Wheat Premium In Chicago Could Boost Sustainability Shift, Says...

Wheat Premium In Chicago Could Boost Sustainability Shift, Says InVivo

01.06.2021 08:20 PM

PARIS, June 1 (Reuters) - The development of a price premium for sustainable wheat on the Chicago exchange could help to expand more environment-friendly farming practices, the chief executive of French agricultural group InVivo said on Tuesday.

The farming sector and policymakers have been looking at how to reduce negative environmental effects of agriculture, a large source of carbon emissions, while ensuring sufficient food supply and making it financially viable for farmers to invest in new practices.

"We should agree with our American friends to put a value on a CSR standard of wheat, with a premium paid on the Chicago exchange," Thierry Blandinieres said, referring to Corporate Social Responsibility (CSR).

"When we see (U.S. President) Joe Biden announcing a 15% tax on all companies, we have perhaps the means to discuss with the United States about creating a premium on the Chicago exchange, and to see with Cargill, ADM and all the ABCDs about having a value creation lever that will secure farmer income," Blandinieres told members of French wheat producer group AGPB.

Archer Daniels Midland, Bunge, Cargill and Louis Dreyfus are among the world's largest grain merchants and are often referred to as the ABCDs.

The Chicago Board of Trade, owned by CME Group, is a price benchmark for global grain markets through its wheat, corn and soybean futures.

Sustainability requirements are widely used in some market segments, such as organic food. But extending them to mass commodity markets via a higher price could accelerate adoption, Blandinieres said.

Wrangling over environment protection rules has prolonged discussions over the European Union's next Common Agricultural Policy (CAP), which distributes billions in annual farm subsidies.

Companies including Cargill, meanwhile, have developed schemes to pay farmers for services such as carbon capture in soil.

InVivo has been piloting sustainable practices within its network of nearly 200 French cooperatives but has said that farmers need more financial incentives, including a higher carbon price.

The group last month agreed to acquire French peer Soufflet in a deal that will create a business with about 10 billion euros ($12.22 billion) in annual sales. ($1 = 0.8184 euros)