Is American Olive Oil About to Have Its Moment?

In 1976 the wine industry changed forever when a vintage from California was judged superior to its European counterparts. The same thing might be about to happen to olive oil.

By Peter Robison and Vernon Silver | January 25, 2016
Photographs by Lucas Foglia

On a Sunday morning in Rome, a couple dozen locals gather in an orchard of some 50 olive trees planted above ancient catacombs. The owner has offered lunch in exchange for help stripping the olives so he can get the harvest to a nearby press as quickly as possible. They begin by spreading a circular net around the trunk of a 12-foot-tall tree. Children scamper to the treetop to yank clumps of olives with their fists. Adults below pull fruit off the lower limbs with small rakes, taking care not to stomp on the piles accumulating at their feet. After 15 minutes, the hail of olives tapers off. The net is lifted and the fruit dumped into a small plastic crate—enough for perhaps a liter of oil. The gaggle moves on to the next tree. By the time the sky gets that glow of an Italian day’s end, the stronger of the pickers are loading the crates onto a trailer hitched to a Range Rover bound for a frantoio, or mill, where the olives are to be pressed into golden-green oil.

California Olive Ranch’s Kelley.

This farmer is a hobbyist, a weekend artisan. But even at much larger operations, in Italy and across the Mediterranean region, the techniques aren’t dramatically different. The height of the technology is a tractor with a vibrating arm that wraps around the trunks of the trees.

Across the Atlantic, however, an 18-year-old company called California Olive Ranch is upsetting tradition and muscling into the ancient industry by fixing the tree itself.

The company’s 2,200-acre orchard, an hour north of Sacramento, is an industrial marvel. The 1.3 million trees there are more like bushes, 6 to 10 feet tall and planted in neat, tight rows. The density lets a two-story mechanical harvester straddle the trees and strip away the olives to a conveyor that drops them into a truck, which delivers them to an on-site mill that can press 3,200 gallons of oil an hour. No olive is touched by hand. California Olive Ranch, a privately held company, estimates it accounted for 65 percent of the olive oil produced in the U.S. in 2015.

Traditionalists sneer at the idea of factory farming in the world of olives. “Some people wonder whether the olive oil produced from these kinds of trees will have such an appealing and varied taste,” says Jean-Louis Barjol, executive director of the International Olive Council (IOC), a Madrid-based organization that represents the primarily Mediterranean producers accounting for 98 percent of world output. “It is rather a question of specialized vs. commodity product.”

Gregory Kelley, chief executive officer of California Olive Ranch, says it’s the mainstream sellers that need to defend the quality of their products. Europeans, he says, have long sold their dregs to unsophisticated Americans, like jug winemakers did in the 1970s. In a strategy said to be either self-defeating or brilliant, depending on who’s talking, Kelley often rails about what he calls the olive industry’s dirty secrets. He says much of the so-called extra-virgin oil sold in the U.S. is of unreliable provenance: adulterated with cheaper oils, processed with excessive heat that strips out healthful properties, or flawed by sloppy harvesting that can cause fermented or rancid-tasting oil. “In food service, it’s a cost center, so there’s pressure even in fine restaurants to buy crappy olive oil,” Kelley says.

These are not merely the claims of an arrogant arriviste. The olive oil industry has been rocked by fraud investigations, most recently in November, when a prosecutor in Turin, Italy, said he was pursuing charges against producers whose extra-virgin oil had tested simply virgin. (To be rated extra virgin, oil must have a fruity, bitter, or pungent flavor, in addition to free acidity lower than 0.8 percent, and exhibit none of 16 official taste flaws; virgin oils may have acidity as high as 2 percent and a limited number of taste flaws.) In a peculiarity of the industry, the alleged fraud results were found not in chemical tests, but through tastings. The probe was conducted by a special branch of the Italian carabinieri, the Nuclei Antisofisticazioni e Sanità. Known as the N.A.S. and cross-deputized as health inspectors, specialists in the anti-adulteration unit are trained to detect bad oil. The agents’ prime investigative tools are little tasting glasses, tinted blue to obscure the color of the oil.

At the same time, Italy’s antitrust authority announced its own probe into allegedly unfair trade practices of seven brands, including the well-known Bertolli, owned by Madrid-based Deoleo. The allegations again were based on oils lacking extra-virgin qualities, in this case as assessed by experts at the Italian customs agency, which also had a role in the Turin tests. The news splashed across Italian front pages. (Deoleo says its bottling records show its oil complied with European Union chemical and sensory standards as extra virgin and that it has followed the law and is cooperating with the authorities.) Agriculture Minister Maurizio Martina reassured Italians in a Nov. 10 statement about the integrity of the country’s olive oil. His own inspectors had done 6,000 inspections and made seizures worth €10 million ($12.5 million) in 2014, he said, and had stepped up enforcement recently. “It’s now important to clear things up and look after consumers and the thousands of honest businesses that are today occupied with the new production season,” Martina said.

There’s more at stake than just national pride and identity. Italy exports billions of dollars’ worth of olive oil, including hundreds of millions to the U.S., the world’s third-largest olive oil market, with $2 billion in sales. Brands that trade on an Italian identity dominate. Many of the best-selling oils, legally labeled “imported from Italy” or “packed in Italy,” with images of the country’s flag or hearty peasants, are made from olives grown in Greece, Spain, or Tunisia and then shipped to Italy for processing. The U.S. is that rarity—a rich market with room to grow. It’s awash in celebrity chefs, reality cooking shows, and cookbooks, yet 6 in 10 Americans never buy olive oil. Consumption in the U.S. has tripled since 1990, compared with a doubling worldwide, and is still only 0.8 liters per capita—one-tenth of what a typical Italian uses in a year.

Samples for an olive oil tasting at the California Olive Ranch mill in Artois, Calif.

California Olive Ranch is trying to do with olives what California did with wine. It’s marrying a fastidious, technology-driven approach—Kelley worked at several Silicon Valley tech startups—with California’s self-appointed role as the world’s regulator. Prompted by Kelley’s lobbying, the state in 2014 established chemical standards for olive oil stricter in some respects than those of the IOC, which was established under United Nations auspices in 1959. This month, New World producers are expected to announce the creation of a rival organization, the World Olive Oil Trade Group. Members may include such non-IOC countries as Australia, New Zealand, and the U.S. The group could press globally for more standards like California’s.

The question of quality is being answered in a way that echoes the moment in 1976 when a chardonnay from Chateau Montelena in Napa outscored its French rivals in a blind tasting that came to be known as the Judgment of Paris. In November, Cook’s Illustrated magazine released its closely followed recommendations for supermarket olive oils. Tasters in blind tests sampled the oils plain, with bread, over mozzarella and tomatoes, and in a vinaigrette drizzled on salad greens. They gave their top ranking to California Olive Ranch’s Everyday Extra Virgin, which they said was “fragrant” and “fruity,” with a “complex finish.” An Italian brand was also recommended. The next eight oils, all imported, were recommended “with reservations.” They were described with such words as “mild,” “dull,” “medicinal,” “thin,” “stale,” “greasy,” and “flat.” As one taster said of a Bertolli extra virgin: “Nothing special. Could be vegetable oil in here.”

California Olive Ranch’s 2,200-acre orchard.

The day after his harvest, the farmer in Rome drives his fruit to the press, then watches closely as the stainless-steel machinery does its work. Hobbyists are often concerned, mostly for sentimental reasons, that the juice coming out the other end is actually theirs and not the previous customer’s batch. He leaves after a few hours with a 50-liter tub of oil.

Not all olive oil coming through Italy’s presses and bottlers has such perfectly documented provenance. Say the next producer at the frantoio isn’t a hobbyist. Say he’s a working farmer who trucks in his olives, then sells the oil to a wholesaler or a local agricultural cooperative. His is added to the oil of other farmers, and that’s where the world of olive oil becomes murky. It can be hard to know where the liquid comes from or what’s in it. Testing is expensive, so the industry relies largely on the honor system.

The business has been subject to scams, most infamously in 1991, when thousands of tons of Turkish hazelnut oil were sold as Greek olive oil, according to Tom Mueller’s 2011 book, Extra Virginity: The Sublime and Scandalous World of Olive Oil. Such blatant cheating isn’t common—but dilution of good olive oil with cheap vegetable or seed oil isn’t unheard of. (In the case of Bertolli, aside from a snarky taster’s comment, nobody has alleged such adulteration, and the parent company points out that taste testing is subjective.) Improper storage is a bigger problem. Exposing oil to heat or light makes it bland and also destroys the cancer-fighting polyphenols that are the basis of its reputation as a promoter of good health.

A harvester works the rows in California Olive Ranch’s orchard. In a half-hour, it can pick 7 tons of olives. Once picked by the high density olive harvester, olives are transported by conveyor belt to a tractor in the next row.

California Olive Ranch positions itself as the New World answer to these problems. But its own roots are in the Old World. The company is owned mostly by Spaniards who, in part, just wanted to sell more trees. In 1986 a Catalan construction magnate-turned-gentleman farmer named Carles Sumarroca was frustrated at how long it was taking to graft peach trees on his estate outside Barcelona. His weekend chats with an agronomist eventually developed into Agromillora, the largest nursery in the world for stone fruit trees.

Agromillora didn’t view olives as a particularly attractive market; the trees can live for 1,000 years, so they don’t need to be replaced often. Then one day, as lore has it, Sumarroca looked out over his vineyards and noticed a mechanical grape harvester systematically stripping the fruit. Nearby, at a neighbor’s olive orchard, he saw men picking by hand. Sumarroca wondered if a grape harvester could do the same work for olives. His managers told him about a variety called arbequina, which grew like a bush.

Their experiments led to a production method now known as super-high- density, with as many as 900 trees planted per acre, eight times what’s typical. José Ignacio Romero, an acquaintance of Sumarroca’s in the Catalan business community, began searching for farmland in California, where, he reasoned, they could start from scratch.

“California is producing, from an agricultural point of view, everything,” Romero, 74, remembers, sitting in his wood-paneled office on the eighth floor of a modern building in a leafy Barcelona neighborhood. “They had not developed olive oil.”

The partners, together with Romero’s brother and another friend, invested $10 million initially. They bought 733 acres near Oroville, Calif., where, in the 1700s, Franciscan missionaries from Spain had planted some of the first olive trees in North America.

To run California Olive Ranch, they brought in former managers from Blue Diamond Growers, the almond cooperative that made the nut a success with its can-a-week marketing. One of them, Alan Greene, recalls asking his wife to sample some of the company’s oil. She reported there was something wrong; it tasted like olives. With so many Americans accustomed to flavorless oils, Greene recommended that the grower stick to private label and bulk supply.

Then, in 2006, Kelley turned up for an open house. After taking a couple of years off to backpack, he’d been consulting and was living in nearby Chico. Romero hired him as chief financial officer, then made him CEO in 2007. Kelley, 44, has the zeal of a man who’s found his true love in mid-career. His two young children slather their toast with olive oil instead of butter; the household goes through a liter a week.

Kelley quickly decided that the company should create its own retail brand; otherwise, there would be little to distinguish it from the sea of imports. At first, buyers told him nobody wanted oil from California. “A lot of people looked at this business and thought we were crazy,” he says. The flagship Everyday Extra Virgin is now sold in 25,000 stores. Unusual for a brand trying to cultivate cachet, it’s marketed by Kelley to Walmart, which sells a 500 milliliter bottle for $7.49, and Whole Foods Market, where it costs $9.99.

Kelley’s retail push coincided with a growing fascination with the health benefits of the Mediterranean diet. Antioxidants in olives, present in the highest concentrations in the best extra-virgin oils, reduce the risk of cancer. The TV chef Jamie Oliver developed such a fetish for drizzling a “lug of olive oil” on his dishes that it inspired parodies.

In 2008 the University of California at Davis created the Olive Center, part research center and part industry advocate. Funding came from California Olive Ranch and other domestic oil producers. Dan Flynn, a former state legislative consultant, runs the organization.

The Olive Center planted a flag in 2010 when it issued a report that bared, and greatly exacerbated, the growing schism between traditional growers and the upstarts. Laboratory tests, the center said, had found that 69 percent of imported brands sold as extra virgin in California supermarkets didn’t meet international standards. Hundreds of media outlets in the U.S. ran stories. Flynn says a half-dozen trial lawyers called, sniffing for opportunities to sue importers.

Dr. Mehmet Oz invited Flynn onto his TV show in 2013, naming extra-virgin oil “among the biggest lies” at the supermarket. “It infuriates me,” Oz said. “I’m buying olive oil to make my family healthy, and I’ve got some news for you, folks—we’re not getting it.” Audience members cringed as Flynn said professional tasters had used words like “waste pond” and “baby diaper” to describe the worst oils.

Importers still complain about the report’s impact. Little mentioned in all the coverage was who funded it: California Olive Ranch, the California Olive Oil Council, and another California producer, Corto Olive. And the 69 percent figure wasn’t from chemical tests, but from a tasting panel. New World producers “have a history of, I would say, bending the facts to support their sound bites,” says Eryn Balch, executive vice president of the North American Olive Oil Association, which represents imported brands including Bertolli, Filippo Berio, and Pompeian. Her group’s own testing, she says, shows that only 2 percent of oil in the U.S. by volume is adulterated. (Flynn responds that chemical tests confirmed the tasting results in the majority of cases.)

When California, with one-tenth of 1 percent of the world’s market, adopted chemical standards stricter than the IOC mandates, it made waves in the Old World. The rules, which for now apply only to California producers, also barred the use of the marketing terms “pure,” “light,” and “super virgin” on labels. The Italian consulate general in San Francisco, a Spanish trade attaché, and representatives from a half-dozen importers traveled to Sacramento to oppose the standards at a hearing of the California Department of Food and Agriculture.

Most of them said, politely, that Americans don’t know what they’re talking about when it comes to olive oil. “What the United States, including the state of California, needs relative to olive oil is education,” said Gabriel Estevez, chief operating officer of Sovena USA, based in Rome, N.Y., the largest importer of olive oil in the U.S. Many of the people testifying against the standards complained that all the talk of bad product would only boomerang, turning Americans off olive oil completely.

Lab tests, the Olive Center said, found that 69 percent of imported brands sold as extra virgin didn’t meet international standards

It’s Day 61 of the harvest in California, which means it’s a banner year: Typically, the harvest is two weeks shorter. Kelley is in no mood to be a statesman. Over lunch, he reaches seemingly offhandedly for a common supermarket brand and sips it. “Crayon,” he pronounces. “It’s not hard to find rancid oil, unfortunately.”

Kelley says California Olive Ranch had sales of $82 million in 2015. Within three years, co-founder Romero forecasts, sales could more than triple, to $250 million.

Limited by its harvesting techniques to three varietals—arbequina, arbosana, and koroneiki—the company sought to broaden its lineup last year by acquiring Lucini, a Miami-based importer whose oil was, as it happens, the top-rated Italian brand in the Cook’s Illustrated report. The deal also brought in Molinos, one of the largest food companies in Argentina, as a shareholder.

Given the close spacing of the trees, risk of disease in monoculture, and the tree damage caused by machine harvesters, California Olive Ranch employees spray a liquid copper fungicide. The spray is used to control diseases such as anthracnose, bacterial leaf spot, fire blight, and botrytis.

Even the old guard concedes that super-high-density harvesting, in use for just 5 percent of Europe’s volume, may eventually catch on. Mechanical harvesting costs about one-seventh as much as picking by hand. “It will probably be the future in Italy and all over the world,” says Renato Calabrese, general manager of Pietro Coricelli, an olive oil producer in Spoleto that exports to more than 100 countries.

Soon after an Oxbo harvester has taken a half-hour to swallow 7 tons of fruit from an acre of trees—work that would have taken 15 people a day by hand—the olives are at the mill in California. After an evaluation of temperature, moisture content, fat content, and fruit size to ensure they aren’t fermenting or oxidizing, the olives, pits and all, are churned into paste, which is run through a centrifuge to separate the oil. A stream of golden oil the diameter of a garden hose pours into a vat.

Kelley dips in plastic cups and hands them around. He drinks. “That’s good oil,” he says, remarking on the buttery, mellow notes of riper olives late in the harvest. “Really good oil,” the burly head miller says, nodding.

—With Sergio Di Pasquale

Inside Monsanto, America’s Third-Most-Hated Company – Businessweek

Inside Monsanto, America’s Third-Most-Hated Company

Inside Monsanto, America’s Third-Most-Hated Company
By Drake Bennett
July 03, 2014 5:54 AM EDT

The 4,400 acres Dustin Spears farms with his father-in-law stretch for 50 miles across northern Illinois in an archipelago of disconnected, mostly rented plots. Even in the best of circumstances, it’s a race to get the corn in the ground in time to take advantage of the full growing season. When spring is unusually cold and rainy, as it was this year, the window narrows even more.

Which is why Spears is in his tractor at two in the morning the first Monday in May, moving at 8 miles per hour through a halogen-lit haze of stirred-up topsoil. On the 60-foot planter behind him, a $47,000 sensor array helps deposit each corn kernel at a depth of 2 inches, no matter how hard or soft the soil. A computer in the cab calculates the fertility of different parts of the field and adjusts the planter accordingly. The seeds themselves are a new hybrid with a candy-green coating containing insecticides and fungicides. DNA inserted into the seeds produces a protein that kills pests such as corn borers, earworms, and rootworms. Other spliced-in genes confer immunity to the weed killers Spears uses, greatly simplifying his spraying schedule.


Photo Illustration by 731; Corn, People: Getty Images (2); Background: iStock/Getty Images[3]

The 32-year-old farmer sits in the bouncing tractor cab, wearing a hooded sweatshirt, a baseball cap, jeans, a Bluetooth headset, and a look of fatigue. The steering wheel is folded up out of the way. When the tractor nears the end of a row, its autopilot beeps cheerfully, and he taps a square on one of the touchscreens to his right. The tractor executes a turn, and he goes back to surfing the Web, watching streaming videos, or checking the latest corn prices. “You see how boring this gets?” Spears asks. “I’ll be listening to music for 12 hours. I’ll refresh my Twitter timeline, like, a hundred thousand times during the day.”

Spears is an early adopter who upgrades his equipment every 12 months (next year’s tractor will have a fridge in the cab, he says) and who just bought a drone to monitor his fields. He can afford to: Corn prices are high, and farmers like him can take home hundreds of thousands of dollars a year. Still, he thinks such technologies—the smart planter software and sensor array, the iPad app offering planting and growing advice—are only going to get more common. So does the company that makes many of those tools, as well as the high-tech seeds Spears is planting: Monsanto[4], one of the most hated corporations in America.

In a Harris Poll this year measuring the “reputation quotient” of major companies, Monsanto ranked third-lowest, above BP[5] and Bank of America[6] and just behind Halliburton[7]. For much of its history it was a chemical company, producing compounds used in electrical equipment, adhesives, plastics, and paint. Some of those chemicals—DDT, Agent Orange, polychlorinated biphenyls (PCBs)—have had long and controversial afterlifes. The company is best known, however, as the face of genetically modified organisms, or GMOs.

Photo Illustration by 731; Corn, People: Getty Images (2); Background: iStock/Getty Images

On May 24, cities worldwide saw the second annual “March Against Monsanto.” In New York City, a couple thousand protesters gathered in Union Square, next to a farmers’ market, to hear speakers charge that the company was fighting efforts in states all over the country to mandate the labeling of GM foods; that organic crops were being polluted by GM pollen blown in on the wind, only for Monsanto to sue the organic farmers for intellectual-property theft; that Monsanto had developed a “Terminator” gene that made crops sterile. Some of the protesters were dressed as bees—studies have found a connection between the colony collapse die-off of honeybees and a common class of insecticides called neonicotinoids. (Monsanto does not make neonicotinoids, but it does incorporate them into some of its seed treatments.)

The company’s name has become shorthand for corporate villainy, like Standard Oil a century ago or the private military contractor Blackwater. A rumor persists that Blackwater, whose own reputation problems have led it to change its name multiple times, has merged with Monsanto. At the New York march, one young man held a sign that read, “Why buy Blackwater if your goal is to feed the world?”

The company has not, in fact, merged with Blackwater. It has never brought a Terminator seed to market and has pledged not to try. It is, however, extremely profitable. Today’s Monsanto was spun off in 2000 after a merger with the drugmaker Pharmacia & Upjohn. That year the new company’s net income was $149 million; last year it was $2.5 billion. Since 2000, Monsanto’s stock market value has grown from $7 billion to more than $66 billion.

Widespread public suspicion of GM crops has not stopped their spread: According to the Department of Agriculture, 90 percent of the corn and cotton and 93 percent of the soybeans planted in the U.S. last year were genetically modified. These are commodity crops used mostly for animal feed and fuel ethanol, but they also provide the corn syrup in bottled beverages and the soy lecithin in chocolate bars. And with the public still leery of the technology, it was perhaps inevitable that after a stretch of relative quiet the GMO wars would heat up again. The latest front is over food labeling: In the past two years, ballot initiatives that would have mandated labeling narrowly lost in Washington State and California; in May, Vermont’s governor signed a bill into law.

Photo Illustration by 731; Corn, People: Getty Images (2); Background: iStock/Getty Images

While the debate about the impact of GM crops on the environment continues, the question of their effect on human health looks increasingly settled. The National Academy of Sciences, the American Medical Association, the World Health Organization, Britain’s Royal Society, the European Commission, and the American Association for the Advancement of Science, among others, have all surveyed the substantial research literature and found no evidence that the GM foods on the market today are unsafe to eat. One of the few dissenting research papers, a 2012 study in the journal Food and Chemical Toxicology that found tumors in rats fed modified maize, was retracted by the journal last fall after questions were raised about the researchers’ methodology.

At the same time, after a decade concentrating on seeds and genetically engineered “traited” crops, Monsanto is broadening its focus. Much of its $1.5 billion research budget goes into traditional plant breeding, the same craft the botanist Gregor Mendel pioneered on his pea plants a century and a half ago, though at a scale and speed that would boggle the friar’s mind. Monsanto is also researching the targeted use of bacteria, fungi, and other living organisms to protect and nourish seeds: farming technologies that borrow, at least conceptually, from organic agriculture.

In perhaps the biggest shift, Monsanto is moving into computing. Through the purchase of two companies, Precision Planting and the Climate Corporation, Monsanto has begun offering software and hardware products that gather and process information relevant to a farmer—data about temperature, rain, soil, seeds, and pests. Big Data has already transformed everything from retail logistics to dating; Monsanto believes it can do the same for farming. “This isn’t about a farm,” says Hugh Grant, Monsanto’s chief executive officer and chairman. “It’s not about a field. It’s literally about every square yard in that field and doing the best thing for the soil and the water in that yard-by-yard approach. I think it’s a big piece of the future company.”

Photo Illustration by 731; Corn, People: Getty Images (2); Background: iStock/Getty Images[8]

Talk to Monsanto executives or the employees who develop and sell its seeds and sprays and software, and they’ll tell you that everything the company does is aimed at making farming more efficient and therefore more environmentally friendly. Monsanto’s critics see this as the cynical rationalization of a profitable company with a problematic history. Whatever the company’s motives, the overwhelming preponderance of scientists agree that in coming decades the world will grow warmer and more crowded. Feeding its swelling population will get more difficult, especially as billions rise into the middle class and develop a taste for resource-intensive foods like meat and fresh produce. Monsanto contends that its massive labs and global network of test plots, its DNA sequencers, plant breeders, software coders, and tireless intellectual-property lawyers are some of the best tools for dealing with those challenges. The argument over Monsanto is an argument, in part, over whether the same companies that gave us today’s food system can also give us tomorrow’s.

The main Monsanto research facility is in Chesterfield, Mo., a few miles from where the Missouri River bends sharply north to skirt St. Louis and then empties into the Mississippi. The 1.5-million-square-foot complex has 250 laboratories and 124 “growth chambers”—rooms like walk-in freezers where temperature, light, and humidity can be customized to mimic different climates. Running along one side of the parking lot are two huge lab buildings, each topped with a long, glinting serration of greenhouses. On the other side of the lot is a construction site—the facility is in the middle of a $400 million expansion.

In 1986, Monsanto scientists successfully spliced into a seed a stretch of DNA from Bacillus thuringiensis, or Bt, a bacterium that makes a protein lethal to insect larvae that feed on corn, potatoes, and cotton. A year earlier, Monsanto researchers had developed plants resistant to glyphosate, a popular herbicide it sold under the brand name Roundup. The source for the resistant genes was also a bacterium, a strain discovered living in the mud by one of the company’s own herbicide factories. Constantly exposed to glyphosate runoff, the organism had developed immunity. The company now sells seeds for Roundup Ready soybeans, corn, cotton, canola, alfalfa, and sugar beets.

Photo Illustration by 731; Corn, People: Getty Images (2); Background: iStock/Getty Images

Those research efforts were led by Robert Fraley, a young, ambitious Ph.D. He’d joined the company in 1981 out of the biochemistry program at the University of California at San Francisco, where genetic engineering had effectively been invented several years before. Today, Fraley is Monsanto’s chief technology officer and, along with Grant, the company’s public face. He tweets and blogs and maintains a steady schedule of speaking engagements. He’s Monsanto’s voice on state labeling laws: “It would just create unnecessary cost and confusion. … We are absolutely supportive of voluntary labeling.” He’s also the chief cheerleader for projects such as the company’s research into how genetic technology might combat colony collapse: “A pretty cool example of using these very precise biological tools to target bee pests.” The son and grandson of Illinois farmers—a fact he is careful to mention—Fraley speaks slowly, in a cadence as regular as a furrowed field. And while he tries for a tone of disappointment when talking about the company’s opponents, his anger is not hard to discern.

“I’m always amazed that critics can figure out some simple sound bite to point out how all these things are bad and wrong, and that there’s a better way,” he says. “Show me that better plan for improving yields and doubling production to meet demand for food, and we’ll probably be doing research on it.” He rattles off studies demonstrating that Bt crops have reduced the use of pesticides and that Roundup Ready technology has allowed many farmers to stop tilling for weeds, increasing yield and reducing soil erosion and water loss. He doesn’t dwell on the fact that those gains have been reversed somewhat in recent years, as insects begin to develop resistance to Bt proteins and as the widespread use of glyphosate has led some weeds to evolve resistance to it as well.

The company has sued farmers, a practice that accounts for much of its reputation as a corporate bully

For Monsanto, the introduction of a new trait, including research, development, and regulatory approval, typically takes a decade and costs about $100 million. The company is notoriously vigilant about that investment. It sends investigators to test farmers’ crops to see if they’re using its seeds without paying for them—either by getting them from a friend or replanting seeds saved from the previous year’s crop. There is a toll-free number to report “seed piracy.” Even before biotech seeds came on the market, corn farmers tended not to save seeds, since store-bought hybrids delivered higher yields, but the technology agreement farmers sign when buying Monsanto’s biotech seeds forbids them from doing it.

The company has sued farmers, a practice that accounts for much of its reputation as a corporate bully. Monsanto says these suits are rare—250,000 American farmers buy its seeds every year, and since 1997 it has sued 145. Fraley argues that these are not farmers, organic or otherwise, whose crops are inadvertently pollinated by GMOs. They’re growers who intentionally try to get the benefits of GM seeds without paying the $40 or so extra per acre they cost. “We sue such a small fraction of our customers that, if you compared us to a software company or a pharmaceutical company, it would be trivial,” he says. “These are usually large growers who are trying to make money reselling seed or growing it.” In the cases that have gone through trial—most notably the 1998 case of a feisty Canadian canola farmer named Percy Schmeiser and a 2011 suit by the Organic Seed Growers and Trade Association—the courts have agreed with the company.

The size of Monsanto’s R&D apparatus—it has 30 research facilities and more than 250 breeding sites around the world—only underlines how much the science behind its products depends on a brute-force approach. The term “genetic engineering” implies a level of control that plant science has not yet attained. Mostly, the process involves taking bits of genetic material, inserting them into the DNA of a seed, seeing what sort of plant results, and repeating the process thousands of times until something useful happens.

Because genetic engineering is so expensive and time-consuming, the company uses it only for traits it has to bring in from other species. For everything else, an accelerated version of traditional breeding makes more sense. Monsanto researchers have sequenced the genomes of its major crop lines so that, rather than waiting for an entire generation of plants to grow to maturity, breeders can take samples from seedlings—using, in many cases, a hole punch to collect them—and test them for genetic markers associated with desired traits such as drought tolerance or stronger stalks. Monsanto breeders also use computer simulations to try out millions of virtual pairings.

Photo Illustration by 731; Corn, People: Getty Images (2); Background: iStock/Getty Images

The company has designed something it calls a seed chipper, a closet-size array of tubes and plungers that takes seeds—about one per second—and shaves off a tiny piece to test for genetic markers. It uses an optical scanning system to ensure that the embryo inside doesn’t get nicked. Plants are tested for traits before they’re even born. “You can run tens of millions of seeds through the lab that otherwise you’d have to go plant in the field,” says Sam Eathington, the company’s head of plant breeding. “You know, corn, you usually plant 30,000 an acre. So you can do the math, right? It’s a lot of land.”

Marker-assisted breeding has also helped Monsanto venture into the produce aisle. The company has begun selling seeds for its own brand-name fruits and vegetables, among them the Melorange, an extra-sweet cantaloupe, and the EverMild, a less lachrymose onion. The company’s breeding armamentarium has allowed it to get these qualities into produce quickly, without having to run the regulatory gauntlet and deal with the cultural baggage of a GMO. According to industry analysts, sales of the seeds have so far been disappointing. There are new products in the pipeline, though, among them a watermelon that, in the words of Kenneth Avery, head of Monsanto’s vegetable business, “almost crunches like an apple.”

Last October, Monsanto announced the $930 million Climate Corp. acquisition. In part an insurance company, Climate Corp. was started in 2006 in San Francisco by two Google[9] engineers as a way to draw on historical weather data to create more accurate, localized forecasts. The founders, David Friedberg and Siraj Khaliq, quickly realized that the business most dependent on the weather was farming and began using their software and the climatological data they’d gathered to offer a new kind of crop insurance. Climate Corp. policies have no claims process: If the company’s models show that the weather over a farmer’s field has been bad enough to hurt yields—too much rain or too little, daytime heat stress or an early freeze—and if that farmer has bought coverage to cover those events, he automatically gets a check.

“The first time I heard about Monsanto being interested, I had to ask, ‘What’s a seed company talking to a software company about?’ ” says Vinod Khosla, a venture capitalist and early investor in Climate Corp. Monsanto particularly liked the way the high-tech insurer used data to help protect farmers not only from poor weather but also poor decisions. For $15 an acre, Climate Corp. offers a set of software “advisors” that can tell a farmer what, when, and how deep to plant, whether to irrigate, which fertilizer to apply and where perhaps to reapply. “For a grower producing a corn crop in the U.S., he’s making somewhere between 40 and 50 decisions,” CEO Grant says. “And a lot of those are cascaded: If you made bad choices early, you live with them.”

Other agriculture giants have begun selling similar products—DuPont’s[10] Pioneer seed division and Deere[11] have formed a partnership to do so. In and of itself, helping farmers make better decisions is not a controversial idea. And yet Monsanto’s attachment to the concept has generated suspicion. “The more data they control, well, the more they’re going to control the farmers,” says Hans Herren, a Swiss agronomist who heads the sustainable development think tank the Millennium Institute and won the prestigious World Food Prize in 1995. (Last year, Fraley and two other pioneers of plant biotechnology won the award.) “So the farmers will go from being entrepreneurs to basically laborers for Monsanto.”

Climate Corp.’s privacy policy emphasizes that the company does not own a farmer’s data. “Your Information remains yours even after you provide it to us,” it reads. Information, however, is different from understanding, and the broader critique of both Climate Corp. and Monsanto is that they’re taking knowledge that once resided in farmers’ brains and centralizing it—some of it in seeds, some of it in software. Spears, the Illinois farmer, doesn’t pretend to understand the considerations that drive the recommendations he gets from his Climate Corp. software, any more than he pretends to understand the avionics inside his drone. “There are these yield curves that tell you you’ll get more bushels if you plant between this time and this time, but I don’t know how they come up with them,” he says. “I’m not a scientist.”

Technology has already dumbed down everything from flying an airliner to filing one’s taxes, and in so doing made those tasks safer and more efficient. But food feels different to many people. “You know, when this data-intensive system recommends you buy a certain seed, it’s going to be a Monsanto seed,” says the author Michael Pollan, a prominent critic of industrial agriculture. “So I have a strong objection to letting any one company exert that much control over the food supply. It depends on the wisdom of one company, and in general I’d rather distribute that wisdom over a great many farmers.”

Friedberg, Climate Corp.’s 34-year-old co-founder and CEO, is aware of this concern. He’s a lifelong vegetarian who will talk with little prompting about the environmental cost of meat and the great benefit of adding quinoa to North American crop rotations. He hadn’t heard many good things about Monsanto before he started negotiating with the company. What he realized, though, is that the best way to think about Monsanto is as a technology company. Its technology “just happens to take the form of a seed,” Friedberg says. “As I got to learn about it I was like, ‘Wow, this company is as innovative and as impressive as Google.’ ”

Photo Illustration by 731; Corn, People: Getty Images (2); Background: iStock/Getty Images

“Farmers make economic decisions that they believe to be best for their families,” he goes on. “They choose to buy Monsanto seeds because it makes them the most money. They may not like the licensing terms or the licensing agreement, because that’s not how they used to do business, but it’s the way that Monsanto can afford to invest a billion dollars a year in R&D on finding new genetic traits that can help farmers get more yield per acre.”

Friedberg exudes an implacable rationality—one of his favorite words is “flawed.” He says the fear and skepticism about Monsanto is based in large part on misinformation and has taken it upon himself to help change that. In late January he hosted a small dinner at his apartment, a triplex in the Pacific Heights section of San Francisco. He invited Fraley, Pollan, Khosla, and a few other activists and Silicon Valley executives and investors. Friedberg and his six guests had drinks around a fire pit on the roof, taking in sweeping views of the city and the bay, then sat down for a vegetarian dinner prepared by a former cook at Chez Panisse, the Berkeley restaurant and temple of organic, locavore cuisine.

By all accounts, the conversation was friendly. Some of the guests disagreed about the scalability of organic farming and the sustainability of current industrial farming practices, but there was also a consensus that there were instances—the creation of virus-resistant papayas, for example—where genetic engineering has brought clear benefits. “I mean, you know, there was a fair amount of back and forth between Robb [Fraley] and me, who disagree on many things,” says Pollan. “But it was cordial and interesting. And for me it’s a great privilege to get to talk to these people who make decisions that affect lots of people.”

Fraley’s recollection is similar. “Because I have spent so much time on the advocacy side and spent so much time wrestling with some of the critics, maybe one of the things I overlooked was how many people are in the middle,” he says. “And so that was exciting, and it was, for me, a small epiphany.”

The dinner went until 11:30, and afterward there was a round of e-mails, some with links to scientific papers people had mentioned. Pollan sent around a study showing that farms using organic methods, such as long crop rotations and limited chemical inputs, could outperform conventional industrialized ones. Friedberg read it; he thinks the research contains a number of “flawed assumptions.” Still, he’s planning to get Pollan over to the Climate Corp. offices and then out to Monsanto’s vegetable breeding site in nearby Woodland, Calif. As he puts it, “We’re going to try and keep the dialogue going.”

Agriculture Prices Slump After Emerging Market Currency Weakness – Bloomberg

Agricultural commodities fell to the lowest in almost one year as weakening currencies in emerging markets heightened speculation that farmers from Brazil to Indonesia will boost exports, adding to supplies.

The Standard & Poor’s GSCI Agricultural gauge of eight farm commodities including sugar, coffee and soybeans fell 2.3 percent by 5:10 p.m. in London, heading the lowest close since June 19, 2012. Nineteen of 24 emerging market currencies tracked by Bloomberg sild against the dollar by an average 3.2 percent in the past month.

Supplies of everything from soybeans to wheat are set to increase this year as planting rebounded following droughts in the U.S. and Russia in 2012. The global sugar surplus will be a record in the 12 months ending in September, the International Sugar Organization in London estimates. Weaker currencies make overseas sales prices in dollars more attractive.

“The currency moves made everything a little more bearish,” Kona Haque, an agricultural commodities analyst at Macquarie Group Ltd., Australia’s biggest investment bank, said in an interview in London yesterday. “Sugar and coffee are likely to see more selling pressure as so much of the exports come from emerging markets.”

Brazil is the world’s top exporter of sugar, soybeans and coffee, and the real is the second-worst performer of 24 emerging market currencies in the past month. Concern that the U.S. Federal Reserve will curb its bond-buying program has boosted the dollar, said Michael Henderson, an emerging markets economist at Capital Economics in London.

Indian Rupee

The South African rand, Brazil’s real, the Indian rupee and the Mexican peso have all depreciated more than 5 percent in the past month, while the price of arabica coffee tumbled 14 and raw sugar fell 4.1 percent in the period.

Supplies of agricultural commodities from sugar to wheat have been climbing as farmers boost plantings. Global cereals production will be a record 2.46 billion metric tons this year, while the forecast for oilseeds output points to a balanced situation, the United Nation’s Food & Agriculture Organization said today. The sugar surplus will be 10 million tons, ISO says.

“The size and speed of the recent falls in emerging market currencies have caught many in the market by surprise,” Henderson of London-based researcher Capital Economics said in a report e-mailed yesterday. “Concerns about a tapering of asset purchases by the U.S. Fed have led to a rush of outflows from emerging markets.”

Brazil’s Role

Brazil, the world’s leading sugar, coffee and soybean exporter, boosted shipments of the three commodities by more than 10 percent last month from a year earlier, data from the government and the country’s coffee exporters’ council showed. Coffee shipments from Indonesia’s Sumatra, the main growing region of the world’s third-biggest producer, surged 58 percent in May from a month earlier, the provincial trade and industry office said in a statement on June 3. The Indonesian rupiah, down 1.5 percent in the past month, prompted the central bank to unexpectedly raise its key interest rates yesterday.

Falling emerging market currencies are making it cheaper for farmers to expand output. The cost of producing soybeans in Brazil fell to $12 a bushel from $12.90 a bushel four months ago as the real weakened, according to Macquarie. That prompted the bank to raise its forecast for soybean production in the South American nation to 86 million tons from a previous estimate of 84 million tons, it said in a report yesterday.

“The falling real has already lowered the cost of production for soybeans,” Haque said. “The same impact will be true for sugar and coffee.”

To contact the reporter on this story: Isis Almeida in ialmeida3

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2


Record U.S. Soybean Crop Seen Extending Bear Market: Commodities

Stockpiles at the end of August 2014 will have gained 116 percent to 7.29 million metric tons in 12 months, according to the average of 30 analyst estimates compiled by Bloomberg.

U.S. soybean farmers are planting a record crop that’s poised to double domestic reserves and expand a global surplus after last year’s drought drove prices to an all-time high.

Narayanan: Asia Scrutiny of U.S. Wheat `Justified' 5:13

June 4 (Bloomberg) — Christopher Narayanan, New York-based head of agricultural commodity research at Societe Generale SA, and Bloomberg’s Alan Bjerga discuss Asian nations’ response to U.S. wheat imports after an unapproved and genetically modified strain was found in an Oregon field. They speak with Sara Eisen, Scarlet Fu and Tom Keene on Bloomberg Television’s “Surveillance.” (Source: Bloomberg)

Stockpiles (US09ESUS) at the end of August 2014 will have gained 116 percent to 7.29 million metric tons in 12 months, according to the average of 30 analyst estimates compiled by Bloomberg. U.S. production will jump 12 percent to 91.74 million tons, adding almost enough extra supply to feed India for a year. The U.S. government updates its estimates tomorrow. Jefferies Bache LLC expects November futures traded in Chicago to plunge 26 percent to $9.88 a bushel by Oct. 1, when harvesting peaks.

Soybeans, which rose to a record $17.89 during the 2012 drought in the U.S., are now in a bear market along with corn and wheat. The surge from as low as $4.985 in 2005 spurred farmers worldwide to add acreage, increasing supply and keeping the $1.14 trillion global food-import bill in check. Producers in Brazil and Argentina reaped the most soy ever in early 2013, capping a 54 percent expansion in combined output in a decade.

“We are going from a barren cupboard to abundant supplies in a very short time,” said Dan Basse, the Chicago-based president of AgResource Co., which sells its agricultural research to clients in 81 countries. “Seven years of extremely high prices has spurred global production that will lead to several years of rising supplies and lower prices.”

Top Commodity

While soybeans are now 26 percent below the record reached in September, the cost of supply for delivery before the harvest has been rising. The July contract rose 10 percent since the end of April, the most among the 24 commodities tracked by the Standard & Poor’s GSCI Index, which slid 0.3 percent. The MSCI All-Country World Index of equities fell 1.5 percent, and a Bank of America Corp. index showed Treasuries lost 2.3 percent.

July futures traded at a $2.08 premium to the November contract, up from $1.6375 on May 1. The gap may widen to $3 next month on prospects for a glut after harvests in the Northern Hemisphere, Basse said.

Global soybean production will jump 6.1 percent to a record 285.5 million tons this year, while demand rises 4.4 percent to 270.18 million, according to the U.S. Department of Agriculture, which updates its forecasts at noon tomorrow in Washington.

Brazil unseated the U.S. as the biggest grower in the last harvest, producing about 1.44 million tons more, USDA data show. That will reverse this season as rebounding U.S. output exceeds the 85 million tons that Brazilian farmers are forecast to collect in February, the USDA estimates.

Weather Risk

With the U.S. harvest still four months away and about a third of Midwest fields unplanted, unusual weather may yet limit output. In each of the previous two years, the USDA’s forecasts in June were higher than the final tally seven months later.

Wet, cold weather the past two months from North Dakota to Illinois is increasing risk of lower yields, said Gregg Hunt, an analyst at Archer Financial Services Inc. in Chicago. Planting is off to the slowest start since 1996, with 71 percent complete on June 9, compared with a five-year average of 84 percent, USDA data show. Unless there is drier weather farmers may decide to leave fields fallow, he said.

About 17.67 inches (44.9 centimeters) of rain fell in Iowa, the biggest U.S. producer, from March 1 through May 31, the most in state records that began in 1873. MDA Information Systems LLC in Gaithersburg, Maryland, said last week that late planting and rising crop-insurance claims will force the USDA to cut its output forecast.

Hedge Funds

Soybean prices jumped 7.9 percent in May, the biggest gain in 10 months, on concern that U.S. supplies will remain tight before the harvest. Hedge funds and other largest speculators boosted bets on a rally for four consecutive weeks and to the highest in almost seven months, U.S. Commodity Futures Trading Commission data show.

Farmers are holding onto inventories and costs for livestock feed are still rising, Joe F. Sanderson Jr., the founder of Laurel, Mississippi-based Sanderson Farms Inc., the third-largest U.S. poultry producer, told analysts on a conference call June 4. Soybeans are crushed to yield oil used for food and meal used in feed.

Supply may be disrupted by a strike in Argentina, where farmers plan to suspend trade for at least seven days, Eduardo Buzzi, the head of the Argentine Agrarian Federation, said in an interview with Radio Mitre on June 9. The growers are protesting tax increases, government policies and a lack of railways.

Lower Forecasts

Soybeans will average $11.75 in 2013-2014, 16 percent less than in the previous season, Deere & Co. (DE), the world’s largest agricultural-equipment maker, forecast May 15. The Moline, Illinois-based company was anticipating $12.50 in February. Rabobank International expects a fourth-quarter average of $11.75, or 11 percent less than now.

“The decline in prices in the second half of 2013 could be significant if weather conditions are near normal or even slightly unfavorable,” because output will jump, Goldman Sachs Group Inc. analysts said yesterday in an e-mailed report.

Worldwide soybean inventories will rise 19 percent to 74.04 million tons in the 12 months ending in September 2014, the biggest pre-harvest reserve ever, according to the average of 16 analyst estimates compiled by Bloomberg.

Price Cure

“The cure for high prices, as the commodities-market adage goes, is high prices,” Greg Page, the chief executive officer of Cargill Inc., wrote in a column for Bloomberg View on May 30. The Minneapolis-based company dominates U.S. grain handling along with Bunge Ltd. and Archer-Daniels-Midland Co. U.S. farm income rose 14 percent to $128.2 billion last year as prices surged and insurers made record payouts for ruined fields.

Global food costs retreated for the first time in four months in May, the United Nations’ Food & Agriculture Organization estimates. Prices are now 9.5 percent below the record reached in February 2011, the Rome-based agency says.

Rising prices for U.S. supply will drive more buyers to South America, said Doug Jackson, a vice president at INTL FCStone Inc. in West Des Moines, Iowa. Shipments from New Orleans cost $1.265 a bushel more than in Paranagua, Brazil on June 7, according to data from the USDA and Sao Paulo-based broker Ary Oleofar Corretora de Mercadorias. They were at a 15-cent discount a year ago.

Export Cancellations

U.S. exporters reported more cancellations than new sales in three of the past seven weeks and shipments are at their lowest for this time of year since 2004, USDA data show. China (US08COCN), the biggest buyer, imported 3.4 percent less in May than a year earlier and has been canceling purchases from the U.S. for delivery before Aug. 31 as it shifts purchases to cheaper supplies in South America. Brazil’s shipments were a record in May, customs data show.

“The pace of Brazilian exports is very strong and will slow demand for U.S. soybeans,” said Anne Frick, the senior oilseed analyst for Jefferies Bache in New York. “We have plenty of global supplies.”

To contact the reporter on this story: jwilson29

To contact the editor responsible for this story: Steve Stroth at sstroth


Coffee Exports From Indonesia Seen Slumping to Two-Year Low – Bloomberg

Coffee bean shipments from Indonesia, the third-largest robusta grower, are set to slump to the lowest level in two years as domestic processors boost purchases and the harvest drops because of rains.

Exports may fall 14 percent to 385,000 metric tons (6.42 million bags) from a year earlier, according to the median of estimates from seven exporters and a processor compiled by Bloomberg. That’s the smallest since 2011, according to data from the Central Statistics Agency. The crop may slide 10 percent to 595,000 tons (9.92 million bags), the survey showed.

Enlarge image Coffee Shipments From Indonesia Seen Plunging to Two-Year Low

Robusta coffee berries are collected in a basket at a coffee plantation in Tanggamus, Lampung Province, Indonesia. Robusta futures fell 12 percent in the past year and traded at $1,858 a ton on NYSE Liffe in London on June 7. Photographer: Dimas Ardian/Bloomberg

Indonesia's Trade Minister on Economy 2:25

June 10 (Source: Bloomberg) — Indonesia’s Trade Minister Gita Wirjawan talks about the government’s plan to pass a compensation package for the nation’s poor, the outlook for the economy and the prospects for foreign investments into the country. He spoke at the World Economic Forum on East Asia in Naypyidaw, Myanmar, on June 7 with Bloomberg Television’s Haslinda Amin. (Source: Bloomberg)

Enlarge image Coffee Shipments From Indonesia Seen Plunging to Two-Year Low

A worker spreads out harvested Robusta coffee berries to sun dry at a coffee plantation in Tanggamus, Lampung Province, Indonesia. Photographer: Dimas Ardian/Bloomberg

Fewer cargoes from Indonesia may slow the decline in prices of the variety used in instant drinks by Nestle SA and Kraft Foods Group Inc. Futures fell 17 percent from a five-month high in March amid a surge in supply from Vietnam and Brazil, the top growers. The crop in Vietnam may jump 13 percent as global coffee output outpaces demand for a second year in 2013-2014, says Volcafe, the Winterthur, Switzerland-based unit of commodities trader ED&F Man Holdings Ltd.

“Production will drop because of the weather and after we had such a big harvest last year,” said Sumita, head of Lampung chapter at the Association of Indonesian Coffee Exporters and Industry. “Local consumption is increasing and everyone is competing for beans,” Sumita, who only uses one name, said in an interview in Bandar Lampung on May 28.

Robusta futures fell 11 percent in the past year and traded at $1,837 a ton as of 9:03 a.m. on NYSE Liffe in London. Prices of the milder-tasting arabica coffee used by Starbucks Corp. dropped 19 percent to $1.263 a pound in New York.

Weaker Trees

In the higher areas of Indonesia’s southern Sumatra, the crop will decline by as much as 50 percent to average 1.5 tons per hectare because of heavy rains, said 63-year-old Sunyoto, who heads a group of 37 farmers. The main harvesting will start in mid-June, one month behind schedule, said Sunyoto, who migrated from Java in 1977 and started planting coffee 30 years ago. A bumper harvest last year weakened trees, he said.

“Big production is not always a good story for us,” said Sunyoto. “Some have to stop farming for a year as the trees need a longer time to grow buds and produce cherries again.”

Production in Indonesia will drop 10 percent to 10.5 million bags in 2013-2014, according to Volcafe. The crop will decline 5.5 percent to 9.165 million bags in 2013-2014, the U.S. Department of Agriculture said in a report dated May 15. A bag weighs 60 kilograms (132 pounds).

Local Demand

International Coffee Organization data showing higher shipments may mean output is more than estimated, said Andrea Thompson, the Belfast, Northern Ireland-based head of research and analysis at CoffeeNetwork, a unit of broker INTL FCStone Inc. Shipments in April were 600,000 bags, up from 561,448 bags a year earlier, according to the ICO.

“There are still some bullish reports about Indonesia,” said Thompson. “If you look at the ICO exports, the flow from Indonesia is strong. The signals are there that output has been underestimated.”

Demand for the crop is increasing from local processors. Consumption may total 2.58 million bags in 2013-2014, 53 percent more than three years ago, according to USDA data.

The industry is outbidding exporters for supplies, said Sumita from the association. Local processors were ready to buy robusta beans at 21,000 rupiah per kilogram ($2,109 a ton) on May 28, he said. Shippers were offering about 19,000 rupiah, said Sunyoto, who receives a daily text-message with prices from a foreign exporter on his mobile phone.

Daily Arrivals

Rains have delayed deliveries to Lampung warehouses, boosting the premium over international prices. Buyers were offering $135 a ton above NYSE Liffe for June/July shipments compared with $50 in April at the start of the crop year, said Moelyono Soesilo, a marketing and purchasing manager at PT Taman Delta Indonesia. Daily arrivals were 800 tons in the third week of May, compared with more than 1,000 tons year earlier, said Sumita from the association.

“Exports will depend on prices,” said Sumita. “We won’t curb shipments if prices are good, but we can see that supply pressure is very high from Vietnam and Brazil,” he said. About $2,200 a ton was the “ideal price” for exporters and farmers, he said. That’s 18 percent above the price on June 7.

To contact the reporter on this story: Yoga Rusmana in Jakarta at yrusmana

To contact the editor responsible for this story: James Poole at jpoole4