Greg Page serves as chairman and chief executive officer of Cargill. He was elected chairman of the board on September 11, 2007, and CEO on June 1, 2007. He continues to hold the office of president, a position to which he was elected in June 2000. He was elected to the Cargill board of directors in August 2000.
Page joined Cargill in 1974 as a trainee assigned to the Feed Division. Over the years, he held a number of positions in the United States and Singapore. Page worked with the start-up of Cargill’s poultry processing operations in Thailand, the beef and pork processing operations of Cargill’s Excel subsidiary in Wichita, Kansas, and the company’s Financial Markets Group in Minneapolis.
Page serves as a member of Eaton Corporation’s board of directors. He also serves as chair of the board of Big Brothers Big Sisters of America. Page received a bachelor’s degree in economics from the University of North Dakota. He was born in Bottineau, North Dakota.
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This Conversation took place between Greg Page and Al Erisman in Greg’s office, Wayzata, Minnesota, on January 21, 2010.
Ethix: How would you describe Cargill — its mission, products, and reach?
Greg Page: Our purpose is to be the global leader in nourishing people. It’s very crisp and straightforward for a company whose roots are deep in agriculture. Founded in 1865, Cargill is privately owned. The family members have been committed, patient, private capital providers for nearly 150 years.
Our portfolio of business has broadened over the years, because for many of our family owners this is the only asset they have. We don’t consider ourselves a conglomerate; we consider ourselves an integrated enterprise and operate as such. Our big businesses are around food and agriculture.
As factors like energy in agriculture have become more prominent, our risk-management business has grown, and we trade significant amounts of energy including coal, electricity, natural gas, and all the various petroleum products. We trade iron ore and steel products because global trade in foodstuffs is dependent on ocean-borne trade and that is very much influenced by all of these commodities interacting with each other.
Internally, we ask our employees to focus on collaboration and connectivity — how the insights that we learn in one part of our business affect another. In part, that is how we fulfill our vision to be the global leader in nourishing people.
How did you create an environment that builds collaboration across divisions? Many companies struggle with this because they create profit centers that effectively compete with each other.
One is by constant messaging from senior leadership to say it is expected. The second is by what I call enlightened self-interest. When people benefit from an insight, they receive from someone else, then we tell stories about it. There is an obligation to pass the story forward and it grows. To the extent a culture is a collection of your stories and the way people understand those stories, we celebrate those successes.
“Balancing the needs of financial returns and the needs to be responsible corporate citizens is never going to go away.”
Last week, I was traveling and met with one of our financial trading businesses that benefited enormously from an insight they received from a person who runs one of our steel-processing plants. The culture caused this to happen. The financial trader slowed down for a minute and asked the question: “Who else in Cargill might have another approach to this issue?” And he made a call to the person in the steel processing plant, which resulted in more than a million-dollar improvement in the outcome of the trade. I would not have expected that a financial trader would benefit from talking to the manager of one of our steel service centers.
And how did he find that person in the steel center? Do you have a knowledge system or is it a “good old boy” network?
We have a company made up of an enormous number of long-serving employees. As our internal email system has improved, we now have an online directory called WeConnect. On this site, you can see people’s roles and responsibilities, who their supervisors are, and how they fit within the organization. We don’t have an organization chart at Cargill. We have worked hard not to create one. But we have found that people need to know the key names in the company.
You can go to our internal website and see who the business leader is in an area. If your intention is to be collaborative, you only need to send an email to someone who knows the right person. You don’t necessarily need to send it to the right person to connect and collaborate.
Benefits of Being a Private Company
The opportunities to run a private company, away from the view of Wall Street, would seem to have advantages. It gives you some flexibility to deal with issues in a way that is perhaps different from a publicly traded company.
I am always careful to not disparage any form of ownership or organizational hierarchy. But while I have worked here my entire career, I have regular conversations with people who lead organizations that have public capital structures. We have the opportunity to have long discussions about the behavioral norms and the expectations of our owners. I think having private capital is not sufficient.
We talk about the three Ps — patient, private, and permanent — and we have the benefit of all three. That’s when you really get to the heart of the benefits of our ownership model. It is the persistence and the patience of the capital that has allowed the company to grow. Our owners don’t have an exit in mind.
You are not working against a timeline or a ticking clock. So, I think you need all three elements of private capital, permanent capital, and patient capital. Out of that comes a good discussion about what businesses can be in the portfolio and what behaviors are expected from all of the associates in the company.
Does this enable you to take a longer-term view of things?
I believe it does, but clearly there are public entities that take very long-term time horizons as well. Some companies have big invention agendas — pharmaceutical companies are an example — with timelines that are every bit as long as Cargill’s. So I don’t think that is the unique part. It is the nature of the conversation.
We explain what we are doing every quarter. We have conversations with our owners, but I think that’s far different than explaining or justifying. I know the amount of time that we spend on it is less than in a public company and the nature of the conversation is different.
How does this business model affect accountability? In a publicly traded company, you are accountable to anyone who buys your stock.
History would tell you that private companies have a greater risk of a paternalism that’s unhealthy in its nature. Paternalism has been disparaged as inherently bad and, like other things, when carried to excess it is. It can breed low expectations and a low sense of urgency.
Cargill has tried to balance the benefits of paternalism in its best sense with the needs for growth and competitiveness in order to attract people and pay them the salaries their performances justify.
How do you deal with tensions that are obviously there between financial returns now and financial returns in the long term?
I think every management team in every organization is confronted with these polarities: short term versus long term, centralized versus decentralized, the needs of individuals versus the requirements to have a corporate culture that has some norms.
Balancing the needs of financial returns and the needs to be responsible corporate citizens is never going to go away. You sit down with your owners, with your board of directors, and try to pick the spot that suits you. I read articles that often portray this as a single moment in time when an organization needs to confront this tension, but I don’t see it that way.
Is it continuous?
The polarity is there every morning when you come in. It’s the culture of the company made up of the sum of all of the decisions you make. For example, if philanthropic giving is the first thing to go every time our earnings dip, that decision will define the culture for us. I can say whatever I want, but our behaviors are what determine the generally held view of our culture.
The tension between the need for financial outcomes, for improvement in society, and for other stakeholders is always present. Boards of directors and management teams must strategically pick a spot that fits their values and is comfortable for them.
I feel privileged to be here because the family owners of Cargill have set that place and it’s a place that is easy for me personally to be proud of.
I have been reading about your industry, and there are critics of what you do. The tension painted by one author is a tension between less processing in food, which offers more nutrition but less profit, and more processing, which offers more profit, but less nutrition. How would you respond to that?
You have to go back to the foundation that food is fuel for the body. For most of humankind’s existence, getting enough of it was the biggest issue. Most of it was obtained locally and so the variety was very low. As the food chain became more sophisticated, with preservation and refrigeration, bulk transportation of large amounts of food at very low cost became possible. The variety of food that people could access and the way they could make up their total caloric needs became more sophisticated. Along with that came an increasing participation of women in the workforce and the need for convenience. It was called processed food and it also was characterized as time saving. If I don’t have an hour-and-a-half to prepare a meal, is there a way to do it quicker?
I think society today has reached the point where the pendulum may swing back in regard to the tradeoff between saving time and participating in the preparation of your own meals. Unfortunately, as with so many other things, there is the disparagement factor. Somebody who has five kids in sports and prefers to buy meals that simply need to be warmed in the microwave should be free to do so. To disparage that as an inappropriate way to nourish the family is a mistake.
Processing inherently involves other issues like food safety and shelf life — how long people keep food in the refrigerator or pantry before it is used. This leads to the introduction of more science in the preparation of food. But the items that are in that pizza are unchanged whether you make it from scratch or not. You start with flour, and we provide flour to the big prepared pizza makers. For a roast beef dinner, the food preparers start with the same piece of roast chuck that you would if you made a pot roast at home on Sunday morning. It is just that it is prepared for you by somebody else.
If I have time to cook from scratch that doesn’t give me the right to make everyone else do it, too.
In our business model, we provide the building blocks for the preparation of meals: the flour, fats and oils, animal protein, and other ingredients. Our customers are the assemblers of these products. On the consumer side, for those who want to buy the individual ingredients, we serve that segment of the food industry, too. So we pack home-use flour, small bags of sugar, and so forth. We are also an important supplier to our customers who provide convenient nutrition.
Individuals sort it out if you leave it to personal choice. The person who wants to cook from scratch should have access to these ingredients, and America’s and the world’s grocers do a good job of providing scratch ingredients. But it’s wrong to legislatively disparage people who elect to purchase products that are more convenient for them. If I have time to cook from scratch that doesn’t give me the right to make everyone else do it, too.
What about the issue of crowded feedlots where cattle, chickens, and pigs are confined to very small quarters? This is another area of criticism.
We have been working on the reversal in trends, for example, in providing more space for laying chickens. In swine production, we have changed the habitat, creating “group homes.” The sows have a loafing area where they are free to interact with a dozen or more of their peers. At the time they are going to birth, they want a certain amount of privacy and, for the safety of the baby piglets, they need a chance to get out of the communal environment. We have been refitting some of our housing and all of our new housing to take into account that people want to know these animals have had good access to roaming space. Are they roaming the high prairies? No. But the issue of how confined livestock should be has received a lot of attention and it will continue to — and the pendulum is swinging back toward more space.
Local vs. Transported Food
I wonder if there is another one of these interconnections in the model that you described about people growing the food in the region where they are and then transporting it. That fundamentally depends on the price of transportation and the carbon emissions associated with that and so that model changes depending on the subsidies in fuel.
It is possible to move one ton of grain by ship over 2,000 miles with a single gallon of fuel. Thus, the impact of a $100 per barrel rise in oil prices on the added cost to move a ton of wheat from Canada to Egypt would be less than $8 a ton. By comparison, the rainfall on the acre of land that produced that ton of wheat would exceed 1,000 tons per growing season. You can see how the importance of capturing the comparative advantage of an area’s water, soil and climate through free trade overwhelms the modest amount of energy needed to move food to areas of demand.
Every time you go to your grocery store, do you buy 100 pounds of food? Is that the way most people shop?
Every time you go shopping, you will have a bigger transportation carbon footprint, relatively speaking, than Cargill’s carbon footprint for moving food halfway around the world.
Because of the efficiency of trains and ships?
Trains and ships versus trucks and cars. The carbon footprint of a train is a third of a 25-ton over-the-road truck. The carbon footprint of that 25-ton over-the-road truck versus that of a 2-ton Ford pickup bringing vegetables in from 10 miles west of Minneapolis – the 2-ton truck’s footprint is astronomical in comparison. As you take down scale, you drive up carbon footprint.
Let me shift to the issue of food labeling. There have been some issues in that area. Some have raised the concern that all ingredients are not listed. Some have raised issues about the transparency of processing.
We may need bigger packages! [laughs].
The goal varies so much by person. Some people want to know what is in the product. For others, it goes beyond that to the processes that surrounded the product’s creation. Some want to understand how that ingredient is processed. For them, simply seeing the name of an ingredient is insufficient transparency.
We were involved in a project that looked at the level of transparency required to disclose both a food product’s ingredients and the processes whereby those ingredients were made. If all of the ingredients and the processes involved in bringing together a cheeseburger with a sesame seed bun and mustard and ketchup were disclosed, it would take 457 pages. That includes the baking, the enzymes used to raise the dough, how those enzymes were created, and the yeast that cultures them. In some cases, there are genetically modified cultures, and it goes on and on. So between nothing — just choose your food and if you like the way it tastes, trust us — and 457 pages lies most of society’s needs.
In many countries, we have seen people ask for red, yellow, and green labels. Just tell me what is really good, what I should be careful about, and what is bad. They don’t want to read the entire back of the package; they want somebody more knowledgeable to give an easy stoplight approach to food.
Well, that is dependent on the philosophy of the person who establishes the stoplight.
Of course. There are more calories in a glass of orange juice than in a glass of soda. So, which one is good and which one is bad? And then, how much credit would you give for the vitamin C or the calcium? It goes on and on.
Our goal is to be as transparent as possible. We have invited people, NGOs, The New York Times, to visit our plants. I think a lot of the challenge comes because fewer people are involved in agriculture. There is a lack of familiarity and that distance creates uncertainty. People, or those they trust such as the general media, want sources of information about their food that cause them to be more confident rather than less. It’s more than simply what you can squeeze onto a package.
Let me respond to the specific question you asked about what is in a product. It goes to the issue of whether you want to reprint all your labels if farmers, because of a very cold spring in North Dakota, elect not to grow sunflowers this year. Without sunflower oil, the product will probably be made with soybean oil or corn oil. The label will say that, which is really a reflection of the uncertainty facing the food company. There is a cost to constantly reprinting labels, which is going to be paid by the consumer. Alternatively, the food company could go a thousand miles upcountry in Russia to find sunflower oil and haul it to St. Louis to make crackers, just so they do not have to change the label. That will also inherently raise the price of food.
I have seen really cynical things said about the industry, but I think the industry is just being honest. This is an outdoor activity, and none of our branded food companies can control the planting decisions or the weather. In North Dakota where I grew up, what you want to plant on the 15th of March and what nature lets you plant in May can be completely interfered with by things outside of your control. The interference will play its way through the food system and force people who intended to use sunflower oil to make a given product to consider an alternative oil, without any devious intentions.
It is our job to make what I think is essentially honest work done honestly, more understandable to people.
It is a complex world we live in and people like simple answers and it just is not going to be that simple.
Yes, that is true. There are second and third order consequences whenever people make one decision. Here is another example: Recently the government proposed carbon capture and sequestration, which sounds interesting enough. The best technology that people envision at this point puts the price at $100 per ton of carbon dioxide. Well, if that becomes the price of carbon dioxide, we will dramatically change farming. A farmer, at $100 a ton, would be enormously incentivized to convert their land use away from growing row crops to the sequestration of carbon in trees. You can do the mathematics on the price that wheat and corn would have to rise to, to compete with $100 carbon dioxide. With a poplar forest on my land, I could sequester every year and sell those offsets for $100 a ton, and that is what I am going to do unless someone pays me enough for my corn that incentivizes me to grow corn.
I can tell you that number is multiples of today’s price of corn, which therefore is multiples of today’s price of eggs or milk. People view these policies in isolation, not realizing the horizontal second and third order consequences. Life is very connected.
I find that in today’s world, the voices tend to be very shrill rather than reasoned. These are very contentious issues in our world today.
We benefit from the shrill voices because they make us rethink our deeply held truths. But sometimes these voices do not stand up to the facts.
World Food Distribution
I recently read the book Enough, which is about the challenge of food distribution in the world. I have spent parts of the last four summers in the Central African Republic, one of the poorest countries in the world. It is frustrating to go down the road and see fields that are basically empty because there is little equipment for farming while large quantities of food come in on ships. This is an expensive way to deliver food. And at the same time there is the reality of corrupt governments that keep people from raising their own food by the policies and practices. Could you offer your perspective on this larger food-distribution problem in the world?
The world will always raise the most food, most economically, if it raises the right crop on the right land.
You have to go back to the start. First, does the world have the capacity to grow enough calories to nourish all of our current inhabitants? To me, the answer is yes. There are clearly enough calories produced in the world. They just don’t get distributed in a way that alleviates the level of hunger, and so my answer would be different for each country. Then we have issues of logistical famine; in some cases civil strife disrupts any meaningful supply chain. In other cases, and more prevalently, we have economic famine.
In my opinion, the world will always raise the most food, most economically, if it raises the right crop on the right land. Technology exists for Minnesota to raise all of the orange juice we consume, but we just should not do it. A very pragmatic example is China. Given its climate, soil type, and water availability, China has a comparative advantage in raising starch. Growing soybeans isn’t necessarily the best decision, and their government has made that decision. The country is more than calorie self-sufficient in rice, wheat, and corn. They have chosen to direct their acres to these three big starch crops. They buy the vast majority of their soybeans from the Brazilians. When Brazil raises what fits their soil and the Chinese raise what fits their soil, everybody wins. To make this model work, we assume free trade exists.
The Chinese, in an effort to be self-sufficient, could redirect the use of their lands to crops less suitable to their climate, soils, and water resources. The effect would be to lower the world’s total supply of food, because you now put the wrong crop on the wrong land in the name of self-sufficiency.
I don’t know enough about the soil types available in the Central African Republic, but my bias is it may be one of those places that might benefit from raising a crop like palm oil, developing its comparative advantage: long growth cycles and tropical moisture levels. It could then use the revenue from selling palm oil to buy the wheat it needs for bread versus trying to raise it there in a climate and soil type that is ill-suited for that purpose. Unfortunately, in places like Zimbabwe or parts of northwest Mozambique you see the untapped opportunity to grow food because of the lack of good property rights. It is very disheartening.
Another book I was reading suggested that a tomato purchased in the market in Kenya would cost more if it came from a Kenyan farmer than if it came from Italy. The reason is the farm subsidies in Italy, which include dumping excess food. This creates a very cheap market for these tomatoes, which undermines the Kenyan farmer. So as a result, the farmer cannot profitably raise anything. So policy issues come to play here too. How do you deal with this aspect of the problem?
Speak against it. Cargill is not a government and policies of predatory mercantilism are not the province of individual companies. It defies what we say is the right thing, to grow the right crop on the right soil. Europeans have backed away from it, but to hyper-subsidize the production of sugar from beets in northern climates against the comparative advantage that a more tropical climate or subtropical climate would have in growing that same sugar impoverishes everyone, both you (because of higher prices) and the people who pay taxes in those northern climates to pay for the subsidies. At the same time, you preclude people that could efficiently raise the same crop in a more suitable climate.
It is my understanding that most governments in the West give more in food subsidies than they do in foreign aid. Does this also support the distortion?
It depends on the year, but if you look at the last four decades, in total I would think that it works out that way. But at the moment of an immediate famine, the desire to give someone a fish versus teaching someone to fish is so enormous. In Haiti, right after the earthquake is not the time to come with the plan for how to improve crop productivity there.
If you have just had a three standard deviation weather event in Sudan and you deliver food aid, most people would characterize that as a good and necessary thing. The kids were hungry at that moment. It has an insidious knock-on effect, which is to discourage the development of the domestic industry. And so there is a tradeoff. Most of the countries that have interesting agricultural infrastructure, whether it is United States, China, India, or Western Europe, have created their infrastructure with the presence of a mispriced put, which is a guaranteed minimum price to their farmers. Because of the host of resource and political issues, many less developed countries have never had the institutions that allow a persistent period of reasonable production that would enable them to become self-sustaining. We have discussions about these issues with NGOs [nongovernmental organizations] and other groups, and no one wants to hear there is an issue of the need for mispriced puts to encourage agricultural development.
Today in China the price of corn to a farmer is 50 percent higher than it is in the United States. The effect of that is to continue to incentivize Chinese farmers to invest against their drainage, their soil preparation, all the infrastructure that allows you to carry your agriculture forward. This is a mispriced put in a financial sense. The same thing is the case in India where they see the government’s role in domestic calorie production and they have created the institutions to drive that. Most of the underdeveloped countries that we mentioned don’t have such an infrastructure.
They don’t even have commodities markets to assure prices, so they are at the mercy of the price after harvest.
In some cases, where governments have played dual path strategies, it is even worse than that. For their urban people, free food is the cheapest food and it helps the government stay in power. The farmers need a higher price. You could identify the names of 30 countries where you or Bill Gates or whomever could sit down with a country’s leader and ask, “What is the fair price for your country’s wheat or corn or millet or rice?” They don’t want to have that discussion. They want to create a system where they have very cheap prices for their urban voters and somehow a much higher price for their farmers.
It requires a Solomonic wisdom to pick a price in a given climate and soil environment that is fair to the farmer and is also fair to the urban dweller. They just want to avoid that discussion, but it is the foundation of any meaningful long-term effort to address those concerns.
As you move from food to biofuels, you create another use for food. But does this create a shift in the price of the food that has an impact on people? Or do you extend the idea of nourishment to the nourishment of vehicles?
We do not [laughing].
It’s nonsensical that people can sit in legislative sessions and pick the amount of the grain crop that must, by mandate, be committed to a given use.
The advent of biofuels was a child of surplus crops. At one level, I can make the argument that the best thing that America ever did for sub-Saharan African farmers was biofuels. Because of this creation, U.S. production of cotton has dropped dramatically. More of our acres have been converted to the production of corn. The U.S. has exported less cotton, which competes less with a crop that that is well suited to sub-Saharan African. It was also good for the world in taking us further from famine. For more than a decade we had de-capitalized agriculture. With the rise in prices of grain crops as a result of the advent of biofuel, more capital began to flow into agriculture.
I spent a lot of time in Russia two years ago. You could see truckloads of new tractors going down the road. You could see the re-capitalization of Black Sea agriculture right in front of your eyes. Prices were finally at a level that attracted capital to agriculture, the effect of which was to pull the world further away from famine than it ever had been.
Our biggest issue with biofuels is the idea of mandates. It’s nonsensical that people can sit in legislative sessions, without any clue what next year’s weather is going to be, and pick the amount of the grain crop that must, by mandate, be committed to a given use. That’s the arrogance of the whole thing.
Sounds more like a planned economy.
Yes, only one that is an outdoor sport. We don’t know, probably plus or minus 15 percent, what our crops are going to be next year in the United States. Yet, legislators sat in session a number of years ago and preordained that 4.3 billion bushels of grain must be converted into fuel. We don’t do that with milk, we don’t do that with meat. If the crops are small, farmers feed less corn to their cattle. They grow them a little slower, they make all kinds of adjustments. The only completely inelastic part of our agricultural system is the legislatively mandated disappearance of part of our foodstuffs into vehicle fuel. It is the inelasticity of demand that is legislatively imposed that I think creates the most threat for consumers and particularly poor consumers.
What would be the alternative? Just let the market take care of it?
If you think it is a social good to incentivize renewable fuels then incentivize them. Everybody will calculate the cost. The cost of a mandate is incalculable because the demand curve goes vertical. You can have a wide disparity in the prices with no change in demand. If renewable fuels need the encouragement of subsidization, declare what it is and the world will monetize it. Then you can move on. But if prices go above a certain level, the demand for corn for fuel will back off just like it would for producing beef cattle or producing milk or one of the other uses. Instead we have elected to have this demand by law, where it is inherently impossible to quantify the impact.
The Economic Downturn
What is the current impact of the worldwide economic downturn on food and food distribution in the world?
Over the last decade, we saw people’s ability to pay for protein in their diet — meat, milk, and eggs — grow, increasing the demand for these products. As world economic growth has slowed, people’s desire to keep protein in their diet has been very strong. So in the developing and, particularly, in the emerging world (the “Thailands” and the “Indonesians” of the world), we have seen people continue to try to maintain balance in their diet that reflects the benefits of the last 10 years.
In Western Europe and U.S., we have seen households reducing their spending on food. In many cases the most expensive thing in their shopping basket is protein, and so we have seen spending back off in the United States. Dairy farmers have lost significant amounts of money; so have pork producers. In Western markets, we have seen people buy less expensive diets, more starch, more Ramen noodles, less eating away from home. It has clearly impacted people. As peoples’ incomes have suffered, their shopping baskets have taken on a different complexion.
Dealing With Obesity
What about the obesity factor in processed foods, and how you think about that from a food distribution point of view?
I think of a couple of things that my mother cooked from scratch. She always tried to make her food taste really good, encouraging consumption. If people who produce processed foods try to make them taste good, too, they think about what people like. The second-order consequence of food that tastes great is our greater propensity to over-consume.
The food industry has to be very careful not to blame the consumer for obesity, because it is a responsibility we all share.
I think it’s too simple to say that making food taste good is an evil act, to condemn all of my mother’s great efforts over the years to make really great tasting meals. It’s an issue of self-restraint, it is an issue of calories in and calories out, and it’s a whole set of decisions around exercise. It therefore is a complicated issue.
The food industry has to be very careful not to blame the consumer for obesity, because it is a responsibility we all share. There are no simple answers. One proposal, making food more expensive in New York with a 1 cent an ounce tax on soda, has a lot of other unintended consequences. Asking people to make food less palatable or less tasty also is not an answer.
Here is an illustration: We’re in the chocolate business, and we made a lot of sugar-free chocolates a few years ago, based on our natural sugar-free sweeteners. We are a big supplier to the confectioners. But sugar-free chocolate and calorie-free chocolate are not the same thing. If you eat three pieces instead of two, you are back where you were.
We need good information about the food we eat, and thoughtful analysis of what our exercise levels allow. Because I am a runner, I consume 2,700-2,800 calories a day. So I have one set of parameters I can put around what I eat. People ask me about my diet. It is to run as far as I need to eat what I want. That may not work for other people but it works for me.
I do not think an olive is a bad thing. But if you eat an olive every day and change nothing else about your exercise regime or your consumption, you’ll gain 30 pounds a decade. So, at your age, you would be about 300 pounds because of an olive, but an olive is not inherently bad. Am I proposing an olive tax? If we are going to tax everything, we have to get olives into this!
We could address the obesity problem by making food more expensive. But to drive people away from food in the United States, we would have to make it really expensive to move a vast portion of the middle class away from their current eating habits. And that would create in the developing world a whole different problem. We can give people less sodium and more fiber and fewer calories, and we work hard on that every day. Cargill’s biggest single ingredient effort is all natural, calorie-free sweeteners, because sweetness is a highly attractive element.
People always tell me they love locally raised tomatoes. It does not surprise me, they have more sugar in them. That is why they taste so good. The sugar content of those tomatoes goes up geometrically as they grow to be exactly ripe. If you eat them at the peak of ripeness you are eating at the peak of their sugar content. Sweetness is one arena where we can offer consumers choices that will help them with their dietary choices.
Role of Marketing
Does the role of marketing fit in here somewhere?
Marketing to children, in particular, is an issue where the industry has taken good steps. It has come a long way in the last three years. There is a legitimate societal role in saying we want to be careful about how we message some of these products to younger people. It is a bit different as you get beyond that and into an adult decision about portion sizes.
Some people really enjoy beer. If you take a third of the calories out, are you going to see a dramatic change, or as a result, will I have a light beer and, therefore, can have more nachos? We have a restaurant customer whose most popular breakfast item is a diet coke and ham and cheese omelet. People think about what this one decision will allow me to do.
Is that marketing or the human desire to do compensatory things? In my case, I’ll run and then I will have a really juicy steak. I do not think that decision would stand the test of complete logic, but we all do compensatory things. You can raise a question about the role of marketing here, but adults need to make choices. So, we refer to “mom-approved products.” You take the trans fats out of a cookie and that is inherently a very good thing, but it does not relieve the parent’s responsibility from controlling how many of those cookies they eat. The cookie had something removed that was not helpful to people’s health, but it is not calorie free.
What are you seeing in the long-term trends in your industry? What would be different about food in 20 years, 30 years? What are you working on that will change that world?
We have already talked about sweeteners. Efforts are being made to reduce sodium, and we have projects that are already in production here. To the extent that people continue with prepared foods, the need for people to get more of their fiber from those prepared foods will continue to go up, and we will play a role in that. There seems to be a clear acceptance of more whole grains, and so we have had to modify a fair number of our facilities to provide more whole grains. That is a good thing. It is something that food companies have been able to accommodate. More of the grain that is produced is utilized for direct human consumption, and people are getting more from the fiber in particular — a more complete whole-grain dietary experience.
I think that we will see the need to raise more crops with less water, so a lot of attention is going to be given to which plants and which agronomic practices are more water thrifty. That will impact where crops are grown and it will also impact farmer behavior. That is going to be a big trend.
Depending on whether the world’s population goes to 9 billion or it stabilizes at a far lower level (some people are beginning to talk more about that), there will be tradeoffs in the share of people’s diet that comes from animal proteins. Here we see a mixed picture, with increases in some places and decreases in others.
People want a story that surrounds their food: who raised it, in what state, and under what conditions.
The trend to people doing significantly more of their own meal preparation is big right now. It is illustrated by the growing number and popularity of cooking shows on television. But with the time pressures of life, I do not see the actual scratch preparation as a persistent trend.
The last one that will probably be more persistent in markets is what I call story food. People want a story that surrounds their food: who raised it, in what state, and under what conditions. This may be more important than a label with all kinds of chemical descriptions, ingredient descriptions and percentages of daily allowances. We need to prepare ourselves for a world in which more of the specific identity of food stays with it all of the way through the supply chain, and where the retailer or the restaurant can make a specific promise to consumers about the life of that food. It goes to people’s desire to learn.
Genetically Modified Food
What about genetically modified food? How do you see that trend?
There are technologies in the pipeline that will allow us to raise our food in harsher climates using less water and fewer chemicals. Society is going to have to make a judgment: Do they trust the science that went into approving those products — the verification and validation that these are safe? If they come to a conclusion that the FDA, USDA, and the European regulatory bodies and others have exercised good judgment over the creation of those seeds, then this could be an important trend.
The benefits come from reduced chemical use, reduced water usage, and the ability to raise our crops on land that might be less than ideal. That is the big opportunity with genetics. Nothing will go forward with genetically modified seeds, which is really what we are talking about, if people do not trust the regulatory bodies that scrutinize them.
We in the food industry have a big obligation to explain the benefits, and the government can judge. The industry also has a big obligation to explain the path through which these are approved, how independent are these scientists, how thorough is the testing, how precise is the science that surrounds them. If we can have confidence and trust in the regulatory institutions, then I think it affords us as the opportunity to feed a much bigger population with no increase in the amount of land that we use and a decrease in the amount of water we use. These are big ecological issues.
How did you get into this food business? Were your parents in this business?
For much of my growing up time my father was a John Deere dealer. I grew up in a town of 2,500 people in North Dakota. Most of us had a really good sense of where our food came from. We raised our own chickens on our farm. We raised one steer every year, and so we had a very precise understanding of beef and where it came from. I came to work for Cargill right out of college.
What did you study?
Economics and accounting. Like a lot of people at 21 years of age, I needed a job. Growing up in North Dakota, there were Cargill elevators on the horizon. So it had some brand familiarity. And I have grown up in the company, spending my whole career here.