Costa Rica announced last week that it will lift the ban on planting robusta coffee as climate change is making it harder to produce the more fragile arabica crop. This is a general trend in the region. Central American robusta will likely displace Brazilian and Vietnamese origins into the US. But even with this switch, Olam forecast the world will not produce enough robusta in 2017/18 – for the second year in a row.
In the longer term, a study published last year forecast that arabica area would drop by 50% globally by 2050 because of rising temperatures and a switch to the cheaper robusta alternative. For premium-brand companies like Whittard of Chelsea it is a problem as robusta does not provide the same taste experience. Some producers are working on crossbreeding arabica but any genetic modification is expected to face consumer backlash.
Following the recent volatility in equities, fund money could be moving out of equities into commodity markets. Several analysts argue that inflation and higher interest rates will push traders to look at commodities that tend to be perceived as “inflation-proof.” Others are quick to point out, however, that agriculture commodities are suffering from oversupply.
After revealing disappointing Q4 results and its worst annual profits since 2009, Bunge announced it was exiting sugar trading, adding that some parties had expressed interest in buying its sugar trading business. Bunge’s CEO explained the aim was to focus on the group’s “core”, namely agribusiness, grains and oilseeds. He added that sugar margins had been unable to cover costs for a few years. In addition to selling its sugar assets, the group is also looking at selling its share in their renewable oils joint venture.
The fundamental fund CC+ – which focused on coffee and cocoa – closed at the end of last year, joining a number of other similar funds such as Jamison Capital Partners and Astenbeck Commodities Fund II which also closed in 2017. The head of CC+, known as “Chocfinger” for his knowledge of the cocoa market, said he could not compete with computer trading, which he accused of distorting prices. Commodities broker Marex Spectron argued that fundamental analysis was now a “waste of time.”
In the US, Republican senators from grain states are trying to remove the disadvantage to private grain traders following the 20% tax rebate mooted for farmers selling their crop to farmer cooperatives. Private grain operators are seeing fewer contracts as farmers wait to see what happens, and big grain trading companies are even looking at setting up cooperatives. Ethanol producer Green Plains has already incorporated a cooperative in Kansas, and ADM is looking for alternatives in case a solution cannot be found.
Nestle acquired a majority stake in superfood producer Terrafertil. The company, based in Ecuador, operates in seven countries and fits Nestle’s aim to diversify into plant-based and healthy foods. The group is facing some issues after a consumer filed a lawsuit in the US accusing the group of using cocoa from Ivory Coast which has been produced using child and slave labour. Nestle is also hitting back at accusations that it is using more water than allowed in California’s San Bernardino National Forest.
A debate in the Dutch poultry sector is highlighting two conflicting facets of sustainable food production: environmental impact and animal welfare. The industry has been moving towards larger living spaces for chicken, along with slower growing strains, which has in turn increased the environmental footprint. Making eggs from battery-caged chicken was banned in the EU in 2012, but commentators noted these eggs actually have the lowest carbon footprint.
And in an attempt to make fish farms more environmentally friendly, companies are looking at insects to replace the fish meal they usually feed salmon. Dutch-based Protix developed an insect-based feed made from the larvae of black soldier flies, which was approved by the EU in 2017. The firm tested the feed for four years and said the fish tasted exactly the same, while the salmon, who are famously picky eaters, reportedly enjoy the insect feed.
Consumers are apparently more worried about the impact of genetically-modified (GM) crops on the environment than on their health, according to a German survey, which was trying to assess where the resistance to GM came from.
Meanwhile, a trade spat between China and the US has grown to include agricultural products. Chinese importers are reportedly looking to lower their purchases from the US, as the Chinese government is expected to retaliate against the US decision to impose a tariff on solar panels and washing machines. Chinese traders are not taking delivery of US corn, and are looking at Australia and Brazil for sorghum and soybeans, respectively, instead of the US.
While some were celebrating the opportunity to expand their export markets, the UAE environment minister told a conference on farm innovation that the global supply chain has made every country susceptible to food insecurity and is also posing a challenge to the Middle East where the rising population is putting pressure on the ability of the countries to provide food to their people.
Penn State University is looking at a novel way to address the food insecurity issue: recycling human waste to make food. Through anaerobic digestion, scientist are growing a type of microbe from methane gas that consists of 52% protein and 36% fat. The end product, dubbed microbial goo, might need to be mixed with conventional food to make it taste better, and if that doesn’t sound appetising, don’t worry, it’s designed for astronauts who might spend months travelling to Mars.
Another, perhaps more popular, method of improving food security has also been making headlines: the effort to reduce food waste. The Italian Agriculture Minister said a 2016 law, which pushes firms to donate food instead of wasting it, has so far provided food for more than 1.5 million people. A Swedish University found that only seven products accounted for 50% of the food waste costs incurred by retailers, namely bananas, apples, tomatoes, salad, sweet peppers, pears and grapes. Aldi announced this week that it will join the Champions 12.3 coalition which aims to half the retail and consumer per capita food waste levels by 2030. Nonetheless, most of the food is wasted by households, not retailers, as highlighted by the Love Food Hate Waste campaign which has been going for more than 10 years.
And if you are still hungry for more agriculture related news, we recommend the Netflix “Rotten” documentary series. Instead of focusing on what it thinks you should not eat, like most food documentaries seem to do, it investigates allegations of crime in the food industry, such as the smuggling of adulterated honey, or the trade war between the biggest US and Chinese garlic producers.
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