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The Presidents of Brazil and the US met this week to discuss the possibility of signing new trade deals, although experts noted that the trade between the two countries was already well-balanced. The US wants to expand ethanol exports but Brazil said it would only consider the move if it can export more sugar to the US, and few expect either side will make significant concessions.

The Brazilian President did mention the possibility of expanding trade relations with China. Having already invested USD 2 billion in Brazil’s agriculture, China is now interested in investing in the ethanol sector as the country prepares to meet its 2020 ethanol mandate. China absorbed 36% of Brazil’s agricultural exports and spent some USD 35 billion to buy Brazilian agricultural products in 2018, up 33% on year.

The EU and the US hit a roadblock during talks on a new trade agreement as the EU does not want to include agriculture. The EU did offer concessions, such as giving the US a share of its duty-free import quota of hormone-free beef, in an attempt to convince the White House to remove anti-dumping duties. Previous concessions included buying more soybean or classifying US soy as a sustainable biofuel feedstock. Australia and Uruguay – who took advantage of the beef quota when it was first opened in 2009 – could challenge this latest move at the WTO.

The US-China trade war was expected to have a long term impact on global agricultural tradeflows but the spread of the African swine fever outbreak in China could now counteract some of these changes. The crisis is helping US pig farmers as China imported huge amounts of pork over the past two weeks despite the 62% tariff recently imposed. However, the US is being very careful to protect its pig population from the virus and the USDA recently seized 450mt of contraband pork products from China, the largest seizure of contraband food in US history.

An expert suggested that the outbreak will continue to lower Chinese demand for soybean for years as feed demand will drop, although US soybean could be diverted to feed the pigs exported to China. Nonetheless, US soybean area will stay almost constant this year as farmers have no viable alternative – other grains such as sorghum and corn are also subject to Chinese duties. Farmers also hope the government will resolve the trade dispute or offer another aid package.

In Japan, Nestle announced that it will expand its range of KitKat ruby chocolates after a successful launch in 2018. Ruby chocolate was developed by Barry Callebaut and is supposed to be the fourth kind of chocolate – after dark, milk and white chocolate. The firm said it had been surprised by the speed and scale of social media reactions, which was more efficient than any marketing campaign. It added that chocolate trends were now made in Asia, as Asian tends to be more open to new foods. In the US, the biggest chocolate market, ruby chocolate still has not received government approval. Specialty ingredients makers, such as Denmark’s probiotic and enzyme maker Chr Hansen Holding and England’s Tate & Lyle, which makes non-sugar sweeteners and texturizers, are also expected to benefit from these new consumer trends.

ADM announced that it has agreed to purchase one of the biggest citrus ingredient maker in Europe, Ziegler Group. The firm recently purchased another citrus firm, Florida Chemicals, and highlighted that it was positioning itself to be a leader in the fast-growing citrus flavour sector.

Euromonitor warned that image recognition might start to drop as consumers switch to healthier food. For the moment, however, packaged foods remain very popular. Some 41 out of Euromonitor’s Top 100 Megabrands in 2019 were packaged food items, with Coca-Cola, Pepsi, Nescafe and Lay’s taking the first four positions of most valuable brands. An unexpected brand, Google, is making a foray into the food world by promoting Refresh, a working group it founded to promote artificial intelligence and machine learning in agriculture.

We know that the food we eat has a huge influence on our lives, but researchers are now saying that food might even change the way we speak. The birth of agriculture meant farmers could make softer food – think cheese and porridge – which affected the shape of our teeth and jaws, according to this new paper. As a result, people were better able to make the ‘f’ and ‘v’ sounds which started to spread along with agriculture.

This summary was produced by ECRUU

Cargill will soon be opening a non-medicated premix production facility in Ohio, USA, as part of its efforts to find a solution to healthy livestock without antibiotics. The head of the group’s Premix and Nutrition business explained that nutrition was a key part in the transition away from drugs, adding that a healthier animal produced better meat and dairy. “Consumers really drive the supply chain,” he said, adding “The environment forces us to branch out far beyond just nutrients and ingredients.” Taking the move into ‘agtech’ one step further, Cargill has opened its first beauty lab in Shanghai, China, which will use the group’s expertise in food to develop sustainable and nature-derived products for the Asian market. In Russia, Cargill invested RUB 1.8 billion (USD 27 million) to expand the production of fats, oils and animal feeds in the Tula region as well as to set up a technology cluster.

Separately, Cargill has developed a new technology to give chocolate products the ‘right’ colour by using fewer chemicals, allowing to get previously difficult to obtain reddish and yellowish tones. The company explained that colour was very important for consumers and that this new method would make it much easier for food companies. Mondelez’ venture arm SnackFutures, meanwhile, has invested in a startup called Uplift which makes so-called “gut-healthy” foods and ingredients. Mondelez’ CEO said the aim was to re-invent snacks so that they have an active health component, “something that does not exist today.”

Olam reiterated its commitment to restore forests and fight deforestation as part of the Cocoa & Forests Initiative (CFI) across its supply chain, with a focus on West Africa. The company already used its supplier mapping to distribute 1.2 million trees in Cote d’Ivoire and Ghana. The aim is to “re-imagine the future of global agriculture where prosperous farmers (…) and healthy ecosystems can coexist,” the company said. The initiative fits well in the UN’s Decade on Ecosystem Restoration launched earlier this month. It hopes to restore 350 million ha of degraded land by 2030 to enhance food security and biodiversity.

In the same vein, China’s President said last week that he would not compromise the country’s health and environment for short term economic gain. The state market regulatory administration announced a new policy which made officials liable for issues around food safety, a major move to crackdown on the number of recent food scandals and improve the current food and drug safety standards.

The US’ Food and Drug Administration (FDA) and the US Department of Agriculture (USDA) announced they have finally agreed on a way to deal with cell-cultured meat. The FDA will regulate the collection and growth of cultured cells while the processing of those cells into meat, as well as labeling, will come under the USDA. While some wonder whether cell-cultured meat is commercially viable yet, some environmentalists have questioned whether the fuel used to power the labs is much better than the methane released by livestock. Regardless, the anti-meat trend seems to be getting increasingly popular. New York City’s mayor just announced “Meatless Mondays” for schools starting 2019/20. The program should reach out to almost a million students.

The US is set to get its first GMO seafood after the FDA gave AquaBounty the green light last week to start raising GMO salmon eggs in the country. The company, which is already implanted in Canada, had been blocked from the US market because of issues around labeling. The USDA’s bioengineered labeling guidance released in December will allow consumers to differentiate but opponents say the labels aren’t enough. AquaBounty’s CEO, on the other hand, pointed out that their salmon would be much fresher than the imported kind.  

A study by the University of California found that fish stocks of the most commercially consumed fish had on average dropped by 4% between 1930-2010 but some areas, notably in the North Sea, had lost close to 30% of their stocks. Overfishing, warming temperatures and acidification of the ocean are to blame. The black sea bass in the Atlantic, however, seems to be thriving in the warmer water. In a bid to make fishing more sustainable, US group Bumble Bee Foods has tied up with a German technology company to launch a platform tracking yellowfin tuna using blockchain technology. Consumers will have access to the whole supply chain by scanning a QR code on the retail package and see for themselves that the products conform to the International Seafood Sustainability Foundation.
Finally, winemakers are looking into replacing the traditional cylindrical glass bottles with Garçon Wines’ flat bottles made from recycled PET. The startup said that it can pack 10 bottles in the space of 4 traditionally sized bottled and that each bottle is 87% lighter, thereby reducing carbon emissions by 500g/bottle.

The biotech industry in the US is being proactive in its campaign to promote gene-edited crops as it hopes to avoid some of the consumer push back that followed the launch of GMOs. While GMOs involve adding foreign DNA to plants, gene-editing happens when DNA is removed. Nonetheless, groups like the Non-GMO Project say the two processes are almost identical and they predict that the industry will struggle to make gene-edited crops acceptable among the general public. The USDA is working to update its rules for gene-edited crops, while the head of the agency has repeatedly defended food companies against “fear your food” movements.

Unlike the USDA, however, the FDA currently classifies gene-edited food as drugs, which implies a very rigorous and lengthy approval process. This expert argues that this is a mistake as gene-edited food is still food but with a snippet of DNA removed. Gene-editing technologies such as CRISPR/Cas9 have huge potential in lowering carbon emissions or improving animal welfare but misguided and unjustified regulations will hinder their development and adoption, she argued.

Meanwhile, the FDA is considering a petition from the Swiss chocolate maker Barry Callebaut who is hoping to put health claims on its products. Although a similar petition was previously rejected, the European Commission authorised the health claims back in 2013. In its petition, Barry Callebaut pointed to some research which identified the flavanols present in cocoa as a promoter of healthy blood flow. Promoting the health aspects of chocolate could be essential to protect demand amid a general shift towards what the public perceives as healthier food.

In Belgium, Cargill announced its purchase of Smet, a family-owned producer of semi-finished chocolate products and gourmet chocolate. And while some are focusing on expanding their premium chocolate lines, Nestle unveiled its Cocoa & Forests Action Plan which will seek to remove all deforestation and labour abuse from its supply chain. As part of the effort, Nestle released the list of its suppliers in Ghana: Agroecom and Cocoa Merchants. It also revealed that Barry Callebaut, Cargill and Cocoanect acted as direct suppliers in Cote D’Ivoire. Another chocolate giant, Mondelez, made a similar pledge this week as it committed to monitor all of its suppliers in Ghana, Cote d’Ivoire and Indonesia with satellites to identify and address incidences of deforestation.

Such efforts could become essential, as a Senate committee in the US approved a bill that would force all large food retailers in Washington to publicly report any human right violations in their supply chain, in an effort to combat human trafficking and slavery. The food industry union argued against the proposal and said it would create a “paperwork nightmare”, while the dairy union said farmers and resellers should not be made responsible of regulating their suppliers. It highlighted that several government agencies already exist for that specific purpose.

Besides regulations, consumer demand is also forcing major food producers to adapt. Bloomberg compiled this list of ingredients which have been subject to sudden changes in perception, such as milk, cheese, sugar and corn syrup, and it noted that firms who failed to adapt have seen their value drop significantly.

Two major pharmaceutical companies, Sanofi and Novartis, announced that they have abandoned efforts to develop a drug to help obese patients lose weight. The decision was partly due to the difficulty in achieving significant results and the growing perception that obesity is not a disease but a lifestyle problem. On the other hand, Novo Nordisk, the last major firm researching the issue, is working on a new drug that could cut patients weight by up to 12.7%.

Lastly this week, researchers have finally solved one of the major mysteries in the food world: why do grapes catch fire when microwaved? Watch this video to understand the complexity of plasma clouds and microwave resonance, or just to see grapes exploding!

This summary was produced by ECRUU

The four ABCDs – ADM, Bunge, Cargill and Louis Dreyfus – all reported that the US-China trade dispute had hurt their bottom line in 2018 despite some initial optimism. Bunge’s agribusiness reported a gross profit of USD 203 million in the fourth quarter, down from USD 238 million last year, and a net loss available to shareholders, mostly because of the truce in the US-China dispute which devalued its Brazilian soybean stocks. Similarly, Wilmar reported a 50% fall on year in net profit during the quarter, at USD 201 million, mostly due to losses in its sugar segment. Regardless, the CEO said the company might look at expanding its sugar business this year, such as buying Olam’s two sugar mills in India if the price was right. Olam, meanwhile, announced that it has purchased the largest cocoa processor in Indonesia, BT Cocoa, to help it integrate its cocoa supply chain.

Looking forward, volatility could remain high next year despite the recent US-China truce. A survey revealed that most US firms expect the situation to stay the same or deteriorate further. Analysts also suggested that the enforcement of any trade agreement could create more uncertainties. But while volatility used to be perceived as an opportunity to increase profits the trade houses’ performance suggests this is not necessarily the case.

Slowing demand growth and increasing transparency are also making it harder for traders to make money. A grains broker argued that “agriculture, in general, is doing a phenomenal job of producing goods, but unfortunately demand is relatively slow.” A hedge fund manager added that to survive, traders are either going to have to reposition themselves in the supply chain or move to riskier, less transparent markets.

On the brighter side, the shift from meat to vegetable protein is expected to change world trade flows and create new opportunities. Contrary to the huge volumes of grains traded globally, pulses, for the moment, are eaten mainly where they are produced but this could soon change.

Talking of grains, the USDA noted that Russia will take the lead as the world’s largest wheat exporter this year, after doubling output over the last 10 years. New wheat varieties, better harvesting technology and improvements in port and rail infrastructure have allowed Russian wheat to compete with US origin even in Mexico.

The share price of Kraft Heinz dropped 27% last week, wiping out close to USD 16 billion in market value, following a series of bad news such as an asset write-down and an SEC subpoena. Analysts said Kraft Heinz might be facing an existential crisis as it has failed to adapt to changing consumer tastes and stagnating sales. Some market commentators noted a pattern where large EU firms such as Nestle, Unilever and Danone, have so far been successful in staying relevant. Nestle, for one, has just released an organic version of Nescafé Gold in the UK.

However, researchers note that large corporations are failing to make their core brands more environmentally friendly, which is just as important as encouraging innovative start-ups. Nonetheless, the CDP research firm ranked Danone and Nestle as the top two companies most involved in addressing climate change, out of 16 major consumer brands. The last position went to Kraft Heinz.

A new FAO report highlighted that our food system is destroying biodiversity, which in turn is putting our whole food supply at risk. The head of the WWF said he was optimistic that humans could find long-term solutions, through changing diets, technology, and reduced waste but solutions might not be as obvious as they seem. This crop scientist argued that the boom of “ugly” fruits and vegetable shops in the US is not helping reduce waste – as farmers would otherwise plough them back into their fields or fed them to animals. A better solution, she adds, would be to move away from open-field farming towards much more efficient greenhouses. Similarly, after trying to live sustainably for a week, this VICE journalist said individual efforts to live sustainably won’t matter much unless large corporations and government took measures too.

In Africa, a think tank published a report warning food investors of the risk of legal disputes over land ownership. It pointed to recent policies in Liberia and Sierra Leone which potentially exposes agricultural producers to challenges by local populations claiming ownership of the land. The solution, the report says, is to develop long-term relations with locals.

Finally, in Sudan, exporters of gum arabic have been able to survive political unrest and US sanctions thanks to strong international demand. That’s because gum arabic, which is extracted from the acacia tree, is an essential ingredient in soft drinks. So much so that the US had exempted it from its sanctions. Sudan exported 60% of world supplies of gum arabic in 2018.

This summary was produced by ECRUU