Author: jonkingsman

When you took on the role of Executive Director of the International Sugar Organisation (ISO) in 2014, what were your three main priorities, and did you manage to achieve them?

My top three priorities were:

• Delivering the quality professional service that members deserve.
• Incorporating new stakeholders, especially the trade, which had not previously engaged with ISO.
• Positioning sugar as a credible food ingredient within a healthy, balanced diet.

The ISO has significantly expanded its scope and strives for participatory growth, serving as a conduit among parties across all regions. The trade now finds it easier to engage with the ISO while respecting its nature as an international organisation that no longer directly intervenes in the market. The effort to reposition sugar as part of a healthy diet has made considerable progress, though the work remains incomplete.

How have your priorities shifted as the sucro‑energetic sector has evolved – especially with biofuels, bioplastics, and meat proteins?

Sustainability, climate change, and the COP process have elevated decarbonisation on the agenda; around 40% of our work now centres on biofuels and related energy alternatives. More countries are warming to ethanol, and the ISO’s role is to provide the intelligence that enables countries in Africa, Latin America, and Asia to make informed choices rather than to direct them on what to do.

Our focus has widened to include bioplastics and polymers. A popular example among young audiences is Coldplay’s wristbands, which, for one tour, were made from sugarcane-based bioplastic – a tangible illustration of sugar’s role in fostering cleaner, more efficient processes.

At the last ISO Seminar, Planetary discussed sugar‑based meat-protein alternatives. Is this a significant opportunity for the sugar industry?

It was very interesting, certainly a novel arena.

It’s important to note that a recent survey found that 20–30 per cent of UK consumers are reducing meat or are willing to try alternative proteins. Companies such as Südzucker are investing heavily in this sector, and it is another “tip of the fork” into which sugar can feed.

What achievements are you personally most proud of during your tenure, and is there anything you wish you had started earlier or pushed harder for?

One of my main missions has been to promote greater respect for developing countries like Guatemala. Regardless of their size, the achievements of nations such as Colombia and Eswatini in water management, and Guatemala and Nicaragua in cogeneration, as well as their contributions to the national energy matrix, deserve recognition.

The ISO’s platform – seminars, conferences, and information sharing – has helped bring those examples to the forefront so others can extrapolate them to their own realities.

The process of adding new members has been frustrating: you gain two, you lose two. My predecessor did an excellent job of increasing membership, and the ISO is now the leading commodity organisation by member numbers. Yet, some countries still do not fully see the return on investment.

I am increasingly frustrated by the declining importance of multilateral “glue”. Sometimes, one wonders whether another major event will be necessary to remind governments that UN organisations like the ISO matter.

Are the USA, Russia and China members of the ISO?

Russia is a member but is currently suspended due to sanctions that have prevented it from paying its contribution, although we are making progress towards resolving the issue.

The United States is more frustrating: in Congress, producers and users are aligned, and farm bills consistently include language in our favour. However, at the executive level, we have never “landed the plane.”

China is similar but for different reasons: it is hesitant to join bodies like the ISO, fearing that membership would undermine sovereignty. We closely collaborate with the Chinese sector and share information, but full membership remains unavailable, which is frustrating given the value ISO can provide.

In 2019, you told me that the ISO was about people, not just statistics. Can you give an example where personal relationships mattered more than numbers?

One example is the ISO’s contribution to the African Continental Free Trade Agreement, where we brought together decision-makers from industry and governments. Concepts such as African‑produced sugar, net-exporter status, and tariff differentiation by origin were incorporated into the text through these personal contacts.

When Fiji needed new cane varieties, the Guatemalan research institute supplied two that are now Fiji’s leading performers. In Uganda, two Colombian varieties are in their second season and performing well.

We still favour face-to-face contact – perhaps “caveman-like” – because being in the same room, sharing coffee breaks, and chatting in corridors often leads to the “white smoke” on contentious issues.

Traders often approach us to ask whom to contact in India, Southern Africa, or Zimbabwe, and the fact that we can pick up the phone and introduce them is often decisive compared with a cold email.

Why did the ISO abandon the economic provisions of the International Sugar Agreement (ISA)?

Members agreed that the market – the interaction of supply and demand – was better suited to determining prices than a post-World War II international interventionist mechanism designed to artificially support prices for food security reasons.

Today, the market is left to perform that role, but there are concerns. We have just experienced a deficit year where prices should have been more favourable for both small and large producers, yet speculative funds kept prices suppressed. This speculative activity undermines the genuine functioning of supply and demand. I sometimes wish those old economic powers still existed to control such distortions.

 With food security back on the agenda, could an ISA‑type system ever come back?

I do not believe so. Food security is primarily addressed at the national or regional level: countries safeguard their borders, and blocs such as the EU, the United States, and China protect their own production. International organisations are unlikely to be given that kind of mandate again. The current form of “territorial protectionism” is driven by major powers, not by multilateral commodity agreements.

Moreover, by the time everyone agrees, several generations will have passed.

Why is sugar important to a country? What role does it play in economic development?

First, sugar remains an essential carbohydrate for human nutrition, especially in many developing countries where it plays a vital role in ensuring adequate calorie intake.

Second, sugar often catalyses development: the signs of prosperity in towns and villages where sugar is produced are evident across Latin America and Africa alike. Sugar supports social development. I often compare sugar to the hub of a bicycle wheel: a strong hub allows many spokes – energy, jobs, social programmes – to expand and foster greater speed and progress.

Third, sugar serves as a vehicle for health: UNICEF regards sugar fortification with vitamin A as the most successful micronutrient programme in history. It has contributed to eradicating infant blindness and improving the health of lactating mothers in several Latin American and African countries, and ongoing work is underway to fortify sugar with other micronutrients, such as iron.

Sugar’s sweetening role in many essential foods remains largely irreplaceable. While other sweeteners can contribute, particularly in drinks, sugar remains pivotal in many processed foods.

What effect has the “war on sugar” had on consumption and production?

Per capita sugar consumption has decreased in many industrialised, “first‑world” countries, including the United States and those in Europe. However, following the WHO report on artificial sweeteners and concerns that aspartame and other sweeteners may be carcinogenic, younger consumers have begun returning to natural sugars. There is a rising preference for raw and so-called brown sugars, as well as for honey, panela, and molasses.

The challenge remains to communicate evidence-based science effectively in a social media environment dominated by sound bites. When I became Executive Director, sugar was at the centre of the nutrition debate. Today, conditions have improved somewhat thanks to better communication. More stakeholders are willing to speak out, although some parts of the industry still resist engaging in that discussion.

When I published my book in 2016, I felt almost alone in defending sugar. Why were sugar companies so reluctant to speak up?

It was the “ostrich trick”: the idea that, when faced with a difficult issue, you bury your head in the sand and avoid discussing it, hoping that, when you bring it out, the problem will have gone away. I inherited an organisation where many members believed that debating sugar and health was merely stoking the fire. That strategy backfired. Silence allowed half‑truths to harden into mantras. Instead of disappearing, the problem worsened, and the sector’s position weakened.

We observe a similar pattern in debates on good practices and traceability. Certification can sometimes become a checklist that conceals the real conditions of labour and environmental performance. Companies that genuinely uphold their commitments, like those in Colombia with excellent water management or Pantaleon in Guatemala with strong worker ownership and services, should promote their stories more loudly.

 Looking ahead, what is the greatest risk to the traditional sugar sector – health regulation, alternative sweeteners, climate change, or something else?

All the above points matter, but the biggest single risk is that, regardless of how productive and efficient you are, world market prices do not reflect true supply‑demand fundamentals. Algorithmic and speculative trading exert persistent downward pressure on prices. Producing sugar fairly and efficiently is not always enough to earn an adequate return on investment.

Climate change presents a significant challenge. We must not only respond to floods and droughts but also proactively work with climate institutes and research bodies to stay ahead.

Africa is projected to experience the fastest population growth over the next 25 years. Will sugar production and investment keep pace?

Yes, the current trends support that perspective.

There have been substantial investments in countries like Nigeria, where recent initiatives have enhanced the legal environment for investors. Morocco, Egypt, and the Eastern Africa region – including Kenya, Malawi, and Tanzania – are also experiencing growth.

Infrastructure is a crucial issue. To foster investment and increase productivity, Africa requires better land transport and shipping links to move sugar from surplus areas such as Eswatini and southern producers to net importers in the west.

The African Union would do well to prioritise infrastructure alongside education and health. Efficiently moving goods from production sites to consumption points is crucial for unlocking Africa’s development potential.

If you were advising your successor, what key messages would you emphasise?

Firstly, start work early to build credibility and strong relationships with key decision-makers in the European Union, India, and Brazil, so they understand and support your proposals.

Second, keep the ISO as a big tent, inclusive of all stakeholders and geared towards participatory growth.

Third, continue enhancing the quality and accessibility of information. The ISO has perhaps the best sucro‑energetic database in the world, but translating it into clear language remains a persistent challenge.

Fourth, surround yourself with qualified professionals and build a team that rows towards the same shore.

Do you have any regrets?

I have experienced moments of frustration due to the lack of support from certain key members, especially when their reasons seem based on personal or political issues rather than performance. It can be disheartening to dedicate much of your life to moving the ball closer to the goal while some people throw banana skins in your way. I hope my successor faces less of this and that members can “row together”, demanding performance but also supporting the organisation they belong to.

When does your term end? What are your plans?

My term concludes on 31 December 2026. Since my two sons reside in Europe, my wife and I will need to balance our lives between Guatemala and Spain, where our eldest son lives.

I would like to undertake some consulting or advisory work, but my immediate priority is simpler: swimming in Lake Atitlán and genuinely taking a break after years of intensive travel.

I have realised that trying to define the future too precisely can be pointless; it’s better to adapt, stay positive, treat others kindly, and practice random acts of kindness. One clear goal is to increase my efforts in Guatemala to support grassroots initiatives that help impoverished people through microfinance, housing, or health projects, probably through NGOs rather than government bodies.

Is there anything you would like to add as a final message?

We must intensify our efforts to decarbonise our sector, produce sustainably, and adopt greener practices, while also highlighting the sector’s achievements. I encourage people to speak out more, engage with platforms like your blog, share experiences, and remember that we live in a global village. Communication is vital: talking to one another, sharing what has worked, what has failed, and what needs improvement.

Thank you, José, for your time and input.

© Commodity Conversations®2026

My interview last week with Rémi Burdairon sparked an intriguing discussion. Some readers questioned whether stablecoins and tokenisation would really revolutionise agricultural commodity trading.

Li Liu commented:

Stablecoins are plausibly useful as payment infrastructure — faster settlement and higher dollar velocity are real advantages. That claim stands on its own. Where the argument weakens is when this payment efficiency is implicitly extended into regulatory bypass and then further into systemic credit expansion via tokenisation….

Tokenised warehouse receipts do not create trust — they merely digitise it, and only to the extent that physical control, inspection, and legal enforceability already exist. The interview actually acknowledges the core constraint: the weakest link is the physical-digital boundary. That admission undercuts any near-term “revolution” narrative.

Rémi replied:

One could argue that this is merely a disruption, but given that this industry has barely evolved over the past 50 years, I would rather call it a revolution in motion.

That revolution is already underway in India, where the warehouses that issue the tokens are government-owned. (I hope to write more about that soon.)  However, attempts elsewhere are running into headwinds.

As one reader wrote to me privately:

Turning warehouse receipts or future crops into tradable tokens does not manufacture trust out of thin air; it digitises the trust already embedded in storage, law, and inspection.

However, while the revolution in tokenisation may be making slow progress against strong headwinds, that of stablecoins is already well underway.

Bloomberg ($)  reported earlier this week that stablecoin transaction volumes hit around 33 trillion dollars in 2025, with USDC dominating DeFi flows and USDT used heavily for everyday payments and trade settlement, signalling “mass adoption of digital US dollars” as a store of value and medium of exchange.

The newswire added:

For citizens and firms in inflation‑prone or capital‑controlled economies, stablecoins are the path of least resistance to holding and moving dollars.

The Wall Street Journal recently reported ($) that by one estimate, almost 80% of Venezuela’s oil revenue is collected in stablecoins like Tether.

In a separate article, Bloomberg writes:

Cryptocurrencies — particularly dollar-pegged stablecoins — are widely used in Venezuela after prolonged bouts of hyperinflation, sanctions and capital controls. The country’s total crypto transaction volume reached $44.6 billion last year, up about 19% from 2022.

Despite having only about half the population of neighbouring Colombia, Venezuela matched its crypto transaction volume last year.

“Venezuela is one of the most prominent examples of countries where crypto adoption became an economic necessity,” said Michal Moneta, chief operating officer at the Onchain Foundation. “It wasn’t about favourable regulation. Individuals found solutions to their problems in cryptocurrencies.”

Stablecoins offer an obvious upgrade to the agricommodity supply chain without asking the industry to rethink who owns the silos.

They are faster and more affordable than traditional FX payments in dollars. Significantly, a trader can continue using the same warehouse receipts while only switching the payment mechanism from SWIFT to stablecoin.

In the US, the Genius Act now establishes clear reserve, disclosure, and licensing requirements for stablecoins.

The revolution might be more gradual in Africa, as Rémi explained:

Regulatory bypass risks may indeed exist in countries where crypto assets are restricted or banned; these are high-risk corridors where stablecoins are viewed as FX circumvention tools. In countries where crypto assets remain unregulated, the situation is admittedly a grey area: stablecoins can be used, but are not always locally off-rampable without offshore structures or local OTC intermediaries.

That said, de facto acceptance is clearly growing. In South Africa, Nigeria, Botswana, Namibia, Mauritius, etc., regulatory frameworks now exist that formally recognise crypto assets. South Africa, in particular, is currently the best-in-class African jurisdiction for stablecoin trade settlement. So my view is therefore that we are moving toward a more generalised acceptance of crypto across the continent

Even so, regulators feel more at ease with a regulated electronic money instrument than with a token that grants ownership of cocoa stored in a warehouse.

All in all, the most realistic near-term outcome is not tokens replacing warehouse receipts, but stablecoins becoming the standard settlement system for agricommodities.

Is the CEO of Tether correct when he says that, within five years, all commodity transactions will be paid in stablecoins?

What do you think?

© Commodity Conversations®2026

Within the next five years, all international deals for commodity trading will run on stablecoins.  – Tether CEO, Paolo Ardoino

Good morning, Remi. Please tell me about yourself.

I’m French but was born in Senegal, West Africa. I spent part of my youth in East Africa, in Djibouti and Ethiopia, and the rest of my early life mainly in France. I have spent the past 25 years in South Africa. I’m married; my wife is English, and we have three boys.

After graduating from the French business school ESSEC, I began my career in 1985 in London, working in the financial markets, with a focus on swaps, options, and Treasury bonds. My ambition was to move into commodities, so when I had the chance to join Dreyfus in Paris in 1987, I seized it. I worked there for four years but decided the grass was greener elsewhere, so I left Dreyfus for a few years. They invited me back in 1994 to join their team in Madrid, where I was head of trading for Spain and Portugal. In 1998, Dreyfus transferred me to Johannesburg, South Africa, as an expatriate. I enjoyed the experience and chose to stay.

I spent ten years in Johannesburg, expanding the business from a small venture to over 50 staff and multiple offices. We traded mainly agricultural commodities with a regional focus.

In 2008, I decided to leave Dreyfus and return to Europe for family reasons. South Africa was not the best place at that time to educate three boys. I moved back to Europe, specifically to Barcelona, where I managed several food security initiatives with Morgan Stanley, as well as biotechnology projects.

And very quickly, Africa called me back. By 2011, I was back in Johannesburg, working for Ameropa and setting up a grain and fertiliser operation. In 2013, I joined my former colleagues from Dreyfus to establish a new venture, Englehart Commodities, under BTG Pactual Investment Bank’s management. It was an interesting experience.

I’ve loved commodity trading all my life, but over the past decade I’ve seen margins gradually shrink as the market has become more transparent.

It became increasingly difficult to make money: the FOB seller would sell C&F, and the C&F buyer would buy FOB. The way traders operated was being challenged, and it was becoming more necessary to take a flat price position and incorporate it into a physical portfolio to gain a market edge.

In 2017, while I was still with BTG Pactual, I attended a conference in Tanzania, where I met one of the largest wheat importers. I asked whether he was buying wheat. He told me to join the queue behind Cargill, ADM, and everyone else. However, when I mentioned I had finance, he immediately asked me to come to his office the next day. I suddenly realised I had possibly been trading the wrong commodity for the previous 20 years. Finance was the most in-demand commodity in Africa.

I shifted to trade finance and joined the Barak Fund, then the largest trade finance fund in Africa, which at its peak managed $1.3 billion in assets. I managed one of their smaller funds, combining traditional short-term credit and profit sharing with traders. I left them in 2023 after a restructuring of the fund. Still, I continued working in African finance, operating at the intersection of trade finance and commodity trading, with a strong interest in new technology and digitalisation.

You recently spoke at two conferences in South Africa, where you estimated the funding gap for small and medium-sized trading firms at around $200 billion. How did you arrive at that figure?

The African Development Bank and associated studies estimate Africa’s trade finance gap before COVID at around USD 80-120 billion annually, although it has expanded over the past decade. More recent figures cited by AfDB mention a gap of over $120 billion each year. I believe it exceeds that. I receive several requests each week for credit and short-term finance in Africa.

Why does that gap exist?

Banks are generally risk-averse and often lack the technical expertise and appetite to structure smaller transactions. They tend to focus on larger deals because the time spent remains the same whether financing a $5 million or a $50 million deal. From a purely asset- and resource-allocation perspective, banks rarely consider anything below a $10 million ticket size.

That’s where a prime opportunity exists for private credit and private funds. Currently, about a dozen funds operate in Africa, mostly managed from Geneva, London, or Dubai. Few operate directly on the ground.

You must realise that in Africa, appearances can be misleading. It presents a challenge for banks or traditional institutions. This is where trade finance can be effective: you don’t finance the balance sheet; you finance the asset. However, Africa’s logistics and value chains can be problematic. If you asked me today whether I could finance copper for a thi^rd party in the DRC or Zambia, I would say no. It’s too risky. Too little control, too much fraud.

Promoters of stablecoins argue they can be useful when US dollars are scarce in these countries. I find that difficult to understand because you need dollars to initially purchase stablecoins.

You don’t always need dollars; you can use local currency to acquire stablecoins through exchanges or OTC desks. Stablecoin operators can establish a liquidity pool and must comply with local regulations. What stablecoins actually address is not dollar scarcity itself, but the inefficiency of dollar distribution and reuse. By enabling instant, borderless settlement, the same pool of dollar liquidity can circulate more quickly and support far more transactions than in traditional banking systems.

But that’s not the main reason for their interest. The value of stablecoins lies in their transparency, speed, and low cost.

Can they avoid forex controls?

No, but liquidity providers, exchanges, and OTC desks must supply the necessary documents for exchange control purposes. Stablecoins don’t eliminate foreign-exchange controls, but by transferring money outside the banking system, they make these controls harder to enforce; they shift enforcement from transaction-level to access-point controls.

Even so, are you bullish on stablecoins?

Yes, very much so. Tether’s CEO has predicted that within the next five years, all international commodity trading deals will be conducted using stablecoin. Commodity trading faces issues with cash flow, trust, and timing. Stablecoins address all three: quick settlement, global liquidity, and no downtime. For anyone involved in commodities who is tired of paperwork and payment delays, this will be a significant relief.

Today, traditional finance and payment channels (TradFi) are increasingly struggling to fulfil this role.

How might things evolve?

It will be driven from the bottom up, starting with on-the-ground operators. I already have clients operating in stablecoins, some to avoid dollar payments passing through American banks.

If you’re a trader in the Ivory Coast or Morocco and want to make or receive a payment, or receive a USD payment, you might be concerned that your funds will need to be cleared by the corresponding bank in the US. There is a move to diversify away from the US dollar, which has become increasingly problematic and risky for certain operators. Even if they are fully compliant and do nothing wrong, they still want to avoid the risk.

DeFi will present a major challenge for banks, leading to revenue loss.

Which countries in Africa would be your initial targets: West African cocoa or East African coffee?

It will be a country where the concept of stablecoins is already accepted, a digitally friendly and educated nation, such as Kenya, South Africa, or perhaps Rwanda. Nigeria is already experienced with crypto and digital assets, although the transactional side remains somewhat challenging.

I am collaborating with a small group of partners to launch a venture that will pilot a new transaction model with the potential to transform commodity trading in Africa.

To clarify, stablecoins don’t mean you can skip daily risk management tasks; you still need to address counterparty liquidity, regulatory risk, and all of that.

Yes, there are still reputational risks and KYC and AML requirements you must meet. Stablecoin itself is not without risk. Tether, the world’s largest US stablecoin holder, was recently downgraded by S&P. Circle, the second-largest stablecoin by USD-denominated market capitalisation, is better aligned with US regulations and could be the first choice for risk-sensitive investors. However, it is not as liquid.

Is there a regulatory risk that a new US administration will close them down?

I don’t think so. If it isn’t USDT or USDC, it will be someone else. It’s not a process that will be stopped, especially after the GENIUS Act, enacted in July 2025, which created the first clear U.S. regulatory framework for payment stablecoins.

Now, let us move on to tokenisation. What is it, and how does it work?

A year ago, I discovered an interesting initiative by a fintech company in Mumbai. I contacted the CEO and realised the company had built one of the largest commodity tokenisation platforms in the world. It utilises blockchain technology and has tokenised over $800 million worth of farm commodities.

This company operates a warehouse receipt financing system in which farmers receive digital, tokenised warehouse receipts recorded on the blockchain that serve as secure collateral for loans. Farmers can trade, refinance, or sell their tokenised receipts through an integrated marketplace.

The platform currently operates in approximately 1,500 warehouses across five states. It has disbursed over $25 million in digital loans to more than 70,000 smallholder farmers. It is a remarkable initiative, recognised by the Bill & Melinda Gates Foundation as unique.

I went to India, saw what they had done, and said, “We have to do that in Africa.” The CEO and I travelled together to Kenya, where we will soon launch a similar initiative.

Why are tokens better than paper warehouse receipts?

Firstly, there is no risk of forgery.

Second, farmers can trade or cash in their tokens in parts. When you deliver 100 tonnes of cocoa to a warehouse, you receive 100 tokens. Tokenisation, combined with stablecoins and blockchain technology, allows cocoa in the warehouse to be sold to investors in separate lots. The large US banks are doing the same with the fractionalisation of Treasury bonds and bills, enabling smaller investors to take part in the market.

We will reach a point in Africa where individual farmers are financed for 25 kilos, 25 tonnes, or whatever, and individual investors provide funding for these farmers for $25 or $250.

It’s a revolution. The challenge we face today in private credit is that impact finance, which everyone discusses at ESG conferences, is hard to implement. The reporting required for it is overwhelming. We will see a new structure emerge in which trade finance becomes more accessible.

Isn’t it a sort of micro-financing?

I call it macro finance with digital tools.

You’ve heard of the tokenisation of real-world assets, or RWA. Today, you can tokenise existing goods, but what about tokenising a crop that hasn’t been planted yet? Then you can also tokenise a person’s behaviour.

This is already happening in India, where everyone has an online ID. It is straightforward to identify individuals and assign a credit or performance rating. For instance, you could identify a particular farmer who has performed exceptionally well over the past two or three seasons, add this achievement to their credit score, and tokenise it.

When I interviewed Saurabh Goyal, he told me that blockchain works with Bitcoins but not with physical commodities. Am I correct in thinking that tokenisation is the missing link, enabling commodities to be traded easily on a blockchain platform?

Yes, definitely, yes.

However, remember that this is a digital twin of a real-world asset, so whatever is traded must ultimately be returned to the physical commodity. That remains the weakest part of the process.

Let’s examine financing cocoa exports from West Africa. Instead of a conventional warehouse receipt overseen by a collateral manager, someone issues tokens, and I convince financiers or traders that they are as dependable as the actual goods. The goods must be physically present. There is a risk of a disconnect between the digital record and the real-world asset. This aspect must be carefully considered and properly managed.

In other words, you issue the token for the goods in the warehouse, but the goods disappear.

Exactly.

Will that be the most complex challenge in Africa?

Yes.

The second challenge will be acceptability. People in Africa are very traditional. However, everyone was surprised by the explosion in mobile phone use. We expected Africa to be ten years behind. You’ve heard of M-Pesa, the East African mobile payment system widely regarded as one of the most important developments of its time. I am confident that Africa will quickly embrace Blockchain and tokenisation.

The third challenge is obtaining regulatory approval for digital assets. Some countries now permit it, and it will become more widespread. I have no doubt about that.

The fourth is a notable client risk because you have many small and medium-sized traders.

What about the big operators? Are the ABCD++ group of companies moving into tokenisation and stablecoins, or are they resisting?

I don’t think that the leading traders are particularly interested. They have experimented with blockchain and set up Covantis, a joint initiative to rationalise and digitise documents on a shared platform. They employ a whole team of execution staff in their shared back office in Geneva to handle paper bills of lading and certificates of origin.

In attempting to digitise the industry, I believe they have chosen the wrong approach. They require a simpler, more adaptable solution. Stablecoin is one such option because it does not handle the entire transaction process; it merely facilitates payments. When it comes to payments, there are two risk factors: payment risk and market risk. You can use a stablecoin for both guarantees and payments.

However, I anticipate that large companies will be hesitant to adopt stablecoins and tokenisation initially, although they might do so indirectly through infrastructure or financing divisions rather than through front-office trading. It will be driven by the base, not the top. It will be a bottom-up, rather than a top-down, phenomenon.

What about Tether’s entry into trade finance? Is it a revolution? Will it transform the African commodity trade?

Tether has announced plans to deploy $1.5 billion in trade finance. I haven’t seen any evidence of this in practice. They’ve completed a few transactions, but they are already several months old.

Would it be a revolution? I’m unsure, but it would certainly represent a radical disruption for established private credit stakeholders. Currently, the largest credit fund in Africa deploys a few hundred million dollars, compared to Tether’s $1.5 billion.

The company has a greater interest in LATAM, a powerhouse in commodities. If you want to gain traction and grow quickly, that is where I would start. Africa should be next, given that traditional banking infrastructure is limited and transaction costs are high.

The strongest foundation for a trade finance empire is ownership of physical assets used to move goods. Think of DP World or Maersk. They can be more confident in trade finance because they control the goods. When you have control over the goods, you don’t require a collateral manager to reduce the risk. If, six months from now, you tell me that Tether has acquired ports or a global network of warehouses, it would make a lot of sense.

Okay, I hadn’t considered that, but it makes sense. It’s much safer to tokenise and digitalise if you control the physical commodity and own the infrastructure. Is that the key?

It is the key. There are two ways to use collateral: either you control it, or you own it. Control is only that good, you know? Shit can happen. Owning it gives you ultimate security.

It also gives you leverage. Imagine you own a 300,000-tonne port silo. Someone delivers 25,000 tonnes to the silo to supply a vessel arriving in two weeks, but the ship is delayed. Do you think the same 25,000 tonnes will remain in the silo until the ship arrives, or will it be delivered to another vessel? Someone else will use the 25,000 tonnes. Suddenly, you have the leverage for trading.

Anything to add?

I’ve attended a few recent crypto conferences, and many traditional Bitcoin holders might be interested in exploring alternative investment options. The same balance sheets that supported exchanges and DeFi are shifting toward the real economy and are now looking at opportunities in commodities, storage, and shipping. The boundary between digital finance and physical trade is rapidly vanishing.

We are on the verge of a revolution in commodity transactions and trading, along with a surge of funding from the crypto sphere. Traditional finance is reaching a breaking point, and the combined power of stablecoins and tokenisation is poised to fundamentally change how commodities are financed, traded, and settled worldwide.

Thank you, Remi, for your time and input.

© Commodity Conversations®2026

I have spent the past week working on my new book about sugar, delving deeper into the sugar-and-health rabbit hole. Back in 2015, I wrote.

What about the tooth decay – is that still a problem? When I was growing up in the 1960s, I disliked visiting the dentist; I always seemed to end up having a large hole drilled in one of my teeth and having it filled with lead.

When my children were growing up, they seemed to eat more sweets and candies than I ever did, yet all four of them reached adulthood without a single filling. They even looked forward to their visits to the dentist; they could read the latest comics in the waiting room. I attributed this intergenerational change to the fluoride in the tap water. 

Recent research suggests it may not have been the fluoride in the water, but rather that our kids rarely drank sugar-sweetened soft drinks (SSBs).

Other children are less fortunate. Recent NHS England data show that tooth decay is the leading cause of hospital admissions among 5- to 9-year-olds in England, surpassing other common childhood conditions, including acute tonsillitis. The data showed that 21,162 children aged 5 to 9 were admitted to hospital in 2024/2025 due to tooth decay.

Dr Charlotte Eckhardt, Dean of the Faculty of Dental Surgery (FDS) at the Royal College of Surgeons of England (RCS England), said:

“These figures are a public health emergency. Tooth decay is entirely preventable, yet thousands of children are hospitalised every year for procedures that could have been avoided with simple daily habits and better access to an NHS dentist.”

But is sugar to blame? In a 2018 study, the authors wrote:

Based on data from the 2011-2012 U.S. National Health and Nutrition Examination Survey (NHANES), there is a positive and statistically significant relationship between added sugar intake (grams/day) and dental caries (defined as the number of decayed, missing, or filled primary and permanent tooth surfaces as proportion of the total number of tooth surfaces in the mouth) for children ages 18 years and younger.

Research published in 2023 confirms a strong link between sugar consumption and dental caries among children. The study found that SSBs contributed significantly.

An earlier review of 6–12-year-olds found that higher intake of dietary free sugars, especially soft drinks, was linked to increased caries incidence in both deciduous and permanent teeth, including an incidence rate ratio of 1.75 when soft drink consumption moved from low to high over two years. The authors explicitly stated that sugar-sweetened beverages contribute to the development of caries.

However, we should not put all the blame on SSBs. A 2023 meta-study found that unhealthy processed foods also contribute to tooth decay. My own dentist told me that potato chips were now the number one tooth public enemy; they stick to your teeth while sugar doesn’t. Even so, drinking sugar-containing soft drinks, sugar-flavoured milk, and fruit juices between meals also keeps the pH level in your mouth high throughout the day, which favours tooth decay.

So, what to do? What should you do as a parent?

I was at least partially correct about the fluoride. In a review, the Oral Health Alliance (yes, that is a thing) writes.

Decades of research demonstrate how preventive oral health practices can help decrease the development of certain oral health conditions, including dental caries, or cavities. Preventive oral healthcare starts good oral hygiene practices, such as brushing with fluoridated toothpaste, drinking fluoridated water, flossing daily, chewing sugar free gum, and avoiding excess sugar and fermentable carbohydrates, and not smoking. Prevention also includes addressing socio-economic and racial/ethnic inequalities that impact access to oral healthcare and education.

Moving on, I wrote the following in 2015,

Although tooth decay is a recognised and genuine issue, child hyperactivity is not. Here, the medical profession owes an apology to all children raised during the 1980s and 1990s who had to endure sugar-rationed birthday parties. We now understand that sugar does not cause hyperactivity; being a child causes hyperactivity. Until a child is old enough to “hang out,” they will only have two speeds: “flat out” or “stop.” 

A 2019 meta-study confirmed that view, finding that sugar had no significant effect on children’s behaviour. I tried to explain that to my two daughters-in-law, but failed to convince them. It seems my grandchildren will continue to have low-sugar birthday parties. (It won’t do them any harm!)

© Commodity Conversations® 2026

 

It has now been ten years since I published my first book, The Sugar Casino, a brain dump after 37 years in the sugar industry. I am currently updating it, but I worry I might once again fall into the rabbit hole of sugar and health. While sugar and health are not my area of expertise, I cannot update the book without addressing the subject.

Fortunately, there has been excellent scientific research on the topic over the past decade, leading to greater clarity and less hype.

Ten years ago, when I wrote my book, I was concerned that the body might process sugar in liquid form—whether in a sugar-sweetened beverage (SSB) or fruit juice—differently from sugar in solid foods. Without scientific proof, I wrote:

When you eat an apple, it takes time for your stomach to break down the fibre in the apple to extract the fructose; when you drink a sugar-containing soft drink, that work has already been done for you. Some argue that the “rush” of fructose in a soft drink may overload your liver and encourage it to turn it into fat.

There is another issue with calorific soft drinks: some researchers have questioned whether the mind registers the calories in liquids.  For most of human existence, nearly all calories came from solid food. Only in recent history have humans obtained significant calories from liquids. Therefore, it would not be surprising if the human brain is not hardwired to recognise this new phenomenon of calorie-containing liquids. 

You can try a simple test at home. One 8-oz (250-ml) glass of apple juice contains approximately 175 calories from three to four apples. This evening, before dinner, drink a glass of apple juice and see if it reduces your appetite. You will find it won’t.

Tomorrow evening, eat three and a half apples before sitting down at the dinner table. Even though you have consumed the same number of calories as the previous evening, you will find that you are far less hungry. Your stomach will feel full, giving you a sensation of “satiety” that will result in you eating less for dinner.

Note that both HFCS and table sugar are similar; they contain approximately the same amounts of glucose and fructose. Glucose is absorbed directly into the bloodstream (activating the brain’s reward system), but fructose must first be processed by the liver. If the liver receives too much fructose at once, it converts some of it into fat. 

It appears I was at least partly right. In the largest and most comprehensive meta-analysis of its kind (1), researchers from Brigham Young University, collaborating with researchers from German institutions, found that the type and source of sugar may be more significant than previously believed. They state:

Researchers analysed data from over half a million people across multiple continents, revealing a surprising twist: sugar consumed through beverages—like soda and even fruit juice—was consistently linked to a higher risk of developing type 2 diabetes. Meanwhile, other sugar sources showed no such link and, in some cases, were even associated with a lower risk.

Another study (2), also published this year, raised similar concerns. The authors wrote:

Because of their liquid form, Sugar-Sweetened Beverages (SSBs) are rapidly consumed and digested, resulting in lower satiety, higher caloric intake, and weight gain. 

High doses of rapidly digested fructose directly activate hepatic fat synthesis, leading to ectopic fat deposition and metabolic dysfunction in liver and muscle. SSBs may also replace other healthier foods in the diet, contributing to harm through their absence.

In 2023, the British Medical Journal published an umbrella review (3) of dietary sugar consumption and health, highlighting the role that SSBs play:

Generally, sugar-sweetened beverages are the largest source of added sugars, including carbonated and non-carbonated soft drinks, fruit drinks, and sports and energy drinks. Previous surveys have shown that consumption of sugar-sweetened beverages is declining in many developed countries, although consumption levels remain high. However, the consumption of sugar-sweetened beverages is still increasing in many developing countries, which may be attributed to their increased availability, accompanied by economic development.

The message is resonating, particularly among younger generations. In a narrative review of the impact of free sugar on human health (4), the authors state:

The turn of the century witnessed a modest decline in added sugar intake. A report by the US Department of Agriculture noted a 14% reduction in added sugars and sweeteners between 1999 and 2014 [76]. Trends from the US 2001 to 2018 National Health and Nutrition Examination Survey (NHANES) highlighted this reduction, albeit observed only in younger adults (aged 19–50 years) from a mean of 96.6 g to 72.3 g per day, including a reduction in SSBs from 49.7% of daily sugar intake to 37.7% [79].

A similar reduction in sugar was observed in Australia and New Zealand between 1995 and 2011, with the proportion of dietary energy from free sugars declining from 12.5% to 10.9%. The greatest contributor to this decline was again observed in children and young adults.

As a bit of fun, I included a sugar-trader’s diet in my 2105 book (5), writing:

A friend of my wife recently completed a “juice week” during which she consumed only vegetable and fruit juice for seven days. She did it to detox her body and lose weight. My wife asked her whether she had lost weight, and she replied that she hadn’t, but she did feel better and enjoyed the challenge of not consuming anything that hadn’t been blended. 

There are two issues with this. The first is that blending fruit may lead to consuming more fruit without feeling full. The second is that the liver might struggle to process all the fructose received at once, potentially converting some of it into fat. 

If you eat the fruit whole rather than blending it first, you will not only eat less of it but also allow the fructose to be absorbed more slowly into the body, giving your liver more time to process it. (You should notice the use of the word “may”; this remains a controversial topic.) Therefore, liquifying fruit into smoothies or juice means you will consume more calories and less fibre. Instead of juicing the fruit, eat it whole.

However, I also added:

My grandmother used to say, “A little bit of what you fancy does you good; that is my first rule of healthy eating.” 

Or, as Oscar Wilde once famously said, “Moderation in all things, including moderation.”

References

1 Brigham Young University, 2025: Differential risk from sugar in drinks vs solid food.

2 Lara-Castor et al., Nature Medicine, 2025: Burden of disease analysis related to SSBs.

3 BMJ Umbrella Review, 2023: Sugar’s association with 45 adverse health outcomes.

4 Gillespie KM et al., 2023: Narrative review of free sugar impact.

5 Yeah, you’re right. I won’t include a sugar trader’s diet in my new book.

(C) Commodity Conversations 2025

In a previous blog post, Pedro Nonay discussed how regional champions are taking market share from traditional grain trading companies.

One of my readers kindly shared a link to a case study by Marcos Fava Neves, Dean of Harven Agribusiness University in Ribeiro Preto. It concerns AMAGGI, a notable regional player in Brazil.

I am embarrassed to admit that I only included a brief paragraph about AMAGGI in my 2019 book, Out of the Shadows – The New Merchants of Grain.

I try in my books and blogs to present a positive picture of our sector and the companies that operate within it, but without falling into what I call “Public Relations Fluff.” It is a difficult balance to strike.

Some reviewers have criticised my books for depicting an overly optimistic view of the sector. Nevertheless, I make no apologies. There are more than enough books that present a critically negative portrayal of the agricultural commodity trade. I hope my books help balance out some of those negative accounts.

Having given that disclaimer, this is what I would write about AMAGGI if I were to update my book now.

And, I must admit, the company is a prime example of a regional champion.

A Brief History

AMAGGI traces its origins to 1977, when André Maggi established Sementes Maggi in Paraná, Brazil, initially concentrating on seed production. The company’s expansion into Mato Grosso marked a strategic shift towards large-scale soybean farming. This move reflected the Cerrado’s growing potential and set the stage for Brazil’s rural transformation.

By acquiring substantial farmland and investing in storage and logistics, AMAGGI facilitated significant productivity improvements and played a key role in the development of towns such as Sapezal. AMAGGI subsequently diversified into energy, logistics, and international trading, establishing offices in China, Paraguay, and Europe over the following decades.

Following André Maggi’s death in 2001, his son, Blairo Maggi, assumed leadership of the company. He also gained national recognition as a governor of Mato Grosso and Brazil’s Minister of Agriculture.

AMAGGI’s growth mirrors the wider Brazilian agribusiness trend towards vertical integration, asset-heavy logistics, and internationalisation.

Market Share and Competition

Today, AMAGGI ranks among the world’s largest private soybean producers, managing over 360,000 hectares of farmland and trading nearly 20 million tonnes of grains and fibres annually, primarily soy, corn, and cotton. It cultivates more than 1.5 million tonnes of soybeans each year on its own farms.

Annual sales consistently surpass US$9 billion, positioning AMAGGI among the world’s top-tier players. AMAGGI’s market share in Brazilian soybean exports is smaller than that of global multinationals but remains significant among domestically owned companies. In recent years, AMAGGI has exported approximately 9% of Brazilian soy, a figure comparable to Louis Dreyfus but lower than Cargill’s 16%, Bunge’s 12%, and ADM’s 11%.

AMAGGI’s main competitors all operate soy processing plants and extensive regional supply chains in Brazil. These multinationals compete both in sourcing and logistics across the country, particularly in Mato Grosso, the nation’s top grain-producing state.

Domestically, competitors such as Raízen (bioenergy), Lavoro (input distribution), and Comerc Energia (energy solutions) challenge AMAGGI’s diversified business model. However, AMAGGI remains unique for its deeply integrated approach, combining agribusiness, logistics, and energy under a single corporate structure.

AMAGGI’s share of global soy and grain flows is significant and increasing, generally estimated at 4–5% of the world’s soy trade and a similar proportion for total grains based on traded volume.

AMAGGI’s vertical integration, emphasis on Brazilian origination, and rapid volume expansion have enhanced its global significance. Still, the worldwide soy and grain sector remains highly fragmented, with no single company holding double-digit market share.

Strategic Direction and Future Plans

AMAGGI’s recent strategic initiatives emphasise a dual focus on sustainability and vertical integration. The company has invested heavily in logistics to enhance grain export capacity, expanded energy generation (notably hydro and biodiesel), and actively pursued digitisation and environmental management platforms, such as ORIGINAR, a technology platform launched by Amaggi to monitor its grain supply chain.

Sustainability partnerships, such as those with reNature, underscore AMAGGI’s commitment to leading in regenerative agriculture and climate-aligned supply chains.

Looking ahead, AMAGGI anticipates further international expansion, harnessing technology for supply chain management, and exploiting Brazil’s growing reputation in sustainable commodity exports. While competition in global agri-trade may increase, the company’s integrated model, substantial asset base, and focus on sustainability should keep it at the forefront of the Latin American agribusiness story.

PS. Please let me know if you feel that I should highlight other regional champions.

PPS, Zero Carbon Analytics recently published a report on soy production in the Cerrado and how land clearance is reducing rainfall and adversely affecting yields. It’s worth reading.

© Commodity Conversations® 2025

As Pedro Nonay explained on a panel during the recent Commodities Show in Geneva, there has been a quiet revolution in grain trading over the past decade: the world of neat, global flows dominated by a few multinationals is giving way to a more fragmented landscape where regional champions and state-backed firms control an increasing share of the trade.

From ABCD To ABCCD++

For most of the modern era, global grain flows were dominated by a small number of international firms that combined origination, logistics, risk management, and relationships under a single global umbrella. That model has not vanished, but it has been weakened by specialised regional players who understand their local basins better than anyone else.

This shift is not accidental; it reflects politics, sanctions, food security concerns, and a broader rewiring of globalisation into a more bipolar transactional system. Grain trading, as it often does, is simply expressing in physical flows what is already true in geopolitics.​

Wheat As The Front Line

Wheat is where this fragmentation is most visible. Russia now accounts for close to 30 per cent of world wheat exports, yet international players are largely excluded from that flow, with state-linked or domestic houses acting as the key conduits.

The result is a two-tier market: on one side, global traders who still dominate in many origins and destinations; on the other, a growing cadre of regional champions that manage specific corridors and price relationships. The more politics intrude, the more those regional specialists gain relative power vs the old global model.​

Three Tiers Of Players

The emerging business structure can be organised into three tiers: global, state, and regional. The large multinationals are consolidating, becoming fewer and bigger, seeking scale in capital, risk, data and logistics to defend their global relevance.​

Alongside them sit state players, whose mandates blend economics, politics, and food security: Demetra/Solaris in Russia, COFCO in China, Olam in its Gulf-linked incarnation, and sovereign-backed stakes in traditional houses such as ADQ’s investment in Louis Dreyfus.

Then there are companies with a strong local presence that have been expanding their CIF trading, including Cefetra in Europe, Invictus and AlGhurair in the Middle East and Africa, and Enerfo in Asia.

We should also mention that there are long-established local companies with crushing operations at origins such as Argentina and Brazil, and destinations such as China or Algeria.

Then there is the third bloc: regional champions that connect local producers and consumers to this more polarised global system, often with sharper local knowledge and greater political agility.

Why Regional Champions Are Winning Share

Several forces are steering volume towards regional specialists. First, the world is transitioning from an era of multilateralism and rules-based trade to what Pedro terms a “bi-decade” that is bipolar, biglobal, bilateral, and binary, where being aligned—or at least acceptable—to a specific camp is as important as price.

Secondly, the grain trade is becoming more ‘weaponised”, with export embargoes, sanctions, and government-to-government deals changing who can ship to whom and under what conditions. In this environment, agile, locally trusted operators often hold an advantage over global corporations that are more constrained by regulation, reputation, and financing arrangements.

Logistics Revolution And The Local Edge

At the same time, logistics are undergoing their own revolution, propelled by climate-related changes such as a potentially more navigable Arctic, as well as shifting investments in ports, railways, and storage facilities along new trade routes. Regional leaders are often best placed near these assets to capitalise on emerging bottlenecks or arbitrage opportunities as routes evolve.

Their competitive advantage is rarely just freight; it is culture, relationships, and the ability to operate with respect for local norms rather than with an imperial mindset. In a world where money no longer buys everything, value systems and mutual trust can be as decisive as balance sheet strength.

Competition, Ethics And Behaviour

Fragmentation has not only altered who trades but also how they behave. The more the system divides into blocs and corridors, the more inconsistent standards become regarding transparency, ESG, and even fundamental business ethics.

This creates a competitive environment where some actors must adhere to strict public-market and Western compliance standards. In contrast, others operate under more flexible or alternative rules, supported by state interests or oligarchic capital. For regional champions, the challenge and opportunity lie in manoeuvring between these worlds without compromising long-term credibility.

From Free Trade To G2G

The core question here is whether the grain trade is returning to a government-dominated model similar to the 1970s. The comparison is fitting, but the outcomes differ: today’s world is highly interconnected, data-driven, and technologically mediated, so state power now appears more through partnerships, stakes, regulations, and informal pressure rather than solely via centralised state boards.

The debate is increasingly focused on “free trade versus government-to-government trade,” and regional champions often sit in the middle, acting as executors or partners in deals where states set the framework and private companies handle the risk and logistics.

How The Majors Need To Adapt

For global companies, competing in this environment requires more humility and collaboration. The era of imposing universal templates on every region has ended; respect and regionalisation now become strategic necessities rather than mere marketing catchphrases.

Future winners among the majors will probably be those who can work together with state entities and regional champions, align values where possible, and accept that control is less important than access. In a fragmented world, connectivity—being the trusted link between very different systems—may be the ultimate defence.

Hedge Funds and Energy Companies Eye Physical Trading

Alongside regional and national players, hedge funds using advanced analytics are broadening their focus from proprietary agricultural trading to physical markets, as demonstrated by Hartree’s acquisition of ED&F Man and Viterra’s cotton team. Energy trading giants like Vitol are also exploring physical trading but often remain focused on proprietary activities. The merging of data, digital tools, and real-time analytics is speeding up these developments, giving new entrants an advantage. These firms are actively recruiting talent from traditional agricultural traders and will continue to do so.

What It Means For The Next Generation

For young people entering grain trading, the rise of regional champions and state players may appear to create a more crowded landscape, but it also provides many more entry points. Careers are no longer confined to a few global desks; they can begin in specialised regional firms, logistics companies, state-linked businesses, or even data and AI providers integrated into this ecosystem.

The common denominator remains the same: curiosity, analytical rigour, common sense, and the ability to raise the periscope and view markets from multiple angles rather than from a single silo. In a world of asymmetry—in demography, competitiveness, energy, and power—those who understand how regional realities connect to global flows will be the true champions of the next grain-trading era.

PS, I interviewed Pedro this time last year for my book Commodity Conversations – An Introduction to Trading Agricultural Commodities. You can read an extract of the interview here.

© Commodity Conversations ® 2025

A master’s student recently asked me for advice. She had applied for a trading position at a major oil-trading firm but had been turned down.

She was sharp, articulate, and clearly passionate about markets. If I still ran my company, I would have hired her immediately. So why didn’t they?

My guess — and it was only a guess — was that the interviewer didn’t think she was “tough” enough.

Oil trading has that reputation. Sometimes you negotiate contracts in places where business norms, political environments, and expectations are very different. The work can feel intense, unpredictable, and occasionally confrontational.

But “toughness” in trading looks very different from the cliché.

Because the truth is: markets will knock down everyone.

Even when your analysis is solid, you can lose money. You can be right and still be forced out of a position. The key isn’t bravado; it’s the ability to reset, learn, and get back into the ring. A kind of emotional agility.

Rocky Balboa with spreadsheets.

As the student told me about some of the challenges she’d overcome in her life, it was apparent she had exactly the resilience the job required. Gender has nothing to do with it. Resilience is universal.

After our conversation, I found myself reflecting on my own assumptions.

Interviewers make life-changing decisions based on ten-minute conversations — and our brains love shortcuts.

But here’s what I’ve learned after decades in markets:

1. You can be both tough and kind.

Some of the best traders I know are empathetic, generous mentors. They’re steady under pressure, not loud.

2. Physical trading isn’t about confrontation.

The best trades are built on collaboration, transparency, and long-term relationships — not “winning” at someone else’s expense.

When I traded derivatives, I never tried to “beat” the market. I treated it like a conversation partner. When I moved into physical trading, I realised some people thrive in high-pressure negotiations — and some don’t. I eventually found my place as a broker, where analysis and relationships mattered more than brinkmanship.

And let’s be honest: trading isn’t the only job that demands toughness. Teachers, doctors, founders, artists, engineers — everyone gets knocked down. Everyone has to get up again.

So yes, you need resilience to trade. But resilience isn’t aggression. It isn’t volume. It isn’t swagger.

At the recent Commodities Show in Geneva, I asked a friend — one of the best traders I know — whether toughness is essential. He paused for a long time.

Then he smiled and said, “You need to be as hard as nails.”

Maybe. Or maybe there’s more than one way to be tough.

What do you think?

© Commodity Conversations® 2025

I recently published a blog about trends and threats in the commodity business. Climate change is one of the threats. This week, I reached out to Steve Wateridge to ask how it is affecting the two crops he follows—cocoa and coffee. I asked first about cocoa.

Climate change is often blamed for everything. There’s a lobby dedicated to amplifying the threat of climate change and pointing to any weather anomaly as evidence of it. You hear about it all the time. It is sometimes justified, but not always.

Cocoa and coffee prices have hit record highs in the last 18 months. I will discuss coffee later, but the record-high cocoa prices were caused less by climate change and more by a severe El Niño, along with long-term structural issues such as ageing trees and swollen shoot disease.

The disease is caused by the Cacao Swollen Shoot Virus (CSSV), which is transmitted from infected to healthy cacao trees by different mealybug species. It is one of the most economically damaging viruses affecting cacao production, as CSSV reduces yields over time and will eventually cause trees to die. The disease has had a significant impact on cacao production in Ghana and Côte d’Ivoire in recent years.

The disease spreads slowly, but as yields decline, the farmer gives up and replants. The problem is, if they replant without realising they’ve got the virus, the new trees will become infected as well. This has been ongoing for 20 years. I first became aware of CSSV in Côte d’Ivoire in 2008, and it has since worsened, yet the government has not taken action to control its spread. The disease is the leading cause of recent poor crop yields in Côte d’Ivoire and Ghana.

Cocoa prices have remained too low for too long. Governments have not taken the disease seriously, possibly because it is mainly smallholders who produce cocoa. There are no big plantations. The Ivorians may not have been aware of the way the disease was spreading, but the Ghanaians have known about it. It was a significant factor in their crop’s collapse in the 1970s, but the government lacks the funds to address it.

It’s truly coming home to roost. The worrying thing is that nothing significant is being done to change it. Cocoa production in Côte d’Ivoire and Ghana will continue to decline until this issue is addressed.

But isn’t climate change at least partly responsible?

Climate change has not been a significant issue. I don’t see any convincing evidence that the climate in West Africa has changed enough to cause a substantial decline in crop yields. We are observing record crops in Cameroon, Nigeria, DR Congo, and Uganda. In South America, record crops are also being harvested in Ecuador and Peru.

Why has the CSSV issue not been addressed previously? And with these record-high cocoa prices, will producers and governments now have the funds to tackle it?

Why has it not been addressed before? You would need to ask the governments of Côte d’Ivoire and Ghana. Either they were unaware of it, or they ignored it.

Once a tree becomes infected, it must be cut down, the infected tissue burned, left for 12 months, and then replanted. There has been no such programme in place. From 2010 to 2020, cocoa production in Côte d’Ivoire expanded significantly, and to a lesser extent in Ghana’s western region, driven by increased area, deforestation, and new plantings. This increase offset the adverse effects of swollen shoot disease.

Côte d’Ivoire production nearly doubled during that period, even as the disease was spreading. Yields began to decline once these new trees reached maturity, and the disease became even more evident, accelerating that decline.

Despite the prices we’ve seen over the last 18 months, there are no real efforts to tackle the issue in Côte d’Ivoire and Ghana. This means prices will need to remain higher for longer to encourage production elsewhere and reduce demand.

The question becomes, “What price level achieves that?

Over the last 12 months, we found that a cocoa price of $10,000 per tonne is too high. It destroys too much demand and incentivises too much supply outside Côte d’Ivoire and Ghana.

It doesn’t mean we have to revert to $2,000 or $3,000 per tonne. That would be too low. A price around $5,000 or $6,000 per tonne should establish a balance between supply and demand, with short-term stock replenishment.

You mentioned that other West African producers are experiencing record crops. What are they doing differently that Côte d’Ivoire and Ghana are not doing right?

They pass higher prices on to the farmers. Côte d’Ivoire and Ghana have state marketing boards that sell forward. Since they sold at lower prices, they haven’t been able to give farmers the higher market prices. Now, farmers in both countries are receiving $5,000 per tonne.

When the price was at $12,000 per tonne, farmers in Cameroon and Nigeria received $10,000 per tonne. They have responded with better farm care, disease-spraying, improved husbandry, and new plantings. The new trees won’t produce fruit for another couple of years, but all of this helps.

The state marketing boards impose a tax on farmers in Côte d’Ivoire and Ghana. They pass on 60-70% of the world price, while in Ecuador, Cameroon, and Nigeria, farmers receive 80-90% of the world price. Unfortunately, the proceeds from that taxation haven’t been invested in the cocoa sector. Instead, they have been used for other purposes.

How has consumption been impacted?

When prices ranged between $2,000 and $3,000 per tonne, we became accustomed to cocoa consumption increasing by 2 to 3 per cent per year.

However, if your two leading producing countries are in decline, you need significantly higher prices to boost cocoa output elsewhere and to slow demand growth. We’ve seen unprecedented demand destruction in cocoa. We’ve lost 10 per cent over the past two years due to high prices.

It’s not just about passing higher prices to consumers, leading them to eat less chocolate. You’re seeing manufacturers reduce cocoa content in their products. The classic example was just this week, when McVitie’s in the UK replaced cocoa butter in its Penguins and Club biscuits with cheaper vegetable fat. They can no longer say,  If you like a lot of chocolate in your biscuit, join our Club, because it’s not real chocolate; it’s chocolate-flavour.

You mentioned that vegetable oils are replacing cocoa butter. Does this alter the taste of the finished biscuit?

When I entered the cocoa industry in the 1980s, I worked at Rowntree’s. Cocoa butter is a delicate vegetable fat in terms of its cooling curve —the temperature at which it melts and so on. It wasn’t easy to replicate. At that time, there were alternatives, but they often felt waxy. You could tell the difference between real chocolate with cocoa butter and cocoa liquor, and the chocolate coatings, which contained cocoa liquor or powder and vegetable fat.

The technology has improved so much that it’s difficult to tell the difference. I’ve tried the new recipe for Penguin biscuits. I didn’t know that it was only chocolate flavouring. They’ve replaced cocoa butter with a great substitute. I couldn’t tell the difference.

It makes it easier for these substitutions to occur. There’s reputational risk. They have had to change the slogan for Club biscuits, and it has attracted significant media attention, even though consumers can’t tell the difference.

Well, that’s all I’ve got on cocoa. Do you have enough energy left to talk about coffee and climate change?

Absolutely! Climate change is significantly impacting coffee production.

Over the past 40 years, the coffee market has generally operated with oversupply at or near production costs, punctuated by price spikes during adverse weather conditions. Brazil is the world’s largest coffee producer, but it is susceptible to periodic droughts and frosts that affect production. These events cause price increases, which tend to limit demand growth and encourage increased production elsewhere. When the weather returns to normal, Brazil produces a large crop, leading to another period of oversupply, which drives prices back to the cost of production. Typically, this cycle takes about 18 months to two years to complete.

The main change is that the current issues in coffee, which have led to record-high prices recently, basically began about five years ago. It was during 2021-22 when a major weather-related deficit occurred, caused by drought and frost in Brazil. Since then, the Brazilian crop has continued to underperform consistently.

I firmly believe that climate change is responsible. We have the evidence. Look at the last five years in Espirito Santo and Minas Gerais. The weather has been drier, on average, than it was over the previous ten years, and those ten years were drier than the ten years before them. It’s also been hotter, on average, than the last ten years, which were hotter than the ten years before that.

Climatologists attribute it directly to deforestation—not only in the Amazon but also in the Atlantic forest. Whatever the cause, the conditions in Espirito Santo and Minas Gerais are now less than ideal for coffee growing. It doesn’t mean you can’t grow coffee, but it does mean the crops consistently underperform their potential.

That’s why we need prices to remain high to curb demand growth. We’re not observing anything like the demand destruction we see in cocoa.

Coffee demand tends to be more resilient. It is uncommon for global coffee demand to decline, even with record-high prices. What we see is a stabilisation in demand growth. The long-term trend indicates that coffee consumption grows at about 1.5% annually. If it doesn’t grow for seven years, that leads to a 10.5% decrease in demand. Prices have been very good for farmers, and we are continually increasing production capacity through better farm management and expanding cultivation areas. What we are not observing is that capacity being fulfilled. It is certainly not in Brazil.

We’ve also experienced a severe El Niño that has impacted coffee production in Asia. Severe El Niños are often linked with drought in Indonesia and Vietnam, resulting in poor crop yields. Additionally, there have been disease issues in Central America and Colombia.

What we need to bring prices down is for Brazil to reach its full potential. If that happens, there will be a significant surplus, and prices will drop to the level of production costs.

What about Vietnam? Has climate change affected coffee production there, too?

I don’t see much evidence of that. The problems in Vietnam over the past few years have been mainly due to a severe El Niño, which brought the rainy season to an early end and delayed its start in April and May. This increases pressure on irrigation. The robusta crop depends on irrigation.

Guy Hogge once told me that coffee production in Central America was moving to higher altitudes and had already increased by about 500 metres because of climate change. Is that true?

I don’t know as much about Central America as Brazil, Vietnam, and Colombia, as these are the leading coffee producers. However, Central America’s production hasn’t increased in the last five or ten years. They’ve had disease issues and labour shortages caused by migration to the US. I wouldn’t like to say if climate is also a problem there.

However, climate change in Brazil is a significant factor. It’s a real game-changer. I’m no longer sure what a typical weather pattern for crops in Brazil is, since we don’t seem to experience normal weather year after year.

Is the coffee sector taking climate change seriously?

That’s a tough question. Brazilian farmers are aware of it, but are they taking it seriously? There was a severe drought in Espirito Santo in 2016-2017, and the farmers invested heavily in irrigation and water storage. Previously, many farms irrigated from rivers, but the state government ended that practice, affecting crops. So now, many more farms have their own storage capacity.

I’m unsure whether that’s enough to lessen the impacts of climate change. It is helping, but the crops still underperform. However, prices will eventually fix the issue. They always do.

Slightly off topic, how is the US’s 50% tariff on Brazilian coffee imports impacting the market?

The coffee market experienced significant deficits in 2021/22 and 2022/23, leading to a drawdown of stocks.

Although the market was no longer in deficit in 2023/24 or 2024/25, we didn’t generate a surplus or rebuild stocks. We still face a tight stock situation. However, stocks should be replenished if we achieve a decent surplus in 2025/26 and 2026/27.

The 50% tariff has come amid a very tight stock situation in consumer countries. As a result, US roasters have tried to secure as much coffee as possible from outside Brazil, because Brazil is just too expensive. You know, usually the most significant flow of coffee in the world in July, August, and September is from Brazil to the US. It hasn’t necessarily stopped, but it’s undoubtedly been curtailed.

They are even shipping certified stocks from Europe to the US. The tariffs don’t affect global supply because the Brazilian crop remains available. But because Brazilian farmers have recently made substantial profits due to high prices, they are not panicking into selling their coffee cheaply or flooding markets outside the US. They believe this will be a temporary problem and are holding onto their coffee.

So, with the Brazilians holding on to their coffee, the US is attracting everything from outside Brazil, and the supply situation is only tightening.

What could cocoa learn from coffee regarding climate change and its associated risks? Should cocoa be worried about climate change?

There is no conclusive evidence that the climate is changing significantly in cocoa-producing regions.

If it becomes an issue, it will only worsen problems caused by the disease and the ageing tree stock. Prices will increase to a level that encourages farmers to invest more in cocoa, while discouraging people from consuming so much. That’s how markets operate.

Thank you, Steve, for your time and input.

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