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About the cover:
A partnership between Cargill and CARE is helping 100,000 people in seven countries lift themselves out of poverty, including these children in the Kutch district of
India’s Gujarat state. The five-year initiative promotes economic opportunities for rural families, while enhancing educational and nutritional support for children.
This version is available in electronic format only.
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prior year. The breadth of performance
was notable, with 38 business units
posting stronger results than a year ago
and 14 delivering record earnings. Four
of Cargill’s five segments—origination
and processing, agriculture services,
food ingredients and applications, and
industrial—increased earnings from
last year. Results decreased in the risk
management and financial segment.
Cargill recorded an additional $1.55
billion from discontinued operations—
income attributable to Cargill’s former
majority ownership position in The Mosaic
Company. Cargill also recognized
a one-time accounting gain of $11.49
billion on the divestiture of the Mosaic
shares. The shares were exchanged for
Cargill stock and Cargill debt.
Sales and other revenues increased 18
percent to $119.5 billion. Cash flow from
operations equaled $4.6 billion.
GRowTh. Cargill invested more than
$3 billion globally in fiscal 2011—a
record. About a fourth went to base-level
expenditures that extend the lives of our
Cargill has a long history of performing
at our best during times of enormous
challenge. In fiscal 2011, significant events
gave rise to renewed attention to food
and agriculture. The dynamics included
the uneven global economic recovery,
Japan’s earthquake and tsunami, armed
conflict in Côte d’Ivoire, the Arab Spring,
the eurozone’s sovereign debt crisis,
looming U.S. deficits, weather-related
supply shocks in food commodities, grain
export restrictions and dramatic price
swings across a range of raw materials.
With uncertainty and risk high, Cargill’s
strengths came to the fore. Supported by
a strong balance sheet, we drew on our
abilities to source food and feedstuffs
from multiple origins, handle the logistics,
manage the risk and deliver reliably. In
short, we sought to be a “port in the storm”
for our customers, dealing with the year’s
challenges and helping customers and
communities do the same.
REsulTs. Cargill earned a record
$2.69 billion from continuing operations
in fiscal 2011, up 35 percent from the
In this year’s annual report, we discuss an issue of universal importance: food security. Today almost 1 billion people go without sufficient food. The calories required to meet their nutritional needs exist but too often the physical or economic access does not. Ahead we share how Cargill and leading institutions are working to feed the world.
Pictured: Greg Page, Chairman and CEO David MacLennan, President and COO
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Financial highlights dollARs In bIllIons
sales and
other revenues $ 119.5
Earnings from
continuing operations $ 2.69
Cash flow
from operations $ 4.6
Percentage of sales and other Revenues by destination
noRTh AMERICA 56,000 employees
37%25%
AsIA PACIFIC 32,000 employees
lATIn AMERICA 21,000 employees
12%
EuRoPE 17,000 employees
19%
noRTh AFRICA/ MIddlE EAsT
1,000 employees
6%1%
sub-sAhARAn AFRICA
3,000 employees
plants and help keep them safe, energy
efficient and environmentally sound.
Of the nonbase allocation, about half was
directed to acquisitions that will help us
better support our customers. Examples
include the AWB commodity management
business in Australia, Unilever’s shelf-stable
condiments business in Brazil, Indonesian
starch and sweetener maker PT Sorini,
Royal Nedalco’s potable alcohol operations
in Europe, a Chinese port facility, a
Canadian grain facility and a U.S. corn wet
mill ethanol facility. The remainder
was invested in new or expanded plants
and innovation centers in about 40
countries. As the new fiscal year began, we
completed the purchase of German cocoa
and chocolate company KVB and Central
American poultry and meat processor
Corporación Pipasa.
As Cargill grows, we continue to improve the
company’s environmental, health and safety
processes. We achieved the lowest rate of
reportable injuries, with two-thirds of 1,100
facilities operating injury free. To reach
our 2015 goal of zero fatalities, we are
implementing new processes for identifying
and mitigating precursor conditions.
Relative to baseline, we realized significant
improvements in energy and freshwater
efficiency and in reduced greenhouse gas
intensity—returns realized from the past five
years of investments in capital and process
improvements.
EnAblInG FuTuRE GRowTh. Our plans for
fiscal 2012 are ambitious because we aim to
deploy a record level of capital. Guided by
Strategic Intent 2015, these investments will
reflect Cargill’s resolve to operate globally
with a balanced, diverse and resilient
portfolio. It means investing, for example,
in both trading and processing, physical and
intellectual property, domestic and export
facilities, and mature and emerging markets.
Importantly, it means pairing growth
with frugality. As a private company, we
depend on internally generated cash flow
and borrowing, at debt levels appropriate
to Cargill’s high-quality credit rating, to
finance growth. For every dollar saved,
the company gains access to $3 in growth
capital.
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One of Cargill’s long-term enablers of
growth is Tartan. This multiyear investment
in common processes and supporting
technologies gives us access to better
information for decision making and
connections across business units and
functions that open up new solutions for
customers. In fiscal 2011, Tartan produced
about $100 million in benefits from process
improvements projects. We passed a
milestone last August, when the first three
business units went “live.” Four more are
set for September. By December 2015, well
over half the company will be using the
Tartan solution.
We salute the progress made in becoming a
more connected company. When we reach
across the full breadth of Cargill, we can
bring solutions to customers that no other
company can match. This year’s launch of
TasteWise™ reduced calorie solutions is
a good example. Cargill tapped scientific,
ingredient, applications, intellectual
property protection and communications
resources across the company to develop
and commercialize this patent-pending,
proprietary technology. It optimizes the
balance of texture, sweetness and flavor,
enabling beverage makers to more quickly
develop and deliver better tasting low-
calorie products.
Each day we draw on the engagement,
talent, diversity and ethical conduct
of Cargill employees. These qualities
strengthen our company and the trust
that customers and others place in all
of us. We added more than 100 women
to managerial levels in fiscal 2011, an
important step toward meeting our goal
of becoming a more diverse, inclusive
company capable of achieving our long-
term strategic objectives.
ChAllEnGEs AhEAd. Price volatility,
with all of its risks and opportunities,
returned with extraordinary scale to
agricultural markets in fiscal 2011. As
shown above, small changes in food
production today are triggering large
movements in price, much more so than in
the past. Last year’s drought in Russia, for
example, reduced global grain production
by 1 percent but sparked price increases of
Global Food Production and Price Volatility
small changes in food production today have large effects on price, much more so than in the past. source: u.s. department of Agriculture (production) barchart.com Inc. (Chicago board of Trade prices)
80 70 60 50 40 30 20 10 0- 10- 20- 30
1976
1.37
2.77Percentage change in price (corn, soy and wheat futures price index)Global food production (billions of metric tons)
Percentage change in production (grain, rice, oilseeds, palm oil and fish meal)
1981 1986 1991 1996 2001 2006 2011
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and CEO, United Technologies Corporation;
and, from Cargill, Sergio Rial, executive vice
president and chief financial officer, and
Emery Koenig, executive vice president and
chief risk officer.
Cargill aspires to be the global leader
in nourishing people. We recognize our
employees for the creativity and commitment
they bring to this purpose. Together, we
grow as a company and as a partner in
helping solve the global food and agricultural
challenges of our time.
Gregory R. Page
Chairman and Chief Executive Officer
David W. MacLennan
President and Chief Operating Officer
Aug. 9, 2011
60 to 80 percent. In 2009, the trend worked
in reverse, with modestly higher production
driving prices down.
The instability has brought global attention
to agriculture and raised concerns about
food security. Much of the discussion has
focused narrowly on prices because, as they
rise, they can lower people’s standards of
living, especially in poorer countries where
food accounts for larger shares of family
budgets. Prices also can motivate producers
around the world to grow more food, and
they can attract much needed investment in
agricultural productivity, infrastructure and
innovation.
The broader challenge of creating a more
food secure world is fundamental to Cargill’s
corporate purpose. In this report, we share
our work and highlight that of leading
organizations. We firmly believe the world
has the capacity to feed its people and that
all of us can accomplish more together.
In ClosInG. Four new directors joined
the Cargill board this past year: Bernard
Poussot, former chairman, CEO and
president, Wyeth; Louis Chênevert, chairman
Cargill Contributions Fiscal 2007-2011 dollARs In MIllIons
$10
0
$20
$30
$40
$50
$60
In fiscal 2011, Cargill contributed
$61.1 million in local communities
in 51 countries. over the last five
years, the company has invested
more than $55 million in partner-
ships to support hunger alleviation
and food security.
2007 2008 2009 20112010
57.561.1
37.244.0
58.2
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About 925 million people—just over 15 percent of the world’s population—are undernourished today. The majority live in developing countries.
Among countries, the largest numbers of under-nourished people are in China and India, and the highest prevalence of undernourishment is in sub-Saharan Africa.
NEAR EAST & NORTH AFRICA
37M LATIN AMERICA & CARIBBEAN
53M
AsIA & ThE PACIFIC
578Msub-sAhARAn
AFRICA
239MdEVEloPEd CounTRIEs
19M
The world’s undernourished:
925 million
Source Food and Agriculture Organization of the United Nations (FAO) and World Food Programme (WFP)
Source FAO and WFP
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Growing population and per capita incomes will add to the demand for food.
Source OECD-FAO Agricultural Outlook 2010-2019
Hunger and malnutrition are due less to the
unavailability of food and more to the inability of the poorest members
of society to access food at an affordable price.
Source Oxfam International
Source U.S. Department of Agriculture
2.8
2.6
2.4
2.2
2.0
1.8
1.6
1.4
1.21176 81 86 91 96 01 06
Global Production bIllIon METRIC Tons
186
174
162
150
138
126
114
102
90 1176 81 86 91 96 01 06
Yield and harvested Area IndICEs, 1975 = 100 YIEld AREA
Most of the increase in food production will need to come from increased yields and productivity rather than from the use of additional land— a challenge met in prior years.
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Growth: population, economies, incomesDiets: diversifying, including proteinDemand: for food, feed, biofuelWeather: unpredictabilityEnergy: rising prices; links to agricultureSupply & demand: imbalancesTrade: export and import restrictions
CoRn soYbEAns whEAT CRudE oIl
Source Chicago Board of Trade Nearby Futures (average weekly)
17
15
13
11
9
7
5
3
12005 2006 2007 2008 2009 2010 2011
150
135
120
105
90
75
60
45
30
$ PER BUSHEL $ PER BARREL$ PER BUSHEL $ PER BARREL
10
Source Estimates, OECD-FAO Agricultural Outlook 2011-2020
The use of agricultural output as feedstock for biofuels is projected to grow, largely driven by biofuel mandates and support policies.
Agricultural output used for biofuel production by 2020 »
of global coarse grain production
of vegetable oil production
of sugar cane production
Source Cargill
only about 15% of the world’s calories cross international
borders, but for countries dependent on imported
supplies, this share can be a lifeline.
Exporters:
North America
South America
Australia
Eastern Europe
Post-Soviet States
Central America
Western Europe
Asia
Middle East
Africa
Importers:
Trade plays a crucial role in ensuring food security by allowing agricultural commodities to move from places of surplus to places of deficit.
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Investments in agricultural R&D … will be a pivotal determinant of long-term growth in the supply, availability and price of food over the coming decades. Source Global Conference on Agricultural
Research for Development, 2010
“Across much of the developing world, the agricultural system is powered by smallholder farmers, more than three-quarters of whom are women …
…Large-scale systems can play an important role in directly supporting small farmers through technical advice and support and access to markets.”Source Kofi Annan, Keynote Address, The 2010 World Food Prize
women
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open Markets
Egypt is the world’s top importer of wheat. when several countries barred grain exports last year, Cargill rerouted wheat from Europe to keep Egypt supplied. we then arranged to ship corn from brazil to Europe for use as animal feed. Cargill also was one of the first companies to resume operations after the Egyptian revolution, providing crucial commodities to food and feed customers.
Agricultural Productivity
Tens of thousands of small-holder farmers in Zambia depend on the income they receive growing cotton to feed their families. but the land has been worked a long time, and harvests can be poor. Through more than 1,600 field schools, Cargill teaches affordable and sustainable practices that improve soil quality, raise yields and lift incomes. we also encourage rotating cotton with food crops, which provides more nutrition at home.
Global Investment
In fiscal 2012, Cargill plans to invest more than $3 billion in assets and facilities that create new capabilities and more capacity to better feed the world.
farmers trained in past two years
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Research and Innovation
Cargill is conducting research on the variables that
affect corn yields in order to help farmers harvest more
corn from the same acreage. working on test plots across
the u.s. Midwest, we developed a program to identify the
best combination of crop inputs and agronomic practices.
The result has been an average yield increase of 20 percent.
now we are expanding to soybeans.
average bushels of corn per acre on
Cargill test plots
better nutrition
hundreds of thousands more people will consume
vitamin-enriched vegetable oil with Cargill’s recent
launch of a new brand of fortified palm olein oil in
eastern India. we enrich all of our refined oils in
India, reaching nearly 30 million people. Cooking
oil is consumed in 99 percent of Indian households,
making it an ideal vehicle to fight malnutrition. A
Cargill-commissioned study will soon evaluate the
program’s impact on health.
Improving diets
nearly 20 percent of nicaraguans do not eat enough daily to maintain good health.* Cargill is helping improve diets there by making chicken more accessible and affordable. our fleet of refrigerated trucks delivers poultry products to 12,000 small shopkeepers, many of whom are isolated by poor roads. not all of their customers can afford whole birds, so we offer lower-priced packages of chicken parts.* source: FAo
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we spoke with thought leaders on food security, both within Cargill and involved organizations, to define the challenge and identify solutions.
EMIlIo CAsTIllo
General Manager,
Cargill Mexico
GREG PAGE
Chairman and CEo
RoZ nAYloR
director,
stanford university’s
Program on Food
security and
the Environment
PAul ConwAY
Vice Chairman
PRoFEssoR
M s swAMInAThAn
Chairman,
M s swaminathan
Research Foundation;
Member of Parliament, India
sIRAj ChAudhRY
business unit leader,
Cargill India
josETTE shEERAn
Executive director,
world Food
Programme
RobERT b. ZoEllICK
President,
world bank
dAVId MClAuGhlIn
Vice President,
Agriculture,
world wildlife Fund
Cargill
Food security thought leaders
EMMAnuEl MbEwE
Project Manager,
Cargill Cotton, Zambia
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pricing, so we need a code of conduct that
at least exempts humanitarian purchases
from bans.
RoZ nAYloR, sTAnFoRd:
Poverty is the main issue driving food
insecurity—it’s a question of access rather
than food availability. The majority of poor
people derive their incomes from agriculture
either directly or indirectly, so low incomes in
agricultural settings, particularly where there
is low productivity and limited market access,
are a big component of food insecurity. Price
spikes are another significant contributor,
especially in urban areas where high
prices for staple foods essentially reduce
disposable income for poor people. The third
and much more difficult issue is the lack of
political stability that would enable markets
to work efficiently so food producers could
sell their commodities and consumers could
buy them at a reasonable price.
GREG PAGE, CARGIll:
Food is not a single issue—it is an
interdependent and interconnected set of
issues surrounding our environment, energy,
RobERT b. ZoEllICK, woRld bAnK:
There are two interrelated challenges as
we work to ensure global food security in
the face of rising prices. First, we need to
increase food productivity and production
in developing countries, especially in
sub-Saharan Africa and with smallholder
farmers. To do so, we need to fix problems
all along the value chain, including property
rights, research and development for seeds
and inputs, irrigation, fertilizer, agricultural
extension, credit, rural infrastructure,
storage and connection to markets. The
second problem is the volatility of food
prices, often because of events outside
poor countries’ control. An interconnected
combination of steps could help ensure that
the most vulnerable countries and people
get the nutrition they need. For example,
we can increase public information on
the quality and quantity of grain stocks to
reassure markets and calm panic-induced
price spikes. We can improve long-range
weather forecasting and monitoring,
especially in Africa, to better prepare for
dangers. Export bans exacerbate panic
Multiple, interrelated factors contribute to the complexity of food insecurity around the world today
Food security
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agriculture and food trade. These factors
contribute not to a caloric famine (the
inability to grow the food we need) but to
an economic famine (the inability of millions
of people to pay for an adequate diet). The
calories exist to feed the world’s hungry
people, but collectively we have not put
the resources in place to do so. The United
Nations estimates that 925 million people
are undernourished. Given their average
caloric deficit, it would take 30 million tons
of whole grain equivalents to feed them.
That is one-sixth of the grain we currently
convert to biofuels. Feeding the hungry is
first an issue of economic capacity to put
enough price into the agricultural system
to create sustainable agriculture. Water,
seed, technology, agronomy—they are all
important. But the fundamental ingredient
of sustainable agriculture is an adequate
price to reward farmers for their efforts and
provide enough money so they can do it
again the following year. Then we must build
supply chains that are efficient enough to
help farmers sell their crops profitably and
help consumers buy their food for less.
josETTE shEERAn, woRld Food
PRoGRAMME:
The challenge of ensuring access to
nutritious food for the most vulnerable
has been compounded by a converging
set of global crises that have now,
unfortunately, become the new normal.
First, we are confronted by an increasing
number of natural disasters across all
continents. Recent floods and droughts
around the world and the devastating
earthquake and tsunami in Japan are just
the latest examples of such destabilizing
and catastrophic events. Last year,
263 million people were devastated by
disasters—110 million more than in 2004,
the year of one of the most destructive
tsunamis in history. Thus far, this year has
the potential to surpass even those record
numbers. Second, we are witnessing
escalating insecurity associated with
ongoing conflicts. Driven by political
unrest, particularly in low-income food
deficit countries, hundreds of thousands
of people are fleeing conflict and in need
of humanitarian assistance. The third
Food security (cont’d)
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factor is volatile food prices. Food prices
are expected to remain higher in the next
decade than over the previous one, given
the projected supply and demand of
agricultural production.
PRoFEssoR swAMInAThAn,
M s swAMInAThAn REsEARCh
FoundATIon:
Generally the factors we now see driving
food insecurity include international price
volatility, which can come from higher prices
for petroleum, fertilizers and other inputs,
and climate aberrations. In India, the farmers
say their fate is linked to the monsoon and
the market—rainfall patterns and what kind
of prices they are likely to get in the market.
This is true for farmers around the world as
normal climatic variations and increasingly
uncertain weather events, such as extreme
droughts, floods, tsunamis and so on,
affect harvests. At the same time, the price
of agricultural inputs is rising. We have to
be prepared to help farmers meet these
challenges. Food security itself has three
aspects. First is the availability of food in the
market, which is a function of production.
The second is access to food and the ability
to buy food. In India, for example, the
availability of food is quite good, but nearly
14 percent of the people do not have the
money to have access to balanced diets.
Finally, the third aspect of food security
is absorption of food in the body, which
includes clean drinking water, primary health
care and sanitation. All three factors must
come together to ensure food security.
dAVId MClAuGhlIn, woRld
wIldlIFE Fund:
There are a number of drivers of food
insecurity. Increased prosperity in high
population countries, such as China and
India, has greatly increased demand for
agricultural commodities, including more
edible oils and proteins. This increased
demand has dropped global stock positions
in key commodities, so the traditional
buffering systems in the food supply are
not as robust as they have been in the
past. Overlay these factors with variability
in supply and production—due to weather
factors, poor harvests and biofuels—and
it’s clear the global food system is being
strained. We have seen this clearly reflected
in prices and market volatility.
Food security (cont’d)
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Increasing productivity in a sustainable manner will be necessary to feed the world’s growing population
Production PRoFEssoR swAMInAThAn:
The term “green revolution” was coined in
1968 to designate higher productivity per
unit of land. Today, we refer to the need for
an “evergreen revolution” because we
have no other option except to produce
more from less land and water, but that
has to be done without harm to the
environment. People realize you can’t go
on extracting from the land and water
indefinitely without giving something
back to promote soil health and so on. So
today the question is: How do you achieve
an evergreen revolution, especially in
developing countries where land is a
shrinking resource for agriculture? One
method is through organic farming using
animal manure with integrated pest
management and nutrient supply. This does
not mean no chemical use at all, but using
the minimum essential chemicals that are
needed along with biological control, genetic
control and so on to ensure environmentally
sound agriculture. Whether it is in the
United States, India, China or elsewhere,
we have to produce more from less per
capita land and water availability and do so
in an environmentally benign manner. That
is the evergreen revolution—productivity in
perpetuity without ecological harm.
dAVId MClAuGhlIn:
We are using natural resources at a rate faster
than they can be regenerated. Our current
consumption of natural resources requires
1.5 planets to meet current demand. We only
have one planet. Clearly the expansion of
the agricultural frontier will have impacts on
finite resources and conversion of critical
habitats. We are running out of land—and
we are seeing a global land grab securing
land and water resources in order to feed
growing populations. Over half the countries
in the world have declining water tables.
Given this increased pressure, we need to
look at how we get more production from
existing land and use natural resources, such
as water, more efficiently. We can’t afford to
take anything off the table; we need to do
more with less. There are wide variations
in crop yields. Access to seed, technology
and inputs are all part of the equation, as
are better management practices, use of
degraded lands, preserving and conserving
soils, reducing food waste, infrastructure,
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land use planning and protecting land tenure
rights. Overlay all of these concerns with
the uncertainties of climate change, and it is
clear, we are facing significant challenges.
We need multiple strategies, and we can’t
afford to bet on just one.
RoZ nAYloR:
The question is this: Will we get additional
food from intensification—higher yields on
existing cropland—or move new lands into
production? It is estimated that about 6
million more hectares per year in developing
countries will be needed, and much of
that could happen in forested areas.
Weakening of forest protections will have
a lot of repercussions for the environment
and biodiversity as well as for regional
and global climate change. In addition to
the threat to rainforest areas in Brazil and
Indonesia, land purchases in Africa also
have risen enormously in the past few years.
How this land actually gets used will be
interesting to watch. Most of the increases
in new farmland, or the purchases of land,
are happening where land institutions are
pretty weak. Is this expansion going to help
food security or hurt it? That depends on
whether the expansion puts capital into the
right hands or the right strategic processes
to make an agricultural system really work.
PAul ConwAY, CARGIll:
It is clear the world needs to produce more
food. In Asia, for example, China is becoming
the motor of world economic growth—and
the world needs China to grow. While the
country is a huge consumer of petroleum
products, iron ore and all sorts of other
products flowing in, in terms of food, the only
product where China is a major factor on
the world market today is soybeans. China
has gone from essentially minimal imports of
soybeans a decade ago to 60-70 percent of
the world’s seaborne flow of soybeans today.
In the future, China’s population is expected
to become increasingly more urban—
approximately 20 million people a year over
the next decade supposedly will move from
rural areas to Chinese cities. The change
will have a major impact on the nature of the
food they eat, including different sources of
protein and more processed foods. China
also faces desertification in some land areas.
These factors point to China’s increasing role
in global trade flows in the years to come.
Production (cont’d)
“It is clear the world needs to produce more food.”PAul ConwAY
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Driven by a multitude of factors, high volatility in commodity and food prices can threaten food security
Price volatility josETTE shEERAn:
After a 25-year trend of stable and
relatively low prices, the world has
witnessed much volatility in the prices of
agricultural commodities over the past five
years. The vulnerability of the poor was
made all too visible by the recent crises,
often referred to as the three Fs—food,
fuel and financial. For the world’s food
insecure, it became the perfect storm
that resulted in more than 100 million
additional people becoming poor and
hungry, a global total that is pushing 1
billion people—or one of every seven on
earth. Additional shocks to already volatile
food prices would be devastating for those
struggling to maintain their livelihoods.
WFP and other international organizations
have mapped out possible approaches to
emergency humanitarian food reserves.
The idea is to explore whether a cost-
effective system of targeted, prepositioned
stocks can help ensure the poorest and
most vulnerable people have rapid access
to sufficient supplies during shocks.
GREG PAGE:
Governments must encourage open
trade and a fair, transparent, rules-based
and rigorously enforced system so food
surpluses can reach areas of food deficit.
In the 2008 food crisis, more than 30
countries imposed export restrictions,
and that action merely pushed prices up
further. Trading bans isolate local markets
and give farmers little incentive to expand
production for the next season, limiting the
potential supply response to soaring prices.
To ensure access to food in emergencies,
governments would do better to supply
temporary assistance to consumers who
are otherwise unable to access food,
ensuring the demand side of the market
continues to operate. During the last three
years, we have seen governments whose
response to price volatility and supply
interruptions has been to pursue self-
sufficiency. If every country on earth tried to
grow all the food necessary to adequately
feed its own population, there would be
much less food available. The world will
always raise the most food economically
21
and in the most environmentally
responsible way when farmers raise the
right crop in the right soil using the right
technology, then trade with others for the
benefit of all.
RobERT b. ZoEllICK:
We have been in a period of extraordinary
volatility in food prices, which poses a
real danger of irreparable harm to the
most vulnerable nations and people. Food
accounts for a large and increasingly
volatile share of family budgets for poor
and urban families. When prices of staple
foods soar, poor countries and poor
people bear the brunt. High, uncertain and
volatile food prices are the single gravest
threat facing the most vulnerable in the
developing world. Since June 2010, rising
and volatile food prices have led to an
estimated 44 million more people living in
poverty—under $1.25 a day. People are
hungry for food and for action on a global
level. Greater transparency on food stocks
around the globe sends a powerful signal
and would help reduce food price volatility
by reassuring markets.
sIRAj ChAudhRY, CARGIll IndIA:
Food inflation in India is largely related to
perishables, primarily fruits and vegetables.
The prices of basic food ingredients
have been relatively stable. In the case
of perishables, and to a certain extent
in the case of the broadacre crops, we
have not been able to predict the outlook
for potential shortages stemming from
inopportune timing or the severity of
monsoons. To effectively manage price
volatility in India, we must get a good
grip on supply and demand, manage the
information flow about crop outlooks and
address situations as they arise.
PRoFEssoR swAMInAThAn:
At the global level, there is a need for
more transparent information systems so
we know how much food is available in
terms of food reserves and food stocks
and where this food is located. Today,
with modern technology for sensing and
satellite imaging, it is possible to have a
much better monitoring and prediction
system. We need a better early warning
system so we can anticipate the shortages
Price volatility (cont’d)
22
that are to come and how best to prepare.
We need a whole series of international and
national actions, which is why the United
Nations has now established a committee on
food security. The committee is examining
price volatility and land use patterns,
including diversion of prime farmland from
food to biofuels and alternate land uses
that can reduce food production. Globally,
there should be greater cooperation to
help manage price volatility. Farmers, the
agriculture industry and the public sector
should combine together to help insulate the
poor consumer from undue price fluctuation.
EMIlIo CAsTIllo, CARGIll MExICo:
Our food system doesn’t always respond
to changes in demand from one day to the
next—sometimes it takes a few growing
seasons. We all need a transparent pricing
mechanism that allows the food system
to reach the appropriate supply-demand
equilibrium. Sometimes governments
consider restricting price increases without
having a clear understanding of how those
decisions affect supply in the short-,
medium- and long-term. Because everything
in the global food system is connected, what
is done in Ukraine or Russia affects food
prices and availability in Mexico, Africa, the
United States and elsewhere. Often, market
changes are due to weather uncertainties.
For example, this January in Mexico we
experienced a very significant frost that
damaged a major portion of the white corn
crop. Cargill and others on the ground
visited farmers to determine estimates of
the crop damage, then we looked for ways
to supplement the local crop with corn
from elsewhere, including South Africa and
the United States. We were able to bring
in yellow corn to be used for animal feed
in Mexico and free up white corn that our
customers could use to make tortillas, a
staple of the Mexican diet. This type of open
trade is critical to cover crop shortfalls in
times and places of deficit.
Price volatility (cont’d)
23
smallholders
Smallholder farmers need support to fulfill their expanding role in feeding the hungry and fighting malnutrition
GREG PAGE:
Besides inputs and cash, four basic things
are required for smallholders to help
improve food security. First, smallholders
need the opportunity to plant the crop that
makes the most sense for their geography
to capture their greatest comparative
advantage. Second, smallholders need
property rights. They have to be able to
own their land and pledge it as collateral
if they are expected to reinvest and
raise their productivity over time. Third,
smallholders need a reliable market into
which to sell their crops. Smallholders
in developing countries lack sufficient
revenue certainty. With price volatility,
capital investment in higher productivity is
severely discouraged. Often, smallholder
farmers are forced to sell at harvest
when they are cash flow destitute and
have limited access to real credit. Selling
at depressed prices creates a cycle of
discouraging further production in future
years. And fourth, these farmers need
physical connectivity to world markets
where they can sell at a more reliable price.
PRoFEssoR swAMInAThAn:
A small farm is not a handicap for
ecologically efficient agriculture. What we
have to do is improve the productivity of
small farms by increasing the capacity of
smallholders through timely availability
of services in rural areas. We need to
strengthen marketing and transportation
services in these rural areas and attract
young people to agriculture by making
it more intellectually stimulating using
new technologies. Small-scale farmers
also need capacity building—through
technology and training—to help them
grow more nutritious food. This can be
done through farmer-to-farmer learning.
We also need the technology infrastructure,
such as storage structures and trade. We
are trying to give the power and economy
of scale to small producers by encouraging
them to form groups and cooperatives. We
need a small farm management revolution.
EMMAnuEl MbEwE, CARGIll ZAMbIA:
In Zambia, the main challenge facing
farmers is low yields due to production
techniques and poor soil conservation
24
practices. To help increase their yields
of cash crops (cotton and soybeans)
and staple foods (corn), Cargill trains
farmers in what we call the five-finger
approach to yield enhancement: proper
land preparation, timely planting, optimum
plant population, effective weed control
and integrated pest management.
Farmers learn these simple practices
in field schools, then witness their use
in strategically located demonstration
plots and finally use the techniques in
their own fields. The result is increased
production of higher quality crops, as well
as better management of water and soils.
We noticed that female farmers spend a
lot of time in the fields but most were not
attending training, so this year we launched
a new program—women’s clubs. These
clubs provide training to female farmers,
who immediately think of food security
challenges at home. We are also partnering
with TechnoServe to teach the women
about better nutrition and help them find
markets for their crops.
josETTE shEERAn:
Women are the secret weapon
against hunger. Closing the gender
gap in agriculture by giving women
farmers more resources could bring
the number of hungry people in the
world down by as many as 150 million.
In many countries, women form the
backbone of the agricultural sector and
food systems, making up the bulk of
agricultural laborers. This is why WFP
is helping smallholder farmers, many of
them women, through a program called
Purchase for Progress. This program,
which is now in 21 countries, helps
connect farmers who are marginalized and
disconnected from markets and gets them
into WFP’s supply chain and the broader
marketplace. We are seeing this transform
lives and empower rural communities by
enabling small-scale farmers to invest
and plan. Already more than 69,000
farmers, warehouse operators, and small
and medium traders have been trained
in agricultural production, post-harvest
handling, quality, marketing and finance.
smallholders (cont’d)
“Poor farmers must be helped not to be recipients of food aid but producers of food to feed the world.”josETTE shEERAn
25
And WFP has contracted nearly 185,000
metric tons of food valued at more than $66
million. Poor farmers must be helped not to
be recipients of food aid but producers of
food to feed the world.
EMIlIo CAsTIllo:
The northern Mexican states of Sonora and
Baja California have weather that is very well
suited to growing high quality durum wheat.
This wheat is used to make pasta and cous
cous in other countries, but there is a limited
market for it in Mexico, so farmers were only
able to sell it locally as feed for hogs. Cargill
is helping farmers sell their durum wheat
into the food chain in other countries, such
as Italy and Algeria, where it has a higher
value. This trade helps raise the incomes of
farmers in Mexico while providing desired
durum wheat to other regions at times when
local wheat is not being harvested, so it
contributes to food security and is beneficial
to all involved.
RoZ nAYloR:
Small-scale irrigation is a promising
technology niche for use in smallholder
agriculture, particularly in sub-Saharan
Africa and South Asia where population
growth, diminishing land plot size, low
yields for staple crops and low incomes
all contribute to food insecurity. For these
farmers, agriculture is highly seasonal work
because their systems are rainfed. Farmers
might only produce food four months a year.
There is not much market connectivity, so
after the harvest they all pour their crops
into the market at the same time and prices
slump. This sort of basic system where
the poorest farmers rely on low-yield,
staple crops that are not irrigated just
does not produce enough income growth
to achieve food security. With small-scale
water distribution systems, these farmers
can diversify into higher valued crops that
are more nutritious and can be grown
throughout the year.
smallholders (cont’d)
26
RoZ nAYloR:
Agricultural markets are highly affected
by policies, both within and outside of the
agricultural sector. Biofuel mandates are
one example of policy that distorts food
prices around the world. The development
of the ethanol industry, and policy incentives
that have promoted its growth, have made
the agriculture and energy sectors more
tightly connected. This connection is
particularly clear with regard to the U.S.
ethanol industry and global grain markets.
Essentially, renewable fuels mandates in
the United States, with a focus on maize-
based ethanol, have created a new level
of demand for grains that is inelastic or
unresponsive to market prices. This new
level of demand affects the prices of food
and animal feeds throughout the world. It
also creates a market that is highly variable,
especially when supplies are disrupted by
climate shocks. If global leaders are seeking
a world in which food prices are lower and
more stable for consumers, the answer is
easy: back off the promotion of biofuels. The
problem is that grain farmers would lose.
biofuels
Use of food crops as fuel and policy mandates for biofuels have an impact on food security
GREG PAGE:
The ethanol program in the United States
and the biodiesel program in Europe stem
from a period of agricultural surpluses,
when most farmers were operating below
their cost of production. There was little
agricultural reinvestment then, and we had
the distortion of direct subsidies in the
Western world distorting prices globally.
The upside of biofuel programs is they
brought prices back to a sufficiency that
reinvigorated investment in agriculture. The
great risk we have now—with mandates
for biodiesel in Europe and ethanol in the
United States—is we have injected volatility
into the food system. Taking a food system
that has all the disruptions in supply that
weather can bring and coupling it with
mandates can produce outsized volatility.
The challenge is to determine the right
size and mix of biofuel programs and put
in sufficient circuit breakers to help ensure
that enough revenue is coming into global
agriculture for reinvestment but, at the same
time, prevent the outsized price volatility that
disproportionately harms the world’s poor.
27
biofuels (cont’d) dAVId MClAuGhlIn:
When we see global food stocks
at critically low levels, food prices
skyrocketing, and more and more people
becoming food insecure, it’s clear we need
more food right now. Going forward, the
problem is likely to become more severe
as society’s ‘ask’ of agriculture grows to
include energy, materials and products
such as renewable packaging. Many
agricultural commodities are closely linked
to the price of crude oil. As demand for
energy increases, we will continue to see
impacts on food security.
RobERT b. ZoEllICK:
We must look globally at easing subsidies,
mandates and tariffs on biofuels from corn
and oilseeds, especially as prices rise.
Additionally, we need to move toward use
of second-generation cellulosic biofuels.
Opening markets to sugar-based fuels that
do not compete directly with food, including
those from Africa, also will be important.
28
dAVId MClAuGhlIn:
On a global basis, we are more exposed
to food security issues when crop yields
suffer, given that we don’t have the surplus
stocks and buffer systems in our global food
system. The FAO Food Price Index clearly
shows we have undergone a dramatic shift
in the last five or six years. Just last year,
we saw a collapse in Russia’s breadbasket
due to drought. While further research is
still needed on exactly what and where
the changes may be, we do know we must
prepare for increasing variability in rainfall,
temperature and crop yields. Climate
change will alter water availability, affect
the spread of pests and diseases, and shift
crop distribution. The agricultural industry
needs to increase investment in research
and extension resources to find solutions to
address these impacts on traditional growing
regions. As a result, a lot of plant research
and breeding needs to be done to help
prepare for these changes and uncertainties.
Climate
Agricultural adaptations can help address changes in climate
PRoFEssoR swAMInAThAn:
There are several components to climate
change, including higher temperature,
drought and rising sea levels. There will
be a common but differentiated impact
of temperature change on food security –
some northern latitudes will benefit from
higher temperatures because the duration
of their growing time will increase, which
will increase crop yields, but other areas will
lose crop duration. In India, for example, the
wheat crop will mature earlier and we could
lose 6 million to 7 million tons of wheat.
That is why we have to start preparing now,
identifying crop varieties that are more
tolerant to heat and a shorter duration by
increasing per-day productivity. We must
prepare by researching more salt-tolerant
crop varieties. Ultimately, poor countries will
suffer most because they have less coping
capacity. Every country will have to have its
own strategy for developing crop varieties
that can cope with climatic changes.
29
RoZ nAYloR:
In addition to crops, we also need to focus
on livestock because with the expected
increased heat, animals will have a harder
time surviving. We will need adaptations,
such as solar-powered structures to
keep animals cool in the hottest seasons.
The worst scenario that needs to be
considered in certain locations is a
movement out of agriculture. There may
be areas in sub-Saharan Africa and in the
tropics more generally where it will be
too hot to farm at all. What we saw last
year with the extreme heat wave in Russia
is an example of the kinds of events we
can expect more of in the future. The
political responses of banning exports or
trade in response to these sorts of supply
disruptions just makes world markets more
volatile and reduces food security.
RobERT b. ZoEllICK:
The stresses on the world’s agricultural
system are compounded by growing
demand for food. Annual growth in rice and
wheat yields in developing countries – home
to four-fifths of the world’s population – has
dropped from 3 percent in the 1970s to just
1 percent today. Without strong adaptation
measures, some estimate that climate
change could reduce yields by 16 percent
worldwide and 28 percent in Africa alone
over the coming half century. We need to
be creative and innovative about farming,
so there are not only more crops but more
resilient crops, if we are to respond to the
challenges of feeding a growing population
under more difficult and unpredictable
conditions.
Climate (cont’d)
30
josETTE shEERAn:
When people have no food – because of
natural disasters, like last year’s earthquake
in Haiti or floods in Pakistan – we bring in
food, and that saves lives. But sometimes
there is food available – it’s just that the
poorest cannot afford it. That’s when we
can deploy tools to help the poorest while
protecting or even stimulating markets.
One of these tools is cash and vouchers. In
Palestine for example, beneficiaries are able
to use an electronic swipe card to purchase
nutritious food at local markets. All the
products in the program are produced locally
– milk, yogurt, cheese. It’s a win-win-win.
Local farmers have increased production.
Local shops have more customers and
profits. And families do not need to travel
long distances in order to receive their
Food aid
Innovation can help ensure access to nutritious food in emergency situations
nutritional food. They have the freedom
to use their electronic vouchers at any
time, reducing cost of transportation and
addressing storage problems. Because of
this innovative approach to promote food
security, WFP is increasing cost efficiency
and allowing for a better analysis of food
consumption patterns in real time.
RoZ nAYloR:
In relief situations when there are food
emergencies and the need for food aid, there
is a critical need to rethink the structure of
food aid programs. The United States, for
example, should contribute cash for regional
purchases and not just crop surpluses
transported on U.S. flagged vessels, which
usually arrive much too late and are much
too expensive.
31
R&d investment
Greater investment in agricultural infrastructure, research and development is necessary to increase global food production
PAul ConwAY:
Investment in the agricultural sector is
very important. For example, the cost
for a farmer in the midwestern United
States to get surplus crops to an export
port is less than a quarter of the cost for
a similar farmer in Brazil because of the
differences in local infrastructure. That’s
where government can have a big impact.
While today the issue of food security
is at or close to the top of government
agendas worldwide, that has not been
the case during the past two decades.
Although companies in the private sector
have continued to invest in assets to help
serve farm communities, public sector
investment in agriculture has declined
year on year for 20 years because we
had an era of surplus food. This long-
term underinvestment in agricultural
infrastructure globally includes both hard
assets, such as transportation, rail and
silos, as well as soft assets, like the ability
to bring new young talent into the industry.
Now there is widespread understanding
that in order to produce the additional food
that will be required in the next 20 years,
we need targeted public sector investment
in a manner that helps balance the paradox
of the need for intensification with the
requirement to increase productivity in a
sustainable way.
RobERT b. ZoEllICK:
Recognizing that the energy-food nexus
means more prices will stay high, our task
is twofold: to handle today’s danger for the
millions of people for whom securing food
has become a daily struggle, and then to
turn higher food prices into an opportunity
for developing world agriculture and for
farmers in developing countries. Increasing
global food production will require boosting
developing country agricultural products
and productivity by investing all across
the value chain, including land use, water
and irrigation, ways to cut wastage,
infrastructure and logistics, working
capital and linking small-scale farmers in
developing countries with retail outlets. We
also need more agricultural research, such
as new rice for Africa that could triple yields,
drought-tolerant maize and flood-tolerant
32
rice. We need financial and other tools to
help farmers and their governments manage
risk, whether rainfall or prices of inputs such
as energy. Collective action is necessary to
counter global risks.
PRoFEssoR swAMInAThAn:
Investing in genetic diversity is very
important because genetic homogeneity
increases crop vulnerability to pests
and diseases as well as vulnerability to
climate changes. Conservation of genetic
biodiversity is fundamental to food security.
Whether it is in animals or plants, we
must fight against genetic homogeneity.
For instance, the Indian government
has created a gene vault where several
million seed samples can be preserved for
posterity. At the community level, we are
also establishing local seed banks to help
us revive these dying crops and vanishing
wisdom. We must support this type of on-
farm conservation.
EMMAnuEl MbEwE:
The portions of the population who are
most vulnerable to food insecurity are in
the less developed rural areas where they
lack the basic infrastructure, networks and
resources that would allow participation
in better markets. These areas need
investment in rural development policies
that target resources to establish or
improve essentials such as accessible
roads, electricity and education. There
needs to be a stronger commitment to
invest in infrastructure to fight illiteracy
and to provide credit facilities that would
strengthen farmers’ capacity to produce
quality crops. We also need extension
services to communicate effective farming
practices and new technologies, and to
challenge farmers to take the initiative in
working together to solve the problems
they face.
josETTE shEERAn:
One of the key challenges to food security
is access. If you’re in a rural area and
you’re lucky enough to have surplus
crops, it may be the roads are inadequate
to get your crops to market, or there are
insufficient roads to get foodstuffs to you.
If you’re a government trying to address
food security, you may not have granaries,
R&d investment (cont’d)
33
R&d investment (cont’d) so if you have surplus you’re not able to
store it for lean times. This is why WFP
has food-for-assets programs around
the world. Providing food in exchange
for work makes it possible for the poor
and hungry to devote time and energy to
taking the first steps out of the hunger trap.
In countries where poverty often forces
farmers to overuse soil and grazing land,
WFP provides food rations to farmers who
practice soil conservation by planting trees
to help weather droughts and floods.
sIRAj ChAudhRY:
In India, investment is necessary to meet
the challenge of getting nutritious food
at an economic cost to the people who
need it. In addition to fighting malnutrition
by fortifying all of the edible oils Cargill
produces in India with micronutrients, we
are working with the Indian government and
NGOs to help establish and distribute food
through the India Food Banking Network.
We also are working with the World Food
Programme in collaboration with the local
government to increase access to nutritious
food for people—especially women and
children—living in Madhya Pradesh, a
state in central India with very high levels
of malnutrition. This program includes
organizing kitchen gardens, fortifying
wheat flour and providing education about
nutrition, health and hygiene. All these
efforts build trust between the government,
private sector and NGOs in the battle
against hunger, malnutrition and poverty.
34
outlook
Despite significant challenges, there is optimism about the world’s ability to adequately feed its growing population
PAul ConwAY:
We believe it is unmitigated good news that
rising incomes around the world have led to
improvement in the diets of tens of millions
of people. As incomes rise above that basic
subsistence level, so many people are being
lifted out of poverty. This intensification
of diets increases the requirement for
food sharply. At Cargill, we are extremely
optimistic that the world can meet this need.
josETTE shEERAn:
There are many reasons why I’m hopeful
that we can defeat hunger and malnutrition.
Working together, public, nonprofit and
private sector leaders can scale up
innovative strategies to help countries on
the front lines of hunger.
dAVId MClAuGhlIn:
I’m an optimist by nature. I believe that
innovation will play a huge role in our
ability to meet the increasing demand
for food. There will be impacts to the
planet and we need to plan better and
work together across the public sector,
private sector and NGOs. If we are to find
solutions, collaboration will be critical.
On a finite planet, sustainability must be
precompetitive, and we all need to work
together.
RoZ nAYloR:
I am optimistic about feeding the world,
especially when I go out and talk to farmers.
They are amazing and ingenious in how they
respond to the enormously difficult task
of working on the land. When I see them, I
think there is hope.
GREG PAGE:
We can harness the power of agriculture
to drive food security, environmental
sustainability and economic opportunity. I
believe fully and completely in the world’s
capacity to harvest photosynthesis to feed
every single person and to do it at a price
that can be borne by all.
35
Cargill is committed to promoting food security. It’s what we work at every day around the world.
These organizations are leading regional and global efforts to create a more food secure world.*
* Descriptions are taken from organizations’ websites; edited for length.
36
These organizations are leading regional and global efforts to create a more food secure world.
37
These organizations are leading regional and global efforts to create a more food secure world.
ouR APPRoACh is to be trustworthy, creative and enterprising. ouR PERFoRMAnCE MEAsuREs are engaged employees, satisfied customers, enriched communities and profitable growth.
ouR PuRPosE is to be the global leader in nourishing people. ouR MIssIon is to create distinctive value.
P.O. Box 9300Minneapolis, MN 55440www.cargill.com
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marketer of food, agricultural, financial and
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in 1865, the privately held company employs
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