Commodity Conversations Weekly Press Summary

Cargill will soon be opening a non-medicated premix production facility in Ohio, USA, as part of its efforts to find a solution to healthy livestock without antibiotics. The head of the group’s Premix and Nutrition business explained that nutrition was a key part in the transition away from drugs, adding that a healthier animal produced better meat and dairy. “Consumers really drive the supply chain,” he said, adding “The environment forces us to branch out far beyond just nutrients and ingredients.” Taking the move into ‘agtech’ one step further, Cargill has opened its first beauty lab in Shanghai, China, which will use the group’s expertise in food to develop sustainable and nature-derived products for the Asian market. In Russia, Cargill invested RUB 1.8 billion (USD 27 million) to expand the production of fats, oils and animal feeds in the Tula region as well as to set up a technology cluster.

Separately, Cargill has developed a new technology to give chocolate products the ‘right’ colour by using fewer chemicals, allowing to get previously difficult to obtain reddish and yellowish tones. The company explained that colour was very important for consumers and that this new method would make it much easier for food companies. Mondelez’ venture arm SnackFutures, meanwhile, has invested in a startup called Uplift which makes so-called “gut-healthy” foods and ingredients. Mondelez’ CEO said the aim was to re-invent snacks so that they have an active health component, “something that does not exist today.”

Olam reiterated its commitment to restore forests and fight deforestation as part of the Cocoa & Forests Initiative (CFI) across its supply chain, with a focus on West Africa. The company already used its supplier mapping to distribute 1.2 million trees in Cote d’Ivoire and Ghana. The aim is to “re-imagine the future of global agriculture where prosperous farmers (…) and healthy ecosystems can coexist,” the company said. The initiative fits well in the UN’s Decade on Ecosystem Restoration launched earlier this month. It hopes to restore 350 million ha of degraded land by 2030 to enhance food security and biodiversity.

In the same vein, China’s President said last week that he would not compromise the country’s health and environment for short term economic gain. The state market regulatory administration announced a new policy which made officials liable for issues around food safety, a major move to crackdown on the number of recent food scandals and improve the current food and drug safety standards.

The US’ Food and Drug Administration (FDA) and the US Department of Agriculture (USDA) announced they have finally agreed on a way to deal with cell-cultured meat. The FDA will regulate the collection and growth of cultured cells while the processing of those cells into meat, as well as labeling, will come under the USDA. While some wonder whether cell-cultured meat is commercially viable yet, some environmentalists have questioned whether the fuel used to power the labs is much better than the methane released by livestock. Regardless, the anti-meat trend seems to be getting increasingly popular. New York City’s mayor just announced “Meatless Mondays” for schools starting 2019/20. The program should reach out to almost a million students.

The US is set to get its first GMO seafood after the FDA gave AquaBounty the green light last week to start raising GMO salmon eggs in the country. The company, which is already implanted in Canada, had been blocked from the US market because of issues around labeling. The USDA’s bioengineered labeling guidance released in December will allow consumers to differentiate but opponents say the labels aren’t enough. AquaBounty’s CEO, on the other hand, pointed out that their salmon would be much fresher than the imported kind.  

A study by the University of California found that fish stocks of the most commercially consumed fish had on average dropped by 4% between 1930-2010 but some areas, notably in the North Sea, had lost close to 30% of their stocks. Overfishing, warming temperatures and acidification of the ocean are to blame. The black sea bass in the Atlantic, however, seems to be thriving in the warmer water. In a bid to make fishing more sustainable, US group Bumble Bee Foods has tied up with a German technology company to launch a platform tracking yellowfin tuna using blockchain technology. Consumers will have access to the whole supply chain by scanning a QR code on the retail package and see for themselves that the products conform to the International Seafood Sustainability Foundation.
Finally, winemakers are looking into replacing the traditional cylindrical glass bottles with Garçon Winesflat bottles made from recycled PET. The startup said that it can pack 10 bottles in the space of 4 traditionally sized bottled and that each bottle is 87% lighter, thereby reducing carbon emissions by 500g/bottle.

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Commodity Conversations Weekly Press Summary

The biotech industry in the US is being proactive in its campaign to promote gene-edited crops as it hopes to avoid some of the consumer push back that followed the launch of GMOs. While GMOs involve adding foreign DNA to plants, gene-editing happens when DNA is removed. Nonetheless, groups like the Non-GMO Project say the two processes are almost identical and they predict that the industry will struggle to make gene-edited crops acceptable among the general public. The USDA is working to update its rules for gene-edited crops, while the head of the agency has repeatedly defended food companies against “fear your food” movements.

Unlike the USDA, however, the FDA currently classifies gene-edited food as drugs, which implies a very rigorous and lengthy approval process. This expert argues that this is a mistake as gene-edited food is still food but with a snippet of DNA removed. Gene-editing technologies such as CRISPR/Cas9 have huge potential in lowering carbon emissions or improving animal welfare but misguided and unjustified regulations will hinder their development and adoption, she argued.

Meanwhile, the FDA is considering a petition from the Swiss chocolate maker Barry Callebaut who is hoping to put health claims on its products. Although a similar petition was previously rejected, the European Commission authorised the health claims back in 2013. In its petition, Barry Callebaut pointed to some research which identified the flavanols present in cocoa as a promoter of healthy blood flow. Promoting the health aspects of chocolate could be essential to protect demand amid a general shift towards what the public perceives as healthier food.

In Belgium, Cargill announced its purchase of Smet, a family-owned producer of semi-finished chocolate products and gourmet chocolate. And while some are focusing on expanding their premium chocolate lines, Nestle unveiled its Cocoa & Forests Action Plan which will seek to remove all deforestation and labour abuse from its supply chain. As part of the effort, Nestle released the list of its suppliers in Ghana: Agroecom and Cocoa Merchants. It also revealed that Barry Callebaut, Cargill and Cocoanect acted as direct suppliers in Cote D’Ivoire. Another chocolate giant, Mondelez, made a similar pledge this week as it committed to monitor all of its suppliers in Ghana, Cote d’Ivoire and Indonesia with satellites to identify and address incidences of deforestation.

Such efforts could become essential, as a Senate committee in the US approved a bill that would force all large food retailers in Washington to publicly report any human right violations in their supply chain, in an effort to combat human trafficking and slavery. The food industry union argued against the proposal and said it would create a “paperwork nightmare”, while the dairy union said farmers and resellers should not be made responsible of regulating their suppliers. It highlighted that several government agencies already exist for that specific purpose.

Besides regulations, consumer demand is also forcing major food producers to adapt. Bloomberg compiled this list of ingredients which have been subject to sudden changes in perception, such as milk, cheese, sugar and corn syrup, and it noted that firms who failed to adapt have seen their value drop significantly.

Two major pharmaceutical companies, Sanofi and Novartis, announced that they have abandoned efforts to develop a drug to help obese patients lose weight. The decision was partly due to the difficulty in achieving significant results and the growing perception that obesity is not a disease but a lifestyle problem. On the other hand, Novo Nordisk, the last major firm researching the issue, is working on a new drug that could cut patients weight by up to 12.7%.

Lastly this week, researchers have finally solved one of the major mysteries in the food world: why do grapes catch fire when microwaved? Watch this video to understand the complexity of plasma clouds and microwave resonance, or just to see grapes exploding!

This summary was produced by ECRUU

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Commodity Conversations Weekly Press Summary

The four ABCDs – ADM, Bunge, Cargill and Louis Dreyfus – all reported that the US-China trade dispute had hurt their bottom line in 2018 despite some initial optimism. Bunge’s agribusiness reported a gross profit of USD 203 million in the fourth quarter, down from USD 238 million last year, and a net loss available to shareholders, mostly because of the truce in the US-China dispute which devalued its Brazilian soybean stocks. Similarly, Wilmar reported a 50% fall on year in net profit during the quarter, at USD 201 million, mostly due to losses in its sugar segment. Regardless, the CEO said the company might look at expanding its sugar business this year, such as buying Olam’s two sugar mills in India if the price was right. Olam, meanwhile, announced that it has purchased the largest cocoa processor in Indonesia, BT Cocoa, to help it integrate its cocoa supply chain.

Looking forward, volatility could remain high next year despite the recent US-China truce. A survey revealed that most US firms expect the situation to stay the same or deteriorate further. Analysts also suggested that the enforcement of any trade agreement could create more uncertainties. But while volatility used to be perceived as an opportunity to increase profits the trade houses’ performance suggests this is not necessarily the case.

Slowing demand growth and increasing transparency are also making it harder for traders to make money. A grains broker argued that “agriculture, in general, is doing a phenomenal job of producing goods, but unfortunately demand is relatively slow.” A hedge fund manager added that to survive, traders are either going to have to reposition themselves in the supply chain or move to riskier, less transparent markets.

On the brighter side, the shift from meat to vegetable protein is expected to change world trade flows and create new opportunities. Contrary to the huge volumes of grains traded globally, pulses, for the moment, are eaten mainly where they are produced but this could soon change.

Talking of grains, the USDA noted that Russia will take the lead as the world’s largest wheat exporter this year, after doubling output over the last 10 years. New wheat varieties, better harvesting technology and improvements in port and rail infrastructure have allowed Russian wheat to compete with US origin even in Mexico.

The share price of Kraft Heinz dropped 27% last week, wiping out close to USD 16 billion in market value, following a series of bad news such as an asset write-down and an SEC subpoena. Analysts said Kraft Heinz might be facing an existential crisis as it has failed to adapt to changing consumer tastes and stagnating sales. Some market commentators noted a pattern where large EU firms such as Nestle, Unilever and Danone, have so far been successful in staying relevant. Nestle, for one, has just released an organic version of Nescafé Gold in the UK.

However, researchers note that large corporations are failing to make their core brands more environmentally friendly, which is just as important as encouraging innovative start-ups. Nonetheless, the CDP research firm ranked Danone and Nestle as the top two companies most involved in addressing climate change, out of 16 major consumer brands. The last position went to Kraft Heinz.

A new FAO report highlighted that our food system is destroying biodiversity, which in turn is putting our whole food supply at risk. The head of the WWF said he was optimistic that humans could find long-term solutions, through changing diets, technology, and reduced waste but solutions might not be as obvious as they seem. This crop scientist argued that the boom of “ugly” fruits and vegetable shops in the US is not helping reduce waste – as farmers would otherwise plough them back into their fields or fed them to animals. A better solution, she adds, would be to move away from open-field farming towards much more efficient greenhouses. Similarly, after trying to live sustainably for a week, this VICE journalist said individual efforts to live sustainably won’t matter much unless large corporations and government took measures too.

In Africa, a think tank published a report warning food investors of the risk of legal disputes over land ownership. It pointed to recent policies in Liberia and Sierra Leone which potentially exposes agricultural producers to challenges by local populations claiming ownership of the land. The solution, the report says, is to develop long-term relations with locals.

Finally, in Sudan, exporters of gum arabic have been able to survive political unrest and US sanctions thanks to strong international demand. That’s because gum arabic, which is extracted from the acacia tree, is an essential ingredient in soft drinks. So much so that the US had exempted it from its sanctions. Sudan exported 60% of world supplies of gum arabic in 2018.

This summary was produced by ECRUU

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Commodity Conversations Weekly Press Summary

Glencore Agriculture saw its attributable share of profits for 2018 drop by 79% on year to USD 21 million in 2018. This was due to smaller grains and sugarcane crops in Australia, Argentina and Brazil, lower margins as well as issues related to the US/China trade war. The group’s Canadian handling operations did well, on the other hand, thanks to what Glencore called its “best-in-class efficiency and service.”

Glencore Agri, as well as COFCO, announced they were now part of the World Business Council for Sustainable Development (WBCSD) and its Soft Commodities Forum (SCF). COFCO’s chairman argued that the world’s food system needed to be transformed to improve diets and help farmers and the environment. As part of WBCSD’s goal of finding ways to feed the world sustainably, members of the Soft Commodities Forum – including Louis Dreyfus, ADM, Bunge and Cargill – said this week they would step up their commitment to increase transparency and traceability in Brazil’s soy supply chain.

Cargill has applied to patent a ‘high protein egg chip’ in a bid to offer a low-fat snacking alternative. The company said that snacking was becoming increasingly common, often replacing meals and that people wanted healthier options. In the Netherlands, the company is investing USD 23 million in its instant starch production facility to meet growing demand from the ready meals, sauces and soups’ segments.

Nestle announced a plan to start selling some 24 Starbucks products as part of what the CEO called “meaningful innovation.” A Forbes analyst pointed out that this was part of a wider strategy to adapt faster to change as activists and hedge funds are becoming increasingly vocal. FAIRR, for instance, which is a network representing investors worth a combined USD 11 trillion, sent letters to the world’s main fast food companies last month asking them to address climate risk in their supply chain.“Companies often respond quickly when large shareholders are asking them questions. Private sector and institutional investors are a huge lever of change,” a FAIRR official said.

Campbell Soup, too, has been under pressure from stakeholders to become more resilient and sustainable. The group teamed up with Land O’Lakes last year and launched a digital platform that collects data from farmers to help them become more efficient. Campbell expects that sustainability will help reduce costs in the long run. However, a group of experts warned that most of the world’s agricultural data was in the hands of a few multinationals, which increased the risks of conflict of interests as well as marginalised smaller players. They said policies were needed to ensure that the merger of big agricultural companies, especially seed companies, did not also lead to the “over-consolidation of farm data.”

The EU is spending the equivalent of 20% of its total budget encouraging livestock farming, according to research by Greenpeace. Europeans already consume twice as much meat and dairy as they should, the NGO pointed out, arguing that the funds would be better used to encourage grass-fed livestock as well as fruit and vegetable production. However, a source from the Commission disagreed with the numbers, adding that the funds were also used to save family farm models and not necessarily encourage industrialised farming. Also, the farmers’ association Copa Cogeca said that lower domestic meat production would not lead to a drop in meat consumption but rather to a rise in imports.

A recent FAO study suggests that livestock is, in fact, a very good way of converting forages which are not fit for human consumption into an important source of protein and nutrients. The study found that almost 90% of what is fed to livestock is inedible for humans and that a big part of the grazing areas is unusable to grow crops. Looking at dairy, total greenhouse gas (GHG) emissions have increased by 18% between 2005-2015, but emissions per kilo of milk have actually fallen by 11% in the same period thanks to improved efficiency. Researchers in Canada, meanwhile, are trying to correlate the amount of methane emitted in cow burps with the cow’s DNA in a bid to breed cows that produce less methane.

Taking it a step further, the tech company behind SellMyLivestock (SML) just launched “Tudder,” an app designed to help farmers find the right cow by using a model similar to the dating app Tinder. The group’s CEO explained that it used data to help predict whether this would be a good match, including the kind of offsprings the cow is likely to have.

The Sustainable Trade Initiative (IDH) thinks the EU is unlikely to meet its target of using only sustainable palm oil by 2020. IDH explained that palm oil has become such a sensitive topic that food companies are even wary of using the Roundtable on Sustainable Palm Oil (RSPO) logo to avoid attracting attention to the fact they use palm oil at all.

Finally, after eating expired food for a year without falling sick, the head of MOM’s Organic Market called for an overhaul of the “vague and inconsistent” regulations used to determine ”best by” dates. This corroborates a survey in the US which showed that consumers are confused about food date labelling which causes a lot of unnecessary waste. The man compiled his ‘Year of eating expired food’ on his blog.

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Commodity Conversations Weekly Press Summary

The sugar industry got together this week to launch the Dubai Blockchain Declaration. The initiative, led by the head of the Dubai-based refinery Al Khaleej Sugar and a number of industry stakeholders, is designed to streamline efforts to develop technological solutions that will make trading and shipping more transparent and more efficient. This follows last October’s announcement that the world’s four major trading houses (ADM, Bunge, Louis Dreyfus and Cargill followed shortly by COFCO) were getting together to implement blockchain technology in agricultural trading.

Times are tough for sweetener producers. Louis Dreyfus’ Brazil-based Biosev reported a loss of USD 240 million in 2018/19 up to December, an 8% increase on year. Nonetheless, the CEO noted that Biosev was not looking at divesting assets further. The head of COFCO, on the other hand, said the firm was looking at purchasing more sugar assets in Brazil. In Europe, meanwhile, major producer Cristal Union says one fifth of the producing capacity was uncompetitive, which means some 10-20 factories are expected to close doors within the next 5 years.

Tate & Lyle reported that it was facing declining demand for sweeteners in North America, mostly because of lower sales to large soft drink manufacturers. Ingredion also reported a smaller income for its sweetener segment in North America. The stevia-maker mentioned that it was looking at acquisitions, while some suggested that Tate & Lyle could be a potential target for a takeover. Stevia has been going through some bad press, however, including allegations that the plant was causing deforestation and water pollution in Peru and China. This has pushed Tate & Lyle and producer Sweet Green Fields to tie up with NGO Earthwatch to assess the sustainability of their supply chain.

Coca Cola has maintained a strong growth in the US despite a falling demand for soft drinks. The success comes mostly from its pricing power and the launch of new beverages, along with a focus on higher margin operations. Technology is also helping Coca Cola cut down on a lengthy and costly process: market research. The group was able to assess whether it should introduce its premium water brand Valser in the US through the crowdfunding website Indiegogo. Only a month after the campaign started, some restaurants already started selling Valser. The move was part of the new CEO’s strategy to experiment and “make mistakes”.

Last year was a good one for Unilever who reported a 51% increase in net profit at USD 11.1 billion, although it noticed a rise in costs because of higher commodity prices. The firm reduced its advertising expenditure by 29% in the UK in 2018 as part of efforts to reduce marketing costs. It lost a rank in the list of biggest advertisers to number four, while McDonalds took the third place after increasing ad spending by 28% to USD 158 million. Otherwise, Unilever joined Yorkshire Tea, Twinings, Tetley and Clipper, and published its full tea suppliers’ list.

Transparency is also one of Olam’s priorities, according to a spokesperson, who noted that sustainably in the cocoa chain was particularly important to ensure the survival of the industry. The firm hopes to achieve a 100% sustainable and transparent supply by 2020. Olam, one of the largest players in the cocoa market, took the opportunity to encourage people to eat chocolate on Valentines Day as a way to help farmers.

During an audit of the dairy supply chain, the Brazilian government found that Danone and Dairy Partners Americas Brasil (DPA) – a joint venture between Nestle and New-Zealand’s Fonterra –  could be complicit in using slave labour. Auditors found that Danone and DPA failed to properly monitor one of the businessman they worked with, who was found to rely on indentured workers.

Alarmed by the sharp fall in insect population, another group of scientists joined a global call to drastically change the way we make our food. A new meta study published in the journal Biological Conservation found that 40% of the world’s insects were in decline and that insects could be completely gone within a century, leading to a collapse of most ecosystems. They point to intensive industrial agriculture and pesticides as the main culprits.
Protecting the environment was the main objective of a flurry of studies that came out with diet recommendations recently, such as the Lancet “Planetary Health Diet”. After trying it out himself, this journalist argued that the diet could never be realistically adopted in most of the developed world as it called for people to avoid all processed food, along with all food additives. His main criticism, however, was that the report forgot to include spices and that everything tasted bland!

This summary was produced by ECRUU

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Commodity Conversations Weekly Press Summary

ADM reported a USD 315 million profit in the fourth quarter, down from USD 788 million in the same period last year. The drop was due to lower revenue in its origination business and ethanol segment as well as increased costs in the North America liquid-sweeteners segment. The company noted, however, that it managed to stay profitable despite the US-China trade war and subsequent collapse in US origination to China. The CEO forecast that the trade war will be resolved within the first half of 2019, as he noted that China has already started buying US soybean again, which should help the company recover in the second half of the year.

Otherwise, ADM has officially acquired French animal feed group Neovia for USD 1.8 billion, its biggest acquisition in 5 years. The company announced last week that the move was part of the strategy to gain market share in the nutrition segment. ADM’s investment arm, ADM Venture, has also invested in Sustainable Bioproducts, a technology company looking at ways to produce a protein with a minimal impact on the environment. At the same time, ADM has committed to gender parity in its senior leadership structure by 2030.

Nestle has bought the rights to Ferri Pro, a technology that will allow them to fortify food products with iron without affecting the taste and help the estimated 1.6 billion people who have iron deficiencies. Nestle also tied up with Swiss universities to create The Future Food Initiative which aims to accelerate research in creating nutritious, tasty and sustainable food. As part of the efforts to improve transparency in the supply chain, it will make public the list of suppliers of 15 priority commodities – the equivalent of 95% of all its raw materials.

In a similar bid, a US group launched Indigo Transport, a network of independent carriers for transporting grain throughout the US, which will hopefully make crop transport more transparent and efficient. The technology, which is already being dubbed the ‘Uber for US crops’ has already 3,000 registered trucks. It will complement its e-commerce platform which has seen grains transactions worth USD 10 billion since it launched in the middle of 2018.

However, high costs and insufficient network coverage means that farmers are still slow to pick on these smart tools. Figures from 2016 suggest that close to 40% of US rural areas don’t have high-speed broadband. The Farm Bill that was passed in December includes the Precision Agriculture Connectivity Act as well as some funds to boost connectivity in the countryside. But Telecom companies say that low population density and tough natural conditions make it very expensive to do so.

Brazil, meanwhile, should see investments close to USD 35 million in 2018/19 towards the development of internet connectivity and smart agriculture. The country’s biggest sugar producer is carrying out a test project using 4G to transmit data on agriculture operations which could reduce costs. The Brazilian Association of the Internet of Things (Abinc) estimates that better connectivity could help improve productivity by as much as 20% by improving soil, weather predictions, field management and transport logistics, among other things. Similarly, IBM expects that better technology, notably on weather forecasting, could help reduce yield losses by 25%.

Meanwhile, a new Australian project is trying to make people more aware of the importance of bees and the role they play in our food production by building a camera designed to show us how bees see the world. You’ll learn that bees need to get very close to an object to see it clearly. You can check it out here.

Finally, a new study argues that food companies have been using the wrong language to encourage consumers to switch to eating more plant-based products. The World Resources Institute found that terms such as ‘low fat’ or ‘meat-free’ tend to make food less appealing and that switching to a more enticing marketing vocabulary could increase sales by 70% and help reduce meat consumption.

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Commodity Conversations Weekly Press Summary

In an effort to differentiate itself and avoid competing with other agricultural giants, Olam announced that it will sell its rubber, sugar, wood products and fertiliser businesses over the next 6 years. The money raised will go towards a USD 3.5 billion investment to grow the dairy, nuts, grains and animal feed segments, which are Olam’s strongest sectors. The company head added that Olam will also seek to focus on sustainability and digitalisation to stay relevant amid shifting consumer preferences.

In contrast, Louis Dreyfus’ Biosev has denied reports that it is planning to sell its 10 sugar production units in Brazil. Otherwise, the chairperson of Louis Dreyfus Company announced that her family trust had completed the purchase of minority shares and that the trust now owned 96.2% of the company.

The sugar industry has been consolidating amid a sharp fall in prices, and three groups – Alvean, RaW (a Raizen-Wilmar venture) and Sucden – now control 60% of the word sugar trading, while Alvean alone has a market share of 30% of global raw sugar trading, according to an analysis.

Meanwhile, in the grain sector, the trading world is noticing the growing role of China’s Cofco. In 2017, Cofco exported 11 million mt of grains and by-products from Argentina, only slightly less than Cargill’s 11.5 million mt. The situation was the same in Brazil, where Cofco was tied with Louis Dreyfus as the third-biggest soybean exporter, behind Cargill and Bunge.

In China, commodity exchanges launched three new options contracts this week for corn, cotton and rubber, adding to the existing soybean meal, sugar and copper contracts. The move comes as the government is hoping to gain a bigger role in establishing commodity prices by attracting more commercial and producer hedging.

The EU unveiled a major policy change this week when the Commission concluded that US soybeans would be considered as a sustainable feedstock for its biofuel program, which will cap the use of crops associated with land-use changes in 2030. The decision was quickly welcomed by the US Soybean Export Council as soybean growers were under significant stress this year when exports to China stopped. The EU decision will also reassure the US who had threatened to impose tariffs on EU goods unless the bloc imported more agricultural products.

The decision comes as the EU is looking for alternative feedstocks to replace the palm oil that goes into making biodiesel. However, Indonesia and Malaysia – the two largest palm oil producers – are threatening to retaliate if a palm oil ban is implemented, arguing that it would violate WTO rules. The Prime Minister of Malaysia sent a letter to the French President and said he could launch a “Buy French Last” policy in response. The comment referenced the “Buy British Last” campaign of the 1980s which required all British imports to be approved by the PM’s office.

Meanwhile, the French President reversed his 2017 pledge and said it would be impossible to completely ban the use of glyphosate by 2021, as entire sectors would be destroyed because of a lack of viable alternatives. And in the UK, a group of lobbyists from the US is arguing in favour of extending the use of glyphosate after the country leaves the EU. The lobbyists are in the country to push for more lenient policies post-Brexit, in what an association said could be “a once-in-a-lifetime opportunity”. American producers are asking the UK to consider allowing the sale of hormone-fed beef, GM crops, antibiotics in meats and limit geographic labelling rules.

A lot of media attention went to the Lancet Commission on Obesity report published this week, as it called for a broad international treaty to curtail the role of the food industry in policy development. Profit-driven food and drink producers are causing an obesity epidemic, while also contributing to malnutrition and climate change, it argued. The report mentioned similar efforts by the tobacco industry to control public policy and suggested that the WHO’s global conventions on tobacco could serve as a model to exclude the food industry from policy making.

The good news, perhaps ironically, is that food crops could actually benefit from higher global temperatures, according to a new study. Scientists previously thought that crop nutrition would keep dropping as the levels of CO2 in the atmosphere increases, while yields will increase. The new study found that higher temperatures could have the opposite effect: boosting nutrition and lowering yields, counteracting the effect of CO2.

If you looking for more agricultural action this week, we suggest watching the new Farming Simulator video game tournament! That’s right, players are planning to compete playing the popular farming game over 10 events in Europe, with a cash price of EUR 250,000 for the winner.

This summary was produced by ECRUU

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Commodity Conversations Weekly Press Summary

At the World Economic Forum in Davos, Cargill’s CEO said this was a difficult time for agriculture, especially for farmers in the US. He explained that the ongoing trade war, now in its eighth month, had already changed global trade patterns that could be difficult to reverse even in the long run.

The company also announced two new managerial appointments for its North American Protein Business as part of the recent change in the leadership structure. A company official said it highlighted Cargill’s focus on developing the “future of protein.” In Pakistan, meanwhile, Cargill will be investing USD 200 million in the next 5 years to help develop the dairy industry as well as the animal feed market. Louis Dreyfus, on the other hand, reiterated its plan to either sell or shut down its dairy segment as it continues to restructure and focus on its ‘core’ commodities. The CFO said that dairy only represented 1% of the group’s sales but used too much working capital.

Bunge lowered the 2018 earning forecast for its agribusiness by about USD 90-100 million and its sugar and ethanol segment by USD 60-70 million, citing the global grain glut and ongoing trade dispute with China. In addition, it has appointed a new acting CEO, the founding partner of Flatwater Partners, while three board members said they would not stand for re-election.

ADM is buying the remaining 50% stake in UK-based grains trading company Gleadell Agriculture from French cooperative InVivo to merge it with its UK marketing arm ADM Arkady. ADM said the aim was to strengthen its UK presence by increasing origination, storage and end-destination marketing. In Thailand, ADM has tied up with tapioca starch producer General Starch Limited to distribute the latter’s products in the EMEA region under ADM branding.

In Bangladesh, Wilmar and India-based Adani are investing USD 400 million to develop an industrial park in an economic zone. The investment will focus on food and include a waste refinery.

In today’s world, an estimated 20% of plant species are on the verge of extinction but the figure is much higher, at 60%, for coffee plants. An expert from Kew Gardens in the UK explained that wild coffee, although not palatable enough to drink, was key to the survival of the two coffee plant species we do drink – Arabica and Robusta. We depend on wild trees for seeds which can be crossed with domesticated species – something which could be a bit of an issue since the Global Change Biology officially classified Arabica as “threatened.” It expects its population will drop by half by 2088 as a result of climate change.

The good news, on the other hand, is that a new study by the US Department of Agriculture found that beef production, including the production of animal feed, caused 3.3% of the world’s GHG emissions, lower than the 14.5% previously estimated. The study also found that US beef farmers have successfully reduced their footprints and only use 5% of water withdrawals in the country.

Nitrogen pollution, meanwhile, remains a growing problem – about half of the nitrogen used in agriculture is lost into the atmosphere or water. A group of scientists are arguing that it would be much more efficient to regulate the few existing fertiliser producer groups rather than trying to shape the habits of millions of farmers. There are an estimated 2.1 million farms in the US while 5 groups control 80% of urea production in North America.

A new report unveiled in Davos points out the need for the world’s agriculture system to become more circular, which means reducing waste as well as sourcing food locally. If not, by 2050 as many as 5 million people could die every year from pollution, pesticide exposure and other factors resulting from today’s agriculture system.

A study from the University of Connecticut found that junk foods ads in the US disproportionately target Hispanic and black children which in turns means they are more at risk of diseases such as diabetes. Similarly, the US brewing industry is also trying to target more people of colour as well as women in a bid to expand its customer base amid slowing growth sales. As the Brewers Association put it “you cannot simply sell beer to young white dudes with beards.” The association also published a “diversity best practices” to boost diversity within the industry.

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Commodity Conversations Weekly Press Summary

The world’s four largest food traders seem to have benefited from the change in trade flows amid the US-China trade war and the additional demand for Brazilian grains. In 2018, Bunge maintained its place as the country’s top soybean exporter with 17.7 million mt, a 9.2% increase from the previous year, followed by Cargill with 12.15 million mt, a 1.4% increase on year. The third and fourth place went to Louis Dreyfus and Cofco, respectively, while ADM and Olam also reported significant improvements in exports. The head of ADM is hopeful that the trade war will end this year. He argued that it had made trade flows rather complicated. For instance, Argentina, the world’s third-biggest soybean producer, imported the biggest quantity of US origin soybean.

ADM announced a plan to purchase one of the largest producers of citrus ingredients in the world, Florida Chemical Company, which could happen in early 2019, pending government approval. The company president said the move would help ADM achieve its goal of becoming the biggest nutrition company. The CEO said the group looked on average at 50 companies every year for potential acquisition. He admitted having analysed companies like Bunge, Louis Dreyfus and Cargill but said the time was not right for a ‘monster’ acquisition. He explained that joint ventures, like the one it has with Cargill in Egypt, would make more sense for the time being.

The Brazilian meat giant JBS is also expected to benefit from the trade war as the USDA announced that it will spend USD 5 million to buy 1.8 million lb of its pork, as part of the USD 12 billion aid package announced by the White House. Lobbyists are already complaining that the money is going to a foreign firm, but the USDA highlighted that the funds will be spent to purchase American-made products.

The US President’s farm support could start to waiver as farmers increasingly struggle because of the delay in the distribution of government grants and key USDA supply and demand reports caused by the shutdown. The USDA did, however, find a way to avoid a potential controversy by funding the food assistance program up to the end of February, while the FDA said that essential food inspections will continue, although it remains unclear how long inspectors will work without pay.

Dairy producers, meanwhile, are celebrating as the US government has started undoing efforts by the previous administration to make school lunches healthier. The National School Lunch Program accounted for up 7.6% of all liquid dairy sales in 2017 which helped compensate for a consistent drop in demand, as per capita milk consumption fell 40% since 1975. This marks the return of full-fat chocolate milk served at every school meal. Meanwhile, health advocates warn that one out of three American children is already overweight or obese.

In China, health advocates argued that food and drink manufacturers were successfully steering the obesity debate around the need for more exercise while downplaying the importance of food and drink in a healthy diet, as laid out by a paper published in the British Medical Journal. The International Life Sciences Institute, funded by Coca-Cola and other food makers, has enjoyed a good relation with health officials, the paper noted.

Danone confirmed that it was investing in Epigamia, a yoghurt maker in India, in order to improve its access to the value-added end of the market. Danone had left the Indian market last year after a failed foray but a spokesperson said Epigamia will be run independently. In Latin America, Danone is partnering with a specialised packaging company to develop yoghurt pots targeted to meet the growing health and environmental concerns of consumers.

In the UK, the interest in dairy alternatives and vegan foods has started to surge, as it does every January, as part of what some call Veganuary. But research by the University of Oxford notes that although all plant-based dairy drinks require a lot less land and emit less carbon dioxide, some alternatives have a larger impact than others. Rice and almond milk, for example, require much more water to make than soy or oat milk. The BBC has a useful calculator which will estimate the environmental footprints of certain food products, based on the Oxford study.

In any case, a group of scientists have come up with the “Planetary Health” diet, which would reportedly prevent millions of premature deaths as well as reduce greenhouse emissions significantly. The diet includes reducing by half the amount of meat and sugar consumed while increasing our nuts, fruits and vegetable intake. Beyond getting everyone on board, the scientists conceded that unequal access to food may be a challenge to implementing this diet.

This summary was produced by ECRUU

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Commodity Conversations Weekly Press Summary

Cargill reported a 20% drop in net earnings in the quarter ending November 30 at USD 741 million in part because of the US-China trade tensions, which also affected its freight transport business. The firm’s starches and sweeteners segment struggled too amid the low ethanol price in the US and the high cost of raw materials in Europe. Looking forward, however, Cargill launched in Europe a brand of artisan chocolate called Veliche Gourmet which is entirely sourced from Rainforest Alliance Certified farms. Chocolate makers will be able to buy the products directly from Cargill’s new e-commerce platform.

Cargill is not the only trading house to struggle with the sugar segment: Olam announced this week it was closing its sugar trading desk. This comes only months after Bunge sold its sugar trading unit to Wilmar and Louis Dreyfus’ Biosev unit in Brazil sold some of its mills and has been looking at selling some more.

In the US, McCain had to recall an estimated 99 million pounds of frozen vegetables in Oct-Nov last year, a record high recall. The company found that all the ingredients that went through its Colton, California, plant since January 2016 were at risk of being contaminated by Salmonella and Listeria monocytogenes. The New Food Economy pointed out that unlike other food recalls in 2018, this one received very little media coverage because it concerned ingredients – a small part in a bigger food system

Meanwhile, Amazon is planning to build more Whole Foods stores in US suburbs in a bid to boost its online pickup services as it aims to expand the reach of its two-hour grocery delivery offered to Prime Now subscribers. This would help boost online sales too, as the stores could also be used as distribution centres.  

Going forward, the line between supermarkets and restaurants should become increasingly blurred. A professor at NY University said this was already happening, with supermarkets offering food courts, salad kiosks and cafes. The assumption is that people still want to get involved in the production of the food they consume, notably in the choice of ingredients. That is – if they can afford to. As one expert put it “If you have the time and financial means, you will keep cooking” but with income inequality poised to grow, the number of food deserts and swamps should continue to increase too.

A study in the UK showed that although the majority of consumers are aware that palm oil causes deforestation and greenhouse gas emissions, most of them do not know about the Roundtable on Sustainable Palm Oil (RSPO) certification. The study also found that labels, even the widely recognised ones like Fairtrade, were not enough to push consumers to change habits. The study concluded that the government needed to make food companies take on the responsibility of sourcing sustainably.  

One country where the government is taking a significant step in trying to change consumer habits is Canada. The new Canada Food Guide, which is due for release early this year, will encourage the consumption of plant-based proteins, which has the dairy and meat industry up in arms.

We covered earlier news on the boycott against Danone products in Morocco which started in April last year and cost the group millions in lost revenues. While the boycott was reportedly against high prices, an investigation carried out by the French government suggests Danone was the victim of a troll operation organised by a local company that specialises in digital influence. According to a source, Danone was a “diversion” in a local affair. Another study carried out by a communication agency found that the boycott campaign was mainly political and aimed at the agriculture minister.

Regardless, Danone lost its number one ranking in the milk business to a local competitor as a result. The group has had to make drastic changes to gain consumer trust again, such as clearly communicating the price it pays for milk. Danone also launched a new milk pack which it sells at cost – i.e. with not profit margins. An expert on company communication argued, “The link between a brand and its buyers is very easy to break, much more difficult and time-consuming to rebuild.”

Nestle is facing a similar predicament in India where it is trying to re-establish consumer trust in its Maggi noodle, three years after the government banned the sale of the highly popular instant noodles. The company was cleared less than 6 months later, taking back most of its lost market share, but the Supreme Court has just revived a class action lawsuit for unfair trade practices, false labelling and misleading advertisements. To avoid losing consumer trust again, it launched an ad campaign across all media.

This summary was produced by ECRUU

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