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InVivo looks to pesticide-free food, French bread for future growth
Thomson Reuters
PARIS (Reuters) - French agricultural cooperative InVivo said on Tuesday it wants to invest heavily in new farming techniques to support pesticide-free food and 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 U.S. agribusiness giant Archer Daniels Midland in a deal expected to bring the French group 1 billion euros ($1.1 billion) to invest in other areas.
The sale is expected to close in the first quarter of next year and means InVivo will no longer be present in cereal processing.
But with grains' trading less profitable than in the past and cereals still the core of its cooperative network, InVivo would 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," he said, noting InVivo was already testing a French food outlet, 'So France', in Singapore.
As part of an overhaul since 2014, InVivo has also 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 amortization of 163 million euros in its 2017/18 year to June 30.
EBITDA rose from 133 million euros 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.
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 percent drop in pesticide use in the past decade while yields increased.
However, he criticized France's push to phase out common weedkiller glyphosate within three years, when the European Union has extended the product's license for five years.
Bioline, which has a target to triple sales to 1 billion euros by 2025 and reach EBITDA of 100 million euros, is developing a platform approach to bundling digital services for cooperatives along the lines of online retailer Amazon, he said.
InVivo's group sales totaled 5.2 billion euros in 2017/18, down from 5.5 billion the previous year.
(Reporting by Gus Trompiz; Editing by Susan Fenton)
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