Takeaways from GGG

It has been a few years since I last attended a Global Grains Conference (GGG), and I was surprised to see just how big it has grown. With over 1,000 registered attendees and 80 speakers the event must now be one of the biggest agricultural conferences in the world. So congratulations to the organizers for that achievement, but also for the seamless way they ran the event. Kudos!

What were my ‘takeaways’ from the event?

My first, and perhaps the most worrying, is that we have probably seen peak globalization; the pendulum is now swinging back to nationalism. We need international trade to feed the world and as Bunge’s CEO Greg Heckman pointed out in a recent interview, the grain companies have invested on the basis that free trade would continue. This now has to be questioned and factored into forward planning.

Unfortunately, it is difficult for grain companies to plan—and invest—with this current level of political uncertainty. We live in a world where everything can turn on a tweet.

My second takeaway was that of oversupply, and the role that technology continues to play in increasing yields. Although the media often worries how the world’s farmers will feed 9 billion people by 2050, farmers worry that oversupply might drive them out of business before they get to 2050!

But it is not just technology that is driving supply. The expansion in Russia and Ukraine, as well as the second safrina corn crop in Brazil, has also contributed to current oversupply. Production in those low-cost areas is likely to continue to grow.

While supply increases, demand stagnates. I come from the sugar market where demand ‘is the background against which changes in supply play out’. The price of sugar is a function of supply.

The price of grain, it seems, is a function of demand. The price over the past ‘super cycle’ has been driven by biofuels and China. As both now level off, grain analysts are searching for the next ‘demand driver’. They are failing to find one and are worried that African Swine Flu will actually exacerbate the situation. No one I spoke with at the conference expects much of price rally from current levels.

My third takeaway concerned the growing importance of sustainability. When I used to organize conferences we always put the topic of sustainability as the last panel, by which time most people were already heading for the airport. Sustainability has now moved up the agenda; it pretty much dominated GGG’s first sessions.

As usual, the discussions were interesting but inconclusive. They will remain inconclusive until someone finds a way to persuade consumers to pay extra for sustainable food. Until they do, it is the farmers who have to bear the costs of certification—and the traders who have to bear the cost of operating traceable supply chains.

On a lighter note, there was a brief discussion as to whether we are ‘traders’ or ‘supply chain managers’. The vote went in favour of ‘traders’. As Swithun Still, the current president of Gafta told the audience. “We are grain traders—and we proud of the role that we play.”

There was a brief discussion on consumer trends—and what the consumer wants. The answer to that is a complex one: it depends on which consumer you are talking about. And the complexity is increased because there is a huge gap between what a consumer says he wants and what he really wants. He may say he wants a sustainable healthy product, but what he really wants is one that tastes good and doesn’t cost much.

As for the current interest in plant-based meats, I was surprised that some panelists dismissed it as a short-term fad rather than a long-term trend. It reminded me of similar discussions at sugar gatherings ten years ago when the anti-sugar movement was lightly dismissed as a short-term fad.

It is obviously impossible to summarize GGG in a short blog. And it is important to note that others will have completely different takeaways. In other words, you had to be there, but if you weren’t there is always next year! (Global Grain also organise regional events that you might want to check out.)

© Commodity Conversations ®

My book Out of the Shadows The New Merchants of Grain is now available in paperback and electronic versions of Amazon

Leave a Reply

Your email address will not be published. Required fields are marked *