The King of Oil

I have just finished reading The King of Oil by journalist Daniel Ammann, a book* that tells the story of the legendary and controversial trader Marc Rich, whom the FT once described as “one of the wealthiest and most powerful commodity traders that ever lived”. I would recommend the book to anyone that is interested in commodities.

Daniel Ammann writes,

Marc Rich, born Marcel Reich, the Jewish boy-refugee from Antwerp, barely escaped certain death in the Holocaust…Penniless and unable to speak a word of English, the young Reich fled (with his parents) to Morocco by freighter and, with a great deal of luck, finally reached the United States.

In 1954, at the age of 20, Marc Rich started in the mailroom at Philipp Brothers, at that time the world’s largest trader in raw materials. He worked his way up on to the trading floor in New York, before moving to head up the company’s Madrid office where he started trading oil. Some observers credit Marc Rich with inventing the spot crude market; previously all oil was traded on long-term fixed price contracts. However, as Daniel Ammann writes,

“The notion of taking risks was as foreign to him as for the entire company, and this was reflected in Philipp Brothers German motto…”It is better to sleep well than to eat well”. The principle was drummed into employees that it was better to avoid a lucrative deal if the risks involved were high enough that they might endanger the entire company.

He felt that Phibros was not aggressive enough and left in 1974 to set up his own trading company, under his own name, in Zug Switzerland. He chose Switzerland because of the low tax rates and the fact that Switzerland was a neutral country and, at that time, not even a member of the United Nations. As Marc Rich himself said, “The only bad thing about Zug is the fog.”

Marc Rich & Co was spectacularly profitable from the start, and by the end of the 1970s had thirty offices around the world. The five partners divided themselves between New York (where March Rich himself worked), London, Madrid and Zug.   

In 1983, however, U.S. authorities charged Marc Rich with evading taxes and trading with Iran during the 1979/81 hostage crisis. Rich fled to Switzerland where he lived as a fugitive for 17 years.

Marc Rich admits buying oil from Iran during the embargo, as well as to supplying oil to apartheid South Africa, and bribing officials in countries such as Nigeria. However, he argues that all this was legal at the time. For example, the bribing of foreign officials was legal in the United States until the passing of the Foreign and Corrupt Practices Act of 1977. In Switzerland, it remained legal until 2000. And as a non-US company based in Switzerland, Marc Rich & Co was legally (if perhaps not morally) exempt from the embargoes on Iran and apartheid South Africa.

Bill Clinton officially pardoned Marc Rich on the President’s last day in the White House in January 2001. The pardon was highly controversial, but, according to Daniel Ammann, it was the result of heavy lobbying by Israel. Throughout his career, Marc Rich had given large sums to the country, as well as working closely with Mossad, their security services.

For some, Marc Rich was,

 “The capitalist without a country who makes deals with the enemy. The speculator who creates nothing of his own but only acts as an intermediary while profiting from others. The “bloodsucker of the Third World” as he was once referred to in the Swiss Parliament. The perfidious profiteer, who would rather leave his own country and give up his citizenship rather than pay taxes.”

But Ammann takes a more balanced view. He writes,

“Most commodities come from countries that are not beacons of democracy and human rights. The “resource curse” and “the paradox of plenty” are the terms economists and political scientists use to describe the fact that countries that are rich in oil, gas or metals are usually plagued by poverty, corruption, and misgovernment. If commodity traders want to be successful, they are forced—much like journalists or intelligence agents who will take their information from any source—to sit down with people that they would rather not have as friends, and they apparently have to resort to practices that are either frowned upon or downright illegal in other parts of the world.”

He adds,

“The commodity trade is a hard, capital-intensive business with tight margins. Profits of 2 to 3 percent are considered quite satisfactory during normal times. It is only during unsteady times…that profits are significantly higher.”

The author describes an interview that he conducted with an ex-Marc Rich trader in a New York bar.

“Ethics,” he laughed. Then he pointed to my Diet Coke. “Your Coke can is made of aluminium. The bauxite that is needed to make it probably came from Guinea-Conakry. A terrible dictatorship, believe me,” he said. “The oil that is used to heat this room probably comes from Saudi Arabia. These good friends of the USA hack the hands off thieves just as they did in the Middle Ages. Your cell phone? Without coltan there wouldn’t be any cell phones. Let’s not pretend. Coltan was used to finance the civil war in the Congo.” Do the people who criticise our work want to know any of this? Or would they rather just pick on us so that they can feel better about themselves”.

By the early 1990s, the legal case against Marc Rich was taking its toll. A difficult divorce and the death of his daughter added to his woes, and the partners began to worry about their company’s future. Marc’s legendry feel for the markets deserted him, as did many of his key traders. A failed attempt to corner the zinc market left the company with $172 million in losses, and the firm was struggling. After at first resisting, Marc Rich finally sold his 51 percent majority share in the company in a managerial buy-out for an eventual total of $600 million.

The first thing that the new owners did was to change the company name to Glencore. The company went public in May 2011 and now has a market capitalisation in excess of $42 billion. Unless I am mistaken, there is no mention of Marc Rich on the company’s website. It is almost as if he has been airbrushed out of history.

Marc Rich himself died on 26th June 2013 at the age of 78. Despite his pardon he never returned to the US.

But I leave the last word to Daniel Ammann,

“You must be a lucky man,” I said to the most successful and controversial commodities trader that the world has ever seen. Rich…remained silent for some time. Then, almost as if he were talking to himself, the King of Oil quietly replied, “Sometimes.”

*Available on Amazon

Smart Networking for Women in Commodities

Three Strategies for Success

By Patrícia Luís-Manso – Head of Sugar and Biofuels Analytics at S&P Global Platts

Women are underrepresented in the commodity trading business, in particular in sugar trading. Amongst the top trading houses that control 85 percent of the total sugar traded in the world, less than 10 percent of physical traders are women; and none of them holds a senior trading leadership position. This has led to me to ask whether differences in the way women and men develop and use their career networks could explain this underrepresentation.

Networks are essential to career development because they give access to information and knowledge, as well as to decision makers, influence, endorsement and reputation, emotional support and recognition.

Both male and female traders that I interviewed acknowledge that developing and nurturing career networks matter, and both invest in significant effort in doing so. Based on the interviews, I identified the structure of male and female traders’ networks and their networking behaviours.  I concluded that career networks of men and women sugar traders are similar in terms of size and diversity. Moreover, female sugar traders tend to engage in networking behaviours to a similar extent (frequency) compared to their male colleagues.

However, they differ in other aspects—ways that may be deterring women from accessing and ascending in this profession. Key differences refer to the proportion of high-status individuals and to the proportion of strong ties. Women sugar traders’ networks tend to have less high-status individuals than men’s and to have a lower proportion of strong ties.

Moreover, even though female sugar traders engage to a similar extent as their male colleagues in professional activities (conferences and seminars, for example), and in community projects, other differences came to surface. First and foremost, female sugar traders engage in activities that increase internal visibility less often than their male colleagues. This could be going to lunch with their supervisor, or being on highly visible committees at work. Instead, women tend to engage more often than their male colleagues in maintaining contacts and socializing activities. 

Based on these findings, how can women close the wide gap in the trading profession? I recommend three strategies.

STRATEGY ONE: Nurture strong ties to strategic partners. 

Female sugar traders’ networks have a smaller proportion of very strong ties compared to a male network. In today’s highly connected world, weak ties may be less relevant for career advancement.

The intensity of the relationship with other individuals in the network does matter enormously as a source of social capital. For career advancement, resources like endorsements, validations and sponsorships that come from emotionally strong ties may prove more effective for female career advancement than access to novel information from weaker ties.

STRATEGY TWO: Participate more in high-visibility activities.

Other studies have highlighted the fact that women need high visibility to build legitimacy. Excellent performance and solid human capital are necessary, yet not sufficient, conditions for women to advance to managerial and leadership positions.

STRATEGY THREE: Be more selective in terms of networking: quality over quantity.

Time is limited and women already engage in several networking behaviours. The key is to become more selective, and to think more about impact. This means that every time you participate in a network you should be prepare in advance to maximise impact.

Note: These findings are based on my final project presented as part of the Diploma in Organizational Leadership from the Saïd Business School at the University of Oxford (October 2018) The title of the assignment was Social capital and career development: is there a gender gap? Evidence from the Sugar Trading industry.

A conversation with Kona Haque

As part of our efforts to encourage more women to join the commodity business we will be running a series of interviews with successful women already in the sector. We caught up with Kona Haque in Dubai.

Kona joined ED&F Man in May 2014 as Group Head of Research, responsible for the company’s commodity and macroeconomic research team (including Volcafe coffee). She previously worked at Macquarie Bank where she was responsible for agriculture and soft commodities research for seven years. Kona spent four years as Senior Commodities Editor / Economist at the Economist Group. She has also worked for a shipping consultancy as Director of Bulk Commodities and spent four years at Metal Bulletin Research, specializing in base metals. Other experience includes working as an economist for a grains market information provider and with the United Nations in Rome, Italy. Kona has an MSc in Economics from the London School of Economics and a BSc in Agricultural Economics from Reading University.

Good morning Kona, thank you for joining the conversation. First, I would like to ask you why do you think there are so few women in commodities?

Commodities as a sector generally seems to do a bad job in attracting women. This could be due to perception – commodities are essentially “raw materials” for processing, which may be seen as a place for engineers or heavy-lifting personnel, which tends to be male-oriented. But within the commodities space, I would say that metals and energy are even more skewed towards men compared to the agricultural or softs sector. The latter has a softer image, and in my biased opinion, I think is better able to attract females. But there are areas within commodities that are very well represented by women – such as Finance, HR, operations and Research. At any rate, times are changing and I’ve never seen the commodities sector so keen to employ women as I have now. It is only a matter of time before the balance improves here too.

Do you think being a woman has held back your career?

Not at all. I joined the sector over 20 years ago when investment banks were just beginning to build their commodities desk in anticipation of the bullish trend following the rise of Chinese demand for energy, metals and food. At that point, the search was on for anyone with a good background in commodities – which I had. Since then I have always tried to be the best version of me, as a commodities employee, that I could possibly be, which in turn gave me recognition and allowed me to compete with other men on a level playing field. So even though I would typically miss out on male oriented after-work drink ups, golfing networks or what have you, I strived to build value by outperforming my peers during work hours, for example.

Is travel a factor: women may be less safe than men going out to get business, particularly in developing countries?

Developing countries are not inherently unsafe, local knowledge is important and we have many female colleagues in our origin locations. A good company will never force you to travel to dangerous locations and staff are counselled to take precautions when traveling on business. Inevitably, when women get married and have families, travelling far and often becomes less easy. This is something that is not unique to commodities though – it’s across businesses. To solve this, the goverment and companies alike will have to come up with solutions that enables mothers to travel more often knowing that they have reliable alternative home arrangements during their absence.

Women tend to work better in networks rather than in confrontation. Do you think the way that the commodity trade is evolving will result in more women being involved.

Commodity trading doesn’t always have to be confrontational! And some women are quite good at it any way – it all depends on individual personalities. I’ve yet to come across a role in Commodities that is truly gender specific, I think women can be as good as men (if not better) in many of the roles that are traditionally male oriented. The challenge is to get women to apply for those roles. At ED&F Man, we’ve been actively trying to boost women applications at all levels. We train hiring managers on unconscious bias and we promote the idea of commodities as a career to  both our own employees and to young people who we mentor (e.g. through our relationship with Future Frontiers). We have a Women’s Network which was set up to encourage women to aim high at ED&F Man and in our wider industry. Commodity companies need to be more active in recruiting at an early stage. Some universities, for instance, offer very good courses in Commodities (e.g. Geneva, City or Cass BS) – which have opened up the field for women as well as providing a very strong talent pool.

What advice would you give to a woman looking to enter commodities?

I would say go for it! I have enjoyed every minute of my career in commodities, and have no desire to switch to another industry. Commodities are real, tangible and international. It’s influenced by changing politics, weather and economic trends so there’s never a dull moment. None of this is gender specific, and as long as you are good at what you do, women from all countries and backgrounds should join the sector. Women should look for a company willing to invest in people and ideally find a mentor / sponsor. It’s important to be open minded and confident in your abilities (and definitely not a shrinking violet), as there is a lot of scope to move around the industry and flourish. Teams that have a good gender balance are known to be high performing, so if the Commodities industry can boost the intake of women, can you imagine how far it can go?

Thank you Kona!

PS: We are keen to interview successful women in commodities. If you would like to make your voice heard on the subject please contact us.

Sugar: The New Reality

The campaign against sugar has picked up pace since the start of this year and shows no sign of slowing. The Sunday Times dedicated the cover of their weekly magazine to sugar, while the Arte television channel in Europe rebroadcast the 2016 Canadian documentary “Sugar: the sweet lie”. Meanwhile Netflix is working on a programme to be broadcast later this year on corruption in the Florida cane sector.

The sugar sector continues to be taken aback by the success of the anti-sugar lobbyists. Sugar professionals have long known that per capita sugar consumption in developed countries has been falling since the 1960s, and they find it both unfair and illogical that sugar be blamed for the surge in obesity that began in the 1970s.

After all, according to the “Sweet lies” documentary (above), world sugar consumption increased 40 percent the 30 years up to 2016. However, in the same period, world population increased by 50 percent, from 5 billion in 1986 to 7.5 billion in 2016. As such, per capita consumption fell during the period.

What many in the sugar business had expected to be a short-term fad has accelerated the long-term down trend in consumption. Sugar has been demonised, and the fall in per capita consumption has reached the point where, in the UK at least, total consumption is now falling. This is the new reality facing sugar producers.

But as always, change, no matter how negative, always throws up new opportunities. It is the way that companies react to change that defines them. Negative can be transformed into positive.

Here are five ways in which some producers are already responding to change (and others should.)

1: Never give up

Companies must continue their work in trying to correct the widely held belief that sugar consumption is the cause of the global obesity epidemic. There are some signs that that tide may be turning, as in this recent BBC podcast, but for the moment the sugar sector is still swimming against the tide. No matter how tiring it may be, it needs to keep swimming! 

2: Consolidate, but responsibly

The sugar sector has responded to falling profits by cutting costs. Economies of scale are significant in sugar:  producers have tended to build large mills or refineries and maximise output to reduce unit costs. There is a tendency for cost cutting to result in increased supply—and increased supply usually results in lower prices that negate the costs saved.

When demand is stagnant the only way around this is close the smaller, less efficient mills and concentrate production in the bigger ones. This is already happening in Europe, but the social cost of mill closures can be high. Unfortunately, the social cost of a milling group going bankrupt can be even more horrendous.

3: Innovate, and innovate again

The sugar industry has a history of innovation, but to be more effective, innovation should be in the form of new products and processes, rather than simple cost cutting. Blockchain can reduce costs, but (see above) if it lowers costs across the whole sector it may just result in lower prices for the consumer. That’s a good thing, but a better thing would be a new product that the consumer may be willing to pay more for. That could be a sugar-stevia mix, or anything that comes under the SOFT (Sustainable, Organic, Fair Trade) category. There are opportunities here to turn a commodity into an ingredient.

4: Add even more value via by-products

Sugar cane and beet are wonder crops with multiple by-products. Ethanol can be used to drive cars or make bio-plastics (and fertilizer from the vinase). Bagasse can be burned for electricity generation or used as building material. Beet pulp can be fed to animals, or be used as an environmentally friendly alternative to salt on winter roads. There is a huge opportunity for the sector to add even more value to their by-products

5: Diversify across supply chains

As the Executive Director of the ISO recently pointed out, some of the most successful companies in the sugar sector currently are the most diversified, whether into pizzas or fruit concentrates. It can be tricky for a company to shift focus from its core competence, but it can be worth the effort. Trade houses are already moving that way, turning themselves into food companies, and sugar companies are slowly following.

So, in conclusion, the world is changing and the sugar sector is changing with it. Of course it could do more–and will do more–but the first steps are promising.

© Commodity Conversations ®

We didn’t see that coming


At the end of every year since 2006, Rabobank asks their contacts in the food supply chain (“ranging from start-up founders to CEOs of zillion-dollar companies, and everyone in between”) the following question: “In the world of food, what surprised you the most over the last twelve months?” This year they received over 200 responses, some surprising, some less so.

Overall, respondents were “surprised” by the way the food supply chain is managing to respond quickly to constant changes in consumers’ demands. As one client wrote: “From delivering new products, changing business models, adjusting to consumer shifts, investing in innovation in various forms, and facing tough realities, the world of food is markedly different.” Heads are no longer being buried in the sand, as “it seems that everyone suddenly woke up.”

However there was still some criticism of “”Big Food,” with one respondent writing that he was surprised that “that big-food-brands companies are still struggling to grow despite most of them revising strategies and replacing CEOs.” Another was surprised that “the troubles faced by the Big CPGs, with brands my mom and grandparents used to buy, seemed to get worse over the past year despite so much renovation and reconfiguration of operations and marketing approaches.”

Some respondents talked about the way Big Food is trying to achieve top-line growth “via overpriced acquisitions that are shareholder wealth destructive”. Another remarked “companies continue to chase the unicorns by overpaying because they have few ideas of their own and get desperate.”

Many respondents expressed surprise at the rapidity with which consumers are embracing plant-based foods and/or a “flexitarian” diet. One client replied that he was surprised by “the acceleration of plant-based foods – and the growing acceptance of the products by non-vegan, non-vegetarian consumers regardless if their motivation is for health, animal welfare, or environment.”

Respondents were almost unanimous in their view that this is an enduring trend rather than a “fad”, but many stressed that the diet was not for everyone. One wrote, “Despite all the money flowing into replacement meat products, I don’t see the evidence of consumer desires for these products.” Another mentioned the “mismatch between what the media is writing about and reality.”

One “surprise” that was cited was the different ways in which consumers respond to technology in their food supply. Some clients detected a thawing in relations between food and science: although “consumers have been rejecting science more and more over the past decade” (such as the non-GMO movement), there is growing appreciation of the role of technology in many aspects of food and agricultural production”.

However, one respondent wrote he was frustrated by “the rising tendency for people to selectively believe science only when it aligns with their beliefs.” Others were surprised by the lack of pushback by food companies against the anti-science bias in food. One criticised “the willingness of some food companies to ignore science and chase consumer fads.” Examples included the proliferation of free-from claims on “products that never have, nor will have, certain ingredients.”

Some respondents expressed surprise “by how quickly capital and ideas are flowing to the nascent and undefined world of CBD, (cannabidiol – a non-intoxicating cannabinoid found in cannabis and hemp) both in food and beverages.” One expressed surprise that food companies and retailers are “embracing CBD given regulatory uncertainty, not to mention uncertainty around its effectiveness, proper dosage, etc.”

However, with the passing of the latest Farm Bill taking industrial hemp off the list of Schedule 1 narcotics (as defined by the Controlled Substance Act), one respondent wrote, “I almost see this as a space that can be as deep and wide as alcoholic beverages, and large strategics are having to act quickly to determine whether or not they want to take the risk of playing in this space (or not).”

Among other surprises cited in the survey was “the velocity and breadth at which #MeToo rippled through the restaurant industry, resulting in rapid response and swift changes.” Regarding the environment, one client wrote, “This year we did not see coming the food industry disruption associated with use of plastic straws.” And for trade, one mentioned “The rapidity with which the trade war with China escalated, the resultant tariffs, and their impacts on fruit and nut producers in the U.S.”

Finally, the last word is left to the respondent who wrote that he was “surprised by the ferocity of the arguments about whether low-fat or low-carbohydrate diets are better for weight status. Really, both work, provided people adhere to them, and calories really do matter.”

Sleep and obesity

When I was researching my book « The Sugar Casino », one of the questions that puzzled me was why we are consuming more calories than in the past. Referring to USDA data, I wrote,

« According to the loss-adjusted food availability data, Americans are consuming more calories per day than they did 40 years ago. In 1970, Americans consumed an estimated 2,109 calories per person per day; in 2010 they consumed an estimated 2,568 calories….

The average American is eating 459 calories more each day today than he, or his parents, were eating in 1970. »

I have now, rather surprisingly, found part of the answer to that question in « Why We Sleep: The New Science of Sleep and Dreams » by Matthew Walker, a British scientist and professor of neuroscience and psychology at the University of California, Berkeley. He was previously a professor of psychiatry at Harvard Medical School. (An article in last week’s Guardian newspaper summarised some of the main themes of the book.)

Regarding the effect that sleep has on health, particularly on obesity, Mr Walker explains that two hormones in your brain control your appetite: leptin and ghrelin. Leptin signals a sense of feeling full, while ghrelin triggers a strong sense of hunger.  He writes that clinical tests have shown that « inadequate sleep decreased concentrations of the satiety-signalling hormone leptin and increased levels of hunger-instigating hormone ghrelin. »

Looking to see what this might mean in practice, one clinical test found that individuals who slept between four and six hours per night consumed 300 calories per day more than individuals who slept eight and a half hours per night. He writes, « Scale that up to a working year, and assuming one month of vacation in which sleep becomes abundant, and you will have consumed more than 70,000 extra calories. Based on calorific estimates, that would cause 10 to 15 pounds of weight gain a year. »

But it is not just a question of how much you eat, but also what you eat. Sleep loss increases the levels of endocannabinoids which, like marijuana, can give you the « munchies ».

In one test, participants were given access to an unlimited lunchtime buffet. « Despite eating almost 2,000 calories during the buffet lunch, sleep-deprived individuals dove into the snack bar. They consumed an additional 330 calories of snack foods after the full meal, compared to when they were getting plenty of sleep each night. »

Tests also found that sleep deprived individuals were 30 to 40 percent more likely to have cravings for sweets, carbohydrate-rich foods, and salty snacks compared to protein-rich foods such as meat or fish.

And Mr Walker counters the argument that your body needs more calories the less it sleeps. He writes, « Sleep, it turns out, is an intensely metabolic active state for body and brain alike. » What’s more, the less you sleep, he argues, the less active you will be during the day. He writes, « inadequate sleep is the perfect recipe for obesity: greater calorie intake, lower calorie consumption. » He continues,

« Of course, the obesity epidemic that has engulfed large portions of the world is not caused by lack of sleep alone. The rise in consumption of processed foods, an increase in serving sizes, and the more sedentary nature of human beings are all triggers. However, these changes are insufficient to explain the dramatic escalation of obesity. »

To emphasise the point, Mr Walker plots the reduction in sleep time (dotted line) over the past 50 years in the US on the same graph as the rise in obesity rates (below).

He summarises the current state of scientific research as follows: « Short sleep (of the type than many adults in first-world countries commonly and routinely report) will increase hunger and appetite, compromise impulse control within the brain, increase food consumption (especially of high-calorie foods), decrease feelings of food satisfaction after eating, and prevent effective weight loss when dieting. »

And as a warning for future generations, he argues, “We are now observing these effects very early in life. Three-year-olds sleeping just ten and a half hours or less per night have a 45 percent increased risk of being obese by age seven than those who get twelve hours sleep a night. To set our children on a pathway of ill health this early in life by way of sleep neglect is a travesty”

Going back to my original question, it is possible that changing sleeping habits explain 300 of the more than 450 extra calories that we consume each day compared to our parents. The rest, I imagine, can be explained by the greater availability of calorie-rich processed foods and larger portion sizes.

So if after a long night entertaining customers you are now reading this blog on your telephone while trying to stay awake at the back of a conference hall, let yourself drift off. It may mean you eat less at the conference lunch buffet!

It is about people

A conversation with José Orive, Executive Director of the International Sugar Organisation

Good morning José. Could you please tell me a little about yourself?

I grew up on a ranch in Guatemala; we were mainly cattle, but we did have some sugarcane and we fed the molasses to the cattle. My brother stayed on the farm and I studied law at Georgetown University in the US, and then did a masters degree in international trade agreements. That led to me working with the Guatemalan diplomatic service as a trade negotiator.

So you are a diplomat with experience of trade negotiations. Does that help in your current role?

It does, especially given the sensitivity around sugar at the moment. Different people have different expectations—and the cultural differences are enormous. Although most people view the ISO as “being about statistics,” we are really about people.

But what does the ISO do exactly?

We are a United Nations body that came out of the Bretton Woods Agreement. It was part of the post-World War era, where food security was of paramount importance.

At first, the ISO intervened actively in the world sugar market, telling people what to produce, when to market it, what stocks to hold and what price to sell at. But by the end of the 1970s, countries realized that the market did all those things better, and did away with the so-called “economic clauses” of the agreement.

Our role now is to monitor, analyse and study the world of sugar and biofuels. Our goal is to produce intelligence that enriches people’s decision making. We avoid telling people what to do, but we lay out the variables and the key factors around issues that are pertinent to the sugar world.

We have 88 country members, including the EU, which acts as one party, and 10 staff.

Is it part of your mandate to defend the sugar industry?

Yes it is. We have an advocate role. It is an interesting function, as many governments do not have a single voice on the issue. Sometimes we act as arbitrators between ministers of health and ministers of trade and agriculture—around the importance of sugar for sustainable development and its role in nutrition as part of a healthy diet.

You have to remember that the sugar industry is a key driver for development and incomes in rural areas in many developing countries. When you visit these countries you can see how villages and small towns can be lifted up when a sugar mill opens nearby. You will see schools and hospitals being built, and then the next generation ends up with a college degree. That is something that governments have to encourage. Sugar plays a huge part in that; it is a driver for development.

Does the ISO also get involved in arbitrating between farmers and millers?

We are currently undertaking a study of the payment systems of cane and beet worldwide. One of the main drivers for this has been the desire of growers of beet and cane to participate in downstream projects such as ethanol, electricity co-generation and green plastics.

Some millers want farmers to participate in the downstream products, but they argue that farmers have to invest with them and assume some of the risk. Other millers say, “No, we acquire the raw material and we pay for it. What we do with it is our business and not yours, because you have been paid. We can lose money in a bad year if the price of these products is
low, but that is our risk and not yours.”

With governments becoming increasingly anti-sugar, are they asking themselves why they should be members of an organization whose role it is to promote the sugar industry?

I haven’t seen a country or a government directly question their membership as a result of their position on sugar. That said, it is almost impossible to stop finance ministers from considering a sugar tax. They look at the additional revenue and it is hard for them to resist. Sugar taxes are driven both by politics and revenue. The tax in Mexico raised $1.2 billion over two years.

Do sugar taxes reduce sugar consumption?

If you take Mexico as an example, domestic sugar consumption dropped during the first year after the tax was introduced in 2014-15, but by the beginning of 2017 it was back to its pre-tax level. By September 2017, consumption was above the pre-tax level.

Politicians suppose that if they make a product more expensive people will stop consuming it, or consume less of it. But that is not the case when the product is relatively cheap to start with.

But aren’t sugar taxes just taxes on the poor? Rich people don’t care, but people on low incomes do. And as you have shown in Mexico, they don’t consume less; they just pay more in taxes.  

That is exactly the case in Mexico where sugar consumption is overwhelming concentrated among the poorer sectors of society.

But is that money being given back to the poor in terms of education or healthcare?

That is the question. I don’t understand why governments aren’t making a big fuss about all the schools and hospitals that they are building with the revenue from the sugar tax. But they aren’t. It is total silence.

If you have $600 million coming in per year and you are only spending $200 million on schools and hospitals, people will start asking what you are doing with the rest of the money. And people will start asking whether the money has been spent efficiently. Politicians hate that.  We have tried to look at the figures in some countries, and we must try to get the politicians to stand up and be transparent with the numbers.

Some advocates of sugar taxes have asked for the revenues raised to go into a separate fund, but in most cases this hasn’t happened. The money just gets funnelled into the general kitty box.

Are you arguing that the sugar taxes have not had any effect on sugar consumption?

Sugar taxes don’t seem to have affected consumption in developing countries, but per-capita consumption in niche markets of developed countries is falling, and the anti-sugar lobbyists are claiming credit for that.

But per-capita sugar consumption in developed countries has been falling for the past fifty years.

Historically, global sugar consumption has been rising at 2.0/2.1 percent per year. Now it is rising 1.6/1.5 percent. The growth in global sugar consumption has slowed, but the total amount consumed is still growing. England is an exception to that; total sugar consumption is dropping in the UK.

Apart from sugar taxes, what are the other challenges facing the industry?

Producers are realising that they have to diversify, and not to put all their eggs in one basket. The companies that are diversified are doing well in spite of the current low sugar prices. I think the traditional model of specializing in, and just producing, sugar is outdated.

I also believe that more effort needs to be made to bring together cane growers and millers, beet growers and factory owners. The industry also needs to work together better to share best practises in terms of sustainability, nutrition and new technologies.

And what are your main challenges at the ISO?

First, we have to stay relevant, to constantly tweak our products and services to make sure that they are relevant to our members. I am sure that we can do more with the data that we have, and we are working on that.

Second, we have not only to maintain our existing membership but we also have to bring in new members.

Third, we have to organize good events—events that are rich in content, interactive and dynamic.

Fourth, we must build relations with our sister organisations in other commodities, to learn from them and share with them.

Fifth, we must learn how to better engage with NGOs, for example on child labour and sustainability, and with health organisations, on sugar and nutrition. If governments are going to adopt policies that affect our industry, then our industry needs to have a seat at
the table.

Where are the success stories in the sugar industry?

There are many. The role that sugar plays in rural development is well documented, but it also has a role in nutrition. Guatemala has the world’s most successful micronutrient programme with the fortification of sugar with Vitamin A. The programme has completely eradicated infant blindness in the country, as well as leading to a fall in child mortality. Malawi and Tanzania are now following Guatemala’s example. We need to do more
to highlight these successes.

Thank you José for your time.

A conversation with Arnauld Petit, Executive Director of the IGC

“Study grain long enough and the world shrinks.” Dan Morgan

As some of you may know, I am currently working on a book that will look at the ways in which the grains markets have changed in the forty years since Dan Morgan wrote Merchants of Grain back in 1979.

At the time, Dan had already identified many of the trends that would drive the grain markets into the future.  On the demand side, he wrote about population growth, rising incomes, changing diets, and in particular the increase in demand for meat protein. On the supply side, he foresaw that agricultural yields would continue to improve. He also foresaw the increase in international trade that would accompany globalisation.

But what didn’t he foresee? What have been the shifts in the past 40 years that have moulded the current grain trade? To help me answer that question I went to see Arnauld Petit, the Executive Director of the IGC, the International Grains Council, based in London.

By way of introduction, Arnauld told me that the IGC is an intergovernmental organisation that was formed post World War II in order to ensure an egalitarian distribution of wheat. Today, the IGC has 56 member countries, and its mission is to facilitate international cooperation in the grains trade; to promote openness and fairness in the grains sector; and to contribute to grain market stability and to enhance world food security. It does this by improving market transparency through information sharing, analysis and consultation on market and policy developments.

In 2012, the IGC joined the Secretariat of the Agricultural Market Information System (AMIS), an initiative established at the request of the Agriculture Ministers of the G20. AMIS covers four crops (wheat, maize, rice and soybeans) and aims to promote food market transparency and the coordination of policy action in response to market uncertainty.

            The GTC holds an annual conference in London in June that brings together the public and private sector in the world of grain. Last year the conference attracted over 350 delegates from 60 countries. I made a note to myself to attend this year.

When I contacted Arnauld I told him about my book project, and I warned him that I would be asking him to list what he considered to have been the top five most significant shifts in the grain market in the last forty years. He had since given it some thought, and we got right into the heart of the matter.

“Number 1 on the list,” he told me, “must be the shift to Asia, particularly the economic take-off in China. Rising consumer incomes, combined with urbanisation, have had a relevant effect on diet and food demand. As the Chinese get richer they eat more meat and fish. This demand for meat has driven the huge increase in vegetable protein imports, and has been the driver behind the explosion in soybean production worldwide. Forty years ago, China imported only a marginal quantity of soybeans. In 2019 the country is expected to import 87.5 million mt, more than half of the total trade in soya.

“At the same time,” he added, “Asian people are eating more wheat products. This has in turn increased their demand for wheat.”

“And Number 2 on the list?” I prompted.

“Before the First World War, Russia was a major exporter of wheat, but by the 1960s the Soviet Union had turned around to become a major importer of grains. In 1979/80, the USSR imported 12 million mt of wheat and 14.5 million mt of corn; and in 1984/5, the bloc imported a massive 28 million mt of wheat and 20 million mt of corn. Now the situation is quite different: in 2018/19 Russia alone is expected to export more than 36 million mt of wheat and 3 million mt of corn. Meanwhile, Ukraine is expected to export over 16 million mt of wheat and 28 million mt of corn. That is an impressive turnaround that nobody would have been able to predict.”

“Do you think Russian exports will continue to grow,” I asked.

“Not necessarily,” he replied. “Most of the new production is in Siberia where it is too cold to plant winter wheat. The short Siberian summers leave farmers only a short window to plant and to harvest; production in the region depends very much on the weather.

“In the meantime, the Russian government is keen to move from grain production to livestock production, mainly pigs. They view this as a way to add value to their supply chain. If the Russian meat industry continues to expand then we could see a decline in grain exports. Some people are asking whether we have already seen peak exports.”

“And what would be third on your list of structural changes?” I asked.

“It would have to be the expansion of the biofuels industry. Forty percent of US corn is used for ethanol production while 50 percent of EU rapeseed is used for producing biodiesel.”

“Those figures are surprisingly high,” I interrupted. “Such a big diversion to biofuels must have had a big impact on prices.”

 “Not really,” Arnaud replied. “When the US ethanol industry started to take off in the mid-2000s there was a big debate in the press as to whether corn should be used as fuel: the “food versus fuel” debate. Looking back, it is now evident that that debate was flawed. US ethanol production hasn’t seriously impacted either the price or the availability of corn for food or feed.”

“Why is that?” I asked.

“Because corn contains both protein and carbohydrates; you can use the protein for animal feed and use the calories to drive your car. When you make ethanol from corn you get a by-product called “Distillers’ Dried Grains with Solubles” (DDGS), which can be used as a feed ingredient for livestock. Each 56-pound bushel of corn used in dry-mill ethanol production generates about 17.4 pounds of DDGS.

“A similar situation exists in Europe with rapeseed: you use the oil for biodiesel and the high-protein rapeseed meal as feed for animals.

“But there is another reason why the whole fuel versus food debate of the early 2000s was flawed. People forget that in Europe after the Second World War, 70 percent of your acreage went to feeding (fuelling) your labour force, including feed for your horses.  Today a rapeseed farmer will see only half of his production going for fuel! The debate was based on the assumption that the market is fixed, and that we have a choice between food, feed and fuel. That is incorrect.”

“But what about the negative environmental impact of using land to grow food for fuel? Aren’t we losing biodiversity?”

“Not in the EU or US at least,” Arnaud told me. “Arable Land has been falling as from 2008, while forestry and urbanisation has increased.”

“Is that because yields have increased?”

“We saw yield increases in Europe until about 2007, but these have now plateaued, particularly for wheat. Corn and soybean yields have continued to increase in the Americas because of GM technology and new breeding techniques. Remember there is no GM wheat anywhere. Wheat yields depend on the weather: sometimes good and sometimes less good.

“What is 4th structural shift on your list?” I asked.

“It is the development of the starch industry for sweeteners and food use. High Fructose Corn Syrup (HFCS) has taken a significant part of the market for sweeteners in both China and the US, largely because it is cheaper than sugar. Isoglucose, as HFCS is called in Europe, has had less impact in the EU, largely because production has been restricted through quotas. Those quotas have now been lifted, and we will be watching closely to see how the market develops.”

“And the last one on your list?” I asked Arnauld.

“Number 5 on the list has to be the big expansion of soybeans. In 1978/19, global soybean production was just 77 million mt, but is set to reach 363 million mt in 2018/19 according to our latest forecasts. This has been achieved through a heavy expansion of acreage around the world, and especially in the US, Brazil and Argentina.  Demand and trade have also risen especially strongly and we have seen some significant shifts over the decades, with Brazil now by far the dominant exporter.

The question now is whether palm oil will follow the same path, and compete with soy oil in all its outlets: We are following this carefully. ”

“Thank you Arnauld. Your comments have been very helpful. Is there anything that you would like to add?”

“Only that I look forward to seeing you at our conference in June!” 

The ebbs and flows of sugar trading

The recent announcement from Olam that they are exiting the sugar trading business has provoked mixed feelings among those left in the business, especially as it comes fast on the heels of Bunge’s sale of their own sugar trading business to Wilmar. Fewer trade houses may mean less competition, but are these just more rats leaving a sinking business?

Forty years ago, when I joined Cargill, I was told that the company made no money on selling grains to destination: the FOBS to CIF portion in the supply chain. Instead, the company viewed these sales as a necessary evil. The money was made upstream: tiny margins on (at that time) selling seeds, fertilizer and other chemicals to farmers, buying and storing the grain at harvest time, shipping it in barges down the Mississippi, storing it again at the port and then elevating it onto the ships. Cargill also made money by offering risk management services to the farmers, and even executing their transactions on the futures markets.

The final stage of selling and shipping the grain to the final buyer was a mug’s game that you had to play as best you could, without losing too much. As Bunge, Cargill and the other heavyweight trading companies knew 40 years ago, the money was in originating grain, not in marketing it to destination.

After completing my training program I moved to Cargill’s sugar department. There I looked after the futures and kept the position, first in London and then in Minneapolis. It was a sharp learning curve; during my time on the futures desk the sugar price rose from 9c/lb to 44c/lb, and then back down again. We didn’t get every move right, but we made money and had fun doing so!

At that time Cargill was the new kid on the block in the world of sugar trading. The company had launched the desk a few years prior to me joining, and then had promptly lost their trading team to Phibros. At that time, EDF Man, Sucden, Tate and Lyle, Woodhouse Drake and Carey, and Kerry (led by the King of Sugar, Robert Kuok) were “the big five” companies that dominated the sugar market.

The big five knew the business inside out, and they had the long-standing relationships that helped them to get trades done. They had all made considerable fortunes in the 1974 sugar bull market (that had seen sugar prices rise to 66c/lb). They were well financed, well connected, well trained and with a considerable depth of experience and expertise. All that the two American newcomers (Cargill and Phibros) could hope for were a few crumbs from the table.

Back in London, Cargill transferred me from futures to white physical sugar. My new role was to buy white sugar from European producers and sell to the MENA region. At that time most sugar-importing countries bought through government tenders. I had a miserable time trying (and failing) to make money by buying FOBS Europe and sell CIF MENA. It was exactly the sort of business that the company had warned me against on my training program.

I found life as a physical sugar trader so tough that I eventually threw in the towel and left to be a broker, first on the futures and then on the physicals. After I left, Cargill gradually expanded their footprint in the sugar sector and eventually invented a profitable business model of leveraging their loss-making physical business into huge profits in the futures markets.

A byproduct of this, however, was to make the standalone physical business even less profitable. As other companies tried to replicate Cargill’s model, the competition to make the physical sales became even fiercer. Over time, traders ended up losing more on the physicals than they gained on the futures. The model broke through overuse, and no one has yet found a satisfactory, and equally profitable, alternative,

Trading companies tend to do well when a market is dislocated— when traditional trade flows are disrupted and buyers have to find alternative supplies. This can occur because of poor weather, or because of government intervention, such as tariffs. Trading companies with a global footprint can really add value in such disrupted markets, but they struggle to make ends meet in dull ones.

If not dull, the current situation in the world sugar market is difficult. Supplies are ample and producers, particularly in India, are sitting on large stocks. Because of the nature of the cane cycle, this situation has lasted longer than many had hoped. All that traders can do is be patient and to wait for the cycle to turn.

What applies to sugar also applies to the companies that trade sugar. New companies enter a market when trading conditions are favorable; old companies leave when conditions deteriorate. Unfortunately this often happens with a lag: new entrants usually appear after markets have peaked; existing participants often leave just as conditions are about to turn up.

Of the “big five” companies that dominated the sugar market in the 1970s, two have disappeared completely. In volume terms the “big three” list today would arguably comprise Alvean, COFCO and Wilmar (including RAW), with EDF Man, Sucden and Dreyfus following closely behind.

The main participants have changed, but this amount of ebb, flow and natural wastage is not out of line with what has occurred in sectors outside of the commodity business. It is less than what has occurred, say, in technology or healthcare.

The physical sugar trade has always been tough, and companies have continually had to reinvent themselves to thrive and survive. Structural change and disintermediation are making things even tougher.

But then no company in any sector can sit back in the belief that what worked in the past will work in the future. As Darwin wrote, “It is not the strongest of the species that survives, nor the most intelligent. It is the one that is most adaptable to change.”

“We are becoming the value chain”

A conversation with Ian McIntosh, the CEO of Louis Dreyfus Company – Part Two

The CEOs of both LDC and Glencore Agriculture come from the sugar market, as did the previous Vice-Chairman of Cargill. Why do you think that ex-sugar traders reach such prominent positions in the business?

 That’s a question I didn’t expect! Sugar has always been a truly global commodity with a global futures market, a global geographic producer base – and a wide consumer base. It has a direct link to the end user through white sugar, as well as an intermediate refining stage. As such, it has the ability to teach you a lot about the different elements that you need to understand the business. People that come up through the grains or oilseeds tend to be from a smaller part of much bigger markets. Sugar propels you very rapidly into a global focus. Sugar has always been an excellent training ground for commodity traders.

Which leads me on to a difficult topic. The Brazilian sugarcane industry has been exceedingly challenging for companies such as yourselves and also Bunge. Can you see any end to the tunnel?

As you say that is a difficult question; it requires a lengthy answer, possibly too lengthy for this conversation. However, I will do my best to walk you through my thoughts.

First, you have to realise that sugar is a multi-faceted commodity. It is a food and energy commodity with a long cycle compared to grains and oil seeds. Sugar production responds relatively slowly to price. Sugarcane is a grass; once it is planted it stays in the ground and can be cut for up to six or seven years. As such the cycles are longer and more complicated.

Regarding the Brazilian sector, I read recently that Brazilian cane production had increased tenfold in the past ten years. That is complete nonsense. Cane production is up only a couple of percent on ten years ago, and there has been no expansion in area in the past five years. In addition, contrary to popular belief—and with one small exception—cane is not grown anywhere near the Amazon jungle.

Once the juice is squeezed out of the cane the dry matter, called bagasse, is burnt to provide electricity both for the mill and for the surrounding areas. The sludge, the vinasse, from the production process is reapplied to the land as fertilizer. The cane fields in Brazil are rain fed so there is no need for ground water irrigation, and wastewater from the mills is recycled and reused. All this means that sugarcane is a relatively environmentally-friendly crop.

In addition, about half of Brazil’s sugar cane is used for ethanol, nearly all of which is used domestically. The sugarcane absorbs carbon dioxide when it grows and some of this is then released back into the atmosphere as the ethanol is burned. In terms of net absorption and release, ethanol produces ten times fewer greenhouse gases than gasoline. This is extremely positive for the environment

Meanwhile, the majority of cars in Brazil are now what is called “flexfuel”: they can burn either gasoline or ethanol. In addition, the sugarcane mills have significant flexibility as to how much sugar they produce and how much ethanol. This provides tremendous flexibility to the mills and “optionality” to the trading companies that own them. Cane is therefore an attractive crop for companies such as ourselves who thrive on flexibility and optionality.

So the Brazilian sugarcane industry has all the ingredients for both economic and environmental success. However, the sector has suffered from government intervention. Successive governments have kept gasoline prices below their economic and environmental cost; this has made it difficult for ethanol to compete and resulted in losses for the sector. The president-elect seems supportive of the country’s domestic ethanol industry and we are optimistic that this situation will be changed going forward.

On the sugar side, world prices have been negatively affected over recent years by significant production increases in Thailand, India and Europe. It looks as if this is slowly changing: the current forecast is for a global sugar deficit for next year and the following year. So I think we will slowly be pulling out of this down cycle in sugar prices.

Having said that, there are still a lot of questions over long-term sugar consumption trends as well as over ethanol policy globally.

 Continental Grain sold their agricultural merchandising business many years ago to Cargill. They apparently felt at the time that the risks weren’t worth the rewards. How difficult is it for a company like LDC to shift these massive quantities of foodstuffs around the world while at the same time manage the associated risks?

That comes back to an earlier point. When Continental Grain sold their trading business most trading companies were trading in a traditional way. The current trend towards disintermediation makes it easier for us to manage our risk. It mitigates risk rather than increases it. If you are your own consumer you are taking your own credit risk.

It is also clear that diversification does have a clear benefit. A number of the companies that have either left the business or been consolidated were relatively narrow sector. The correlation across commodities varies: some are highly correlated but others aren’t. For example, the correlation between coffee and corn is low. The risk management benefits of a portfolio approach are significant, as too are the benefits of a diversified global footprint.

It is true that you have a different type of risk the further downstream you go, and the more you immerse yourself in developing economies. Back in the 1990s you were mainly concerned with market risk. Now you are concerned with market, geopolitical, country risk and company risk. Having an integrated approach mitigates that.

When I joined Cargill they always said that if you traded twenty commodities, five would have a lousy year, ten would have an OK year and five would have a stellar year.

 The last 20 years have proven that. You always have some sectors of the portfolio that are having a tough time while others are performing extremely well.

Trading conditions have been tough recently for the grain trading companies. To what extent do you think this is structural and to what extent cyclical?

Grain is a simple commodity with relatively low barriers to entry. It has an animal nutrition component and a human nutrition component. It also has a biofuel component through corn. Companies that are successful today in grains participate in all three sectors. The value proposition today is integrated logistics across geographies, and with links to oilseeds.

Having said that, a combination of over-supply and competition means that the grain market is currently difficult, but that is part of the cycle. All commodities are the same in that sense.

How do you see technological change affecting the business into the future, particularly Blockchain?

Blockchain is part of a broader move towards digital documentation. New technologies, like blockchain, can mitigate a number of risks and work well with traceability and the integrated value chain approach that we are pursuing. They represent a significant move in the right direction in making the agricultural supply chain appropriate to the requirements of consumers.

LDC did the first Blockchain transaction in agricultural commodities—a cargo of soybeans to China—and we intend to remain at the leading edge of technology. Having said that, I don’t see Blockchain as revenue transformative. I see it as a mandatory evolution of the value chain. Overcoming the challenges of integration, interoperability and industry standards will create a more robust, efficient and transparent way to manage our flows and reduce operational risk. It will also improve the credibility of the supply chain. In addition, it will lower barriers to entry and potentially bring more liquidity to our market.

About 30-40% of food is wasted between farm and fork. How can LDC help to reduce that wastage?

Most food waste occurs outside of the supply chain in which we operate. In most cases LDC is not a food producer, so our ability to reduce waste at the farmer level is limited. At the other end of the chain the fact that supermarkets sell goods with defined sell-by dates—that may or may not be appropriate—is not something that we can control. That is not to say that we have no desire to control it, but we have no interface with that. It is therefore wrong to say that the solution to food waste sits within the commodity-merchandising sector. There is virtually no waste in what we do, and quite often what we do regard as waste is a by-product, which is further used.

Would you recommend a young person to enter the business today?

Yes very strongly. We operate in a unique sector—and it is more unique now than ever—where you can combine an interest in geopolitics, with economics, with logistics, financial elements and at the same with industrial activities, and with agriculture. It is the most multi-faceted business that I can think of. That’s what attracted me to commodities in the first place.

One of the areas where a young trainee can come in and really make a difference is in how the world is nourished, and how farmers can not only survive, but thrive. In addition there is the whole area of traceability, sustainability, human rights…it is a hugely multi-faceted sector. For any young individual with an ambition to be part of a global business it is a great career.

LDC is an exception in that your chairperson is a woman, but the commodity merchandising business is generally male-dominated. Why do you think that is, and what should the industry be doing to encourage more women to join the sector?

That is an important question. It is important that we convey the message that this is an interesting career where people can make a real difference—where people can succeed. I strongly believe that there is no reason why that should be male or female—or anything—centric. Our business requires a broad set of skills that can be found in everyone, irrespective of their gender, nationality, etc.

As to why the percentage of females in senior management positions is low, it may be due to a combination of historical factors. Nothing would give me greater pleasure than to see a more balanced situation and I am committed to make that happen.

Commodity trading has always had the reputation of being very macho…

When I started in the business that was probably true, even to the noise level on the trading floor. We didn’t have instant messaging and electronic communications. You shouted down the telephone and if you weren’t getting your message across you shouted a bit louder. That did tend to come across as quite an aggressive environment, but that’s not to say that there weren’t some extremely successful female participants even then. My head of grains when I worked in Paris was female.

Commodity trading today is a much more diversified and complicated business We need the best talent that we can find, whatever the gender.

What advice would you give anyone joining the business today?

First, maintain a high level of ambition. Ours is an industry where people can progress very rapidly when they have the right skill sets. So don’t be afraid to push. People’s careers develop by filling vacuums. Vacuums occur all the time. You must never be afraid to put your hand up to fill the vacuum. People succeed in this business on their ability, not because of some hierarchy.

Second, remain humble. There is a graveyard of egos in this business. Recognize what you don’t know. Recognize that there are people that do know and learn from them. You can’t learn if you can’t listen. Listen to people.

Is there anything that you would like to add?

What I really want to stress is that preconceived notions of what a trade house is and does no longer apply. Those notions are outdated.

I would also like to emphasise the importance of adaptability. The companies that succeed are the ones that rapidly recognize change, and then adapt their structures and staff accordingly.

I started life as a “commodity trader” and I have never lost that trader’s DNA; it runs through everything I do. However, I and we as a company are much less traders than we were thirty years ago. And that trend will continue.

People still use the term “trade houses” to describe us, and I think it will be hard to change that. However, I don’t think there is such a thing as a trade house any more. We are all supply chain operators within the agricultural sector, but we are also nutrition companies. And we are all moving in our different directions.

But it will take a while for old mnemonics to change.

Ian, thank you very much for your time and for what has been an interesting conversation.