Cargill on Trump and trade
Cargill chief executive David MacLennan speaks to the FT about US president Donald Trump's administration, populism and how the company can cut carbon emissions.
Produced by Vanessa Kortekaas. Filmed by Steve Ager.
Cargill is one of the biggest private companies in the US. It's also one of the world's largest agricultural traders. I'm joined by David MacLennan, the man who runs the business. David, welcome.
Can we just start at one of the biggest stories of the year? It's the spread of populist politics and the backlash against globalisation. Indeed, we're seeing in the US President Trump pursuing what he calls an American first economic policy. From your perspective, and at Cargill, I mean, is this a threat or opportunity for your business?
It depends on where it goes. I mean, if you think about it, we're only about 90 days or so into the Trump administration. Certainly, the rhetoric of the campaign is concerning. Isolationist or nationalist policies for any country we think are not good for trade, for peace, for the global economy.
So for us, we're keeping a careful eye on it. But ultimately, where there is opportunity, there's also a threat. But right now, we're concerned about, but keeping a careful eye. It's still early days, I think.
So I mean, do you have any feeling as how policy will play out under the new administration at all?
Relative to trade I think the focus has been on health care, obviously, and then tax policy, and then ultimately, or next trade and immigration. I think it depends on how much of the campaign rhetoric is followed through on actual policy. What we're doing is making sure our voice is heard and that we're urging officials and the administration, politicians, law makers to ensure that we keep open borders, that trade is supported. But ultimately, until actual policies are put on the table, it's difficult to say where exactly are we going to go.
But clearly, there will be some concerns if the administration moves to renegotiate NAFTA, for example. I mean, that would not be good for the US agricultural industry, presumably.
Well, it depends on how much of it and what exactly gets renegotiated. So if we think about it, NAFTA is almost 24, 25 years old. In that time, trade with Canada and Mexico for agricultural products, from the US, has benefited significantly, going from about $9 billion in the early '90s to close to $36, $37 billion today. So depending on the nature of the renegotiation, anything needs to be looked at, again, any trade agreement to make sure that it's fair and balanced. But ultimately, we think NAFTA has been very favourable for the US agriculture economy.
OK, can we just move away from Trump and politics? You were appointed CEO in 2013. Since then, you've pruned the company's portfolio.
You've shaken up the management structure. You've had a more responsibility to divisional heads. Are you happy with the shape that the business is in at the moment? Have you can get to where you want it to be?
I'm happy with where the business is today. We're having a good year. We've had two successive quarters that were a lot better than they were last year.
And so this year is shaping up to be a good year. A couple of things are at play. I think the factors that you mentioned, realigning the management structure, making it more efficient, giving the leaders of the enterprises more responsibility, more accountability, that's played out very well. We've also had some good conditions in various industries that have helped us.
But overall, I'm happy with where we are today. But I'm not satisfied that we're we want to be ultimately. And we're spending a lot of time thinking about the future and where the portfolio needs to be over the next several years to be successful.
You're just so allied to that point. I mean, the world needs to cut carbon emissions. And at the same time, there's a growing demand for more protein across the world. I mean, how do you think the industry can produce the protein that it needs with at the same time reducing it's carbon footprint?
I think the world animal protein industry is evolving and needs to focus. And we are focusing more on a sustainable development of beef and poultry production. As you mentioned, we're not in pork anymore, but we are in salmon. And I think that's also an industry, a protein source that is more sustainable.
But I think what we're also seeing is alternative sources of protein. Plant-based protein, for example, are substitutes for traditional protein, which ultimately will grow over time. But I think it's incumbent on the industry, on players like us, to look at ways to be more sustainable relative to traditional forms of animal protein, beef and chicken being the most notable ones, because it is an environmentally intensive industry.
OK, just to switch topics for a moment. I mean, the whole of the business is it is grain trading, agricultural trading. I mean, we've seen in the last few years, bumper harvests, bulging stocks, low prices, volatility. How do you see that? Is that the new normal to the industry or are there reasons to be more optimistic, do you think?
That's a good question. And I think in terms of low prices, it's optimistic for the consumer. It's good for prices that in the grocery store.
Ultimately, it's not something I don't think it's the new normal. Because you can always get very quickly and sometimes unexpectedly some type of supply disruption. And in terms of the production of food, production of agriculture, it's an outdoor sport. And you can get a significant drought, significant heat, unexpectedly.
So I think it's been-- I don't know, maybe it's not fair to say it's been unusual that we've had so many successive years of increased crop production. Some of it is the resilience of the farmers and the breadbasket of the world are getting better at production. But ultimately, all you need is one severe weather event and things change. But stocks are pretty healthy. And I think the world-- there's plenty of food right now in the world. But that can change unexpectedly.
David MacLennan, thank you very much.