China’s COFCO is reportedly looking to purchase a 25% stake in Russia’s KSK grain terminal in Novorossiysk, Krasnodar, for USD 400 million. The facility is the third largest Russian grain terminal in the Black Sea and would allow COFCO to boost the purchase and exports of Russian grains to Africa, the Middle East and eventually China. Cargill already purchased a 25% stake in the terminal back in 2013.
Neovia, which was bought by ADM earlier this year, will slow its acquisition rate, after purchasing 20 firms over the past four years. The animal feed producer, which has operations in the EU, Southeast Asia and Latin America, will focus on consolidating operations and growing organically.
A company that isn’t slowing down, meanwhile, is Cargill as it announced a USD 48.8 million investment in building a new plant to expand its protein production business in China’s Anhui Province. The integrated poultry facility will be able to trace the origin of any goods in the production process within two hours, Cargill highlighted. In a recent blog post, the group CEO conceded that the industry was unlikely to meet its goal of eradicating deforestation from the beef, soy and palm oil supply chains by 2020. Some USD 30 million will be invested to accelerate efforts, he added, as he called for more cooperation in the sector to achieve the goal.
Similarly, Barry Callebaut and Unilever, are piloting the Field to Market and Sustainable Agriculture Initiative Platform Equivalency Module to better monitor the sustainability performance of US farmers. The groups hope the initiative will help align different agricultural sustainability initiatives.
Amid the growing backlash over the safety of glyphosate, Bayer is planning to spend USD 5.6 billion to identify new ways to fight weeds. The future of glyphosate is uncertain as the EU might not renew it after 2022 but the firm said the investment was not linked to the discussions around the controversial weed killer. Analysts noted that Bayer could not openly admit it was looking for alternatives without undermining the idea that glyphosate is safe.
Despite some encouraging news that the US and China will hold trade talks later this month, agricultural companies have been vocal in urging the White House not to escalate tensions by imposing new duties. The US Meat Export Federation noted that the US was missing out on the surge in pork demand caused by the African Swine Fever outbreak in China due to the 62% retaliatory tariffs.
But it’s not all bad news for US farmers, as the country will be guaranteed 80% of the EU hormone-free beef import quota over 7 years. The increase was only possible after other exporters, Australia, Argentina and Uruguay, agreed to lower their shares. Moreover, an increasing number of US farmers are looking into cultivating hemp, which can potentially generate much higher profits than corn or wheat, according to a processor. Vote Hemp estimates that the total acreage could double in 2019, although the USDA is yet to regulate the plant which leaves states responsible for drafting rules.
In the short term, however, the American Farm Bureau Federation expects the White House might have to offer farmers a third bailout package as the upcoming elections could make the negotiations of new trade deals unlikely. This could be a problem as several countries, including China and the EU, are already questioning whether the farm subsidy package of USD 16 billion is within the amount allowed under WTO rules. They have asked for more information on the program, which the US is yet to officially notify. Similarly, India is facing questions at the WTO about how it intends to fulfil its promise of doubling farm incomes by 2022 and its various farm subsidies.
To address the issue around subsidies, the US and the EU are supporting a proposal by Japan to overhaul the way each WTO member country reports its subsidy policies. The proposal would either suggest a single subsidy threshold for all countries (instead of the 5% for developed countries and 10% for developing countries) or a change in the formula used to calculate it. The proposal will be discussed at the next G20 meeting.
Finally, the rocket scientist behind the popular Youtube channel Smarter Every Day explains the incredible science involved in grain bins, in this video called Farmers are Geniuses.
This summary was produced by ECRUU
