In an effort to differentiate itself and avoid competing with other agricultural giants, Olam announced that it will sell its rubber, sugar, wood products and fertiliser businesses over the next 6 years. The money raised will go towards a USD 3.5 billion investment to grow the dairy, nuts, grains and animal feed segments, which are Olam’s strongest sectors. The company head added that Olam will also seek to focus on sustainability and digitalisation to stay relevant amid shifting consumer preferences.
In contrast, Louis Dreyfus’ Biosev has denied reports that it is planning to sell its 10 sugar production units in Brazil. Otherwise, the chairperson of Louis Dreyfus Company announced that her family trust had completed the purchase of minority shares and that the trust now owned 96.2% of the company.
The sugar industry has been consolidating amid a sharp fall in prices, and three groups – Alvean, RaW (a Raizen-Wilmar venture) and Sucden – now control 60% of the word sugar trading, while Alvean alone has a market share of 30% of global raw sugar trading, according to an analysis.
Meanwhile, in the grain sector, the trading world is noticing the growing role of China’s Cofco. In 2017, Cofco exported 11 million mt of grains and by-products from Argentina, only slightly less than Cargill’s 11.5 million mt. The situation was the same in Brazil, where Cofco was tied with Louis Dreyfus as the third-biggest soybean exporter, behind Cargill and Bunge.
In China, commodity exchanges launched three new options contracts this week for corn, cotton and rubber, adding to the existing soybean meal, sugar and copper contracts. The move comes as the government is hoping to gain a bigger role in establishing commodity prices by attracting more commercial and producer hedging.
The EU unveiled a major policy change this week when the Commission concluded that US soybeans would be considered as a sustainable feedstock for its biofuel program, which will cap the use of crops associated with land-use changes in 2030. The decision was quickly welcomed by the US Soybean Export Council as soybean growers were under significant stress this year when exports to China stopped. The EU decision will also reassure the US who had threatened to impose tariffs on EU goods unless the bloc imported more agricultural products.
The decision comes as the EU is looking for alternative feedstocks to replace the palm oil that goes into making biodiesel. However, Indonesia and Malaysia – the two largest palm oil producers – are threatening to retaliate if a palm oil ban is implemented, arguing that it would violate WTO rules. The Prime Minister of Malaysia sent a letter to the French President and said he could launch a “Buy French Last” policy in response. The comment referenced the “Buy British Last” campaign of the 1980s which required all British imports to be approved by the PM’s office.
Meanwhile, the French President reversed his 2017 pledge and said it would be impossible to completely ban the use of glyphosate by 2021, as entire sectors would be destroyed because of a lack of viable alternatives. And in the UK, a group of lobbyists from the US is arguing in favour of extending the use of glyphosate after the country leaves the EU. The lobbyists are in the country to push for more lenient policies post-Brexit, in what an association said could be “a once-in-a-lifetime opportunity”. American producers are asking the UK to consider allowing the sale of hormone-fed beef, GM crops, antibiotics in meats and limit geographic labelling rules.
A lot of media attention went to the Lancet Commission on Obesity report published this week, as it called for a broad international treaty to curtail the role of the food industry in policy development. Profit-driven food and drink producers are causing an obesity epidemic, while also contributing to malnutrition and climate change, it argued. The report mentioned similar efforts by the tobacco industry to control public policy and suggested that the WHO’s global conventions on tobacco could serve as a model to exclude the food industry from policy making.
The good news, perhaps ironically, is that food crops could actually benefit from higher global temperatures, according to a new study. Scientists previously thought that crop nutrition would keep dropping as the levels of CO2 in the atmosphere increases, while yields will increase. The new study found that higher temperatures could have the opposite effect: boosting nutrition and lowering yields, counteracting the effect of CO2.
If you looking for more agricultural action this week, we suggest watching the new Farming Simulator video game tournament! That’s right, players are planning to compete playing the popular farming game over 10 events in Europe, with a cash price of EUR 250,000 for the winner.
This summary was produced by ECRUU
