Riceland's new chief strides into challenge
August 31, 2004
by Joel Crews
Copyright 2004 Little Rock Newspapers, Inc.
Arkansas Democrat-Gazette (Little Rock)
August 29, 2004 Sunday
Riceland's new chief strides into challenge Kennedy follows retiring Arkansas legend Bell, but can he build profits at world's No. 1 miller?
BY NANCY COLE ARKANSAS DEMOCRAT-GAZETTE
STUTTGART - As Arkansas farmers begin harvesting their 2004 rice crops, a transition is under way within the corporate headquarters of the world's largest rice miller and marketer. On Aug. 1, K. Daniel Kennedy became president and chief executive officer of Riceland Foods Inc. The 40 directors of the 9,000-member, farmer-owned cooperative selected Kennedy to succeed Richard E. Bell, who had served as chief executive since 1981. Kennedy is just the fourth chief executive in 60 years.
Tommy Hoskyn, a Stuttgart rice farmer and Riceland board chairman, said the cooperative made great strides under Bell's leadership. And even though Kennedy "has some awful big shoes to fill," Hoskyn says he is confident Bell's hand-picked successor will excel.
Kennedy, 45, faces numerous challenges, including fortifying profits.
Keith Glover, president of Producer's Rice Mill, Riceland's crosstown competitor, says millers must strive to keep rice farming profitable by pushing for a stable farm program and good trade agreements.
"It's important that we have fair and open trade agreements, where we are not excluded or shut out of key markets," Glover said.
Ben Noble, vice president of government affairs for USA Rice Federation, an industry trade association, says another challenge for millers like Riceland will be deciding how to position themselves in dealing with the "lowcarb craze," although reports by Morgan Stanley and other analysts say the number of low-carbohydrate dieters is slowly declining.
Originally formed in 1921 to market rice, the Arkansas Rice Growers Cooperative Association evolved into the company now known as Riceland Foods, which markets rice, soybeans and wheat. L. Clyde Carter ran the cooperative from 1944 to 1977 and was succeeded by Wilfred F. Carle, who served as chief executive until 1981.
Bell, 70, joined Riceland in 1977 as executive vice president and chief operating officer after an 18-year career with the U.S. government in Washington and Ottawa, as well as Brussels, Belgium and Dublin, Ireland. He started as a low-level employee at the U.S. Department of Agriculture in 1959 and ultimately became the department's assistant secretary for international affairs and commodity programs. Following the election defeat of President Ford in 1976, Bell left the federal government and accepted a job in Connecticut with Louis Dreyfus, the giant French commodity trader. He came to interview at Riceland "to be polite, because they kept calling me."
"When I came out here, I was really taken by surprise, because it had much more potential than I had ever realized," he said.
Tommy Hillman, a Riceland board member during most of Bell's 27-year tenure, says Bell brought a global perspective.
"Dick made a tremendous contribution," not only to Riceland but also to Arkansas and American agriculture, Hillman said.
Romey Short, who was Riceland board chairman in 1981 when Bell became chief executive, says Arkansas was lucky to have adopted such "an enormous asset" from his home state of Illinois.
BELL'S TENURE In 1977, Bell was well versed in new U.S. farm and trade policies that encouraged growth in the domestic rice industry. The Rice Production Act of 1975, which eliminated quotas and permitted unrestricted production, had a huge impact in Arkansas.
"At that time, Arkansas had a very small quota. The big allocations were in Texas, Louisiana and California," Bell said.
The 1981 Agricultural and Food Act, which based price support on planted acres rather than acreage allotments, and the Food Security Act of 1985, which introduced a marketing loan program for rice, further encouraged Arkansas farmers to expand rice acreage.
During Bell's tenure at Riceland, numerous technological advances increased average rice yields by about 50 percent. All U.S. rice-producing states except Texas increased their production. The most dramatic increase occurred in northeast Arkansas and southeast Missouri, where many soybean farmers shifted acreage into rice.
"I see that as progress," Bell said. "They replaced a loweryielding crop with a higher-yielding crop - with rice - and really ended up with a lot more revenue per acre. The costs were higher, but so was the net."
U.S. rice production has doubled in the past 27 years and Arkansas now grows nearly half the total.
Bell dedicated much of his tenure to facility growth, newproduct development and building a stable customer base that now includes companies such as Tyson Foods, Wal-Mart Stores, Anheuser-Busch, Kellogg, Quaker, General Mills, Kraft, SYSCO and U.S. Foodservice.
In 1977, Riceland shipped nearly 70 percent of its rice overseas, primarily through U.S. food-aid programs, Bell says. Today, Riceland sells about 70 percent of its product domestically and exports go primarily to commercial interests in the Western Hemisphere.
"The domestic users are all fairly steady and predictable and generally pay a premium price," Bell said, but they expect high service and quality. The domestic market has growth potential, he adds, because of increasing demand from an increase in Hispanics and Asians.
Bell says that during his Riceland tenure he was especially proud of the company's worldwide reputation for quality, integrity and dependability.
"I told the staff when I arrived that I wanted us to be worldknown and, any time someone thought of rice, I wanted them to think of Riceland," he said. "I think, in the end, that was accomplished."
Bell, well-known for his ability to recall statistics and details, says one of his last major tasks was to select and groom his successor. Believing that "life-science" companies were going to have a tremendous influence upon agriculture, Bell thought Kennedy's biotechnology background would strengthen Riceland's management.
Kennedy had spent 16 years with Monsanto, a leading agricultural supplier that is probably best-known for its Roundup herbicide and Roundup Ready line of herbicide-resistant seeds. In August 2000, Kennedy moved to Stuttgart to fill Bell's old post of executive vice president and chief operating officer.
KENNEDY'S BACKGROUND Daniel Kennedy grew up in Crowley, La., and earned a Bachelor of Science in agricultural economics at Mississippi State University before joining Monsanto's sales force in 1984. By 1988, he was involved in setting prices for the Roundup product line.
Following a district-sales assignment in Michigan and a brief stint in Monsanto's St. Louis headquarters, Kennedy spent time in Indiana, where he commuted on weekends to Chicago to complete an executive master's degree program at Northwestern University's Kellogg School of Management.
Kennedy then moved to Stuttgart in 1995, when he was named president of Hartz Seed Co., which Monsanto had bought about 10 years earlier. Monsanto already had developed Roundup Ready soybean seeds but was just beginning to develop a marketing strategy for them.
"When we decided that we needed to get a better understanding of the seed business, I ended up getting a chance to come to Stuttgart and run Hartz Seed," Kennedy said, "and that's when I met Mr. Bell."
Kennedy says he enjoyed the agility of Hartz, a small company of about 100 employees. "We were nimble, we were quick, we had a tremendous product and we had a lot of success, so it was a lot of fun."
Living in Stuttgart also appealed to his wife, Michele, a Lake Village native.
But Kennedy's tenure in Stuttgart was cut short when Monsanto merged Hartz with two other seed companies, first Asgrow and later DEKALB. In mid-1996, Kennedy was sent to Des Moines, Iowa, where he spent more than two years as president of Monsanto's seed unit. Kennedy ended his Monsanto career as vice president in charge of North American marketing.
During the past four years, Kennedy said he has gotten to know many of Riceland's 1,800 employees and has visited many of its 65-plus locations in Arkansas, Louisiana, Mississippi, Missouri and Texas.
EFFICIENCY DRIVE Kennedy was onboard in 2002 when Riceland bought a New Madrid, Mo., rice mill from Louis Dreyfus, and he helped integrate the facility into Riceland's new management information system. Now he is rethinking many of Riceland's business processes to make them more cost efficient. One of his major goals is to "break down some organizational walls" and "develop a cross-functional group" that can do more than just deal with today's fires. Riceland's transportation department, for example - in trying to negotiate the lowest freight rates - might cause plant productivity to decline precipitously if the new delivery schedules are inconvenient.
"That's why you've got to get a different group of people together to really understand the whole problem," Kennedy said.
With the increasing importance of domestic sales, Kennedy says, Riceland must change and adapt. "Instead of just being a big rice supplier, we've really become an integrated supply-chain company that helps manage our customer's inventory."
Although Kennedy now leads Riceland's management, he is quick to point out that he receives invaluable assistance from nine corporate vice presidents who collectively have 228 years of service.
And Bell, although officially retired, plans to continue serving Riceland as a consultant on grain markets and U.S. farm policy.
"I think we need to work toward making the legislation more [environmentally] `green,'" Bell said, to gain important urban support for national farm legislation. Rice farmers, Bell explains, could be required to reduce soil erosion and conserve water. Shifting to zero-grading practices, reducing tillage, building waterfowl-friendly reservoirs and installing tailwater-recovery systems all may become mandatory to qualify for federal pricesupport programs.
Kennedy says he likes to work closely with his operating managers when planning new strategies, but prefers to delegate responsibility for their implementation. Short, the former board chairman, described Bell as a hands-on manager.
Although Kennedy knows his management style differs from Bell's, he is optimistic the transition will proceed smoothly for all concerned - the co-op's members, customers and employees. "We're going to continue to build on a great tradition and we're going to do it in a most respectful way.
"The things that will change will be the things from a business standpoint that need to change. The things that won't change will be the moral high-ground, if you will, of the way that we want to continue to operate and run the company."
This article was published 8/29/2004