Challenges facing grain industry
April 11, 2017
When the top executive of one of the world’s largest grain-based companies addresses a convention of his industry’s leaders, the expectation is that he will express a degree of enthusiasm about the business, regardless of the present situation. Juan Luciano, chairman and chief executive of Archer Daniels Midland Co., speaking to the recent gathering of the National Grain and Feed Association, did not surprise in pointing to the promising future he sees for the global grain and food business. Yet, in making that case, Mr. Luciano said achieving that future requires companies and executives to face up to and win over specific challenges. As the industry has already learned in listening to and reading what this executive believes, the direction he describes leaves no room for missing the mark.
His approach is emphasized in the lead positive he cited. Pointing out that 90 per cent of the global population lives in developing nations, he said their life “has been getting better in the last 20 years.” During those two decades, the share of population living in poverty or experiencing chronic hunger has been halved. The result is marked growth in numbers approaching or reaching middle class, which obviously improves the quantity and quality of what they desire to eat. Combining this with expanding world population means growing demand for grains as the basic raw material of many foods.
Realizing the benefits of this expansion requires a keenly alert industry fully in tune with reacting to a series of challenges. Here he emphasized that trade issues will loom large in determining how the grain industry evolves. “We must strike home the message that trade in agricultural products is not a zero-sum game, that trade is essential for feeding the world, for the health of the global economy,” he said, also voicing the belief that “farmers must have the freedom to plant what they want.” Saying that agriculture has run a trade surplus for America for nearly 50 years, Mr. Luciano emphasized that “few things are as critical for us as healthy, robust support for agricultural trade.”
It was at this point Mr. Luciano revealed that he had recently been at a White House working group session attended by 24 executives of major corporations. What he heard made him “a little bit more positive.” He based this on President Trump saying his administration does not oppose trade but wants a level playing field reflecting fair trade. The ADM executive noted he had traveled to both Mexico and China this year, and this led him to conclude “there is a lot of room for discussion, for collaboration and for understanding before we step up the rhetoric.” His view is built on a multipolar world requiring the United States and its businesses to face these realities.
Turning to America and other developed countries, Mr. Luciano cited the challenge created by shifting consumer preferences and different expectations about health and nutrition of specific foods. He cited examples from ADM’s experience and also related efforts to ensure traceability of products as well as sustainability.
The fourth challenge discussed by Mr. Luciano involved how the industry and its member companies react to, as well as leveraging, the amazing technological changes under way across the economy. Citing what he called the “phenomenal pace” of change, he said it is essential for the food industry to embrace and find ways of leveraging these new developments. That challenge is just the sort of issue that Mr. Luciano embraced in urging the industry not to resist, but to recognize what may be gained by taking advantage of this fast-changing world. Equating advocacy of trade and agricultural policies without restraints on farmers as well as embracing new technologies represents a heady challenge. But Mr. Luciano made doing that worthwhile when he commented, “Things often are better than we seem to think they are.” Coming from someone who has seen so much, his “better” offers great promise.