Another major commodity group, this time Louis Dreyfus, reported lower results because of global trade tensions and the African Swine Fever in China, along with the bad spring weather in the US Midwest. The CEO said the situation will remain difficult for the second half of the year and will only improve in 2020. Nonetheless, the firm paid USD 428 million in dividends for the first half of the year, the highest since 2014, as the chairwoman is reportedly looking to repay loans she took to buyout minority shareholders.
China could have lost up to half of its pig herd to swine fever and the Vice Premier has set a target to return to a normal herd size as early as next year. In the meantime, the country is facing a shortage of 10 million mt of pork, more than the global trade supply. To deal with the shortage, a local pig farmer imported 906 breeding pigs from Denmark, the first pig imports this year. And a breeder in Nanning is looking to raise pigs that weigh up to 500kg, compared to the usual weight of around 125kg.
US producers are also looking to take advantage of the surge in Chinese pork demand. To that end, JBS USA announced that it will remove ractopamine from its pig supply. Ractopamine is a growth drug banned in China and the EU. A US competitor, Smithfield Foods, has already dropped the additive to export to China while Tyson Foods said it was considering a similar move.
Global trade is due to see another wave of protectionism as the WTO ruled that the US could impose duties worth USD 7.5 billion on EU products in response to the EU support of Airbus. The US will levy a 25% duty on EU food goods starting on October 18, but an EU official said the US seemed uninterested in finding a way to avoid the tariffs. Food firms in the US warned that this could have significant repercussions on their businesses. A cheese importer said he was stocking up with USD 15 million worth of Italians cheeses ahead of the duties.
A Dutch-based company, DSM, published some potentially good news for both the environment and meat lovers. It developed a new feed that can reduce the amount of methane emitted by cows by up to 30%. The feed, called Bovaer, could be available in late 2020. Cows are responsible for a third of the methane emitted in the US but experts highlight two common misconceptions: the methane comes from burps, not farts, and the natural gas infrastructure still emits more methane.
A new evaluation of published research also tried to correct a misconception by arguing that there was not enough evidence to support the claim that eating red meat can have a negative health impact. Researchers analysed past observational studies and concluded that the impact of eating red meat was very small and not supported by strong evidence. Health experts were quick to criticise the paper and some argued that nutritional research can not be held to the same standards as medical research. A professor highlighted that years of studies consistently found a negative health impact. And the press revealed that the lead researcher had failed to properly disclose his past ties to an industry group.
Ireland revealed that the average sugar content in drinks dropped to 23g in 2019, compared to 31g before a sugar tax was introduced in 2015. Nonetheless, the government noted that some of the decrease was offset by larger container size and the growth in energy drink sales. Similarly, the UK said the sugar content in soft drinks dropped 28.8% since the introduction of a sugar tax in 2017, although the total consumption of sugar gained 2.6% between 2015 and 2018. Public Health England explained that the overall increase in sales of sweet products was enough to offset the drop in sugar content.
Nonetheless, PepsiCo’s said a good performance from its low-sugar and bubbly sparkling water brands will help with revenue growth in 2019. And Coca-Cola announced that it will launch its energy drink in the US, as it noted that sales in the sector have been increasing while regular soft drink consumption has been steadily declining. Separately, Coca-Cola unveiled a new bottle that uses recycled marine plastics. The plastic was collected in the Mediterranean sea and is used for 25% of the bottle packaging.
Two very unusual products were unveiled this week. Glenlivet launched whisky cocktails contained in a seaweed-based skin that dissolves in the mouth. And Aleph Farms announced that it has successfully grown lab-meat using cow sells, on the International Space Station!