Photos courtesy of IGC.
“I have high respect for the work done by the team here,” Petit, who started in the role on Feb. 1, told World Grain at the IGC’s London headquarters. “It’s tremendous work, in terms of having a lot of data monitoring, having the right information, considering worldwide neutral information for the market. There are not a lot of places in the world where you can get neutral information on the grains and oilseeds sector. It should stay the cornerstone of the IGC.”
The IGC faces highly dynamic grains and oilseeds markets.
“The way it is done has changed quickly,” he said. “The main players have changed also drastically in the last decade.”
The IGC needs to look at the way it follows the market, he said.
“Maybe new issues are of interest for our members? The issue of quality for example,” he said. “On wheat it is becoming more and more of an issue for industry to know quickly the quality of the harvest.”
There are members for whom the big issue is climate change.
“You can draw some link between quality and climate change,” he said.
Petit highlighted the effect of the development of “big data.” For the IGC it means using digitalization of its information to benefit members.
The Council started out as a platform for governments and their civil services to discuss grain trading.
“Now the question is if IGC could be to some extent a platform where you have a discussion with administrations but also with industry, the stakeholders,” he said. “It is very important for public bodies to take part in this debate with the stakeholders to understand better the new trend.”
The IGC will explore how to integrate the private sector’s strategy into the information it provides. It is extending its conference, which is June 19-20 in London, by half a day to give it the chance to hold specific workshops on commodities and look at how it can provide market information for the private sector. One focus will be the oilseeds sector, in which he suggested the IGC Conference was probably the only forum in the world where producers, processors and governments come together to discuss the market.
The question was whether vegetable oils or proteins would be the driver for the sector in future.
“That’s a discussion we would like to have,” he said. “As the IGC, we have robust knowledge about market movement and about production, but it is quite difficult to get figures about demand. We do have our own figures, but it is good to be in contact with the private sector to show our perception of the trend on the demand side is the right one.”
On the rice sector, there is a need to consider the increasing move toward sustainability criteria.
“New standards will be a factor, a new driver for stability or instability of the rice market,” he said. “That is the type of discussion I would like to stimulate. The big players are funding some research institutes to develop these standards of production. But from the demand side, are they taking up the standards?”
On wheat and coarse grains, the question would be how to consider plant protection products, maximum residue limits and their impact on trade?
“When you see different regions of the world developing specific regulations on plants protection products and limits, how can others adapt?” he asked. “We would like to cross the issues of market monitoring with the issues dealt with day-to-day by the companies that will help us to develop out forecast studies.”
Asked whether the IGC might extend its coverage to more commodities, he first paid tribute to his predecessor, Etsuo Kitahara, and the IGC team for the tremendous achievement in widening the organization’s work. Currently the IGC Secretariat is considering how it could create a better understanding of the pulse sector.
“A large part of our membership is interested in this because there is an increasing trade in pulses,” he said. “We are starting to have a better understanding of how the market is working. By June there will be a consideration of if we still need to work on it.”
Another potential area for expanding IGC’s information is freight costs, “not a commodity per se but it is also part of the market information,” he said, noting that the IGC already provides a price series for shipping, which is much appreciated by its members.
“We need to continue and we need to look if we can go further on that aspect,” he said.
It might also be useful to explore quality and a value chain approach to the market. “There is real change in the value chain and that’s something we will have to watch in the future,” he said.
“We have limited human resources,” he said. “We have still first to keep the core business of the IGC, which is providing robust data, and I don’t want to sacrifice the reputation of this work.”
There is room to improve and analyze it with other international organizations such as AMIS. He focused on the need to look, as the IGC already does, at where stocks are and whether those stocks are likely to be available to the market.
“The issue of stocks, it isn’t new, it is very difficult, but we have to continue to progress,” he said.
Petit cited a conversation he had when he started to work for the E.U. farmers organization Copa-Cogeca with a former president of grain trader Limagrain. The man had stressed that when figures and theory contradict each other, the figures were the thing to watch.
“What IGC is doing is important for the price-making process and also important for the companies,” he said. “Analysts and economists have a huge database available today in IGC. The issue is not necessarily the volume of the database. It’s how we can use which type of analysis based on that. That will be the new layer in the value of IGC.”
Governments are no longer managing the market.
“They need to understand the strategy of the companies, what is happening in the market,” he said.
The IGC’s membership includes most of the world’s biggest grain trading nations, but there are some notable absences. Petit believes that they should be viewed in terms of region. He pointed out that the market has changed, with new countries becoming important in the market.
“Brazil is a relevant player now,” he said. “In terms of the demand side, China … is a relevant player. IGC should not become an OPEC of the grain sector. We should more look at the regional integration, rather than country by country.
“Clearly, we need to have a better link with South America. Today we have one member from South America, a very active member, Argentina. But maybe we need to develop better what happens there.”
Further relations need to be developed also with East Asia, he said, particularly now that the Council has added rice production to its information.
He also wants to make progress in Africa.
“In the next 20 years, they will double in population,” he said. “There will be more than 2.4 billion people in Africa, mainly in mega cities close to coastal regions. That will mean developments in trade but also potential disruption. We have to have better information for trade but also for food security reasons.”
The world works on a regional basis.
“We talk about Mercosur, Brazil and Argentina together,” he said. “North America is the same; it’s all done by regions.”
Flour production data a problem
Asked about flour production data, he said the challenge is that IGC doesn’t produce its own information on the subject.
“We are relying more and more on private data,” he said.
The other problem is that the definition of flour varies by region.
“What is meant by flour in India is not what we mean in Europe or the U.S.,” he said. “Having worldwide monitoring of flour is very, very complicated. At IGC what we try to do is have robust information about food use. It is not specifically flour but we have data on food use from 82 countries around the world, which represents 98% of the food consumption of grains.”
The IGC’s Conference will include a focus on technology and how it can change the market. There will be policy makers, including Argentina’s Under Secretary for Agriculture. There also will be specific sessions on the Black Sea and emerging markets.