Commodity Conversations Weekly Press Summary

The EU and Mercosur nations – Argentina, Brazil, Paraguay and Uruguay – announced that they have finalised a draft Free Trade Agreement (FTA), a deal 20-years in the making which could potentially create one of the largest free trade areas on earth. One of the biggest winners would be Brazil and Brazilian meatpackers as beef, along with poultry, pork, sugar, cheese and honey exports would see lower tariffs when entering the EU. The country is also hopeful this will encourage investments in its agriculture industry. 

Commentators say, however, that the draft is likely to face further hurdles before it gets approved. The French agriculture minister already said the country would not sign on to the deal. The foreign minister added that the government would wait until it could see the final text, although it would remain vigilant to ensure that French farmers do not face unfair competition. And some European producers urged their governments not to sign the treaty, such as the sugar association CEFS. It argued that it was unfair to EU producers who are forced to follow much stricter environmental and social standards. Similarly, the European Renewable Ethanol Association said the EU industry needed to act quickly and find new markets in order to deal with competition from imports. 

Another positive trade news was announced by the US President who said he would postpone additional tariffs on Chinese goods after China committed to buying more US agricultural products at the G20 meeting in Japan. However, market participants are sceptical that China can really buy more given the current anti-dumping tariffs and rising corn prices in the US. In addition, the US Agriculture Secretary pointed out that China had not fulfilled an earlier commitment to buy more US products.

In contrast, China banned all meat imports from Canada as it found that a pork shipment received in June used counterfeit health certificates. The investigation initially started because the pork was found to contain ractopamine, a feed additive banned in China. While Canada confirmed that counterfeit certificates were used, the ban comes amid deteriorating relations between the two countries following the arrest of the Huawei CFO in Canada. The ban comes at a particularly frustrating times for Canadian producers as the meat demand in China is surging because of the African Swine Fever.  

Analysts warned that the swine flu is expected to impact the performance of Wilmar’s oilseeds and grains business, which is responsible for 49% of the group revenue, because of the drop in soybean-based animal feed from China. However, the pain will be short as the demand will normalise once the swine herd recovers, while Wilmar is otherwise well placed to gain market share in the country. The firm is focusing on packaged food, rice and flour, which is in line with current Chinese consumption patterns, the analysts added. 

Nestle published further details on its project to track the supply chain of products through a blockchain, which will start with milk shipped from New Zealand to the Middle East. A previous test used IBM Food Trust’s blockchain solution but Nestle will now use a system called OpenSC developed by the World Wildlife Fund (WWF) and The Boston Consulting Group Digital Ventures. Auchan, Albert Heijn and Carrefour already handle products with a QR code linked to a blockchain. 

Digital technologies like blockchains or Artificial Intelligence (AI) are among the five megatrends in the food sector as identified by the president of Syngenta Seeds and North America region. He listed the growing population, technology, new farm structures and sociopolitical pressures as the other trends. Meanwhile, experts participating in a farm and tech summit in the US noted that the living standards of food producers in rural communities will need to improve to guarantee basic food security. 

When the sale of organic celery in some US stores skyrocketed earlier this year, shopkeepers were confused at first. But this investigative piece uncovered the mystery: a single book published by someone with no medical background claimed that drinking celery juice was very healthy. While the trend was quickly picked up by major celebrities, experts insist there is no scientific evidence backing the health claims. It just goes to show that some nutritional facts last even when they have clearly been contradicted by rigorous studies, such as the idea that fish oil reduces heart risk which was disputed in this study involving 12,500 people. The New York Times put together a list of some of these strangely enduring ideas.  

This summary was produced by ECRUU.

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