MacMillan discusses food security
March 13, 2012
by Josh Sosland
Policy makers face a number of difficult and important decisions about food in the years ahead, requiring extremely careful choices, said Whitney MacMillan, the retired chairman and chief executive officer of Cargill.
“Make the right decisions, and we can continue to feed a growing world,” he said. “Make the wrong choices, and a great many people around the world will feel the effects — and they won’t be good.”
MacMillan addressed critical world food issues in a recent speech at The Blake School, the Minneapolis college preparatory school he attended as a student.
Setting the stage for his key points, MacMillan said the world population is expected to grow from 7 billion today to 10 billion, or even more, “in the lifetime of people in this room.”
“Every day we have another 200,000 more people to feed, most of them in what we used to call the developing world,” he said. “Somebody has to produce the food a growing, hungry world needs. And just as important, someone has to generate the wealth needed to enable those hungry people to afford the food they need.”
Over the past 30 years, the global population has grown by 70%. Despite “great strides forward in productivity,” capacity for food production has not kept pace with this population growth, MacMillan said.
“The balance between the food we produce and the food we consume remains razor thin,” he said.
In addition to the projected population growth, global income levels may increase nearly threefold, driven by economic growth in Asia and other key economies worldwide, MacMillan said. Food consumption will double as a result of the population and income growth.
With the higher incomes will come increased demand for protein, which, in turn, triggers attendant resource issues associated with production of chicken, pork, beef and milk.
“To make things more complicated, much of that growth will occur in urban settings,” MacMillan said. “But as they say, ‘we aren’t making any more land.’ Perhaps more noteworthy is the fact that half the world’s farmers today can’t feed their own families. So just saying ‘let more people farm’ isn’t an option.”
Emphasizing the need to optimize use of agricultural resources, MacMillan mentioned the role of food in recent political unrest around the world, including Egypt.
“The link between food security and political stability should be obvious,” MacMillan said. “But here in the richer countries of the world, we can lose sight of that simple fact. But we need to understand that political instability in places like the Middle East and Africa can have important consequences for us.”
Looking at the present situation, MacMillan warned of what he sees as a “formula for the price volatility that has rocked the commodity world in recent years.”
He said he sees a real risk of rapid and major increases in food costs and a precarious balance between supply and demand.
MacMillan offered a diverse set of examples of trends that drive food costs higher. He said the term “organic” is often considered to mean “better” because of the association between the world with products that are more pure and natural.
“But (organic) also offers considerably lower yields, and frankly, poses its own food safety problems,” he said.
“Similarly, we see a lot of people arguing against the use of improved genetics, most notably in seed genetics,” MacMillan said. “Some say it somehow tampers with nature and leads to that most evil of all things — ‘Franken-foods.’ Anything that smacks of ‘intensive’ farming is automatically bad, according to others. But how can anyone object to a seed that increases yields and income, requires no tillage, uses less water, does not require pesticides nor insecticides and uses less fertilizer?
“I can’t help but see this blind opposition to scientific progress as something regrettable. I see a world with serious challenges to food security but hear a debate that sounds remarkably like what Copernicus and Galileo must have faced hundreds of years ago.
“I don’t mean to disparage the views of genuinely concerned people. Debate is healthy. But let’s have debate, not shrill nay-saying and denial of an unpleasant reality.”
MacMillan reminded the audience of the need to find a way to feed 10 billion people by 2050, while also preserving natural resources. Success, he said, will depend on “the smart use of exactly this kind of technology” around the world.
Consequences of ethanol policy
In contrast to approaches like biotechnology that could help meet world food demand in the years ahead, MacMillan cited ethanol as a “favorite example” of the consequences of bad decision making.
The supposed promise of ethanol was wonderful, MacMillan said, including reduced dependence on foreign oil, job creation, economic activity, a cleaner environment and better health.
“All that was required to bring ethanol to life was an estimated $53 billion in federal subsidies by 2015,” MacMillan said.
He said substantial tax credits have been offered for every gallon of ethanol produced and mandated increase use of ethanol in the U.S. gas supply.
“Creation of policy like this places ag companies in a no-win position, which is why so many in the industry have been reluctant to speak up,” he said. “Years ago, many of us warned against this policy, but we lost the debate. And once such a far-reaching program came into being, there was no choice but to compete as best we could. Some people can’t grasp — or accept — that it is essential to remain competitive in order to survive in agribusiness. But ask anyone in the business — or better yet, anyone no longer in the business, of whom there are many. Competitiveness is essential.
“But in the past year or so, there’s increasing evidence that more and more people realize the true and far-reaching consequences of what we have done. More and more people inside the agricultural community have realized that bad ag policy is no cure for bad energy policy.
“Ethanol has gone center-stage in the larger middle-class tax revolt against questionable federal spending. More and more people question whether it’s smart to use so much of one of our cornerstone commodities — corn — for fuel.”
Ethanol from corn has not been the exclusive cause of food insecurity and price volatility, and MacMillan expressed the view ethanol does have a place in a comprehensive U.S. energy policy.
“It’s the reliance on corn as the predominant source of raw material that troubles me and so many others,” he said. “I hope to see us move toward reliance on other stocks, just as Brazil has done.”
Still, he described as “disingenuous” claims ethanol policy is not a factor in global food challenges worldwide.
He noted 40% of the U.S. corn crop currently is used for ethanol. With this growth has come increasing political clout from rural areas, the ethanol industry and related lobbying groups.
“Our ethanol predicament reminds me of the old saying: The road to hell is paved with good intentions,” MacMillan said. “I believe we need to keep that thought front and center as we make policy choices. If we make bad choices — even with the best and most noble of intentions — the result will indeed be hell for a great many people worldwide.”