Cargill plans to further diversify as food market becomes more complex

Cargill Ltd., a meat-packing plant near Montreal, that will be suspending operation due to a number of employees testing positive for the coronavirus disease (COVID-19), is seen in Chambly, Quebec, Canada May 11, 2020. REUTERS/Christinne Muschi

SAO PAULO/NEW YORK (Reuters) - Global commodities trader and food processor Cargill plans to diversify further, investing in more elaborate, higher-valued products that can meet consumer demands in an increasingly complex market, an official in its South American business said.

Laerte Moraes, Cargill’s South America head for starches and sweeteners, said the company will continue to invest in new products as it seeks to balance large-volume businesses that have small margins and its presence in market segments with reduced volumes and higher product prices.

“Consumers are willing to pay more for products that meet the specifications they are looking for,” Moraes told Reuters in an interview late on Wednesday. “In the past we used to have one market niche here ... Now we have dozens.”

Diversification reflects a need to cater to evolving consumer dietary and industrial customer requirements regarding clean label products, sustainability of the supply chain, and a growing market for low-calorie sweeteners, low-trans and low-saturated fat oils.

For example, Cargill is finishing construction of a new plant in Brazil where it invested 550 million reais ($98.37 million) to produce pectin, a by-product from citric fruits used in jams, beverages, dairy products and confectionery.

The plant will primarily serve export markets and should be onstream by May.

Moraes said sales of food ingredients in South America and North America are basically close to where they were at this time last year despite the coronavirus pandemic. In Brazil, a cash aid program to help the poor weather the pandemic boosted food sales across segments, but doubts remain about what will happen in coming months when those policies end.

About half of Cargill’s business in Brazil still comes from the commodity-trade side of the business, Moraes said.

Reporting by Ana Mano and Marcelo Teixeira; Editing by Paul Simao