How food companies are making super profits & driving inflation!
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Meat, Dairy & Seafood News
Read: Cattle price review
Arla Foods & Muller
Arla and Muller, two major dairy companies, have announced further price drops for their producers. Arla’s milk prices will significantly decrease by 5.30p per litre from April 1, 2023, due to the ongoing cost of living crisis and volatile economic environment. Muller has also announced a 2.5p per litre milk price fall for May. These announcements come as the spring flush is fast approaching, which will see increased supplies of milk on the market, and the Global Dairy Trade price index has been falling for a number of months. Dairy farmers are disappointed with the rapid drop in milk prices and warn that a fall in cow numbers may soon follow if prices continue to drop.
Brazilian meat company Marfrig Global Foods, which sold its poultry businesses in 2015 and 2018, has increased its stake in poultry producer BRF to 33.25% and the chairman of Marfrig has become the chairman of BRF. Despite shared synergies worth around BRL1bn ($188m), the chairman said there were no immediate plans to merge the companies. The priority is to fix BRF’s underperformance before considering strategic moves, but both companies will keep focused on their operations during 2023, he added. Quarterly financial information for both companies will be released in mid-May.
Aparna Rao has been appointed as India Leader for Cargill Business Services (CBS), the shared services division of the company. Rao will lead CBS in India and provide strategic leadership, while also being a member of the CBS global leadership team based in Bengaluru. She has more than two decades of experience managing cross-functional teams and nurturing global teams within multinational corporations. Before joining Cargill, Rao was heading Bayer’s Shared Services Center in Bengaluru and was a member of their South Asia country leadership team.
Clemens Food Group
The Clemens Food Group pork packing plant in Michigan has been approved to run faster line speeds as part of a one-year trial program, joining other plants in Pennsylvania, Minnesota, and Nebraska. The program was created after a decision in 2021 that threw out the elimination of line speed limits codified in a 2019 rule due to concerns over worker safety. Nine pork packing plants that had adopted the New Swine Inspection System, six of which were operating with faster line speeds, were allowed to apply for the program. According to Iowa State University economist Dermot Hayes, if six plants are in the program, the aggregate impact on US pork harvest capacity will be a 3.6% expansion, which could lead to an increase in live hog prices of 6% after one year.
Conagra Brands Inc. (CAG) stock has experienced a slight increase of 0.11% for the week, but has seen a rise of 7.18% in the past month and a drop of -6.97% in the past quarter. The volatility ratio for the week is 1.99%, and the volatility levels for the past 30 days are 1.64%.
Waterford-based Dawn Meats has acquired full control of Dunbia after Dunbia’s co-founder Jim Dobson retired. The UK business will continue to trade under the Dunbia brand, and the same management team will remain in charge of its 12 beef and lamb processing facilities across Northern Ireland, England, Scotland, and Wales. Dawn Meats’ combined businesses in the UK and Ireland now process approximately one million cattle and three million sheep annually, employing over 7,000 staff, and working with over 30,000 farmer suppliers.
Hickman’s Family Farms
Hickman’s Family Farms has introduced an egg carton made from 100% recycled PET from water and soda bottles. Global Plastics, a recycler located in California, takes in the baled recycled PET bottles from buy-back centres and recycles approximately four million bottles a day, sorting them by colour and washing them to FDA standards to ensure clean recyclate. The company then pelletises the material and extrudes the sheets for use in thermoforming. The company had an idea for an RPET egg carton that they pitched to Hickman’s, which was open to the idea. The carton uses recycled green and amber PET, an underdeveloped portion of the market.
Read: Rabobanks’ egg industry price forecast
Lotus Seafoods, a seafood distributor based in San Diego, is planning to invest $10 million in a tuna plant in Indonesia that uses a unique antioxidant treatment to preserve the fish.
Ukraine-based MHP SE reported a 6% increase in revenue to $766 million in Q4 2022, driven by a 6% increase in poultry exports and a 25% rise in average prices. For the whole of 2022, revenue rose 11% to $2.6 billion, while net profit for the quarter more than doubled to $38 million, although the company reported a net loss of $231 million for the year due to a $365 million non-cash foreign exchange loss. Despite being unable to provide guidance on its poultry segment for 2023 due to the war in Ukraine, MHP expects to match 2022’s grain harvest of 360,000 this year.
Food processing company Moy Park has installed a new combined heat and power (CHP) unit at its Craigavon facility in Northern Ireland. The unit will generate electricity and hot water on site using natural gas and its exhaust gases will be used to provide steam. The move will help the company improve its energy efficiency and move closer to its target of net zero greenhouse gas emissions by 2040. Alongside investing in emission reduction projects in its facilities, Moy Park is also researching regenerative farming practices and plans to reduce water use intensity by 15% by 2030 and achieve 100% renewable energy across the business by 2025.
Spain’s Abanca is in talks with Canadian seafood company Cooke Inc to sell 80% of its stake in Nueva Pescanova. Abanca did not disclose the size of the transaction but said that it would justify a future valuation of Nueva Pescanova at around €800m ($881m). Nueva Pescanova was founded in 2015 after a group of banks took control of bankrupt firm Pescanova. Abanca currently owns 97.8% of Nueva Pescanova, and the company would keep its headquarters in Vigo while Abanca would retain 20% of its stake in the company under any deal.
Read: UK Downgrades Mackerel score due to overfishing
Pilgrims Food Masters
Pilgrim’s Food Masters, a UK-based food company, is facing criticism for threatening to fire and rehire 1,000 low-paid workers at its Southall facility, citing difficult economic conditions. The workers would be rehired with minimal sick pay, no paid breaks, and no Diwali holiday pay. The decision has been condemned as unfair and unethical, given that the affected workers have been loyal employees for several years. The company’s CEO earns £6.5 million in compensation, while the workers do not receive paid breaks and have to work longer shifts. The company produces own-brand curries for major UK supermarkets such as Tesco, Waitrose, Sainsbury’s, Aldi, and Morrisons.
SalMar has sold Norway Royal Salmon’s (NRS) trading arm to Visscher Seafood, a processor and distributor of farmed salmon and North Atlantic whitefish based in the Netherlands. The sale was confirmed in March and the export company will be rebranded to Norwegian Seafood AS. Visscher Seafood plans to double its salmon volumes to 50,000 metric tonnes with the acquisition. In addition to the sale, SalMar is also in the process of selling its 72% stake in aquaculture services firm Frøy ASA.
Almost 100 Sysco delivery drivers in Louisville have returned to work after a two-week strike ended with the group’s first labor agreement with the company. The newly unionized group, who joined Teamsters Local 89 in 2022, returned to work this week after striking for 13 days in late March. The drivers, who deliver items to various locations including schools, hospitals, and nursing homes, secured wage increases of 34% over five years and mandatory minimum staffing levels or double-time for any hours over 13 in a day. The agreement also cut workers’ health insurance premium by over 50%.
Despite closing its Glen Allen chicken plant in Virginia and eliminating 692 jobs, Tyson Foods will still receive $6m in grants for a new facility in Pittsylvania County. The state subsidies will come from the Commonwealth Opportunity Fund and Virginia Investment Performance grant programs and will not be affected by the closure of the Glen Allen plant, state officials said. The new plant is expected to cost $300m and employ 376 people.
WH Group, the Chinese pork processing giant that owns Smithfield Foods, processed 30% more poultry last year as it diversifies into other meats to lower costs and become more competitive. The company reported a 34.3% rise in annual profit to $1.4bn, largely due to the sale of spices company Saratoga Specialty Foods. WH Group processed 240 million chickens, geese and turkeys in Europe and China in 2021, up 30% from 2020, with growth of the poultry business seen as key to its diversification. However, in China, sales volumes were hit by COVID prevention measures.
Feed, Nutrition & Ingredients News
Read: Why China issued a ban on soymeal use in animal feed
ADM and Believer Meats have signed an MOU to collaborate on developing and commercialising cultivated meat products. ADM will work with Believer to explore new ingredients and solutions for the cultivated meat market to expand the protein ecosystem to meet the needs of the growing global population. The MOU follows news of a bill to ban the use of cell-based food in Italy.
Charoen Pokphand Foods
The Development Bank of the Philippines (DBP) has signed an aquaculture financing agreement with Charoen Pokphand Foods Philippines Corp. (CP Foods). The DBP’s Aquaculture Value Chain Financing Program will provide support to small and micro enterprises, and cooperatives with loans of between PHP 5 million and PHP 15 million to finance 90% of the total project cost. For medium to large enterprises, the deal will fund a minimum of PHP 15 million or up to 70% of the total project cost. Projects planned under the agreement are valued at PHP 7 billion this year, with a focus on increasing shrimp production in the country.
CHS Inc. and Mid-Kansas Cooperative (MKC) plan to expand their current grain marketing joint venture to create an end-to-end cooperative supply chain in the Southern Plains. This move will expand market access and maximise patronage-eligible options to connect area farmers and cooperatives with end-use markets and customers. The two companies will build a rail-served grain terminal near Sterling, Kansas, that is expected to be operational by 2024.
Heartland Co-op has completed its merger with United Western Coop, headquartered in Missouri Valley. The terms of the merger were not disclosed, but UWC’s member-owners will receive capital from Heartland for new infrastructure, rolling stock and customer service support. Heartland will now operate in UWC’s former territory, which will become District K for Heartland. This latest deal brings Heartland’s location count to 71, with more than 400 employees and over 5,500 members. According to CropLife.com, Heartland is estimated to have annual revenues between $100 and $499 million.
Purina Animal Nutrition has launched two feed additives, EnduraSow and EnduraPig, which are designed to support sow productivity and piglet respiratory health and immune function. EnduraSow helps to improve sow productivity during a health challenge and reduce the number of days from weaning to first service. Meanwhile, EnduraPig helps to prepare pigs’ immune systems to address health challenges and supports pig growth performance throughout a respiratory challenge, particularly during the weaning process when the pig’s immune system is still developing. Both additives are part of Purina’s range of complete feeds and supplements for pigs in all performance phases.
Norwegian land-based salmon farmer Proximar Seafood has signed an MoU with Japan’s Marubeni Corporation, with a focus on a potential sales and marketing agreement. This is in line with Proximar’s strategy to engage in strategic partnerships with strong local partners in Japan. Marubeni is one of Japan’s top general trading companies with a global presence. The MoU aims to conclude a long-term sales and marketing agreement in the Japanese market.
Royal DSM has launched a fortified rice kernel manufacturing line near Hyderabad, India, to produce nutritionally fortified rice kernels using ultra-modern technology and high-quality production methods. The facility aims to produce 3,600 tonnes of kernels per year and comply with GMP standards and FSSAI regulations. The unique technology uses vitamins and minerals blended with broken rice, and safely “locked in” through a hot extrusion process to produce new rice kernels that are easily blended with raw rice as it looks, cooks, and tastes the same. The fortified rice kernels address the nutritional deficiencies in India, where rice is a staple food, and can help prevent hidden hunger, which can cause lasting consequences for people’s economic prospects and well-being.
Viterra, the Canadian grain handling company, announced record EBITDA of $2.65 billion for the year ended December 31, 2022, a 21% increase from the previous year, and revenue of $54 billion, up 35%. These results were due to market conditions, record production in main export regions, and completion of the acquisition of Gavilon. The company acquired Gavilon in October, adding 110 up-country sites in all primary growing areas across the United States. Viterra also completed the construction of a vegetable oil refinery in Hungary, complementing its existing crush facility at the same site. The outlook for 2023 is positive, with a record crop expected in Australia and a top three record crop in Canada.
Distribution & Container Shipping News
French shipping company CMA CGM has ordered 16 container ships worth over $3 billion from China State Shipbuilding Corporation (CSSC). The order is for 12 methanol dual-fuel 15,000 TEU vessels and four liquefied natural gas (LNG) duel-fuel 23,000 TEU vessels, with construction to be carried out at various Chinese shipyards. The order is said to be the largest ever placed for containerships in China. The deal adds to a surge of containership newbuild activity as carriers reinvest recent profits into modern, more fuel-efficient tonnage.
The DB supervisory board has requested that DB explore options to sell its entire DB Schenker logistics business, currently the fifth largest integrated logistics company globally, generating an Ebitda of €1.846bn in 2021. DB has continued to invest in new international logistics acquisitions during 2022 despite pressure to sell all or part of DB Schenker, which represents around 49.5% of total DB group turnover but more than 92% of total group profits.
Daimler has announced plans to produce an electric long-haul truck that uses lithium-iron phosphate batteries, changing direction from its previous focus on hydrogen fuel cells. The eActros LongHaul truck, set to go into production in 2023, will have a range of 500km and use three battery packs with a total capacity of 600kWh. Daimler still sees hydrogen as a solution for “very flexible and particularly demanding applications” in heavy-duty transport and long-haul applications. The company has a “dual strategy” that stresses the importance of both technologies.
Maersk has opened new Global Service Centres (GSC) in Mexico City and Santos, Brazil, which will create over 700 new positions in 2023 and plan to increase to 1,300 by 2025. The GSC provides functions such as customer experience, finance, process management, technology, and data/analytics and is a key enabler of Maersk’s integrator strategy. Maersk’s GSC oversees the strategic execution of finance and commercial processes while partnering with technology teams and encourages cross-functional perspective on process design.