Page 59 - Farm and Food Policy Strategies for 2040 Series

Dallmier welcomes farmers’ increasing focus on fine-tuning their crops and practices to satisfy
new generations of consumers willing to pay premium prices for food they consider better. He
also welcomes what he sees as the consequent “shift from a supply-push ag economy into a
demand-pull economy.” He said as 2040 moves closer, consumers and, therefore, the supply
chain itself increasingly “will demand transparency of production methods for food staples such
as grains, vegetables and meat protein.”

Dallmier adds “producers need to be merchants who keenly analyze customer demand and
develop markets and logistics to satisfy what the customer wants — not what we think they
need because we have a huge pile of product to sell.” What consumers want, Dallmier
concludes, are proven health and environmental benefits based on transparent, identity-
preserved, traceable and sustainable production.

Cargill & Tyson choices

One bellwether indicator of what could be ahead for the food supply chain as a whole in 2040 is
that conglomerate giant Cargill, closely aligned with the traditional meat industry, sold its last
two cattle feedlots, in Kansas and Colorado, in 2017. It has invested some of the proceeds in
cultured meat pioneer Memphis Meats.

Cargill’s 2017 sale of its last feedlots followed Cargill’s 2015 sale of its entire pork business to
JBS USA Pork for $1.45 billion. Perhaps tellingly, Cargill in 2016 changed the name of its
protein division from Cargill Animal Protein to simply Cargill Protein.

Signaling company strategy, after the 2015 sale of Cargill’s two Texas feedlots, John Keating,
president of Cargill’s beef business, said “Anticipating the future direction protein demand is
headed, we believe it is wise to redeploy capital away from feed yard and cattle ownership to
projects that enhance our capabilities and provide greater value to our customers and consumers,
now and in the future.”

Notably, the sold, low-margin feedlots are continuing to supply higher-margin Cargill beef
processing plants under multiyear contracts.

Cargill insists that it “remains fully committed to investing in and growing our traditional animal
protein business” despite selling off its feedlots and pork business. Cargill Protein group leader
Brian Sikes explained that investing in Memphis Meats enables Cargill “to explore the potential
in growing the cultured meats segment of the protein market.”

Sikes said Cargill believes “consumers will continue to choose meat as a protein source.” But to
meet this demand, he said, “Our traditional proteins, as well as new innovations like cultured
meats, are both necessary.”

Cargill is not alone in jumping aboard the alternative foods train before it’s out of sight.
Memphis Meats, launched in 2015, raised $17 million in new funding in 2017 provided by
investors that include not only Cargill but Bill Gates, Richard Branson, and venture-capital firms
Draper Fisher Jurvetson, Atomico and Kleiner Perkins.

In 2018, Tyson Foods bought its own stake in Memphis Meats. This means Tyson has hedged its
bets by investing in both a lab-raised meat leader and a top plant-based-meat contender. The

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