The Future of Food

May 03, 2016

Carlson School of Management – First Tuesday Speaker Series
David W MacLennan, Cargill President and Chief Executive Officer

Good afternoon.

It’s great to be at the Carlson School of Business. Cargill has a proud history of partnering with the University of Minnesota.

Today, as you enjoy your lunch, I’d like to talk about the future of food. I’ll walk through:

  • The trends,
  • The tradeoffs, and
  • The takeaways for you as business leaders and consumers

It’s no secret. When it comes to the future of food, we are seeing real disruption.

Climate change is impacting farmers’ fields and consumers are voting with their values.
As business leaders, many of you are experiencing the same kind of disruption in your industries.

At Cargill, we are focused on being the global leader in nourishing people. We take that very seriously.

Food is not like most other goods. It is more than just a commodity. Food is about connections…

  • It’s about our ties to farmers and the land.
  • It’s the way we stay connected to family and friends – the people we share our meals with every day.

For this reason, the future of food is increasingly being negotiated in fields, in the halls of government and over dinner tables…or in this case lunch meetings.

As a leader in global agriculture, Cargill is facing into a bold new reality with open eyes and optimism.

As a sector, we have a unique challenge: We need to sustainably nourish 9 billion people by 2050.

This is one of the grand challenges of our generation: to address the connections between food security, sustainability and nutrition.

Land grant, research institutions like the University of Minnesota will play a critical role in addressing this challenge. As private-sector partners based here in the Twin Cities, we are proud to be working with you and others to advance lasting solutions.

At Cargill, we work every day to nourish people while protecting the planet. We have 149,000 employees in 70 countries. While we are a big company, we are not a household name.

That’s partly because we are privately owned. It’s also because we are primarily a business-to-business company.

People often mistake us for a seed company, or a manufacturer like General Mills.  What most people don’t know is that for 151 years, Cargill has been working with small - and large-scale farmers around the world. Today, we advance global agriculture from farm to fork.

As we manage our business, we stand at the intersection of food security, sustainability and nutrition.

These issues are connected and often involve challenging tradeoffs. But because Cargill has a global footprint and deeply local connections, we know an important truth:

If we don’t sustainably nourish the planet today, we risk being judged by history for taking too long to act.

Food security, sustainability and nutrition are difficult and complex issues, but that doesn’t make them any less important.

It’s time to act now, so that we can build a more sustainable, food-secure future.

I’ve been in this industry more than 30 years. I wouldn’t have guessed that one day you could get kale in a McDonald’s breakfast sandwich in Canada.

Things are changing! Let’s tackle some of the trends when it comes to our food.

At Cargill, we know people want to know what’s in their food.

We support the U.S. government’s rules for labeling that provide information on nutrition and safety. We are also working with the Non-GMO Project and are eager to advance trustworthy, voluntary labeling that is consistent across product claims and geographic borders.

Cargill is working with customers like General Mills, Nestle and Campbell's:

  • Use other Cargill ingredients to achieve their nutrition priorities, or
  • Create completely new products, with the help of our R&D team

In fact, Cargill customer Dannon recently announced it will transition to non-GMO animal feed for several of its dairy lines by 2018. We look forward to supporting this effort.

This is about nutrition and recognizing people want clear information so they can make informed choices.

I’d like to take a real-time poll on ingredients.

Raise your hand if you would like to eat something right now that contains carrageenan.

OK, that’s about 15 people.

Now raise your hand if you’d like to grab a beer with me at Boom Island Brewery right here in Minneapolis. (Majority of the audience raised their hands.)

Wow. That’s quite a gap. What’s noteworthy is that carrageenan is contained in many beers.

It’s a natural ingredient with a really unfortunate name.

You might expect seaweed to appear on a sushi menu, but it is also the source of carrageenan. This product is used as a thickener and by craft brewers to clear up their beers.

Some of you may have rocked babies and given them formula. Carrageenan is one of the ways to ensure all the nutrients in formula don’t sink to the bottom of the bottle. It keeps products from separating.

But recently, online critics confused carrageenan with poligeenan, which has industrial use and is not used in food.

This issue picked up momentum and Cargill worked to set the record straight.

We reiterated that carrageenan is both safe and made from natural sources. It is GMO-free.

The formula is really, very simple – it’s just seaweed, using heat, filtration and salts. You could make it in your own kitchen.

The seaweed for carrageenan is harvested by tens of thousands of family farmers, mainly in Asia, Latin America and Europe. Cargill sources from these farmers. The unwarranted blowback against carrageenan has had immediate and unintended consequences on these farmer’s incomes and lives.

This is evidence of the linked nature of our food economy.

Now let’s talk about GMOs, but let’s start with a little late night TV.
(Jimmy Kimmel “What is a GMO” video)

My point in sharing this clip isn’t to ridicule people, but to make a point: Consumers make choices based on values and lifestyle.

As consumers increasingly seek out food that aligns with their values – organic and non-GMO products are expected to experience 12 percent market increase over the next five years.

In a market with flat growth, these premium supply chains and alternatives are important opportunities. We are exploring non-GMO supply chains to address customers’ values.

What Jimmy Kimmel highlights is that we don’t have enough honest, detailed discussion about GMOs.

I am not here to make a pitch for the technology; we work with customers on a wide variety of approaches. However, the nuances of GMOs can’t be reduced to 140 characters on Twitter and we need to consider the intended and unintended consequences.

Let me give you an example. The Wall Street Journal recently reported on a controversy that erupted on another campus – Iowa State University.

Essentially, students were invited to participate in research and were offered $900 to eat bananas that were genetically modified to deliver higher levels of Vitamin A.

Vitamin A deficiency, which can cause blindness, is a devastating problem across low-income countries. In Uganda, roughly 40 percent of children under 5 are vitamin-A deficient.

On campus, however, a petition opposing this research gathered 57,000 signatures. The opponents argued that the vitamin-fortified bananas were an attempt by the private-sector to control the seed market.

When debates like this get played out in Uganda, the view is often different. The Journal piece quoted the head of Uganda’s National Banana Research Program.

It read:
They sound like they’re trying to save an organic garden in Berkeley ... It’s one thing to read about malnutrition; it’s another to have a child who is constantly sick, yet [unable to] get immediate … medical care.
If they knew the truth about the need for vitamin A and other nutrients for children in Uganda and Africa, they’d have a change of heart
.”

At Cargill, we respect the rights of governments and consumers to choose what’s best for them. But we fundamentally believe that people should be given a choice. Particularly when it could mean better health and more productive future for hundreds of thousands of children and families.

When it comes to GMOs and nutrition, we are seeing science intersect with values. That’s a complicated meeting point.

As an industry, we need to acknowledge that both science and values drive decisions.

So we are trying to share information, build trust and ensure transparency.

We also engage with critics to find the right place for GMO and non-GMO solutions in addressing complex global challenges.

Cargill anticipates we will continue to source GMO crops –the yield and sustainability benefits are too compelling to ignore. But we are also excited about value-added opportunities presented by specialty supply chains, like non-GMO.

Whether GM or non-GM, our focus will be on ensuring access to safe, sustainably-sourced, affordable food for all. This more nuanced discussion of all the alternatives is critically important if we are going to nourish a growing population.

Let’s dig in further to the tradeoffs when it comes to addressing food security, sustainability and nutrition.

As we look at sustainability, we have identified four areas where we know we can use our size and market presence to have an impact – land, climate, water and farmer livelihoods.

I was proud to stand with governments, NGOs and the other private-sector leaders to endorse the U.N. New York Declaration on Forests, pledging to end deforestation. That’s important because of its impact on land, but also on climate.

A few weeks ago I was visiting our business in Brazil. As I flew over the Amazon, I saw lush green landscape, but every so often the green was interrupted by farm fields. It was a powerful picture of what we are working to protect. I was reminded that we have one chance to get this right or lose the biodiversity of the Amazon River basin forever.

We know around the world and right here in Minnesota, farmers are resilient entrepreneurs who are increasingly doing more with less.

If we’re going to nourish people today and protect our ability to provide for future generations, we need to work with farmers around the world to end deforestation. It’s the right thing to do.

But how do these commitments square with our discussions on GMOs?

The truth is, we can feed the world without relying on GMO technology. We just shouldn’t.

The consequences for land use, water use and greenhouse gas emissions are just too high.

Purdue University is no U of M, but they recently produced some important data on the impact of stepping back from GM crops.

Here’s what they found:

  • Corn yields decline by 11 percent on average.
  • Soybeans lose 5 percent of their yields.
  • Cotton loses nearly 19 percent.
  • To offset the yield declines, more than a quarter million acres of forest and pasture land would have to be converted to croplands. Just in North America!
  • That is roughly the equivalent of 300 Central Parks.
  • And every acre of forest or pasture converted to farmland increases carbon in the atmosphere, contributing to global warming.

So that’s the trade-off: there is nothing wrong with non-GMO, but given the other pressures we’re dealing with – mainly from population growth and climate change – they carry their own price tag.

Another example of trade-offs in our industry is cage-free eggs.

McDonald’s, a key Cargill customer, recently announced they are transitioning to 100 percent cage-free eggs. That’s a trend that is shifting the industry.

The fact of the matter is, you can have your eggs cage-free, but – again – there are tradeoffs.

Just look at the flow chart from Wired Magazine. It’s probably too complicated for you to read from where you’re sitting, but that’s exactly the point. A farmer who chooses to go cage-free faces a series of daunting choices:

  • Do you build a new barn or retrofit an existing one?
  • And, if you’re making capital investments that will take 20 years to break even, how do you know that cage-free eggs are a trend that will hold while you’re still paying for your new barn?

As you can see at the bottom of the chart, it all comes at considerable risk for the farmer.

Don’t get me wrong. I’m not here to speak out against cage-free eggs. In fact, Cargill has worked closely with McDonald’s to develop hen-housing systems and cage-free supply chains for years, and we’re always concerned about animal welfare.

But what I do want to make clear, is that there are trade-offs involved that we have to weigh carefully and work with farmers to manage.

These are difficult decisions, and at Cargill, we don’t make any of them lightly. As business leaders and consumers, neither should you.

Let’s talk through a few key takeaways.

First, pick the issues or values that matter to you most.

The choices are complex, leaders need to pick their issues, but also avoid limiting choices for the wider world.

You might opt to buy Cargill produced non-GMO chocolate for a premium price. But we shouldn’t summarily dismiss GM alternatives that conserve environmental resources or help farmers adapt to climate change.

Next make informed choices.

We know consumers want simplicity, but as business leaders we all operate in increasingly ambiguous and unpredictable landscapes.

At Cargill, we operate complex global supply chains. Based on this work, I can tell you one thing with unwavering certainty – there is no silver bullet.

As leaders in the future of food, the mandate isn’t ‘either/or,’ its ‘both/and.”

There is room for companies of all sizes to be a part of the solution. A new, nimble approach is required to manage this complexity.

We cannot afford to dismiss approaches or ostracize ourselves on separate sides of issues. Not when the stakes are this high.

Finally, spread the word. Talk about the tradeoffs and complexity of our global food system.

Today, we have new and unprecedented access to information. But all too often, the most incendiary voices get the most air time.

We can and must do better.

The future of food is complex and requires a more informed and balanced discussion. We need new voices to share this story and work with large and small-scale farmers to build a more sustainable, food-secure future.

At Cargill, we are working to be the most trusted source of sustainable products and services for our customers. We are inspired as we look toward the future.

Together, we can address the intersections of food security, sustainability and nutrition, but it is going to require a new approach. We need to deploy the kind of innovation that has exemplified this University, this state and Cargill for more than a century.

Let’s get to work. Let’s build the future of food, together.

Thank you. I look forward to taking your questions.