Cargill reported a 24% decline in net profit to USD 495 million for the Dec-Feb (Q3) quarter, mostly due to a USD 161 million adjustment cost to comply with the new US tax law. The firm said profit would have been up 1% without the tax change, while sales increased by 2% on year to USD 28 billion. The biggest growth contributor was its animal nutrition and protein segment, followed by the food ingredients unit, although it was impacted by low ethanol prices in North America and high manufacturing costs in its European sweetener and starch business.
Cargill is investing USD 20 million to double egg processing capacity at its Minnesota plant. The company explained that Americans seemed to increasingly prefer eating out for breakfast, instead of lunch or dinner as it used to be the case. The company already spent USD 900 million in its North American protein business in the last two years to meet the growing demand for animal protein which it attributed to a growing middle class.
Cargill said India was an important growth market for the group and hopes to turn the country into an export base for products like corn. However, the company’s CEO for the Asia-Pacific region said India must first promote free trade and adopt technology such as GM seeds to meet its target of doubling the income of farmers.
Olam reported a post-tax profit of USD 551.65 million in 2017, up from USD 339.10 million in 2016. The COO attributed the increase to improved efficiency as it invested to make its supply chain more digital. The company foresees important changes in people’s eating habits, including a move towards ethical eating which requires increasing traceability. With this goal in mind, it will be implementing a Living Landscapes Policy at its farms and its network of third-party suppliers, which include around 4 million small and big farmers. The policy is designed to attend to ecological and social problems which affect its agricultural supply chain.
Louis Dreyfus announced a USD 50,000 grant to World Coffee Research to work on areas such as low yields, impediments in improving quality and impact of climate change on the commodity. An LDC official said the grant is part of its sustainability efforts to achieve positive and long-term impacts on the coffee value chain.
Meanwhile, Netafim Mercosul, a Brazilian irrigation company that allows farmers to buy their irrigation systems against some of their production, has seen an 116% increase in coffee irrigation projects in 2017. The company also saw revenues grow by 109% as more farmers, struggling to get bank financing, turn to this barter system.
ADM Arkady, ADM’s UK feed distribution arm, has entered into a long-term deal with the Peel Ports Group which will develop its Glasgow port facilities with a view to improving the handling of animal feed shipments. The managing director said the deal was aimed at combining regional feed shipments and improving supplies to the north of England and Scotland markets.
The UK’s grain trading market is likely to see consolidation soon as small and regional grain traders struggle to stay profitable amid falling margins. Several groups have already exited grain trading in the past year. A Dalmark group director argued that the entry cost was too low while high volatility and reduced crop volumes have pushed up expenses and lowered margins.
Brazil-based Marfrig Global Foods will acquire 51% stake in Kansas-based National Beef Packing Company for USD 969 million to become the world’s second-largest meat producer. The Kansas-based National Beef is the fourth largest beef processor in the US.
The UK launched its sugar tax last week. The government is apparently already considering bringing other products, such as added-sugar flavoured milk drinks under the tax to tackle obesity. Food manufacturers and bakers have voluntarily agreed to lower sugar content in cakes, biscuits and cereals by 20% in the next four years. On the other hand, Coca-Cola launched a marketing campaign for its original Coke highlighting the fact that the recipe hasn’t changed – which means the price has gone up due to the tax.
Coca-Cola India will launch its first sugar-free drink in India to meet changing consumer tastes. An official explained that people in cities were increasingly concerned about their health, adding that the sugar-free beverage segment was growing fast. In the same vein, Nestle will spend USD 27 million on modernising its prepared foods and noodle-based soups plant in Ukraine. The modernisation plan, which would be completed by 2021, aims at reformulating recipes to reduce fat content in line with WHO’s dietary recommendations.
Nestle also announced a target to only have recyclable or reusable packaging by 2025. Some NGOs complained, however, that the announcement amounted to “greenwashing” given the lack of clear quantitative targets. The company CEO admitted that “plastic waste is one of the biggest sustainability issues the world is facing today” but that the company’s ability to deal with that problem also depended on each country’s recycling infrastructure.
Similarly, Unilever has joined hands with the world’s top PET resin maker Indorama Ventures and a Dutch start-up Ioniqa to develop a technology that transforms PET waste into new food packaging material – a technology that could revolutionise food packaging and reduce waste. The technology has cleared the pilot testing phase and will now be tested at an industrial scale.
Finally, the not-for-profit advisory firm Ceres has said that not enough food companies are committed to end deforestation. It found that less than 50% of the 469 food manufacturers that have deforestation commitments in 2018 have made official plans to improve traceability across their palm oil supply chain, and less than 20% plan to make it completely transparent – the way Nestle and Unilever have done.
This report was produced by ECRUU
