Broad Gate's strategy is anchored by several fundamental and long-term supply and demand trends:
Rising Global Demand for Grains and Oils
World population is forecast to grow from 6.5 billion to 9 billion people by 2050. To sustain that level of growth we will need to produce more food in the next 40 years than has been produced in the previous 10,000 years. Global per-capita income is also expected to triple over this time period and as incomes rise consumers always move away from low-cost vegetable and tuber-based diets toward more proteins and grains. These two trends, towards qreater quantity and quality, will be driving explosive global demand for grains and feeds for livestock and countries around the world. The countries that traditionally import these commodities will increasingly rely on production centers in Eastern Europe and Russia to fulfill their requirements.
Tightening Supply of Arable Land
Supply of arable land in the United States, Canada, Australia and the countries of the European Union is increasingly constrained by urban encroachment, land degradation and conservation. Now government bio-fuel mandates are placing additional demands for arable land in these areas. So there is intense competition for quality space and it is emerging precisely when the largest exporters are starting to feel the “new reality” of climate change and reduced supplies of fresh water.
Broad Gate recognizes this encroaching constraint on agricultural land and food supply. With over 121 million hectares of arable land and plenty of rainfall the countries of Eastern Europe and Russia are relatively unconstrained in their future productive power.
Increasing Demand for Healthy Grains and Oils
We live in a world now where more and more people are demanding higher quality food with respect to both health and food safety. Governments around the world are imposing stricter dietary guidelines* on food supply chains in a preventive effort to control health care costs. Food manufacturers are responding to this changing landscape by reformulating their products** in a manner that raises the content of “healthy grains” and reduces or eliminates the use of edible oils that research shows contribute to obesity, heart disease, and diabetes. As one of the largest producers of these healthy grains and oils in the EE/CIS Broad Gate adds to the ability of our buyers to innovate and build this kind of value along the supply chain.
Follow a Clear Product Methodology
Broad Gate management researches agricultural commodities to identify those that are likely to outperform the market over the long term. We then determine which growing areas of EE/CIS can provide a competitive edge in their production. It was through this methodology that the company recently chose healthy grains and oils as a market niche to develop.
Align Customer and Producer Needs
Broad Gate creates a mutually beneficial relationship between European oil buyers and large, progressive Eastern European and Russian farms. With Broad Gate, our producers gain access to high quality seed varieties, agronomic consulting and international markets and our buyers gain access to a reliable, tested and secured supply chain to accommodate the growing demand for high-oleic cooking oils.
Acquire Key Assets
The company is aggressively identifying and acquiring distressed ag-assets in EE/CIS countries that logically integrate its business lines and add to the company’s profitability. These assets include sub-performing land, farming operations, equipment fleets and grain storage and processing facilities in strategic areas.
Establish Operational Control
Using in-house expertise and the talents of our partners assets are developed through a detailed operational strategy uniquely tailored to the selected commodity and region. We then follow Western best practices with respect to field agronomy, crop planning and manure management and pay particular attention to the quality standards required by our customers throughout the growing season. The company maintains internal guidelines with respect to identity preservation, traceability and contamination avoidance.
Perform Quality Risk Management
Risk management is a part of each step we make: from initial product selection, land sourcing and assessment and qualification of producers to on-site production monitoring, harvesting and transport. We ask that our producers undergo the supply chain sustainability certification processes demanded by some of the largest food service providers in the world and make year-by-year improvements to meet quality standards. Every year we try to bring new farms into compliance before we place them into our production program.
Provide Sustainable Alternatives
Broad Gate strives to be a responsible player in the agriculture supply chain and our commitment is reflected in not only what we grow but how we grow it. The oils that the company produces are considered a substitute for palm oil in many applications. The growth of palm oil plantations has been a major contributor to deforestation and carbon emissions in vital, environmentally sensitive tropical regions of the world. Major governmental efforts are underway, particularly in the EU but also worldwide, to try and curb the use of palm and food producers are trying to source more high oleic oil but production volumes are limited by the traditional sources. Eastern Europe, Russia and some CIS countries provide an ideal climate, proximity to market, and limitless area for future growth of supply of these healthy alternatives to palm oil and Broad Gate has become one of the leading suppliers of these products to meet the needs of the food industry.