First of all, I have to tell you that this is a particular time for me. After 44 years in the business, I am taking my retirement at the end of this year.<\/p>\n
I started my career in 1977 when I joined a trainee program with an Andr\u00e9 company in Argentina.\u00a0 After an initial training period, I began as an assistant oilseed trader, working on trade execution, finance and shipping. I then became a soymeal trader on the domestic market. Later, I was in charge of the soybean oil exports to Latin America, after which I spent two years at Andr\u00e9\u2019s head office in Lausanne, Switzerland.<\/p>\n
Did you stay with Andr\u00e9?<\/strong><\/p>\n I left Andr\u00e9 within a couple of years of returning to Argentina and moved to a locally owned oilseed crusher, Guipeba<\/em>, as commercial director. In 1995 Ceval, a large Brazilian company bought Guipeba and, in 1997, Bunge bought Ceval. \u00a0It was almost a reverse-takeover. I became CEO of Bunge\u2019s Argentine operations in 1998.<\/p>\n When did you join Bunge\u2019s executive committee?<\/strong><\/p>\n In 2001, when we did the IPO. At that time, we were a confederation of companies and countries that lacked structure. It made it difficult for everyone to work together. It became evident that we needed a marketing arm to bring together all our physical origination\/production and destination operations.<\/p>\n We looked at various options, including merging with one of our competitors. We talked at length with Dreyfus, but we eventually decided that we would be better on our own. I helped A. Gwathmey, Bunge\u2019s Ag. Product Line CEO at that time, put together a consolidated and central marketing arm. We opened trading offices in Geneva and elsewhere.<\/p>\n In 2010, I moved to White Plains to become responsible for Bunge\u2019s agri-business segment, where I integrated the different divisions and companies within the company. I did that for four years, but I grew weary of the corporate side of the business. I like to run an operation and be part of the day-to-day action. So, in 2014, when the CEO of Bunge\u2019s Brazilian operations (Pedro Parente) decided to leave the company, I asked to replace him.<\/p>\n Brazil is \u2013 and always has been – an essential piece of Bunge. It has been almost half of the company. In 2014 we had three divisions in Brazil: sugar, agribusiness, and food and ingredients.<\/p>\n Tell me a little about Bunge\u2019s decision to go into sugarcane.<\/strong><\/p>\n I was not in favour of Bunge going into sugar. I didn\u2019t like it, not because I knew the sugar business, but because it made us farmers \u2013 and farming was not our business. Sugar is eighty per cent agriculture. Bunge is not an agricultural producer; it is a merchant and processor.<\/p>\n Anyway, that\u2019s history, but I ended up being responsible for Bunge\u2019s sugar and bioenergy operations until we merged it with BP in 2019. I continue to sit on the board.\u00a0 We have a great partner in BP, and the team is doing an excellent job with the combined business.<\/p>\n Were the other businesses working well?<\/strong><\/p>\n Our results were not what they should have been, and we decided we needed to make another adjustment. In 2017, we split operations into three regions: South America, North America, and Europe and Asia. I took the responsibility to integrate the South American functions. However, we were still not performing as well as the shareholders and we wanted.<\/p>\n So, at the end of 2018, we shook the tree again. Greg Heckman took over as CEO, and the company made changes in the board. Everyone knew that we had to do things differently. We had to change the way we were operating throughout the whole company. I like to describe it as \u2018pushing the reset button\u2019.<\/p>\n Does that mean you are now doing less trading and more merchandising?<\/strong><\/p>\n We manage the mismatch between farmers selling and consumers buying. Addressing that mismatch forces us to have a market view. Sometimes the supply chain will give us a structural margin that we can lock in without thinking about it, but it doesn\u2019t happen every day. There is risk in each of our supply chains. As part of our company reset, we have changed the way we managed risk.<\/p>\n Are physical assets important to trading?<\/strong><\/p>\n They are essential. You need physical assets to receive, store and process agricultural commodities. You can\u2019t be in the business without physical assets. Processing is critical in soybeans as you can either sell beans or process them into oil and meal. And as you move down the supply chain, you can market the oil in retail bottles or, for example, for biodiesel. We have 35 per cent of the packaged oil market in Brazil – a vast number of bottles!<\/p>\n If you are a grain exporter, you can buy and sell corn, but most importantly, you have the option to do nothing \u2013 to neither buy nor sell. You don\u2019t have that luxury in an oilseed supply chain. Capacity utilisation is essential to efficiency. We at Bunge process 45 million tonnes of oilseeds each year. You cannot say, \u2018OK, I do not see things clearly; I will step out of the market for a while.\u2019 That doesn\u2019t happen when you manage a crush operation.<\/p>\n People sometimes accuse trading companies of controlling markets.<\/strong><\/p>\n The only thing that trading companies can control is their cost structure and risk appetite; that\u2019s all.<\/p>\n Moving on to biofuels, is renewable diesel an opportunity \u2013 the next big thing?<\/strong><\/p>\n It is at the centre of the strategic discussions in the industry.<\/p>\n Biofuels fell out of popularity when food prices rose in the 2000s, and there is a danger that history will repeat itself. I fear that food inflation and the food versus fuel debate is going to resurface. We won\u2019t be able to avoid it, although the focus on climate change and sustainability will change the dialogue from last time.<\/p>\n In addition to the food versus fuel debate, the amount of CAPEX required to make a significant bet in the renewable diesel sector is substantial. It\u2019s a big cheque, and you have to be pretty sure of what you are doing and the projected returns.<\/p>\n So yes, renewable diesel is a big thing \u2013 a significant factor that we have to consider. We will not rush in; we don\u2019t have all the answers, but we are doing the work as things develop.<\/p>\n Are you worried about peak meat?<\/strong><\/p>\n We are following this constantly, and the company has invested in alternative meat companies. We did so partly to help us better understand the changes in consumer demand and as an investment in an expanding sector. We debate meat demand constantly – at every commercial discussion.<\/p>\n How has trading changed since you have been in the business?<\/strong><\/p>\n Today, everyone has access to the same information, real-time on their phone. It is how you interpret the data that is important now, rather than the data itself. We used to have better information, but now we all have to analyse the same information faster and better.<\/p>\n Now everything is immediate; we have instant communication with customers and suppliers. We also have quick access to our colleagues. Over the past year, due to the pandemic, we have all been working from home, connected by technology. We have run a global processing and trading business from home. It is an extraordinary achievement that demonstrates how the world has changed. It is incredible how things have changed so fast.<\/p>\n Would you advise a young person to join the industry?<\/strong><\/p>\n Absolutely. \u00a0Our business is never dull. It changes from hour to hour and even from minute to minute. You can have one scenario in the morning and a completely different one in the afternoon. You have to rethink everything.<\/p>\n You will never be bored, but you will have to be on your toes 24\/7.<\/p>\n Thank you, Raul, for your time and input!<\/strong><\/p>\n \u00a9 Commodity Conversations \u00ae 2021<\/p>\n This is a short extract from an interview that I will include in my upcoming book ‘Commodity Crops – And The Merchants Who Trade Them.’<\/em><\/p>\n
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