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.

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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. 

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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

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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. 

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Commodity Conversations Weekly Press Summary

Coca-Cola, which depends on venues like restaurants or cinema halls for half of its revenues, expects that the economy will take a while to recover from the coronavirus crisis. Consumers will have less money to spend and will look for cheaper products, the CEO  forecast. The group launched a #WeLoveThisPlace social media campaign in the US to encourage people to support their local restaurants. An analysis in the Motley Fool argued that Coca-Cola’s fate is tightly intertwined with that of restaurants. Using data from a survey which showed that 80% of restaurateurs are worried they may have to close down, compared to a 38% restaurant closure rate in April, it warned this could translate into a 50% fall in Coke sales. 

On the other hand, the company is set to benefit from its new plant-based milk products called Simply Almond Milk which it just launched in North America. The US sales of plant-based milk grew by almost 15% in 2017-19, and even more in the lockdown period, according to GFI data. 

Nestle, too, expects a fall in sales in the current quarter, after benefitting from panic-buying at the start of the lockdown. However, it reported a surge in the sale of pet food globally, which it attributed to more people adopting pets to cope with the lockdown but also because vets stayed open. And in the same vein as the Coke CEO, Nestle’s India head forecast that consumers would “trade downwards” and buy cheaper products to cope with job losses and pay cuts. In Malaysia, Nestle and Starbucks released a premium instant coffee to continue to encourage consumers to consume the in-store coffee at home. Back in the US, meanwhile, Starbucks has reportedly sent a letter to all the landlords of its stores asking them to write-off one year of rent to help them cope with the current scenario. 

A poll of small-scale farmers across the US showed that a third of them would go bankrupt if restaurants and farmers markets don’t reopen by August. The government’s USD 16 billion farm aid is not expected to make much of a difference because it is based on large-scale wholesale prices, which are much lower than the prices small farmers usually get. An indepth piece by Mother Jones found that, for instance, the compensation price for asparagus was USD 0.38/lb, compared to USD 5/lb at a farmers market. 

The CEO of ADM said the COVID-19 pandemic had made the need for sustainable business more apparent. As such, the group committed to reducing water intensity by 10% and reach a 90% landfill diversion rate by 2035, as well as reduce its greenhouse gas emissions by 25%. Similarly, Danone announced it would become an “entreprise à mission” (company with a mission). The framework was set up by the French government in 2019 and includes a novel governance system which checks on social and environmental goals. Danone would be the first publicly listed company to do so. 

Looking at the waste side of things, Coke joined the “Paper Bottle Project” as part of its pledge to be plastic-free by 2023 by using environmentally friendly, biodegradable plastic from plants. It might also build a plastic recycling plant in Indonesia as the country committed to reducing plastic waste by 70% by 2025. Nestle, meanwhile, committed to only using recyclable and reusable packaging by 2025. It is looking into bulk delivery systems instead, combined with refill options to reduce packaging whilst ensuring food safety. It is currently testing such a system with Purina pet food and Nescafe coffee dispensers in a few shops in Switzerland. 

In its latest sustainability report, Cargill said it was now able to trace half of the cocoa beans in its direct supply chain from farm to factory. It has some 300 data points along the supply chain using GPS, digital data collection and mobile money, among other technologies. Technology is also helping Cargill trade faster. In Australia, the group used a trade finance platform, Bolero International Galileo, to transfer documents required for a canola oil vessel headed to China ahead of the Chinese holidays and despite coronavirus disruptions. On a more global scale, Cargill signed an agreement with Eagle Genomics to digitalise microbiome data that the former has collected over the last 10 years. 

On the topic of data, this piece by The Counter brings you inside the world of vaults and bunkers designed to protect…seeds! These banks contain seeds and roots collections to ensure a wide range of genetic material for scientists to breed new varieties with. One plant physiologist recounts how Russian scientists died protecting one such seedbank during the Leningrad siege in 1941. You can read the story here

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Commodity Conversations Weekly Press Summary

While many small independent farmers have been able to benefit from the impact of the coronavirus so far, an expert argued that “the current boom is a sweet illusion; the bust is coming fast”. A US survey revealed that many small operations would not survive the year. Part of the issue is that the pandemic seems to have reversed the previous trend where consumers were moving away from processed food to focus on eating local and fresh products. An executive at a large food firm noted that “people aren’t cooking, they’re reheating”, as he highlighted that processed food has gotten much better both in terms of taste and health. The result is that the disease could open the door for large multinationals to take over smaller operations. 

Right on cue, Nestle announced that it will invest USD 100 million to grow its presence in China. The plan includes building its first plant-based meat factory on the continent, expanding a pet food plant and a biscuit factory. In Brazil, Bunge said it will purchase two soy processing plants from Imcopa for a combined USD 9.16 million. The move would cement Bunge as one of the largest soy processors as it currently operates 12 facilities in the country, compared to Cargill’s eight plants. 

Others are seizing on the crisis as an opportunity to highlight sustainability goals. Danone, for one, will add the commitment to produce healthy and environmentally-friendly food to the company bylaws. The key aspect to sustainability is transparency when it comes to gaining consumer trust, according to Cargill’s latest Feed4Thought survey. The Global Salmon Initiative (GSI) has taken the idea to heart and published its Sustainability Report outlining the performance of salmon farming. Salmon farms have a lower carbon footprint and more efficient use of feed when compared to land-based operations, the report claims. 

Meanwhile, the price of food in US grocery stores saw its biggest monthly jump in 50 years in April with the outbreak of the coronavirus. Data from the Bureau of Labor Statistics revealed a 2.6% overall price hike in retail food prices when compared to the previous month. The situation is similar in Latin America where rising food prices and shortages led to some violent protests. In Chile, the President argued that supply remained plentiful, although he pledged to accelerate the distribution of food packages. 

The extraordinary measures taken by the EU to alleviate the impact of the coronavirus are increasingly clashing with the bloc’s long-term sustainability efforts. For example, countries like France have relaxed rules on the use of pesticides, while a draft proposal by the European Commission outlined a plan to reduce the use of chemical pesticides by half by 2030. Similarly, the Agriculture Commissioner expressed his concern at the call from France and Poland asking citizens to buy local products instead of items imported from other EU nations. The idea could threaten fair competition in the common market, he said. 

The Commissioner also expressed concern at the amount of direct aid offered by some governments. The EU recently increased the limits on state aid but he argued that this would give wealthier countries an unfair advantage. Most of the direct aid so far has been offered by Germany and the Netherlands. A solution presented by Poland would be to increase the CAP budget to make it more resilient in times of crisis. 

A key piece of legislation is due to be published this week with the release of a draft Farm to Fork (F2F) strategy, a central component of the European Green New Deal. The bioenergy policy will also see a major rewrite and will focus on minimising the use of food and feed crops, while reconsidering whether biomass feedstock is carbon neutral. In response, Bioenergy Europe said it was concerned about the decision to impose arbitrary restrictions that do not reflect the scientific consensus.

In the meantime, official data from the EU showed that supermarket food and beverage sales surged in March when compared to February, most notably in Luxembourg, Ireland and Belgium where food sales were up 20%, 14% and 13% respectively. More dramatic was the surge in demand for Trappist Westvleteren 12 ale made by monks in Belgium. Their website crashed after being opened for just four hours because of what they called a “tsunami of visitors”. In the UK and Scotland, prime barley usually used to make scotch and beer might have to be used as pig feed. 

This summary was produced by ECRUU

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Commodity Conversations Weekly Press Summary

Uber is looking to buy US delivery company Grubhub to cash in on the surge in home food deliveries, according to sources who spoke with Bloomberg. The rumour comes just a week after Uber said it was closing its UberEats operations in 8 countries where it didn’t think it could become a major player, although it said that its business in the US grew 54%, helping in part to offset an 80% fall in the ride side of the business. A Bloomberg analyst noted that most of the food delivery giants were unprofitable, however, while a merger of UberEats and Grubhub may not be allowed as it would represent a 55% share of the US market

Restaurants have been complaining about some of these delivery companies, however, accusing them of listing without their consent or charging very high fees. In response, the Mayor of Chicago (where, incidentally, Grubhub is based) announced that, as of next week, third-party delivery services would have to be more transparent about their cost and break down what they charged in receipts to customers. Chicago would be the first city to do so. DoorDash and Grubhub both opposed the measures, saying it was “overreaching regulation” and would confuse customers. 

One industry which, apparently, has extensive food production and delivery networks is airlines. A New York NGO has been working with airline caterers to deliver meals to people in need in 11 cities in the US. The founders of Project Isaiah said they were able to tap into the nationwide network of kitchens and distribution that airlines use. Meanwhile, companies that specialise in buying surplus stocks, such as Imperfect Foods, have been selling surplus airline snacks. In Japan, an Olympic athlete made the headlines by enrolling for a food delivery job. He said that, with the Tokyo Olympics delayed, this was a good way to make money while staying fit. 

Restaurants in the UK are blaming a 25% surge in food wastage on “unpredictable ordering patterns” during the coronavirus lockdown. The research, done by the Sustainable Restaurant Association, also found that in 2019 close to 10% of all ordered food ended up in the bin in people’s homes. One of the most wasted items, surprisingly, is chips.

The US meat processing industry was described this week as “the most narrow bottleneck in US agribusiness.” A small scale farmer told the Eater’s Digest that most of the livestock has been bred for “feed conversion” which means they have a low immune system and are not designed to outlive their slaughter date. The scale of the problem is such that the US is looking into financial assistance to put down some 7 million pigs because of the closure of meat plants. What to do with the carcasses is also a major environmental headache

But even if the industry wasn’t operating at a reduced rate, most of the meat is usually shipped in boxes that are close to 1mt, which cannot be sold to supermarkets. And in any case, the quality of food destined for the industrial chain is often of lower quality than that sold in supermarkets. This is also why a lot of vegetables, which don’t meet the higher specification for supermarkets, have not been harvested. In Florida, three-quarters of the lettuce crop has reportedly not been harvested, along with sweet corn and squash. 

An analysis by Bloomberg suggests that the main meatpackers will likely make some operational changes that will result in more expensive meat. Investment in automation is already happening, although it will be limited by the fact that the industry is a low-margin one. Similarly, more dairy producers are investing in making lactose-free milk, as demand saw a 30% increase in March, growing faster than plant-based alternatives. 

A famous consultant to the livestock industry noted that “Big is not bad, it is fragile.“ She expects that there could be some interest to shift to a more localised or distributed supply chain, even if it is more expensive, as it is less prone to disruptions. However, a study from Oxford University found that transport only accounted for 10% of carbon emissions in the global food supply. That’s because most of the food is transported by sea, and not by plane as many people believe. In other words, the main researcher explained that “It’s what you eat, not where it comes from, that really has an impact.”

Talking of where you eat, the Michelin star restaurant The Inn at Little Washington, which is already known for its theatricality and eccentricity, announced it would set up mannequins at empty tables to make social distancing less awkward when it reopens. 

This summary was produced by ECRUU

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Commodity Conversations Weekly Press Summary

The latest quarterly results of the major agricultural groups show that the most significant impact of the coronavirus pandemic, so far, has been on the meat and biofuels industries. ADM reported a 2.2% drop in revenue, although it performed better than the market was expecting, while Bunge logged a loss and lowered its 2020 outlook. Both firms struggled with the collapse in biofuel consumption and the drop in corn or soybean demand, along with the closure of US meat plants and lower feed demand. For its part, Cargill decided to postpone its earnings release amid the uncertainty. Brazil was the only silver lining in the period, thanks to a weak Real and a recovery in demand from China. 

The failure to quickly implement containment measures in US meat plants could actually be boosting margins, especially after the President signed an order to keep them open which should protect them from lawsuits. With 22 plants closed, meat prices went up while the price of livestock collapsed. An expert estimated that the margin for cattle went from USD 74 in 2014 to USD 726 now. In response, ranchers are asking the government to correct the disparity in profit, while some lawmakers are already looking to block mergers to avoid creating more food giants and monopolies. 

Despite the recent White House order, Cargill is still closing meat plants across the US, such as in Wisconsin and Nebraska. The situation is more complicated in Canada as workers are legally allowed to refuse to work if they think it is still too dangerous. A union filed a lawsuit to block Cargill from reopening a plant in Alberta arguing that working conditions were still not safe enough. 

The supply disruptions forced Wendy’s to stop selling beef items at over 1,000 of its stores, while Costco is now rationing the sale of beef, pork and poultry products to three items per customer. The supply disruption is forcing people to change their habits, by buying chicken from small independent farms, for example. Unlike food giants like Perdue and Tyson, small poultry operations have seen little disruptions and some reported a 300% increase in retail sales. One farmer said he expected that large firms will keep struggling and that this was just “the tip of the iceberg”.

Beyond Meat is seizing the opportunity by offering discounts and large value packs to increase its market share. The higher meat price is eroding the premium for the plant-based meat, which was previously 2-3 times more expensive than ground beef. Moreover, the difficulties faced by the meat sector is protecting alternative-meat producers as shoppers would normally focus on cheaper goods amid an economic downturn. Nielsen data suggested that US sales of plant-based meat were up 200% in the week ending April 18 when compared to the same week last year. In Asia, plant-based meat is also gaining in popularity as the coronavirus outbreak was linked to the consumption of animal-based products, the World Economic Forum suggested. 

In India, Kashmiris are also struggling to find enough meat because the lockdown is slowing imports from other states. Consumers are not worried, however, as they are simply eating more locally grown vegetables, like haakh. Vegetables are not seen as a suitable substitute by everyone, however, and some regions in the US noted a spike in hunting and fishing permit requests. 

Agencies are warning of severe supply disruptions in Africa because of pests. The restriction on cross border trade and global air freight is hampering efforts to combat the worst locust outbreak in decades in East Africa, according to the FAO. The coronavirus containment measures are limiting the supply of pesticides ahead of the key planting season, which could jeopardise the production of key crops

A sudden change in lifestyle was also responsible for new consumer habits. Sales of sugar in British supermarkets were up by 46% over the four weeks up to mid-April, mainly because shoppers were reportedly doing more baking. In Sweden, a leading candy manufacturer reported a sharp drop in sales of pick & mix candy, as people are worried about touching the shovels to select their candy.

The coronavirus pandemic has created an unusual and sometimes painful sight: producers forced to destroy food crops because of the drop in restaurant demand, combined with a worrying increase in hunger as more people lose their jobs. The obvious solution is to divert some of the food to food banks. For example, Kroger said it will donate 200,000 gal of milk, as the Dairy Farmers of America estimated that 2.7-3.7 million gal/day of milk will need to be dumped. Even luxury products are going to food banks, such as these USD 60 prime 10 oz American Wagyu steaks from Snake River Farms. The meat usually goes to high-end restaurants but the farm donated 35,000 steaks, worth USD 2 million, to the San Francisco-Marin Food Bank.

This summary was produced by ECRUU

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