Louis Dreyfus reported a net profit of USD 355 million in 2018, up 12% on year, thanks in large part to the US-China trade war which boosted demand for Brazilian soybean. Analysts suggested that the group is recovering, especially after the majority shareholder managed to buy out other family members. She earlier said the company was looking into “strategic partnerships” but the CEO dismissed any major buyouts or tie-ups. He argued that the main trading houses – the ABCDs – all had very different businesses now which would make any synergy unlikely. On the other hand, he expects that acquisitions or joint ventures at regional levels will continue to make a lot of sense.
ADM created a new board committee on sustainability and corporate responsibility. The CEO explained the board would help ensure that sustainability remained at the core of the group’s strategy. Separately, the group said the floods in the US Midwest were likely to reduce Q1 operating profits in its Origination and Carbohydrate Solutions units by USD 50-60 million, due to disruptions in ethanol and corn processing. Also in the US, ADM started producing organic wheat flour to meet the growing demand for organic packaged foods.
After a successful pilot project in China, Cargill and Heifer International announced the launch of the Hatching Hope Global Initiative which aims to help smallholder farmers improve their economic situation while helping feed the world by promoting the production of poultry. The CEO of Heifer argued that chicken and eggs provided valuable nutrients and were more affordable than other meat proteins thanks to their fast-growing cycle.
Earlier this month, the Commodity Futures Trading Commission (CFTC) asked market participants to come forward if they have been involved in or witnessed acts of briberies in other countries. The CFTC said it will be working with the US Justice Department. The focus at the moment seems to be on the oil and gas sectors, with several investigations already underway, but bankers suggest this could force trade houses to re-evaluate the role of agents across commodities, traditionally used to create access and help them get beneficial deals.
Greenpeace activists are urging Nestle to step up and reduce its use of single-use plastic, said to be used for 98% of its product offering. Nestle has admitted they needed to do something, the NGO said, arguing, however, that they were not moving fast enough. In the US, Nestle Waters North America announced the acquisition of beverage-delivery service Diamond Springs. Nestle is also building an R&D centre in China, its second biggest market, so that it can develop and commercialise new products faster. The CEO said that China was one of the “fastest-changing food and beverage markets in the world.”
Another company banking on China is Starbucks, where the coffee group opens a new store every 15 hours. The CEO explained that the tie-up with the Alibaba delivery platform has been key for the group’s growth, adding that it had also partnered with Uber in the US to that same end. The group is also investing USD 100 million in a new food start-up venture fund, as well introducing greener cups and developing disease-resistant coffee trees.
The US Environment Protection Agency said last week that it was looking at overruling the power of states to curb the use of pesticides that have been approved at the federal level. The agency is being sued by pesticide companies that argue their products fulfil federal requirements and therefore should not be limited anywhere in the country. The American Association of Pesticide Control Officials, however, said it intended to fight any attempt by the EPA to undermine “states’ right to protect their environment.”
This comes at the time a new study by EWG found that 70% of fruits, nuts and vegetables in the US have traces of pesticides, with strawberries having the highest. Even worse, 90% of people have traces of pesticides in their bodies. On the other hand, the UN Food and Agriculture Organisation (FAO) forecast that yield losses of the major crop staples due to pests is expected to increase by 10-25% for each degree of global warming, in addition to the 20-40% of the world’s crops yields that are already lost to pests every year. The FAO explained that climate change was making it harder to fight pests whose location and behaviour was changing.
The chemical pesticides’ industry slowed by 6% last year to USD 64 billion, according to International Bio Intelligence (IBO). On the other hand, the world’s biological pest control market has grown by 17% in 2018 to reach USD 3.8 billion and is expected to reach USD 11 billion by 2025. Farmers told the IBO that, unlike chemical pesticides, the dosage requirements for biological pesticides actually dropped over time. Brazilian agribusiness group Agrosalgueiro said that this was revolutionising agriculture, especially as it could be used to fight diseases for which there existed no chemical pesticides.
This summary was produced by ECRUU
