are basically in the hands of a few companies. For example, the US company Bunge owns a large number of farms in Brazil. While selling fertilizers, seeds, and agricultural machinery to farmers, they purchase the grain they produce and send To sell or process in other countries, Brazil's grain storage and transportation capabilities are basically controlled by these companies!"

The business scope of the four major grain merchants is also different. Louis Dreyfus of France naturally pays more attention to the European market. They have great advantages in coffee, cotton and other fields.

About 2/3 of ADM's income comes from the processing of soybeans, peanuts and other oilseeds. Wilmar International was jointly established by ADM and the Guo family in Singapore. Brands such as Arowana and Orchid are also controlled by them.

Cargill is the largest manufacturer of animal nutrition and agricultural products. They occupy a leading position in the fields of corn and feed. When Li Lei went to Southeast Asia to explore the market, he saw many feed factories under Cargill. Nonghe Hope's main competitor.

Bunge, on the other hand, is an integrated global agribusiness and food company that operates the food chain from farm to consumer. The world's leading company in vegetable oil is also the one with the deepest influence on South America among the four major grain merchants.

At the same time, Cargill and ADM also have a strong influence in Brazil. This history can be traced back to earlier times. It was the Japanese who first invested in the soybean industry in Brazil. Japan needs to import food from abroad for a long time because of its large population and small land. They searched for suitable land all over the world, and Japan had a large number of immigrants in Brazil, and it happened that the Brazilian government was distressed by the resistance in rural areas at this time, so the two sides hit it off, the Brazilian government provided land, and the Japanese invested in infrastructure, Export and processing equipment, planting soybeans in the countryside to increase the income of local people, meet the vegetable oil needs of urban people, and at the same time earn foreign exchange through export, and the Japanese also got a new source of soybeans.

At this time, Japan was in a period of rapid economic development, and they had enough funds to invest in this project. If Brazilian soybeans also ushered in rapid development, in the 60s Brazilian soybeans only accounted for 70% of the total global soybean production, but in the 18.00s By the end of the [-]s, this figure had increased to [-]%.

In addition, the El Niño phenomenon in the 70s also accelerated the expansion of soybean production in Brazil, because the El Niño phenomenon caused a reduction in the production of American fish and West African peanuts, and fishmeal and peanut cakes are the main protein sources for animal feed. In order to solve the domestic food supply in the United States The problem was that the export of soybeans and soybean meal was once announced, which immediately caused panic in Europe and Japan, because they have been importing these two materials from the United States. Now that the United States stops exporting, they can only find new production places, so Brazil has become the best choice.

The mad cow disease outbreak in the UK in the 80s accelerated this process again. Previously, cattle and sheep bone meal had been used in Europe to provide nutrients for cattle and sheep, but this would cause cattle to be infected with a subacute progressive neurological disease caused by prions, namely mad cow disease. .

After scientists figured out the cause of mad cow disease, cattle and sheep bone meal was soon banned from being added to feed, and then they had to find new sources of feed raw materials, so the international market demand for Brazilian soybeans increased again, and seeing this situation After that, Cargill and ADM couldn't sit still.

They have used their own resources to force the Brazilian government to no longer subsidize the country's soybean industry, and at the same time allow foreign companies to acquire shares in Brazilian soybean-related companies, so they also entered Brazil as quickly as Bunge, and together with Bunge controlled the Brazil's soybean industry.

"Now they take advantage of the Brazilian economic crisis to start buying more shares in large quantities to strengthen their control over Brazilian soybeans. If we only buy farms, even if we can produce hundreds of thousands of tons of soybeans, they will only rot in the ground. , can’t be sold at all, because the fleets, warehouses and terminals controlled by these companies will definitely not provide services for us! So we must build our own storage and logistics channels!” COFCO will do this in the future, knowing that it will cooperate with ADM, Bunge, and Cargill competed and sent their lifeblood to them. Isn't that a fool?
Bunge, Cargill, and ADM have indeed done similar things in the future. Now Brazil’s soybean exports mainly go to the port of Paranagua. In 2005, Paraná State issued a law prohibiting the transportation of genetically modified soybeans, and then the three major grain traders immediately In response, they immediately transferred the fleet to Sao Paulo, so the port of Paranagua, which used to have to queue for 48 days to load goods, immediately became empty. They used their monopoly position to easily let the state of Parana cancel it. laws against them.

This is true for the government, let alone a competitor?Li Lei believes that even if several major grain merchants hand over their channels to Huinong for use in the past two years, it is to paralyze themselves. When the soybean war starts, they will definitely tear up the contract and let their soybeans rot in the field. Not to China.

Li Lei is not worried about the problem of sea-going ships. Although COSCO and China Shipping are far from being as powerful as they will be in the future, it is still not a problem to transport hundreds of thousands or millions of tons of soybeans. The most important thing now is how to get soybeans from Brazil. The plateau has been transported to the port of Paranagua, and this route must be controlled by oneself.

The good news is that Brazil is facing the economic crisis, and many warehousing and logistics companies that transport and store soybeans are on the verge of bankruptcy, and they can win as long as the bid is right; the bad news is that Cargill, Bunge, and ADM are also eyeing these companies. machine to strengthen the control of soybean storage and logistics.

At the same time, giants such as Itochu Corporation, Mitsubishi Corporation, and Mitsui & Co., Ltd. in Japan also wanted to acquire these companies. Since Japan and Brazil signed an agreement to establish the Japan-Brazil Agricultural Development Co., Ltd. in the 70s, Japan has not relaxed its control over Brazil’s agriculture. Itochu, Large general trading companies such as Mitsui and Mitsubishi continue to extend their tentacles to Brazil. They will definitely not give up this good opportunity, so Li Lei will definitely face fierce competition.

These news scared Ronaldo a lot. I am just a football player. Why do I have to compete with so many international giants now?So Li Lei comforted, "Don't worry, Ronnie, any country with a little sense will not allow its important industries to be controlled by foreign companies. Now Cargill, Bunge, ADM, Itochu, Mitsui, and Mitsubishi are all interested in Brazilian soybeans. I think the Brazilian government is not willing to see this. Although they are now in deep economic crisis and cannot protect their own industries, they can still introduce some competitors to decentralize control. My Emergence precisely meets the needs of the Brazilian government."

"I have seeds, fertilizers, agricultural machinery, pesticides, and more importantly, sufficient funds and sales channels. This is exactly what the Brazilian government dreams of cooperating with, so when it comes time to bid, we still have a chance!" In any case, Brazil is also a big country. Although it is deeply influenced by the United States, it has not yet become their vassal. This is Li Lei's opportunity.

"So, Ronnie, we are not only investing, but also contributing to Brazil's economic security! Not only can you become a Brazilian hero on the court, but you can also do it in the economic field!" Li Lei couldn't help but I muttered in my heart, but it is a pity that Ronaldo is not as keen on politics as Weah and Karadze. Otherwise, with his contribution to winning the World Cup and protecting Brazil's economic security, it is possible to run for the president of Brazil. The industry can be unimpeded in Brazil.

When they came, they took a private jet. When they went back, in order to let Ronaldo and others more intuitively understand the control of the Brazilian soybean industry by several giants, Li Lei deliberately chose a car. It is a soybean field, and the asphalt road has long been messed up by overloaded large trucks, and most of these large trucks have logos of certain companies printed on their bodies.

As soon as he sees a truck, Xiao Fuxing will introduce it to them, "The company that passed the car just now belongs to a subsidiary of Bunge. This one is controlled by Cargill. Oh, this is the fleet of Itochu Holdings."

When they arrived at Paranagua Port, the traces of the giants became more obvious. Xiao Fuxing pointed out to them the office buildings of Cargill, Bunge, ADM, Itochu and other giants. Almost [-]% of the surrounding warehouses are controlled by these giants. The port enjoys various privileges.

Xiao Fuxing also made a joke, "Even the strip clubs near the offices of these companies are the best in the whole port, because the executives of these companies have the strongest spending power!"

Ronaldo was a little tired from bumping all the way, but when he heard this, he was not sleepy immediately, and even wanted to go to the bar to have fun, but was stopped by Li Lei in the end, "We are going to participate in the bidding soon. It's not a good thing in front of the opponent."

Ronaldo gave up with regret. What they are now bidding for is a certain local Brazilian warehousing and logistics company. The small and large fleet also has its own porters. Only by winning this company can Huinong gain a foothold in Brazil. Such a major bidding must be done with caution.

When he arrived at the first residence, Li Lei reminded Ronaldo, "Ronnie, don't go out when you live here at night. I will go to other places. Xiao will accompany you with the bidding materials. Before the bidding starts tomorrow, we will follow different routes. The bidding site, if I don't arrive, you can cooperate with Xiao to complete the bidding; if you encounter any accidents on the road, don't panic, at most they want to stop us, and they dare not make too much trouble!"

"Li, this is different from the commercial bidding I imagined?" Hearing this, Ronaldo's bald head began to break out in cold sweat again. In watching film and television works, isn't it all well-dressed and polite bidding?Why is it like negotiating with gangsters now?
"Welcome to the real world, real bidding is not so refined!"

(End of this chapter)