Commodity Conversations Weekly Press Summary

Brazil’s private sector is putting pressure on the government to act and protect the Amazon from deforestation. Some of the country’s main corporations sent a letter to the President saying that concern over the Amazon was driving foreign investment away. Brazil’s poor environmental image is also being used against it in trade discussions, such as the in EU-Mercosur deal. The Ministry of Economy denied that investments were falling, noting a 26% increase in investments in 2019. It also argued that Brazil was one of the countries that did the most to protect its environment, with 60% of the territory preserved, almost twice that of the US and Canada. 

One of the companies involved in the letter, Cosan, argued that protecting the Amazon would help Brazil become more competitive. This comes as Brazil’s agribusiness exports reached a record high for the month of June, with sales up 25% on year. Most of the increase is due to a surge in soybeans exports to China, but sugar and ethanol exports combined increased by 75% on year. The head of Cosan said he had spoken with the President to work on a campaign to improve the country’s image

In China, the possibility that the Shanghai and Shenzhen stock exchanges may start to require disclosure of environmental, social and governance (ESG) information at some point this year could be a big step forward for the use of sustainable palm oil. A researcher explained that although China is the world’s third-biggest consumer of palm oil, there is very little consumer awareness in the country. Palm oil is almost always consumed within another product, notably in instant noodles, and is usually labelled as “vegetable oil.” As such, while the country’s main palm oil importers do trade certified palm oil, they mostly don’t import it into China as no one is willing to pay a premium for it. Palm oil has recently been displacing soy oil which has become more expensive due to the trade war with the US but also because the soybean meal industry, from which it was a by-product, collapsed with the African Swine Fever. 

A conservation professor noted, however, that while most of the world seems to have agreed that palm oil is bad and coconut oil is good, coconut palm trees threaten many more species than palm. This is because coconut grows in areas with far more biodiversity. Data from the International Union for the Conservation of Nature showed that, for every million tonnes of oil produced, coconut threatens over 20.2 species, followed by olive oil with 4.1 species and palm with 3.8 species. He argued that the solution was not to discriminate one oil over another but for each oil to be produced in the most sustainable way possible. 

Some of the world’s multinational food companies are reducing their product ranges to cut the costs of maintaining stocks in this new era of online grocery shopping. Mondelez, for one, announced it would shelve 25% of its products. The CEO said, “we have too many flavours, too many sizes.” Similarly, General Mills is reducing by almost half its range of soups. The CEO explained that websites could not host as many options as supermarkets so it did not make sense to have that many varieties of the same product any more. 

Another big change at Unilever is the group’s decision to put carbon footprint labels on every one of their products. An analyst noted that, a decade ago, Tesco had also tried, and failed. But he argued that Unilever’s tight supply chain would make the data collecting process more feasible. All they need now is an independent carbon labelling standard. 

Cattle ranchers frustrated with the meat labelling standards in the US are working on selling their meat directly to consumers under their own brand, a trend that has been accelerated by the coronavirus. They complain that meat that has been processed or packaged in the US can get the ‘Made in the USA’ label even if the animal was not born in the US. Congress is looking into making it easier for smaller slaughterhouses to operate but cattle ranchers say the cost of setting up is still prohibitive and it is unclear whether consumers are willing to pay a premium. Three groups control close to 60% of the US’ beef industry and, as of 2019, 12 plants processed over half of the country’s cattle. 

If you thought the issue of food labels was not complicated enough, pet owners are now getting worried that misleading labelling on feed bags could be contributing to their pet’s obesity. An estimated 100 million pets are overweight in the US and a law firm is looking for complainants to build a class-action lawsuit against a major pet food manufacturer. They argue that the suggested portions are deliberately based on a working dog’s needs, whereas most pets don’t do much more than relax at home.

This summary was produced by ECRUU

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