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BUSINESS
Wheat traders reel amid fears of worst famine since WW2
The last time Clive Ashdown
can remember wheat prices
shooting up as rapidly as they
have this year was during
another tragedy in Ukraine.
“After Chernobyl, the
market went berserk because
nuclear matter contaminated
water used to irrigate crops,”
said Ashdown at Essex-based
wheat, corn and barley trader
CW Grain, “but it was nothing
like this.”
Russia’s invasion of
Ukraine nearly 100 days ago
sent the price of crops
surging around the world.
Ukraine, a big exporter of
grain, is sitting on millions of
tonnes of food that it cannot
get out of the country. Those
crops are desperately
needed, not just to support its
battered economy, but to
feed developing nations
around the world,
particularly in North Africa.The UN has warned of a
crisis that could last years,
not from a shortage of food,
but an inability to get crops to
where they are needed.
“I think the sad truth is
that this is likely to be our
new normal. We will see a
long period of market
volatility and high prices that
will affect vulnerable
households around the
world,” said Laura Wellesley,
senior research fellow at
Chatham House, the think
tank. “I think we are looking
at the worst famine situation
since the Second World War.”
The vast majority of
Ukraine’s wheat, barley, corn
and sunflower oil was
exported out of ports at
Odessa and Mykolaiv. These
remain under Ukrainian
control, although they may
have sustained damage. The
problem lies in Russia’s
blockade of the Black Sea.
Last week it emerged that
Turkey was negotiating withJon Yeomans and
Laith Al-KhalafRussia and Ukraine to set up a
“grain corridor” for exports.
Russia suggested it would
allow safe passage of ships in
return for the easing of
international sanctions.
Others thought military
convoys could protect ships.
However, market experts
dismissed the likelihood of a
grain corridor succeeding.
“It’s all nice in theory, but
Russia didn’t turn
humanitarian overnight. It [a
deal] would come with
conditions, and I’d be verysurprised if the West had any
flexibility on reducing
sanctions,” said Richard
Buttenshaw, director of
grains at commodity trader
Marex. “We don’t think a
grain corridor is really likely.”
Russia’s co-operation is
only one problem. The Black
Sea has been mined by both
sides, with reports of drifting
explosives littering sea lanes.
It could take months to clear
shipping routes, though last
week Russia said it had de-
mined the waters outside the
captured port of Mariupol.
Commercial shipping into
Ukraine halted in February
after the Joint War Committee
at Lloyd’s of London listed
the region as high risk, which
sent insurance premiums
through the roof. A restart of
shipping would require
collaboration between
governments, insurers and
shipping companies, said
Richard Meade, editor of the
Lloyd’s List journal. “Even ifA shortage of Ukrainian grain is being felt in North AfricaBiggest wheat exportersRussiaCanadaUSFranceUkraine$10.1bn$7.1bn$7bn$4.8bn$4.6bnSource: Observatory for Economic Complexitythere is a political will, there
is a huge amount of red tape
that needs to be worked out
within the insurance markets
and the reinsurance
markets,” he said. “I think the
general consensus within the
insurance markets right now
is it’s not happening — not in
any hurry, anyway.”
Even if ships could return
to the Black Sea, sending Nato
vessels in to protect them
could escalate the conflict.
Ukraine has been ramping
up exports of grain via train
and road, but rail deliveries to
the West are hampered by the
need to change trains at the
border because of different
gauges of railway tracks.
Infrastructure, such as roads
and bridges, has been
damaged by bombing and
there is a shortage of diesel
and lorries.
Mike Lee, who used to
farm in the region and now
runs Green Square Agro
Consulting, said Ukraine’sfarmers would have to find
ways of storing wheat on their
land once the harvest begins
in July. “The real problem is
going to be in September and
October when the corn and
sunflower harvest starts, if
that wheat hasn’t been
shifted along,” he said.
With the prospects of
exporting Ukraine’s bountiful
harvest looking bleak, other
grain-producing nations maybe able to step into the
breach. Lloyd’s List noted
that some shipments of
wheat from Brazil had been
diverted from the Far East to
North Africa to make up
some of the shortfall.
The world’s biggest
exporters of wheat are
Russia, which continues to
ship grain, the US, Australia
and Canada. China and India
are also big growers of wheat,but mainly for domestic
consumption.
Dry weather in many parts
of the world has exacerbated
supply problems. In March,
India announced plans to
ramp up exports of wheat to
fill the gap left by Ukraine but
this month it reversed course
because a heatwave damaged
its harvest. Farmers globally
are constrained by the rising
cost of fertiliser, which has
been pushed up by the war.
Wellesely expects that as
climate change accelerates,
disruptions to global supply
will become more frequent.
“All the major wheat-
producing regions are
expecting a hit to their
harvest because of dry and
hot conditions,” she said.
Ashdown, of CW Grains,
said the only response was to
spread the pain down the
chain. “Unfortunately, the
costs get passed on to our
buyers, which then get
passed on to the consumer.”T
o Peter Cowgill’s great disap-
pointment, work commit-
ments meant he had to drop
out of a lads golfing trip to
Spain last week. Instead, the
executive chairman of JD
Sports flew to Tel Aviv for
meetings with local managers
before returning on the red
eye for the board meeting that
would prove to be his last.
Last Wednesday afternoon, in the
boardroom of JD Sports’ Bury headquar-
ters, the company’s non-executive direct-
ors voted unanimously to boot Cowgill off
the board, abruptly bringing the curtain
down on one of the biggest corporate suc-
cess stories of the 21st century.
Since he walked into JD’s Bury office in
2004, Cowgill has transformed a strug-
gling sportswear chain into a £6.2 billion
athleisure powerhouse operating from
3,300 stores in 29 countries.
But as JD churned out record profits
and Cowgill conquered new markets,
boardroom discontent simmered. Argu-
ments raged over how and when JD’s
hard-nosed kingpin should end his reign.
Meanwhile, Cowgill’s reckless behaviour
and casual approach to aspects of corpo-
rate governance left non-executives
dumbfounded. Last Wednesday, the dam
burst. This is the inside story of how the
King of trainers lost his crown.C
owgill, 69, qualified as a chartered
accountant before setting up his
own practice. Early clients of Cow-
gill Holloway, which operated from
an office above a barber’s shop in
Bolton, included Cowgill’s friend “Big
Sam” Allardyce.
Last week’s dramatic ousting was the
third time Cowgill has been chucked out
of JD Sports. He was hired by John Wardle
and Dave Makin — the J and D in JD Sports
— as finance director in 1996 before being
fired, re-hired and fired again. When the
chain hit trouble in 2004, Cowgill was
asked to return once more. The gruff Lan-
castrian never looked back.
The foundation of JD’s huge success
has been cosying up to Nike and Adidas,
the two dominant forces in the sports-
wear industry, who deemed JD deserving
of their most “hyped” trainers. The ath-
leisure phenomenon, and particularly
the soaring popularity of trainers, played
right into JD’s hands.
In the City, Cowgill developed a repu-
tation for having a sharp mind and an
iron liver. “On a night out he would
always say ‘This is my last drink... and
it’s your fault if it isn’t!’ said one source
who has known him for years. “He has
this knack of being able to go out until
2am and then get up at 6am and carry
on working like nothing had hap-
pened.” Cowgill’s favourite tipple? A
Bacardi and coke.W
hen Helen Ashton took her
seat on JD’s board last Novem-
ber she strolled right into a PR
nightmare. Over the previous
weekend The Sunday Times
published damning pictures of Cowgill
and Footasylum chief executive Barry
Bown chatting in a black Mercedes,
parked on an industrial park near Bury.
The images were hugely embarassing
for the company and Cowgill personally.
After a lengthy review process the Com-
petition & Markets Authority (CMA) had
blocked JD’s £90 million acquisition of
Footasylum, meaning the two companies
were banned from sharing confidential
or commercially sensitive information.
After an investigation, the CMA found
Cowgill and Bown had exchanged com-
mercially sensitive information and that
both companies had “severely deficient”
safeguards to prevent it happening.
Phone records had also been deleted and
JD was fined £4.3 million.
Cowgill’s decision to hold the meeting
is understood to have left some board
members speechless at his poor judg-
ment and was viewed in the boardroom
as a symptom that JD was not being run in
a way that was commensurate with its
blue-chip status. Cowgill was still operat-
ing a global empire from an office in Bury
that Makin chose 40 years ago — princi-
pally because it was close to his house.
Ashton, as audit chairman, kicked off aPeter Cowgill’s ousting from JD Sports brings an era
of huge profits and controversy to an abrupt end
review
of JD’s gov-
ernance, risk
controls and
compliance. A
source close to Cow-
gill denied claims he did
not support the review,
arguing that failing to do so
would have served only to can-
cel out JD’s successes.
“What’s the point working your bol-
locks off to score a load of goals up front if
you keep leaking them at the back? There
are a lot of analogies you can draw from
football — and that’s one of them,” the
source said.
In April last year The Sunday Times
learned that JD’s board, at the behest of
investors, was planning to split the role
of chief executive and chairman amid
concern that too much power was vested
in a man who once described his hobbies
as “blondes and Barbados”. At the time,
Cowgill heavily played down the
prospect of such a move, laughing off the
idea that he would be “stepping back” or
that investors were pushing for change,
joking that “when I go to see sharehold-
ers, we get the brandy glasses out!”.B
ehind the scenes, JD’s kingpin
became embroiled in a power
struggle. When asked by the board
whether he wanted to be chairman
or chief executive, Cowgill initially
clung to the idea of staying as chairman
and working with a new chief executive.
He then flipped by offering to move to
chief executive, prompting the board to
search for a non-executive chairman.
Some board members perceived Cow-
gill’s flip-flopping as a brazen attempt to
cling on to power, believing he would
sanction the appointment of a “token
patsy” only as chairman. And the best
candidates for chief executive, they said,
were not willing to do the job with
Cowgill looming over their shoulder.
On the contrary, Cowgill’s allies claim
it became clear during the recruitment
process that the candidates for chief
executive would need to be coached and
JD’s main man only wanted to ensure a
smooth transition. Cowgill has been
angered by reports that he objected to
the roles being split and is understood to
be taking legal advice with a view to suing
his former employer for defamation. A
friend said Cowgill was taking the allega-
tions “very, very seriously”. Amid the
running boardroom arguments Cowgill
threatened to resign multiple times.
“Peter’s view was that if he went the
share price would drop by 30 per cent...
he wanted the drama. It was almost like
he wanted the business to stop because
he wasn’t here,” one source said. A
source close to Cowgill said he threat-
ened to resign only when he felt his voice
was not being heard.
In the meantime, the City was left
wondering why a company in such prime
shape was unable to find a successor for
Cowgill. Then in January, Cowgill, under
pressure from his wife to do some inher-
itance planning, sold half his stake for
£21 million, sending JD’s shares tumbling
by 6.5 per cent. On Friday, they closed at
120p after falling 44 per cent this year.
Amid pressure from shareholders, JD
had refreshed its board with fourHow the
King of
Trainers
lost his
crown
SAM
CHAMBERS
ILLUSTRATION: TONY BELL