POSCO Inter and Nonghyup Feed Sign Business Agreement to Strengthen Food Security

Jusibo (left), President of POSCO International, and Jeong Seong-tae, President of Nonghyup Feed, signing a business agreement. Photo by POSCO International

[Asia Economy Reporter Yoo Hyun-seok] Private companies and the largest domestic feed company under the Nonghyup are joining forces to stabilize the domestic feed market and counter the supply chain crisis.

POSCO International announced on the 9th that it signed a business agreement on the 8th at the POSCO International Seoul office with Nonghyup Feed, attended by former Vice Minister of Agriculture, Forestry and Fisheries Yeo In-hong and Nonghyup Economic Holding outside director Kim Dong-hwan, to secure stable imports of feed.

Through this agreement, the two companies will expand cooperation in ▲importing domestic grains using overseas elevators owned by POSCO International ▲long-term supply contracts for feed raw materials such as palm kernel meal ▲joint development and investment in overseas food projects ▲information exchange through POSCO International’s global network.

The domestic feed market is about 21 million tons in total, of which 16 million tons, or 75%, are imported, showing a high dependence on overseas sources. The import routes mainly come from the four major grain companies ‘ABCD (ADM, BUNGE, CARGILL, Louis Dreyfus),’ the Chinese state-owned company COFCO, and Japanese general trading companies, which lowers the stability of grain procurement.

This agreement was promoted as a follow-up to the cooperation between the Ministry of Agriculture, Food and Rural Affairs and POSCO International in July to collaborate between the public and private sectors for domestic food security.

Nonghyup Feed is the largest feed company occupying 31% of the domestic feed market. It imports and processes feed such as corn and wheat from the United States, South America, and Ukraine, supplying it to domestic livestock farms. POSCO International is the only company operating a grain terminal overseas. In October 2020, it was the first in Korea to import 70,000 tons of feed wheat shipped from a grain terminal in Ukraine.

Through cooperation between the two companies, Nonghyup Feed will be able to increase its price negotiation power against global major companies and stably procure various raw materials including palm kernel meal and corn. POSCO International is also expected to achieve quantitative and qualitative growth in its food business by securing stable domestic trading partners.

POSCO International classifies energy and food as future core businesses based on its trading capabilities and is making strategic investments. In the energy sector, it has laid the foundation to grow into a global eco-friendly energy specialist through acquisitions such as Senex Energy and mergers like POSCO Energy. In the food sector, it plans to execute bold early investments to secure domestic food security and profitability.

Joo Si-bo, President of POSCO International, said, “It is meaningful to form a strategic partnership with Nonghyup Feed, which has led and continuously grown the domestic feed business for half a century,” adding, “We will gradually expand the business and strive to have a positive impact on the domestic feed market from the perspective of food security.”