Commodity Conversations Weekly Press Summary

The UN’s World Food Program (WFP) was awarded the Nobel Peace Prize this week for its work on “bettering conditions for peace”. The award comes as the agency recently warned that the coronavirus pandemic will double the number of acutely food-insecure people and the Nobel Committee highlighted that food and violent conflict often interact as part of a vicious circle. Researchers, however, argued that the link between food assistance programs and peace is not so straightforward, as food aid can in some cases exacerbate armed conflicts. The WFP’s work will need to go hand in hand with conventional peace-building efforts, experts argued. 

Food assistance programs have been evolving to better reflect the economic reality of agricultural development. The WFP and others are increasingly donating cash instead of food in order to encourage the local production of food crops. Besides, some argue that ending systematic hunger is a worthy goal in itself. In response to the prize announcement, Cargill said it would match the USD 1 million donation offered to the WFP by the Nobel Committee. 

In Brazil, the less-talked-about Pantanal region is suffering from fires that have destroyed 22% of the whole area since January, a NASA scientist estimated. The destruction and uncontrollable fires were caused by a complex combination of drought, more ranchers clearing land, bureaucratic inaction and climate change. Even the fires in the Amazon are affecting the region by limiting the amount of water available. 

As the deforestation rate in Brazil keeps accelerating, experts doubt whether or how food corporations will be able to completely monitor their supply chain. One investigative piece looking at COFCO’s soy supply chain in the Cerrado highlighted a lack of transparency. Moreover, COFCO only pledged to monitor its direct soy supply chain entirely by 2023, without mentioning indirect suppliers. In response, COFCO said it was also looking to monitor indirect suppliers, just as observers noted that the Chinese group recently received a USD 2.3 billion loan linked to its sustainability performance. 

France announced new restrictions on the use of glyphosate as it prepares for a full phase-out by 2021. A few days later, the European Court of Justice ruled that EU nations were indeed allowed to ban pesticides or regulate their use even if they are allowed at the EU level. Activists hope this will encourage more member states to impose their own bans. 

Going further, civil groups are looking to ban the production and exports of pesticides in the EU. Some 41 pesticides banned in the EU were exported by the bloc in 2018 to countries with weaker environmental laws. Lawmakers argued that exporting dangerous pesticides was not only hypocritical but could also lead to pesticides being imported back into the EU via food imports. 

After glyphosate, Bayer and BASF are now fighting to maintain the authorisation to use dicamba in the US. The herbicide was found to drift to neighbouring farmlands and Bayer has already paid USD 400 million to settle legal claims. The two German groups are now saying that dicamba can be mixed with other products to stop it from spreading. 

The IEA commented that the global demand for oil will not peak but plateau by 2040, in part because some of the changes caused by the coronavirus pandemic could actually encourage oil consumption. Regardless, some food activists have now turned to another concept: peak meat consumption, as they note that growing environmental concerns could lead to an overall long-term decline in meat demand. Some were quick to point out key differences between oil and meat, however, like the fact that sustainably produced meat can actually help the environment by sequestering carbon or improving soil health. 

In the same vein, the World Sustainability Organization launched a certification program to ensure that plant-based seafood is sustainably produced. The segment has huge growth potential especially in Asia, the organisation noted, as it highlighted the importance of building trust with consumers surrounding the environmental benefits of plant-based alternatives. 

Beyond the environmental credentials of plant-based alternatives, the sector is facing a bigger challenge when addressing potential nutritional advantages, as many products are being criticised for being highly processed and high in additives. Nevertheless, experts explained that consumers these days are more focused on taste and protecting the Earth. In the long-term, some say plant-based meat should merely act as a tool to help people cross-over to a conventional plant-based diet which can have significant nutritional advantages. 

In the meantime, food and drink producers are looking for creative ways to deal with the immediate consequences of climate change. The wildfires in California, for example, are giving grapes an unwanted smoky flavour, making it unsuitable to make wine. In response, one winery is using the grapes to make brandy which should benefit from the smoky aromas. Whether the idea works will only be known by the end of 2021 as the brandy is still undergoing its ageing process. 

This summary was produced by ECRUU

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Commodity Conversations Weekly Press Summary

European and UK negotiators have reportedly made some progress on reaching a free trade agreement although EU officials note that some open issues still need to be addressed, such as fisheries and state aid. The UK has set a deadline of October 15 to reach an agreement and the Prime Minister said he was open to a deal in line with what Australia has with the EU. However, commentators pointed out that there was no trade deal between Australia and the EU, while Australia has been looking to sign a full trade agreement with the block for years.

The UK did report a trade win this week as the country exported its first shipment of beef to the US in 20 years. The US banned imports in 1996 following issues with the mad cow disease but ruled that safety standards were acceptable again in March this year. The UK government estimates that this could generate USD 85 million annually over the next five years. This remains only a small victory, however, as the UK could lose USD 174 billion every year for 10 years with the combined impact of a no-deal Brexit and the coronavirus pandemic, according to Baker McKenzie. 

Food imports into Iran might become even more difficult if the US moves ahead with a plan to extend its sanctions and cut the country off from the global financial system. Essential goods should be exempt from the sanctions, in theory, but banks are reluctant to facilitate deals because of the fear of facing penalties. Besides, EU and Swiss efforts to set up alternative payment channels have only had limited success. Iran has been focusing on trade with the UAE and China in the meantime. 

As countries look to negotiate new trade agreements, industry members are busy trying to reduce the environmental impact of transporting commodities by ship. Sea Cargo Charter was launched by a coalition of 17 companies, including ADM, Bunge, Cargill, COFCO and Louis Dreyfus. The group set up a standard to transparently report shipping emissions to help meet greenhouse gas targets. In the same vein, Cargill will let its customers access CocoaWise, a portal set up to centralise the sustainability data of the cocoa supply chain. The solution includes a map with details on 128 cooperative offices in Cote d’Ivoire, 7 buying stations in Ghana and 11 stations in Cameroon.

Campaigners submitted a petition with 300,000 signatures urging Nestle to reconsider its decision to stop using Fairtrade cocoa and sugar in its Kit Kat bars. In response, Nestle highlighted that they are now sourcing Rainforest Alliance certified cocoa instead. They also argued that, along with its own Nestle Cocoa Plan, they are now in a better position to help improve the livelihoods of farmers. 

In the plant-based food world, oat milk just overtook soy milk to become the second most popular non-dairy milk. Oat milk has been gaining in popularity because of the low amount of water it needs to grow and the high protein and fiber content but almond milk remains the most popular in part thanks to its health advantages: it is low in calories, fat and carbohydrates.

Shoppers might be seeing a lot more plant-based products on sale following pledges by Tesco and Asda to boost sales. Tesco partnered with the WWF to increase sales of plant-based meat by 300% by 2025, while Asda is launching 104 new plant-based products. The move was not welcomed by the head of the National Sheep Association, however. He highlighted that it was based on an incorrect assumption, as meat can, and often is, produced in a sustainable way, while plant-based products are often mass-produced, highly industrialised and highly packaged.

Other experts are also questioning whether overselling the potential benefits of agricultural practices can actually undermine the fight against climate change. Environmentalists have recently been eagerly promoting the idea of regenerative agriculture to sequester the carbon in the atmosphere into the soil. But some proponents argue that the practice could actually absorb all of the carbon we currently emit. Such a claim is not only baseless, some experts say, but can also overpromise and simplify a complex problem that will require a whole suite of changes to solve. 

Talking of smart technological solutions to fight climate change, farmers found two clever ways to use agricultural products in surprising places this week. The first is in the Netherlands where researchers made bitumen – usually produced from fossil fuels – using lignin. And in the UK, the largest dairy cooperative, Arla, started converting some cow manure into methane and biofuels to power its trucks. 

This summary was produced by ECRUU

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Commodity Conversations Weekly Press Summary

Germany has gone all out to contain the African Swine Fever (ASF) which was detected this month in a few wild boars but already cost the country a ban on exports to China. Even though no commercial pigs have tested positive, one expert estimated that Germany lost a USD 1 billion market in just one day from import bans. He calculated that the world’s pig population dropped by at least 25% because of ASF, whereas China lost about a third of its pig population since 2018. The US and Spain could fill in the gap but an analyst warned that the situation was very volatile. A second Covid-19 wave could have a drastic impact on both pork consumption and supply. 

China is also asking importers to be careful about sourcing frozen food and seafood from countries with big Covid-19 outbreaks. The government said it had found the virus in imported cold-chain food. The WHO still maintains that one was unlikely to catch the virus through food. 

The growing demand for salmon has led to its wild population dropping by half in the last 50 years. Beyond overfishing, sea lice, which spreads from fish farms to the wild, also contributed to the fall in population. US startup Wildtype is working to solve the issue with their lab-grown salmon. For the moment, it cost them USD 200 to make a spicy salmon roll but they hope to commercialise their salmon within the next 5 years. 

US-based plant-based protein company Puris is hoping to solve the issue of the high sodium content in alternative burgers with its new low-sodium pea protein. The CEO explained that plant-based burgers have much more salt than meat burgers, with one Beyond Burgers containing 16% of our daily allowance. The group, which will be doubling its pea protein production by next year, is also launching lupin flour and pea syrup, to be used in keto products and as a substitute for corn syrups. Similarly, ADM launched a series of plant-based proteins designed to improve the “sensory appeal” of plant-based meat, including textured pea proteins and textured wheat protein. 

The British Retail Consortium calculated that new import tariffs as a result of a no-deal Brexit could cost households an additional GBP 112 in food expenses, and probably more once the administrative costs are also taken into account. It explained that the UK’s food supply chain works on very little margin, which means most of the additional costs would be passed on to consumers. Besides, the recently launched Future British Standards Coalition is lobbying against any lowering of food standards after Brexit. A specific point of contention is the import of chlorinated chicken from the US – something opposed by many in the UK. 

Some 200 global food suppliers joined a voluntary coalition committing to reduce their food waste by half by 2030. An insight by Food Dive, however, points out that 80% of the world’s food waste happens in supermarkets, restaurants and with the end consumer. Nevertheless, it expects the commitment to eventually happen as it will help boost these companies’ bottom line. One solution is being tested in Kenya, where a farm is feeding food waste to black soldier fly larvae which will then be used for animal feed. 

If fighting waste was not enough, Walmart declared its commitment to becoming a “regenerative company.” The CEO Explained that “Regenerating means restoring, renewing, and replenishing, in addition to conserving.” Concretely, the target is to reach zero net emissions by 2040, restore 50 million acres of land and 1 million sq m of ocean by 2030. 

Funding and incentivising sustainable farming is a growing issue, one that a new fund hopes to solve in Brazil. Saff, the product of a public-private partnership, will start with USD 68 million in 2021, aims to reach USD 1.4 billion by 2026 and will target farmers who follow the crop-livestock-forest integration on at least 5% of their area. In the UK, McDonald’s tied up with McCain to set up a GBP 1 million fund, called the Sustainable MacFries Fund, to help potato growers become more sustainable.

We live in an era where we are used to questioning the things we’ve been doing but here’s one you probably didn’t see coming: you shouldn’t use boiling water to make tea. An expert explained that the habit of boiling developed when water was unsafe to drink. Instead, he suggests using water at 50-65 degrees for green tea and 80 degrees for most breakfast teas. Otherwise, he warned, your tea will taste “no better than cabbage water.”

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Commodity Conversations Weekly Press Summary

New York hosted the annual UN meeting last week, along with Climate Week, and the Brazilian President used his speech to highlight that Brazil successfully ramped up food production to meet a growing export demand. He also claimed that his government was a victim of “brutal disinformation campaigns” concerning the Amazon and Pantanal, as he highlighted new measures taken to protect the environment. Nonetheless, local experts were quick to highlight that these rules were rarely enforced, while Brazil’s own space agency published data suggesting that deforestation in the Amazon reached a 14-year high in the year ending in July. 

Fires in the Amazon and Pantanal could potentially lead to the end of trade negotiations between the EU and Mercosur. The French government issued a list of three demands before it would agree to continue negotiating a free-trade deal. The list highlights the importance of meeting the Paris agreement and fighting deforestation. Other EU nations, namely Germany, Ireland, Austria, the Netherlands and Belgium, have also expressed concerns.

Food producers in the region are being proactive to protect their image on the international stage, however. The world’s largest meatpacker, JBS, announced a USD 183 million investment to help develop the Amazon and fight deforestation. The company also pledged to eventually monitor 100% of its indirect cattle supply chain, as it noted that no company currently does so. Seventeen brands behind the Consumer Goods Forum (CGF) also used Climate Week to announce the creation of the Forest Positive Coalition of Action. Food firms like Mondelez, Nestle and Unilever, pledged to intensify efforts to end deforestation. 

Supply-chain traceability has been a goal of the industry for a while now but it can take years to achieve because of “fragmented farming systems and lack of infrastructure”, according to the CEO of Olam Cocoa. The firm published an update to its 5-year old effort to increase traceability across nine cocoa-producing countries. Olam can now trace 100% of its direct supply chain and 12% of the global cocoa supply to an individual farm or community. The topic might actually gain traction with the coronavirus pandemic, as a Kellogg director said the firm had noted that interest in the environment and social issues was accelerating

The coronavirus pandemic will lower the volume and value of Australian exports because of the lower demand for certain products, according to a government agency. Moreover, trade relations with China have been deteriorating, with the country imposing prohibitive duties on Australian wheat and increasing inspections. Australian producers are hoping to adapt by finding new markets, like Indonesia and Thailand. Soybean processors in Brazil are facing the opposite problem, meanwhile, as a surge in export demand is putting pressure on stocks despite a bumper crop. As a result, Brazil’s soybean imports might reach the highest since 2003. Sources reported that Bunge was now buying soybean from Uruguay to supply its plant in Rio Grande, Brazil. 

The EU is looking to create financial incentives to push farmers to focus on carbon-capture crops. The Commission recently argued that while agricultural emissions “can never be fully eliminated under existing technology and management options, they can be significantly reduced”. Some of the proposals include financing crop rotations and afforestation. Norway is also doubling down on its carbon-capture ambitions, as it will spend EUR 1.54 billion to fund two-thirds of a massive project, which had failed a decade ago because of cost issues. 

Tech enthusiasts are highlighting the potential of vertical farming to lower the carbon footprint of agriculture. Some firms, like Square Roots, also emphasise that container farming allows them to perfectly control temperature, light and fertiliser application to create the best tasting products. Nonetheless, this investigation concluded that the claim was “more marketing than science”, mostly because sensory scientists are still working on what makes food taste good, while focusing only on taste could negatively impact yields or shelf-life. In the end, an expert reiterated that “if you just leave a consumer panel to their own devices, they’ll typically choose whatever is sweetest.”

Beyond creating the best tasting products, supporters of vertical farming argue that the technology will be key in the age of space exploration. At the same time, scientists are making impressive progress in farming crops on simulation Martian and lunar soils. Unlike what some Hollywood movies would like us to believe, however, potatoes actually struggle in space soils, while kale actually grows better than on Earth soil. And in case you were wondering, yes, the researchers are experimenting with growing barley and hops that could be used to make space beer

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Commodity Conversations Weekly Press Summary

One of the biggest challenges for food and beverage manufacturers in the post-Covid era will be to offer consumers products that combine health, indulgence and affordability. A survey by ADM noted that people had become increasingly concerned – as well as knowledgeable – about their health but that they were also facing a weaker purchasing power. Besides, the stress of losing jobs and the general uncertainty is pushing them to indulge in comforting snacks. ADM noted that, in that category, plant-based snacks were becoming increasingly popular but remained expensive. 

The timing is perfect for Nestle, which, after selling several businesses over the past year and a half, said it was now looking to make acquisitions in line with the group’s new image as a “nutrition, health and wellness business.” The company just announced a USD 30 million investment in Closed Loop Partners, a company looking at food-grade recycled plastics, as part of its commitment to lower its use of virgin plastic by 30% by 2025. In China, it is investing USD 59 million to help make dairy production more sustainable as well as develop organic grains. Beyond health and wellness, it remains open to “high growth” categories, with an eye on the frozen food sector which has been growing steadily, a company official said. Another focus is to be able to reinvent their established big brands fast enough to meet the consumers’ needs, he added. 

Kraft Heinz, too, is changing the way it is looking at products. The CEO explained that they were now looking at what people need instead of thinking in terms of a range of products. The group has scrapped 1,100 products from its portfolio, the equivalent of 20% of its business, to lower its cost of procurement and avoid “cannibalising sales.” The plan is to use fewer ingredients, to lower the sugar content and work closely with suppliers to save USD 1.2 billion in its procurement division over the next 5 years as part of a major turnaround plan. 

Another group trying to speed up the pace at which it can meet consumers’ needs is Pepsi which just launched Driftwell, a sugar-free drink made with stress reducers L-theanine and magnesium to promote relaxation. The company said this was the “fastest new product to ever come out of the company” and is banking on the recent focus on good sleep and relaxation. 

Cargill is building a 50,000mt plant in China to produce a sugar substitute called trehalose. The plant, Asia’s biggest, will produce more than enough to meet China’s demand of 30,000mt for the sweetener. Although China produces almost three-quarters of the world’s sugar substitutes, consumption in the country has lagged because of permissions related to patent issues. But with demand for sugar-free drinks exploding, such as Yuan Qi Sen Lin which beat its full 2018 revenue in the first five months of 2020, demand for sugar substitutes is growing just as fast. And with a sweetener market share of only 10%, it still has a long way to go. 

But while new generation sweeteners such as erythritol and sucralose are perceived to be much better than the older ones such as Aspartame, they are still about 80 times more expensive to produce. Regardless, Cargill said it is a trend that is here to stay and food and beverage makers will need more and more solutions. In Hong Kong, however, the Consumer Council warned that many of the sweeteners used in diet drinks could potentially be harmful if consumed in large quantities. It noted that while drink companies in Hong Kong are only allowed to use some 10 sweeteners, there is no limit on the quantity.

Olam announced the launch of a new business arm, Olam Cocoa for Professionals, under which it supplies its premium deZaan cocoa powders to restaurants and bakeries in smaller bags instead of the traditional packing in tonnes destined for large manufacturers. Olam Cocoa has also been working on plant-based creamers that can be used in snacks and ice-cream, something that has been a challenge, a company official said. The market is growing – a survey commissioned by Olam in the UK found that more people were turning to plant-based snacks since the start of the coronavirus lockdown, in part because of health concerns. 

In the US, a multi stakeholder meeting is happening to figure out ways to incentivise farmers to switch to more environmentally friendly practices. Known as Honor the Harvest, the aim is to “create value chain financing where the customers or corporations partner with farmers to coinvest in climate-friendly practices,” the founder said. He explained that while farmers don’t like to be told what to do, it makes financial sense to get involved as the world’s major food producers, including Nestle, Danone, McDonald’s and more have plans to achieve net zero carbon at some point in the next decades.

After much negative press this summer, Tyson Foods announced it had tied up with certification provider Where Food Comes From to verify sustainable beef production practices on more than 5 million acres of cattle grazing land – the biggest initiative of its kind in the US. 

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Commodity Conversations Weekly Press Summary

Consumers of Swedish vegan milk company Oatly have called for a boycott of the brand after they realised that it had raised, earlier this year, USD 200 million from Blackstone Group, a group also known to invest in companies linked to the deforestation of the Amazon. In a typical case of Chinese whisper, Vice reported that Oatly had to defend itself and clarify that it was not, itself, involved in deforesting the Amazon. The company, which has been valued at USD 2 billion, said the investment was, actually, really good news for the plant-based food industry. And regardless of the PR fiasco, the demand for oat milk in the US increased by 290% between March and June this year. 

Israeli startup Redefine Meat is eyeing the whole-cut steaks meat segment – the highest margin segment in the meat industry – and working on a 3D-printed vegan alternative, with options including “roasted” and “grilled.” The printers should be able to produce 250kg of meat every day, the equivalent of a whole cow, the CEO said, adding that he would start selling them to select restaurants by the end of the year. 

US-based company Bond Pet Foods, meanwhile, is betting that vegan pet owners want their pets to be vegan too. The company said it had found a way to make pet food from lab-grown chicken. It will take some time – by 2023 – for it to be rolled out commercially, but it said its cultured-meat dog treat has been a success. 

In China, Pepsi’s Quaker oatmeal brand tied up with the pharmaceutical group Pan Gaoshou to launch products that combine health, local culture and traditional medicine. Their first two products are Hericium Erinaceus (a type of fungus also known as lion’s mane) oatmeal and donkey-hide gelatin oatmeal. As one analyst put it, it’s the new way of consuming traditional medicine

In Oceania, Coca-Cola Amatil invested in cryptocurrency payment provider Centrepay as part of the group’s plan to allow consumers to buy drinks in vending machines in Australia and New Zealand using cryptocurrency. In Europe, Coca-Cola European Partners will be moving to 100% recycled plastic (rPET) bottles in Norway and the Netherlands over 2020/21, with the shift already taking place in Sweden. A company official explained that local deposit return schemes were key in the process. 

Nestle tried a different approach in the Philippines where it said it had reached “plastic neutrality”, by which it means that it picked up and processed just as much plastic as it sells. In Switzerland, and similar to Coca-Cola’s local deposit return schemes, Nestle is testing reusable and refillable systems for petcare and soluble coffee products. In the US, Nestle also doubled its use of rPET for water products from 2019 to 17%. 

Nestle is also doing corporate and local education campaigns to encourage people to recycle. Taking things one step further, and not losing sight of its focus on scientifically-backed health food, the company just launched MYAACD.org, an education platform about Age-Associated Cellular Decline (AACD). The concept is to offer consumers nutritional options to reduce the process of ageing

Cargill is pushing for a carbon pricing system to help the shipping industry – which accounts for 3% of global carbon emissions – meet its decarbonisation targets. A company official explained that carbon pricing was necessary to make the new technology and fuels viable, adding that bulk vessels travel to hundreds of ports around the world which will require significant investments. As such, Maersk added, the whole industry needs to get involved 

An analyst at JP Morgan Asset Management said that investments were already flowing into technological innovations that improve fuel consumption, adding that the coronavirus had not affected the investment flow. He added that ships would likely switch to travelling slower to reduce fuel consumption, which should also push up rates by reducing vessel availability. Investing in the Internet of Things (IoT) is another way to improve fuel consumption thanks to smart meters and better data analysis. A report noted that the maritime industry was the sector that has shown the biggest switch to using IoT, which has helped improve efficiency and reduce costs.

At a time when even The Michelin Guide is trying to figure out ways to “remain relevant,” fine dining restaurants are wondering whether people will still be willing to pay significant premiums to eat out. One restaurant making that bet is California-based the French Laundry which just launched a dining experience priced at just USD 850 per head. 

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Commodity Conversations Weekly Press Summary

Concerns have been growing that the coronavirus pandemic will lead to an unprecedented rise in world hunger. Oxfam estimates that, under the worst-case scenario, hunger could kill 12,000 people a day by the end of the year, more than the deaths caused by the virus itself. The crisis would be particularly shocking as we are also facing a massive global food surplus which is forcing many to destroy their crops. Farmers explained that the logistics do not exist to divert crops where they are needed, while farmers are also more likely to let crops rot instead of paying to harvest it and donate it. As an expert put it, “it’s hard to take surplus milk in Wisconsin and get it to people in Malawi”.

Some countries are particularly vulnerable as they import most of their food, like Gulf Countries. In response, the UAE recently purchased 4,500 Holstein cows from Uruguay, with more purchases to come. The country has also set up a trading platform, Agriota, to help local companies connect with Indian farmers. Some companies, meanwhile, are looking at improving their position in global supply chains. For one, Glencore Agriculture purchased a port terminal from Orezim in Ukraine. The Everi port terminal can load 1.5 million mt/year of vegetable oil. 

In the health science world, Nestle announced the purchase of Aimmune Therapeutics, the producer of the world’s first approved treatment for peanut allergy. The purchase valued the company at USD 2.6 billion. Nestle said it was hoping to get the treatment approved in the EU next year. Unilever has also been looking at health and wellness nutrition, as it signed a deal to buy Liquid IV. The firm produces drink mixes that claim to boost the hydration capacity of water by two to three times. 

In the technology realm, ADM Capital Europe bought an 11.7% stake in Saga Robotics. The Norwegian firm uses an autonomous robot to treat mildew with UV. The firm is also looking at commercialising harvesting robots. Otherwise, Unilever announced a partnership with Algenuity, a biotech startup researching microalgae. Algenuity is looking to remove the bitter taste and smell from microalgae to take advantage of the high levels of protein, antioxidants, vitamins and minerals. 

For the time being, most plant-based proteins still come from the land. Bunge invested USD 22.7 million to help Merit Functional Foods build a plant that will produce canola and pea proteins. The Canadian firm hopes its patented extraction technology will help it expand in the USD 4.5 billion plant-based foods market. The traditional beef market is not yet doomed, however, and a USD 8.5 million project seeks to help cattle operations in Nebraska store some of their gas emissions in the soil. The project is supported by Cargill, McDonald’s and Target. 

Mondelez International signed an agreement to buy power generated by the Roadrunner solar plant. With 1.2 million photovoltaic panels, Roadrunner is the largest solar farm in Texas and will help Mondelez get closer to meeting its goal of reducing manufacturing emissions by 15% by 2020. In Cashmere, Washington, a producer of mealworm is pushing the high tech concept even further. A new plant will use the heat generated by computers mining cryptocurrencies and the waste generated by a neighbouring apple factory. The company behind the plan hopes that the mealworm, mostly beetle larva, will be used as feed for livestock and fish. 

Not to be outdone, Chinese researchers are also embracing the concept of “intelligent farming”. A few pig farms are testing the use of facial recognition to monitor every step of animals and, potentially, even their mood. The country is hoping the tech will help improve food security and deal with an ageing population and labour shortages. While the solution could hopefully improve the well-being of animals and replace the use of ear tags, a journalist wonders whether this sounded a bit like “Orwell’s nightmare”. 

A less controversial idea was announced this week with the launch of the world’s first carbon-negative vodka. The Air Company is now selling Air Vodka, a drink made using only water and ethanol produced from CO2, in a factory powered by solar panels. In India, Phool found a clever way to deal with the 8mt of temple flower waste that usually ends up in the river Ganga every day. The flowers go to make incense sticks, vermicompost, packaging and, most recently, Fleather – a vegan leather.

An ancient McDonald’s burger received some Internet fame this week as a woman discovered a burger 24 years old meal that looked completely intact. McDonald’s defended itself, however, arguing that their burgers do decompose like other food products, given a sufficient amount of moisture. 

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Commodity Conversations Weekly Press Summary

Brazil’s agriculture minister said the government was looking into ways to incentivise the financing of sustainable agriculture. She said that there were currently no interest-free loans for sustainable producers and that reaching out to small farmers was a challenge. Some banks are trying to step into that space, with Itau BBA saying its loan portfolio for the agricultural sector had increased to BRL 37 billion (USD 6.6 billion) in the first half of 2020, from BRL 30 million (USD 5.3 billion) for the whole of 2019. 

Taking a different approach, analysts at HSBC warned investors about Brazilian meat giant JBS after some funds dropped the company from their portfolio. They said that the group had no ways – and didn’t plan to set up systems – to ensure that its supply chain did not contribute to deforesting the Amazon. Nonetheless, HSBC still recommended buying JBS stocks, hoping that a plan to list on the New York Stock Exchange would force it to improve on governance. 

Commodity trading financing is going through a crisis, on the other hand. Several banks, such as ABN Amro, announced they were exiting the field while others are “reviewing” the situation, such as BNP Paribas and Rabobank. Banks have been trying to offset low and negative margins with higher volumes, taking increasing risks, which has been compounded with tougher regulations. This is paving the way to more expensive financing which could benefit bigger players by squeezing out the smaller ones, some say. But this could also lead to more expensive food down the line.  

In India, meanwhile, ICICI Bank is now using satellite images of farms to make financing decisions for the country’s millions of small farmers. The new system is also helping reduce costs by replacing the thousands of officers sent to visit farms before loans are granted. 

Unilever is working with Orbital Insight on a pilot program using geolocation and artificial intelligence to improve transparency in its supply chain and specifically the so-called “first mile.” It is starting with several palm oil mills in Indonesia and soy mills in Brazil to see where they really get their supply from by monitoring the real-time movements of trucks. A Unilever official explained that the “first mile” had presented a significant challenge, especially considering that almost half of Indonesia’s palm is supplied by small farmers. 

It is because it is so difficult to monitor supply chains that Olam created its AtSource sustainability platform back in 2018 and is now making it available for its customers. The group has some 3,500 “boots-on-the-ground” to collect the information. AtSource’s CEO explained that challenges vary from one supply chain to the other. In cocoa, for instance, there is a big focus on providing farmers with a sustainable income. In dairy, the priority is animal welfare while in Cote d’Ivoire, child labour is a major concern. They have to develop metrics for each of these requirements, he said. 

Companies are also struggling to choose which sustainability commitments and initiatives to choose from, given the multitude of options available. The Lobbying group Business for Nature noted a surge in big companies’ willingness to step up their commitments to protect nature, after decades of lackluster interest. The head of a large British supermarket chain said that customers were asking for it, but he added that more demanding government policies would help turn commitments to real action. 

One country which is stepping up its game is the UK. The government is looking into new regulations to eradicate deforestation from the supply chain of big groups such as supermarkets and fashion companies. The plan put forth, which is currently in consultation, would require these companies to prove the origins of products such as soy and cocoa, but also leather and paper, showing that these did not involve deforestation. 

As such, businesses across segments are starting to see the benefits of working together. A sustainable sourcing specialist working with fashion conglomerate Kering said that fashion and agriculture were completely interconnected as things like leather, wool and cotton come from the same places our food comes from. By working together, these industries could multiply their sustainability impact. 

On the subject of joint efforts, the alcohol industry is looking into cashing in on the health trend. The FitVine Wine, for one, is marketed as a “low-sugar, keto-friendly wine.” If this doesn’t sound too appetising, don’t worry, because a group of Finnish researchers said they have finally found a cure for hangovers. The study wasn’t easy to do, apparently, with some participants who couldn’t cope with the amount of alcohol that had to be ingested while others just wanted more. 

This summary was produced by ECRUU

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Commodity Conversations Weekly Press Summary

The coronavirus pandemic has not slowed the efforts by the food and agricultural sector to expand internationally and fight for open markets, according to a survey of EU firms. It revealed that 90% of companies surveyed kept their plans to expand or at least maintain their market presence in the short-to-medium term. About 57% said they would concentrate on their core business. 

In the same vein, Olam mentioned that it has successfully implemented parts of its reorganisation plan in the first half of the year, as it reported strong results despite the pandemic. Olam International Limited​ closed its sugar, rubber and fertiliser desks, while Olam Global Agri​ saw good results in grains origination and merchandising. 

Some vulnerabilities in the global food supplies were made clear with the pandemic, however, and some cities are hoping to solve the issue with vertical hydroponic farms. Unfold, a joint venture between Singapore’s Temasek and Bayer AG, was created to focus on seeds aimed at vertical farms to improve food security in metropoles. It could help Singapore reach its goal of producing 30% of its own food needs.

In the meantime, the popularity of plant-based meat continues its impressive rise, as Impossible Foods reported that demand for its grocery business increased by 60 times. To keep up, the group has been raising capital and secured USD 200 million in the latest round, which will go to increase capacity and research and development. Impossible Foods also partnered with the Know Your Rights Camp to help Black and Brown communities in the US. 

Engaging in social and political activism is fraught with risks, however, as many firms found out after sending out awkward or even hypocritical messages in the wake of the Black Live Matter movement. One food maker stands out of the lot, as this Bloomberg cover piece highlighted, the Vermont-based Ben & Jerry’s. The key to its successful foray in social activism could be its decades of fighting for the environment, same-sex marriage and criminal justice reform. The 2000 acquisition by Unilever initially exposed a clash of culture, but Unilever is reportedly now taking inspiration from Ben & Jerry’s on how to react to the new conscious approach of shoppers. 

Ben & Jerry’s recent campaigning has not been welcomed by the UK government, however. The ice-cream maker tweeted at the interior minister criticising her for her comment that the UK will stop asylum seekers from crossing the English Channel. In response, a lawmaker said the comment was merely “statistically inaccurate virtue signalling”, while the Home Office called the brand “overpriced junk food”.

A less risky venture for agricultural business for now remains the fight to protect the environment. The Coalition of Action on Food Waste was launched this week, a consortium of 14 food producers and retailers, including Nestle and Walmart. The group will look at standardising date labels, better reporting of food loss data and partnerships with existing frameworks like the UN Sustainable Development Goals. 

The Chinese government also joined the fight against food waste by launching the “Clean Plate Campaign“. Nonetheless, the similar “Operation Empty Plate” launched in 2013 was not a great success as observers noted that empty plates are a Chinese cultural sign that not enough food was served. 

Another unlikely ally in the fight against food waste is the coronavirus. An analysis based on interviews found that British citizens had significantly reduced the amount of food they wasted because of a growing concern over the availability of food and fewer grocery runs. Other nations found similar patterns, while some suggested that the unemployment crisis and frugality could further the trend. Environmentalists welcomed the news as food waste is responsible for 8% of total greenhouse gas emissions. 

Some clever technological innovations can help address the issue, such as the plant-based edible film developed by Apeel Sciences which can help reduce avocado waste by 50%. Edeka and Netto supermarkets in Germany are now testing the solution, which acts as a barrier to retain moisture and slow oxidation, with avocados and citrus. 

Another promising discovery published this week was the successful cultivation of basil and spinach under semi-transparent tinted solar panels. The solar panels provide shelter and filter through red light which boosts the plant’s ability to photosynthesise. This method could pave the way for a merging of electricity and food production into something called agrivoltaics. 

Lastly this week, Unilever’s Good Humor ice cream distributor found an ingenious solution when it realised that a jingle used by ice cream trucks, called Turkey in the Straw, has a strong racist history. In response, Good Humor partnered with RZA, the leader of the legendary hip hop group Wu-Tang Clan, to develop a new tune which you can enjoy here.  

This summary was produced by ECRUU

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Commodity Conversations Weekly Press Summary

Food wrappers are about to get a makeover after four manufacturers in the US volunteered last week to phase out the use of a PFAS chemical called 6:2 fluorotelomer alcohol, or 6:2 FTOH. PFAS – short for polyfluoroalkyl substances – are known as “forever chemicals” because of how long they take to disappear. They have been in use for decades to stop food from sticking to wrapping but some studies suggest a link between PFAS and health issues such as cancer and autoimmune diseases, among others. 

The US Food and Drug Administration explained that the agreement was done on a voluntary basis but health advocates said this was not enough and argued that PFAS must be phased out entirely. Mind the Store tested wrappers used by the US’ main fast-food chains and found that at least one food packaging item used by each of the companies was likely to have toxic PFAS. 

Several companies have already been pushing for PFAS-free wrapping. Whole Foods announced a plan to stop using them over a year ago while Taco Bell – the US’ fourth-biggest fast-food chain – said it would stop using it by 2025. Lawmakers in New York are also hoping the Governor will sign off a bill banning the food packaging that contains PFAS chemicals, following in the footsteps of places like Washington state and San Francisco. Mind the Store urged fast-food chains to be more proactive, however, in making the change happen. 

The UK gave the green light to Amazon to buy a 16% share in delivery platform Deliveroo for GBP 442 million (USD 575 million). The Competition and Markets Authority reportedly approved the deal because Deliveroo said it needed Amazon’s cash injection to survive and, if Deliveroo went down, there would be less competition in the market. Similarly, UberEats, which bought Postmates last month for USD 2.65 billion, saw its Apr-Jun revenues double to USD 1.2 billion but the unit still recorded a loss of USD 232 million. Uber’s CFO noted that losses had narrowed from last year’s USD 286 million but he expects the segment will continue to post losses for the next couple of years. Analysts doubt whether food delivery apps can ever become profitable as they continue to focus on market share over profitability and therefore continue operating at a loss. 

The issue goes deeper as more and more restaurants are complaining about the commission fees charged by the apps. An investigation by LAist said that none of the food delivery apps were transparent with their fees and that each restaurant negotiated their own terms. However, the Los Angeles-based restaurants interviewed all said the fees were around 30%, much higher than their own margins of 3-6%. A number of restaurants have been looking at alternative ways to cope, including delivering food themselves or focusing on drive-throughs. 

Countries continue to gear up their fight against obesity and the consumption of unhealthy foods. In the UK, Google announced that it will require advertisers to label their products if they contain a lot of sugar, salt or fat, and will not display them to people under 18. In Mexico, the state of Oaxaca took it several steps further and passed a law banning the sale of soda and junk food to minors

But if you were thinking you have to give up on your fast-food fix for the sake of your – and the environment’s – sake then there’s good news coming your way. This piece in Wired forecast that fast-food chains switching to plant-based meat could be a game-changer. Arguing that “You can have happy cows or cheap burgers, but you can’t have them both” and that “big problems demand big solutions,” the magazine explains that the sheer reach of fast-food chains would help lower the cost of alternative proteins and scale up their production. As such, replacing every burger in the US with an Impossible burger would lead to a 90% reduction in land and water use as well as a 90% cut in greenhouse gas emissions. 

Having said that, S&P Global Market Intelligence noted that there was very little disclosure about the real environmental impact of plant-based proteins. Looking at data from 2018, it noted that Beyond Meat scored 0% on their weighted disclosure for greenhouse gases, compared to 100% for meat companies Hormel and Tyson. 

And for those of us who are still on a coronavirus-induced baking binge, you can try out this new trend: cloud bread. Not convinced? You can also try Dalgona coffee

This summary was produced by ECRUU

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