US grain trader ADM setting up raw-food material plant in Zhejiang

Archer Daniels Midland Co, or ADM, a United States-based grain trader and processor, is setting up a raw-food material plant in Jiaxing, Zhejiang province, next year to supply raw materials and other products to the Asia-Pacific market, according to a senior executive.

ADM is also eyeing opportunities arising from the Regional Comprehensive Economic Partnership, the world's largest free trade pact inked last month, and the early recovery from the COVID-19 pandemic in countries such as China, Vietnam and Singapore.

Leo Liu, president for the Asia-Pacific region at ADM, said the moves will promote trading in agri-food ingredients and stimulate innovation activities.

When the Zhejiang plant is completed next year, the company will not only target China but also export products to the entire Asia-Pacific region, including Japan, South Korea, Southeast Asia, Australia and New Zealand. The new facility's business covers the sub-packaging of raw materials, exports of raw materials and finished products, he said.

"China has recovered from the pandemic in a fast and efficient manner. We have seen the quick recovery of the Chinese consumer market and surging demand for raw materials and ingredients from other parts of the world amid the slow recovery in global productivity due to the pandemic," he said.

The export value of ADM's China factories is expected to jump by over 100 percent on a yearly basis by the end of this year, thanks to the production capacity expansion project completed in May 2019 in its Beijing factory, and the low tariff rate in China, Japan and member states of the Association of Southeast Asian Nations. The company mainly ships nutritional ingredients, beverage ingredients and food flavors from China to these countries.

"China has continued to deepen reform and opening-up, creating a fairer and better business environment for multinational companies operating in China, prompting us to import more agricultural products and innovative solutions into the country faster," he said.

Eager to further diversify its business scope, Liu said the group is looking for opportunities to acquire high-quality nutrition and healthcare businesses in China as the pandemic has further stimulated the market demand in this specific area. ADM plans to double the proportion of its nutrition and healthcare operations during China's 14th Five-Year Plan period (2021-25).

As China has been working with other countries to make economic globalization more inclusive and balanced to mitigate the effect of the COVID-19 pandemic, he said the country's promotion of the dual-circulation development pattern will prove timely.

Ding Lixin, a researcher at the Chinese Academy of Agricultural Sciences in Beijing, said that the new pattern is centered on the domestic economy and aims at better integrating the domestic economy with the global economy. It will not only benefit the Chinese economy but also create more fresh momentum for businesses across the world.

Apart from ensuring grain security and tackling environmental issues in the area of agriculture, China has to feed a growing and increasingly wealthy population who demand better and more nutritious food, he said.

Ding said what is key is a combination of growth and demand that is linked to income and urbanization. Those two factors created a humongous market in China. Therefore, it has attracted a lot of attention from global players in both food manufacturing and agricultural sectors in recent years.

Entering China in the mid-1990s, ADM set up its local headquarter in Shanghai, and currently runs food ingredients and animal feed production facilities in different locations, including Tianjin, Dalian, Qingdao, Suzhou, Zhangzhou and Xiangtan, and innovation centers in Beijing and Shanghai.