The transformation of large grain traders

The marketing activity of granaries, which has always been the axis of the global agri-food system, has changed fundamentally in 10 years; and now tends to become a productive, high-tech nutritional platform, focused on the "life sciences".

ADM (Archer Daniels Midland), the largest grain trader in the United States and the world, has purchased this year Probiotics International (PIL), a British producer of live bacteria used as components of "healthy" products ", which can be considered an advanced biotechnology lab, and paid $ 210 million.

Also acquired for $ 1,800 million the French company Neovia. It is a company specializing in animal feed, holding a wide range of patents of the latest generation of technology relating to animal nutrition in its different variants.

Animal nutrition follows the same trends as human nutrition, which refers to the quality and traceability of its components.

Profitability and New Challenges

Cargill considers that the commercialization of granaries is historically over, despite the fact that most of its revenue comes from it. Last year, this company's revenues exceeded $ 100 billion

The reason for this badertion is that the rate of return – the level of net profit – of this activity is declining worldwide, and although the income from this article tends to increase.

The power – the comparative advantages – of the four big "traders" of the attic – ADM, Cargill, Bunge and Dreyfus – who have now joined Cofco, China's largest importer, was based on two structural factors that have come to the fore today. faded away.

The first is that the information monopoly of the entire production chain that they owned has disappeared, from primary production to markets, including distribution, in all that has made commodity prices, climate, agricultural yields, and trade flows; and today all this is on the Internet, to which there is unlimited and instant access

The animal feed follows the same trends as the human in terms of quality.

The second point is that the four big "traders" financed the primary producers, and bought them the crops. Now this place has been occupied by the international financial system, and the sale of agricultural products tends to take place within global production chains.

Producers have practically become independent; and now the time – the prices offered by the markets – is playing in its favor, by the work of information, multiplied in its intensity by the supply of silo bags.

This implies qualitatively different management of "cash flow".

The result of this trend has been that grain stocks in the United States increased by more than 40% last year; and the system of silo bags as part of the installed capacity grew by more than 7% between 2013 and 2017 in US agriculture (according to the USDA).

In addition, primary production has diversified its destinations; and now, more than 40% of the North American corn crop goes to the ethanol plants and not to the giant grain silos of the four major traders, as was traditionally the case.