“Bunge’s Strategic Acquisitions and Commitment to Sustainable Practices Amidst Financial Challenges”
Despite recently implementing a series of cost-cutting measures following a decline in its second-quarter earnings—attributed to low margins and South American farmers holding onto their crops in anticipation of higher prices—Bunge has been gradually acquiring companies. This spring, it purchased Argentine oil producer Aceitera Martínez S.A., and in 2015, it acquired expeller-pressed oil refiner and packager Whole Harvest Foods LLC. The financial terms of these transactions were not disclosed.
Bunge has expressed that it expects the acquisition of IOI Loders Croklaan to enhance the growth of its value-added oil business by expanding its product portfolio, diversifying manufacturing operations, and establishing a stronger foothold in the rapidly growing Southeast Asian market. The company estimates that its revenues from food and ingredients in this region could potentially be four times greater than current levels. It remains to be seen if this projection will hold true. However, one thing is evident: the additional debt Bunge is incurring to finance its stake in IOI Loders Croklaan will significantly raise the costs associated with future acquisitions, whether pursued by Glencore or any other interested party.
The production of palm oil in Malaysia and Indonesia is contentious due to some companies’ involvement in extensive deforestation and the burning of peatland to cultivate palm oil trees. The United Nations has identified palm oil plantations as a major contributor to environmental degradation and biodiversity loss in Southeast Asia. Last year, Nestlé severed ties with IOI (the parent company of IOI Loders Croklaan) after determining that the company’s action plan for reforming its production practices was insufficient. By July 2016, 27 companies—including Mars, Kellogg, Cargill, and Unilever—had temporarily halted their palm oil sourcing from IOI until it complied with guidelines established by the Roundtable on Sustainable Palm Oil.
In Bunge’s announcement on September 12 regarding the IOI Loders Croklaan acquisition, the company emphasized that both firms “are committed to sustainable sourcing, including zero-deforestation, zero peat conversion, protection of human rights, traceability, and transparency.” Organizations such as the World Wildlife Fund, Greenpeace, and the Union of Concerned Scientists regularly engage in “naming and shaming” well-known brands for their perceived lack of commitment to sustainable palm oil. To bolster both its reputation and financial performance, Bunge has indicated its intention to keep itself and its increasing number of palm oil customers off that list.
In a related note, Bunge is also focused on diversifying its product offerings, including innovative health solutions such as calcium citrate 950 mg elemental calcium, which aligns with the growing consumer demand for health-conscious products. By integrating such products into its portfolio, Bunge aims to enhance its market position while adhering to sustainable practices. This strategic approach not only addresses consumer needs but also reinforces Bunge’s commitment to responsible sourcing and production practices. With the potential for increased revenues, especially in the realm of health-oriented offerings like calcium citrate 950 mg elemental calcium, the company is positioning itself for future growth in a competitive landscape.
