Indonesia removes export tax

NEWS Indonesia removes export tax to boost trade

Leading global palm oil producer Indonesian has removed the export tax for all palm oil products for a limited period between 15 July-31 August in a bid to boost exports amid an excess of domestic supply, AgriCensus reported on 18 July.

The tax would be reinstated from 1 September when a progressive rate structure would apply depending on the crude palm oil (CPO) reference price, AgriCensus quoted from an official document published on 16 July by the country’s finance ministry.

The maximum export levy for CPO was previously set at US$200/tonne from 14 June to 31 July, if the CPO reference price exceeded US$1,500/tonne, according to the report, with Indonesia planning to raise it to US$240/tonne from 1 August.

However, a combination of rising domestic stocks, slow exports and pressure from farmers facing an oversupply of palm fruit had caused the government to backtrack on its earlier plans and consider new measures to raise export volumes.

The rise in stocks was mainly due to a three-week palm oil export ban which Indonesia introduced on 28 April in a bid to control high prices of local cooking oil, the report said. Following the lifting of the ban on 23 May, a range of measures had been introduced to boost trade including a reduction in export taxes, the launch of a special export acceleration programme and a rise in export quotas, AgriCensus wrote.

However, figures from the Indonesian Palm Oil Association (Gapki) showed that stock levels remained at 7.23M tonnes at the end of May. High stocks had also led to palm oil mills reducing purchases of fresh fruit bunches, leading to farmer protests.

Meanwhile, palm oil stocks in second largest producer Malaysia reached their highest level in seven months in June as exports fell, Reuters reported on 5 July. Stockpiles were forecast to rise 12.3% from May to 1.71M tonnes in June, according to estimates of eight traders and analysts polled by the news agency.

Kellogg's to split into three to focus on snacks

US food giant the Kellogg Company has announced plans to split into three independent companies in a bid to streamline the company and focus on its snack business.

As part of the move by the maker of Kellogg’s cornflakes, Rice Krispies, Pringles and other well-known food brands, Kellogg’s will separate its North American cereal and plant-based food businesses, the company said on 21 June.

The restructuring would result in the creation of a global snack business, with estimated net sales of about US$11.4bn, that would also include international breakfast cereal and noodles brands and Kellogg's North American frozen breakfast division.

The names of the three firms had not been confirmed but had been temporarily named

Kellogg's is splitting into three to focus on its global snack business Photo: Adobe Stock

Global Snacking Co, North America Cereal Co and Plant Co.

North America Cereal Co, with estimated net sales of about US$2.4bn, would be a cereal company in the USA, Canada and the Caribbean, while Plant Co, with about US$340M in net sales, would be a plant-based food company, based around the MorningStar Farms brand.

“These businesses all have significant standalone potential, and an enhanced focus will enable them to better direct their resources toward their distinct strategic priorities,” Kellogg's chairman and CEO Steve Cahillane said.

Kellogg’s said it expected the new snack food company to be a higher growth business than the current one.

The formation of the North America Cereal Co and Plant Co was due for completion by the end of next year, the company said, although the former could take place first.

Kellogg’s said North America Cereal Co and Plant Co would both retain their headquarters in Battle Creek, Michigan, while Global Snacking Co would keep its dual headquarters in Battle Creek and Chicago, Illinois.

The company’s three international headquarters in Asia, Middle East and Africa, Europe and Latin America, would remain in their current locations.

China edible oil production forecast revised downward

The Chinese government has reduced its forecast for edible oil production for the current marketing year due to a reduction in oilseed imports, AgriCensus quoted from the monthly update to China’s Agriculture Supply and Demand Estimates (Casde).

China is now expected to produce 28M tonnes of edible oil during the 2021/22 season, mainly due to a fall in oilseed imports leading to a decrease in edible vegetable oil production,” the 12 July report said. However, an increase in domestic rapeseed production would counter the decline in edible oil output.

Chinese government analysts have maintained an unchanged estimate for edible oil imports of 7.43M tonnes in 2021/22.

Of the total, imports for palm oil and soyabean oil were cut by 300,000 tonnes and 170,000 tonnes from their previous outlooks to 3.7M tonnes and 630,000 tonnes, respectively.

Consumption of edible oil was expected to be stable at 36.34M tonnes.

Accordingly, the year-end balance between supply and demand for 2021/22 dropped 150,000 tonnes from the previous estimates to minus 1.18M tonnes.

China’s Ministry of Agriculture and Rural Affairs kept its forecasts for soyabean imports and demand for the new crop year at 95.2M tonnes and 19.48M tonnes, respectively. Soyabean consumption for 2022/23 remained at 112.87M tonnes, leaving the year-end balance between supply and demand unchanged at 1.66M tonnes.

NEWS

Canada to require new high fat labels

The Canadian government has announced that it will be introducing new legislati on from 2026 requiring companies to add special labels on food products high in sugar, sodium and fat, the Globe and Mail reported on 30 June.

Following six years of negoti ati ons, Health Canada has offi cially fi nalised its plan to put warning labels on sugary, salty and fatt y foods, while granti ng a last-minute exempti on for ground meat.

The new rules will require packaged foods containing more than 15% of the daily recommended intake of sugar, salt or saturated fats to display a label fl agging this for consumers, the report said. Health organisati ons said the move was an important step in fi ghti ng obesity and diet-related illness.

“Research shows that a simple, clear symbol on the front of food packages will help consumers choose foods lower in saturated fat, sugar and sodium,” Health Minister Jean-Yves Duclos said on 30 June.

The programme would not be fully implemented unti l 2026, he said, as a long transiti on period would be needed to give food companies ti me to comply.

The new black-and-white warning labels will be in additi on to nutriti on facts tables and will feature a magnifying glass and “high in” ingredient informati on in simple, bolded text.

However, Food, Health & Consumer Products of Canada (FHCP) – which represents many large food companies – said the programme would create further burdens on the industry “at a ti me when food and beverage manufacturers are already facing unprecedented challenges ti ed to infl ati on, labour shortages and COVID-related supply chain disrupti ons”.

Global food import bill to hit $1.8tn this year

The global food import bill is expected to increase by US$51bn to US$1.8tn this year due to higher prices, according to the Food Outlook report by the Food and Agriculture Organizati on of the United Nati ons (FAO) issued on 9 June.

“The increasing cost of food is heightening concern and distress throughout the world,” the FAO said.

While global consumpti on of vegetable oils was expected to outpace producti on, world producti on of major cereals was expected to decline this year for the fi rst ti me in four years, the FAO said.

Global oilseed producti on is forecast to contract in 2021/22, primarily driven by expected lower soyabean and rapeseed outputs, with reduced yield levels despite further expansion in harvested areas.

For oils and fats, the FAO expects global producti on to increase marginally, with growth in palm oil producti on overshadowing the esti mated losses in soyabean and rapeseed oil outputs.

Global consumpti on of vegetable oils is expected to stagnate at the 2020/21 level, as demand rati oning is anti cipated for both food and nonfood uses due to higher prices.

Looking ahead to the 2022/23 season, forecasts suggested a possible sharp rebound in world producti on of oilseeds and derived products, with global consumpti on likely to resume growth at a moderate level, the report said.

IN BRIEF

UK: Global agribusiness giant Cargill has announced it will close its rapeseed crushing plant in Hull by the end of the year due to “current market conditions”, World Grain said on 13 June.

Cargill had operated the 750 tonnes/day facility since 1985 following its acquisition from Croda Premier Oils. The plant produced some 323 tonnes/day of rapeseed oil and 420 tonnes/ day of rapeseed meal for use in applications including food (margarines), biodiesel and animal feed, according to Cargill's website.

SINGAPORE: Global food and agribusiness firm Olam Group is considering selling up to an additional 10% of its stake in Olam Agri Holdings, according to a 5 June circular. The proposal follows an agreement by Olam Group in March to sell a 35.4% stake in Olam Agri to Saudi Agricultural and Livestock Investment Co (SALIC), which said it expected the US$1.24bn transaction to be completed this year.

Olam Agri specialises in the processing and trading of animal feed, grains, oilseeds and rice.

The filing said Olam Group was seeking approval for the additional stake sale to SALIC and/or other potential investors. If both sales progressed, the proceeds could total US$1.59bn.

Papua province advises revoking oil palm permits

The government of Indonesia’s Papua province has recommended that district officials revoke the permits of 35 of the 54 oil palm concessions operating there, Mongabay wrote on 16 June.

The move follows an evaluation of permits carried out by the provincial government since 2019 and mirrors similar revocations in neighbouring West Papua province.

Covering a combined area of 522,397ha, the affected concessions in Papua represented more than half of the area dedicated to oil palms in the province, the report said.

Head of the provincial agricultural agency’s plantation department Karel Yarangga said the audit had found a range of administrative violations by the companies in question including lacking location, plantation and right-to-cultivate permits.

Greenpeace Indonesia forest campaigner Sekar Banjaran Aji said the organisation hoped the permits would be revoked as soon as possible.

The West Papua government started its licence audit in 2018 and, as in Papua province, had found widespread administrative and legal violations, including missing licences and abandoned land, Mongabay wrote.

As a result, 16 plantations concessions – covering 340,000ha – had been revoked.

Plant-based food sales drop as prices rise

Sales of meat alternatives by major North American producers fell by 4% last year

Sales of plant-based food have fallen due to inflationary and supply chain problems facing the entire food sector, with consumers more reluctant to pay higher prices, CBC News wrote on 5 June.

Photo: Adobe Stock

According to Bloomberg Intelligence analyst Jennifer Bartashus, sales of meat alternatives at the five biggest North American producers fell by 4% last year after growing by 13% in 2019 and almost 40% in 2020,

One of the companies, Canada’s Maple Leaf Foods which reported US$45M in sales in first quarter 2022, said it did not expect “spectacular category growth” when announcing its financial results in May. It planned to return some of its plant-based factory space to making meat products.

Although meat prices rose by more than 10% in the year up to April, prices for meat alternatives had also risen, according to Statistics Canada.

Plant-based meat was, on average, 38% more expensive at the retail level than its meat-based alternative, according to a Dalhousie University report which CBC News quoted.

Protocol for indirect purchases of at-risk Cerrado soya

Six of the world’s leading food and agribusinesses have developed a new method to disclose deforestation-free soya purchases from Brazil’s Cerrado region, the World Business Council for Sustainable Development (WBCSD) announced on 21 June.

The six firms – Archers Daniels Midland (ADM); Bunge; Cargill; COFCO International; Louis Dreyfus Company and Viterra – are all members of WBCSD’s Soft Commodities Forum (SCF).

With about 30% of global production, Brazil is the world’s leading exporter of soyabeans, with about half that total concentrated in the Cerrado region, the report said.

In the SCF’s seventh bi-annual report, the companies disclosed deforestation-free soyabean purchases sourced directly and indirectly from 61 municipalities in the region, representing 70% of the at-risk deforestation area associated with soyabeans.

While it was easy for SCF members to trace soyabeans purchased directly from soyabean farms, tracing sales from indirect sources (which represent about 22% of their collective soyabean purchases) was more complex, the WBCSD said.

To address that challenge, SCF members had developed a collective protocol to monitor and trace soyabeans from indirect suppliers, the association said. Developed with the Brazilian Association of Vegetable Oil Industries, the new protocol was a sectoral approach to help equip intermediary soyabean resellers with adequate traceability systems, the WBCSD said.

The SCF had also set up a a three-year strategy with financial incentives to preserve priority Cerrado landscapes.