Milling & Baking News - April 11, 2017 - 16

Industry Activities X

Cargill c.e.o. decries menace of
creeping protectionism
LAUSANNE, SWITZERLAND -
While trade fosters prosperity and
peace, trade barriers heighten the risk
of economic weakness and major political and social upheaval, said David
W. MacLennan, chief executive officer
of Cargill.
Speaking March 28 at the Financial
Times Global Commodities Summit,
Mr. MacLennan advocated against
"me-first" trade stances. The summit
was held at the Beau Rivage Palace in
Lausanne.
"Severe economic conditions -
combined with other social and political factors - can also push governments to the edge and, in worst cases,
spark civil unrest," Mr. MacLennan
warned. "Poverty and conflict all too
often force people to leave countries
they love in search of a better life for
themselves and their children."
Such a dire picture of the potential
consequences of aggressively protectionist trade actions is anything but
hypothetical, Mr. MacLennan said. He
described a chain of events that resulted
from a 2010 heat wave in Russia that reduced that country's wheat production
by a third. In response, Russia instituted
a wheat ban that triggered a dramatic
escalation in global wheat prices.
"A 2% change in global wheat
supply drove nearly a 60% increase
in prices around the world," Mr.
MacLennan said. "At the time, Russia
supplied Egypt with the majority of its
wheat. The rapid shift in supply led to
price increases, and when combined
with broader political tensions, was
one of the contributing factors to the
2011 protests in Tahrir Square."
He said similar scenarios played
out in 60 different nations around the
world over the last decade, contributing to varying levels of social and political instability.
Noting that many nations recently
have been "leaning further toward
economic nationalism," Mr. MacLennan described a domino effect of economic actions and retaliatory moves
that threaten to leave world trade
"tied in knots."
Advocating for support of the World
Trade Organization, and a rules-based
trading system, Mr. MacLennan offered a dystopian view of what could
transpire if the "me-first" approach to
trade continues to build.
"Imagine critical commodities -
oil, food, metals and manufactured
16 / April 11, 2017 XMilling & Baking News

goods - used as bargaining chips at
every turn," he said. "Imagine a world
where technology and ideas cannot
cross borders. It's a world none of us
wants to see, but is foreshadowed by
recent meetings of the G20."
While warning of the threats posed
by a global tilt toward protectionism,
Mr. MacLennan devoted most of his
presentation to offering a vigorous defense of world trade, describing what
Cargill is doing to advocate for free
trade and encouraging his audience to
defend free trade.
The scope of world trade, which
provides nations access to commodities, services and capital, is colossal

and education systems "need to keep
pace," too.
As an example, Mr. MacLennan
described a plant converted by Cargill from a beef processing facility to
a cooked meat plant. A $100 million
initiative prompted by changing consumer demand, the project required
Cargill to retrain plant employees for
"jobs that will be vital over the long
term," he said.
"Retooling and retraining isn't
easy," he continued. "But as our societies move into the Fourth Industrial
Revolution, we need to address skills
gaps to keep our businesses and economies strong."
Returning to the idea that trade is
scapegoated for hardships around the
world, Mr. MacLennan said trade becomes a "convenient excuse," in part

'The challenge is that the jobs of today will
not be the jobs of tomorrow. That has been
consistent throughout history. We need to
immediately address this skills gap.'
- David W. MacLennan, Cargill

and growing, Mr. MacLennan said. He
noted global trade jumped more than
150% between 2000 and 2014, rising to
$12.2 trillion from $4.8 trillion. In the
United States alone, where Cargill is
based, one third of U.S. farmland is
planted for exports.
Acknowledging that "trade is imperfect and that its benefits are not always
evenly distributed," Mr. MacLennan
said trade often is scapegoated for other economic dislocations. For instance,
he noted that 88% of U.S. manufacturing job losses over the past decade
were caused by increased productivity
associated with information technology, robotics and organization.
"That's a harsh reality to face for
workers and their families," he said.
Still, due to economic growth, manufacturing jobs in the United States are
growing.
"It's estimated that nearly three and
a half million manufacturing jobs will
be needed, and two million are expected to go unfilled due to a widening skills gap," Mr. MacLennan said.
"The challenge is that the jobs of today
will not be the jobs of tomorrow. That
has been consistent throughout history. We need to immediately address
this skills gap."
Mr. MacLennan said companies like
Cargill should make investments in
its future workforce, but public policy

because of distortions perpetuated
both by defenders and detractors of
trade.
"Pro-trade factions tend to overpromise the benefits of trade, while
those who advocate trade restrictions
often blame trade policies for a variety of unrelated societal impacts," Mr.
MacLennan said. "The true nature of
trade's impact lies somewhere in between."
To combat these misperceptions,
Mr. MacLennan said political leaders
must understand that:
x"Trade is a net job creator.
x"Today, more than half of the U.S.
manufacturing workforce depends on
exports.
x"And that nearly half of all exports of U.S.-manufactured goods
are sold to the 20 countries that have
eliminated barriers through free trade
agreements."
Citing U.S.-China trade as an example, Mr. MacLennan noted that as per
capita consumption of U.S. beef has
declined, imports from China have
risen, sustaining total demand. China
also has been a growing importer of
soy products.
"All of this makes sense through
the lens of comparative economics,"
he said. "But we tend to forget that it
is not just about economics, it's also
about sustainability. Farmers in China
bakingbusiness.com / world-grain.com

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Milling & Baking News - April 11, 2017

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