CEO Chris Policinski says policies to boost output would help global stability.
WASHINGTON - En route to a day's worth of meetings with members of Congress to sing the praises of America's farmers, Land O'Lakes CEO Chris Policinski took the broad view of the world's skyrocketing food prices -- now at record highs.
"We have to think about the world and the role that the U.S. plays in feeding a growing and hungry planet," said Policinski, who heads an Arden Hills-based farmer-owned cooperative with $11 billion in annual sales.
The World Bank reports that rising food prices have driven 44 million people in developing nations into poverty since June. The World Bank also blamed instability in the food supply for helping spur anti-government riots in Egypt, Tunisia and other countries.
America's ability to produce an abundance of safe, affordable food was what Policinski discussed last week with members of Congress.
The highest world food prices in at least 20 years are only "the tip of the iceberg" in global food demand that will require a 70 percent increase in production by mid-century, Policinski predicted.
"We see a connection between food security, economic stability and political stability," he explained before ducking into the office of Sen. Mike Johanns, R-Neb. "But it can go in the other direction. Food insecurity can ultimately lead to political instability. So as a society, we need to think this through."
Sending the wrong signals will prolong this crisis, said Devry Boughner, who directs international business relations at the Minnetonka-based agribusiness giant Cargill. "Policymakers in the face of crisis look for quick fixes," Boughner said.
Short-term solutions such as hoarding, stockpiling, banning exports or capping prices may help individual countries, but backfire in longer-term price increases worldwide, Boughner said.
"Price is an important signal to farmers [about what and how much to plant]," she said.
Price caps could limit production at the very time it needs to expand, said Jean Kinsey, a retired University of Minnesota economics professor who served on the International Food Policy Research Institute's board of directors.
Boughner believes Saudi Arabia's recent decision to double its wheat stockpile is a mistake.
Cargill stepped in last summer when Russia shut down wheat exports because of a drought, cutting off shipments bound for Egypt. Cargill quickly found another source of wheat and delivered it to Egypt, Boughner said.
"If we can't move food across borders, it affects everyone," Boughner said.
Food price spikes are inevitable because humans can't control weather and natural disasters, like drought in Russia, flooding in Australia or blizzards in America. The current price spike in some ways mirrors one in 2008.
Spikes hurt most in the developing world. But the Great Recession swelled U.S. food stamp rolls by 13 million from October 2008 to December 2010, according to the Department of Agriculture, making Americans as vulnerable to food prices as they have been in decades.
During Policinski's visit to Washington, he spoke Thursday at a breakfast organized by Womens Thrive Worldwide, a Washington-based nonprofit. Land O'Lakes sponsored the event. Minnesota Sen. Amy Klobuchar and Indiana Sen. Richard Lugar co-hosted the event to encourage U.S. investment in impoverished female farmers in developing countries.
Policinski said in his speech that the United States will need to be involved as the planet grows to 9 billion people.
"There's no doubt that American farmers will play a major role in meeting this challenge," Policinski said. "Our farmers have proven that through the use of modern production practices and the application of safe, beneficial technologies, they can deliver amazing results. Over the past six decades, U.S. agriculture productivity has increased 250 percent."
Kinsey, the former director of the University of Minnesota's Food Industry Center, said governments need to develop safety net programs with food reserves that don't disrupt markets the way hoarding does. However, growing demand, coupled with climate change, may warrant other extraordinary measures.
Financial incentives that come from an emphasis on renewable energy drive farmers to grow corn for ethanol or other biofuels and to reduce acreage of other commodities, she said.
A month ago, Kinesy wrote on the Food Industry Center's blog that the food crisis could force more countries to accept genetically modified food, a move considered environmental heresy in some parts of the world.
"We may have to spread the growing areas of commodities into places they haven't grown before," Kinsey said in an interview. "We may need to engineer seeds to be more productive and to grow in what we now think of as impossible conditions."
Jim Spencer • 612-673-4029