Henry C. Gardiner Global Food Systems Lecture Greg Page, Executive Director, Cargill Thank you, President Schulz. Good evening. It’s great to be here and it’s an honor to have the opportunity to speak to you about climate change, and more importantly about how our food production system reacts to those changes. But before I begin, I too would like to extend my thanks to the Gardiner family for sponsoring this series but more importantly for everything that they’ve done over the years for the beef industry for ranchers, in terms of productivity, and for increased positive consumer dining experiences. Certainly all of the work they’ve put into the quality of the beef raised in this country raised the level of performance of our entire industry so my thanks to the Gardiner family. Over the next few minutes I will share some of my observations and then invite you to question and challenge and put forward your ideas on how best to tackle a significant challenge for the next generation. The challenge itself is clear: we must determine how to feed nine-­‐plus billion people by 2050, a group of people who will not only be more numerous but hopefully more prosperous and almost certainly more urban. We will have to do so with heightened attention to sustainability and the practical limits of our planet’s natural resources. And to make matters more complicated, we will have to learn to grow that extra food in the face of a range of possible impacts from climate change. But if the challenge is clear, the responses and the solutions can be a bit murky. Just like Kansas State, Cargill has been attached to and has deep roots in agriculture. Our company is celebrating, as President Schulz said, our 150th anniversary. We’re just two years younger than K-­‐State. Over the course of those 150 years the company has faced its share of daunting challenges, beginning with our first investment in a small town, Conover, Iowa, in 1865. With the railroads quickly expanding across the American prairies, Conover became an overnight boom town and we were there to benefit. There were over 200 buildings in Conover, fresh produce markets, and thirty-­‐two saloons – must have been good corn prices. Not too much later, however, the railroad abruptly dismantled its train station and within a couple of years Conover was a ghost town. Cargill moved on. Like everyone in this industry we learned very early on in the life of our company that markets are always changing and it is we who must adapt. So a little bit about Cargill. First, we move crops from times and places of surplus to times and places of deficit. This core grain trading that many people think of when they hear the name Cargill actually makes up about 25% of Cargill’s investments. We also provide farmers at all scales of agriculture across the globe with a variety of production services. We produce a variety of foods: sweeteners, cocoa and chocolate, malt, cooking oils, beef, pork, turkey, a long list of the products that fill grocery stores around the world. We also trade ocean freight, electricity, natural gas, petroleum, basic metals and currencies. The prices of each of these commodities has a dramatic direct and indirect impact on agriculture. As the president said, Kansas is home to several Cargill businesses: our North American meat business is headquartered in Wichita. We have a beef processing plant in Dodge City, a feedlot in Leoti, a soybean processing plant and vegetable oil refinery in Wichita, and our salt operations in Hutchinson. In addition, there are a number of Cargill AgHorizons grain elevators spread across Kansas. At these locations we receive corn, wheat, milo, and beans from farmers and provide a range of services, including grain origination, storage, grain marketing resources, agronomic advice, crop insurance, and crop inputs. Together these businesses employ 4,100 Kansans at 39 locations. We are also the beneficiaries of an excellent educational foundation that KSU provides. We have more than 500 KSU graduates currently working at Cargill and contributing to our success. A number of my colleagues are here with me tonight. Kansans know a lot about what it takes to feed a hungry world. 1 | P a g e Henry C. Gardiner Global Food Systems Lecture Greg Page, Executive Director, Cargill Tonight I want to talk to you about the potential impacts of a changing climate on the future of food production. It is certainly a fitting time to discuss this topic. This week, the World Food Prize activities in Des Moines (Iowa) will again draw the world’s attention to the challenges of feeding the planet. Then, at the end of next month, world leaders will convene in Paris to hammer out agreements to reduce global greenhouse gas emissions and start the world on a path hopefully to mitigate the most serious threats from climate change. This is also a fitting place to be talking about this topic. As all Wildcats know, Kansas State was the first land-­‐grant institution in the United States. Land-­‐grant universities have historically been important contributors to developing the science, the technology, and the human talent and ingenuity that has enabled the global food system to move the world further from famine than ever before. And I repeat that because it’s something that each of us should be proud of: we are further from famine than ever before. All the world’s people owe a debt of gratitude to the advances in agriculture, agronomics, animal husbandry, food safety and food science that our land-­‐grant universities have helped produce. America’s agricultural sector should be very proud of the significant advances that have been made both in productivity and in sustainability. For example: it now takes 33% less nitrogen to produce a bushel of corn versus thirty years ago. No-­‐till farming has helped improve soil fertility, reduce erosion, improve energy use, and limit carbon emissions. And farmers have improved feed conversion in hogs by a third during the last generation. Each of these successes has dramatically lowered the greenhouse gas footprint of feeding the world. In the face of the challenges still ahead for our global food system it is reassuring to see the concentration of resources, energy, and effort represented right here in Manhattan, Kansas. I’ll list just a few: the Biosecurity Research Institute, the Food Science Institute, the International Grain Science and Industry complex, the USDA-­‐ARS Center for Grain and Animal Health Research. The Kansas Department of Agriculture. The Urban Water Institute. And very importantly and exciting to see it beginning the soon-­‐to-­‐be-­‐built National Bio-­‐ and Agro-­‐Defense Facility. An impressive concentration of intellectual capital right here in Manhattan, Kansas. Among the challenges ahead are those presented by a changing climate. Climate change is not a particularly popular subject in much of the heartland, but at Cargill we have come to believe that it is important to have serious conversations about what we can do now to accommodate a range of climate scenarios and for agriculture to take part in those conversations and in making reasonable preparations. Why? Because of all the things that are challenging about farming under any circumstances, it becomes more difficult with a growing population and in the presence of a more quickly-­‐changing climate. How much more difficult? A group with which I am affiliated has studied risks associated with the changing climate. The studies from Risky Business bring a unique perspective, focusing on the economic risks under a range of scenarios, and not focusing on the causes of climate change or on policy prescriptions. So what did the report say? Specific to agriculture the Risky Business report outlined the shifting agricultural patterns in crop yields that we should expect and prepare for. With likely gains for northern farmers offset by losses in the southern grain belt. The report also showed that without agriculture adaptation, US production of corn, soybeans, wheat, and cotton could decline by 14% by mid-­‐century, and by as much as 42% by late-­‐century. And again, I restate this is without adaptation and investments in agriculture. 2 | P a g e Henry C. Gardiner Global Food Systems Lecture Greg Page, Executive Director, Cargill However, the resilience and adaptive capacity of farmers is real, and it’s already in place, and it’s already happening. It’s evidenced by the myriad ways in which the farm families represented in this room are farming differently than their parents did. I grew up in North Dakota. I was back for a wedding in September and sat with several of my farmer friends. They have the opportunity to grow thirty different crops in North Dakota, far different than when I left in 1969. Much of it is a result of the increase in the number of frost-­‐free days available to them, heightened by the technologies that have been created by the land-­‐grant universities like K-­‐State. Cargill has just opened in May of this year a canola processing facility north of the 53rd parallel – un-­‐
thought of 30 years ago that we would be contemplating an investment of this size that far north, but again showing the adaptive capacity of the Canadian famers and the willingness of suppliers like Cargill to follow them. The temperatures that are predicted in the Risky Business study are actually lower than the temperatures faced by our corn-­‐farming customers in Mato Grosso, Brazil, or in Thailand. And so, in many cases, the technology we will need to adapt to the US Midwest are already being tested and put into practice in other parts of the world that face the possible temperatures that we may face here ten, twenty, and thirty years from now. In the face of a climate that is likely to become warmer – wetter in some places, drier in others, and more prone to extremes everywhere – how do we preserve and enhance the resilience and adaptive capacity of the global food system? I’d like to review several suggestions. First, embrace the signaling power of price. The foundation of sustainable agriculture is a price adequate to reward farmers for their efforts and to permit their reinvestment. This is as true for commercial small-­‐holders in the developing parts of the world as it is for large farms here in Kansas and elsewhere. Prices are potent fertilizer, signaling and motivating farmers to produce more when the market calls for it. We mask these signals with subsidies, tariffs, and other market-­‐distorting mechanisms at all of our peril. But we can’t afford to look at commodity prices in a vacuum. Because consumers must have enough purchasing-­‐power to create the demand, growth in the wider economy is critically important for agriculture to thrive in both the developed world and in the developing world. Second, honor comparative advantage and enable trust-­‐based free trade. The world’s farmers will produce the most food in the most economically-­‐ and environmentally-­‐sound ways when they cultivate the crops best suited to their particular conditions and trade the resulting production with others. Food self-­‐sufficiency is a very tempting idea. But it is not the path the food security. However, many countries too readily default to dreams of self-­‐sufficiency. Export bans exacerbated the food crisis in 2007-­‐2008. Russia’s ban on wheat exports again in 2011 also caused disruption. Today, in the last six months we’ve seen Indonesia implement a ban on corn imports in a misguided effort to instantly create self-­‐sufficiency in corn. We’ve watched as India has put in place a subsidized system to grow palm oil in India, a crop for which they have literally no comparative advantage, as a way to deal with the foreign exchange problem. By contrast, in soybeans China has set a far better example. China has helped the world in aggregate produce more food through its decision to honor comparative advantage and import soybeans. When China focuses on those areas where it has an advantage using its scarce land and water to produce corn, wheat, and rice, all of which yield relatively better in China – and then import soybeans and vegetable oils which yield relatively poorly in China – the world in total raises more food and at a lower cost. Honoring comparative advantage and embracing open trade are particularly important given the demographic trends ahead. More population growth is expected in regions that are natural food importers means more food will need to cross borders. 3 | P a g e Henry C. Gardiner Global Food Systems Lecture Greg Page, Executive Director, Cargill Honoring comparative advantage and embracing open trade are also buffers against regional crop failures resulting from extreme weather events, more of which we should expect to see in ensuing years. I think it’s an often-­‐underreported fact that following crop failures or crop shortages in 2012 – and to a lesser degree 2013 – here in the United States we imported beans and corn, and in some years both, to help get us through July and August before our new crops came in. And we bought those crops from Brazil. It was an enormous assistance to the cost and to the livelihood of the livestock producers in the southeast United States. So this is not simply a third-­‐world concept but one from which the US has already benefited twice in the last four years. Third, pursue sustainable intensification. Since 1975, the world’s farmers have doubled the amounts of grains, rice, and oil seeds that they have produced, and they have done it bringing very little incremental land into production. We will continue to need to deliver production increases, primarily from productivity improvements. The alternative is to further encroach on the world’s native forests and wetlands. It’s entirely possible to do this, but not if we turn our backs on proven technologies that enable farmers to produce more with less water, with less fertilizer, with less herbicides, and with less tillage. Fourth, we should tackle climate change head-­‐on. Climate change is a devilishly difficult challenge. One wag said: “it is a problem politics is almost perfectly designed not to solve.” Nonetheless, we need to tackle that political challenge as well head-­‐on. The potential costs are far in the future and uncertain. And the solutions require coordination across scores of countries and industries, each of those countries having wildly disparate economies, agendas, and political systems. Bill Gates has pointed out on more than one occasion that 90% of what the wealthy nations are spending today on carbon-­‐free energy goes into subsidizing things that won’t solve the challenge. Only 10% is being spent on the basic research into technologies that might solve the challenge. We collectively must reconsider and rethink this mix. Visiting Cargill about six months ago, the Risky Business co-­‐founder Tom Steyer called climate change “the transcendent issue of our generation.” But the profound question that his comment begs is how and how much to spend against an uncertain outcome? That is the essence of risk-­‐management. But he, like me, is optimistic that we will rise to the occasion, particularly in the United States where ingenuity and entrepreneurship impulses and an ability to scale solutions can all be assets in addressing the climate challenge. In that spirit, allow me to recap what I believe will make our global food system more resilient and adaptable to the potential impacts of a changing climate. First, continue to invest in yield growth and increasing attainable yields though improvements in genetics and agronomic practices. Second, continue to reduce agriculture’s environmental impact and to convince consumers that we’re serious about doing that by using less water, using less land more efficiently and judiciously, by protecting the soil and water quality, and by adopting practices that enable us to continue sustainable intensification. In doing this we build upon a proud tradition. Third, discourage political leaders worldwide from pursuing food self-­‐sufficiency, imposing export barriers, and taking other actions that inhibit food from moving freely across international borders. Fourth, favor flexibility in implementing renewable fuel policies so that food crops are not diverted by rigid dictate in periods of poor harvest, and importantly preserving this tool to support price adequacy in times of surplus. Fifth, let’s all be open to collaboration and cooperation. Let’s each assume good intent, even on the part of people with whom we disagree, sometimes vehemently. That’s the way to enter into the conversations we need to have to make smart decisions about our collective future in the presence of an evolving climate. 4 | P a g e Henry C. Gardiner Global Food Systems Lecture Greg Page, Executive Director, Cargill Thank you very much for your attention. October 12, 2015 Henry C. Gardiner Global Food Systems Lecture Delivered at McCain Auditorium Kansas State University Manhattan, KS 5 | P a g e