Commodity Conversations News Monitor

The UN FAO has published a new report urging reform of the world’s $540bn in farming subsidies.  The FAO estimates that subsidies account for 15 per cent of agriculture’s total production value globally, with the figure expected to more than triple to $1.8tn by 2030.

The report finds that converting land to agricultural use has led to a 70 per cent reduction in global biodiversity. Food production generates about a quarter of all greenhouse gases. The UN estimates that these hidden costs to public health and the environment total about $12tn a year: $6.6tn in health problems caused by obesity, undernutrition, and pollution; $3.3tn from agriculture’s effects on the climate and the environment; and $2.1tn due to wasted food and fertiliser leakage.

The Guardian adds that while $100bn is spent each year on climate change measures and $5bn for deforestation, governments annually provide $470bn in farm support that negatively impacts the world’s climate and biodiversity.

Bloomberg warns that climate change could negatively affect food supplies. It says that yields of staple crops could decline by almost a third by 2050 unless emissions are drastically reduced in the next decade.

The US and the EU have agreed to try and cut methane emissions by about one-third by the end of this decade. Their agreement targets the energy, agriculture and waste industries.

A report in Nature argues that agriculture is responsible for 35 per cent of global GHG emissions, with the meat industry accounting for 57 per cent of all food production emissions, with 29 per cent coming from the cultivation of plant-based foods. The rest comes from other crops like cotton or rubber. Beef alone accounts for a quarter of emissions produced by raising and growing food.

When asked about meat’s contribution to GHG emissions, most people will quote the FAO figure of 14.5 per cent. Another new report, however, claims that this figure is out of date and that the minimum estimate for animal agriculture’s emissions should be updated to 16.5 per cent.

The Guardian writes that one solution might be to potty-train livestock to poo and pee in designated areas where their waste can be better managed.

The FT writes that PR agencies working for the alt-meat sector may be behind some of the anti-meat articles in the media. The newspaper argues that lab-grown meat is not about sustainability. They write, “Ultimately, lab-grown meat is not about saving the planet, it’s not really even about food. It’s about IP.”

Meanwhile, ADM plans to launch its first US plant-based meat portfolio in a joint venture with Brazilian beef producer Marfrig Global Foods SA. According to ADM, more than half of conventional meat-eaters are diversifying to alternative proteins.

Nestlé SA has announced a three-pronged plan to invest approximately $1.3 billion over the next five years to help its farmers and suppliers transition to using regenerative agriculture practices. Agriculture accounts for nearly two-thirds of Nestle’s total greenhouse gas emissions, with dairy and livestock making up about half of that. The company hopes to halve its emissions by 2030 and achieve net-zero emissions by 2050.

With a certain irony, a shortage of CO2 used to stun pigs and chickens before slaughtering could impact UK meat supply chains. The CO2 used by the meat industry is a by-product of fertiliser production, but two large UK fertiliser factories have recently suspended operations due to soaring gas prices. The UK’s biggest poultry supplier has said the CO2 shortage could result in a lack of turkeys for traditional Christmas dinners.

Meanwhile, the UK retailer Marks & Spencer is closing eleven of its French stores because of problems supplying them with fresh and chilled foods since Brexit. The UK government has promised an investigation into how labour shortages, Brexit and surging commodity prices are hurting the country’s food industry.

Governments in other countries are also looking at their food supply chains as shortages bite, and prices rise. Global food prices were up 33 per cent in August from a year earlier. Bloomberg thinks that the situation is unlikely to improve as extreme weather, soaring freight and fertiliser costs, shipping bottlenecks, and labour shortages compound the problem.

In China, the government has said it will continue efforts to stabilise commodity prices using various measures, but with a particular emphasis on the use of market instruments (presumably the management of reserve stocks).

The Danish shipping giant Maersk has upgraded its profit expectations for a second time this year to between $22bn to $23bn. At the start of this year, they had forecast profits between $8.5bn and $10.5bn. Freight rates have jumped 26.6 per cent from a year earlier, the sharpest increase since February 2006, based on figures from Cass Information Systems. The gain followed a 23.8 per cent increase in July. A record 65 container ships are waiting to offload in the ports of Los Angeles and Long Beach. Of those, a record 23 are drifting because anchorages were full.

In long reads, the Guardian writes that new forensic testing techniques are helping to reduce food fraud, particularly in terms of origin. Bloomberg Green takes a long look at how even the best-intentioned agricultural companies can fail to live up to investor expectations regarding sustainability and human rights.

Lastly, the FT looks at how investors can use ETFs to profit from the commodity super-cycle, but, in this excellent podcast, a seasoned trader asks whether there is a super-cycle at all.

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Commodity Conversations Media Monitor

The world’s food supply chain is buckling due to staff shortages, soaring transport costs and other disruptions caused by coronavirus. Agricultural workers lack across the globe, from Malaysia’s palm plantations, Vietnam’s shrimp farms and Italy’s tomato orchards. As a result, food prices have risen 40 per cent over the past 15 months.

Developing countries feel the effects more than developed countries. People in poorer countries spend a larger proportion of their income on food: 45 per cent in India compared to 10-15 per cent in the US and less than 2 per cent in Japan and Germany.

Palm oil prices have risen more than for other foodstuffs. It is a problem for India, which imports 60 per cent of its cooking oils. More than half of those imports are of palm oil from Malaysia and Indonesia. The Indian government wants to boost domestic palm oil production by targetting high rainfall areas in the northeast of the country and the eastern archipelago of the Andaman and Nicobar Islands. Ecologists are worried that palm plantations might harm the local ecosystems.

The cost of shipping a 40-foot container from Shanghai to Los Angeles reached $11,569 in the past week, nearly eight times higher than pre-pandemic levels. One shipping line, France’s CMA CGM, has decided to cap rates through to the end of January, “prioritising its long-term relationship with customers in the face of an unprecedented situation in the shipping industry.” The Economist argues that the rising cost of container shipping could have a long-term structural effect on trade flows.

The International Chamber of Shipping, which represents more than 80 per cent of the world’s merchant fleet, has submitted a plan to the International Maritime Organization to impose a levy on carbon dioxide emitted by vessels. They would use the proceeds to close the price gap between zero-carbon and conventional fuels and to “deploy the bunkering infrastructure required in ports throughout the world to supply fuels such as hydrogen and ammonia”.

Maersk has bought a minority stake in a green fuel start-up as part of a broader strategy to commit funds toward developing green energy. Maersk consumes about 12 million tons of marine oil per year, roughly equal to all the oil produced in the world in a single day.

Ecologists in Sweden hope that the replica of an 18th-century wooden sailing ship will become an ambassador for a sustainable maritime industry. The ship will set sail in April 2022 from Sweden to Shanghai and will be partly powered by biodiesel made from rapeseed oil.

But what about electric ships? Apparently, they won’t have much of an impact. Electric tractors could, however, have a rosy future. As for planes, a consortium of Indonesian companies, regulators and a university has begun a series of tests on an aviation fuel containing a 2.4 per cent share of biofuel made from refined palm oil.

Chevron and Bunge have joined forces to boost soy oil production to meet the demand for renewable diesel. Bunge will contribute soybean processing facilities in Louisiana and Illinois, and Chevron plans to put about $600 million into the venture. The two companies anticipate doubling the combined capacity of Bunge’s facilities from 7,000 tons per day by the end of 2024.

The FT is worried about how biofuel demand – especially for renewable diesel – will affect food prices. They call the debate Doughnuts versus Diesel. The newspaper is also concerned about how the Russian government may use grain exports as a political and diplomatic weapon.

A group of European non-profits has published the Meat Atlas 2021, a critique of the world’s meat industry. The report finds that the world’s five biggest meat and dairy companies emit the same volume of greenhouse gases as ExxonMobil and that twenty livestock companies are responsible for more greenhouse gas emissions than either Germany, Britain or France.

Technology helps to reduce livestock’s impact on the environment. Euronews reports on the dairy farm in Rotterdam’s harbour where robots milk cows fed, among other things, on grass clippings from football fields and golf courses. The floating farm processes the manure into garden pellets.

Even so, Dutch politicians are considering plans to cut the country’s livestock numbers by 30 per cent to reduce ammonia pollution. The government may force farmers to sell emissions rights or their land to the state.

The Dutch nutrition company Royal DSM NV is making progress with their feed additive, Bovaer, which cuts methane emissions from livestock. The Brazilian government has authorised its use after a trial on Brazilian beef showed it cut methane emissions from cows’ stomachs by as much as 55 per cent. DSM is trying to get permission for the product in the EU, the US, and New Zealand.

Brazil, meanwhile, has suspended beef exports to China after confirming two cases of mad cow disease. China and Hong Kong buy more than half of Brazil’s beef exports and have limited alternatives. As such, analysts expect the export ban to be short-lived.

Indonesia has ended a deal with Norway to reduce carbon emissions from deforestation, citing a lack of payment after the country met its commitment to cut greenhouse gas emissions in the 2016-2017 period.

CNBC interviews Nestlé’s CEO on how the company is winning the hearts and minds of the younger generation on sustainability. One key quote: “Basic rule No. 1 in consumer goods marketing and food and beverage marketing is never, ever lose the younger generation.”

Finally, in a blow to children around the world, there is news this week that a shortage of hazelnuts threatens the supply of Nutella. Will millions of breakfasts – and days – be ruined?

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Weekly Media Monitor

Shipping is hitting the headlines with news that Maersk has ordered eight new flex-fuel vessels that can run on traditional bunker fuel and carbon-neutral methanol. Hyundai Heavy Industries will build the ships that carry 16,000 containers each and deliver them in 2024. Maersk has also included an option for four more vessels in 2025. The new ships will replace older ones rather than add new capacity.

Clean methanol is currently twice as expensive as fossil-based fuel oil. Doubling the fuel price could translate to about a 15 per cent increase in container rates, but Maersk believes that enough of its customers will be willing to pay that extra to ensure carbon-free shipping.

The company intends to produce green methanol for its first vessel in cooperation with REintegrate, a subsidiary of the Danish renewable energy company European Energy. The Danish facility will supply about 10,000 tonnes of carbon-neutral e-methanol, using green hydrogen combined with carbon emissions captured from burning bioenergy such as biomass.

Maersk’s biggest challenge will be to secure enough green methanol for the vessels. If it can’t and continues to power its fleet of ships with fuel oil, nothing will change. The company accepts the challenge while admitting, “We need a significant ramp-up in production. We do feel there has been a lot of chicken and egg. So, we find by going out with this announcement that we can break this cycle.”

Meanwhile, a Norwegian company has created the world’s first zero-emission, autonomous cargo ship. The ship, capable of carrying 103 containers and a top speed of 13 knots, will make its first journey between two Norwegian towns before the end of the year and will be the world’s first fully-electric container ship.

The container-shipping industry is financially well-placed to invest in new ships. Maersk was expected to make around $4.5 billion in 2021 but may now make $14.5 billion. It is not the only shipping company making record profits. Container lines could make up to $100 billion in profits this year, fifteen times typical earnings.

Soaring freight rates are not restricted to containers. Rates in the dry-bulk sector hit 11-year highs last week, with further strength expected. Clarkson predicts that the dry bulk trade will rise 4.2 per cent in 2021 and 1.7 per cent in 2022. Fleet growth is likely to lag the increase in cargoes, with capacity expanding by 3.3 per cent this year and 1.4 per cent next year.

GHG emissions are not just hitting the headlines in shipping; they are also becoming a political hot potato in the upcoming US elections. Democrats are worried that they will lose rural votes in agricultural states like Iowa and Wisconsin if they try to limit methane emissions from the livestock industry.

They are also a political issue in India. The predominantly agricultural northern state of Uttar Pradesh will likely drop legal proceedings against farmers accused of burning crop waste. The ruling Bharatiya Janata Party wants to placate growers ahead of state assembly elections next year.

Politics is also entering the food supply in the UK, where farmers blame the government’s new immigration policies for an acute shortage of truck drivers, fruit and vegetable pickers, and meatpackers.  Meat processors have asked the government to allow the sector to use prison labour to make up for the shortage. Britain’s meat processing industry, which is two-thirds staffed by non-UK workers, is currently missing about 14,000 people out of a total of 95,000 usually employed in the sector.

However, the UK government has turned down a request to temporarily ease visa requirements for truck drivers and instead asked the industry to train the domestic workforce. The sector argues that it will take too long and short of 90,000 drivers right now. The labour shortages are already impacting supply with UK McDonald’s restaurants running out of milkshakes.

Bloomberg takes the conversation back to climate change and makes the environmental case for fish farming. It writes that seafood is the only significant source of protein that humanity is still harvesting in the wild and that almost 90 per cent of global fish stocks are exploited or overfished. Farmed fish should surpass the volume of traditional fishing by 2024, and the global aquaculture market could exceed $245 billion by 2027, up from $180 billion today.

Reuters, meanwhile, looks at how climate change prompts coffee growers in Brazil to produce more robusta (known as conilon) and less arabica. Robusta coffee is more heat tolerant than arabica and can be grown at lower altitudes. Conilon yields in Brazil now match Vietnam’s, and roasters are using more robusta in their blends.

Finally, a few stories on technology. Bloomberg writes about electric tractors and the challenges of vertical farming. Wired asks whether AI and robots will transform farming into an ecological utopia or dystopia, and Greenbiz examines the role that Google is playing in regenerative agriculture.

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Weekly Media Monitor

Chinese authorities have closed the Meidong Container Terminal at the Port of Ningbo after a dock worker tested positive for COVID. There are five container terminals in Ningbo, the third-largest container port in the world after Shanghai and Singapore.

The closure leads to concerns that the rapid spread of the delta variant will lead to a repeat of last year’s shipping nightmares. It could lead to even higher freight rates. The benchmark cost of shipping a container from Shanghai to Los Angeles has tripled over the past year. The F.T. writes that the world’s ports face the most significant disruption since the start of container shipping 65 years ago, with 353 container ships stuck outside ports, more than double the number from earlier in the year.

Last week, we reported that Maersk, the world’s largest container shipping firm, had reported profits for their second quarter of $5.1 billion, up 200 per cent from the $1.7 billion in the same period last year. This week, Hapag-Lloyd reported a net profit for the six months to June of €2.7 billion, compared to a total net profit of €977m in the previous ten years. Hapag-Lloyd’s average freight cost per 20ft container rose 46 per cent to $1,612 in the first six months of the year.

The Guardian reports on the growing momentum behind a shift to regenerative agriculture in the U.K. The country’s National Farmers’ Union has set out an ambition for U.K. farming to be climate neutral by 2040.

The global market for agricultural robots for seeding, harvesting and environmental monitoring is expected to increase from $5.4 billion in 2020 to more than $20 billion by 2026.  Robots can help reduce soil disturbance, which can contribute to erosion, and allow farmers to reduce or even eradicate the use of herbicides.

Indonesia’s three-year ban on new palm oil permits ends in September, and conservationists urge the country to extend or make it permanent. A separate moratorium on new forest clearance for palm or logging, covering about 66 million hectares of primary forest and peatland, remains in place.

The worst drought since 1977 has devasted the wheat harvest in eastern Washington state. Bloomberg warns that poor wheat crops in Canada and Russia will lead to higher bread prices and food inflation. Bloomberg is also worried that California’s current drought could become permanent.

Farmers in eastern Canada may have to euthanize and dispose of more than 130,000 hogs due to a strike at the pork processing facility in Vallee-Jonction, Quebec. The plant usually slaughters 36,000 hogs each week but has been shut since end-April.

This week, there was more discussion on the effect of the alt-meat movement on livestock farmers and the roughly half a million people employed in the U.S. meat processing industry. Meat processing is the top-ranked manufacturing industry by employment in the U.S.

CNN reports on Perfect Day, a California-based start-up that uses fungi to make dairy protein “molecularly identical” to the protein in cow’s milk. The company grows the fungus in fermentation tanks to produce whey protein. They then filter and dry it into a powder for use in products including cheese and ice cream.

Olam International has picked London for the IPO of food ingredients business, Olam Food Ingredients, with a secondary listing in Singapore.  OFI last week reported earnings before interest of S$316m ($233m) for the six months to June with sales of S$6.8 billion.

Wilmar International has reported earnings of US$750.9 million for the first half of 2021, up 23 per cent year on year. Revenue was up 30.4 per cent to US$29.5 billion.

A California appeals court has refused to overturn a 2019 verdict that awarded more than $2 billion to a couple who claimed they fell ill after using the herbicide Roundup but left intact a ruling that reduced the award to $86.7 million. It is Bayer’s third consecutive appeals court loss over Roundup.

Bayer has other woes with Corteva Agriscience’s announcement that it plans to sell Enlist, their biotech soybean seeds, in Brazil in competition to Bayer AG’s Intacta genetically modified soy technology. Corteva’s Enlist beans have already captured 35 per cent of the U.S. soy area.

Cargill’s CEO has given an interview to Time magazine. It is too wide-ranging to be summarized, but I did like his answer to a question as to the best way to feed the world’s growing population. “Make sure that you can travel across borders. Don’t erect trade barriers. Don’t use food as a weapon. Practice comparative advantage. Use your natural resources of your region, grow what is best suited for the soil, the climate, the access to water.” (Well said!)

And finally, you will be familiar with arabica and robusta coffee but have you tried liberica coffee. It accounts for less than one per cent of world coffee production, is expensive to grow and harvest, but I, for one, would love to try it!

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Weekly Media Monitor

The United Nations Intergovernmental Panel on Climate Change (IPCC) has published a new report on global climate change. One of the authors has warned that ‘If we do not halt our emissions soon, our future climate could well become some kind of hell on Earth.’ The last decade has been hotter than any period in 125,000 years. Atmospheric CO₂ is at a two-million-year peak, while methane and nitrous oxide levels are the highest for at least the last 800,000 years. Methane has a ‘warming potential’ more than 80 times that of CO2.

However, all is not lost. The Guardian writes that ‘everything we need to avoid the exponential impacts of climate change is doable. But it depends on solutions moving exponentially faster than impacts.’ Planting trees is apparently, not going to solve the problem. In a new report, Oxfam argues that an over-reliance on tree-planting to offset carbon emissions could push food prices up 80 per cent by 2050.

With the meat industry blamed for being part of the problem, people are increasing shining the spotlight on alternative meat (alt-meat) products (both plant-based and cultured meat)

In a new report (that a friend of mine calls ‘science fiction’), Rethinx predicts that the US cattle farming industry will be bankrupt by 2030. The think tank adds that ‘all other commercial livestock industries worldwide will quickly follow the same fate, as will commercial fisheries and aquaculture.’

The report authors argue that Precision Fermentation (PF) will make protein production five times cheaper by 2030 and 10 times cheaper by 2035 than existing animal proteins. They write that ‘foods made with them will be higher quality, safer, more consistent, and available in a far wider variety than the animal-derived products they replace.’ They add that the new PF foods will be up to 100 times more land efficient, 10-25 times more feedstock efficient, 20 times more time-efficient, and ten times more water-efficient. They will also produce far less waste.

Impossible Foods CEO is on the same message and wants to end all animal farming by 2035. Meanwhile, the CEO of Beyond Meat sees his company working to make this ‘the first generation of humans to separate meat from animals.’

If they are correct, what will the end of animal farming mean for producers and the rural communities they support?  In a series of 37 interviews, the Breakthrough Institute has tried to answer just that question. The conclusion? The situation for meat producers and meatpackers is not unlike that for coal miners and oil workers before natural gas, wind energy, and solar power took over a big chunk of the market.

Bloomberg joins the conversation with a video that argues that the alt-meat sector will only take significant market share once it develops whole cuts rather than burgers. In another article, Bloomberg claims that cell-cultured meat will be doomed if it doesn’t get its marketing right. They suggest that the sector should stop calling it lab meat.

The world is not just switching away from meat. It is also moving away from dairy. The Guardian interviews the self-proclaimed Queen of Vegan Cheese about the growing demand for non-dairy products and how farmers can make the switch. Figures from Euromonitor show that the dairy alternatives market is the fastest-growing sector among packaged foods and worth £2.5bn in western Europe in 2020-21. The UK market has grown by 69 per cent over the past five years, with non-soya-based milk increasing by 129 per cent.

But what about seafood – are we also moving towards fishless fish? The answer, it seems, is that alt-fish will be the ‘next big thing’, not just among vegans but among all fish-lovers. The sector is already growing strongly, if from a small base. Plant-based fish is a minnow in the alt-protein space, with 2020 sales estimated at $12 million. It compares to alt-dairy at $2.5 billion and alt-meat at $1.4 billion- Alt-meat is growing the fastest at 45 per cent compared to 20 per cent for alt-milk and 23 per cent for alt-fish.

Neither Cargill nor Continental Grain seems convinced that the move to alt-meat will happen quickly. Both companies are reportedly interested in buying Sanderson Farms Inc, the third-biggest chicken farmer in the US, producing about 13.6 million chickens a week. The price discussed is $4.5 billion.

Cargill was also in the news last week for record annual profits of nearly $5 billion. Why is it acceptable for Apple or Google to report record profits from mobile phones or advertising, but it is somehow seen as morally wrong when a trading company makes record profits from food?

To put those Cargill profits in perspective, Maersk, the world’s largest container shipping firm, has reported profits for their second quarter of $5.1 billion, up 200 per cent from the $1.7 billion reported in the same period last year. Revenues were up almost 60 per cent to $14.2 billion. Maersk earned in one quarter what Cargill earned in a year and expects to earn between $18 billion and $19.5 billion over the whole year.

Sky-rocketing freight rates have been driving Maersk’s profits. The spot rate per container on the China-US East coast route has climbed to nearly $20,000, while rates on the China-EU route are flirting with $14,000. The price graphs are astounding. China-US rates have jumped by almost a third in a month and are up by more than three quarters over the year so far. China-EU rates have jumped by nearly 50 per cent on the month and 120 per cent year-on-year.

Demand is not driving these spiking rates. Maersk estimates that global container shipping demand was up only 2.7 per cent in the second quarter versus the same period two years ago, before the pandemic. Instead, the company blames covid-related bottlenecks and congestion.

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Weekly Media Monitor

The USDA warns that 1.2 billion people in the world will be food-insecure this year, up from 761 million people pre-Covid. The USDA blames the increase on a pandemic-induced drop in disposable income. Asia, particularly Bangladesh, India, Pakistan, and Indonesia, will see the most significant rise in hunger. At the same time, Yemen, Zimbabwe, and Congo are projected to have the highest prevalence of hunger, with more than 80 per cent of the population going hungry.

Argentina has declared a six-month state of emergency for the Parana River after water levels dropped to their lowest in 77 years. The river – often described as a grain superhighway – transports about 80 per cent of Argentina’s agricultural exports. Bulk carriers are currently loading 21 per cent less grain at Rosario ports due to the low water levels and could face a 40 per cent load reduction by end-September. The collapse of a grain silo at a Bunge facility in Argentina’s Up River hub has added to difficulties with activity suspended amid fears of injuries to personnel.

Authorities in Brazil are concerned about how the drought and global warming will affect their agricultural exports. They will publish a risk assessment document on the subject later this month.

While Argentina has too little water, China has too much. Flooding in Henan province, which grows about 25 per cent of China’s wheat, has led to concerns over mycotoxin contamination.

There is also concern that global warming and pesticide resistance could lead to a worldwide crop pandemic similar to Covid-19.  China is already limiting disease, particularly ASF, by isolating their pigs in multi-storey ‘hog hotels’.

On the subject of pigs, California shoppers may not be able to bring home the bacon from the beginning of next year when the state enforces a new law that requires more space for pigs, egg-laying chickens and veal calves. Veal and egg producers are optimistic they can meet the new standards, but only 4 per cent of hog operations now comply with the new rules.

The Guardian argues (in a long-read) that lab-grown meat, rather than hog hotels, would provide a more sustainable food system. It could, they claim, be “a monumental win for animals and the environment.”

Meanwhile, ADM continues to invest in plant-based meat. The company recently purchased Sojaprotein, the largest plant-based protein provider in southern Europe. China is also dipping its toes into plant-based meat.

ADM continues to expand its soybean crushing operations in North America, backed by solid demand for both meal and oil. The company forecasts North American soy meal demand to grow 2-3 per cent per year. It expects US green diesel demand to grow at a higher growth rate, increasing by about one billion gallons per year and reaching 5 billion gallons by 2025. The company plans to open a new crushing plant every couple of years.

Wilmar International is listing its joint venture, Adani Wilmar, through an initial public offering worth up to 45,000 million Indian rupees ($605.19 million). The company is a 50-50 joint venture between Wilmar and the Adani Group.

Hedge funds are investing more money into commodities. Still, smaller trade houses find it difficult to access finance amid a flight to quality in trade finance.

Coffee was in the news this week with the publication of a 72- page report by the Columbia Center of Sustainable Development that finds that coffee roasters fail to guarantee a living income for coffee farmers.

Coffee may be bad for your brain and good for your heart. Nutritional Neuroscience published a study that found that six or more cups of coffee per day may impact brain health, potentially increasing the risk of neurological diseases like dementia. Another study, however, found that coffee is good for your heart.

One of the world’s largest freight brokers has warned that a “dramatic lack of capacity” for ships, trucks, trains, containers, and warehouse workers will continue into 2022. He told Bloomberg, “There’s not any point in the supply chain that is not experiencing some sort of dislocation or issues. I don’t think there’s any sign that it’s going to get better.”

The founder of Freight Right Global Logistics is even more pessimistic. He told Freightwaves,

“I don’t expect demand to curtail or the dynamics to change probably until mid-next year, and even that may not hold. It isn’t even an ocean capacity issue; it’s an infrastructure capacity issue.”

The FT agrees that port congestion is now the primary driver of these higher freight rates and is worried about their effect on inflation.

As part of their series on sustainable agriculture, the FT writes of the difficult choices farmers face when trying to produce food sustainably. In one article, the newspaper focuses on carbon emissions from peatlands, arguing that they may not be suitable for agricultural production. In a second article, the FT looks at ways of measuring sustainability.

Looking forward, we expect the media to shine an increasingly bright spotlight on the food supply chain ahead of next month’s controversial UN FAO Food Summit in New York. Experts and lobbyists have begun to outline their positions and expectations, while the USDA believes science and technology are essential.

Lastly, Mongabay takes a deep dive into deforestation and illegal land deals in the Amazon.

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Weekly Media Monitor

The WWF and Tesco have published a report, Driven to Waste: Global Food Loss on Farms, that estimates 2.5 billion tonnes of food – or approximately 40 per cent of total global production – is wasted each year.

Of that amount, some 1.2 billion tonnes are lost on farms. I had previously understood that most farm wastage occurs in poorer countries. Still, the report shows that 58 per cent of global harvest waste occurs in Europe, North America, and industrialized Asia.

In addition to the food lost on farms, 931 million tonnes are wasted each year in retail, foodservice, and consumer homes. The remainder is lost in the post-farmgate transport, storage, manufacturing, and processing stages. In their estimates, the WWF includes agricultural production destined initially for human consumption but diverted instead to animal feed.

The last analysis of the total loss and waste from farm to fork was conducted by the UN’s FAO in 2011 when they estimated it at about 33 per cent.

Staying on the theme of waste, UK charities have asked the prime minister to introduce an anti-waste law after videos emerged of Amazon workers in Scotland destroying in-date groceries – as well as household goods.

However, food shortages, not food waste, are the UK Prime Minister’s current priority, with a shortage of workers leading to unstocked shelves. In what has been called a ‘pingdemic’, an over-zealous Covid-contact-tracing app is telling too many workers to quarantine.

Poor weather, labour shortages, rising freight rates and supply bottlenecks have led Unilever to warn that they face their most significant cost increases for years.

The Northern US and Canada drought is prompting farmers to sell their wheat and barley as hay for livestock operators. Cattle breeders have asked for permission to graze their herds on land in the Conservation Reserve Program.

The worst frost in 20 years hit Brazil’s coffee areas last week, sending prices to multi-year highs. The story made it into the mainstream media. Analysts worry that the frost could have long term repercussions as it has killed or damaged young coffee trees.

Heavy rainfall in China’s key pork region has flooded farms and raised the threat of animal disease, just another weather event that has negatively impacted agricultural production this year.

If you have a subscription to the Economist (I don’t), you can read how ‘big agriculture is having a field day as food prices soar’: cereal entrepreneurs, they say, are milking it. I wonder, though, whether the newspaper might be missing the point that agricultural prices are soaring because harvests are poor, making many farmers worse off.

High shipping costs are adding to the woes of the world’s farmers. Container lines are shipping empty containers from the US to Asia rather than facing the delays of having them filled.

Staying with freight, have you ever wondered if or when one of the tech giants like Amazon or Uber would enter the business of transporting bulk commodities? Well, Uber is increasing their footprint in the US trucking sector. Are ships next?

Some small-scale farmer organizations have called for a boycott of September’s UN Global Food Systems Summit in New York. They explain why here, although I am not convinced that their arguments are valid. (Engagement works better than boycotts.)  They are currently holding a counter-summit, but it seems to have attracted little attention in the world’s media.

The South China Morning Post has published an opinion piece that argues that factory farming is a greater pandemic risk than the consumption of exotic animals. And if you have ever wondered how China produces a billion eggs a day, you will find the answer here. (Warning: It could put you off eating eggs.)

Nestlé has taken an interesting initiative in asking the public how they should deal with deforestation and forced labour in their palm-oil supply chain. And if you haven’t seen it yet, look at the WWF’s page on palm oil. It dates from last year, but it is still relevant.

Finally, the FT published two excellent ‘Big Reads’ this week. The first asks whether the commodity boom can revive Brazil’s economy. The second, what growing avocados in Sicily can tell us about climate change.

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Weekly Media Monitor

The Rockefeller Foundation has joined the crowd wanting to transform the US food supply system. They say America faces a hunger and nutrition crisis unlike any the country has seen in generations, with 33 per cent of families unable to afford the amount or quality of food they want. You can access the report entitled Reset the Table: Meeting the Moment to Transform the US Food System here.

Announcing new EU legislation to cut greenhouse gas emissions by 55 per cent, the EC Executive Vice-President has struck an alarmist tone. He says that if we fail to act, “we would fail our children and grandchildren, who will be fighting wars over water and food.”

The Guardian believes that the problem lies with the few transnational companies who dominate every link of the food supply chain from ‘seeds and fertilizers to slaughterhouses and supermarkets to cereals and beers’. It argues that these mega-companies dictate what farmers grow, how much they are paid, what consumers eat, and how much our groceries cost.

The Guardian is also worried about the future of regenerative agriculture, concerned that it doesn’t pay to rewild farms.  Reuters joins the debate, writing that critics want to ban the conversion of wildland for organic farming. They say that transitioning conventional farmland into organic is a three-year process, and some farmers may be converting untouched land instead. (In any case, yields are usually lower with organic farming than conventional farming, requiring a more significant acreage for the same production.)

Although selective breeding and genetic modification have made corn and soybeans more tolerant to heat and drought, a recent study has found that the gain is offset by reduced productivity under normal conditions. As one of the researchers explains, ‘There’s been this trade-off; crops become better adapted to extreme weather, but less adapted to normal conditions.’

In a special report on sustainability and agriculture, the FT looks at the increasing role of green finance. At the same time, Euronews argues that food must be at the heart of environmental action ahead of the COP26 meeting in November.

Palm oil is once again in the spotlight with a new report by a coalition of NGOs which accuses the Indonesian palm oil industry of human rights abuses. The piece is critical of the RSPO complaints system, which it calls ‘slow and ineffective.’

Last week, sugar taxes were back in the headlines with the publication in the UK of a government-commissioned report that called for a surcharge of £3 a kilo on sugar and £6 a kilo on salt sold wholesale for use in processed food, restaurants, and catering. The British Prime Minister seemed unimpressed by the idea. An expert at GlobalData suggested that one of the tax goals would be to force product reformulation. Still, food makers are unlikely to find alternatives without affecting taste and texture or increasing price.

Impossible Foods Inc. plans to launch a plant-based chicken nugget made from textured soy protein and sunflower oil, but Bloomberg wonders whether it is entering the market too late. The news agency is more optimistic about lab-grown foie gras, which it finds delicious. Meanwhile, Popeyes, the US fast-food chain, is worried about shortages and is stockpiling chicken ahead of its launch of a new chicken nugget product at the end of July.

Is lab-grown chocolate next on our shopping lists? The answer is apparently ‘No’. Although possible, it will be too expensive compared to the real thing.

Chinese pork imports should drop significantly after a 50 per cent fall in domestic pig prices. US pork is now more expensive than domestic meat after tariffs and freight, and the Chinese government can now replenish state reserves more cheaply from the local market.

Environmentalists often criticize the global shipping industry for its environmental footprint, even though it transports about 90 per cent of world trade by weight while accounting for only 3 per cent of human-made CO2 emissions. The sector is looking for solutions – is sail one of them?

The Wall Street Journal looks at how the recent US Presidential executive order on increasing competitiveness may affect the railroads and ocean shipping. Meanwhile, even though the Ever Given, the cargo ship famous for blocking the Suez Canal has now left Egypt, the vessel’s owners are worried about legal claims against them.

Raízen, a joint venture between Cosan and Royal Dutch Shell, is selling 8 per cent of its shares through an initial public offering, seeking to raise R$6.9bn ($1.34bn). Raizen is Brazil’s fourth-largest company by revenue, with a workforce of about 30,000. If successful, the offering would put it among the top-10 IPOs on record in Brazil.

Finally, and while on the subject of alcohol, hope may finally be at hand with a hangover-recovery drink attracting attention from major drink companies. And no, it’s not a Bloody Mary!

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Weekly Media Monitor

The UN FAO food price index dropped 2.5 per cent in June, down from a nine-year high. Prices of vegetable oils and cereals fell, offsetting gains in meat and sugar. However, the heatwave and severe drought in the U.S. Pacific Northwest continues to damage crops, including wheat, canola and fruit.

Transporting a 40-foot steel container of cargo by sea from Shanghai to Rotterdam now costs a record $10,522 – up 547 per cent on the seasonal average over the last five years. Drewry Shipping Consultants predicts that container shipping liner profits will surpass $100 billion in 2021 after posting a record EBIT in 1Q21 of $27.1 billion, beating the full-year 2020 EBIT of $25.4 bn. Drewry predicts freight rates will increase a further 50 per cent on average but warns that there is a danger that shippers will view carriers as “profiteering villains.”

The US White House has released an executive order to encourage the Federal Maritime Commission to vigorous enforce competition rules in the shipping industry. The European Union is also shining a spotlight on the sector to ensure that container shipping companies follow competition rules.

High freight rates are encouraging the world’s sugar refineries to delay shipments and run-down stocks, resulting in a 60 per cent drop in shipments from Brazil so far this year and encouraging Brazilian millers to produce more ethanol and less sugar.

The shipping industry is worried about Covid infections among vessel crews but face difficulties in vaccinating them. Some ports continue to restrict access to vessels with unvaccinated or infected crews. Sadly, shipping delays have adversely affected the welfare of live animals shipped overseas.

Reuters looks at the double whammy of rising grain prices and increased freight rates, but the FT takes a different tack, writing that commodity prices have slipped on Covid fears. Bloomberg highlights the recent collapse in lumber prices. The Guardian worries that the UK’s truck driver shortage will lead to increased food prices and shortages at Christmas. CNBC is worried about the pending ‘rubber apocalypse’ and how producers must adapt to climate change and tree disease.

The White House executive order (mentioned above) also includes measures to increase competition within agriculture, especially in the beef sector, where four large meat-packing companies dominate over 80 per cent of the market.

Following the European Commission recent commitment to table a proposal to phase out the use of cages in farming by the end of 2023 and enforce the ban from 2027, the EU’s biggest egg producer, Eurovo Group, has committed to phasing out cages for laying hens on its Italian-owned farms by 2022.  Across the pond, Massachusetts lawmakers have warned of a looming egg shortage ahead of the introduction of legislation mandating that all eggs sold in the state come from cage-free hens.

Nestle SA plans to enter the cultured meat market, working on alternative meat products that blend cultivated meat with plant-based ingredients. Aleph Farms Ltd has completed a $105 million Series B funding and will use the money to commercialize its cultivated beef steaks, scale up manufacturing and expand the product range.

IHS Markit finds that the price of Brazil’s agricultural land reached the highest average value of the past 20 years. The cost of grain land gained 30 per cent in the year to April, while cane land gained 10 per cent in value.

The world’s trade ministers held a virtual meeting this week to try to hash out an agreement to eliminate or reduce the $22 billion that rich countries spend each year subsidizing fishing. In their annual report, the WTO writes that “reaching an agreement will be critical for marine sustainability and the WTO’s credibility as a negotiating forum.”

China plans to broaden its agriculture insurance policies to protect farmers and increase rice, wheat, and corn production. The government will subsidize insurance costs for farmers to cover natural disasters, pest damage and other losses. In a further move to improve food security, the Chinese government harvested its first batch of “space rice” from seeds that returned from a lunar voyage last year. Scientists hope they could help create new plant varieties.

Chinese farmers have increased corn planting this year mainly at the expense of soybeans and other crops, including sorghum and edible beans. Pig farmers in the central province of Sichuan of China are still battling severe outbreaks of African Swine Fever (ASF). The disease has been spreading in the region since early March.

In longer reads, the Maritime Executive looks at how shipping companies are experimenting with biofuels to reduce their carbon footprint. In contrast, Rolling Stone looks at how US farmers can profit from carbon capture. FoodDrinkEurope, meanwhile, has published a report that finds that farm-to-fork food production represents 30 per cent of total carbon emissions within the EU.

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Weekly News Summary

The ongoing drought in the Americas continues to cause concern. Water levels in the Parana River are still falling, delaying Argentina’s soybean shipments. In California, a shortage of water is threatening the state’s almond industry. California grows about 80 per cent of the world’s almonds. The CME believes that their water futures contract could help.

But just when you thought the situation couldn’t get any worse, swarms of grasshoppers are now devouring crops across the US mid-west. The drought has provided ideal conditions for grasshopper eggs to hatch and survive.

Mexico is also suffering a severe drought but hopes that the upcoming rainy season will replenish parched reservoirs. The country gets between 50 and 80 per cent of its annual rainfall between July and September.

Bloomberg wonders whether weather problems will strengthen the supercycle but complains that ‘Commodity Traders Harvest Billions While Prices Rise for Everyone Else’. General Mills is undoubtedly worried about rising prices. The company expects total input cost inflation of about 7 per cent during the current fiscal year.

A new study predicts that climate change could result in a ten per cent fall in corn, rice, soybean and wheat crop yields by 2050 and that this figure could rise to 25 per cent by the end of the century.  The researchers argue that agriculture is falling behind on climate adaptation.

Another study finds that food – and GHG emissions from the farmers that produce it – are killing us. It estimates that 4.1 million deaths in 2018 were associated with dietary health risks, 6.0 million with overweight or obesity and that 730,000 infant deaths resulted from malnutrition. Researchers estimated that air pollution caused by food production lead to about 530,000 premature deaths per year globally, with 85 per cent occurring in Asia.

Bloomberg has an interesting video that asks whether we need a new green revolution in agriculture. The news agency argues that an excellent way to start the process would be to reconfigure subsidy programmes to incentivize farmers to improve soil health and build resilience to extreme weather.

But the revolution is already ongoing. Reuters highlights what one company, in this case, Olam, is doing to improve the food journey.

Politico questions US government plans to encourage farmers to capture carbon, arguing that the carbon price is too low to make it worth their while. Farmers receive around $15 per ton of sequestered carbon, but the price needs to be above $30 for the scheme to pick up momentum.

EU ministers last week backed a provisional agreement to revamp the bloc’s Common Agricultural Policy to help promote greener farming methods. Environmentalists called on the European Parliament to vote down the deal; they say that the reforms do not go far enough.

Major food manufacturers have signed the EU Code of Conduct on Responsible Food Business and Marketing Practices, a voluntary code to support ‘the sustainable transition of our food systems’. The Code of Conduct is part of the EU’s new Farm to Fork strategy, but Food Navigator asks whether it will deliver on its lofty ambitions.

The European Commission will propose legislation in 2023 to phase out and eventually ban farming caged animals, possibly by 2027. The European Parliament had earlier voted to support the ban.

Bloomberg takes a long look at how high prices and changing consumer tastes negatively affect global meat demand. The meat industry will face more competition from Nature’s Fynd, a start-up company that ferments a volcanic microbe from Yellowstone National Park to produce protein.

The Guardian asks what foods we, as consumers, should be eating to save the planet. Grass-fed beef and lamb top the list, followed by oats, locally grown vegetables, mussels, pulses, seaweed, venison, and waste food.

The WWF has published a new study that argues that insect protein in animal feed could replace 20 per cent of the UK’s soya imports by 2050, cutting deforestation and GHG emissions. The WWF calls on the UK government to follow the EU’s lead and permit insect protein in pig and poultry feed.

Euronews has published an extract from Planet Palm: How Palm Oil Ended Up in Everything-and Endangered the World by Jocelyn C. Zuckerman. The excerpt focuses on the murky world of lobbying. Meanwhile, Malaysia’s palm oil producers are coping with a labour shortage that may leave some trees unharvested.

Although the European Commission may include shipping in its carbon trading scheme in 2023, the FT asks whether Brussels will be brave enough to extend the project to all ships coming into EU ports, rather than just those travelling between European countries.

Meanwhile, Quartz looks at the container shortage and writes that the three Chinese manufacturers that supply about 80 per cent of the world’s shipping containers are operating at full capacity. It argues that demand still outstrips supply and that inventories of new containers remain low. An executive at Maersk is more optimistic, predicting that ‘the container shortage is temporary in nature’.

Senators from the US farm belt have introduced three bills to promote biofuels in the face of a growing threat from electric vehicles. One would provide $1 billion in grants to pay for pumps and storage tanks with higher gasoline blends of biofuels. A second would give a $200 per-car tax credit for automakers who make flex-fuel vehicles. A third would provide fuel blenders and retailers with a tax credit for each gallon that they sell of fuel containing 15 per cent or more of ethanol.

Finally, US biofuel and corn industry groups have asked the Environmental Protection Agency to use restraint in its use of waivers exempting refiners from their biofuel blending obligations.

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