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Truth in nutrition

An article in New Food Economy this week warns that almost 40% of peer-reviewed dietary research is wrong, and that “we stop treating new nutrition studies like they contain the truth”. The online magazine argues that “Food research has some big problems: questionable data, untrustworthy results, and pervasive bias”.

In my book The Sugar Casino, I dedicated a chapter to nutrition and told the story of how two enterprising German journalists carried out a “scientific” study that “proved” that eating chocolate will help you to lose weight. They managed to get the study published in a scientific journal and sent out press releases to all the media. Within a week it was on the front page of all the newspapers. None of those newspapers verified the story or checked on how vigorous and exhaustive the study was; they based their stories entirely on the press release.

I wrote at the time,

 Nutrition is an inexact science. It is not possible to isolate the different elements or to establish the causality of any correlation. One test group may lose weight when they eat bananas, but that does not mean that they lose weight because they eat bananas. They could, because they were taking part in the study, have focused more than usual on their health and taken more exercise. Another point is that in the German study the test group that ate chocolate did lose more weight, but the sample size (4 people) was too small to be significant.”

As the New Food Economy wrote in their article, “it is not surprising if you are confused whether coffee causes cancer, or whether butter’s good for you or bad”.

Or whether sugar is a poison that should be regulated like nicotine, or just a calorie that can be part of a healthy diet. (A drunk at a cocktail party recently told me “sugar is toxic”. Sugar isn’t toxic, but alcohol is.)

Aeschylus, the founder of Greek tragedy, wrote “In war, truth is the first casualty.” Perhaps if he were alive today he would replace “war” with “nutrition”.

Julian Baggini touches on nutritional studies, and in particular on the sugar versus fat debate, in his book, A Short History of Truth: Consolations for a Post-Truth World.

He writes,

Hence in the early twenty-first century we find ourselves in a position where we know some truths are hidden by powerful groups to protect their own interests, we are not usually competent enough judges to know which claims about esoteric truths are correct, and we don’t have much confidence in experts to make those judgments for us.

When I read his book last year I found it flawed as I felt the author confused “truth” and “belief”. However I am now not so sure: what may be true for one individual may not be true for another. God may exist for some people, but not for others. Some people believe that the earth is flat or that NASA faked the moon landings.

And on a more mundane level, I may find that when I eat chocolate I lose weight—an individual truth—even though I screen out the fact that I at the same time I start to walk to and from work rather than take the bus. And I may not be able to be convinced otherwise. As Mr Baggini writes,

Reason works best in a blend, which includes not just logic but experience, evidence, judgment, subtlety of thought, and sensibility to ambiguity.

He adds,

“Despite the fact that intelligent people evidently disagree, we are inclined to think that what we believe really is rational and that those who disagree are being blinded by prejudices, ignorance or plain stupidity.”

Perhaps, rather sadly, he is right when he writes,

The relativist argues that there are no bare facts only interpretations of facts, mediated through culture. Nothing is true, period; it is only true for certain people, in certain contexts, or in certain senses. Truth has become personalized, with the individual sovereign over their own interpretation of reality.

So what should we do; who should we believe? In The Sugar Casino I wrote,

There is an old joke about a man who went to see his doctor and asked him what he should do to live to one hundred years old. The doctor replied that he should give up sex, sugar and alcohol and only eat fibrous vegetables mixed with unsweetened porridge.

“If I do that,” asked the man, “will I live to be one hundred?”

“No”, replied the doctor, “but it will seem like it”.

Oscar Wilde once famously said, “Everything in moderation, including moderation.” My grandmother used to say, “A little bit of what you fancy does you good” – and that is my first rule of healthy eating. So eat healthily, enjoy your food and don’t beat yourself up over that occasional slice of cheesecake.

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Commodity Conversations Weekly Press Summary

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

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Merchants of Grain

I am enjoying (re) reading Merchants of Grain, written by Dan Morgan and published in 1979. Many of the comments and observations in the book are still relevant today. Perhaps the most important one is this:

“..the (trading) companies managed to stay in the shadows most of the time. Perhaps it was the ancient nightmare of the middleman-merchant that made them so aloof and secretive—the old fear that in moments of scarcity or famine, the people would blame them for all misfortunes, march upon their granaries, drag them into the town square and confiscate their stocks.”

Government intervention has always been a threat. Socrates once wrote, “No man qualifies as a statesman who is entirely ignorant of the problems of wheat”, while Lenin is credited with saying “Grain is the currencies of currencies”.

Describing the beginning of the US wheat trade in the 1850s, Dan Morgan writes:

“…margins of profit had to be extracted “upstream”—along the railway lines and at the storage terminals in the interior. In the struggle among farmers, merchants, millers, and exporters for their share of the wheat price that was determined in world markets, the advantage always went to those who controlled the storage and transportation of grain.”

But even, or perhaps especially, back then, technology was changing the way food was produced and distributed. Dan Morgan writes, “In 1837, it took 148 man-hours to plant, cultivate, and harvest an acre of wheat; in 1890 it was down to only 37 hours”. As for distribution, “In 1890, the four-masted Shenandoah, driven by a spread of two acres of canvas, left san Francisco with 5200 tons of wheat, the largest grain cargo on record up to that time.” One hundred years later it is now commonplace to ship cargoes of ten times that amount.

Profit margins have also changed in the past one hundred years. Dan Morgan writes, “Between 1883 and 1889, two large terminals in Minneapolis (Empire Grain and Minnesota and Northern Grain) averaged annual returns on capital investment of 40 percent and 30 percent respectively.” And in the 1920s a Federal Trade Commission study showed that US wheat exporters were making returns of more than 20 per cent on their funds deployed.

However, the good times were not to last forever. In the late 1940s a grain surplus “made for dull markets and extremely thin margins, and the zip went out of the business. It was a time when traders had to fight for a quarter of a cent a bushel, and this situation indelibly stamped and indeed altered the essential character of the companies…The grain trade was becoming not much more than a service business, which eked out a living on costs plus commissions”.

And as a reminder to those who forget the cyclical nature of our business, margins picked up with Russian imports in the 1960s and hit a zenith in the “Great Grain Robbery” of 1972 when millions of tons of grains were exported to Russia, restoring the fortunes of some traders and making the fortunes of others.

Dan Morgan describes the events of 1972 as “one of those economic events that, like the OPEC oil embargo the following year or the repeal of the Corn Laws more than a century earlier, can be truly to be said to have changed the world”. (He couldn’t get everything right!)

But most of his observations are still valid today. On the subject of farm surpluses, Dan Morgan writes, “Farm surpluses tended to occur in rich, industrial nations where had powerful, well-organised lobbies, rather than in developing countries where farmers were usually weak and underrepresented.”

And on the strength of character of the Russians. “If anything characterized the Soviet Union since the Revolution, it was its economic isolation and its determination to survive on its own. It was a Yugoslav Communist politician…who had told American officials in Washington in the late 1940s that his countrymen would rather eat grass than accept help from the West with strings attached.” (President Putin said the same thing last year.)

In 1912 Leopold Louis-Dreyfus wrote, “Our business fills a great human and economic need”. It did then, and it does now.

But I would like to leave the final word to Dan Morgan who sums it all up with, “Study grain long enough and the world shrinks”.

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Commodity Conversations Weekly Press Summary

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

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Of dinosaurs and conferences

In a Linkedin post this week Hartwig Fuchs, the ex-CEO of Nordzucker (one of the world’s biggest sugar producers), warned that time is running out for the world’s big agricultural trading companies, or as he called them, “the dinosaurs of the international ag trade”. He wrote, “Unless they redefine their business, and focus on true function that benefits their customers, they might have to go”.

He argued that producers no longer need trade houses to intermediate between them and their final buyers, to book fobbing capacity and freight, or to make the destination sales. He wrote,

“So, looking at those companies today, question is: who really needs them? Where do they generate genuine added value for their customers – and for themselves? Who really likes them and wants them around? What´s their purpose?”

Although none of these arguments are new, it is worrying to see them expressed by so significant a personality in the commodity trade. (Mr Fuchs was also at one time Chairman of Toepfer.)

We have already written extensively on the issues that the trading houses are facing, and discussed various alternative business models. As a reminder, take a look at these two interviews: one with Abercore, a trader that has become an advisor, and another with Solaris, a trader that has found a successful niche in the Black Sea grain trade.

It is interesting that Mr Fuchs refers to the trade houses as “dinosaurs”.

“Evolution or Extinction” was to be the theme of the Commodity Conversations ® event that we had been organising at the Natural History Museum in June. Unfortunately we had to cancel the event due to a lack of interest from both sponsors and attendees. This lack of interest was perhaps a sign that the sector is really in difficulty.

Or perhaps it was that the evening cocktail party was due to be held in the museum’s Earth Hall under the watchful eyes of the most intact fossil skeleton ever found. At three metres tall and almost six metres long, the Stegosaurus was perhaps too big a presence for the cocktail party attendees!

I have recently begun to (re) read Merchants of Grain, written by Dan Morgan and published in 1979, almost forty years ago. The book describes the five trading companies that dominated the world’s grain trade: André, Bunge, Cargill, Continental Grain, and Louis Dreyfus.

Mr Morgan wrote that the trade houses

“had made themselves indispensible because of their control of the distribution systems, the processing plants, the technology, the capital and the communications with buyers and sellers…The companies run their own intelligence services all over the planet—private news agencies that never print a word.”

He added,

“The grain merchant houses are private, centralized oligopolies that do not publish financial statements. There are no public stockholders, which greatly limits the obligation to disclose information. Ownership of the companies is vested in the hands of seven of the world’s richest and most uncommunicative families, and the same families also have operating control of the companies.”

However, that was already beginning to change by the time the book hit the shelves. Cargill had already begun to publish a monthly newsletter, starting an “opening-up” that continued for the next forty years—and still continues today. The big trading companies, even the privately held ones, have long realized that they have a responsibility to account to the public, to disclose and explain what they do, and how they do it.

Two of the five companies cited in Merchants of Grain no longer exist, and a third is a candidate for takeover. However, Even so, I am not sure that the agricultural trading sector has been subject to more change than other sectors.

A recent study showed that the lifespan of large, successful companies has never been shorter. In 1965, the average tenure of companies on the S&P 500 was 33 years. By 1990, it was 20 years. It’s forecast to shrink to 14 years by 2026. If this trend continues, about 50 percent of the S&P 500 will be replaced over the next 10 years.

Commodity trading companies have significantly changed their business models in the past forty years and this evolution will continue. Those that do not evolve will become extinct, but this process is not restricted to agricultural commodity trading.

Finally, I do not agree with Mr Fuchs’ argument that agricultural trading companies add no value. When prices and price volatility are low it is relatively easy for buyers and sellers to connect directly. Wait until prices turn or there is a major harvest failure somewhere. It will be then that the skills and value of the trading houses (big and small) will once again be appreciated.

But it is still a shame that we had to cancel the conference planned for June. It would have been an interesting discussion.

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Commodity Conversations Weekly Press Summary

Bunge saw a loss of USD 29 million in the Jan-Mar (Q1) quarter, down from earnings of USD 39 million in the same period last year. However, the company explained that a big part of the losses was due to an increase in forward soybean crushing margins, which means losses should be offset later in the year once the contracts are executed. As a result, it increased the forecast for operating profits this year to between USD 800,000 million and USD 1 billion, compared to USD 550,000-700,000 previously forecast.

On the other hand, losses in the sugar segment increased to USD 24 million mt in Q1, up 40% on year as low sugar prices could not offset the higher ethanol values. Bunge reduced its full-year forecast for operating profits from USD 50-70 million to USD 40-60 million for the sugar division as a result. The company said that it is planning to file for an IPO of its Brazilian sugar mills in May, adding that mills have assured debt financing and can now operate independently. The company had spent over USD 1 billion in its acquisition of the sugar mill operator Moema in 2010.

ADM announced a 16% jump in its profit for Q1 due to better margins and higher soybeans processing volumes in North and South America. However, it is anticipating a USD 30 million negative impact in its Q2 results due to China’s anti-dumping tariffs on sorghum. In combination with DuPont, the group opened a pilot facility in Illinois, US, to make bio-based plastic from corn-based fructose which aims to cut plastic in soda bottles by 25%.

US-based POET dislodged ADM as the world’s top ethanol producer. Previously, both companies had an annual capacity of 1.8 billion gal, which POET expanded to 1.9 billion gal, with a goal of 2 billion gal by 2019, while ADM reduced it to 1.6 billion gal.

The Commodity Futures Trading Commission (CFTC) has fined Glencore Agriculture and Glencore Ltd USD 2 million for breaking trading rules between January 2013 and November 2015. These included breaching speculative position caps and illegal wash deals.

Mondelez International’s profit and sales in Q1 exceeded market expectation due to a strong showing in Europe and emerging markets.

EU members have voted in favour of a near-total ban on the use of neonicotinoids following studies that found its use posed a threat to bees and other pollinators. The sugar beet industry warned this would have a significant impact on yields as there are no alternatives, adding that it threatened the future of the industry.

The head of Unilever said the efforts to source palm oil sustainably were not working well enough, as he noted that deforestation accelerated significantly in 2016. He called on the G7 and G20 to include the topic of food security and sustainability in their agendas. Meanwhile, Greenpeace International has accused Indonesia’s Megakarya Jaya Raya, which supplies palm oil to Nestle, Mars, Pepsi and Unilever, of destroying over 4,000ha of rainforests in the Papua region between May 2015 and April 2017.

UK-based supermarket chain Iceland decided to stop buying products containing palm oil from the end of 2018, saying its production encourages deforestation. The palm oil industry warned, however, that palm cultivation needs less land than other oils.

Leading retailers and food firms such as Walmart, Nestle and Kellogg last week joined a new drive that aims at creating more environmentally and socially responsible global supply chains and ensuring that bonded labour is not used. The Consumer Goods Forum, consisting of around 400 food retailers and manufacturers across 70 countries, is setting up a benchmark auditing and certification system to avoid duplication in audit and promote sustainable sourcing.

Similarly, food industry stakeholders and supermarkets in the UK including Unilever, Nestle and Pepsi will do away with non-essential single-use plastics by 2025 and make sure that the rest of the packaging is recyclable, degradable and reusable as a part of the government’s Plastics Pact. They will also ensure recycling of a minimum of 70% of plastic packaging compared to around 33% now, and use  plastic packaging with an average of 30% recycled content.

In the US, the Illinois House of Representatives passed legislation that seeks to permit farm zones in cities deficient in fresh food items. The bill, which will now go to the Senate, also seeks to create a fund from the sales tax proceeds of such farm produce to finance social programmes.

More and more start-ups are looking at plants to replace animal products, such as eggs, milk, cheese and meat, to lower the carbon impact of agricultural productions. Taste, however, is particularly hard to perfectly reproduce and the race is now moving to finding a cheap way to make lab meat. Following the success of Maastricht University who made the first cultured meat in 2013, Cargill is backing Memphis Meats’ effort to make beef, chicken and duck in labs. Nonetheless, making food in laboratories goes against the move to eat more natural and local ingredients, and a former consultant for Monsanto warned that the burgeoning industry needs to manage its image carefully.

This summary produced by ECRUU

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Commodity Conversations Weekly Press Summary

Louis Dreyfus announced it has reorganised its top management team to include eight new members, including the head of finance, a Group COO and a strategy chief. It said the new team will focus on its Brazilian sugar company Biosev, which underwent a USD 1.45 billion recapitalisation in 2017, and on China’s soybeans market, which is exhibiting a higher feed demand. It also clustered its grains and oilseeds segments with its finance and freight divisions.

Cargill has leased its port-based sunflower processing unit in Quequen, on Argentina’s Atlantic Coast, to Renova, the joint venture between Glencore and Vicentin, for a year. Cargill has been struggling with workers protests which have affected soybean crushing and exports from Argentina. The situation has created concern that the company may not be able to export as much soybean as a result.

In the US, meanwhile, Cargill has donated USD 150,000 to set up a poultry research centre at the University of Arkansas. The facility will focus on developing alternatives to antibiotics, including probiotics, prebiotics and other nutraceutical-type products. Similarly, ADM is tying up with a Chinese group to open a lab in California that will focus on developing feed and enzymes to improve animal health and nutrition. ADM explained that adding enzymes to swine and poultry diets, for instance, helped their digestion, improved their wellbeing and reduced their carbon footprint.

Canada’s Walmart has officially committed to being waste free by 2025 by becoming more efficient, discounting food about to go off as well as by donating through local food banks. The group will also give USD 15 million to help find solutions to reduce wastage along the supply chain.

UK-based company AB Sugar has pledged to use all recyclable and biodegradable plastic packaging and reduce its carbon footprint by 30% by 2030, according to its first sustainability report. The company will also cut down water usage by 30% in association with its 25,000 producers.

In China, Nestle will sell 67 more items on Alibaba’s Tmall in an effort to grab a larger share of online sales. A company official forecast the Chinese online market will become bigger than Europe and the US combined in 2018. Meanwhile, Nestle is set to lose its KitKat four fingers patent case to Mondelez which would open the gates for other European candy producers to make similarly shaped items. Sources say the European Court is likely to agree with the attorney general’s findings that the shape is not distinctive enough to give Nestle its sole ownership.

US citizens throw away a total of 150,000mt of food per day. The USDA study found that the Americans with healthier diets consuming fruits and vegetables wasted the most followed by dairy and meat consumers. Discarded food translates into an annual waste of 30 million acres of land, 354,000mt of pesticide and 4.2 trillion gal of irrigated water, besides choking landfills and increasing methane release.

A campaign by the Eating Better coalition, consisting of 50 civil society groups, has drafted eight principles to guide consumers on making healthier choices on meat and dairy products and lessen the damage they inflict on the environment. The group recommends buying meat in smaller quantities to reduce waste and improve health. It advises lowering consumption of intensively reared animals like chickens and pigs in which there is antibiotic overuse. The coalition also demanded better labelling of foods.

In an era when 10 companies own 75% of global seeds trade and 94% of the vegetable seed varieties have been lost, Open Source Seeds (OSS) is trying to promote the common ownership of seeds. So far, however, it is struggling to win over plant breeders and has licensed only 3 varieties each of tomato and wheat. The group argues that having diverse crop varieties will come in handy at a time when climate change is a challenge. It added that having an open-source market will ensure continued development and breeding of multiple varieties of each seed.

On a more artistic note, click here to see the best contendants for the Food Photographer of the Year.

This report was prepared by ECRUU

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Commodity Conversations Weekly Press Summary

Cargill is planning to invest USD 118 million in Brazil in 2018 in developing waterways and rail transport as an alternative to trucks, and its Santos Port terminal. Cargill already acquired the remaining stake in the Cevasa sugar and ethanol mill and, with SJC Bioenergia, is banking on the booming corn-to-ethanol business. The head of the Brazilian operations said that regardless of the uncertainties brought by the elections Brazil will continue to be a major global food producer, adding that the challenge lies in bringing these crops to port.

Wilmar and the India-based group Adani via their joint venture Bangladesh Edible Oil Ltd (BEOL) are planning to spend USD 350 million to build an agro-based foods and allied products industrial park in Bangladesh. BEOL said the popularity of its edible oil was encouraging the investment.

Olam has announced the launch of AtSource, a technological solution for a sustainable agricultural supply chain which allows customers to see the social and environmental footprint of a commodity. The dashboard will start by showing the supply chain for West African cocoa and cashew, as well as Brazilian and Vietnamese coffee, among others. It’s target is for all of its products to be on AtSource by 2025.

Similarly, Hershey has launched Cocoa For Good, a USD 500 million initiative to help cocoa farmers improve their livelihoods as well as promote sustainable farming practices as the company aims for all of its cocoa to come from certified sustainable sources by 2020. The company is working with Sourcemap to make its supply chain more transparent.

The exiting head of Sucden’s cocoa trading desk, who has been in the business for 50 years, is arguing that the drive to grow sustainable cocoa is keeping farmers poor. He explained that the system allowed the various companies involved – including NGOs – to cash in on sustainability practices but that West African cocoa farmers are probably poorer today than they were before.

In Brazil, conservation groups have offered USD 5 million in grants to help turn deforested and degraded Amazon land into 1,700sq km of cocoa tree plantations. Cocoa trees are financially more interesting than using the land for cattle ranching, which faces additional rules designed to curb further expansion into the forest. Brazil’s Cocoa Processing Industry expects production to double to 400,000mt/year by 2028, which would increase global production by 5%.

China’s high birth rate and rising middle class allowed Danone to increase its sale of baby formula, dairy products and water brands in the country. In Europe, on the other hand, sales of dairy products during the first three months of the year were 0.3% lower than last year as the firm is trying to adapt to changing tastes and slow demand growth.

Nestle reportedly made some progress over a dispute with AgeCore, which represents six retailers in Europe, which started in September last year over supply terms. AgeCore, whose membership includes Switzerland’s Coop and Germany’s Edeka, has been encouraging its retailers to boycott Nestle products. And in the US, Nestle Waters has abandoned a plan to build a bottling plant in Pennsylvania, although it might look for alternative sites. Food & Water Watch welcomed the news and highlighted the strong opposition the project had faced.

In the UK, the dairy and meat industries – with the support of NGOs such as the animal rights group RSPCA – are trying to change the name of “veal” to “rosé beef” in an attempt to convince more people to eat veal; this could give an outlet for male calves that are otherwise killed at birth. The Guardian found that as many as 95,000 calves are killed at birth as it is cheaper to kill them than to keep them alive.

In the US, cell-cultured meat – so-called clean meat – is causing regulatory confusion. The US beef industry is divided between those who say it should count as meat as it comes from a stem cell and those who argue that it is technically a food additive. Whether it is the former or the latter could impact the definition of “meat” as we know it. It is also unclear which government body should take the call. Some say it falls under the US Department of Agriculture (USDA), others argue it’s in the Food and Drug Administration (FDA) department and others still say that only Congress can take the call.

A recent study looking at – and grading – how supermarkets in the US work to reduce food waste found that none of the major groups managed to score an A. The company that fared best was Walmart thanks to policies like clearer labeling which distinguish between “Best if Used By” and “Use By” dates, among others. The study found that part of the problem was that the supermarkets are not disclosing data, making it hard to assess how much is actually being wasted, and therefore making it harder to find solutions.

The European Commission has allowed member states to declare dual standard food as illegal, after Central and Eastern European countries complained that multinational firms were selling lower quality food in their countries despite identical packaging. For example, eastern countries complained that animal fat was often substituted with vegetable fat and sugar was substituted with artificial sweeteners or corn syrup. In response, food producers had argued that these differences were designed to suit local tastes.

Finally this week, a new book, called The Food Explorer, tells the unusual tale of an American botanist and explorer, who at the age of 22 founded the USDA’s Section of Foreign Seed and Plant Introduction. Over 37 years of travel, David Fairchild travelled to more than 50 countries to bring back new or better fruits and vegetables, such as mangos, quinoa, dates, cotton or soybeans. He even befriended Bavarian beer makers to bring back some of their high quality hops. Kazakhstan gave him apples, New Guinea gave him bananas and China oranges and lemons: The food we eat is indeed the product of a globalised world.

This report was produced by ECRUU

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New York conversations

The family at the next table were stocking up enough food from the hotel breakfast buffet to last them for weeks. Admittedly it was a big family, three generations of them, but there wasn’t a square inch of space on their table that wasn’t covered in food. Every time a plate was emptied, the grandmother went back to the buffet to get a refill. None of the family members was overweight, and there was no way that they were going to eat all of the food they had piled onto their table. I guessed that at least half would be thrown away, if not more.

As I finished my coffee a businessman sat down at the table on the other side of me and started to tuck into a plate piled high with fruit: melons, pineapples, huge red strawberries and grapes. I estimated that he had more than a kilo of fruit on his plate. He saw me looking at him and smiled. “I am on a diet,” he explained. “I only have fruit for breakfast now.” I thought about telling him that fruit were carbohydrates and heavy in calories but he had already got up to fetch a pint glass of apple juice.

The grandmother walked past my table again with what could only be described as a bucket of scrambled eggs. She piled some of them onto her grandchildren’s plates, but they were more interested in the chocolate brownies that she had amassed earlier. The grandmother wasn’t eating anything; she was just making sure that her grandchildren were well looked after. I realised that she was expressing her love through food—and I thought once again how complex our relationship with food really is. Food is life and love, but it is also guilt and self-depravation.

The previous day I had dropped in to meet the editorial team at New Food Economy. The online magazine had recently run a series of articles about farmer suicides in the US. Farmers borrowed heavily the last time crop prices were high, and they had invested that money in new equipment and more land. With crop prices down again, farmers are now unable to meet their interest payments; as a result, farming now has the highest suicide rate of any profession in the US.

We discussed how low food prices mean that producers can’t cover their costs while at the same time they encourage consumers to overeat and throw away a large percentage of what they buy. While high food prices attract most attention from the media, the social and environmental costs of low food prices are always underestimated.

The next day I was talking with a Bloomberg journalist about how low food prices were impacting farmers, but she wasn’t impressed. “Maybe food prices are low in the US”, she told me, “but what about the currency effect? Russian wheat producers are doing just fine, as too are Brazilian soybean farmers. ”

She made another good point about low prices. “Perhaps,” she suggested, “the improvements in seed technology and farming practices—drones and the like—have reduced production costs while at the same time made crops more resistant to poor weather, pests and disease.

“Is it possible,” she asked, “that bad weather and disease has less impact on production now than in the past? It is possible that technology has taken some of the volatility out of the agricultural markets? If it has, then crop prices could stay lower for longer than in the past—especially if the US dollar stays high.”

Technology and innovation were the main subjects of conversation when I met a friend for lunch, but this time we focused on AI—artificial intelligence—and the way that the algorithmic funds (according to him) now dominate the futures markets.

“They are so secretive,” he told me, “none of my contacts know how they work. We all try to guess how they are programmed, and how they might react to, or to create, market moves, but it is impossible. Perhaps they change their trading strategies too quickly, or perhaps they have many variants of a particular trading strategy.”

“What about market fundamentals,” I asked him, “don’t they impact the markets?”

“Yes they do,” he replied. “Supply and demand will always drive medium and long term trends. But there currently aren’t any trends in these range-bound and over-supplied markets. For the moment I am just trying to survive. I call it “death by a thousand cuts”—all these tiny short-term moves just pick away at my equity. Algorithmic funds love these markets. And to be honest, they will probably also love trending markets. Perhaps computers are just better at trading than humans.”

My final business conversation of the trip was with another old friend in the business. I told him about the pessimism that I had encountered and he laughed. “It’s just that phase in the cycle,” he reassured me. “Cycles turn and when this one does farmers and traders will be able to make money again. It will then be the consumers’ turn to complain. The last time food prices increased, everyone blamed traders and speculators; no one blamed the poor weather or the preceding period of low prices that had driven farmers off their fields.

“Give it two years,” he laughed. “Traders and producers will once again be making money—and everyone will hate us. It’s been like that since the beginning of time, so you might as well get used to it!”

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Commodity Conversations Weekly Press Summary

Cargill reported a 24% decline in net profit to USD 495 million for the Dec-Feb (Q3) quarter, mostly due to a USD 161 million adjustment cost to comply with the new US tax law. The firm said profit would have been up 1% without the tax change, while sales increased by 2% on year to USD 28 billion. The biggest growth contributor was its animal nutrition and protein segment, followed by the food ingredients unit, although it was impacted by low ethanol prices in North America and high manufacturing costs in its European sweetener and starch business.

Cargill is investing USD 20 million to double egg processing capacity at its Minnesota plant. The company explained that Americans seemed to increasingly prefer eating out for breakfast, instead of lunch or dinner as it used to be the case. The company already spent USD 900 million in its North American protein business in the last two years to meet the growing demand for animal protein which it attributed to a growing middle class.

Cargill said India  was an important growth market for the group and hopes to turn the country into an export base for products like corn. However, the company’s CEO for the Asia-Pacific region said India must first promote free trade and adopt technology such as GM seeds to meet its target of doubling the income of farmers.

Olam reported a post-tax profit of USD 551.65 million in 2017, up from USD 339.10 million in 2016. The COO attributed the increase to improved efficiency as it invested to make its supply chain more digital. The company foresees important changes in people’s eating habits, including a move towards ethical eating which requires increasing traceability. With this goal in mind, it will be implementing a Living Landscapes Policy at its farms and its network of third-party suppliers, which include around 4 million small and big farmers. The policy is designed to attend to ecological and social problems which affect its agricultural supply chain.

Louis Dreyfus announced a USD 50,000 grant to World Coffee Research to work on areas such as low yields, impediments in improving quality and impact of climate change on the commodity. An LDC official said the grant is part of its sustainability efforts to achieve positive and long-term impacts on the coffee value chain.

Meanwhile, Netafim Mercosul, a Brazilian irrigation company that allows farmers to buy their irrigation systems against some of their production, has seen an 116% increase in coffee irrigation projects in 2017. The company also saw revenues grow by 109% as more farmers, struggling to get bank financing, turn to this barter system.

ADM Arkady, ADM’s UK feed distribution arm, has entered into a long-term deal with the Peel Ports Group which will develop its Glasgow port facilities with a view to improving the handling of animal feed shipments. The managing director said the deal was aimed at combining regional feed shipments and improving supplies to the north of England and Scotland markets.

The UK’s grain trading market is likely to see consolidation soon as small and regional grain traders struggle to stay profitable amid falling margins. Several groups have already exited grain trading in the past year. A Dalmark group director argued that the entry cost was too low while high volatility and reduced crop volumes have pushed up expenses and lowered margins.

Brazil-based Marfrig Global Foods will acquire 51% stake in Kansas-based National Beef Packing Company for USD 969 million to become the world’s second-largest meat producer. The Kansas-based National Beef is the fourth largest beef processor in the US.

The UK launched its sugar tax last week. The government is apparently already considering bringing other products, such as added-sugar flavoured milk drinks under the tax to tackle obesity. Food manufacturers and bakers have voluntarily agreed to lower sugar content in cakes, biscuits and cereals by 20% in the next four years. On the other hand, Coca-Cola launched a marketing campaign for its original Coke highlighting the fact that the recipe hasn’t changed – which means the price has gone up due to the tax.  

Coca-Cola India will launch its first sugar-free drink in India to meet changing consumer tastes. An official explained that people in cities were increasingly concerned about their health, adding that the sugar-free beverage segment was growing fast. In the same vein, Nestle will spend USD 27 million on modernising its prepared foods and noodle-based soups plant in Ukraine. The modernisation plan, which would be completed by 2021, aims at reformulating recipes to reduce fat content in line with WHO’s dietary recommendations.

Nestle also announced a target to only have recyclable or reusable packaging by 2025. Some NGOs complained, however, that the announcement amounted to “greenwashing” given the lack of clear quantitative targets. The company CEO admitted that “plastic waste is one of the biggest sustainability issues the world is facing today” but that the company’s ability to deal with that problem also depended on each country’s recycling infrastructure.

Similarly, Unilever has joined hands with the world’s top PET resin maker Indorama Ventures and a Dutch start-up Ioniqa to develop a technology that transforms PET waste into new food packaging material – a technology that could revolutionise food packaging and reduce waste. The technology has cleared the pilot testing phase and will now be tested at an industrial scale.

Finally, the not-for-profit advisory firm Ceres has said that not enough food companies are committed to end deforestation. It found that less than 50% of the 469 food manufacturers that have deforestation commitments in 2018 have made official plans to improve traceability across their palm oil supply chain, and less than 20% plan to make it completely transparent – the way Nestle and Unilever have done.

This report was produced by ECRUU