Dreyfus on global trade and carbon

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I'm here at the FT Commodities Global Summit in Lausanne. I'm joined by Gonzalo Ramirez, the chief executive of Louis Dreyfus Company. Gonzalo, we've heard a lot at this conference about the treats to global trade from the protectionist policies of the Trump administration. Are you concerned about that? How do you think it might affect your business?

Well, we have two areas of concern. One of them is the sugar flows from Mexico into the United States, where we are lucky to say that this administration has taken part on it and they are analysing all the elements that we are providing-- not us, LDC, but as an industry. The other concern is what we are hearing about biodiesel from Argentina being eventually banned or regulated by the US on concerns of dumping. We just won a case against a European accusation on this, so we will start all over again.

Apart from this, I don't see major concerns. I am lucky to hear that all the participants here are claiming that they want free trade, and we are firm supporters of the free trade of all commodities in all the world.

Let's change tack now. I mean, Dreyfus is a very, very big agricultural commodity trader. You move millions of tonnes of foodstuff around the world each year. Do you have a strong feeling on the direction of prices this year? Will they remain depressed? Might they rally?

It's a very good question. Prices should remain under pressure, I would say. It's interesting that we've heard how we've achieved what we were looking for, which is high technology, precision farming, a lot of logistic investments, investments in crush capacity, port capacity. Everything is there. Consumption is very strong, keeps on growing hard every year. But what we've had in the last two years is perfect production everywhere, with some isolated problems.

So 2017, without any major disruption in weather, should be a year with low prices. 2018 is basically where we see the shift and consumption overpassing production.

So it sounds like you're quite bullish on demand then. I mean, consumption is good. There's not a problem with that. It really is on the supply side.

I'm very bullish on demand. In general, I see the consumer continue to shift into more protein consumption. And I would add to that statement that the problem is not only on production. It's all the capacity that we brought as ports and crushing plants. So we need to be careful not to continue to bring capacity to the world. Otherwise, we will continue to see very low margins in very large volumes.

Can I just ask you what your priorities are for 2017 at Dreyfus?

Yeah. We will expand our crushing capacity more at destination that at origin. We want to continue to integrate vertically in the oilseeds platform. We are doing something similar in the grains platform. Large investments connecting especially the Black Sea with the north of Africa. We have investments both at origin and destination. We will continue to work hard to be the supply chain managers of coffee for the main brands of the world on sustainable certified coffee. We will continue to grow in our origination of rice from Asia into Africa. But I guess that refocusing on those businesses where we are big and good is basically our challenge for 2017.

OK, we touched on it briefly before-- protein. The developing world wants more of it. But how do they achieve that, or how do you provide that, without a big carbon footprint? How do we reduce the emissions from supplying that protein to the developing world?

Supplying protein to the developing world is the challenge that we are all facing right now. We've seen-- I'm surprised to see in Davos the level of concern about carbon emissions, especially deforestation, water treatment, water waste, et cetera. And I think that looking forward, we have two trends. One of them is the creation of artificial meat in laboratories. The other one is to see how we can provide vegetable protein straight to the human consumption, instead of feeding animals and producing more carbon emissions.

I would like to investigate more on this last one, so we are working hard to see how we do proper research on this bet. Countries like Argentina that have the crushing plants right along the water, instead of selling out meal to be fed into animals, to then slaughter and distribute the meat, should be the ones providing this protein as vegetable texturised protein to the humans.

Gonzalo Ramirez, thank you very much.

Neil, thank you.