Cargill Inc. is adapting to digital disruption by finding ways to better serve farmers – and to healthier eating habits by expanding its food and nutrition offerings.
Gone are the days when farmers relied solely on the grain-trading middleman’s knowledge of the commodity prices their crops could fetch — now farmers can just pick up their smartphones or tablets to learn on their own what a far-flung overseas buyer would pay, cutting into Cargill’s historically fat trading margins. Farmers are also now able to store more of their grain, lessening the need to rely on Cargill’s grain elevators.
“The days of ‘Hey, we’re going to buy your crops, we’re going to store it, we’re going to play the carry’—you know, sell it at a profit—it’s over,” CEO David MacLennan told Bloomberg Businessweek in June.
As such, the 153-year-old Minneapolis-based company has had to trim down its trading and storing business and find additional ways to serve farmers. Recent launches include productivity apps with artificial intelligence capabilities to help shrimp farmers determine the best time to activate automatic feed dispensers, and facial recognition gear for cows tied to software to monitor what they eat and how much milk they produce.
Healthier eating habits are also propelling Cargill to expand from being just the top supplier of ground beef into also aggressively getting into aquaculture, including buying EWOS, one of the world’s largest producers of feed for the salmon aquaculture industry. Cargill has also cut a number of underperforming units, including energy trading, pork operations and even some of its North American grain elevators.
All of the changes have been spearheaded by MacLennan, who became CEO in 2013.
“I thought, Boy, if we wait for something to change without disrupting ourselves, we’ll be in trouble, ” he said. “What’s that old adage? You put a frog in a pot of water and slowly turn up the heat, and the frog doesn’t notice it’s been boiled. I didn’t want to be the frog in the boiling water.”
At the World Economic Forum last month in Davos, Switzerland, MacLennan said that food and agriculture systems must continue to evolve as the global population grows and consumer values shift.
“Innovation in all its forms—technology, digitalization and R&D—provides the means to address some of the greatest challenges facing the global food system,” MacLennan told the audience. “Whether it’s achieving zero hunger, delivering on consumer preferences, creating safer workplaces, offering transparency in our food system or helping farmers prosper, Cargill believes technology can unlock solutions.”
But the company can’t do it alone, he said, which is why Cargill favors open-source technologies and partners with companies like Hyperledger, Descartes Labs, Cainthus and Techstars to introduce solutions that strengthen the future of food and agriculture.
MacLennan joined Cargill in 1991, and worked his way through the ranks to become the ninth CEO since the country’s largest private company first opened its doors in 1865.
When he took the helm, MacLennan said that Cargill has made a difference throughout its history because one or more of its people have stood up. The same is now true as the company and its people partner with others to figure out how to sustainably feed a world fast approaching nine billion people.
“It is our heritage,” he said. “It is in our DNA. It is who we are. We have challenges ahead. I look at them as opportunities for people to step up and make this company even greater. I feel very confident about where we are going and our role as a leader in the world.”
He’s No. 16 on Chief Executive and RHR International’s CEO1000 Tracker, a ranking of the top 1,000 public/private companies.
David MacLennan, CEO of Cargill
Headquarters: Wayzata, MN
Education: Amherst College (B.A.) and University of Chicago (M.B.A.)
First joined company: 1991
Prior to joining Publix: LIT America
Named CEO: 2013