Interview Mike/Vito
Grain trade routes interrupted by conflicts, volatility of commodity prices, extreme weather events affecting harvests, logistics, and trade – these and other factors are causing growing food insecurity in many regions of the world. Vito Martielli, Senior Analyst for Grains and Oilseeds at Rabobank, and Mike Häfeli, Head of Grain Quality & Supply at Bühler, look at the tools at our disposal to address these critical challenges.
Janet Anderson
Vito Martielli: In terms of commodities, the biggest impact in my view is on wheat. We need to keep in mind that Ukraine and Russia together, before the start of the war, were responsible for 30 percent of global wheat trade, 30 percent of global barley trade, 20 percent of global corn trade, and 80 percent of global sunflower oil trade. In terms of absolute volumes, wheat is the biggest one − these two countries are responsible for 57 million tonnes of wheat traded globally. On the demand side, the biggest buyers of these grains are in the Middle East and North Africa. In the last three years, on average, Egypt has been the largest importer of wheat globally, followed by China and Turkey. There are also a number of developing markets in sub-Saharan Africa that are becoming more important buyers of wheat and others that are close by, for example in Southeast Asia. There are also developed markets that are impacted. The European Union is the largest buyer of corn from Ukraine. So, there is also quite a significant impact being felt there too.
Mike Häfeli: Our aim, first and foremost, is to support all our customers that are affected by such events. For example, we have customers in Ukraine that are still operating, and we are doing everything we can to support them. But that is not all. A more local, less import-dependent grain supply chain needs to be considered. For example, we are seeing our customers in Africa making improvements in the way they do agriculture. These are entrepreneurs who want to support local farmers in growing more grains. That includes not only the grains that they used to import, but also more local grains such as millet and sorghum. Their aim is to provide local grains from Africa for Africa. This makes them less dependent on imports and, therefore, on events in exporting countries. Equally importantly, these entrepreneurs are also supporting local businesses and local farmers, creating jobs, and enabling local products to be used locally.
There are different ways in which we, at Bühler, can help. One key factor is our local presence. This is a big benefit. It means we can support local entrepreneurs in turning their dreams into reality. We can provide technical guidance and solutions to reduce waste or improve yields. At our African Milling School in Nairobi, Kenya, we can train and upskill our customers’ employees to become more proficient in processing so that they can support local grain production.
Häfeli: This touches on a number of areas. On the one hand, different applications are required to transport these raw materials. Up to now, when we imported grains from Ukraine, for example, it was usually by sea on big vessels. This will change quite a bit. With stronger local production, more and more of the grain is now being transported by road or rail on trucks or freight trains. This means that fewer grain export terminals are being built at ports. Instead, we are seeing smaller collection points where trucks and trains can be loaded easily and quickly. That’s a new opportunity we are exploring.
But also, if we look at capacities, the infrastructure required in Africa will be less about the huge industrial facilities with thousands of tonnes of processing capacities and more about the smaller applications that are also appropriate for local grains, such as millet and sorghum. All this requires different processing know-how and skills, but also a different size. Whereas today large facilities are needed because most grains are imported, in future local grains will not go through large import terminals but rather smaller local distribution centers. In addition, it is vital to transition the processing of these grains from what, today, is a largely manual procedure into a more industrial one. This is an area where we can contribute.
Vito Martielli has been Senior Grains and Oilseeds Analyst for Rabobank at the Rabo Research Food & Agribusiness department in the Netherlands since 2005. As an expert in grains, oilseeds, meat, and vegetable oils, he is a regular speaker on these topics at global conferences in Europe, the Americas, Asia, Africa, and Oceania. Before joining Rabobank he worked for the Agricultural office of the Dutch Embassy in Rome. He also advised the Italian Ministry of Agriculture on the promotion and quality of Italian food in the world market. He has also worked for McDonald’s Italy in Milan working in marketing research and business development.
He holds a degree in Business Administration from Bocconi University in Milan, Italy, and an International Ph.D. from the Faculty of Agriculture at the University of Basilicata, Italy, in cooperation with Wageningen University in the Netherlands.
Mike Häfeli is Head of Grain Quality & Supply at Bühler. He started at the company as an apprentice 29 years ago and has since held a variety of positions. He has been Head of Automation at Bühler North America and Sales Director for Grain Logistics. He is based at Bühler’s office in Beilngries, Germany, where Bühler Grain Quality & Supply is headquartered.
He completed his Bachelor of Science in Mechatronics in 2002 at the University of Applied Science in St. Gallen, Switzerland, and completed his Master of Advanced Studies in Customer Relationship Management in 2009 at Zürich University of Applied Science in Switzerland.
Martielli: That is a challenging question. The answer is that it depends. Because, in the short term, for wheat there are other regions that are able to supply it. For example, in the Southern Hemisphere, Australia is an important net exporter of wheat. Argentina also exports some wheat. Having said that, wheat is mainly produced in the Northern Hemisphere – in Canada, the United States, and Europe. In Europe, the important exporters of wheat have traditionally been France and Germany. But there are other regions such as Romania, Bulgaria, Hungary, and Serbia − the Danube countries – that produce wheat. These are countries that, over the last few years, have increased their exports and can potentially do more. There is also potential in the Baltic countries. So, we might see some shift in trade, but you need to plant the seed first. That means it’s not going to happen overnight. I think also that the war in Ukraine is likely to have a long tail. We do not know how long the war will last, but we can assume we will see a shift in investment. These shifts will drive demand for new grain elevators to be built in new places and, at farming level, for new storage facilities.
Martielli: For me, the most important answer to this lies in our ability to improve yields at farming level in a sustainable way. For emerging markets, we need to concentrate on the yield side first. Africa is the region with the biggest expected growth in population, but it is also the region with some of the lowest yields at farming level. That is therefore one of the biggest goals that we need to achieve, because if you can improve the farming yield then you can improve self-sufficiency in Africa. This, in turn, will most likely lead to a requirement for more storage infrastructure. That is one of the key aspects.
The second most important factor is probably the ability to improve logistic infrastructure and control food loss along the supply chain, including first-degree processing − for example, milling − and second-degree processing at consumer level. If you are able to capture the food loss and improve efficiency, that will enable important gains which will help improve global self-sufficiency.
Martielli: We already mentioned the African Milling School. I think that’s where it starts. It is essential to provide support on the ground in education to teach people more about the product, how to grow the crops, and how to reduce food loss and improve logistics and efficiency in the supply chain. We have to look at how we can help people to better understand and make more use of the products they have and improve access to those raw materials that they cannot easily produce. We also need to help people use byproducts and side streams instead of letting them go to waste, and we have to look for opportunities to upcycle. Maybe we can use the husks to produce energy in a sustainable way based on circular economy principles, or maybe we can use them in the feed industry. We have to think about how we can upcycle and generate more value.
If you are able to capture the food loss and to improve efficiency, that will enable important gains which will help improve global self-sufficiency.
Vito Martielli, Senior Analyst for Grains and Oilseeds at Rabobank
Martielli: We already mentioned the African Milling School. I think that’s where it starts. It is essential to provide support on the ground in education to teach people more about the product, how to grow the crops, and how to reduce food loss and improve logistics and efficiency in the supply chain. We have to look at how we can help people to better understand and make more use of the products they have and improve access to those raw materials that they cannot easily produce. We also need to help people use byproducts and side streams instead of letting them go to waste, and we have to look for opportunities to upcycle. Maybe we can use the husks to produce energy in a sustainable way based on circular economy principles, or maybe we can use them in the feed industry. We have to think about how we can upcycle and generate more value.
Häfeli: I agree, education will remain of utmost importance. This is where our African Milling School or our recently opened Grain Processing Innovation Center in Kano, Nigeria, will be a big benefit. Both help tremendously to continuously improve knowhow, skills, and new processing solutions. At the end of the day, it’s all about collaboration. We need to start working together.
We’ve seen great entrepreneurs, for example, Nelson Carrinho in Angola, who is creating local jobs, supporting local farmers to do more locally, and building large processing facilities to feed the local people. The more we can collaborate with such entrepreneurs, the better we can support local food production and local grain production, and through training and education, enable them to improve processing capabilities and local farming, and reduce loss in doing so.
Martielli: That is one of the challenges in the global grains and oilseeds industry, because you need the right climatic conditions to grow these products. This is the case for palm oil and soybeans, but also, in a certain sense, for wheat and corn. That is why grains are produced in only a few countries. And, as we have learned, if there is an issue that affects the supply in one of these countries – whether it is a climatic issue or something else – it becomes a global issue. So diversifying is therefore difficult.
Instead, I think the key in emerging markets like sub-Saharan Africa is to improve farming businesses and yields, and, at the same time, improve transport and logistics infrastructure. But there are other tools as well. For example, during the pandemic industry learned to be flexible and to use the local products that are available. Finally, the third tool is policy. Policymakers need to provide supporting policies that are viable and sustainable for the long term to stimulate private-public partnerships. This is a winning combination that brings results.
It is vital to transition the processing of grains from what, today, is a largely manual procedure into a more industrial one. This is an area where we can contribute.
Mike Häfeli, Head of Grain Quality & Supply at Bühler
Gupfenstrasse 5
Uzwil
9240
Switzerland
