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In company news, the Commodity Futures Trading Commission last week fined Cargill Inc $10 million for providing inaccurate information on swaps, and for failing to supervise the company’s swap dealers. The charges date from 2013. In an emailed statement, Cargill admitted no wrongdoing, but said it was “enhancing its internal controls and employee training programs” inside its swap dealer division.

Meanwhile Cargill has announced it is investing an additional $240 million in India over the next five years. The investment will be in Cargill’s core businesses, including edible oil, cocoa and chocolates, starches and sweeteners and animal nutrition. Last year, Cargill inaugurated its first wet corn milling plant in India; set up with an investment of $100 million.

Bunge Ltd has said it may be able to get the best value for its Brazilian sugarcane milling business through an initial public offering of the unit. The company began looking at selling the mills in 2013. Bunge is already in the process of separating the finances of its sugarcane-milling unit from the rest of the company. The CEO said that this would make it easier for the company to act quickly once it decides to launch an IPO or take other measures.

COFCO International has agreed to sell Nidera Seeds, its crop seeds business that operates in South America, to Syngenta AG. Financial terms were not disclosed. Syngenta, owned by ChemChina, has said it would pursue deals to become the third-biggest player in the seeds industry.

Ferrero, the Italian food manufacturer, attracted media attention last week after a German consumer group noticed that the company has slightly changed its recipe for its Nutella spread. It has increased the content of powdered skimmed milk from 7.5% to 8.7%, and sugar from 55.9% to 56.3%. Furious Nutella fans took to Twitter to criticise the changes, using the hashtag #boycottNutella. In a statement Ferrero confirmed the changes had been made but insisted, “the quality … and all other aspects of Nutella remain the same”.

The danger of changing recipes was also highlighted in a Bloomberg article this week. In the 1980s Coca Cola responded to the “Pepsi Challenge” advertising campaign by introducing a new formula. Loyal customers said they didn’t like the new taste and sales fell. The company reacted and relaunched “Classic Coke.”

Back in the future, the UN’s FAO warned last week that global hunger is on the rise for the first time in a decade. A total of 815 million people went hungry last year, an increase of 38 million on the previous year. The FAO blamed climate change and conflict for the increase.

The organisation’s Director-General said that “About one in three people globally suffer from at least one form of malnutrition: be it hunger, micronutrient deficiencies, or overweight and obesity. Unless we take urgent and effective action, more than half of the world’s population will suffer from at least one type of malnutrition by 2030.”

The journal Nature Geoscience has published a report that argues that the world could feed an additional 825 million people, produce 10 percent more food calories, and grow 19 percent more protein by adjusting what crops are grown where. Changing where crops are grown would also reduce farmers’ use of rainwater by an estimated 14 percent. The study’s authors did however acknowledge that cultural and dietary preferences could pose a challenge in changing where crops are grown.

People’s tastes do however change; we can get used to anything. To illustrate the point Reuters reports that North Koreans now eat the dregs left over from making soybean oil, which usually go to feed the pigs. They press and roll them into paste, stuff them with rice, and top it with chilli sauce. The dish’s name, injogogi, means “man-made meat”. If not a national dish, it has become a street food popular for its taste.

Meanwhile, Russia’s 2017-18 grain harvest is expected to hit a record 133 million tonnes. Of that amount, 44.5 million tonnes are earmarked for export, up from 37.7 million last year and only 1.3 million tonnes in 2001. Russia is set to overtake the United States as the world’s biggest wheat exporter this year – regaining the top spot it last held before World War One. However analysts warn that a lack of port infrastructure could limit further export expansion.

Lastly an opinion piece in the New York Times argues that we should stop talking about food in the negative sense. By fretting about food, we turn occasions for comfort and joy into sources of fear and anxiety. And when we avoid certain foods, we usually compensate by consuming too much of others. The writer adds, “All of this happens under the guise of science. But a closer look at the research behind our food fears shows that many of our most demonized foods are actually fine for us”. He adds, “If there’s one thing you should cut from your diet, it’s fear”.

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Low prices and thin margins continue to make for hard times in the agricultural trading business.

This week Archer Daniels Midland Co announced that their quarterly earnings had fallen 44 percent. The company handled 20 percent less grain than expected and average margins in the United States were 50 percent below expectations. The company’s CEO said that he will reduce capital spending next year by about 20 percent and reallocate funds away from oilseed crushing towards its higher-value businesses. However he added said he didn’t expect conditions to get better any time soon.

Bunge Ltd has forecast lower full-year earnings in its core agribusiness unit after posting a third-quarter profit that fell 28 percent on flat revenue. The company’s CEO was, however, optimistic about the future. He said that the company’s trading and processing next year would benefit from cost cutting and strengthening demand for oilseeds, a key driver of revenue. He added, “The third quarter was better than the second and the fourth quarter will be better than the third.”

The CEO of ED&F Man is leaving the company as part of a senior management reshuffle after “a very challenging year”. The company said that the move was part of a restructuring driven by difficult market conditions in its sugar business.

Mackprang jr. GmbH, a Hamburg-based trading house founded in 1878, is venturing into the consumer breakfast market in search for higher value businesses. The company said it will source oats, corn and raisins, then mix and pack them before shipping out to China. The company’s managing director said, “Being a grain trader is no more the place where you make your money so easily. Definitely not. Times are changing and we have to look for other opportunities.”

But at least one trading company is looking to expand during these tough times.   Sucafina, the Swiss-based coffee trader, has hired about 50 people in the past year, opened offices in Colombia and Brazil, reorganized its North American unit and is starting a business in Seattle. The company has taken out a $300 million 18-month syndicated loan to fund its expansion.

The company’s CEO told Bloomberg, “I like to consider Sucafina the smallest of the big trade houses or the biggest of the small trade houses. If we were content to stay at this size and we weren’t vertically integrated, we would eventually get acquired by someone.”

Goldman Sachs Group Inc. is also expanding their commodity operations during tough times, hiring traders from Morgan Stanley and Castleton Commodities. To be fair, though, the expansion seems to be more in energy and metals, rather than agriculture.

It is not just commodity trading companies that are facing headwinds; agricultural chemical companies have also been in the news this week.

US farmers have overwhelmed state governments with thousands of complaints about crop damage linked to weed killers that use a chemical known as dicamba. Farmers claim that the herbicides have harmed crops because they evaporate and drift away from where they are applied. Monsanto and BASF, who make the herbicides, say the herbicides are safe when properly applied.

One expert estimated that 3.1 million acres of non-targeted crops have been damaged by the herbicide. In Monsanto’s defense, the company says it investigated 1,000 such claims, and found that in 88 percent of those cases, the farmer was to blame for faulty application of the product because “the label was not followed.” However, as New Food Economy points out, the “label” is 4,500-words long.

Meanwhile, The New York Times has accused President Donald Trump of damaging people’s brains, not by his angry early morning tweets, but through his lack of action on the chemical pesticide chlorpyrifos. The newspaper claims that the chemical is found in food, air and drinking water, and that human and animal studies show that it damages the brain and reduces I.Q.s while causing tremors among children. The Environmental Protection Agency banned the pesticide for most indoor residential use 17 years ago, and was preparing to ban it for agricultural and outdoor use this spring, but the Trump administration has apparently rejected the ban.

Campbell Soup has announced it is joining the Plant Based Foods Association, acknowledging reduced consumer demand for meat and dairy food. Earlier this year the company left the industry’s top trade and lobbying group, the Grocery Manufacturers Association, citing the lobbying group’s opposition to labeling whether food contained genetically modified ingredients.

The PBFA counts more than 80 companies as members but Campbell Soup will be by far its largest., “We’re not trying to make the whole world vegan,” a spokesman for the association told Bloomberg. “All we’re doing is trying to make plant-based products available to more people.”

In a similar vein, McDonald’s Corp have announced that they will require suppliers to follow new standards for raising and slaughtering chickens. Under the new guidelines, suppliers such as Tyson Foods Inc and Cargill Inc must comply by 2024 with rules dictating the amount and brightness of light in chicken houses, provide birds with access to perches that promote natural behavior, and take other steps to improve animal welfare. Tyson and Cargill have said that they support McDonald’s moves.

And while we are on consumer trends, people are abandoning their supermarket trolleys for baskets. The annual Waitrose Food & Drink Report (which covers all UK supermarkets), reports that customers are increasingly shopping little and often. One in ten people buy what they are going to eat that night, on the way home from work. Two out of three go to the supermarket more than once a day. As the report puts it: “People treat supermarkets like giant walk-in fridges.”

Nestlé, Mars and Hershey have been accused of breaking pledges to stop using “conflict palm oil” from deforested Indonesian jungles. The Rainforest Action Network (RAN) says consumers have been “deceived” by promises from the brands to clean up their supply chains, which were subsequently delayed, revised or watered down.

Hershey’s communications director responded to the allegations by saying that, “While we remain deeply committed to pushing all stakeholders to accelerate traceability and bring full transparency to this supply chain along with our supplier partners, we realise it would take more time to achieve this goal than originally anticipated.”

Meanwhile Malaysia is bracing itself for a total ban on EU imports of palm oil as the European Parliament gears up to ratify a proposed resolution to ban palm oil imports. The European Parliament has already voted to phase out the use of palm-oil biodiesel by 2020. After India, the EU is Malaysia’s second-largest export market for palm oil. China is in third place.

 

A recent survey conducted in the UK and reported by CampaignLive showed that McDonald’s and Coca-Cola were the two brands consumers most associated with litter. Two-thirds of those surveyed said their perception of a brand was negatively affected when they saw its waste in the streets and that they were less likely to buy from them as a result.

Following in the footsteps of Danone, Bloomberg reported that Nestle was working on making its water-bottling business more sustainable through its tie-up with Alliance for Water Stewardship, as consumers become increasingly worried about the environmental problems caused by bottling water. Similarly, the World Bank is flagging the importance of water management in a new report that found that some 80 million people could be fed for a year with all the food destroyed by drought, the Guardian reports. The Bank warns that water will become increasingly scarce with growing population and climate change and that the regions the most at risk were also the areas with the highest food deficits.

Olam announced it will be managing Gabon’s Owendo’s multipurpose terminal along with Bolloré Transport & Logistics (through their affiliates STCG and GSEZ Ports), according to Stat Times. Some USD 300 million will be invested to increase the port’s capacity, a strategy that could be replicated elsewhere on the continent as both partners said they are looking to work together in developing West Africa’s agricultural commodity market.

The race to buy Unilever’s margarine and spreads business is on, with three bidders expected to be shortlisted for an auction’s second round, according to sources who spoke with Reuters. The amount could be in excess of USD 7 billion given the business’ high margins, even though consumption of bread and margarine has reportedly dropped in western countries.

Meanwhile, Cargill continues on its acquisition spree as part of its strategy to diversify, having just added Iowa-based feed maker Diamond V to its portfolio, Reuters reports. Cargill said this was one of its five largest acquisitions ever and Standard & Poor commented it made a lot of sense as the world will need plenty of proteins to feed a growing population.

More and more impact investors are looking at sustainable food and agriculture, a sector in which impact investment has grown at an annual rate of 33% since 2013, according to Global Impact Investing Network, Greenbiz reports. Projects include encouraging grass-fed beef and transitioning farmland so that it can regenerate. There are a lot of good ideas but not enough access to capital, one of funds said.

Talking of things to come, China is anticipating exponential demand for pet food. A Chinese group has just bought the majority stake in Queensland-based The Real Pet Food Company (TRPC), ABC reports. A company official commented that the global phenomenon of “pet humanisation” had already taken place in the US and Europe, and has started to happen in China.

Finally, take a look at this infographic to see how self-executing Smart Contracts on the Blockchain could eventually replace brokers, some say. 

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