The US shipped record amounts of corn and soybean to China in the last quarter of 2020, just as the dry weather in South America led to forecasts of poor crops and pushed up prices. This helped grain merchants post impressive results and ADM’s share price reached a new record while Bunge’s reached the highest since 2018. Analysts say the outlook for 2021 also looks promising for grain traders and farmers, although they warn that US farmers might now look to significantly increase their output thanks to a sharp rise in income.
US firms were not the only ones to benefit from strong Chinese demand in 2020 as COFCO saw its revenue exceed CNY 500 billion (USD 77 billion) for the first time, including profits north of CNY 20 billion (USD 3 billion), according to Chinese media. As a result, COFCO became the world’s second-largest grain trade house after Cargill.
China’s impressive import pace might not last, however, as the country continues to issue warnings that frozen food imports could be a source of coronavirus contamination. Some shops have now completely banned the sale of imported meat and supermarkets in Beijing and Shanghai need to store imported meat on separate shelves. Most experts still doubt the idea that frozen food and packaging can be a source of contamination, although a draft WHO guidance which was released by error outlines the potential risk of the virus spreading through the cold chain. China imported a record amount of meat in 2020 to rebuild stocks but Rabobank warned that meat imports could drop 30% in 2021.
Food firms are being criticised by government officials and human rights groups for their involvement with factories in Xinjiang that probably rely on forced labour from the Muslim Uyghur ethnic group. Coca-Cola’s factory close to Urumqi was highlighted as it is surrounded by a dozen prisons or so-called re-education camps. Coca-Cola has another reason to be wary of its relationship with China as a Chinese engineer is due to face trial this year for the alleged theft of company secrets. The engineer reportedly stole confidential information on Coke’s can-coating research and was granted funds by the Chinese government to open a firm to compete using the stolen technology.
A potentially promising technology, vertical farming, might not deliver on its promises to reduce hunger, restore forests and lower agricultural emissions. Vertical farming operations are finding that powering lamps for 12-16 hours a day, on top of heaters, makes it hard for them to compete with crops grown under natural – and free – sunlight. A US operation said its products cost 3-5 times more than the competition grown on traditional farms, although they require significantly less water.
A new study by Mintel revealed that meat-eaters in the UK made less of an effort to cut down on meat consumption amid the pandemic in 2020. Some 41% of the people surveyed said they were actively looking to eat less meat, compared with 51% in 2019, although 42% of people conceded that a meat-based diet was bad for the environment, up from 25% in 2018. Researchers explained that people were looking for familiar comfort food during the pandemic, as even canned meat sales increased, while the trend should return to favour plant-based alternatives after the pandemic.
Investors certainly believe in the future of plant-based diets as Blue Horizon Ventures exceeded its target of raising EUR 100 million (USD 121 million). The venture capital fund is planning to invest in startups looking at alternative proteins. Governments are also under pressure to reconsider their meat consumption as an assessment of the meals served to British MPs found that 72% of the carbon footprint came from meat products. Humane Society International is calling on MPs to replace 50% of meat products with plant-based alternatives.
Finally, Jonathan Kingsman, the founder of Commodity Conversations, has recently published ‘Crop to Cup – Coffee Conversations’. The book looks at all aspects of the coffee supply chain and contains interviews with leading figures in the sector. It is now available on Amazon.
This summary was produced by ECRUU
