Corporate Europe Observatory’s Post

What do we have here? Our largest exporter has announced that they are looking at selling their value-added business to focus on their core business – primary ingredients. Despite this business generating 19% of profits from 15% of volumes (i.e. outperforming the average) they have decided this is “not core” and they are exiting it. Some quotes: “We have conducted a strategic review which has reinforced the role of our core business,” [Peter] McBride [Fonterra Chair] said. “This is working alongside farmers to collect a sustainable supply of milk and efficiently manufacture products valued by customers, to deliver strong returns to farmer shareholders and unit holders.” “[Miles] Hurrell [Fonterra CEO] said divesting those assets would help create a simpler, higher-performing co-operative focusing on core ingredients. He said they expect the divestment process to take at least 12 to 18 months.” This is totally out of step with the narrative that we need to increase innovation and value-add as a nation and can’t compete on a volume, commodity play. Fonterra’s argument at merger was that they’d be able to create more added value by co-operatives working together, despite giving farmers less choice about who they sell to. This convinced the government to over-rule the ComCom and allow the merger to proceed. What we have here is evidence that the social license that we gave them has been totally and utterly ignored. I’d love someone to prove me wrong and show me that this is going to result in an explosion of scalable, sellable farming innovation, but past performance doesn’t seem to suggest that will be the case. What we have is yet another example of short-term profit taking over long term revenue generation and Economic Value Adding. While I believe that it’s each individual company’s right to set their own strategy and choose how to run their business, when it’s our largest exporter who operates under a regulated monopsony (TIL this term!) we need to hold them to account for their decision making. Fonterra aren’t going to lead us to the promised land of wealth and sustaining thriving generations – it’s time for the future leaders to step up and take the reins. #id2070 #productivity #dairy #commodities #valuechain #economicgrowth #newzealand

NZ in a nut shell. Primary production, generic products where we are price takers at the bottom of the world. Also its a stretch to call the 'businesses' value add. To be crude: polishing a t$%d does not really add value. Clueless, pointless and environmentally destructive: what a trifecta! #climateemergency #ledbydonkeys

The M&A outlook for the agriculture industry in the U.S., particularly for upstream businesses that have faced a lot of difficulties in the last number of years, is starting to look bright. Was great getting insights from Mike Seccuro of Intrepid Investment Bankers about the prospects for dealmaking among ag companies going forward. Check out this Mergermarket piece from Mark Andress, Izaz Ansari, and myself: https://lnkd.in/eYJyAD2v

Several more co-op mergers and partnerships are in discussion. How do retailers and manufacturers see opportunities adjusting with customers across the farm production value chain? #valuechain #supplychain #customers #agriculture #marketing #retail #B2B #cropprotection #grain #commodity #chemicalindustry https://lnkd.in/ep7Mtszm

It was great to speak with Avery at MergerMarket and contribute to this article. Looking forward to improved M&A activity in the agribusiness sector in 2025.

Lantmännen’s operating income for the second four-month period of 2024 amounted to 1 116 MSEK – slightly lower than the previous year’s record result of 1 196 MSEK, but the second best four-month result ever. “Lantmännen delivered a strong result both for the second four-month period and for the first eight months of the year,” says Magnus Kagevik, Group President and CEO of Lantmännen. He continues: “Our investments in the infrastructure for food production continue. During the four-month period, it was decided to invest 1.2 billion SEK in production of plant-based protein from peas and field beans. This investment means new cultivation prospects for farmers – and creates conditions for increased food production and food exports.” 👉Learn more: https://lnkd.in/dGV49PpJ

💭 Why did the EU quietly approve the harmful mega-merger between Bunge and Viterra? The merger touches on important topics that dominate EU politics: 🚜 farmers’ protests 🌽 food prices and 📈 inflation Nevertheless, it was approved without any further investigation. What happened? Hans van Scharen and Irene Keizer reflect on what happened this summer in the EUobserver. #BungeViterra #MonoployPower #antitrust #Mergers

Hot off the Press! We Raised $11.2 Million in New Funding to Fuel Growth & Drive Sustainable Agriculture. We’re thrilled to add new investors Working Capital Fund and Rabo Investments (the captive investment arm of Rabobank), and have the continued support from Archer Daniels Midland (ADM), Cargill, Louis Dreyfus Company (LDC), and Olam. Thank you to our customers, our team, and our investors for joining us on this journey. As our CEO, Allison Kopf, puts it: “We believe in shaping increasingly sustainable agricultural supply chains for a better future.” We’re excited for what’s to come! 🚀 Read more about what’s coming next from team TRACT: https://lnkd.in/ex8KRsZy

Great to share that Rabo Investments invests in TRACT’s $11m funding round to accelerate its mission of enhancing sustainability measurement, transparency and traceability in agricultural supply chains. The food and agri sector is under increasing pressure for greater transparency to help manage environmental and social issues. TRACT helps address these challenges by facilitating supply chain transparency and traceability - from origin to destination. Congrats to Allison Kopf and the team! Looking forward to our collaboration to drive sustainable agriculture 🚀 Floris Onvlee, Faye Wasser, Ilze Nijs - Zonneveld