Commodity Conversations Weekly Press Summary

Sri Lanka banned the import of palm oil, effective immediately. The President instructed local palm oil companies to uproot their crops. His goal is to make the country palm oil-free and address deforestation. Coconut plantation owners were also told to progressively change crops. Farmers were advised to plant “rubber or other environmentally-friendly crops” instead. 

The country used to import most of its palm oil from Malaysia but the amount was too small to have a significant impact. Instead, palm oil prices grew last week amid a strong demand from India, Europe and Africa. The global vegetable oil supply is also expected to be tight as US farmers might plant fewer soybeans than expected. 

Global grain markets could be upended again with the resurgence of African swine fever in China, where 20-25% of the pig population in the north was reportedly lost. Local sources claim that the government is underreporting cases which have risen in the first quarter of 2021 because of the cold weather, a high density of new pig herds and new strains. The disease killed 50% of the country’s hog population in the first year after it was discovered in 2018.

Malaysia’s palm oil estates have been able to deal with the strong growth in demand thanks to huge improvements in yields. New research, however, argued that improvements in yields are being slowed by the changing climate. Farm productivity would be 21% higher when compared to 1961 if it wasn’t for the warming climate, the study claims. Ironically, one of the major culprits of global warming is the agricultural sector and its drive to boost productivity. Researchers suggested that farmers should aim to improve yields without relying on more inputs like land or water. 

The increasing prevalence of droughts, floods, heat and cold waves is also leading to more crop failures, according to another recently published paper. Europe lost 2.2% of its crop production in 1964-1990 because of extreme weather events, while losses in 1991-2015 were almost three times higher at 7.3%. Some crops, like cereals, are much more vulnerable because they are less likely to be irrigated. Nonetheless, average yields in Europe still increased by 150% between 1964-1990 and 1991-2015.

While a growing number of meat and dairy companies announced pledges to reach net-zero emissions, a paper from New York University noted that most firms still have no climate policy. And it argued that the pledges made so far are often inadequate. They do not contain details and focus mostly on carbon dioxide without addressing methane or land-use change. The paper also highlights the lobbying efforts by agricultural producers to fight climate change policies. The money spent to influence policy often exceeds the amounts paid by fossil fuel companies, although they come under less scrutiny. 

Consumers could help accelerate the switch to a sustainable agricultural supply chain as the food industry is catching up with the world of big data to quickly respond to consumer preference. Food producers used to lack information on customer purchases but the rise in delivery and direct-to-consumer sales is making large food firms much more responsive. Kraft Heinz, for example, launched a larger portion size for its mac and cheese only a few months after people started asking for it on social media. 

Evidence suggests that consumers are already buying more products they believe to be environmentally friendly. A survey of 42,768 shoppers found that they would choose a product with an ecolabel – like Rainforest Alliance or Certified Carbon Reduction label –  79% of the time. Income, age or education were not factors in purchases, although women were more likely to choose goods with ecolabels. However, not all ecolabels are strictly regulated or transparent. The industry should work on labels that “capture a product’s full environmental impact from farm to fork”, researchers suggested. 

Despite the huge amount of money invested in plant-based meat alternatives, the consumption of meat in the US is actually still increasing, according to USDA data. The per capita consumption of chicken, pork and beef were all up in 2020 when compared to 2016. 

Restaurants and investors have been experimenting with new kitchen concepts during the pandemic, like ghost kitchens that rent out space for cooks to make internet-only restaurants. A journalist discovered a new phenomenon when investigating a series of listings on delivery apps. Some restaurants are selling their menu items as if they came from different restaurants. The concept is being pushed by Future Foods – a unit of CloudKitchen which was created by the Uber cofounder – and relies on very flashy marketing. Some of the items were sold under restaurant names like Pimp My Pasta, Cheeky’s Cheesesteaks or OMG BBQ LOL. 

This summary was produced by ECRUU

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