NEW YORK — While the company has not yet been successful in its efforts to expand into corn wet milling, Bunge Ltd. is "well on its way" to becoming a significant player in the sugar market, said Alberto Weisser, chairman and chief executive officer.
Mr. Weisser commented on Bunge’s aspirations for sugar during a Nov. 20 presentation at the Morgan Stanley Consumer & Retail Conference in New York.
"The sugar industry is attractive because it benefits from steady growth in demand and from a move in production to lower cost markets in the Southern Hemisphere such as Brazil," he said.
Expanding in sugar represents part of a "pillar strategy" at Bunge to "expand into complementary value chains, new products" in which Bunge is able to "leverage its current expertise and assets for competitive advantage," he said.
Sugar was mentioned by Mr. Weisser as an example, together with corn wet milling and palm oil.
He described sugar as similar to Bunge’s core businesses and said ethanol produced from sugar is a highly attractive first generation biofuel. Its low production cost and higher energy conversion ratio per unit of input "bode well for its growth in the Brazilian and international markets," he said.
"Long term, our goal is to be a world leader in sugar," Mr. Weisser said. "Today we have three active sugar mill projects in Brazil. Within the next three to four years, we should have approximately 13 million tonnes of milling capacity.
"We also are an active marketer and trader of sugar worldwide. Last year we purchased the trading unit of Tate & Lyle, which provides us great capabilities in these areas. This year we are already trading around 5 million tonnes of sugar."
Asked by an audience member whether Bunge may become a player in corn wet milling by constructing capacity, Mr. Weisser said such an approach was not under consideration.
"This would have to be in the form of an acquisition, and you remember that last year we tried to merge with Corn Products," he said. "It didn’t work, but it stays in our view that one day we hope to be able to do that."
Mr. Weisser began his presentation offering macro observations about worldwide food demand. He noted United Nation figures suggesting a doubling of world food production will be needed by 2050. Trade will be critical to meet demand going forward, he said.
"The world’s arable land and population are not distributed evenly," he said. "Growing populations in places like Asia, the Middle east and Northern Africa will increase their reliance on countries in the Americas and Eastern Europe to supply greater quantities of agricultural commodities.
"Customers will require products year round from all over the world with high quality, safety and reliability. As a result, trade linkages will need to handle greater volumes with more efficiency, flexibility and security."