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At the World Economic Forum in Davos, Cargill’s CEO said this was a difficult time for agriculture, especially for farmers in the US. He explained that the ongoing trade war, now in its eighth month, had already changed global trade patterns that could be difficult to reverse even in the long run.

The company also announced two new managerial appointments for its North American Protein Business as part of the recent change in the leadership structure. A company official said it highlighted Cargill’s focus on developing the “future of protein.” In Pakistan, meanwhile, Cargill will be investing USD 200 million in the next 5 years to help develop the dairy industry as well as the animal feed market. Louis Dreyfus, on the other hand, reiterated its plan to either sell or shut down its dairy segment as it continues to restructure and focus on its ‘core’ commodities. The CFO said that dairy only represented 1% of the group’s sales but used too much working capital.

Bunge lowered the 2018 earning forecast for its agribusiness by about USD 90-100 million and its sugar and ethanol segment by USD 60-70 million, citing the global grain glut and ongoing trade dispute with China. In addition, it has appointed a new acting CEO, the founding partner of Flatwater Partners, while three board members said they would not stand for re-election.

ADM is buying the remaining 50% stake in UK-based grains trading company Gleadell Agriculture from French cooperative InVivo to merge it with its UK marketing arm ADM Arkady. ADM said the aim was to strengthen its UK presence by increasing origination, storage and end-destination marketing. In Thailand, ADM has tied up with tapioca starch producer General Starch Limited to distribute the latter’s products in the EMEA region under ADM branding.

In Bangladesh, Wilmar and India-based Adani are investing USD 400 million to develop an industrial park in an economic zone. The investment will focus on food and include a waste refinery.

In today’s world, an estimated 20% of plant species are on the verge of extinction but the figure is much higher, at 60%, for coffee plants. An expert from Kew Gardens in the UK explained that wild coffee, although not palatable enough to drink, was key to the survival of the two coffee plant species we do drink – Arabica and Robusta. We depend on wild trees for seeds which can be crossed with domesticated species – something which could be a bit of an issue since the Global Change Biology officially classified Arabica as “threatened.” It expects its population will drop by half by 2088 as a result of climate change.

The good news, on the other hand, is that a new study by the US Department of Agriculture found that beef production, including the production of animal feed, caused 3.3% of the world’s GHG emissions, lower than the 14.5% previously estimated. The study also found that US beef farmers have successfully reduced their footprints and only use 5% of water withdrawals in the country.

Nitrogen pollution, meanwhile, remains a growing problem – about half of the nitrogen used in agriculture is lost into the atmosphere or water. A group of scientists are arguing that it would be much more efficient to regulate the few existing fertiliser producer groups rather than trying to shape the habits of millions of farmers. There are an estimated 2.1 million farms in the US while 5 groups control 80% of urea production in North America.

A new report unveiled in Davos points out the need for the world’s agriculture system to become more circular, which means reducing waste as well as sourcing food locally. If not, by 2050 as many as 5 million people could die every year from pollution, pesticide exposure and other factors resulting from today’s agriculture system.

A study from the University of Connecticut found that junk foods ads in the US disproportionately target Hispanic and black children which in turns means they are more at risk of diseases such as diabetes. Similarly, the US brewing industry is also trying to target more people of colour as well as women in a bid to expand its customer base amid slowing growth sales. As the Brewers Association put it “you cannot simply sell beer to young white dudes with beards.” The association also published a “diversity best practices” to boost diversity within the industry.

This summary was produced by ECRUU

The world’s four largest food traders seem to have benefited from the change in trade flows amid the US-China trade war and the additional demand for Brazilian grains. In 2018, Bunge maintained its place as the country’s top soybean exporter with 17.7 million mt, a 9.2% increase from the previous year, followed by Cargill with 12.15 million mt, a 1.4% increase on year. The third and fourth place went to Louis Dreyfus and Cofco, respectively, while ADM and Olam also reported significant improvements in exports. The head of ADM is hopeful that the trade war will end this year. He argued that it had made trade flows rather complicated. For instance, Argentina, the world’s third-biggest soybean producer, imported the biggest quantity of US origin soybean.

ADM announced a plan to purchase one of the largest producers of citrus ingredients in the world, Florida Chemical Company, which could happen in early 2019, pending government approval. The company president said the move would help ADM achieve its goal of becoming the biggest nutrition company. The CEO said the group looked on average at 50 companies every year for potential acquisition. He admitted having analysed companies like Bunge, Louis Dreyfus and Cargill but said the time was not right for a ‘monster’ acquisition. He explained that joint ventures, like the one it has with Cargill in Egypt, would make more sense for the time being.

The Brazilian meat giant JBS is also expected to benefit from the trade war as the USDA announced that it will spend USD 5 million to buy 1.8 million lb of its pork, as part of the USD 12 billion aid package announced by the White House. Lobbyists are already complaining that the money is going to a foreign firm, but the USDA highlighted that the funds will be spent to purchase American-made products.

The US President’s farm support could start to waiver as farmers increasingly struggle because of the delay in the distribution of government grants and key USDA supply and demand reports caused by the shutdown. The USDA did, however, find a way to avoid a potential controversy by funding the food assistance program up to the end of February, while the FDA said that essential food inspections will continue, although it remains unclear how long inspectors will work without pay.

Dairy producers, meanwhile, are celebrating as the US government has started undoing efforts by the previous administration to make school lunches healthier. The National School Lunch Program accounted for up 7.6% of all liquid dairy sales in 2017 which helped compensate for a consistent drop in demand, as per capita milk consumption fell 40% since 1975. This marks the return of full-fat chocolate milk served at every school meal. Meanwhile, health advocates warn that one out of three American children is already overweight or obese.

In China, health advocates argued that food and drink manufacturers were successfully steering the obesity debate around the need for more exercise while downplaying the importance of food and drink in a healthy diet, as laid out by a paper published in the British Medical Journal. The International Life Sciences Institute, funded by Coca-Cola and other food makers, has enjoyed a good relation with health officials, the paper noted.

Danone confirmed that it was investing in Epigamia, a yoghurt maker in India, in order to improve its access to the value-added end of the market. Danone had left the Indian market last year after a failed foray but a spokesperson said Epigamia will be run independently. In Latin America, Danone is partnering with a specialised packaging company to develop yoghurt pots targeted to meet the growing health and environmental concerns of consumers.

In the UK, the interest in dairy alternatives and vegan foods has started to surge, as it does every January, as part of what some call Veganuary. But research by the University of Oxford notes that although all plant-based dairy drinks require a lot less land and emit less carbon dioxide, some alternatives have a larger impact than others. Rice and almond milk, for example, require much more water to make than soy or oat milk. The BBC has a useful calculator which will estimate the environmental footprints of certain food products, based on the Oxford study.

In any case, a group of scientists have come up with the “Planetary Health” diet, which would reportedly prevent millions of premature deaths as well as reduce greenhouse emissions significantly. The diet includes reducing by half the amount of meat and sugar consumed while increasing our nuts, fruits and vegetable intake. Beyond getting everyone on board, the scientists conceded that unequal access to food may be a challenge to implementing this diet.

This summary was produced by ECRUU

Cargill reported a 20% drop in net earnings in the quarter ending November 30 at USD 741 million in part because of the US-China trade tensions, which also affected its freight transport business. The firm’s starches and sweeteners segment struggled too amid the low ethanol price in the US and the high cost of raw materials in Europe. Looking forward, however, Cargill launched in Europe a brand of artisan chocolate called Veliche Gourmet which is entirely sourced from Rainforest Alliance Certified farms. Chocolate makers will be able to buy the products directly from Cargill’s new e-commerce platform.

Cargill is not the only trading house to struggle with the sugar segment: Olam announced this week it was closing its sugar trading desk. This comes only months after Bunge sold its sugar trading unit to Wilmar and Louis Dreyfus’ Biosev unit in Brazil sold some of its mills and has been looking at selling some more.

In the US, McCain had to recall an estimated 99 million pounds of frozen vegetables in Oct-Nov last year, a record high recall. The company found that all the ingredients that went through its Colton, California, plant since January 2016 were at risk of being contaminated by Salmonella and Listeria monocytogenes. The New Food Economy pointed out that unlike other food recalls in 2018, this one received very little media coverage because it concerned ingredients – a small part in a bigger food system

Meanwhile, Amazon is planning to build more Whole Foods stores in US suburbs in a bid to boost its online pickup services as it aims to expand the reach of its two-hour grocery delivery offered to Prime Now subscribers. This would help boost online sales too, as the stores could also be used as distribution centres.  

Going forward, the line between supermarkets and restaurants should become increasingly blurred. A professor at NY University said this was already happening, with supermarkets offering food courts, salad kiosks and cafes. The assumption is that people still want to get involved in the production of the food they consume, notably in the choice of ingredients. That is – if they can afford to. As one expert put it “If you have the time and financial means, you will keep cooking” but with income inequality poised to grow, the number of food deserts and swamps should continue to increase too.

A study in the UK showed that although the majority of consumers are aware that palm oil causes deforestation and greenhouse gas emissions, most of them do not know about the Roundtable on Sustainable Palm Oil (RSPO) certification. The study also found that labels, even the widely recognised ones like Fairtrade, were not enough to push consumers to change habits. The study concluded that the government needed to make food companies take on the responsibility of sourcing sustainably.  

One country where the government is taking a significant step in trying to change consumer habits is Canada. The new Canada Food Guide, which is due for release early this year, will encourage the consumption of plant-based proteins, which has the dairy and meat industry up in arms.

We covered earlier news on the boycott against Danone products in Morocco which started in April last year and cost the group millions in lost revenues. While the boycott was reportedly against high prices, an investigation carried out by the French government suggests Danone was the victim of a troll operation organised by a local company that specialises in digital influence. According to a source, Danone was a “diversion” in a local affair. Another study carried out by a communication agency found that the boycott campaign was mainly political and aimed at the agriculture minister.

Regardless, Danone lost its number one ranking in the milk business to a local competitor as a result. The group has had to make drastic changes to gain consumer trust again, such as clearly communicating the price it pays for milk. Danone also launched a new milk pack which it sells at cost – i.e. with not profit margins. An expert on company communication argued, “The link between a brand and its buyers is very easy to break, much more difficult and time-consuming to rebuild.”

Nestle is facing a similar predicament in India where it is trying to re-establish consumer trust in its Maggi noodle, three years after the government banned the sale of the highly popular instant noodles. The company was cleared less than 6 months later, taking back most of its lost market share, but the Supreme Court has just revived a class action lawsuit for unfair trade practices, false labelling and misleading advertisements. To avoid losing consumer trust again, it launched an ad campaign across all media.

This summary was produced by ECRUU

Soybean and corn farmers in the US could be looking at a difficult year ahead. A recent study showed that average 2018 returns should turn out higher than the previous year, as excellent yields and early hedging mitigated the effects of the escalating trade war with China. However, farmers will likely bear the brunt of the trade war in 2019 with a forecast for negative margins if prices stay where they are. Brazil has benefitted, on the other hand, with soybean exports surging 23% in 2018, mainly due to demand from China. But corn exports dropped 18% because of the higher logistics costs as a result of the minimum truck rates implemented last year.

These high trucking rates are pushing Cargill, Bunge and ADM to look into buying their own trucks although they said they will wait until a decision from the Supreme Court in the hope the minimum rates are overturned. If the decision takes too long, Cargill said it would go ahead and get its own fleet, while other Brazilian giants, such as Amaggi, Coamo and meat producer JBS have already bought trucks. However, there could be a limit in terms of the production of trucks, and logistics experts pointed out that these fleets were mainly intended for emergencies and not to replace outsourcing. Truck logistics is a completely different business with significant operational and labour costs, an expert warned.

Another conflict taking a toll is that with Iran. Even though the sanctions don’t apply to food, Cargill, as well as Bunge, are among the trade houses that have halted exports to Iran amid payment difficulties. The trading groups used to be able to avoid US sanctions by using smaller banks – mostly based in the EU – but an Iranian official explained that these banks have closed down or have stopped dealing with the country under pressure from the US. Some 16 vessels are reportedly stuck at port unable to offload because of payment issues.

Separately, Cargill announced it would sell its global malt business to the French cooperative Axereal. The unit is composed of 15 factories in four continents. And COFCO has joined a venture announced in October by ADM, Bunge, Cargill and Louis Dreyfus which aims to boost transparency and efficiency through the digitisation of agricultural transactions. The head of COFCO said that one of the goals was to automate execution to reduce costs.

Plant-based meat continues to attract the interest of the world’s largest food makers and distributors as it addresses two key consumer demands: the focus on health and lowering carbon emissions. A senior MacDonald’s executive recognised the value of meat alternatives and revealed that the food-chain – the world’s biggest beef consumer – might look into opportunities in the sector.

Cargill, Tyson Foods and Unilever all recently purchased firms involved in producing plant-based meat. Nestle joined the club this week and announced that it will launch of the Incredible Burger next spring, which is made from soy and wheat protein. The firm hopes to grow its vegan business to USD 1 billion within 10 years.

Meanwhile, the Impossible Burger, made by Impossible Foods, is already sold at 5,000 restaurants in the US. But the firm now faces another hurdle: the FDA said that in its uncooked state, the soy leghemoglobin used to give the burger a meat-like colour and texture would count as a food colouring. Under US law,  additives used for colour fall under much stricter norms, mostly because food makers have previously been found to use unsafe products to change colours. Nonetheless, Impossible Foods is still optimistic it will start selling the burger in stores in 2019.

Dairy products represent the next opportunity to switch to plant-based ingredients, and Nestle also announced plans to release a spirulina algae latte and a drink made from walnuts and blueberries. Nonetheless, recent studies reveal that not all plants are equal in the consumer’s eye, as sales of soy-based drinks have been dropping, while oat-based drinks have seen significant increases. Firms are also responding to this change, with Pepsi announcing the release of a Quaker Oat Beverage and Danone announcing three Oat Yeah drinks.

Producers are also responding to another growing consumer demand: cruelty-free products.  No-kill eggs, for instance, were recently introduced in Germany. Under a newly developed process, eggs are scanned just a few days after being fertilised to determine the chick’s sex so that males can be discarded before they hatch. And the team behind the eggs seem to enjoy a good pun – they called the scanning method “Seleggt” and labeled the no-kill eggs “Respeggt”.

This summary was produced by ECRUU