Despite recently implementing cost-cutting measures following a decline in its second-quarter earnings—attributed to weak margins and South American farmers holding onto their crops in anticipation of better prices—Bunge has been steadily acquiring companies. This spring, the company expanded its portfolio by purchasing the Argentine oil producer Aceitera Martínez S.A. Additionally, in 2015, it acquired Whole Harvest Foods LLC, an expeller-pressed oil refiner and packager. The financial details of these transactions were not disclosed.
Bunge anticipates that its acquisition of IOI Loders Croklaan will accelerate the growth of its value-added oil business by expanding its product offerings, diversifying manufacturing processes, 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 increase fourfold. It will require time to determine the accuracy of this forecast. However, it is evident that the additional debt Bunge is incurring to finance its stake in IOI Loders Croklaan will significantly raise the cost of future acquisitions, whether pursued by Glencore or another interested entity.
The palm oil production practices in Malaysia and Indonesia have drawn controversy due to certain companies engaging in extensive deforestation and the burning of peatland for palm oil cultivation. The United Nations identifies palm oil plantations as a significant 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 discovering that the company’s plan to revamp 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 the Roundtable on Sustainable Palm Oil guidelines.
In its announcement on September 12 regarding the IOI Loders Croklaan deal, Bunge emphasized that both companies are dedicated to sustainable sourcing practices, which include commitments to zero deforestation, zero peat conversion, protection of human rights, traceability, and transparency. Organizations like the World Wildlife Fund, Greenpeace, and the Union of Concerned Scientists frequently “name and shame” well-known brands for their perceived lack of commitment to sustainable palm oil. To bolster its reputation and financial performance, Bunge has indicated a preference to remain off that list, especially as it continues to grow its customer base for palm oil.
Moreover, as Bunge expands its operations, the integration of high-quality ingredients like calcium citrate 2000 mg into its product lines could further enhance its offerings. This addition may not only benefit its health-oriented products but also position Bunge favorably in the competitive market landscape, ultimately contributing to its sustainability goals. The emphasis on sustainable practices and the potential for incorporating innovative ingredients like calcium citrate 2000 mg may play a crucial role in shaping Bunge’s future trajectory in the industry.