Pedro Nonay explores redefinition of global trade and transformation of finance paradigms Pedro Nonay's insights illuminate the evolving landscape of global trade, geopolitical influences, and technological advancements within the feed industry. From navigating the impacts of conflicts like the Russia-Ukraine war to advocating for technological innovation in agriculture, Nonay's expertise offers a comprehensive view of the sector's future challenges and opportunities.
Interview by: Cemalettin Kanaş
Pedro Nonay
Trade Consultant
Pedro Nonay, a seasoned veteran in the commodities trading sector, shared his insights with Feed Planet magazine on the sidelines of 15th International Feed Congress and Exhibition (TUYEM) held in Antalya, Turkey. With nearly 20 years at Cargill and 13 years at Louis-Dreyfus, Mr. Nonay has accumulated a wealth of experience in global trade. Currently, he is engaged in consultancy, advisory roles, and academia, advising companies at the board level and running an agro-commodities program for managers at IEB-Madrid. In our conversation, Mr. Nonay shared insights about his career journey, the impacts of the pandemic, the ongoing Russia-Ukraine conflict, and the future of the feed trade industry. Regarding the Russia-Ukraine conflict, Mr. Nonay described how it has reshaped global trade flows, introducing significant uncertainty and protective measures like food nationalism. He explained that this conflict is part of a broader geopolitical struggle involving emerging and existing global powers, affecting trade dynamics, food security, and policy regulations. He stressed, "This is not just a war; it is a battle within a larger geopolitical conflict involving emerging and existing global powers, particularly the U.S. and China."
Mr. Nonay also discussed the impact of political conflicts on agro-commodity trade, highlighting the industry's ongoing consolidation at a global level and the rise of regional champions driven by food security policies. He noted that the financial landscape is evolving, with challenges to the current financial model dominated by the U.S. dollar, potentially redefining global trade and finance paradigms. Concluding our interview, he highlighted the critical challenge of attracting new talent to the agriculture industry and the necessity of technological advancements to meet growing demands. Nonay passionately stated, "Technology is crucial in bridging the gap between population growth and food production.”
First of all, can you please introduce yourself to our readers?
Absolutely. I have been in the commodities trading industry for almost 20 years with Cargill, followed by nearly 13 years with Louis-Dreyfus. More recently, I was a shareholder in Solaris, focusing heavily on the Black Sea and Russian markets. After selling my shares shortly before the war started, I shifted to consultancy, advisory roles, and academia. I advise companies at the board level and also run a program for managers at IEB-Madrid in a Spanish university focused on Agro-commodities. I also organize trading seminars for international companies.
Academically, I hold a master's in sociology, a degree in political science, and a law degree. This academic background fuels my passion for teaching and sharing knowledge. I have significant experience in Turkey, having worked extensively in the region during my time at Louis-Dreyfus and Cargill, especially in the oil and grain flows sectors. It’s always a privilege to be here in Antalya for TUYEM, organized by the Turkish Feed Industrialists’ Association (TÜRKİYEMBİR), and to reconnect with industry professionals.
We have been witnessing and experiencing many global shocks within a very short period of time such as the COVID-19 pandemic, the ongoing Russia-Ukraine war, and the Israel-Palestine conflict. Let's start with the pandemic. What did it teach us about food, agriculture, and agro commodities?
The pandemic highlighted the critical role of the agricultural sector in the global supply chain. Previously, agriculture was often taken for granted, overshadowed by sectors like banking, finance, and technology. However, the pandemic brought agriculture into the spotlight, showcasing its essential role in feeding the population amidst disruptions.
People realized the strategic importance of agriculture, from farming and logistics to trading and storage. Companies quickly adapted to the new realities, demonstrating remarkable resilience. The pandemic taught us about the fragility of global supply chains but also about the industry's ability to adapt and maintain stability under pressure. Although some after-effects of the pandemic may be permanent, the experience has strengthened the sector’s visibility and importance.
The Russia-Ukraine war has significantly affected the grain market. How do you evaluate the current situation, and what are your predictions for the future?
The Russia-Ukraine conflict has reshaped global trade flows, introducing significant uncertainty and protective measures like food nationalism. This conflict is part of a broader geopolitical struggle, with roots dating back to Russia's annexation of Crimea in 2014.
The market's initial reaction to such geopolitical issues is often protective, leading to sky-high prices. However, over time, markets adjust to new normals. We are currently seeing new trade flows and a reshaping of global trade dynamics.
This is not just a war; it is a battle within a larger geopolitical conflict involving emerging and existing global powers, particularly the U.S. and China. The conflict underscores the importance of geopolitics in agricultural commodities, affecting trade dynamics, food security, and policy regulations.
GEOPOLITICAL CHESSBOARD SHAPING TRADE DYNAMICS
How do political conflicts like these affect agro commodity trade, and what changes do you foresee in the industry?
Political conflicts significantly impact agro commodity trade by altering trade routes, prices, and supply chains. The industry is undergoing consolidation at a global level, with larger companies growing through mergers and acquisitions. At the same time, we see the rise of regional champions, driven by food security policies and government encouragement.
Local players are also becoming stronger, filling the gaps left by global companies. This reshaping of the industry creates inefficiencies but is necessary for stability. Food security is a top priority, leading to policies that encourage local production and protect exports.
REDEFINING FINANCIAL PARADIGMS AMIDST THE DOLLAR DOMINANCE
Additionally, the financial landscape is evolving. With the growth of India, the strength of China, and the emergence of cryptocurrencies, we may see challenges to the current financial model dominated by the U.S. dollar. This period of instability could redefine global trade and finance paradigms.
TURKEY'S FEED TRADE PARADOX: BALANCING IMPORTS AND EXPORTS
In your presentation at TUYEM, you discussed the Turkish paradox in feed trade. Can you elaborate on this?
Certainly. Turkey presents an interesting paradox in its feed trade. About 56% of its imported agricultural raw materials are re-exported. Of these exports, 71% are attributed to the tolling model, particularly in flour wheat and chicken egg production, while 29% follow the transshipment model. This dynamic reflects Turkey’s strategic role in global agricultural trade, balancing between import reliance and export capabilities.
You also mentioned the concept of 'Just in Time' versus 'Just in Case' in supply chains. How does this apply to the feed industry?
The 'Just in Time' model, which focuses on efficiency and reducing inventory costs, faced significant challenges during the pandemic. The disruptions highlighted the need for a 'Just in Case' approach, where companies maintain buffer stocks to ensure supply chain resilience. In the feed industry, this shift means ensuring that supply chains can withstand shocks, maintaining food security even in times of crisis. This involves strategic planning and possibly higher costs, but it is essential for stability.
What are your thoughts on the energy transition and its impact on the feed industry?
The energy transition is a major paradigm shift, with an estimated $300 trillion investment required as per Mckinsey. This transition impacts the feed industry by driving changes in energy consumption patterns, influencing the cost and availability of inputs like fertilizers and affecting the overall sustainability of agricultural practices. Increasing biofuels consumption will impact on raw materials prices as well as will depress relative value of proteins for the feed sector. The industry must adapt to these changes by embracing new technologies and sustainable practices to remain competitive.
BRIDGING THE TECHNOLOGICAL GAP IN FOOD PRODUCTION
Do you have any final thoughts for our readers, particularly those in the feed industry?
It’s essential to respect and value the agriculture industry. Our biggest challenge is attracting new talent and adapting to technological advancements. Technology is crucial in bridging the gap between population growth and food production. We need to refine data into knowledge and translate that knowledge into action.
The agriculture industry must be seen as an attractive sector for young professionals. Embracing technology will help us meet the growing demands and challenges. The theory that population growth outpaces our capacity to produce food has been debunked by technological advancements, which continue to fill the gap. We must continue to innovate and adapt.