CEO says foreign aid hits home

  • Article by: JIM SPENCER , Star Tribune
  • Updated: July 23, 2011 - 10:29 PM

Selling the concept of foreign aid is tough in rough economic times, but the Land O'Lakes exec says it's key for U.S. job creation.

WASHINGTON - Chris Policinski, the president and chief executive officer at Land O'Lakes Inc., has an expression he uses when he thinks he's got the evidence to make a point.

"The facts," he says, "are friendly."

Policinski runs the $11 billion, Arden Hills-based cooperative that started in 1921 to ship butter to big cities on the East Coast. Now it is a full-fledged agribusiness producing a range of dairy products, as well as animal feed, that operates in more than 50 countries.

Policinski came to Washington recently to a conference of the U.S. Global Leadership Coalition (USGLC) to discuss the importance of the U.S. government's investment in overseas markets. Tough economic times have made increasing the country's foreign aid budget a hard sell, Policinski said.

In private meetings with senators and representatives early this year, "there was already a sense of the enormous pressure that was coming," Policinski said. "It certainly has filled out with the public debate."

Still, like Secretary of State Hillary Clinton, World Bank president Robert Zoellick and others who participated in the USGLC conference, Policinski insists that U.S. foreign aid can pave the way back to jobs in the United States. He spoke with the Star Tribune after appearing on a panel discussing strategic foreign investment.

Q The most critical way to get public money for foreign development is to convince Congress that it's worth people's time and tax dollars at a time when it's really awful economically. How do you, as a chief executive, go about convincing members of Congress that it's an important thing to do?

A The facts are friendly. The one percent we spend on foreign assistance has a big payback. There is a national security story, which is where we've focused a lot of energy in the discussion up on the Hill before. But there is an economic story, and it's the jobs story. Ninety-five percent of the population of this planet lives outside the United States. The cold, hard facts are their growth rate is several times higher than ours. It's not an academic debate when you consider that 12 percent of our [gross domestic product] is currently associated with export markets. Those are jobs; they are jobs for Americans.

Q Everything is on the table with the budget deficit. What do you say to someone who says, 'Well, they're going to take my farm subsidies because of the economic situation, and if I could trade some money going to some foreign country to come back to help me on my farm here, why shouldn't we do that?

A The foreign affairs budget really creates jobs. And it creates a market for those farmers' output. Without a market, without demand, those farmers aren't going to be happy ... The foreign affairs budget does get a big response: You're spending money overseas while we've got trouble at home. But the facts really are friendly. First, the perceptions are wrong. When people say foreign affairs budget, people think we spend something like 24 percent on it. It's one percent. The second thing is: Through development and diplomacy, you create stable political environments and markets for our goods. It's a productive spend. It results in jobs. We'd be worse off without it.

Q How have you gotten people at Land O'Lakes to buy into the idea that foreign investment will create jobs at home?

A When you have 95 percent of the world's population outside of these borders and they're growing at 8 to 10 percent and we're growing at 2 to 4 percent, you can see you really have to hitch your wagon to that global growth, or you become less and less and less relevant. Our sales today are skewed more domestically than internationally. Yet if you look at our growth prospects and our growth projects, there is a far greater opportunity for global growth than domestic. The ability to serve the Asian markets with dairy proteins -- milk powders that are produced here in this country -- is our single fastest growing business today and by far our biggest growth opportunity into the future. Annually, I take a large group of our board over -- first China, then Brazil, this past year was developed Europe. We take a lot of ag groups over to show them the opportunity firsthand. There is a little skepticism about how that's going to work. But when they go over, they say, 'Wow, look at the potential here to serve this market.' They feel good.

Q Describe for me the dairy facility in the central valley of California where you said there are jobs that are the result of foreign markets.

A It's one of the biggest dairy plants in the world. There are about 2,000 people out there. It produces butter and one of the byproducts of that is a dairy powder. If we weren't successful in having a market overseas, that plant wouldn't be as full, and we'd have less employees working. It's just that simple. If we weren't serving a global market there, we'd be dumping the product on this market at low prices. We wouldn't be making any money. We couldn't invest in future capacity to be able to expand the plant to grow. This thing spirals down if you don't have a market and it spirals up if you do.

Q Do you feel in your dealings with political people that the country is feeling more protectionist than it did at other times when the economy wasn't in such bad shape and more Americans were employed?

A The rhetoric is certainly higher. We'll see if that translates beyond rhetoric, but the rhetoric is certainly higher. You can see why. There are people who are really hurting. But I think we really have to be careful. We need good, strong leadership, because what we don't want to do is make the situation worse. These export markets are markets for our products. They allow us to create jobs. That's a good thing, and we don't want to lose it even in these dire times.

Jim Spencer • 202-408-2752

  • About Chris Policinski
    Age: 53
    Position: President and chief executive officer of Land O’Lakes Inc.
    Education: MBA from New York University and a bachelor’s degree from the University of Notre Dame.
    Career: Became president and CEO of Land O’Lakes in 2005 after serving as executive vice president and chief operating officer, where he oversaw Land O’Lakes dairy foods operations. He joined the company in 1997. Before that, he worked 24 years in the food industry, including senior management jobs at Pillsbury and Kraft General Foods.
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