On Tuesday, French agricultural cooperative InVivo said that it wants to invest heavily in new farming techniques, to support pesticide-free food, and it is considering making bread, as it seeks new growth drivers after the sale of its animal nutrition unit.
InVivo, a grouping of around 200 farmer-owned cooperatives, is selling Neovia to US agribusiness giant Archer Daniels Midland in a deal expected to bring the French group €1 billion ($1.1 billion) to invest in other areas.
The sale is expected to close in the first quarter of next year and means that InVivo will no longer be present in cereal-processing.
Focus On Cereals
With grains' trading less profitable than in the past and cereals still the core of its cooperative network, InVivo will look at ways to develop other cereal products, like bread, particularly for Asia, chief executive Thierry Blandinieres told reporters on Tuesday.
"Asia is going to be the boom region for wine and for bakery goods," Blandinieres said, noting that InVivo was already testing a French food outlet, So France, in Singapore.
As part of an overhaul since 2014, InVivo has expanded its retail network, scaled back grain-trading, and entered wine distribution.
Neovia accounted for two thirds of InVivo's core earnings before interest, tax, depreciation and amortisation of €163 million in its 2017/18 year to 30 June.
EBITDA rose from €133 million in 2016/17.
Despite the sale of Neovia, InVivo aims to lift EBITDA back above the 2017/18 level within four years, helped by its Bioline farming division and expansion along the food chain, Blandinieres said.
Digital Tools
Bioline will use digital tools and natural pest control methods to help produce food free of pesticide residues, Blandinieres said.
With organic farming set to remain only a small part of farming, the key to meeting demand for sustainable food would be changing practices in mainstream agriculture, he said, noting that InVivo's pilot farms had recorded a 17% drop in pesticide use in the past decade, while yields increased.
However, Blandinieres criticised France's push to phase out common weed-killer glyphosate within three years, when the European Union has extended the product's licence for five years.
Bioline, which has a target to triple sales to €1 billion by 2025 and reach EBITDA of €100 million, is developing a platform approach to bundling digital services for cooperatives along the lines of online retailer Amazon, he said.
InVivo's group sales totalled €5.2 billion in 2017/18, down from €5.5 billion the previous year.
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.
