Category: ECRUU weekly

Another major commodity group, this time Louis Dreyfus, reported lower results because of global trade tensions and the African Swine Fever in China, along with the bad spring weather in the US Midwest. The CEO said the situation will remain difficult for the second half of the year and will only improve in 2020. Nonetheless, the firm paid USD 428 million in dividends for the first half of the year, the highest since 2014, as the chairwoman is reportedly looking to repay loans she took to buyout minority shareholders. 

China could have lost up to half of its pig herd to swine fever and the Vice Premier has set a target to return to a normal herd size as early as next year. In the meantime, the country is facing a shortage of 10 million mt of pork, more than the global trade supply. To deal with the shortage, a local pig farmer imported 906 breeding pigs from Denmark, the first pig imports this year. And a breeder in Nanning is looking to raise pigs that weigh up to 500kg, compared to the usual weight of around 125kg. 

US producers are also looking to take advantage of the surge in Chinese pork demand. To that end, JBS USA announced that it will remove ractopamine from its pig supply. Ractopamine is a growth drug banned in China and the EU. A US competitor, Smithfield Foods, has already dropped the additive to export to China while Tyson Foods said it was considering a similar move. 

Global trade is due to see another wave of protectionism as the WTO ruled that the US could impose duties worth USD 7.5 billion on EU products in response to the EU support of Airbus. The US will levy a 25% duty on EU food goods starting on October 18, but an EU official said the US seemed uninterested in finding a way to avoid the tariffs. Food firms in the US warned that this could have significant repercussions on their businesses. A cheese importer said he was stocking up with USD 15 million worth of Italians cheeses ahead of the duties. 

A Dutch-based company, DSM, published some potentially good news for both the environment and meat lovers. It developed a new feed that can reduce the amount of methane emitted by cows by up to 30%. The feed, called Bovaer, could be available in late 2020. Cows are responsible for a third of the methane emitted in the US but experts highlight two common misconceptions: the methane comes from burps, not farts, and the natural gas infrastructure still emits more methane. 

A new evaluation of published research also tried to correct a misconception by arguing that there was not enough evidence to support the claim that eating red meat can have a negative health impact. Researchers analysed past observational studies and concluded that the impact of eating red meat was very small and not supported by strong evidence. Health experts were quick to criticise the paper and some argued that nutritional research can not be held to the same standards as medical research. A professor highlighted that years of studies consistently found a negative health impact. And the press revealed that the lead researcher had failed to properly disclose his past ties to an industry group. 

Ireland revealed that the average sugar content in drinks dropped to 23g in 2019, compared to 31g before a sugar tax was introduced in 2015. Nonetheless, the government noted that some of the decrease was offset by larger container size and the growth in energy drink sales. Similarly, the UK said the sugar content in soft drinks dropped 28.8% since the introduction of a sugar tax in 2017, although the total consumption of sugar gained 2.6% between 2015 and 2018. Public Health England explained that the overall increase in sales of sweet products was enough to offset the drop in sugar content. 

Nonetheless, PepsiCo’s said a good performance from its low-sugar and bubbly sparkling water brands will help with revenue growth in 2019. And Coca-Cola announced that it will launch its energy drink in the US, as it noted that sales in the sector have been increasing while regular soft drink consumption has been steadily declining. Separately, Coca-Cola unveiled a new bottle that uses recycled marine plastics. The plastic was collected in the Mediterranean sea and is used for 25% of the bottle packaging. 

Two very unusual products were unveiled this week. Glenlivet launched whisky cocktails contained in a seaweed-based skin that dissolves in the mouth. And Aleph Farms announced that it has successfully grown lab-meat using cow sells, on the International Space Station! 

Cargill saw its net earnings drop 10% on year to USD 915 million for the quarter ending in August as good protein demand was not enough to offset the disruptions caused by the trade war and the African Swine Flu. Cargill said it was re-organising its animal nutrition business to focus on animal health and wellness. The company is also working on its ecommerce platform to better liaise with its customers and to simplify transactions. For instance, the platform should help Cargill communicate more effectively on issues including new tariffs due to the trade war. The company has also set up a new Land Use and Forest Protection Advisory Panel to scale up efforts against deforestation. In Brazil, it wants to set up a start-up accelerator to finance ideas to solve the deforestation challenge. 

Nestle said it wouldn’t meet its 2020 deforestation goals. It now targets 90% of its commodities to be “deforestation-free,” up from 77% in 2019. On the other hand, it denied claims by the  Rainforest Action Network that it had sourced palm oil from illegal suppliers in Indonesia. Nestle pointed out that 100% of its palm oil supply chain was closely checked using satellites. The group’s senior vice president said he would welcome increasing government regulation to create more of a level playing field among stakeholders. For example, Nestle just inaugurated a 28,000 photovoltaic solar plant at its Al Maha site in Dubai as part of its target of zero net emissions by 2050. Separately, Nestle has bought a minority stake in Before Brands, a company that makes products with allergens designed to prevent allergies from developing in young children. 

Louis Dreyfus and China’s Luckin Coffee announced a plan to jointly produce and distribute juices in China, on top of their plan to set up a coffee roasting plant. Commentators pointed out that the venture helped Luckin compete with Starbucks in the Chinese market on the one hand, and was part of LDC’s strategy to do more food processing, on the other. 

ADM is going to make yet another by-product from corn. It has tied up with Korean group LG Chem to make a sustainable corn-based acrylic acid used in polymers which can then be used in products such as diapers. A company official said the group was already making some 30 products from corn kernel. At the same time, ADM reportedly set up a company called Vantage Corn Processors under which it will incorporate its ethanol plants by the end of the year. 

Olam has echoed a proposal by a famous economist that industry stakeholders in the coffee market get together to create a global fund to subsidise farmers in times of low coffee prices, as is currently the case. Olam’s head of coffee argued that, because coffee is mostly grown in poor countries, farmers usually don’t benefit from subsidies when prices fall below the cost of production. He suggested the fund could also help growers develop more sustainable practices. Nestle pointed out that, at the current pace of global warming, it might be impossible to grow coffee by 2050. In the US, retailers The Kroger and Albertsons announced they were joining the Sustainable Coffee Challenge to do their bit in helping what Fair Trade USA called a “pricing crisis” in the coffee market. 

There’s been progress in the cocoa sector, meanwhile. For one, Cargill’s cocoa and chocolate business announced it was extending its partnership with the International Finance Corporation for a sustainable supply chain in West Africa, Indonesia and Brazil. Barry Callebaut said it would soon launch its WholeFruit Chocolate, a product that is made entirely from the cacao fruit, including parts that are usually thrown away. This is part of a plan to use only sustainable ingredients by 2025. Similarly, Nestle said it had started using the usually discarded cocoa plant fruit as a sweetener. Interestingly, Nestle also launched KitKat bars that will cost USD 17/bar as part of its premium range of chocolate products. 

Plant-based meat continued to gain traction last week as Impossible Foods received a United Nations Global Climate Action Award in recognition of its contribution to the fight against climate change. The Spoon noted that in September alone, at least six new plant-based burgers had been launched in the US. Similarly, IKEA is trying to make a vegan version of its signature meatballs.

The drop in soy demand caused by the African Swine Fever outbreak in China will mean that COFCO will source less soy from Brazil this year, although the director said he hoped the group will be able to compensate by boosting corn exports. He noted that Brazil holds great potential for agricultural expansion that will be key to expand future food production. The state-controlled company said it will continue to invest in the country, although very cautiously. COFCO has already spent USD 4 billion in acquisitions recently, which enabled it to quickly grow in Brazil’s grains, oilseeds, sugar, coffee and cotton sectors. 

Argentina overtook Brazil as the largest beef exporter to China as beef sales more than doubled in the first seven months of the year. The overall protein demand has surged following the sharp drop in the local pig population. The swine fever has also impacted the supply of edible oils in China, which are produced during the processing of soybeans used to feed pigs. The country doubled its import of palm oil in August compared to last year in order to compensate. Palm oil is also replacing the beans that would have been imported from the US. 

In Indonesia, the state-owned PTPN III  – one of the largest land-owners in SouthEast Asia – said it raised USD 640 million to finance its capital and expand activities in palm oil, rubber, tea and sugarcane. The group manages 1.18 million ha of palm oil plantations. Meanwhile, the Center for International Forestry Research revealed that the deforestation rate related to palm oil on the island of Borneo has steadily been declining since 2012, mainly because of low palm oil prices and government moratorium on new plantations. The center unveiled a new tool, called Borneo Atlas, which lets anyone track deforestation on the island and the companies responsible.

Some 87 companies around the world have now agreed to join the UN’s Global Compact and align their operations to limit global temperature rise to 1.5°C. Unilever was one of the first groups to follow the pledge announced back in June, which now also includes Danone, Nestle, Novozymes, Royal DSM and Natura. Many of these companies also launched the One Planet Business for Biodiversity ahead of the UN Climate Action Summit in NY, highlighting the risks attached to the loss of biodiversity. Two-thirds of the world’s crop production is based on only nine plants: sugarcane, corn, rice, wheat, potatoes, soybeans, palm oil fruit, sugar beet and cassava. 

Similarly, Harvard joined the Cool Food Pledge and will work to reduce its greenhouse gas emissions related to food by 25% by 2030. Nonetheless, students note that the University still refuses to divest from fossil fuel investments, as the University President argues that the USD 39 billion endowment was not a tool for social change. The endowment has also tried to diversify from the risks of conventional stocks by investing in direct agriculture holdings across the world. The process was seen by many as a failure and the total value of the investments was written down from USD 4 billion to USD 2.9 billion. 

Some experts speaking at the UN summit attempted to defend the role global food trade can play in fighting climate change by disputing the idea that importing food always leads to more carbon emissions. Buying locally produced food only makes sense when the produce is in season, and driving a long distance to buy goods could emit more carbon than air freighting fresh produce from across the world, according to the Hoffmann Centre for Sustainable Resource Economy. A recent survey showed that people were also confused about how and why almost a third of all food produced is wasted. Food waste was not as much of a factor for a majority of people when dining out, while people said their biggest reason to limit waste was to save money. 

Farmers in the US highlighted that barley is particularly vulnerable to sudden weather changes, such as drought, heat or floods, which means climate change could potentially threaten our beer supply. To anticipate the issue, beer makers created the Brewery Climate Declaration and are testing other small grains such as winter barley, wheat rye or rice to ensure that future generations can also drink good beer. 

Unilever and Nestle have been talking this week about their commitment to being carbon neutral by 2030 for the former and 2050 for the latter. Nestle is giving itself two years to plan how to do it and figure out how much it will cost. An energy expert warned that the task would be difficult – and costly – in part because there was no standardised way of measuring emissions. However, Unilever said it had managed to switch to only using renewable electricity across all its operations in North America, Africa, Asia, Europe and Latin America at a net-zero cost.

As part of its strategy, Nestle said it would sign the “Business Ambition for 1.5°C” which is a global initiative focusing on fighting climate change. The CEO explained that they were working on reducing the group’s environmental footprint by using environmentally friendly ingredients, working with farmers to reduce carbon emissions as well as developing reusable or recycled packaging. It has already set up an Institute of Packaging Sciences to find sustainable packaging options. “Our vision is a world in which none of our packaging ends up in landfill or as litter,” he said. In the US, meanwhile, the group is downsizing its workforce as it transitions away from direct store delivery to using warehouses. 

McDonald’s is approaching the packaging challenge differently. It decided to test out different packaging options and get feedback from consumers via its plastic-free restaurants in Germany and Canada. The idea is to see what works before it can be implemented globally. 

Going back to Unilever, the group has been accused by a Mexican organisation of falling short of its commitment to fortify its corn flour products with vitamins and minerals as is required by law. The group registered USD 190 million in sales in fortified food last year, ranking second in the global Access to Nutrition Index. Analysts say that this specific food and beverage sector is expected to grow 24% within 5 years. In Greece, Unilever is working with the WWF on a pilot project to reduce food waste at three hotels. Customers are given notes urging them to carefully consider how much food they put on their plates during buffet meals. The hotels have also tried to reduce the availability of buffets in favour or meals that need to be ordered. 

Meanwhile, a blockchain-enabled sustainability and traceability project started by WWF Australia and BCG Digital Ventures’ managed to raise USD 5.8 million in funding. The idea behind OpenSC is to use technology to identify and earmark sustainable supply chains and then help customers learn about them. An official involved explained that this would not replace certifications but aims to help bridge the gap between customers and producers. 

Cargill announced it was exiting asset management and selling its share in CarVal Investors, explaining that it wanted to focus on businesses where it was more actively involved. Cargill and Maersk Tankers are pooling together some of their Medium Range (MR) fleet, combining the former’s trading expertise with the latter’s digital capabilities to become more flexible and efficient. In India, Cargill opened a USD 10 million 60,000mt corn silo in Karnataka, its first foray into bulk storage in the country. 

In the US, Cargill is upping its marketing efforts on beef packaging to highlight the meat’s protein level after the group identified that other meat products advertised their protein content better, leading consumers to believe that beef had less protein than it did. In New York, meanwhile, local residents are protesting Cargill’s use of seismic testing ahead of an expansion of a salt mine near Cayuga Lake. The residents are concerned about the effects on local wildlife as well as possible contamination of the lake water but Cargill argued that the seismic testing was used specifically to identify and prevent environmental damage. 

Bunge is acquiring 30% of Brazil’s agricultural group Agrofel as part of its plan to increase origination from farmers, especially soybeans. The group, which has 450,000mt in storage capacity, originates about 1 million mt of grains annually. In Asia, meanwhile, Olam was granted a USD 525 million loan linked to sustainability Key Performance Indicators. The funds will be used to finance their current loans. 

Following in Austria’s footsteps, Germany’s cabinet agreed to progressively phase out the use of glyphosate and implement a total ban by the end of 2023. In France, some 20 mayors banned the weedkiller last month. This could be a game-changer for agriculture, as a farmer in Nebraska pointed out that glyphosate and Monsanto’s Roundup Ready seeds were probably the biggest labour-saver since the invention of the tractor. That same farmer, however, was one of the first farmers in Nebraska to file a lawsuit against Monsanto after being diagnosed with non-Hodgkin lymphoma.

Some of the major scientific institutions disagree on whether glyphosate is safe but three juries in California have already ruled against Bayer – the new owner of Monsanto. Experts note that the outcome of the legal challenges might not come down to science, but rather Monsanto’s efforts to manipulate the regulatory process. In France, the government is investigating a list of potentially influential individuals Monsanto compiled in order to control public opinion. Bayer conceded that the list was created but argued that it was not illegal. 

The Environmental Protection Agency in the US explained that relying on industry studies when assessing pesticides was a common practice because companies must cover the costs of approval. It highlighted, however, that the data is shared and often collected by outside labs. The comment was in response to a second lawsuit filed against the agency which claimed that the recently approved sulfoxaflor pesticide would threaten bees, beekeepers and the whole food supply. 

In France, a public consultation was opened on the proposal to ban the use of pesticides within 5-10 metres of houses, due to come into force in January 2020. Associations argue that the distance is too small, while some mayors have already implemented a ban than can be as wide as 150 metres. The agriculture ministry warned that enforcing a 150-metre pesticide free-zone would reduce the total crop area by 20-30%. 

Meanwhile, Malaysian palm oil exporters are expected to lose market share in India following the recent 5% hike in import duty. India said the higher levy would apply to refined palm oil to protect domestic refiners. In response to hostility towards palm oil and low prices, the Malaysian government announced a plan to promote the cultivation of food crops. Palm oil is currently grown on 5 million ha, out of the 7 million ha of total agricultural area, but crude palm oil prices more than halved in the last eight years. 

The Indonesian government, on the other hand, hopes it can address mounting palm oil inventories by promoting the use of biodiesel. It recently reported that a fleet of cars travelled 42,000km on biodiesel and reported no engine issues. The plan is to increase the current 20% blending mandate to 30% next year and possibly 100% in 2021. 

China approved 25 Brazilian meatpacking plants for exports this week at a time when European countries are increasingly worried about buying meat from Brazil amid the spike in deforestation rate. Brazil already exports most of its meat to China, where the African Swine Fever (ASF) has decimated the local pig herd. The trade war with the US is also impacting the supply of soybeans and China announced that it will allow the import of soybean meal from Argentina. 

China is stepping up efforts to deal with the ASF by boosting subsidies and has even started enforcing pork rations in some cities. Last week, the government said it would release emergency stocks of frozen meat if necessary. Some estimates say China lost 100 million hogs to the disease while Vietnam said it culled 4.7 million pigs to contain the outbreak. The disease has also made its first appearance in the Philippines, despite a ban on pork imports and reinforced quarantine procedures. 

ADM was the target of two separate antitrust lawsuits last week which accused the group of manipulating prices. The first one concerns its Golden Peanut subsidiary, along with another peanut sheller Birdsong Corp, which are accused by farmers of conspiring to fix unprocessed peanut prices. The two firms control 90% of the shelling industry. The second lawsuit accused ADM of manipulating the Argo ethanol market to benefit from its short position. Some traders had already complained to S&P Global Platts that ADM was selling large amounts of ethanol on the cash market just before the market closed.

Bunge revealed that it owned a 1.6% stake in Beyond Meat. The maker of plant-based meat alternatives recently reached a market capitalisation of USD 9.9 billion, more than Bunge. Kellog and Danone joined the long list of firms planning to launch meat alternatives, while the University of Cambridge said it has removed beef and lamb from its menu to reduce its carbon footprint. A less impressive announcement came from Unilver’s Country Crock with the launch of “Plant Butter”. People quickly realised it was pretty much margarine, but with a higher concentration of saturated fat.  

Just when there seemed to be no limits to the possibilities of plant-based meat alternatives, the CEO of Whole Foods‘ warned that these alternatives were highly processed, rich in salt and fat and therefore not very good for you. Whereas he did concede that it was better than eating meat in terms of the environmental impact, a researcher at Oxford argued that it would be better still to consume unprocessed plants. He explained that “while [plant-based meat] products have about half the carbon footprint than chicken does, they also have 5 times more of a footprint than a bean patty.” And if this was making you think of waiting for lab-grown meat to be financially viable, a food anthropologist warned that it was not yet clear that this option would be much better for the environment either. 

Eating fruits and vegetables might not be as healthy as we think, according to a recent study published in the British Medical Journal. Researchers noted that, as expected, people who consume meat have a higher chance of reporting a coronary heart disease when compared to vegans and vegetarians, although it also found that vegans and vegetarians have a 20% higher stroke risk. The reasons are unclear, although experts said it could be linked to the lack of B12 vitamins in a vegetarian diet. Overall, dieticians argue that the healthiest diets involve eating a  wide range of foods.

We might also have to rethink whether buying unpackaged fresh food is better for the environment. A new study argues that the carbon footprint of food that wastes faster because it is not packaged is bigger than the environmental impact of the actual packaging. The solution, then, seems to be better packaging. 

The media backlash against Brazilian agriculture policy – which is being blamed for the fires in the Amazon – continues. ADM, Bunge and Nestle are some of the groups that have officially committed not to source from the newly deforested areas. They are using satellite data as well as ground teams to identify the affected areas. Some have blamed the Amazon fires on the US-China trade war which has led to a boost in exports from Brazil. However, Brazil’s soybean exports dropped to 5.3 million mt in August, a fall from over 8 million mt in the same month last year at the start of the trade war. On the other hand, Brazil exported a record high 7.65 million mt of corn in August, double what was exported in the same month last year.

In the US, Cargill tied up with White Dog Labs to work on a sustainable alternative to fishmeal in aquafeed using corn feedstock. It is also investing USD 75 million in Puris, which supplies plant-based meat companies such as Beyond Burger, to set up a new pea protein plant in Minnesota. 

In Ghana, the 20,000 certified cocoa farmers who supplied Cargill in 2018/19 benefitted from a combined USD 2 million in sustainability premium, an increase of 33% on year. The group buys directly from farmers who bring the cocoa to local warehouses where they are registered, allowing full traceability. Cargill also announced a USD 121 million investment in expanding its cocoa grinding plant in the Ivory Coast. 

As it continues to look for innovative solutions for the food and agriculture industry, Cargill announced the official opening of a research lab at the University of Illinois. Similarly, ADM said it would donate USD 2.5 million to the University of Illinois’ Feed Technology Center.

Bunge continues on its cost-cutting tracks and announced it was reducing headcount at its New York headquarters, which will be moving to St Louis as part of the company’s strategy to become more globally integrated. Analysts forecast that the group will probably look at selling its fertilizer business and could split the commodity trading side from food ingredients ahead of a possible sale. Glencore is seen as a potential acquirer, on the assumption that antitrust regulators would not approve a takeover or merger with ADM. 

Launched at the last G7, Danone is chairing a new initiative, Business for Inclusive Growth (B4IG), which aims to help all member companies encourage diversity and fairness throughout their supply chain. The program, which will be managed by the OECD, has already identified some 50 projects worth USD 1 billion in funding. The head of Mars, which also signed up, said, “It isn’t about philanthropy, but rather an understanding that a business can only be successful if it also enables all of its partners, community and the environment to thrive.” 

The concerns over the Amazon fires continued to grow this week as some fear the environmental reputation of Brazilian food producers will be jeopardised for years to come. Norway’s Mowi, the largest salmon producer in the world, said it would source soy outside of Brazil unless the government addressed the fires, and the biggest meatpacker in the world, JBS, said it was closely monitoring its suppliers in the area using satellites. Although it admitted that monitoring indirect suppliers was challenging. Many other Brazilian agribusinesses, including from the paper and pulp sectors, argued that the President’s environmental stance has been ‘disastrous’ in terms of what was being communicated to the outside world. 

In contrast, the sugar union, UNICA, said the current government could not be blamed for the fires, adding that the environment minister was committed to protecting the forest. The CEO of Summit Agricultural Group, which owns a corn ethanol plant in Brazil’s Mato Grosso, argued that the media was not covering the Brazilian President’s response fairly and that sending in the army had been the right thing to do. 

The US President is also potentially facing a growing backlash from farmers for undermining the ethanol standard, a key political topic in Iowa where it involves at least 40,000 jobs. Most Democratic Presidential candidates for 2020 have come out in strong support of the ethanol industry, but environmental activists note that their stances often contradict earlier pledges. They also argue that supporting ethanol goes against the goal of completely phasing out fuel-based engines, as proposed in the Green New Deal.

The wavering support for the ethanol mandate, along with the damage caused by the trade war, pushed some to believe the President is losing farmer support. But this poll conducted at the end of July suggests the opposite, as 66.6% of farmers said they would vote to reelect the President, up from 59.6% at the same stage last year. Analysts suggested this could be thanks to the generous cash payouts he offered farmers. 

In Indonesia, the government is taking action to protect its palm oil industry by banning the use of  “palm oil-free” or “no palm oil” messages on food products. The government highlighted that the messages pushed consumers to think the product is not healthy, a claim that has not been proven. A similar move was implemented in Malaysia, the home of FGV Holding, the world’s largest producer of crude palm oil. FGV reported poor results for its second quarter, which it mostly attributed to the sharp drop in palm oil prices. The group is also looking to restructure its struggling sugar business, with Wilmar reportedly one of the investors interested in buying a stake. 

Still in Malaysia, Nestle reported a good growth momentum in the second quarter, as product innovations and portfolio enhancements sustained strong consumer demand. The same cannot be said about its tinned milk product in Australia – Nestle announced plans to close its tinned milk factory in northern Victoria. Consumers are less interested in the products and it cannot compete with cheap imports, the group said. In Europe, Nestle expanded its plant-based meat offer by launching Incredible Mince and renewing the recipe of its Incredible Burger.

Meanwhile, a recent survey in the US found that the proportion of people who identify as vegetarian or vegan has remained steady over the past 20 years and only represent a small portion of the population, at 5% and 3% respectively. But experts note that this hides the growing popularity of semi-vegetarian diets. Regardless, in Argentina, beef consumption is not dropping even after a 15-20% hike in prices. The depreciating currency has led to a recent surge in prices but consumers are reportedly willing to lower their budget elsewhere before cutting down on beef purchases. 

Japan’s second-largest beer company, Kirin, announced a plan to spend USD 1 billion to buy a 30% stake in Fancl, a maker of health foods and cosmetics, in order to deal with a shrinking local beer demand. In contrast, Coca-Cola will launch its first alcoholic drink ever in the country, a lemon-flavoured fizzy drink mixed with a grain-based alcohol called shochu. In India, Coca-Cola will launch a non-alcoholic malt-drink through its Barbican brand. Both products are seen as new alternatives amid a global shift away from soft drinks. 

The most exciting Coca-Cola innovation, however, comes from the UK, where the group will be testing the use of robots to deliver drinks in Alton Towers, a theme park resort. The self-driving robots will use AI technology to manoeuvre and deliver drinks to outlets across the park. 

Last week, Nigeria’s President said he was “taking [the] focus on agriculture to the next level” as he banned the central bank from giving foreign exchange to all food importers. This policy started in 2015 when the President came to power and blocked foreign exchange access for 41 items, including rice, which was then extended to dairy products in July. An analysis by the BBC argues there is a lack of reliable data to assess the success of the policy but it did lead to domestic rice production increasing to 8.9 million mt in 2018, from stagnating around 7.1 million mt in the 2013-17 period. However, the policy also pushed domestic prices up and caused a surge in smuggling. Commentators argue that the idea is not a bad one but it needs to be accompanied by other measures, such as assisting farmers to increase yields. 

Farmers in the UK are facing a different kind of pressure – a target of net-zero emissions by 2040. They have placed their bets on several technologies, including battery-powered precision robots that would simultaneously reduce diesel used in tractors and allow targeted pesticides use. Keeping grass fed cows outdoors – instead of soybean fed livestock indoors – will also help reduce emissions while lowering soybean demand. 

In India, too, the Prime Minister has appealed to farmers to reduce their use of pesticides on crops by 10-25%, saying chemicals were hurting “Mother Earth.” He said that the government would soon launch a campaign aimed at ending the use of chemical fertilisers completely while sticking to its commitment to double farm income. However, the FICCI pointed out that Indians use 0.27kg/ha of chemicals, compared with 4.58kg/ha in the US. 

The International Maritime Organization (IMO) rule requiring all ships to switch to low-sulfur fuel from January 1, 2020, could be a game changer for wheat trade flows. The analysis by Platts quoted traders as saying that it was easy for big buyers, such as Indonesia, to switch between Australian, Black Sea and Argentinian origins as the quality was almost at par. As such, freight costs were usually the determining factor. The IMO2020 rules will make freight more expensive which means that Australia, which recently lost market share to the Black Sea, could become more competitive in Asia again. 

Another environmental concern that could affect tradeflow is the fate of the EU-Mercosur trade deal. Analysts warned that the Brazilian President’s stand on the environment – and notably his recent denial of deforestation data – could push some countries such as France not to ratify the deal. Brazil’s National Institute for Space Research (INPE) said it had tracked 72,843 fires in Brazil so far this year, including half of them in the Amazon region, an increase of 80% on year. Environmentalists have blamed the President’s policies on the increasing deforestation, while he, in turn, accused NGOs of starting the fires as part of a media campaign against him.

At the same time, Brazil is focusing strongly on China. The Brazilian delegation which recently went there came back with a USD 1.5 billion coffee deal. The Santa Monica group will be setting up to roasters in the country, distributing some 100,000 coffee vending machines and eventually open a series of coffee shops.  

After a successful pilot project in the US, Coca-Cola is rolling out on a national scale its Dasani PureFill water dispenser line. This is part of a move towards “package-free delivery at scale” as well as part of its commitment to scrap 1 billion virgin PET plastic bottles from its supply chain. The group will also start selling its Dasani water in aluminium cans and bottles, also in abid to reduce plastic use. 

Similarly, Nestle Waters North America launched an Instagram #NotTrash campaign to encourage consumers to ask, via the social media platform, if they need help to figure out how to recycle its Poland Spring bottled-water products. The company explained that consumers tend to be confused about recycling, which explains why only 30% of plastic bottles are recycled in the US. 

Bunge CEO said the company was focusing on improving risk management through better coordination with the commercial team and by doing more analysis. The company, which just moved headquarters from New York’s White Plains to Saint Louis in Missouri, is aiming to have completed its “portfolio transformation and optimization work” by the middle of next year. 

Meanwhile, data analysed by Bloomberg showed that the 125 family members who own Cargill received a USD 643 million payout this year, the highest since 2010 and over USD 5 million each. Some say that this will likely postpone any potential plan of going public despite diluting shares over time. Based on the share value of its publicly traded competitors, Cargill could be worth an estimated USD 50 billion. 

Last but not least, and we bet you didn’t see this coming, a global survey found that the UK has the healthiest packaged foods and drinks in the world, followed by the US and Australia. What is less surprising is that the survey also found that the poorest countries had the unhealthiest packaged foods.

In the UK, around 17% of the population has been stockpiling food and medicine to prepare for an eventual no-deal Brexit in October, according to a survey by Premium Credit. The total cost of the stockpile is estimated at GBP 4 billion, which has affected the cash flow of both businesses and individuals. Nestle warned that a no-deal departure would lead to “major challenges” for the food industry. Back in 2018, the group already said it had increased stocks to prepare for the March 29 deadline. 

In contrast, the National Farmers Union welcomed comments by the new Prime Minister who mentioned allowing the production of Genetically Modified Organisms (GMO) in the UK. Researchers in aquaculture biotechnology also welcomed the move and mentioned that GMOs could help address some of the most pressing issues facing our food supply. Nonetheless, experts warned that seeds would have to be developed specifically for the UK, which would take time, while GMO exports to the EU would have to go through a lengthy approval process. 

The White House weakened the Endangered Species Act (ESA) this week in order to minimise its economic consequence and improve efficiency. Farmers will most likely be able to use more pesticides in at-risks habitats, which could be bad news for the bumblebee, a recent addition to the endangered list. A new study suggested that the growing use of neonicotinoids pesticides has increased the toxicity level of agricultural land 48-fold in the last 20 years, which threatens the wild bumblebee. Farmers have increasingly been using neonicotinoids instead of organophosphates as they are cheaper and safer for humans. In response to the study, Bayer and Syngenta, the makers of the top three neonicotinoid products, said the toxicity loading method used by the researchers oversimplified exposure levels. 

The US Environmental Protection Agency (EPA) said labels warning that glyphosate can cause cancer will no longer be approved. The head of the agency argued they were confident the product was not carcinogenic. California had looked into imposing warning labels on the herbicide but the proposal was blocked by a preliminary injunction. 

Cargill announced that it will no longer accept Canadian lentils that have been treated with glufosinate ammonium, distributed by BASF in its Liberty herbicide. Canadian growers were warned that the EU and Japan allowed the herbicide but under a very low maximum residue limit (MRL), while the US has not yet set an MRL. On the other hand, Cargill said it will start accepting soybean treated with fluoxastrobin fungicide after conducting a comprehensive scientific review. 

Singapore-based Olam saw profits in the first half of 2019 drop by 8.5% on year to USD 230 million, in part due to lower coffee prices. The CEO pointed out, however, that this was satisfactory given the current market conditions, adding that the group’s diversified portfolio was helping it cope well in the current scenario. Olam will continue on its path to diversify away from non-core businesses to be able to invest in areas of growth, such as its bid earlier this year to buy out Nigeria’s Dangote Flour Mills. 

Wilmar, on the other hand, reported a 52% drop in net profit to USD 151 million during the second quarter of the year as the impact of the African Swine Fever on soybean crush margins was bigger than expected. In contrast, the group’s sugar operations in Australia and Indonesia improved, along with the consumer products and oleochemicals sectors.

A Feed4Thought survey conducted by Cargill revealed that 55% of respondents thought the first priority of a farmer was to provide “safe, healthy, abundant and affordable food”, while 28% said the priority should be sustainability. A Cargill spokesperson noted that the two demands were not necessarily exclusive. The survey also found that most people viewed farmers in a positive light. In contrast, another study analysing social media conversations found that people were increasingly talking about sugar, albeit in a negative light. The study found that monk fruit and coconut sugar were among the most mentioned alternatives. 

The rising popularity of imposing a tax on sugar-sweetened drinks could lead the way to similar sin taxes being imposed on red meat, according to Fitch Solutions. Meat is increasingly being targeted for its impact on the climate, animal welfare and health. The idea has already been discussed in Denmark and Sweden, while a poll in Germany showed that a majority of respondents were in favour of imposing a tax on meat to promote better living conditions for animals. 

Subway announced that it will sell Beyond Meat’s plant-based meatballs in 685 restaurants across the United States and Canada. The news pushed up the share price of Beyond Meat, which has gained 545% since the IPO in May. While some are jumping on the plant-based meat bandwagon, this Australian chef is taking another direction by encouraging people to treat fish like meat. In his new cookbook, he introduces the Hot Smoked Fish Turducken: yellowfin tuna loin, wrapped in a cod fillet, wrapped again in a tail-on ocean trout fillet, and smoked for a few hours. 

This summary was produced by ECRUU

This week, China pledged to stop all purchases of US farm goods, on top of considering new duties for products imported after August 3. This is in response to the new US tariffs due to come into force in September. Goldman Sachs said the latest escalation made a trade resolution unlikely before the US elections in 2020. The bank had earlier assumed that resolving the trade deal would be in the President’s interest ahead of the elections. 

This will make things harder for US farmers and ranchers who were already struggling to survive. However, the President hinted that the government could offer more aid to farmers, on top of the USD 28 billion already pledged. The comment contradicted an earlier message by the USDA which warned farmers that no further aid was planned.

The bad weather and delayed planting is also making the situation difficult for US livestock producers who are looking to alternative feeds amid surging corn prices, as the country is expected to harvest its smallest corn crop in four years. Alternatives feeds include wheat, outdated pet food, leftover bakery products and imported South American grain. 

Brazil’ agricultural sector is one of the winners in the trade war. China’s Cofco noted that tax and pensions reforms enacted by the new Brazilian government will encourage investments in the country by providing more predictability and stability. 

Unfortunately, efforts by the Brazilian government to attract investors has led to a significant increase in the deforestation rate, according to official data from the National Institute for Space Research. The deforestation rate now risks falling back to the levels seen in the early 2000s, which could impact the sustainability pledges made by large companies. Mondelez, for one, is using satellite data provided by Global Forest Watch Pro, nicknamed the “Google Maps of forests”, to monitor its suppliers in Brazil. 

The worsening environmental performance of Brazil’s farm sector could potentially threaten its ability to trade and jeopardise the new free trade agreement with the EU. The Brazilian agriculture minister argued that the country was able to maintain its high standards despite the accelerated pace of approval for agrochemicals. The country needs to “win the communication war”, she added. 

Another trade agreement at risk is the African Continental Free Trade Area (AfCFTA) which is being challenged by Nigeria’s protectionist stance. So far, all African countries but one – Eritrea – signed on. Also in Nigeria, Dangote Flour Mill (DFM) announced that it had received a final bid from Olam wishing to take over the firm for NGN 120 billion (USD 331 million). Now a global commodity group, Olam started in Nigeria as a cashew nut exporter 30 years ago.

A few weeks after launching a new chocolate made entirely from the coca fruit, Nestle announced a new range of Nescafe Gold which is entirely plant-based. Three new latte products will be launched: almond, oat and coconut coffees. Similarly, Marfrig Global Foods and ADM will collaborate to offer a plant-based burger in Brazil later this year. JBS SA also announced a plan to sell a plant-based meat patty, called Seara. 

In the aquafeed sector, the USDA has approved Cargill’s plant-based fish oil alternative for US cultivation. Using canola oilseed, Cargill is able to provide a source of long-chain omega-3 fatty acids, required in aquafeed, without putting pressure on wild fish stocks. 

The UN’s Intergovernmental Panel on Climate Change (IPCC) is due to release a new report this week analysing the relationship between land use and climate change. The main takeaway, researchers say, will be to repeat the call to switch to consuming less meat and dairy towards plant-based alternatives. 

Not all plant-based solutions are equal, however, as highlighted by this study of breakfast cereals published by the Union of Concerned Scientists. The paper recommends switching to oat-based cereals instead of corn-based cereals, because corn cultivation leads to nitrate runoff and water pollution, while oats are often grown as a cover crop which regenerates soils. 

Ever heard that the longer the soup cooks, the better it tastes? Well if that was true, this Bangkok restaurant would have the best soup on earth, as three successive generations have been stewing the same broth continuously for the past 45 years!

This summary was produced by ECRUU