Posts

Cargill has launched the initial phase of its new grain terminal in Ukraine’s Yuzhny port, in partnership with local company MV Cargo. The terminal, which is one of the biggest investments the country has seen in a while, should be handling 1 million mt of grains by this autumn. Techagro also announced a plan to build three grain terminals at the same port that would handle 4.5 million mt by 2021.

In Argentina, Cargill hiked its stake in Glucovil Argentina to 70% by buying 40% of Ledesma’s holdings. The family now holds a 30% stake which Cargill can buy until 2023.

Bunge announced it opened a new wheat mill in Mexico. Located near the port, from where the wheat is imported, the mill will process and re-export the wheat to the rest of Latin America. In Brazil, meanwhile, Bunge announced it had completed the sale of its 49.9% share in the algae business SB Renewable Oils to joint venture partner Corbion.

Wilmar is planning to release the Indonesian version of an online system designed to help its palm oil suppliers become more sustainable. It already launched one in Malaysia ahead of the Malaysian Sustainable Palm Oil national certification becoming compulsory next year. The questionnaire, which results in a score, will give Wilmar an idea of which areas need to be addressed and develop further training or workshops accordingly. The company has also designed a similar system for Latin America.

Danone’s dairy arm, Centrale Danone, is facing losses in Morocco after a boycott from consumers caused its sales to fall by over 50%. To cope, the company has reduced by 30% the amount of milk it buys from farmers and has had to lay people off. The boycott, which also affected fuel stations, was started to protest high prices from foreign brands.

Coca-Cola aims to recycle all of its packaging by 2030. In Zimbabwe, the company is now collecting over 15% of the PET produced, up from just over 7% in 2017. Similarly, in Uganda it invested in Plastics Recycling Initiative which recycles 14mt of plastic every day while providing an income for plastic collectors.

A report from the UN showed that some 50 countries are actively working to fight plastic pollution. Additional taxes and outright bans have been, in some cases, effective, such as in Eritrea, Morocco, China and Ireland but have failed in other areas mainly because of the lack of enforcement. The head of the UN environment argued that plastic in itself was not bad, the problem was what we did with it. As such, the report suggested businesses and plastic producers needed to incentivise recycling more.

In a bid to capture more of the value chain and to control prices, Ivory Coast and Ghana are planning to work together on cocoa production and marketing. Both countries, which represent two-thirds of the global cocoa production but where very little processing happens, want to build warehouses, coordinate production and encourage local consumption. Many analysts are sceptical this will work, however, arguing that previous attempts to coordinate efforts have failed.

Ghana did send a delegation to China to try to convince consumers of the benefits of cocoa and look for a market for its premium cocoa beans, semi-finished and finished cocoa products.

Meanwhile, chocolate maker Barry Callebaut has partnered with growers in Ghana and Ivory Coast to replant trees infected with the swollen-shoot virus disease as part of a wider sustainable farming initiative.

Qatar has become a self-sufficient milk producer just a year after its neighbouring countries cut off diplomatic and trade ties and soon expects to start exporting. Before the blockade, the country imported all its milk from Saudi Arabia and had no dairy herd. The cows were flown in from the US and could reach 20,000 head-count by 2019.

Neighbouring Dubai, meanwhile, could soon be growing paddy in its desert on a commercial scale. A group of Chinese scientists have successfully grown rice in diluted sea-water in a test project which yielded 7,500kg/ha, over twice the world average. Ultimately, the aim would be to cover 10% of the UAE, although some question whether the region has enough fresh water to dilute into the seawater.

Oxford University and Agroscope researchers published a huge database of the environmental impact of 40 food products across the world, using data from 40,000 farms and 1,600 processors. Have a look at the impact of 9 animal and 6 vegetable products here.

This summary was produced by ECRUU

The White House announced on May 29 that it will publish a list of Chinese goods that will fall under new USD 50 billion tariffs on June 15, frustrating US farmers and Chinese trade negotiators who are struggling to keep up with the uncertainty and frequent reversals. Last week, the trade secretary claimed that the two countries had agreed to avoid imposing new tariffs. On the other hand, experts suggest that markets are now ignoring such announcements, while US grain farmers said they actually don’t expect the US to go ahead with the tariffs.

Bayer said it hopes to be able to start integrating Monsanto in two months, after the US antitrust regulators approved a plan for the USD 62.5 billion takeover. The new company would have annual sales of about EUR 20 billion, dwarfing sales of the two other competitors who were also recently engaged in mergers, namely DowDuPont who has EUR 12.4 billion in annual sales and  ChemChina-Syngenta with EUR 11 billion in sales. BASF, the fourth largest agricultural supplier, is also expected to benefit as it plans to purchase assets worth USD 9 billion Bayer agreed to sell as part of the antitrust approval.

Cargill plans to have a 100% transparent and sustainable palm oil supply chain by 2020, according to the group’s supplier’s global sustainability director, who said 96% of the volume was already traceable to mills and 55% traceable to plantations. The company will be using a satellite mapping tool this year to identify and improve issues in the supply chain. The director said they are using lessons learnt from the soy and cocoa supply chain.

India’s Adani Group is likely to take over Shree Renuka Sugar‘s sugar segment from Wilmar Sugar. A board member of Renuka Sugar and a senior executive of Adani group said Adani Wilmar may be interested in adding sugar to its product mix and to leverage the latter’s distribution network. Wilmar International will also launch an open offer for a 25.14% stake from June 4-15 to help its arm Wilmar Sugar increase its stake in Renuka Sugar from the current 39%. Separately, Adani Wilmar reportedly increased its offer to acquire the bankrupt edible oil refiner Ruchi Soya group.

Nestle is downsizing its workforce in Switzerland by 5% and relocating some positions to Spain and Portugal in a bid to reduce costs, in part because of the strength of the Swiss Franc. It will also close its headquarters in Kenya. The CEO said the group will spend USD 706 million in restructuring this year. The Research Centre and the Institute of Health Sciences will be merged into a single entity to speed up the development of new products. Nestle wants to accelerate research efforts amid growing competition from smaller rivals and increasing preference for organic, vegan and gluten-free products.

In Spain, the company launched its first range of organic products which should grow to represent 10-15% of the turnover within 5 years. The regional head said this was in answer to consumer demand and that “Nestle has decided to bet heavily on organic products.” Meanwhile, in China, Nestle has sold its 95% stake in a raw milk powder factory.

And Pepsi bought Bare Foods Co, the maker of healthy chips made from beet or baked apples, to further expand its health-conscious food offering.

French MPs voted down a proposal to ban the use of glyphosate, although a presidential spokesperson clarified that the government was still committed to phasing out the use of the herbicide by 2021. In another twist, the Belgian government said recent scientific research on glyphosate did not conclusively show any health risks.

An investigation by The Guardian and the Bureau of Investigative Journalism found an increasing number of industrial-scale beef fattening units in the UK – an area which is overall unregulated and unacknowledged – causing concern that the country’s agriculture is developing towards the type of industrial-scale farming common in the US. The environment secretary said they would fight against this US-type of farming but producers argue that it’s the only way to be cost competitive.

Organisations in the UK are working hard to redistribute food that would otherwise be thrown away. In 2017, the food bank Trussell Trust distributed 1.3 million parcels of food, up 13% from the previous year. Similarly, Charity FareShare gives food to some 750,000 people every week, an increase of 60% on year. Demand from food charities is increasing with an estimated 1 in 8 people experiencing hunger in the country.

In the first research of its kind, a study found that rice could have as much as 10% less protein, 5% less zinc and 30% less vitamin by the end of the century due to the increasing levels of carbon dioxide in the air. Rice represents half the calorie intake of around 2 billion people, which means the nutrient loss would have a significant impact on health.

This summary was produced by ECRUU

Wilmar has secured a USD 1.5 billion syndicated loan facility to refinance its debt and working capital at a time when its sugar and tropical oils businesses are going through a slump. In Uganda, meanwhile, the group has managed to get the final go-ahead to secure more land to grow palm oil for its local subsidiary Bidco Uganda – a project that had been delayed for over 10 years. The government will also be allocating them land to develop a vegetable oil refinery. In Zimbabwe, Wilmar has made an offer to buy 50% of the Cotton Company of Zimbabwe (Cottco) which also has edible oils operations. Cottco hopes that Wilmar would help revive operations as the fall in cotton output has led to a drop in cotton-derived oil production.

US-based farmer-owned Central Valley Ag Cooperative announced it will buy out of its joint venture with Cargill in Progressive Ag Partners so that it can have full control of the grain storage company. Regardless, Cargill’s North America agriculture supply chain president recently said that “Cargill [now] has an even stronger emphasis on commodity trading and being the leading merchants of grain. The core of what we do is trade grain.” He explained that the company was focusing on providing farmers the best services, including an efficient and fast supply chain. An analyst explained that, in the grains industry, this meant being the fastest at loading at grain elevators when other smaller groups face queues. Looking forward, Cargill plans to continue adding value and serving farmers by using advanced technologies such as blockchain to solve issues like labeling and traceability.

Cargill, as well as Nestle Purina, will be working with the Nature Conservancy on a three-year project designed to reduce water usage in the beef supply chain. The aim is to use technology such as weather apps and sprinklers to help farmers reduce the water use when irrigating the crops that will be fed to beef. Eventually, the technology should be scalable to all US farmers.

Cargill, Richardson International and ADM are among the grain trading firms focusing on plant-based proteins (such as peas) to reap higher margins amid growing demand from China and health-conscious consumers in the US. Cargill has put money in a joint venture with PURIS which owns a Wisconsin plant that makes peas powder. It is also working on developing pea varieties with more protein as it is an ideal food that is plant-based and gluten-free.

Similarly, ADM is setting up a pea plant in North Dakota and getting farmers on board to grow yellow pea. The group said it was still working on solving issues with flavours and functionality, however, so that the protein could be used more in food processing. Ingredients company Roquette also announced last week it was starting a new production unit in France for speciality pea protein.

Unilever New Zealand has said that sustainable living products accounted for 70% of company’s revenue growth in 2017, and grew 46% faster than other product categories due to increasing consumer awareness. In India, the company just completed its second round of investment in the grocery delivery service Milkbasket. The startup has developed an “early morning, contactless, micro-delivery model akin to the prevalent newspaper and milk supply chain models.”

Brazil fined five grain trading groups, including Cargill and Bunge, for buying soybean produced in areas linked to deforestation. Farmers were also fined for growing soybeans in these areas. However, Bunge said it had checked databases which had indicated that these areas were in line with their best practices. Reports suggest that the amount of forest land being cleared illegally to grow soybean is increasing rapidly in the Matopiba region.

The European Court of Justice maintained its ban on neonicotinoid after finding that the Commission’s 2013 conclusion that these insecticides harm bees was valid. The ruling will give a leg-up to last month’s decision to limit the use of neonicotinoids to greenhouses, but Syngenta and Bayer said they would weigh future action. Similarly, Dutch sugar beet growers as well as their Belgian counterparts have urged their agriculture ministers to seek exemption from the ban. The Belgium agriculture minister argued that investors will be tempted to go to countries where there are fewer environmental restrictions.

Sales of frozen food witnessed growth for the first time in five years in 2017 driven by demand from millennials.  An analyst with Euromonitor explained growing preference for vegan foods and millennials having less time for cooking a full meal with meat have also spurred demand for frozen food. Another analyst pointed out that the record-high number of single people in the Americas was also contributing to the consumption of frozen food. The plus point is that there tends to be much less wastage than with fresh food.

Finally, illegal gold mining is displacing cocoa plantations in Ghana. Given that the country produces 20% of the world’s cocoa, this is expected to have a significant impact on the price of chocolate. See BBC’s investigation here.

This summary was produced by ECRUU

Cargill is worried that the US strategy to tackle the tariff issue with China will worsen trade tensions between the two countries. The US is considering imposing tariffs worth USD 50 million on Chinese goods in response to Beijing’s threat to impose duties on US soybeans and other commodities. As a result, China’s COFCO plans to buy more soybean from Brazil. A source said the company had expanded its teams that deal with farmers in Brazil. Olam and Wilmar, too, are looking to import from South American nations like Brazil and Argentina to avoid paying high taxes.

ADM and Bunge, on the other hand, expect they will benefit from the trade dispute, combined with the drought in Argentina. The CEOs of both companies said the uncertainty provided volatility and opportunities for arbitrage across origins which would help improve margins. Looking forward, however, ADM’s CFO is confident that China and the US will sort out their differences.

Another trade deal which is not going well is NAFTA. The negotiators from Canada, Mexico and the US are likely to miss the May 17 notice of intent deadline fixed by the House speaker so that the Congress could vote on it in December. The Mexican Economy Minister said the trade treaty was unlikely to be rewritten in 2018.

Olam reported its net profit rose by 10% on year to USD 118 million in Jan-Mar (Q1) due to lower taxation and finance cost. Sales volume soared by 56% boosted by grain trade.

Louis Dreyfus announced it has completed the sale of its metal segment – one of its most profitable – to China-based fund NCCL Natural Resources Investment. Louis Dreyfus had in December announced the sale of its metal segment as it looks to focus on its main agriculture trading business.

Bunge, meanwhile, announced on May 15 that it has filed for an IPO of its Brazilian sugar and ethanol arm Bunge Acucar & Bionergia with the Brazilian security commission. Bunge plans to keep a controlling stake in the unit after the public offer.

Alvean, the joint-venture between Copersucar and Cargill, has renewed its long-term supply contract with Dubai-based sugar refinery Al Khaleej. Al Khaleej already bought 20 million mt of raw sugar from them (and Copersucar prior to the creation of the JV) over the past 20 years.

However, a Saudi Arabia-based investor thinks there is potential for Dubai to grow more of its own food. The group has set up a vertical farm to grow vegetables and crops. The emirate currently imports around 90% of its food requirement.

Nestle will look to reduce the level of sugar by another 5% in its packaged food products amid growing preference for healthier foods across the world. The CEO said they have already reduced sugar content by 34% since 2000 and spent USD 1.7 billion in research and development in 2017. The group launched “Nestle for Healthier Kids” program which aims to make the life of 50 million children healthier by 2030. Nestle will add additional fruits, vegetables, fibre-rich grains and micronutrients to the foods and beverages for children. The company will also continue to cut salt as well as saturated fats. Nestle Bulgaria, meanwhile, announced it would reduce electricity consumption of its mills by another 2% as well as reduce the use of water.

At a time when consumers want to know more about their food, Cargill has launched a new interactive beef guide that explains beef production in the US and Canada. It has an online story map called ‘Raising Beef to Higher Standards’ with gives details about ranchers, stockers, feedlot operators and packing plant and other information that might be useful to cattle rearers. Users can virtually explore cattle ranches and feeder operations using aerial maps while also locating feeder lots and packing plants.

Finally, Scandinavia is witnessing a bout of cross border trade as consumers try to evade taxes. After Norway recently hiked its sugar tax by 83%, neighbouring Sweden’s border areas saw a surge in the sale of sugar containing products. A Sweden-based supermarket manager said sales of products affected by the sugar tax had shot up by 10-20% as a result, also aided by the weak Swedish currency.

This news summary has been produced by ECRUU

The World Bank’s International Finance Corporation offered Olam International a USD 120 million unsecured corporate loan, which will go to supporting Olam’s supply chain and improve its market access. The IFC hopes the loan will help some of the 40,000 smallholder farmers who supply Olam.

Nestle reported a 3% organic growth in the first three months of 2018 partly thanks to a good performance in Asia. The group announced a USD 7 billion deal to distribute Starbucks coffee and tea in stores around the world. Sales of premium coffee are reportedly faring much better than traditional roasted coffee with Nespresso grabbing only 1% of the single-serve coffee market in the US. Petcare was among Nestle’s fastest growing segments in the US, particularly natural products. AMD is also expanding its pet business and recently inaugurated a USD 35 million animal nutrition premix factory in Illinois.

Keystone Foods LLC, who supplies chicken nuggets to McDonald’s, is for sale as its Brazilian parent company Marfrig Global Foods is looking to reduce its debt and finance the purchase of a beef packaging firm in the US. Cargill and Tyson Foods Inc are among the interested firms, according to sources who suggested that a USD 3 billion deal could be signed within the next few weeks.

Farmers in the US are worried about China’s unwillingness to discuss the trade deficit. Some Chinese officials reportedly think the economy is strong enough to take the US head-on in a trade-war. On the other hand, an agribusiness expert argued the face-off have created trading opportunities for grain exporters who could benefit from the added volatility.

China is hoping to use new gene editing technologies, like Crispr, to take the lead in gene editing and develop better crops. Syngenta, the Swiss firm recently purchased by ChemChina, is building a research center in Beijing. The CEO said the government was very supportive.

The country spent about twice as much on agricultural research than the US in 2013. Experts think tools like Crispr could disrupt the industry, previously dominated by US firms like Monsanto and DowDuPont because they do not rely on adding foreign DNA, which means regulation could be lighter.

The USDA is still working on the guidelines that will clarify how food firms have to disclose the presence of genetically modified food in their products. The agency published a draft proposal, ahead of the July 29 deadline, although some details are missing, such as whether genome editing will fall under the “GMO” classification. The USDA did suggest that the term “bioengineered” could be used instead of “GMO”.

Still on the topic of GMOs, a US columnist claims that if you are anti-GMO, you’re anti-science, too. He notes that the scientific consensus clearly suggests that directly modifying genes instead of doing it through slow selective breeding has no consequence for our health. Going further, he draws a comparison with climate-change deniers and anti-vaxxers to argue that denying the truth about GMO could have a real human cost. A new book by an early anti-GMO activist, called “Seeds of Science: Why We Got It So Wrong on GMOs” is due in June.

A recent study argued that efforts to reduce the carbon emitted during the production of agricultural goods needed to be complemented by efforts to reduce emission linked to food consumption in large cities. It suggested implementing better solutions to manage distribution, localised production and waste management. Another study by the Changing Markets Foundation argued that the sustainability certification schemes for palm oil and fish did little in terms of protecting the environment and ensuring sustainable agricultural practices. It claimed that the certifications had to lower their standards in order to capture most producers.

Last Friday, the WHO published its recommendation for trans fats and saturated fat consumptions, 15 years after its previous recommendation was published. The agency says the fats should represent less than 10% of total caloric intake to lower the risk of cardiovascular diseases.

Human Reproduction published a study suggesting that women who consumed fast food regularly would take longer to conceive. However, experts noted that like most food studies, researchers had to rely on the subjects remembering what they ate during the month before their pregnancy, which limited results.

Remember last year’s French butter crisis? Well, prices are still going up as supply problems have not been addressed, according to bakers, who are worried about their dwindling profit margins.

This report prepared by ECRUU