Agricultural and food ingredient firm Bunge has increased its foothold in the soybean processing industry with the announcement of the recent service agreement concerning a US soybean processing facility.
The agreement, effective from September 1st, is set to benefit both parties, with Bunge providing commercial and administrative support to the processing operations - lending Minnesota Soybean processors the benefit of its experience within the meal and oil industries.
"While we have strong relationships with our local farmers, we will look to Bunge to expand our markets since the company has extensive experience marketing meal and oil both domestically and for export," said Bruce Hill, president of Minnesota Soybean Processors. "We will also be able to tap into Bunge's operational expertise as needed."
However, by making use of the soybean processing facility in Minnesota, Bunge is strategically broadening its company profile in a relatively untapped area.
"This service agreement with Minnesota Soybean Processors gives Bunge access to additional meal and oil supplies in an area of the country where we don't currently have a presence," said Greg Bechtel, general manager of Bunge Oilseed Processing.
Teaming up with soybean processors is not a new business move by the company, following the recent announcement of a joint venture to construct a new soybean processing plant in China.
Last month Bunge announced a partnership with Sinograin, the Chinese state-owned grain company to build and operate the new facility in Dongguan, Guangdong Province. The venture is still subject to government approval.
Similar to the move into new areas of the US, the new Chinese facility is the company's first in southern China and fourth in the nation - increasing its aim for global awareness.
The facility will have a daily processing capacity of 4000mt of soybeans, and will be connected directly to discharge facilities at Dongguan port via Sinograin's existing warehouses and conveyor systems.
It will produce soybean meal for the livestock production industry in Guangdong and soybean oil for nearby urban markets, said Bunge.
Construction of the plant, which will be located between Guangzhou and Hong Kong, is expected to finish in late 2008. Bunge will hold a 65 percent interest in the plant.
In April this year, Bunge announced another joint venture in the Chinese soy market with the Thai-based Charoen Pokphand Group. The processing giant said that the agreement will grant it a majority interest in the running of a third soybean processing plant within the country, aided by Charoen's Chinese subsidiary, Chia Tai.
The recent business developments follows the company's recently reported solid growth in its second quarter and half year performance, indicating that the firm could be getting back on track after a difficult period.
The company announced a 65 percent increase in overall net sales for the quarter ended June 300 2007 to $9.9bn up from $6bn a year earlier. Net income shot up 460 percent to $168m compared to $30 last year.
According to Bunge's chairman and chief executive officer Alberto Weisser, the strong second quarter performance was driven by a "good performance" in the firm's agribusiness, and "outstanding" results in its fertilizer operations.
"While futures prices for soybeans and grains have been volatile, industry fundamentals are solid," he said.