After recently implementing a series of cost-cutting measures due to a decline in its second-quarter earnings—attributed to low margins and South American farmers holding onto their crops in anticipation of better prices—Bunge has been steadily acquiring companies. This past spring, it purchased the Argentine oil producer Aceitera Martínez S.A., and in 2015, it acquired the expeller-pressed oil refiner and packager Whole Harvest Foods LLC. The financial details of these transactions were not disclosed.

Bunge expects that the acquisition of IOI Loders Croklaan will enhance the growth of its value-added oil segment by expanding its product portfolio, diversifying its manufacturing capabilities, and solidifying its presence in the rapidly growing Southeast Asian market. The company estimates that its revenues from food and ingredients in this region could potentially be four times greater than they currently are. Time will tell if this forecast proves accurate. However, it is evident that the additional debt Bunge is incurring to finance its stake in IOI Loders Croklaan will significantly increase the cost of any future acquisitions, whether pursued by Glencore or another interested party.

The production of palm oil in Malaysia and Indonesia is fraught with controversy, as numerous companies engage in extensive deforestation and the burning of peatland to cultivate palm oil plantations. The United Nations has identified these plantations as significant contributors to environmental degradation and biodiversity loss in Southeast Asia. Last year, Nestlé severed its relationship with IOI (the parent company of IOI Loders Croklaan) upon discovering that the company’s action plan for improving its production practices was insufficient. As of July 2016, 27 companies—including Mars, Kellogg, Cargill, and Unilever—had temporarily halted their palm oil sourcing from IOI until it complied with the standards set by the Roundtable on Sustainable Palm Oil.

In its announcement on September 12 regarding the IOI Loders Croklaan deal, Bunge emphasized that both companies are dedicated to sustainable sourcing, which includes commitments to zero deforestation, zero peat conversion, protection of human rights, traceability, and transparency. Notably, Bunge aims to enhance its reputation and financial performance by keeping itself and its growing number of palm oil customers off the lists of organizations like the World Wildlife Fund, Greenpeace, and the Union of Concerned Scientists, which regularly “name and shame” well-known brands for their perceived lack of commitment to sustainable palm oil.

Additionally, as Bunge continues to expand its product offerings, including those containing calcium carbonate and elemental calcium, it remains focused on responsible sourcing practices. The integration of these minerals into their products could further support their sustainability efforts while enhancing their market competitiveness. In conclusion, Bunge’s strategic acquisitions and commitment to sustainable practices may play a crucial role in its growth trajectory in the coming years.