Cargill reported operating profits of USD 476 million in the Mar-May quarter, a 41% drop on year due to the ongoing trade war with China, poor weather in the US and the African Swine Fever. The group’s financial services unit was the only segment to see higher earnings. Cargill had to close several feed mills in China due to the swine fever – some of which it is not planning to reopen. A company official said it would take two to three years for the hog population to recover. In the US, meanwhile, Cargill announced it was ‘swapping’ some of its Indiana grain elevators against ADM’s Illinois elevators in a bid for both companies to become more efficient.
Looking forward, Cargill’s CFO warned that the trade war with China could have long-lasting effects in terms of shifting trade flows. The situation is particularly hard on US farmers who are struggling to get financing. Higher volatility due to the weather and political uncertainty are expected to be the ‘new normal,’ he added. ADM’s CFO agreed, saying that China would, from now on, ensure it is no longer dependent on the US for its soybean – or any other origin for that matter. He forecast that China will be focusing on boosting domestic production by improving yields. He added that this was also an opportunity for US agriculture to reduce its dependence on China. At any rate, a US-based agriculture economist argued that any trade deal with China would take years. He suggested it would be much simpler – and quicker – to reverse the new tariffs.
If Cargill’s woes were not enough, the NGO Mighty Earth accused it of being ‘The Worst Company in the World.’ In its report, it argued that Cargill contributed to deforestation and was not doing enough to fight child labour, among other things. Another company facing heat is Nestle. Users of the popular website Reddit (so-called ‘Redditors’) have been calling for a boycott of the company via a compilation of humorous memes.
Wilmar announced that the IPO for its China operations was on track for the fourth quarter this year after the Securities Regulatory Commission accepted to list its Yihai Kerry Arawana Holdings on the Shenzhen Stock Exchange. Wilmar said the IPO should help grow the group’s market share by making it more visible. COFCO, meanwhile, said it had secured a USD 2.1 billion loan from various international and Chinese banks with margins linked to the group’s environmental sustainability performance.
Sources reported last week that Bunge has been in talks with BP about a possible joint-venture for its Brazilian sugar and ethanol assets. Bunge has been looking for ways to offload these assets for a while now and if this deal does happen, the JV would have a combined crushing capacity of 32 million mt of cane spread over 11 mills.
The US Environmental Protection Agency has extended the use of the pesticide sulfoxaflor to several new crops for the first time, such as alfalfa, corn, cocoa and grains. The agency recognised that the pesticide is very toxic for bees but noted that it had issued guidelines to ensure that the negative effect on the bee population is limited. The EPA also said that farmers were facing tough times and needed the pesticide to reduce crop losses. Environmentalists condemned the move, arguing that it would be impossible to monitor whether farmers respected the guidelines. They also criticised the USDA’s decision to end the program to track bee populations. The Bee Informed Partnership pointed out that this program had been one of the only remaining ways to monitor the bee population, adding that the loss of honeybees this winter had been 7% above the previous year.
Well financed multi-restaurant delivery apps such as Uber Eats and GrubHub are heavily subsidising the cost of food delivery, making customers believe that delivery costs are much cheaper than they really are, according to the CEO of Domino’s Pizza. He explained that these apps were very disruptive and were, in part, responsible for the company’s disappointing sales growth. However, he argued that the way these apps functioned was probably not viable in the long run. Instead, the group is focusing on what it calls “fortressing” – opening more franchises in a concentrated area to shorten delivery times. Delivery app GrubHub, meanwhile, could be facing a federal investigation for setting up as many as 20,000 fake websites with the names of its customer restaurants – a practice called “cybersquatting.” It is also being accused of overcharging for phone orders.
A survey by the World Health Organisation found that baby and children products sold in Europe often contain too much sugar. Some products are labelled as suitable for children under six months, which is authorised by the EU but goes against the WHO recommendation that babies under 6 months old should only consume breast milk. This was probably good timing for Nestle to announce the launch of chocolate made entirely from the coca fruit and without adding refined sugar thanks to a new pulp extraction process. The chocolate will first be sold in 70% chocolate KitKat bars in Japan.
This summary was produced by ECRUU.
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