Commodity Conversations Weekly Press Summary

Major food merchants surprised market experts this week by publishing surprisingly robust quarterly earnings. Both ADM and Bunge were able to seize on the volatility created by the US-China trade war and the coronavirus pandemic to improve the results of their trade desks. Another factor that seems to have helped was the weak Brazilian Real, combined with a strong demand from China. Some of the strategic bets made by the firms also seem to have paid off, like ADM’s decision to invest in probiotic nutrition, or Bunge’s cost-cutting strategy. 

Similarly, Cargill performed very well in the year ending in May, data analysed by Bloomberg suggested – since the firm recently stopped publishing its full financial results. The volatile environment and the focus on animal protein paid off, as net income grew 17% on year to the fourth-highest ever. As a result, the 125 family members received a record USD 1.13 billion in dividends. 

Global trade flows remain at risk of coronavirus disruptions, however, as demonstrated by recent interruptions at Argentina’s major export hub in Rosario. COFCO, Bunge and Vicentin all reported disruptions after workers tested positive for COVID-19. Nevertheless, the three firms said they were diverting products to other facilities which should avoid creating significant delays. 

The global pandemic poses less of a threat to the UK’s food supply than Brexit does, a report by the Environment, Food and Rural Affairs Committee argued. The country is due to leave the EU on December 31 and is yet to ensure that food supply will remain steady. A third of the UK’s food is imported from the EU, some of it on a “just-in-time basis”. In Northern Ireland, grocers are already warning that they might have to increase prices or leave the region entirely because of the added costs created by Brexit. Since Northern Ireland will follow the EU’s customs rule in 2021, UK grocers like Tesco will need to produce extra documentation when shipping animal products.

On top of all that, the EU’s food supply is being threatened by the dry weather. Rainfall in France was 25% below normal in July, making it the driest month in 60 years. The corn harvest and beet crops were at risk as a result, while the country’s soft wheat production could drop 25% on year to a 20-year low. Production in the UK could be 30% lower and Romania expects a 6-year low harvest. On the other hand, recent rains helped the crops in Germany and Poland. 

The overall food trend over the next few decades, however, points towards abundant and cheap food, according to a group of economists disputing the idea that we are facing a potential food crisis with a growing population. Climate change could seriously challenge our ability to make food beyond 2050, but the main causes of concern for now remain conflict and poverty. In the meantime, more countries should actually consider paying farmers to turn crop land back into forests or grasslands, they argued. 

The fastest growing food sector in the world is aquaculture and half of all sea-food currently consumed is farmed. The sector holds great potential because of its unparalleled nutrient efficiency but is at risk of creating environmental damages if operations are not made more sustainable, a paper in Nature Food highlighted. Researchers laid out a series of improvements to address issues like the reliance on antibiotics or the use of wild-caught fish as feed. 

While Nestle’s sales for the first half of the year were down 9.5% on year, some product segments performed much better and the firm expects full-year organic sales to grow 2-3%. The pet food brand Purina and Nestle Health Science performed particularly well in the period. And the launch of new plant-based products allowed the segment to report a 40% growth in sales. To get into the mind of Nestle’s marketing genius, check out this story on how a psychoanalyst helped get Japanese people to drink coffee. By focusing on childhood and launching coffee flavoured KitKats, Nestle was able to create an emotional bond with coffee. 

Sales of fast food products in the US are surging with the reopening of some states and major fast food chains are now going on hiring sprees. Chipotle Mexican Grill, McDonald’s, Starbucks and Taco Bell all unveiled plans to hire thousands of workers, as half of all restaurant workers were laid off in Mar-Apr. The most exciting fast food news of the week, however, came with the launch of a fashion brand by Chipotle Mexican Grill. If you’re new to the world of fast food fashion, you need to check out KFC Crocs!

This summary was produced by ECRUU

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Commodity Conversations Weekly Press Summary

Nestle has been using augmented reality to keep employees connected despite the coronavirus containment measures. Nestle’s team in Switzerland even managed to help set up a new production line at a Thai factory using the technology which, as a result, was completed ahead of schedule. A company official forecast that “Going forward, remote assistance will become a new way of working” as it will reduce traveling, and therefore lower costs and CO2 emissions. 

Another challenge for food and beverage companies has been adapting to online sales. For one, Coca-Cola is investing to become more visible and more attractive for online shoppers, including making images that are optimised for screens as well as better content, videos and descriptions. The idea is to have a product that is just as appealing online as it was designed to be in supermarket aisles. 

In China, Danone is following Nestle’s strategy and is focusing on importing premium water brands like Evian and Volvic. Nestle also launched a new sugar and sweetener-free flavoured water bottle range targeting children, as well as a coffee bean based bottled water. The Plant+Water by Buxton line is banking on the plant-based diet trend, an official said. As part of the same strategy, Nestle is launching the world’s first plant-based condensed milk from oat and rice flour. It will come out in September in the UK. Nestle also tied up with Starbucks to release plant-based creamers from almond and oat. 

Going back to the topic of water, Cargill has given more details on its new sustainability water targets. It plans to restore 600 billion L of water in priority watersheds – more than twice the amount of water the company uses across operations. It also plans to reduce 5,500mt of water pollutants – all of that by the end of 2030 and across its supply chain. The United Nations said this was the biggest water related sustainability target for a single company, especially as it does not only apply to its direct operations but also to its suppliers. Cargill explained that getting the right data was relatively easy thanks to its tie up with the World Resources Institute (WRI) but getting farmers to make the changes was a bigger challenge. To get other stakeholders to join the effort, Cargill and the WRI have worked on a Water Management Toolkit and made it publicly available. 

Governments around the world seem to be caught between a rock and a hard place managing the effect of the coronavirus. In the UK, the government has asked Nestle’s KitKat to rethink its decision to switch to buying Rainforest Alliance cocoa instead of Fairtrade cocoa. The Members of Parliament (MPs) said that poor coca farmers would be affected at a time when they are already struggling because of the coronavirus. The MPs said the move could affect consumer confidence in KitKat. They criticised the fact that farmers have agency over only one third of the Rainforest Alliance premium, compared to the full premium with Fairtrade. 

The UK government is being much more aggressive in its fight against rising obesity rates which it called a “a time bomb.” Backed by health data showing that 8% of those critically ill from the coronavirus were obese, compared to less than 3% for the general population, the government is banning the advertisement of junk food on television and online before 9pm. It is also banning ‘Buy one get one free’ discounts on products that are high in fat, sugar and salt, and these products won’t be allowed at checkout counters any more. Besides, big restaurants will have to display calories on their menus. Other measures that the government is looking at include completely banning online junk food advertising and adding calories counts on alcoholic drinks, among other measures. 

Critics say that the food, advertising and TV industry will be significantly affected. They also pointed out that the new measures are in direct contradiction with the government’s ‘Eat Out to Help Out’ promotion designed to stimulate the economy. The Advertising Association argued that junk food ads had already dropped by 70% over the last 15 years without any impact on obesity rates. Government officials, on the other hand, said that the sugar levy had been successful at forcing beverage companies to reformulate, adding that the new rules could have a similar effect. 

Similarly, analysts say that the coronavirus pandemic is hitting Mexico particularly hard because of the high incidence of obesity, diabetes and hypertension. While Coca-Cola noted a 28% global drop in sales during the second quarter due to the coronavirus and lockdown measures, sales in Mexico only dropped by 5% as people drank just as much but inside the home. 

The Minister of Economy said Mexico’s new labeling rules to highlight food and drinks products that have sugar, salt or fat content above a certain threshold will be rolled out as planned on October 1. He added that the coronavirus made this policy a priority. In response, the National Chamber of Sugar and Alcohol Industries (CNIAA) argued that sugar should not be blamed for the obesity crisis. Mexico’s per capita sugar consumption decreased by 36% in the past 25 years, while obesity and diabetes cases have been rising, it highlighted. 

Overall, however, the coronavirus pandemic is expected to cause a surge in obesity rates. A study by the University of Alberta found that stress, especially financial stress, enhances people’s urge to eat comfort food as the body, under stress, looks for high-calorie foods. To make things worse, many beverage companies, including alcoholic beverage makers, are facing a shortage of aluminium cans as producers have been adapting to the in-home consumption market and using cans instead of kegs. As a result, more companies are having to resort to using plastic bottles. 

If you’ve been thinking of switching to sugar-free Haribo Gummy Bears you may want to think again. A series of Amazon reviews brought to light the fact that the sugar substitute used, Lycasin, caused significant digestive and gut issues when consumed in large quantities. One review in particular caught the attention of The Mirror and likened the experience to a scene of The Games of Throne taking place in the bowel. 

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Commodity Conversations Weekly Press Summary

The changes in food habits caused by the coronavirus over the past four months are starting to have an impact – growers can no longer rely on predictable consumption trends when making planting decisions. One big winner has been Canadian durum wheat as the surge in pasta, flour and cereal purchases pushed prices to a three-year high. The situation was compounded by bad weather and a drop in output in Europe and North Africa. A Canadian industry member noted that as a result, “If you eat couscous in Casablanca, you’re probably eating Saskatchewan durum wheat.”

Not every product has benefited from the shift in consumer demand, however. Meat, cheese and butter, for example, tend to be used much more in restaurants than in home cooking. In California, a farmer was forced to destroy his lettuce crop because of the drop in restaurant demand. But restaurateurs are not giving up on their business model and are looking for new systems to adapt. Some are combining the concept of ghost kitchens – restaurants that only serve for delivery – with outdoor food halls to create “ghost food halls”. 

For the moment, online delivery continues to be the most obvious alternative in times of social distancing. In China, Starbucks expanded its partnerships with Alibaba to allow more consumers the option to pre-order drinks via mobile apps. But the surge in online orders is starting to have an impact on online prices which have gone up 4.2% over the last six months, data from Adobe Inc showed. The inflation pushed digital purchasing power into negative numbers for the first time. 

Many firms are also hitting a limit on capacity, like Campbell Soup which is facing manufacturing challenges after the demand for ready-to-eat soup surged 140%. One solution we mentioned last week has been to reduce the number of products on offer. Nestle announced that it was looking to sell its water business in China. The company previously said it might sell water brands in North America and the Chinese Yinlu Foods business. Similarly, Coca-Cola said it would stop selling what the CEO calls “zombie brands”, starting with Odwalla juices. For its part, Pepsi was able to weather the coronavirus downturn in the second quarter thanks to its wider product diversification, as it also owns Quaker Oats Company and Frito-Lay. 

The recent surge in online shopping and the simplification of product ranges were actually part of an ongoing long-term shift in the food supply, according to the experts at IDEO. As such, the coronavirus is not really “new information. It’s more of a reveal”, a consultant argued. The pandemic is also accelerating other ongoing changes, like the focus on regional food and farmers’ markets, along with a growing concern for working conditions in the food industry. 

The virus has highlighted the risks of animal diseases spreading to humans and the need to protect wildlife, according to a director at Danone. He suggested that our current system was “broken” although he was optimistic that shareholders and consumers would embrace a new approach based on sustainability. Danone was the first firm to entrench environmental laws in its official rules based on a 2019 French law. 

Cargill has also been busy reducing the impact of its operations around the world. In northeast Brazil, it has partnered with the Omega windfarm to supply port terminals in Bahia and Para with renewable energy. Cargill also unveiled a new water management practice to help make agriculture more regenerative. And in Zanzibar, Cargill is partnering with the Nature Conservancy to provide guidelines for algae farmers. When done correctly, algae farming can have a positive impact on water quality and wildlife habitat, a spokesperson highlighted. 

KFC is making progress on its effort to offer more meat alternatives as it announced that it will collaborate with Russia’s 3D Bioprinting Solutions to print chicken meat using cells and plant material. Although more environmentally friendly, the final chicken will still contain meat. Meanwhile, KFC’s fully plant-based fried chicken is being offered in more restaurants across the US. The chicken is made by Beyond Meat. 

In the same vein, Burger King is advertising beef made from cows that emit 33% less methane, thanks to the introduction of lemongrass in their diet. While the idea of modifying a cow’s diet to lower methane emissions has shown promising results, experts noted that the Burger King claim was not yet backed by peer-reviewed science. The move was still welcomed, however, as Burger King starts by accepting that “we are part of the problem”. 

Lastly this week, we recommend watching the “fascinating but useless” experiment conducted by an Australian marathon runner. He ate only tinned beans for the 40 days leading up to a 50km ultra-marathon. Besides showing his love for beans, the experiment was most revealing as it deprived him of a source of creative expression. It also gave him terrible wind, obviously. 

This summary was produced by ECRUU

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Commodity Conversations Weekly Press Summary

Brazil’s private sector is putting pressure on the government to act and protect the Amazon from deforestation. Some of the country’s main corporations sent a letter to the President saying that concern over the Amazon was driving foreign investment away. Brazil’s poor environmental image is also being used against it in trade discussions, such as the in EU-Mercosur deal. The Ministry of Economy denied that investments were falling, noting a 26% increase in investments in 2019. It also argued that Brazil was one of the countries that did the most to protect its environment, with 60% of the territory preserved, almost twice that of the US and Canada. 

One of the companies involved in the letter, Cosan, argued that protecting the Amazon would help Brazil become more competitive. This comes as Brazil’s agribusiness exports reached a record high for the month of June, with sales up 25% on year. Most of the increase is due to a surge in soybeans exports to China, but sugar and ethanol exports combined increased by 75% on year. The head of Cosan said he had spoken with the President to work on a campaign to improve the country’s image

In China, the possibility that the Shanghai and Shenzhen stock exchanges may start to require disclosure of environmental, social and governance (ESG) information at some point this year could be a big step forward for the use of sustainable palm oil. A researcher explained that although China is the world’s third-biggest consumer of palm oil, there is very little consumer awareness in the country. Palm oil is almost always consumed within another product, notably in instant noodles, and is usually labelled as “vegetable oil.” As such, while the country’s main palm oil importers do trade certified palm oil, they mostly don’t import it into China as no one is willing to pay a premium for it. Palm oil has recently been displacing soy oil which has become more expensive due to the trade war with the US but also because the soybean meal industry, from which it was a by-product, collapsed with the African Swine Fever. 

A conservation professor noted, however, that while most of the world seems to have agreed that palm oil is bad and coconut oil is good, coconut palm trees threaten many more species than palm. This is because coconut grows in areas with far more biodiversity. Data from the International Union for the Conservation of Nature showed that, for every million tonnes of oil produced, coconut threatens over 20.2 species, followed by olive oil with 4.1 species and palm with 3.8 species. He argued that the solution was not to discriminate one oil over another but for each oil to be produced in the most sustainable way possible. 

Some of the world’s multinational food companies are reducing their product ranges to cut the costs of maintaining stocks in this new era of online grocery shopping. Mondelez, for one, announced it would shelve 25% of its products. The CEO said, “we have too many flavours, too many sizes.” Similarly, General Mills is reducing by almost half its range of soups. The CEO explained that websites could not host as many options as supermarkets so it did not make sense to have that many varieties of the same product any more. 

Another big change at Unilever is the group’s decision to put carbon footprint labels on every one of their products. An analyst noted that, a decade ago, Tesco had also tried, and failed. But he argued that Unilever’s tight supply chain would make the data collecting process more feasible. All they need now is an independent carbon labelling standard. 

Cattle ranchers frustrated with the meat labelling standards in the US are working on selling their meat directly to consumers under their own brand, a trend that has been accelerated by the coronavirus. They complain that meat that has been processed or packaged in the US can get the ‘Made in the USA’ label even if the animal was not born in the US. Congress is looking into making it easier for smaller slaughterhouses to operate but cattle ranchers say the cost of setting up is still prohibitive and it is unclear whether consumers are willing to pay a premium. Three groups control close to 60% of the US’ beef industry and, as of 2019, 12 plants processed over half of the country’s cattle. 

If you thought the issue of food labels was not complicated enough, pet owners are now getting worried that misleading labelling on feed bags could be contributing to their pet’s obesity. An estimated 100 million pets are overweight in the US and a law firm is looking for complainants to build a class-action lawsuit against a major pet food manufacturer. They argue that the suggested portions are deliberately based on a working dog’s needs, whereas most pets don’t do much more than relax at home.

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Commodity Conversations Weekly Press Summary

The World Bank’s International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD) are being accused of falling short of their climate change commitments. An investigation by The Guardian and the Bureau of Investigative Journalism found that the banks had invested some USD 2.6 billion in large-scale livestock and dairy companies over the last decade. At the same time, the World Bank was involved in a new multisectoral report released last week recommending reducing beef and dairy consumption which account for 41% and 20% respectively of total agricultural emissions. The banks defended themselves, saying that the investments were to improve food security in poorer countries. Analysts, however, argued that a big part of the investments were made in rich countries, saying this was “not […]  justifiable.”

The apparent conflict between food security and climate change is exemplified in Indonesia where the government announced a plan to set up a 164,000ha agricultural estate in Borneo to ensure sufficient domestic food supply. The targeted area would require further land clearing, environmentalists warned, adding that the crops the government wants to grow, such as rice, are unsuited for the dry area and could lead to fires. 

To accommodate these increasingly complex scenarios, the Rainforest Alliance announced it was changing its certification system. The NGO said that certification was facing “much bigger challenges” because climate change was worsening social inequalities. The new certification will require its members to have a more proactive role in identifying and controlling their supply chain, in exchange for a mandatory premium. 

Food corporations, meanwhile, are looking at technology to help accelerate the process. Nestle joined The China Food Tech Hub, a consortium of 15 members, including Mars, Coca-Cola and Ferrero, designed to accelerate innovation in food by putting together multinational companies with startups. The areas of interest include plant-based protein and cell culture as consumers are increasingly concerned with their health, an official from the Tech Hub said. 

Unilever has tied up with Alibaba to use the Chinese company’s artificial intelligence and data on consumer behaviour for its digital marketing. Unilever explained that consumers’ buying patterns are changing very fast, adding that this was part of an intention to “reduce marketing waste.” This also comes at a time when Unilever joined several other companies, including Coca-Cola and Starbucks, in boycotting Facebook advertising for the way it’s been handling hate speech. Also in China, Walmart tied up with blockchain group Varcode, whose technology helps identify food that has gone bad. 

Cargill, meanwhile, tied up with Burger King and the World Wildlife Fund (WWF) in a grasslands restoration program. The idea is to reseed some 8,000acres of marginal cropland in Montana and South Dakota in the US, transforming the areas into diverse grasslands with the beef’s grazing as part of the ecosystem. Cargill also announced it had managed to completely trace its Brazilian soybeans supply chain, with several other countries to follow through by the end of the year. The group’s GPS data points enable it to identify the land of origin of the soybean it purchases, thereby ensuring it comes from land that was not recently deforested. An NGO complained, however, that “recent” was a relative term. COFCO International, meanwhile, said it was planning for its soybean supply chain to be fully traceable by 2023. 

In the EU, farmers are asking the Commission to ease rules on agriculture drones. They argue that the drone’s precision technology will help meet the bloc’s Farm to Fork strategy, which involves halving the use of pesticides. DroneDeploy, which is based in the US where the use of commercial drones has been allowed since the end of 2016, argues that the data generated from drones is also very valuable, helping farmers make better decisions with regards to their crops. 

In Brazil’s Mato Grosso, for instance, UISA and Vivo have tied up to cover some 90,000ha of sugarcane area with Internet connection by setting up 4G towers. The system will facilitate the control of self driven technologies as well as streamline data collection, which was previously done offline. A company official explained that this would improve the efficiency of both machines and people, thereby reducing cost. Similarly, a trial on a sugarcane farm in South Africa’s KwaZulu-Natal showed that using drones instead of helicopters to apply ripener, as is traditionally the case, led to a 1% increase in sugar recovery, which could translate into significantly higher revenues for farmers. 

Last but not least, you will probably have noticed how polarising the debate about whether to wear or mask or not has become. This can have some very real repercussions in food shopping aisles, as these videos aggregated by Eater show.

This summary was produced by ECRUU

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Commodity Conversations Weekly Press Summary

The UK’s environment secretary said that food supply would not be an issue in case it has to leave the EU without a trade deal by January 2021. He explained that the supply chain proved to be “remarkably resilient” during the coronavirus pandemic. Besides, the food industry was able to find enough labourers thanks to the “Pick for Britain” campaign, ensuring there weren’t any significant disruptions in Britain’s food supply.

British farmers seem to be more concerned about what concessions the government would offer as part of trade negotiations with the US and EU. A new advisory group was launched to protect agricultural interests and make sure food and welfare standards are not compromised. 

Nevertheless, some UK lawmakers called for a reclassification of gene editing technology like CRISPR, which was classified under the same regulations as GMOs by the EU. A UK official argued that gene editing was merely “an extension of conventional plant breeding”. The National Farmers Union agreed, while another organisation warned that loosening the rules would make it much harder to reach a trade deal with the EU

As it slowly but steadily recovers from the coronavirus pandemic, China has been ramping up its purchases of agricultural products. Imports of US products, however, are still far behind the targets set under the phase one trade agreement, while US sanctions imposed in response to Hong Kong’s new security law could further deteriorate trade relations. China also took the surprising decision to ban imports from Tyson Foods following the COVID-19 outbreaks in meat plants. US exporters were asked to provide certificates to prove their food was not contaminated, something one company argued was “not based on any legitimate food safety concern”.

China’s demand for protein was boosted by the impact of the African Swine Fever and Brazil’s export sector has been reaping the benefits, in part thanks to bumper crops and the depreciation of the Real. Firms geared for exports are doing relatively well but a Cargill executive noted that the opposite was true for firms focusing on the domestic market. Consumers are starting to cut down on food expenses as the coronavirus continues to spread. The government, meanwhile, is trying to balance the need to contain the disease, protect food workers, and the importance of its food sector.

In neighbouring Argentina, the government took drastic action earlier this month when it unveiled an expropriation plan to revive the bankrupt Vicentin, once one of the largest grain exporters in the country. Sources said this would stop Glencore’s plan of purchasing a higher share in Renova, a joint venture between the two groups. Some experts argued the goal of reaching “food sovereignty” was misguided, although they believed that it should not affect exports for now. More recently, however, an official conceded that the government might review its plan and look to create a public-private partnership instead. 

The head of Louis Dreyfus Co mentioned that the company was on track to meet its sustainability targets for 2022, in part thanks to partnerships with certification bodies. The good progress was also a sign that the decision to link the financing model with sustainability goals was working. Bunge, meanwhile, said it should be able to deliver earnings to shareholders thanks to crush margins normalising and successful cost-cutting efforts. Bunge will continue to restructure and offload non-core business assets, the CEO mentioned.

While food firms have been involved in sustainability movements for some time, they are increasingly taking a political stance as well. Unilever, Coca Cola, Starbucks, Nestle’s Blue Bottle Coffee, Diageo and Hershey’s have all announced that they will temporarily stop advertising on social media platforms, as the #StopHateForProfit campaign continues to gain ground. 

The Roundup legal nightmare is close to being over – or at least Bayer hopes so – after the firm agreed to settle 95,000 lawsuits for USD 11 billion. The company has also set up a fund to deal with future cases. However, some lawyers noted that around 30,000 cases refused to settle as the financial compensation was too low, and they pledged to continue the fight. The settlement, which still has to be approved by a judge, also includes USD 400 million for farmers whose crops were destroyed by dicamba drifts. All the while, Roundup is still for sale as it is still considered safe by the EPA. And Bayer submitted to the USDA a new corn variety for approval that is resistant to a record five herbicides, including glyphosate and dicamba. 

Finally this week, the coronavirus pandemic created another unsual but excellent headline as Guinness announced that it will use “leftover lockdown beer to fertilise Christmas trees.”

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Commodity Conversations Weekly Press Summary

Initial estimates by the World Trade Organization (WTO) suggest that global trade in goods dropped by 19% in the second quarter due to the coronavirus. This is a record drop but much better than the worst case scenario of a 32% fall which had been touted back in April. The WTO director explained that governments were faster to intervene than during the 2008 crisis, notably by encouraging consumer spending. He is worried, however, that a tendency towards protectionism, combined with a possible second wave of the virus, could slow the recovery in global trade. 

Cargill’s CEO expressed concerns after Brazilian government officials mocked and criticised China. China has bought more Brazilian soybean than expected this year, he explained, saying it was risky to upset buyers. The US administration, meanwhile, continues to send conflicting messages about the state of its trade deal with China. Some officials were heard saying that the deal was over, something which was denied later on. In any case, analysts say that we will only really know in the last quarter of the year when China will buy the bulk of US goods and after the US elections. 

Both the US and Brazil have complained to the WTO about Thailand’s intention to ban paraquat pesticide and chlorpyrifos insecticide, including in imported food. If the proposal goes ahead, Thailand would have one of the strictest policies around, as others such as the EU and China still allow some residue in imports despite having banned these chemicals. Thailand is a major market for wheat and soy imports from the US and Brazil, both of which would be significantly impacted as a result. Farmers in Thailand aren’t happy about this either, as they argue that the alternatives are much worse for the environment. 

Food sustainability is a major concern for the world’s most “disruptive” companies, according to a list by CNBC aggregating 50 companies that attracted a combined USD 74 billion in venture capital. One of the companies listed is Apeel, which gained attention for attracting funding from celebrities and is focusing on food waste, blamed for 8% of the world’s greenhouse gas emissions. The company created an edible film that can be applied on fruits and vegetables to double their life span without refrigeration. 

Another company in the CNBC list is the plant-based meat company Impossible Foods whose reach is expected to grow significantly with Starbucks launching an Impossible Breakfast Sandwich across the US. Impossible Foods is working to be viewed as “better meat” and not an alternative product, the CEO explained. He said that 90% of their consumers are meat eaters and that the coronavirus-linked meat shortages helped push consumers to their products. 

Danone North America is taking it one step further and looking at how to enhance its range of plant-based food and drinks with health properties. It has tied up with Brightseed to use artificial intelligence to “analyse plants at the molecular level in order to understand the specific roles that nutrients play in the proper functioning of our bodies.”

Technological advances are also key in the meat sector where ADM noted that spicy flavours are becoming increasingly popular among meat eaters. One of the group’s food scientists noted that “The consumer palate for spice is also becoming much more nuanced with increasing desire for specific pepper varieties and hyper-local regional spices.” The group is working on developing the right ingredients for marinades to capture all the flavours as well as physical sensations. 

Cargill launched fully traceable chicken in China using blockchain technology. Consumers can scan the QR code to see which farm it came from. “This is chicken 2.0,” Cargill said. Otherwise, the group is investing EUR 3.5 million to produce more gourmet chocolate in Belgium. It is also setting up a chocolate production plant in India, the group’s first chocolate production unit in Asia, to capture the growing demand in the region. 

Nestle’s KitKat announced it would stop buying cocoa certified by Fairtrade and would focus instead on the Rainforest Alliance as it “harmonises [its] certification for sustainable sourcing internationally.” A company official said they would help Fairtrade cocoa farmers to get certified with Rainforest Alliance so that they can continue to get the premium. 

In Australia, Nestle said it would change the names of RedSkins and Chicos sweets as part of an industry wide movement to rebrand products viewed to have racist stereotypes. As such, Pepsi’s Quaker Oats will be rebranding its century old Aunt Jemima line, the same goes for Mars’ Uncle Ben’s rice and Dreyer’s will rename its Eskimo Pie.  

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Commodity Conversations Weekly Press Summary

As more countries around the world look to progressively unlock their economy, many food producers are still struggling to cope with the coronavirus outbreak. The disease is now spreading in Brazil where Raizen, one of the world’s largest sugar producers, reported that 15 workers at a Sao Paulo plant had tested positive for COVID-19. The meat sector, with its densely packed processing lines, remains one of the most vulnerable and a court forced JBS SA to close a meat plant in Rio Grande do Sul for two weeks. 

Some groups have jumped on the opportunity to highlight issues in our current food system and call for a dramatic rethink of the status quo. In response, a coalition of industry members insisted that livestock and modern agriculture were in no way responsible for the outbreak, which originated in wildlife. They asked the EU to keep supporting the meat sector and insisted on its high safety and welfare standards. 

In the US, meat plants are struggling to maintain a positive image as many criticised a decision by Tyson Food to reinstate a policy on absent workers which centres around “punitive effect for missing work due to illness.” Tyson has also taken a central role in the government’s price-fixing investigation as the firm confirmed that it was cooperating with the Justice Department. By becoming one of the first parties to admit to misconduct and collaborate with authorities which will now go after other firms, Tyson will be offered leniency, confidentiality and possible financial benefits. 

The impact of the pandemic on other food sectors has been more discreet but not always less significant. In Florida’s poor Immokalee area, a doctor revealed that half of the people he tested had been infected, making him think the area had “one of the highest rates of coronavirus infection globally.” Some 25,000 farm workers live in Immokalee, mostly to harvest the tomato crop, but many are undocumented and officials have not made the area a priority. 

Food producers who rely on foreign demand are also particularly vulnerable, like West Africa’s cashew nut growers. The region is responsible for 55% of world production but very little is consumed locally. Most of the crop is usually processed in Asia and Olam – the largest player in the market – commented that prices should remain low for a while as the pandemic disrupted cross border trade. In a demonstration of how global the food supply chain is, an African exporter noted that the collapse in cashew prices could be linked to the mass cancellation of weddings in India. 

How the world trades food could also be impacted by the coronavirus as the CME Group announced that its grain option pits will remain closed until the situation in Chicago and Illinois significantly improves, with the introduction of a vaccine or a treatment. A broker said she was struggling after losing the advantage of being on the floor, while Futures International suggested this could mark “the end of a 180-year era.”

Countries like Singapore are realising the key role international trade needs to play to feed people. The country unveiled a plan to diversify its trade partners and has been approving more countries for food imports, bringing the total to 170 countries. A plan was also launched to produce 30% of food needs locally by 2030, compared to 10% currently. The situation is going in the opposite direction in Venezuela which is now “on the verge of famine” according to the International Crisis Group. Farmers have not been able to sow crops because of a fuel shortage.

Things could be changing over at Nestle as the CEO mentioned a potential plan to sell the Nestle Waters North America unit in order to refocus on premium international brands like Perrier, S Pellegrino and Acqua Panna. The firm also announced the purchase of a majority stake in Vital Proteins, the US’ largest producer of collagen-based supplements, vitamins and food and beverage products. 

ADM, Bunge, Cargill, COFCO, Glencore Agriculture, and Louis Dreyfus joined forces under a new partnership program with Solidaridad Brazil which will focus on improving the sustainability of soy production in the Cerrado. The deforestation rate in the area is currently twice as high as in the Amazon. In Iowa, Cargill is hoping to expand a program that paid soy farmers for their efforts to sequester carbon dioxide and improve water quality. The venture is now looking to expand to other crops and find new corporate partners. 

After Murder Hornets made headlines in the US, another dangerous-sounding insect is now taking the spotlight: the Samurai Wasp. Italy is releasing the wasps, originally from Asia, in the hope that they will prey on the brown marmorated stink bug which was accidentally introduced from Asia. 

This summary was produced by ECRUU

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Commodity Conversations Weekly Press Summary

Many workers in the US food industry have been taking a stand as part of the #blacklivesmatter movement. On-duty officers have been asked out of a Starbucks in Arizona while employees staged a walkout in a Condado Tacos in Ohio after refusing to serve patrol officers during protests. This piece in Eater explains that this is in part because a majority of the food industry is made of minority workers. However, companies, too, are taking a stand. In Georgia, Coca-Cola was one of 60 signatories to a letter urging the state to pass hate crime laws. And Unilever’s Ben & Jerry’s issued a statement with a call to investigate the consequences of discrimination. Last September, it had launched a new ice cream called Justice ReMix’d in support of a reform to the criminal justice reform. 

Unilever’s head of marketing said consumers expect brands to have an opinion, explaining that “Brands need to move at the speed of culture and culture is moving faster than ever.” She warned, however, that while brands had an important role to play, they should make sure that they don’t come across as opportunistic which would result in a backlash, as L’Oreal discovered last week.  

Cargill just announced it would no longer release quarterly reports to reduce costs but also to keep the focus on long term goals. In its sustainability report, it said it was on schedule to meet the goals in the palm oil sector, notably to eliminate deforestation from its third-party supply chain – which represents 95% of its supply – by the end of the year. It added, however, that getting indirect suppliers to fall under the “No Deforestation, No Peat and No Exploitation” compliance was an issue and may require a different approach. 

Cargill said it had reduced CO2 emissions in ocean transportation by 800,000mt in the last two years as part of a commitment to reduce emissions in its supply chain by 30% by 2030. It is also working on a standard greenhouse gas emissions reporting process and has partnered with technology experts to find solutions for its beef supply chain as part of its BeefUp Sustainability initiative. 

The group launched a new sweetener made from wheat and barley malt syrup, called SweetPure. A company official said the sweetener was “label-friendly,” explaining that consumers want to know everything that goes into their food. This comes at a time when the US’ Sugar Association petitioned the FDA to force manufacturers to clearly identify the use of alternative sweeteners in their products. The FDA recently mandated that products list the amount of added sugar, so manufacturers are often exchanging sugar for other sweeteners that do not have to be labelled as such. Another Cargill official added that “The call for radical transparency is increasing.”

A class action lawsuit in Minnesota is taking Cargill, JBS USA, National Beef Packing and Tyson Foods – which control 80% of the meat industry – to court accusing them of fixing the price of meat since 2015 and deliberately running plants at below capacity to create a livestock surplus. This is coming out of an investigation started last month by 11 Midwestern states looking into explaining the rally in retail meat prices during the coronavirus outbreak while the price for livestock collapsed. The head JBS subsidiary Pilgrim’s Pride was already charged with fixing chicken prices by the Justice Department last week. 

In Tyson Foods’ 2019 Sustainability Report, it noted that the group was the country’s largest meat producer to go into plant-based protein via its Raised & Rooted line. However, its meat production throughput is picking up again with the easing of lockdown measures. It expects that demand for meat would continue to be strong even if people eat more at home. Besides, a survey by FMCG Gurus in 18 countries found that people were increasingly worried about the weight they gained from increased snacking during lockdown. It suggested there would be a growing demand for healthy snacks, as people will likely continue to snack amid the stress of a second wave of the coronavirus but will be more health conscious about it.

A Yale study looking at the impact of posters showing the carbon emissions of dishes in dining halls showed that two-thirds of students took this information into account when making their choice. Project Drawdown wants to get food delivery apps to join the initiative, arguing that people were likely to choose more sustainable dishes if they had the information at hand. The restaurant Just Salad has already added the estimated emissions next to each of its dishes in the menu. Those who come in can thus find out that a salad with a yogurt dressing has a heavier carbon footprint than a salad with chicken. In Europe, meanwhile, Danone’s water brand Volvic has been certified as carbon neutral by the Carbon Trust.

Nestle joined the Race to Zero campaign which commits to net-zero emissions by 2050. The group’s head of digital innovation and transformation in the US said she was putting together a common, single agenda to streamline and strategise the testing and adoption of new technologies across the group. She added that the media often hyped-up new technology, when in fact it was just a nascent stage. 

On the topic of testing, Nestle Australia is looking for a paid chocolate taste tester. If you’re interested, you can apply here

This summary was produced by ECRUU

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Commodity Conversations Weekly Press Summary

Countries around the world are unlikely to impose more restrictions on food exports, according to the FAO which said that “food supply is not the issue” amid the coronavirus pandemic. The export control measures imposed by countries like Russia, Kazakhstan, Ukraine and Vietnam have been removed as the supply chain showed it could easily cope with the increase in demand from countries building food stocks. However, an economist warned that an uncontrolled spread of the disease in Brazil could be dramatic as the country is “basically […] feeding China”. 

Moreover, ships looking to export grains from Argentina and Paraguay are struggling because of the very low water level in the Parana river, which is pushing traders to buy from Brazil instead. Besides, the US reaction to China’s new security policy in Hong Kong, along with the US President blaming China for the coronavirus pandemic, could potentially lead to the collapse of the Phase One trade deal. China’s state-run agricultural groups have been reportedly instructed to stop buying US farm goods. US lawmakers, however, remained confident that the tensions were only temporary and that China would honour the deal. Some pointed to the Chinese purchase of US soybeans earlier this week, although market sources said this could just be motivated by the low price

The United Arab Emirates, which currently relies on imports for 90% of its food supply, is intensifying efforts to produce more food locally. The country successfully harvested rice grown using underwater irrigation and desalinated sea water, a method considered more sustainable than Saudi Arabia’s use of groundwater and rotary sprinklers. In parallel, Abu Dhabi Ports Co launched a new shipping company, called Safeen Feeders, which will strengthen food and medical imports from India, Pakistan, the Persian Gulf and East Africa. 

In contrast, Thailand is cementing its position as a major food exporter. A government official said she expected that the proportion of food and agricultural exports will keep growing – the weak economy and currency should keep supporting exports. Nonetheless, farmers are worried about a new ban on paraquat and chlorpyrifos which was enforced as of June 1. Farmers often do not have alternatives and total food output could suffer as a result. A similar decision to ban glyphosate was reversed in November after some pressure from the US. 

Glyphosate was in the news this week as lawyers presented arguments in the appeal of a California verdict against Bayer, the maker of the Roundup pesticide. Bayer’s legal strategy reportedly revolved around fighting the three guilty verdicts to gain leverage and settle cases. The Californian court heard arguments that federal guidance comes before state laws, as Bayer highlighted that the Environmental Protection Agency does not classify glyphosate as cancerogenic. Regardless, legal experts predict that Bayer will need to spend USD 10-12 billion to settle around 125,000 lawsuits. 

Although it started in a wet market, some experts are using the coronavirus pandemic to highlight the inherent dangers of massive livestock farms, or Concentrated Animal Feeding Operations (CAFOs), as they call for urgent institutional reforms. In Germany, the Green Party went as far as proposing a minimum price for meat, while a new law was passed banning meat plants from hiring foreign workers on short-term contracts. And in the Netherlands, Europe’s biggest pig slaughterhouse managed to avoid disruptions by relying on robots to do most of the work. 

In the meantime, global food producers continue to bet on the growth of plant-based meat. ADM and Marfrig Global Foods, the world’s second-largest beef producer, created a new venture called PlantPlus Foods to market plant proteins in North and South America. The market for plant-based meat should more than double in the next 5 years, the firms estimated. Otherwise, Nestle will be forced to rebrand its plant burger in the EU after a Dutch court agreed with a claim by Impossible Foods that Nestle’s Incredible Burger was too similar to the Impossible Burger. Nestle will rename its product Sensational Burger as a result, while it used the name Awesome Burger in the US after a court made a similar ruling. 

Competition is also growing in the coffee sector as large firms are rushing to fill in the gap left by small operations which did not have the cash reserves to survive an extended lockdown. Nestle and Starbucks are seen as the two main contenders, but Coca-Cola joined the scene with its 2019 purchase of Costa Coffee, the second-largest coffee chain in the world. Earlier this week, Coca-Cola launched the first at-home Costa Coffee products in the EU. But small coffee operations might not all disappear, as this couple from London discovered. They opened two small coffee shops inside red telephone boxes and realised that the lack of space inside the boxes was actually an advantage in the time of social distancing. 

This summary was produced by ECRUU

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