I’m happy to announce that my book, “Commodity Conversations: An Introduction to Trading in Agricultural Commodities”, made it to BookAuthority’s Best New Commodities eBooks:
BookAuthority collects and ranks the best books in the world, and it is a great honor to get this kind of recognition. Thank you for all your support!
The book is available for purchase on Amazon.
Last week, Monsanto—the agribusiness company that everyone loves to hate—was ordered to pay $US289 million to Mr. Dewayne Johnson, a former school groundskeeper, after a San Francisco jury ruled that the company’s popular Roundup weed killer contributed to the cancer that is killing him.
Glyphosate, the main ingredient in Roundup, was first approved for use in Monsanto’s weed killer in 1974, and has since been the subject of much emotive debate both in and out of the scientific community.
In September 2017, the U.S. Environmental Protection Agency concluded a decades-long assessment of glyphosate risks and found that the chemical was not likely to be carcinogenic to humans. However, back in 2015, the International Agency for Research on Cancer, which is part of the World Health Organisation, classified it as a “probable human carcinogen”. Since then, California has added glyphosate to its list of chemicals known to cause cancer.
Mr Johnson’s lawsuit was the first to go to trial among hundreds filed in state and federal US courts that claim that Roundup causes non-Hodgkin’s lymphoma. Monsanto has said it will appeal the verdict.
However, the trial was an important test of the evidence against Monsanto, and will serve as a template for litigating thousands of other claims over the herbicide. Shares in Bayer AG (Monsanto’s parent company) fell sharply as investors weighed the potential costs of protracted legal battles. Bayer bought Monsanto for $66 billion in June this year.
Among the varied lawsuits against Monsanto is one from a bee keepers’ cooperative in France that claims that glyphosate is now widely found in honey. The US’s Food and Drug Administration also recently found traces of glyphosate in US honey, even apparently in “organic mountain honey”. The U.S. Organic Consumers Association and Beyond Pesticides filed a lawsuit against Sue Bee Honey of Sioux City, Iowa, because its honey tested positive for traces of glyphosate. The lawsuit said Sue Bee’s labelling, advertising its honey as “Pure” and “Natural,” is false and misleading. Another class action was started last year in Canada against a honey producer
Meanwhile, a federal judge in Brazil has ordered the suspension of products containing glyphosate until the government re-evaluates the chemical’s toxicology. France has already ruled that the herbicide will be phased out completely within five years.
Unsurprisingly, Monsanto has been accused of a corporate cover-up, with many on social media arguing that the company knew all along that their product causes cancer. Some scientists accused the company of “ghost writing” the scientific studies into the herbicide, and of trying “to destroy the United Nations’ cancer agency by any means possible” to save glyphosate.
Some on social media were quick to draw attention to an arguably similar ruling back in March where a Californian judge ruled that coffee companies will have to carry a cancer warning label because coffee contains acrylamide, a carcinogen. The acrylamide in coffee is formed early in the roasting process. All the foods we roast or fry also contain acrylamide, with 5 micrograms in a slice of toast or 7 micrograms in a bag of potato crisps, as examples. A cup of coffee has around 0.9 micrograms to 2.4 micrograms per 150 millilitre cup.
Others drew similarities between the Monsanto ruling and the recent EU’s almost complete ban on the use of neonicotinoid insecticides across the EU. Just as glyphosate is the world’s widest used herbicide, neonicotinoids are the most widely used insecticides. Back in 2013 the European Union opted for a partial ban on the use of the three chemicals in this class: Imidacloprid, clothianidin and thiamethoxam. The restrictions applied to crops including maize, wheat, barley, oats and oil seed rape. The newly agreed Commission regulation goes much further, meaning that almost all outdoor uses of the chemicals would be banned.
The action was driven by a recent report from the European Food Safety Authority (Efsa), which found that neonicotinoids posed a threat to many species of bees, no matter where or how they are used in the outdoor environment.
The decision is likely to particularly affect sugar beet production across the EU. The French sugar beet growers group CGB said, “This decision has a devastating impact on beet growing. With this ban, all French regions are likely to be affected by viral jaundice, with potential yield losses estimated at 12 pct at national level, and up to 50 pct in certain ocean climate zones.” Producers in the UK and Germany expressed similar opinions while others questioned whether neonicotinoids actually cause bee colony collapse disorder
These two latest rulings follow on from one by the European Court of Justice (on 25th July) that organisms obtained by mutagenesis plant breeding technique (gene-editing) are GMOs and should fall under the GMO Directive. The decision shocked the agriculture industry, which described it as a severe blow to innovation in EU agriculture and warned about economic and environmental consequences.
In a piece for Foreign Affairs published in April, Bill Gates outlined the case for using CRISPR and other gene-editing techniques on a global scale to meet growing demand for food and to improve disease prevention, particularly for malaria. “It would be a tragedy to pass up the opportunity,” he wrote.
In agriculture, Gates argues, gene-editing technologies could be used to make animals more productive while editing crops to withstand harsher growing conditions, or to include naturally occurring pesticides and herbicides, would improve crop yields.
These three rulings will make life more challenging for some farmers and may have major secondary implications. I will take up some of the issues in next week’s blog.
Images under Creative Commons from Pixabay
Glencore logged a record USD 8.3 billion in net profit for the first half of 2018 despite its legal issues with the US Department of Justice, mostly thanks to strong commodity prices. The CEO noted, however, that protectionist US policies and doubts surrounding Chinese growth might add volatility in the second half of the year. Cargill also cited the uncertain global environment in its 2018 annual report, where it assesses its corporate responsibility performance, although the firm logged some of its best results in 2018.
While ADM and Cargill have profited significantly from the China-US trade war and Bunge was on the wrong end of the situation, the majority of S&P 500 companies say they have not really been affected by the change in trade tariffs and they don’t expect it will be the case.
On a similar note, Nestle said this week that it was not affected by the US re-imposing trade sanctions on Iran. The firm has two factories there and noted that it only imports a small number of products. Otherwise, Nestle has been testing a blockchain system developed by IBM, called Food Trust, to assess whether it can be used for global food traceability.
Five months after the new CEO of Nestle USA was appointed, he laid out his plan to help the food giant survive amid growing competition from smaller players and fast changing consumer trends in this Washington Post interview. The plan is to focus on the most popular brands, keep moving into high growth categories and develop in-house products to quickly respond to new trends.
Cotton producers in Tchad have expressed their gratitude to Olam for revitalising the local cotton industry. The trading group took over 60% of CotonTchad from the government earlier this year as it was struggling to keep the industry afloat. It is planning to invest USD 41 million over 5 years to revamp old mills and build two new ones. It hopes to produce 300,000mt within 3-4 years, up from 25,000mt in 2017/18.
Coca-Cola India and the Indo-Dutch Horticulture Technologies propose to jointly set up 110 orchards in India to grow apples and produce pulp. The move is in line with the company’s plan to grow fruits, to source locally and to diversify its portfolio with healthy drink options. It also plans to boost productivity – India’s apple acreage is the second highest in the world but the yield is low.
Pet food company Wild Earth has raised an additional USD 450,000 from a PayPal co-founder, taking its funding to nearly USD 5 million. The green, animal-friendly food maker plans to make a plant-based alternative to cat and dog food using koji, a type of fungus eaten by humans. Most of the food is currently produced from corn and wheat. It will launch koji-based dog food in 2019.
Kraft Heinz is targeting to make all its package recyclable, reusable or compostable by 2025. However, the CEO said that most of the company’s emissions are due to processes outside its direct operations.
Recent medical analysis found that, overall, consuming omega-3 pills made little – if any – difference to the risk of heart and coronary disease. Omega-3 is one of the most commonly consumed supplements, while the fish oil industry represents an estimated USD 30 billion business. The author of The Omega Principle argues that while fish oil pills are very well marketed, they are an inefficient use of valuable marine resources. He argues that, instead, we should consume it directly as a protein which would solve two things: reduce emissions caused by livestock and help us be healthier by reducing our meat consumption.
A study of Minnesota residents revealed that 67% of those surveyed cannot afford to feed their families and rely on food banks at least once a month. Around 53% of them said they depend on food shelves for more than half their monthly food needs. Data from 2015 showed that 15% of US citizens have been through food insecurity at some point. The situation seems to be getting worse – people went into Minnesota food banks an estimated 3.4 million times last year, which is a record high. The survey also showed a growing demand for healthy food at these food banks, going against the perception that demand is higher for junk food.
This summary was prepared by ECRUU
Wheat prices spiked last week, reaching a three-year high, and then fell back down after Ukraine issued confusing statements on possible export limits. The trouble started when Ukraine said on Facebook that it planned to limit shipments of milling wheat. The ministry later tried to clarify things by saying that it was not discussing “strict limits” and would instead discuss projected shipment volumes with traders. The wheat price fell back pretty much to where it came from. The move can be seen on the following graph from Bloomberg.
The episode set off a social media storm. Some traders complained that journalists had acted irresponsibly by reporting on the original Facebook post without first checking on its accuracy. Others argued that the Facebook post was in itself a market-relevant event (even ignoring what it contained) and that needed to be circulated as quickly as possible.
In an (excellent) article published after the event, Agricensus explained that,
The big two providers that control 56% of the market – Bloomberg and Reuters – have spent vast sums of money on improving latency by milliseconds – hoping that it gives their clients an edge in trading.
That puts pressure to print stories and market moving headlines, leaving reporters with little time to corroborate, double-check or even question the most ambiguous statements made by ministers and even world leaders.
Some commentators on social media complained that the episode was just another example of fake news. Others argued that you shouldn’t be trading on Facebook posts in the first place—and that if you want good information you should pay for it. However this ignores the fact that the original post was picked up by the big newswire services. And as Agricensus points out,
Global spending on financial market data analysis and news exceeded $28 billion in 2017, according to consultants Burton Taylor International – up 3.6% on the previous year and the highest growth rate since after the financial crisis.
People are already paying huge sums for “real” news.
However, the idea that if you want real rather than fake news then you have to pay for it is one of the themes of Yuval Harari’s new book 21 Lessons for the 21st Century. The book will be released at the end of August, but in a prepublication interview Mr Harari tells The Guardian,
The idea of free information is extremely dangerous when it comes to the news industry. If there’s so much free information out there, how do you get people’s attention? This becomes the real commodity. At present there is an incentive in order to get your attention – and then sell it to advertisers and politicians and so forth – to create more and more sensational stories, irrespective of truth or relevance. Some of the fake news comes from manipulation by Russian hackers but much of it is simply because of the wrong incentive structure. There is no penalty for creating a sensational story that is not true. We’re willing to pay for high quality food and clothes and cars, so why not high quality information?
The Guardian has also published an extract from the book in which Mr Harari writes,
In fact, humans have always lived in the age of post-truth. Homo sapiens is a post-truth species, whose power depends on creating and believing fictions. Ever since the stone age, self-reinforcing myths have served to unite human collectives. Indeed, Homo sapiens conquered this planet thanks above all to the unique human ability to create and spread fictions. We are the only mammals that can cooperate with numerous strangers because only we can invent fictional stories, spread them around, and convince millions of others to believe in them. As long as everybody believes in the same fictions, we all obey the same laws, and can thereby cooperate effectively.
He continues,
Joseph Goebbels, the Nazi propaganda maestro and perhaps the most accomplished media-wizard of the modern age, allegedly explained his method succinctly by stating that “A lie told once remains a lie, but a lie told a thousand times becomes the truth”. In Mein Kampf, Hitler wrote that “The most brilliant propagandist technique will yield no success unless one fundamental principle is borne in mind constantly – it must confine itself to a few points and repeat them over and over.” Can any present-day fake-news peddler improve on that?
Returning to the wheat market I understand that Ukraine always tracks and informally manages their wheat exports. Professional wheat traders were therefore surprised by the way that the market reacted to the Facebook post rather than by the Facebook post itself.
The post stampeded the herd—a herd that was already extremely nervous because of the extreme hot weather in many of the world’s wheat growing regions. Something else could have stampeded the herd: a rumour, say, or a big order hitting the screens—or even nothing at all. The herd was ready to stampede; it didn’t necessarily need an outside stimulus.
This type of situation is common in markets. Indeed, there was a lesser example just the week before when two famous wheat traders, Donald Trump and Jean-Claude Juncker announced that the EU would increase their purchases of US soybeans. The US soybean price rallied on the news and then fell again when the market realised that Trump and Juncker were not soybean traders after all.
There is an old commodity market saying that price will often go back to check out the extreme highs or lows made in a panic move, like the one in wheat last week. (This is not a prediction that the wheat price will return to last week’s highs, but I will be interested to see if it does.)
Finally, I had lunch with an old trader friend last week who reminded me that although traders love volatility, they don’t like political volatility; weather they can deal with, politics they can’t. Traders may or may not think that wheat prices will rise further on supply factors, but they have no way to foresee what the politicians will do in response.
As Bunge found out to their cost recently, it is dangerous to predict what politicians will do next, especially our present crop of politicians. As a result, traders normally increase the size of their bets in a fundamental market and reduce them in a political one.
Wheat has always been a “political” commodity; the current drought makes it even more so.
As the ongoing trade dispute between the US and China escalates, some major food merchants are taking advantage of the trade dislocations to boost their profit margins. After Cargill mentioned the change in dynamics in its latest earning, ADM reported a two-fold increase in its second quarter net profit and said it was benefiting from the trade disruptions. The tensions propelled China’s grain demand from South America, where supply is already low because of a drought, while forcing other buyers to source grains from the US.
Bunge was not so lucky. The group posted a USD 26 million loss in the quarter, including USD 24 million linked to hedges in the grains market. The CEO explained they had – wrongly it turns out – gone long on Chicago soybeans on the expectation that the trade war between China and the US would be of short duration. They are hoping to do better in the second half of the year, however, despite the uncertainty linked to the new Brazilian freight rates and lower exports from the US. Bunge’s sugar and bioenergy groups reported a USD 40 million loss in the quarter, and the group explained it was partly a result of preparations to exit that business. Bunge added that it decided to postpone a potential IPO.
In Russia, meanwhile, the KSK terminal at the Novorossiysk port, which is a joint venture between Cargill and Delo Ports, could export 6-7 million mt/year of grains by July 2019. The manager said that in the last five years, KSK has increased exports three-fold, from 1.5 million mt in 2015 to 4.9 million mt in 2017.
Coca-Cola has been trying to cash in on the fact that students tend to carry a bottle of water on campus by installing self-service water stations at US universities. The idea is that the water is free but you can get additional bubbles or flavours at a cost. A test trial showed that students opted for the add-ons 10-20% of the time. The company wants to install more machines across the country’s university campuses. The timing may be right, especially as Coca-Cola had to increase prices this year because of higher import duties.
Starbucks’ US sales increased by a mere 1% in the last quarter, which the company blamed on health-conscious customers. In China, the company has joined hands with Alibaba’s meal delivery unit Ele.me to start door deliveries as local rivals eat into its shares. The company registered a 2% drop in comparable store sales in Apr-Jun but still hopes to triple its revenue in China over the next five years.
In Europe, Nestle lost an 11-year long court battle after the EU’s highest court rejected its trademark claim on Kit Kat’s four-fingered shape. Nestle had obtained a European trademark in 2002, which was challenged by Cadbury five years later.
There was a lot of talk about genetically modified (GM) food last week after the European Court of Justice decided to categorise gene editing in the same bracket as GM. The announcement was criticised by the biotech and chemical industries. Some farmers also criticised the decision, saying it will deny consumers access to high-quality farm products which use fewer pesticides.
In India, a survey of packaged food, including imported products, found that 32% had GM ingredients but 65% of them did not disclose it on their labels. This is despite the fact that Indian laws ban importing of GM food without approval. In Brazil, on the other hand, sugar and ethanol producer Copersucar says cane productivity can rise to 21mt/ha in 2025, from 11mt/ha in 2015, by using GM cane and better seeds.
In the US, the USDA has received a slew of suggestions from industry representatives on the National Bioengineered Food Disclosure Standard which is likely to be implemented from January 1, 2020. The Grocery Manufacturers Association wants refined ingredients to be excluded from disclosure norms as 90% of corn, soybean and cane are genetically modified. This, it said, will prune the list of products by 78%.
Environmentalists are hoping that China will direct some of its focus on cutting emissions to its livestock sector and its growing meat consumption instead of only looking at the power and transport segments. Chinese demand for feed is being blamed, in part, for deforestation in South America while the meat industry is a significant contributor to pollution.
On the subject of climate change, Cuba is looking into whether it needs to change its sugar harvest and planting calendar. The government said climate change had affected the weather, seasons and that the harvest timings may need to be adjusted accordingly.
Finally, a survey found that people in the UK are increasingly concerned about wastage as well as sugar content in food, but less so about prices. Over half of those surveyed put food wastage as a top concern, compared to 42% three years ago.
This summary was prepared by ECRUU
In his book Merchants of Grain (published in 1979), Dan Morgan describes the history of the grain trade and takes a look at what the future might hold for the five private companies—Cargill, Continental, Louis Dreyfus, Bunge and André—that at that time dominated the business.
The early 1970s had been exceptionally profitable for those five companies, and the seven families that controlled them. The Soviet Union was redirecting resources away from industrial production and towards consumers. Increasing meat supply was an integral part of that plan, but to do that the USSR had to import large amounts of protein and animal feed.
This coincided, in 1972, with the failure of the anchovy season off the west coast of South America (anchovies/fish meal was a significant source of animal feed at that time), as well as poor weather in the Black Earth region of the USSR.
The first wave of Soviet buying in 1972 came to be known as the “Great Grain Robbery”, and resulted in rising food prices and domestic inflation in the USA. It also began to focus political attention onto the grain trade, something that intensified when the Soviets came in for a second round of buying in 1975.
But that buying was a double-edged sword. As Dan Morgan writes, “Opportunities for big profits, which the companies had looked forward to in the doldrums of the 1950s and 1960s, certainly were present. But the enormous volumes and the volatility also created unprecedented risks.”
Continental Grain learnt this the hard way when they underestimated the depth of the second round of Soviet buying; the grain giant sold physical corn short, expecting to cover their sales when prices fell later in the year. But corn prices didn’t fall; they continued to climb and the company covered their shorts at the top of the market.
For Michel Fribourg, the owner of Continental Grain, this was a traumatic event, and he declined to offer any further tonnage when the Soviets came back for more in October 1975. A few months later he reorganized the company, firing traders and employing risk and business managers instead. As Dan Morgan writes, the risk in these big sales was just too big: “The glory days of the grand slams in the Russian trade were over.”
He continues,
“Continental was not the only company to experience trading troubles. Most of the companies now insisted that the Soviet Union share more of the risks. Louis Dreyfus, for its part, set up a system of compensating balance sheets with the Russians. In effect it worked for the Russians on a fixed commission; losses in any given transaction would have to be recovered in profits on subsequent transactions…”
At that time most commodity imports were handled by central government agencies within the importing country. Governments were generally assumed to be more reliable counter-parties than the private sector, but this belief was shaken when in early 1975 wheat prices fell and “Turkey’s wheat-importing agency cancelled the wheat import contracts it had concluded at higher prices with Continental, Bunge, and Cargill.”
At the same time, the state buying agencies in importing countries had begun to attract the US government’s attention in terms of the inducements and bribes that the grain companies paid to civil servants and politicians to get the business done. A new light was being shone on these practices. A new morality began to take hold within the US, leading to the Foreign Corrupt Practices Act that was passed in 1977.
A new light was also being shone on the shipping and transportation of the physical grain, leading to an FBI investigation in short-loading and falsified shipping documents at the Mississippi grain loading terminals. In 1975 a grand jury in New Orleans “issued a total of thirty-one indictments, covering 265 federal criminal violations against forty-eight individuals…All kinds of activities came to light that showed how company employees schemed to misgrade or diminish the quantities of grain destined for foreign countries.”
Meanwhile, anti-competitive practices were also being brought under the spotlight. “In December 1976, the Interstate Commerce Commission held hearings in Chicago to determine why some small grain elevators inland had been unable to obtain covered hopper cars and grain boxes to move their commodities…The hearings showed what a close relationship existed between certain railroad companies and the grain firms.”
Physical trading margins within the agricultural supply chain were almost as thin in the 1970s as they are now, and the big trading companies largely made their profits by speculating massively on the futures markets that they themselves dominated. But there again a new morality was beginning to take hold with the formation in April 1975 of the Commodities Futures Trading Commission, a new independent government agency to police the exchanges. It was formed “with fewer “policemen” than the Rockville, Maryland Police Department” and appeared to get off to a slow start, but it was a sign of things to come.
Perhaps more importantly, the big trading companies were already—in the 1970s—beginning to lose their domination of the agricultural futures markets. Large well-financed speculators were moving in. The most famous were the Hunt brothers who had made a fortune early in the decade by squeezing the silver market. The brothers entered the soybean market in 1976, accumulating “approximately a third of the total beans that forecasters thought would be left over when the new soybeans from the 1977 crop became available. This was not a corner, but it was getting near to one”.
Their buying pushed prices higher and helped speed the demise of the publicly quoted Cook Industries, a former cotton trader that by the mid 1970s had begun to rival the traditional grain companies. “Within a year the company that Ned Cook had built into one of the highest-flying grain companies in the world had all but disappeared”. Cook was forced to sell its US grain elevators, allowing the Japanese trade houses Mitsui and Marubeni their long-awaited opportunity to get a foothold into the US grain business.
Taking all this together it is perhaps possible to pinpoint the start of the decline of the traditional grain business as a reaction to the massive price volatility and subsequent general inflation that followed the Russian purchases of US grain in the 1970s.
The grain companies had been hoping for such an event all through the doldrums of the 1950s and 1960s, but the consequences were greater government intervention and increased transparency, as well as the entry of well-financed speculators into markets that had previously been quietly local.
Bring those elements into a sector that was already struggling to cope with higher volumes and greater counter-party risks and you can begin to see that the writing was already on the wall. The era of seat-of-the pants buccaneering trading was on the way out; professional risk management, cost control and a new morality were on the way in.
Photos from Pixabay under Creative Commons
The US-China trade spate has resulted in the doubling of the premium for Brazilian soybeans in one month, as China may have to replace some 4 million mt of US soybean imports in the fourth quarter with Brazilian origin. An analyst at Rabobank said that the EU, which is the world’s second largest importer of the crop, is likely to shift to the cheaper US origin as a result, after buying mainly from South America for the past few years.
Meanwhile, traders in Brazil are worried that the recently implemented minimum road freight rates will push commodity prices higher. The minimum rates were put into place after a countrywide strike by truck drivers. Cargill has warned that trade houses might have to start buying grains delivered at port, instead of ex-farm or from elevators as is currently the case.
Sources say that Bunge is in talks to sell parts of its sugar trading unit to Wilmar. The talks are apparently focusing on the Asian trading unit, which would give Wilmar better access to Thailand’s exports. In Argentina, meanwhile, Bunge is reportedly going to close down its soybean mill complex at the Ramallo port, according to the mill’s workers’ union. The trade house did not confirm the news, but the union has threatened to strike at some of the other port complexes as a result.
ADM announced it will buy premium vanilla producer Rodelle in Madagascar. The company said that Rodelle was unique in that it had a vertically integrated supply chain which allowed it to supply large scale volumes of certified organic vanilla at lower costs. ADM also said it was keen to secure vanilla supply, especially as a shortage of the product lead to a recent surge in the price of vanilla extract.
Separately, ADM and Vedan have got together to create tapioca starches and tapioca maltodextrin ingredients for manufacturers that are non-GMO and organic. The company said food companies were increasingly looking for plant-based and ‘clean’ ingredients in response to changing consumer demands.
China’s State Development and Investment Corp (SDIC) will become the majority shareholder in Arab Potash Co after it buys an additional 28% stake from Canadian fertilizer supplier Nutrien. This will help China – the world’s main consumer of potash – to guarantee supply.
Staying on the topic of fertilisers, an estimated 58% of the nitrogen applied to crops runs off from farms and emits nitrous oxide, which in turns produces half of the greenhouse gas in the US agriculture sector. However, a recent report suggested that switching everything to organic farming was not the solution. Part of the reason is that all manure – whether organic or synthetic – releases more nitrogen than the plants can absorb. The answer would be to focus on developing more efficient ways to use nitrogen so that we need to use less of it.
Starbucks and McDonald’s have announced a NextGen Cup Challenge through which they have invited ideas to create fully recyclable and compostable cups. The rival companies will contribute USD 5 million to the winners of the challenge to create a prototype, which will then be replicated across their stores. The two companies intend to phase out plastic cups within the next three years.
In Canada, meanwhile, McDonald’s plans to purchase beef from farms and ranches which are Canadian Roundtable for Sustainable Beef (CRSB) certified. The company serves over 20 million Angus burgers every year.
Major meat and dairy producers such as JBS, Fonterra, Dairy Farmers of America, Tyson Foods and Cargill could account for 81% of the world’s emissions by 2050 if they make no changes to their supply chain and continue growing at the same pace. That would be more than emissions from oil producers Exxon, Shell and BP. The findings were published in a report which said it was difficult to find the data to make these assessments because of the lack of reporting. Only 14 out of the 35 companies analysed said they were planning to reduce emissions, but less than a third of those included emissions from the whole supply chain.
Similarly, a Food FW survey found that 53% of the UK companies surveyed did not carry any sustainability information on their websites, and only 7% of the companies in the sector have made investments in sustainability. The report conceded that companies may be hesitant to disclose their sustainability strategies as it could be held against them. However, it added, that mentioning sustainability credentials would benefit the company in the long run.
Finally, in Indonesia, the government has had to intervene as domestic egg prices in June-July rallied to a 2-year high. The price rise was due to the high consumption of instant noodles with eggs during the FIFA football World Cup. A poultry farmers association secretary-general added that the price was also influenced by lower egg supply as farmers sold their hens because the demand for meat was higher.
This summary was prepared by ECRUU
The Guardian recently published two articles concerning the cancer risks of mobile phone use. The first was entitled, The inconvenient truth about cancer and mobile phones. The second, published one-week later, was headed, Mobile phones and cancer – the full picture.
In the first article the two journalists highlighted a recent study that found that mobile phones caused cancer in rats. They wrote,
The study concluded that there is “clear evidence” that radiation from mobile phones causes cancer, specifically, a heart tissue cancer in rats that is too rare to be explained as random occurrence.
The journalists continued,
Not one major news organisation in the US or Europe reported this scientific news. But then, news coverage of mobile phone safety has long reflected the outlook of the wireless industry. For a quarter of a century now, the industry has been orchestrating a global PR campaign aimed at misleading not only journalists, but also consumers and policymakers about the actual science concerning mobile phone radiation. Indeed, big wireless has borrowed the very same strategy and tactics big tobacco and big oil pioneered to deceive the public about the risks of smoking and climate change, respectively. And like their tobacco and oil counterparts, wireless industry CEOs lied to the public even after their own scientists privately warned that their products could be dangerous, especially to children.
The story was picked up by other media, both in the UK and in the US, and spread rapidly across social media.
The second article in The Guardian, written by Dr David Robert Grimes, a physicist, cancer researcher, and science writer based at Queen’s University Belfast and the University of Oxford, completely refuted the first article.
He argues that the study cited in the first article is flawed, and accuses the journalists of cherry-picking and misrepresentation, saying they had ignored data that contradicts their hypothesis and retained only evidence that fitted the desired story. He writes that, this is antithetical to science, where the totality of evidence must be assessed in concert.
He continues,
Since the early 1990s, mobile phone usage worldwide has grown at an exponential rate. If phones are linked to cancer, we’d expect to see a marked uptick in cancer with uptake. Yet we do not. American mobile phone penetration increased from almost nothing in 1992 to practically 100% by 2008 and there is zero indication glioma (cancer) rates have increased, a finding replicated by numerous other studies.
And adds,
The scientific evidence points to a conclusion totally at odds with what the authors postulate. The analogy to industry bamboozling the public to ignore findings doesn’t hold if there is no strong scientific consensus from which to deflect, rendering it cynical or ignorant to equivocate the twain. This is not a case of an industry trying to distract from an inescapable scientific conclusion – the reality is there is nothing of substance from which to deflect.
All this might sound familiar to those of you who are in the business of producing and supplying sugar to an increasingly reticent public. In most people’s minds sugar has now been identified as “the cause” of obesity. This has become an almost irrefutable fact, despite there being little—or no—scientific evidence that a sugar calorie is more fattening than any other calorie. Meanwhile, the sugar industry has been accused of lying to the public and conspiring to conceal the harmful nature of their product.
In his article Dr Grimes argues that the fact that cancer rates have not increased in line with mobile phone use suggests that there is no link between the two. There is no correlation. As far as sugar is concerned, per capita sugar consumption has been falling while obesity has been increasing. This is an inverse correlation.
I will leave the final words to Dr Grimes whose strong criticism of the first article may strike a cord to those of you in the sugar industry.
As enthralling as (the) narrative might be, it is strewn with rudimentary errors and dubious inferences. As a physicist working in cancer research, I found the authors’ penchant for amplifying claims far beyond that which the evidence allows troubling. And as a scientist deeply invested in public understanding of science, I’ve seen first-hand the damage that scaremongering can do to societal health. While it is tempting to rage into the void, perhaps this episode can serve as a case study in how public understanding of science can be mangled, and what warning signs we might look out for.
Photos under creative commons from Pixabay
Cargill logged adjusted operating earnings of USD 3.2 billion in 2017/18 – a record high – as the global demand for beef and animal feed boosted its revenue by 7% to USD 30.4 billion. The animal nutrition and protein unit remained the top earner for the second year on the trot. The finance director said, meanwhile, that Cargill is being more nimble-footed in moving grains because of the tariff wars between the US and its trading partners such as China, Mexico and the EU. The trade disputes may force the company to delay investments or redo its functioning, he added.
The World Bank estimates that global demand for aquaculture feed production will increase from the current 77 million mt to 94 million mt in 2030. Cargill, which currently produces 3.5% of the world’s output, is convinced it can play a key role in boosting aquaculture production whilst meeting sustainability goals. The group is working in reducing greenhouse gas emissions and sourcing most of its ingredients (such as soy and palm oil) so that it will only be using Marine Stewardship Council (MSC) certified marine ingredients by 2025. Cargill also launched a new technology application centre in Vietnam to provide the latest innovations to aquaculture farmers.
Danone, Mars, Nestle and Unilever got together to form the Sustainable Food Policy Alliance. Commentators say this is another sign that the food industry is responding to changing demand from consumers and that the new alliance is expected to be more aggressive than the Grocery Manufacturers Association which several of the main food companies left last year. As a start, the alliance has asked the Environmental Protection Agency to keep the Clean Power Plan, it also wants the Obama-era Nutrition Facts panels, a reduction of salt in processed foods and clearer GMO labeling.
The Roundtable on Sustainable Palm Oil (RSPO) reinstated Nestle’s membership, which was suspended on June 27 after Nestle did not submit a report stating its action plan to produce 100% RSPO-certified sustainable palm oil by 2023. In New Zealand, meanwhile, the company announced it had arrived at a conditional agreement to sell six of its confectionery brands as it intends to concentrate on its chocolate, baking and other businesses.
In the UK, Nestle and Unilever joined the likes of Tesco and Ocado as users of the data management service ProductDNA. Created by the UK Retail Grocery Advisory Board, the application creates a transparent catalogue of product data between suppliers and retailers verified by a third party.
Coca-Cola European Partners (CCEP) said their large PET bottles will use 40% recyclable PET (rPET) in 2018 as the company wants 50% of its PET portfolio to be recyclable. The sustainability head said the company is changing the branding on its bottle closures by imprinting messages urging consumers to recycle. Such closures are currently on 500ml bottles of Coca-Cola and Coca-Cola Zero sugar and the company aims to include them across its entire portfolio on about 900 million bottles. It plans to expand the deposit return scheme currently available in Scotland to England.
In Mexico’s Chiapas, however, Coca-Cola has been blamed both for the rise in diabetes as well as for the water shortage. Soft drinks are more easily available than water in the province and the local plant consumes over 300,000 gal/day of water. As a result, there is a local movement asking to shut down the plant.
The world’s food import bill reached USD 1.43 billion in 2017, three times what it was in 2000, according to the latest UN Food and Agriculture Organisation (FAO) report. The situation is worse in the poorest countries whose import bills have increased on average five times as they depend increasingly on the world market. The FAO argues that such countries could help improve their trade deficit by exporting more of the so-called “minor tropical fruits” like jackfruit and mangosteen. Only 10% of their global production is exported but demand is rising as a result of increasing health concerns. Jackfruit is even being used to replace meat.
This summary was produced by ECRUU
In his 2006 book The Omnivore’s Dilemma, Michael Pollan asked the question, “Where does your food come from?” He wrote,
“Imagine if we had a food system that actually produced wholesome food. Imagine if it produced that food in a way that restored the land. Imagine if we could eat every meal knowing these few simple things: What it is we’re eating. Where it came from. How it found its way to our table. And what it really cost. If that was the reality, then every meal would have the potential to be a perfect meal.”
In 2016, when Penguin published a tenth anniversary edition of his book, New Food Economy interviewed the celebrated author, asking him whether he thought his book had had an effect on the way food is produced and marketed, and how much had changed in the previous decade. His answer to both questions was “not much”. He did however concede that the market (in the US at least) for organic and local product has been growing strongly, and that the alternative food economy (as he called it) is gradually being co-opted by the main food economy. He told New Food Economy,
“One of the good things about having a handful of large companies dominate the food landscape is that monopolies can sometimes move quickly to change the system. When you persuade McDonald’s or Walmart or KFC to change what they do, you can rapidly drive a lot of change throughout the food system. Ultimately, I think many of the values that seem alternative now—cage-free eggs, for example—will be mainstream very soon. I think you’ll have major fast food chains switching to organic at some point as a marketing matter—and it’ll work, and others will follow suit.”
He added,
“This is how change comes to America, right? We tend to make progress by co-opting challenges, rather than by revolution and replacement. There is no question that you’ll see this alternative food economy gradually co-opted.”
This is certainly something that we have seen over the past few years: sustainability has gone mainstream in terms of both the environment and human and animal rights. However the biggest challenge is still to come: to get (wealthy) consumers to pay for it. As Michael Pollan told New Food Economy in 2016,
“Still, the alternatives we’re talking about will probably never be as cheap as conventional food, partly because those low prices didn’t reflect the true cost of product. We pay for conventional food in other ways: in public health, in damage to the environment, in taxpayer subsidies. As we reform the system, I think we’re going to see that the low cost was illusory. You can’t really produce food that cheaply, without charging the real cost to the environment or the public health.
That, I think, is the big challenge of the food movement: to democratize sustainably and ethically produced food.”
Describing his relationship with nature, there is one thing that Michael Pollan wrote in The Omnivore’s Dilemma that I particularly liked,
“The single greatest lesson (my) garden teaches is that our relationship to the planet need not be zero-sum, and that as long as the sun still shines and people still can plan and plant, think and do, we can, if we bother to try, find ways to provide for ourselves without diminishing the world. ”
I was thinking of this when I picked up a copy of Mr Pollan’s recently published How to Change Your Mind: The New Science of Psychedelics. This surprising new book describes the history of psychedelic drugs, such as LSD and psilocybin (from magic mushrooms), and looks at the new research being done around the effects of these drugs. Mr Pollan uses himself as a guinea pig, starting with some dried up magic mushrooms. Under their influence he rediscovers a connectivity with nature that he lost as a child. He writes,
“I stepped outside, feeling unsteady on my feet, legs a little rubbery. The garden was thumming with activity, dragonflies tracing complicated patterns in the air, the seed heads of plume poppies rattling like snakes as I brushed by, the phlox perfuming the air with its sweet, heavy scent, and the air so palpably dense it had to be forded. The word and sense of “poignance” flooded over me during the walk through the garden.”
For many city dwellers (and I count myself in that category), our main—and sometimes only—connection to nature is through the food that we eat. It is no surprise that we need to maintain that connection. But to do that we have to know where our food comes from, and that its production doesn’t inflict damage on the environment, or cruelty to animals or our fellow human beings. Food is not only our connection to our agricultural past, but also to our environmental future.
My favourite quote from How to Change Your Mind is from Huston Smith. Michael Pollan writes,
“Huston Smith, the scholar of religion, once described a spiritually “realized being” as simply a person with “an acute sense of the astonishing mystery of everything.”
The author argues that when we treat nature and the environment as an object to be studied—and mastered—we are losing sight of the fact that we are in, and connected to, nature. We have no choice in the matter: everything we do that alters nature alters us in turn.
In his book Michael Pollard interviews Paul Stamets, a world expert on mushrooms and advocate of medicinal fungi.
“Mushrooms have taught me the interconnectedness of all life-forms and the molecular matrix that we share…. I no longer feel that I am in this envelope of a human life called Paul Stamets. I am part of the stream of molecules that are flowing through nature. I am given a voice, given consciousness for a time, but I feel that I am part of this continuum of stardust into which I am born and to which I will return at the end of this life.”
Whether or not you need psychedelic drugs to feel this connectivity is another matter—and perhaps the subject of another blog.
All images from Pixabay under creative commons
