Cargill living through the ag cycles, as the presidents cycle in and out

Yesterday I met with the retiring and the incoming presidents of Canada’s Cargill.

 

 

 

 

 

(Jeff Vassart, left; Len Penner, right)

(Jeff Vassart, left; Len Penner, right)

I was struck by both their sense of optimism about agriculture and farming, and also about how focused they are on building a role in evening-out the long cycles and wild volatility that dominate farming and agricultural commodity production and pricing.

It must be a nice time for present president (for a few more hours) Len Penner to retire from his position, since  both grain farming is booming and his own company’s decisions to focus on adding risk management and other services to both farmers and end users is paying off and looking prescient. As much as high grain prices have helped grain farmers in general, the volatility has caused carnage for farmers who don’t plan out their marketing or engage various forms of hedging. And much livestock production has been ravaged by margin volatility that doesn’t cause spikes, but plunges. Cargill’s network of risk management advisors has a loyal clientele and that’s an area of growth still. And advising and supporting farmers as they employ new technologies, as various business sectors undergo consolidation, as farming itself becomes much more complex and highly managed is something companies that stand in the space between producers and users can both provide and benefit from.

“The industry has clearly had ups and downs, highs and lows,” said Penner, as he sat in his downtown Winnipeg corporate headquarters with Jeff Vassart, the incoming president.

“We don’t think it’s going to end.”

It must also be a nice time to come in as a new president. Vassart will head a company that sees piles of potential and which finds many people actually seeing ag as a positive place to work, invest, operate. How often has that been the case? I still find it weird to hear ag and farming seen by many people as a dynamic part of the economy, as somewhere that’s “hot,” as opposed to “not” where you’d want to be. I started working at this newspaper in 1994, and worked at other prairie papers from 1991 onwards, and until about eight years ago, ag and farming seemed to most outsiders – and many insiders – as dull, stagnant, boring, dusty, uncool. Now it’s anything but that, and Vassart has a collection of novel challenges to tackle once he takes the helm.

The volatility I mentioned above is a focus for him too.

“How do we help our customers through what they’re facing,” said Vassart, noting that ag product buyers have been rattled by the post-2007 commodity price volatility like farmers have been.

Vassart spent a couple of years working in Australia’s grain business before coming back to Canada for this posting, so he’s seen the after-affects of massive grain marketing changes like the ending of the Canadian Wheat Board’s monopoly. Australia’s monopoly-breaking happened a few years before Canada’s so he’s seen some stuff work well there and other stuff go bad. Canada’s going through the process now, but there is still a long way to go and Vassart hopes his antipodean experience lets him get Cargill and its ag businesses through the transition safely.

Both Penner and Vassart talked about the need for skilled and dynamic workers in its agriculture businesses, but the challenge of attracting those people in a competitive job market in Western Canada. The company has 8,000 employees in 18 businesses, so finding and retaining people is an ongoing concern.

Now the wheat board’s monopoly has gone, lots of American grain and ag companies are looking at Canada and sticking toes into the market. And global players like Glencore have snatched up big assets like Viterra. But Cargill has been operating in Canada for decades, and Penner said he hopes that demonstrates that the company is committed to and a big part of the evolution of Canadian agriculture.

“Cargill has seen Canada as a great place to invest,” said Penner.

“We’ve seen about a six-fold increase in our investment in Canada since 1990 . . . We vote with our wallets . . . We don’t see it necessarily stopping.”

With a new canola crusher being built by Cargill in Camrose, Alberta, and expansion in Clavet and numerous other upgrades and expansions to business operations going on now, the company doesn’t seem to be resting on its laurels as one of Canada’s big three grain companies and one of two major beef packers. Farming is volatile, food processing is volatile, and Cargill has toes in both pools. But it thinks that when everything is evened-out, it’s a sensible and reasonable place to put money and optimism.

“These are great industries to invest in,” said Penner.

“It’s a pretty bright light.”

(I’ll have a story on our interview in next week’s paper. These are just my impressions from our meeting.)

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