At this week’s Financial Times Commodities Global Summit leaders of agricultural trade houses warned that their traditional business model is over. The head of Cargill’s agricultural supply chain said that the margins in trading grains have disappeared with the markets becoming more transparent and farmers more powerful and aware. ADM’s head of global trade agreed, saying the group was now focusing on adding value through “destination marketing” while other companies, like Cargill, work on offering more services to farmers.
ADM announced it was restructuring into four units: carbohydrate solutions, nutrition, oilseeds and origination, in a bid to separate its grain-trading segment from the other businesses. The trading will be part of the origination segment while the wheat milling and corn processing units will go under the carbohydrates solutions segment.
The CEO of Louis Dreyfus said the company was adapting to the demands of the millennial generation, a generation which, he said, drives consumption trends and which wants environmental friendly food. The organic market has a huge potential, with an annual growth expected at 14% by 2021, he added. The group is also looking to improve its supply chain as well as to focus on areas of strong demand, such as China.
Louis Dreyfus reported a net income of USD 317 million in 2017, up 4% on year mainly thanks to the sale of the metals unit, while its agriculture business’ s profit dropped 16% to USD 224 million.
Cargill has acquired the Colombian company Pollos El Bucaneroas as a part of its plan to double its Central American poultry business. The group said it aims to invest USD 300-500 million up to 2022 to increase its market presence.
In Canada, the company announced that its pilot project on beet sustainability was a success and could be scaled up to produce higher volumes of sustainable certified beef. Cargill explained that the three-month project showed it was possible to trace sustainability across the entire supply chain, as required by the Certified Sustainable Beef Framework established by the Canadian Roundtable for Sustainable Beef (CRSB).
Separately, Cargill said it was looking to sell its three cargo ships and work only as a charterer. It owns three capsesizers in partnership with Mitsui.
Olam sold its 50% stake in the investment holding company Nauvu to Wilmar, which already owned the other 50%.
As part of its effort to produce locally, Nestle has commissioned a new Cremora (coffee creamer) line in Zimbabwe, a move which should help the country save USD 2 million in imports. The company will also continue to expand production capacity to export in regional markets.
The US State Department has launched a project to fight forced labour across the world by creating a registry for workers using blockchain technology. Coca Cola will be partnering in the venture, following increasing pressure to improve standards, especially in sugarcane producing countries.
The UK government is planning to introduce a bill this year which aims to restore the soil’s fertility levels throughout the country by 2030 – the first bill of its kind. Data suggests that the country’s soil fertility could be close to gone within the next 30-40 years because of industrial farming. The farm minister argued the focus should be on designing local solutions as large scale compliance programs don’t work.
In a recent report, the WWF warned that unless people make a conscious effort to eat more sustainably, climate change would have a drastic impact on what we will be able to eat. In 30 years, the quintessential British ‘fish & chips’ may have to use anchovies instead of cod, whose population is dropping due to warming oceans. The taste of meat may change too as traditional feed will become less available. Cutting back on meat, fish and dairy all contribute towards eating more sustainably, the WWF said.
Along the same lines, a study found that the 20% of Americans who have diets with the highest calorie intake and animal based food consumption were responsible for almost half of the country’s diet-related greenhouse emissions. If that 20% group changed their eating habits in line with the average US diet US emissions would drop significantly – almost 10% of the reductions needed to meet the Paris accord targets.
McDonald’s franchises and suppliers are planning to cut greenhouse emissions by over a third by 2030, the first restaurant company to do so. The CEO explained that beef production was among its biggest source of greenhouse emissions but that some of its suppliers were also working on reducing their carbon footprint.
When asked by Greenpeace to list the name of their palm oil providers, a few food and beverage manufacturers failed to provide an answer. The firms, part of the Consumer Goods Forum (CGF), pledged to reach ‘no deforestation, no peat, no exploitation’ (NDPE) by 2020, but Greenpeace argued it was impossible to assess the success without the proper information.
In the UK, a farmer survey, conducted by Feeback, found that pressure from supermarkets was a major drive in farm waste. Farmers reported that they wasted about 16% of their crop because of the strict cosmetic requirements which they say have effectively normalised overproduction. The report noticed some encouraging actions, such as Tesco’s “wonky fruit and veg” isle.
Still in the UK, the government has invited suggestions on ways to reduce plastic waste, and it mentioned a GBP 0.25 (USD 0.35) tax on disposable coffee cups, as well as a landfill tax. And with Easter approaching, a survey by Which? found that packaging, on an average, accounts for 25% of the weight of Easter eggs, hitting a high of 36.4% in the worst case.
This report has been produced by ECRUU – Commodity Media Monitoring
