COEXISTENCE IN MAIZE AND SOYBEAN SUPPLY CHAINS IN PORTUGALC. Trindade, J. Ponte, F. Quedas

Summary

1. Portuguese Supply of Maize and Soybean2. Interviewees3. Structure of Supply Chains 4. The Market of Primary Processed Maize and

Soybean5. Supply Chain Deals and Pricing Mechanism6. GM Products, GM-Free Products and

Segregation7. Conclusions

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1. Portuguese Supply of Maize and SoybeanImports, domestic production and exports

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PT supply of grain maize and soybean (103 tons)

Year

Grain maizeSoybea

n

Production

Imports Exports Imports

2009 634 1414 31 1190

2010 626 1411 24 1186

2011 832 1602 33 1110

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Maize grain imports: yearly shares of quantity (ton) and value (€) of major origins

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Exports of Portuguese maize and maize products

Produc

t

Grain Meal By-

products

Starch Others (%)

Year ton 103€ ton 103€ ton 103€ ton 103€ ton €

2009 30,83

1

7493 4824 1636 3117 1047 1701 640 3 % 17 %

2010 23,76

2

5811 5659 1741 3102 1037 248 120 4 % 24 %

2011 33,07

2

9277 4058 1902 3594 1327 4920 2295 3 % 15 %

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Share of soybean products in Portuguese imports

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Yearly shares of quantity (ton) and value (€) of major origins of soybean grain

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Yearly shares of quantity (ton) and value (€) of major origins of soybean meal

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2011 shares of quantity (ton) and value (€) of major origins of soybean oil

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2. Interviewees• Association of Maize and Sorghum Producers (ANPROMIS)• Association of Storers, Traders and Importers of Cereals

and Oilseeds (ACICO)• Association of Compound Feed Manufacturers (IACA)• Importers: Acembex, Bunge Ibérica Portugal, S.A. and Louis

Dreyfus Commodities• Port operator: Silopor• Certifier: Société Générale de Surveillance S.A. (SGS) • Agricultural trading post: AGROMAIS • Wholesaler: Reagro • Crusher: Nutrinveste SGPS, SA., Sovena Group • Mill industries: Atlantic Meals and Carneiro & Campos • Starch industry: Portuguese Company of Starch (Copam) • Compound feed industries: Poultry Company of Center, S.A.

(Cac) and pig industry Raporal.

3. Structure of Supply Chains

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Importers and certifiers• Most importers are international marketing

companies (Bunge, L. Dreyfus, Noble, Cargill), usually with a very simple local structure.▫National: Iberol, Acembex and the Cooperative

of Compound Feed Manufacturers’ Supply (Caiaca).

• Cost, Insurance and Freight (CIF) imports • Certifiers: SGS and Inspectorate (Bureaux

Veritas).• Usually port operators act as service providers,

under loyalty agreements. • Tagol and Bunge have a contract à façon, and

have a terminal port and elevators of their own.

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Port terminals and operators• Port terminals of Lisbon, held by Silopor and by

Oilseed Company of Tejo, S.A. (Tagol): 80 to 90% of maize and soybean imports.

• Port of Leixões, in Porto: 10 to 20%. • Small ports (ships up to 5000 tons): Aveiro and

Figueira da Foz.• Port operators are liable for:

▫ unloading, weighting, storage and delivery to buyers of the product and quantity indicated by the IMC.

• Lisbon - Silopor and Tagol: unloading and storage • Leixões - Company of Traffic and Stowage (ETE):

unloading; Leixões Elevators (SdL): storage.

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Other players• Wholesalers:

▫ Reagro (80%) and Acembex (15 to 18%)• Crushers:

▫ Sovena (edible oils), Iberol and Torrejana (biodiesel)

• Primary processors (maize): ▫ A single starch firm: Copam ▫ Main mills: Atlantic Meals and Carneiro & Campos’

• Feed industry: 125 compound feed manufacturers▫ Valouro, (15% share), Lusiaves (production of feed

and broilers), Saprogal Portugal and Provimi Ibéria: 45 to 50% share

▫ Ten largest firms: 75% share

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4. The Market of primary Processed Maize and SoybeanPrimary processing products are directed to food industry or biodiesel, as feed industry uses 40 to 50% grains (maize and soybean) and 50 to 60% of by-products of mills and crushers.

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Maize growers

Crushers Farmers’ associatio

ns

Self-supply

Wholesalers

MillsFeed industry

Soybean oil

Soybean meal

Exports

IntegratedFree

market

Starch

Brewing

Baby foodFood

industry

Biodiesel Egg/Broiler

Pig Beef/Milk Others

Imports

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5. Supply Chain Deals and Pricing Mechanism

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Supply Chain Deals• Maize supply of food industry

▫ Trade agreements between maize mills and maize producers’ organizations, both in Portugal and Spain.

▫ Deliveries usually made overland, and storage facilities of producers’ associations or of the mills themselves.

• Supply of feed industry and soybean crushers ▫ Dealt with the wholesaler (Reagro) or the

importers.

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Pricing Mechanism - 1• The prices of maize and soybean are established

after the Marché à Terme International de France (MATIF), MATIF corn and MATIF soya, the Chicago Stock Exchange and the cost of transport.

• Freight rates:▫ Maize: 20 $/ton (Ukraine) to 35 $/ton (Brazil)▫ Soybean grain: 28 $/ton (USA) to 30 $/ton (Brazil

and Argentina) ▫ Soybean meal: 32 $ to 38 $/ton

• Premium price for non-GM maize ▫ Imported maize: 20 to 30 €/ton▫ Domestic maize: 10 to 20 €/ton

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Pricing Mechanism - 2• Price of maize by-products: 15% lower than dry

grain price.• Some compound feed producers have their feed

prices indexed to the stock Exchange of Lleida.• Net margin of compound feed producers’ sales to

animal producers: it rates 10% and 20% for, respectively, integrated and non-integrated customers.

• Price fluctuations are also effected by energy cost and, for feed, by competition between manufacturers.

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6. GM Products, GM-Free Products and Segregation

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Labelling and thresholds• In Portugal GM-labelled products include:

▫ All compound feed except organic compound feed▫ Some soybean edible oil or soybean containing

edible oil brands. ▫ No other food product is GM-labelled.

• Negative labelling is rare• Non-GM products:

▫ Some food industries do simply comply with the 0.9% threshold, others are intended to be GM-free, and use thresholds as low as 0.01%.

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IP of GM-free products• Port operations are the most problematic for IP

of GM-free products: ▫ Non-GM commodities may either be unloaded from

cargo-ships to smaller ships that take them to a different port terminal (Lisbon port, used by Reagro) or be unloaded by non-continuous systems and stored in horizontal silos (Aveiro port, used by Acembex).

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IP by IMC• Neither Dreyfus nor Bunge import GM-free

products, though they might import from non-GM producing countries, such as Ukraine.

• To prevent risks of non-authorized events IMC follow one of two options: take advantage of their own IP systems in the country of origin or change the country of origin.

• IMC are responsible for testing, that is run by certifiers that also oversee the loads, check the cleaning of the ship and check cross-contamination at the port. IMC usually manage certification at corporate level.

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7. Conclusions

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• Portuguese maize and soybean supply chains are decisively contingent on imports.

• Feed industry is by far the major customer of maize and soybean and given its low net margins took the option of GM-labelling its products.

• Edible oils are also currently GM-labelled when they contain soybean oil.

• Therefore, the bulk of maize and soybean imports does not require segregation of conventional and GM materials, but only demands certification for the absence of EU non-authorized events.

• However, millers and starch industry on one hand, and meal and starch importers on the other hand, have to deal with IP of non-GM products, coping with thresholds that might vary between 0.9% and 0.01%.

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• Millers and starch industry mainly rely upon conventional maize domestic or Spanish production, contracting directly with farmers or their organizations, or imports from other European countries, such as Ukraine or France.

• In their own processing plants millers and starch industry easily manage to succeed in IP, as they don’t process GM maize at all.

• Given the price premiums for non-GM maize, individual farmers and some farmers’ associations look consistently bind to millers, in spite of the absence of integration systems.

• On the other hand, maize large demand by feed industry and its GM-labelling option are pushing other farmers to adopt Bt-maize to minimize corn borer damages.

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• As the purpose of this research was a comprehensive look over the supply chains, some minor players haven’t been heard.

• In particular, the market niche of maize bread, that involves numerous small millers, will be the focus of the continuation of this research. Another further step will be the comparison of maize and soybean supply chains of different EU and third countries.

Thank you very muchGrazie mille

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GM-free testing

•Besides certifiers’ labs, such as SGS labs in France, GM-free product importers and maize mills also use customers’ reference labs:

•Atlantic Meals: Danone lab in Germany•Acembex and Carneiro & Campos’ Mill:

Nestlé lab in Italy.

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