John Graettinger - Advancing Technologies to Feed 9 Billion

Technology in Agriculture

Role of technology in a safe and abundant food supply Consumer perceptions of technology in food production

Current Industry Issues & Opportunities

Increasing Beef Prices

Generational Shifts

Changing Eating Preferences/Habits

Continued Activist Threats

Increased Global Opportunities

Freedom to Operate Challenges

Forrest Roberts, NCBA 2

Will our Customers Accept New Ag Technologies?

First let’s talk about the U.S. consumer

“The new source of power is not money in the hands of a few but information in the hands of many.” John Naisbitt Megatrends 1982

“We are drowning in information but starved for knowledge.”

John Naisbitt Megatrends 2000

Moms have questions and are seeking information about their food is grown

and how animals are raised.

But whom can they turn to for the knowledge they crave if the Ag Industry adopts a new technology

Social Networking Fills Knowledge

Voids

“Who can Consumers trust?”Trend: Consumers don’t know who to trust.

– Mass media and advertising have consumers feeling “over-marketed,” overwhelmed and confused

REALITY for agriculture:– Consumers’ desire for

authenticity and transparency is increasing – they want the real facts from real people

NBC News: “GMOs are here to stay – should you be worried?”

Dr. Oz: “No to GMOs”

GfK Public Affairs, Illinois Farm Families®

Eroding consumer trust• Trend: Consumers are skeptical.

– They’ve lost faith in businesses, government, and religious institutions

– Distrust extends to other industries including agriculture

• REALITY for agriculture:– Consumers trust people– They need to feel they know you,

the people growing and raising their food to trust the system

GfK Public Affairs, Illinois Farm Families®

Consumer perception: big is badTrend: Big is bad1.

– Consumers trust the small family farmer or the “traditional” image of farming

– Corporate factory farms are untrustworthy, driven by $$$

– Size of farm linked to perception of shared values

REALITY for agriculture:

– Transparency is no longer an option2

What they envision farms are like

What they fear most farms are like

1. Illinois Farm Families® 2. The Center for Food Integrity 2013 Consumer Trust in the Food System Research

65%

66%

67% of consumers think it’s important to understand how their food is produced

of consumers would like to see the food industry take more action in educating people on how food is produced

of consumers want to know more about where their food comes from

“Emerging Faith in Food Production,” Sullivan Higdon & Sink FoodThink, 2014.

The Educated consumers’ hunger for more food knowledge

Consumers are concerned …

“Emerging Faith in Food Production,” Sullivan Higdon & Sink FoodThink, 2014.

Retailers Top of Mind:Meat

beef pricesmanaging meat mix case margins

Crisis managementkeeping out of activists line of sight

Product mix and supplynatural, organic, traditional

Other Concernsantibiotics usefood safetyanimal well-beingmeat quality

Retailers: Don’t add technology that I have to

defend

On meat labels they’d like to know…

“Building Trust in What We Eat,” Sullivan Higdon & Sink FoodThink, 2012.

Value of Technologies

Bill Gates: I also believe that innovation will improve our ability to produce meat.gates notes: the blog of Bill Gates April 21,2015

Technologies: Producing more with less

In 2012, the U.S. produced 4.4 billion pounds more beef with 20 million fewer total cattle than in 1980

Cattle Numbers

Beef production

Why not Maintain the Status Quo?Protein demand is increasing:• Population growth:

• 9 billion people by 2050.• Incomes rising to 4.8 billion middle class.• Increased urbanization: 2014 54% est. in 2050 66% Hunger continues:• One in eight people suffer from chronic hunger, 3.1

million children starve to death each year• Not one recorded death from GMO’s, rbST,

hormones, ßAA, etc.

UN and Brookings Institution

The Agriculture Industry steeped in History and Heritage

History and Heritage

Paulinemene T" Grand Champion Angus Female, Fort Worth Livestock Show 1955.

A 1950s Championship hog

Millennials want brands to care and to do something…

Cause change Stand for something

Food Democracy not a Food Aristocracy.

What Do Brands

Do?

What do Retail Brands do when confronted?

Millennials

Social Media Activists

NGO’s

What Do Brands

Do?

Unless informed, it’s easiest to acquiesce!

Millennials

Social Media Activists

NGO’s

Are brands taking positions to…

seize a marketing opportunity?

avoid getting slammed in the media? ?

as looking out for their customer?

Who Do Brands Turn to For their Information?

Export Market Challenges

Supplies of certain foods

aren’t growing as fast as Demand

• The merger of Kraft Foods and Heinz aims to save $1.5 billion annually by the end of 2017 by making the combined Kraft Heinz Company more efficient.

• Heinz and Kraft may try to lower costs for retailers, but their ability to do so will depend on the prices of food ingredients and oil.

• “As China and other developing countries have grown their middle class, that has grown the demand for protein products like dairy and meat.” “Supply has been unable to grow as swiftly as demand.”

• Virginia Lee, food market analyst Euromonitor Int.

The largest growing market doesn’t accept current technologies

• Cattle Implants yield 90 lbs. of additional red meat• Feeds 41.7 million people per capita beef

• Beta agonist use in pork adds 10 lbs. of additional lean pork• Feeds 24 million U.S people their per capita pork needs

• All antibiotic use in livestock is under scrutiny

“Food Elitist” efforts are preventing

proven technologies from providing safe abundant affordable food

Global Technologies Acceptance Crossroads

Need to increase Agricultural Productivity

Distractors

Global Governmental Regulators

Need for Affordable Food

Will our Customers Accept New Technologies

So What do We do?

Adapt to our changing world.• Technologies must be accepted by the food chain

• Be careful how you position the product • Embrace full transparency

• Help fill the knowledge void• Frame the customer needs to the value message • Be part of the conversation

• Suggest a better way• Frame your conversation carefully

• Support the companies that support help feed the world