The food industry is being tested by shifting consumer tastes, new technology and global trade disputes. Those issues and more were discussed and debated Thursday at The Wall Street Journal’s Global Food Forum by some of the sector’s key players, including the chief executives of Hershey Co. HSY -0.25% , Syngenta and Smithfield Foods Inc.; Bayer AG’s BAYRY 0.98% president of crop science; and Secretary of Agriculture Sonny Perdue.
Below is a full recap of the day.
U.S. Won’t Back Down on Milk Demand From Canada
The U.S. won’t back down from efforts to get Canada to eliminate its dairy-farming support programs, which have become a sticking point in U.S.-Canada trade talks, said U.S. Agriculture Department Secretary Sonny Perdue.
“I’m hoping Canada comes to the realization that we’re not going to give up on the dairy issue,” Mr. Perdue said.
Canadian officials say the program curbs Canada’s contribution to global oversupplies of milk, but the U.S. has criticized it as unfair protectionism.
“They’ve got themselves in a political bind by having such a sweet deal for their dairymen at the expense of their consumers,” Mr. Perdue said.
As for China, Mr. Perdue said he expects the U.S.-China trade battle will take a bite out of soybean acreage, even though the USDA’s official projections for 2019 crop-planting won’t be out for a few months.
China’s heft as a soybean purchaser—acquiring roughly one-third of U.S. production to feed its hogs, among other uses—has pushed U.S. soybean prices sharply lower after China implemented tariffs in July. Next year, Mr. Perdue said, U.S. farmers are likely to replace some soybean acres with corn, sugar beets and other crops, unless soybean prices rebound.
Meanwhile, Mr. Perdue said the European Union’s move this summer to break with the U.S. on gene-edited crops was “a serious mistake.”
The U.S. has determined that crops altered with gene-editing technologies like Crispr-Cas9—which let scientists change DNA without incorporating new genes—don’t need to be regulated like biotech crops enhanced with outside DNA. An EU court ruling this summer took the opposite tack, regulating gene editing the same as earlier genetically modified crops, which the seed industry says effectively closes off the EU market.
Mr. Perdue said that in time, EU consumers will want gene-edited crops, and regret the decision. “They can only build that wall so long,” he said.
Smithfield Foods CEO: Trade Battle With China Needed
Smithfield Foods Chief Executive Kenneth M. Sullivan, left, says the current trade spat with China was needed to improve market access for U.S. pork. He is joined by Fred Krupp, president of the Environmental Defense Fund, and Wall Street Journal reporter Sarah Nassauer. Photo: Gabe Palacio for The Wall Street Journal
Smithfield Foods Chief Executive Kenneth Sullivan said the current trade spat with China was needed to improve market access for U.S. pork. Smithfield Foods is the largest U.S. pork producer.
Despite the pain that the Trump administration’s trade policies are causing U.S. farmers, the status quo wasn’t working either, he said. For example, he said, a pound of frozen U.S. pork already faced a 25% tariff in China, which wasn’t a good deal.
“It’s a fight that was necessary,” Mr. Sullivan said, adding that he’s confident both the U.S. and China have an interest in resolving the trade standoff, though it isn’t happening as quickly as he’d like it to. “China looks a little bit intractable at this point,” he said.
Smithfield Foods Looking at Areas Hit by Hurricane
Smithfield Foods Chief Executive Kenneth Sullivan Photo: Gabe Palacio for The Wall Street Journal
Smithfield Foods Chief Executive Kenneth Sullivan said the meat-processing company is taking a fresh look at the areas affected by Hurricane Florence in North Carolina, after pig-waste lagoons flooded.
He said that after last year’s hurricane in Florida, the industry and Smithfield took steps to try to eliminate the lower-lying lagoons by buying out the hog farmers who own them.
“We will see after this storm what we can do,” he said, adding that 0.5% of all the lagoons in the area had an issue. Fred Krupp, president of the Environmental Defense Fund, said a higher frequency of intense rainfall is rising, and that “is the new normal.”
Sweets Business Not Going Anywhere, Hershey CEO Says
Hershey Chief Executive Michele Buck Photo: Gabe Palacio for The Wall Street Journal
Hershey Co. Chief Executive Michele Buck said the company aims to strike “more balance” between its longstanding candy businesses and the healthier snack operations it has been building up via acquisitions.
Consumers talk a big game when it comes to eating healthy, but Ms. Buck said the company’s candy business isn’t going anywhere, and in many cases remains bigger than the healthier offerings.
“Consumers don’t always do what they say they are going to do,” she said.
Sometimes consumers are looking for an indulgent snack and other times they’re looking for a healthy snack, Ms. Buck said, and the company is trying to provide both. “It’s really about capturing incremental snacking occasions,” she said.
Ms. Buck also warned that food companies have to be careful about tinkering with beloved brands to make them healthier. “The number one thing [consumers] want is the brand as it is; they don’t want it to change,” she said.
Meanwhile, e-commerce is the single-biggest opportunity for food companies, Ms. Buck said. “Food has been behind in that,” she said, adding that Hershey is evolving its business to take advantage of that.
“The lines are blurring between physical stores and digital shopping,” she said. “The shopping cart, shelf and checkout still exist, but now it’s in your pocket, on your phone.”
—Jacob Bunge and Julie Jargon
The World Is Upside Down on Trade, Bunge CEO Says
Bunge CEO Soren Schroder Photo: Gabe Palacio for The Wall Street Journal
Farmers will feel a “prolonged hangover” if trade disruptions continue, said Bunge Ltd. Chief Executive Soren Schroder.
The agribusiness chief said history shows tariffs are a bad idea as far as farmers are concerned, with prior trade disputes contributing to Brazil’s emergence as a soybean behemoth.
President Carter’s grain embargo against the Soviet Union in 1980 “ended up creating significant surpluses and a buildup of stocks that pressured prices for many years to come,” Mr. Schroder said. “This is a world upside down for sure.”
Speed Is Needed on Trade, Dairy CEO Says
Beth Ford, chief executive of Land O’Lakes Photo: Gabe Palacio for The Wall Street Journal
Dairy farmers need the Trump administration to work quickly on trade, according to a key dairy industry executive.
American dairy farmers largely support the president’s push to open up the Canadian market to U.S. dairy products, but they are struggling to stay in business during a painful downturn, said Beth Ford, president and chief executive of Land O’Lakes Inc.
In August alone, 43 Wisconsin dairy farmers went out of business, Ms. Ford said. “We need market access,” she said, adding that tariffs on dairy products from key trading partners, excess food supplies and the strong dollar all have contributed to trouble in the dairy industry.
“[Tariffs] are pressuring the market and many farmers aren’t able to withstand that pressure after multiple years of a down cycle,” she said.
Syngenta CEO Sees EU Inconsistency on Gene Ruling
Erik Fyrwald, chief executive of Syngenta Photo: Gabe Palacio for The Wall Street Journal
The European Union isn’t being consistent in its approach to souping up the genes of crop seeds, said Erik Fyrwald, chief executive of Syngenta, which derives about a third of its sales from selling seeds to farmers.
An EU court ruled this summer that seeds developed via new gene-editing technologies, like Crispr-Cas9, should be regulated similar to earlier forms of genetic engineering, where outside genes are added in to bestow new characteristics.
Mr. Fyrwald said that doesn’t make sense because gene editing doesn’t necessarily add in new DNA—and because the EU doesn’t consider mutagenesis, an older means of altering plant genetics through radiation or chemicals, a form of genetic modification. “It makes no scientific sense,” he said.
One of the main knocks on genetically modified crops is that they have not delivered many discernible benefits to consumers, which hasn’t helped the public image of GMOs. Mr. Fyrwald said Syngenta is using new gene-editing technologies that allow plant scientists to make precise tweaks to crop DNA and make better-tasting vegetables, which could help get children to eat their veggies.
Meanwhile, China has been on a yearslong campaign to modernize and scale up its agricultural sector, he said, and it sees high-tech seeds as a key component to food security and curbing agriculture-related pollution.
Syngenta, which is owned by China National Chemical Corp., is developing gene-editing technology in China that can help with the government’s goals of improving soil nutrient levels, reduce carbon emissions and reducing the amount of fresh water used to grow crops, Mr. Fyrwald said. China will likely trail the U.S. by about 5 years in introducing gene-edited crops, he said.
Grubhub GRUB 0.99% CEO says Fast Food Chains Help it Lower Delivery Fees
Grubhub Chief Executive Matt Maloney Photo: Gabe Palacio for The Wall Street Journal
Grubhub Chief Executive Matt Maloney said signing on fast-food restaurants like Taco Bell and KFC enables the company to build scale in markets so it can lower costs to the diner.
His goal, he said, is to get the delivery fee to zero for consumers because then, “there’s no reason not to order restaurant delivery.” Despite a proliferation of third-party delivery services, he said there is still plenty of room for everyone.
Mr. Maloney said $200 billion worth of food is sold annually in U.S. via restaurant pickup and delivery but that all third-party services combined are processing just $10 billion of that.
“It’s not a zero-sum game,” he said. “Someday it will be.”
Bayer Sees Growing Role for Predictive Farm Tech
Liam Condon, head of Bayer’s agricultural business Photo: Gabe Palacio for The Wall Street Journal
As predictive technology improves in agriculture, Bayer AG sees the potential to shift some of its multibillion-dollar business selling seeds and chemicals toward an “outcomes-based” model, said Liam Condon, head of Bayer’s agricultural business.
That would mean that, rather than selling bags of seed and crop-protection products, Bayer potentially could sell farmers a plan that would guarantee a certain level of crop yield, and the products that would produce that. To get there, though, “you need a high level of confidence in your predictive capabilities, he said.
Farmers Outpace Tariffs with Early Grain Sales
Lon Frahm, owner of a 34,000-acre farming operation in western Kansas Photo: Gabe Palacio for The Wall Street Journal
Tariffs on U.S. agricultural products have pushed down the prices farmers get for soybeans, hogs and other foodstuffs—but some farmers have shielded their pocketbooks by selling crops long before they are grown.
Lon Frahm, the owner of a 34,000-acre farming operation in western Kansas, said he has pre-sold corn two years into the future.
“I haven’t even bought the seed for [it] yet,” Mr. Frahm said. “I do everything as far out as I can.”
Produce and Value-Added Foods Vulnerable in Trade Spat
Darci Vetter, left, former chief agricultural negotiator for the Office of the U.S. Trade Representative Photo: Gabe Palacio for The Wall Street Journal
Deep in the throes of a trade war, U.S. commodities will find a home, but it’s a different story for produce and value-added products, said Darci Vetter, former chief agricultural negotiator for the Office of the U.S. Trade Representative.
Raw commodities like soybeans will ultimately find a buyer even if China isn’t bidding, but products like fruit, vegetables and wine could face an uphill battle reclaiming shelf space lost during global trade disputes.
Value-added products from Australia, New Zealand and the European Union will make their way into Japan and other countries, while the U.S. loses out. And compared with grain farmers who can store their crops until a later date, producers of perishable goods like cherry farmers have few options.
“If you have cherries that don’t have anywhere to go you just have a rotten pile of cherries,” Ms. Vetter said.
On Food Labels, Some Vitamins Sound Like Chemicals
Anna Abram, deputy commissioner for FDA policy, planning, legislation and analysis Photo: Gabe Palacio for The Wall Street Journal
The FDA’s considering language on food labels, where some at the agency wonder whether consumers’ concern over technical words could obscure what some officials regard as benign.
Take vitamin B12, which is represented on some food labels as methylcobalamin. “That sounds like cyanide,” says Anna Abram, deputy commissioner for FDA policy, planning, legislation and analysis.
“Are there ways to make that consumer friendly while still making sure consumers get the information they need?”
How to Get a Blueberry Farmer onto Blockchain?
Brigid McDermott, vice president of the IBM Food Trust, Photo: Gabe Palacio for The Wall Street Journal
Blockchain can speed the tracking of tainted food from weeks and months to mere seconds, but getting it into the right hands across the supply chain remains a challenge.
Brigid McDermott, vice president of the IBM Food Trust, said the average U.S. blueberry farmer grows 2 acres of the fruit.
“They don’t have an IT department, they have a phone,” Ms. McDermott said. “How do we make sure they’re able to get on [blockchain]?” Getting farmers, food processors and retailers to use the technology to improve food safety investigations is what keeps her up at night, she said.
Across the food-supply chain, records are kept on paper in notebooks, computer spreadsheets and other databases. And farmers, processors and others are required to keep minimal information about where there products came from and where they’re headed.
“There’s no other transparency,” Ms. McDermott said. As a result, companies and regulators weren’t much better prepared this year for a deadly E.coli outbreak linked to lettuce than they were a decade ago when an outbreak in spinach also took lives. “We haven’t made any advances,” she said.
Gene-Sequencing a Game Changer for Food Safety, FDA Says
Susan Mayne, center, director of the Center for Food Safety and Applied Nutrition at the FDA Photo: Gabe Palacio for The Wall Street Journal
The number of U.S. foodborne illness outbreaks is going up, but the number people sickened in them is going down, according to the U.S. Food and Drug Administration.
Technological advancements like whole genome sequencing are allowing federal officials to detect foodborne illness outbreaks it wouldn’t have noticed even five years ago, boosting their incidence, said Susan Mayne, director of the Center for Food Safety and Applied Nutrition at the FDA.
But individual illnesses are declining because gene-sequencing means regulators are able to identify outbreaks earlier and get food off the market more quickly. “It’s really game changing,” she said.
General Mills Executive Looking For ‘Secret Sauce’
Carla Vernon, General Mills’ head of emerging brands Photo: Gabe Palacio for The Wall Street Journal
General Mills’ head of emerging brands Carla Vernon said she’s looking for the “secret sauce” of merging small brands it acquires with the larger corporate conglomerate.
“We’ve done every acquisition differently,” she said. While smaller, startup food brands are just a fraction of food sales, they are growing much faster than legacy brands. Ms. Vernon said her “bosses are outside the building not inside the building” because they are the consumers, and they are looking for purpose-driven brands.
Transparency Key to Food Safety, EU Commissioner Says
Vytenis Andriukaitis, commissioner for health and food safety at the European Commission Photo: Gabe Palacio for The Wall Street Journal
Transparency across international borders is key to ensuring food safety, said a top food official at the European Commission.
Vytenis Andriukaitis, commissioner for health and food safety at the European Commission, said transparency in the food supply chain between Europe and America will increase consumer confidence, even in the face of food safety breaches.
“You can imagine how many actors are involved in the food chain,” Mr. Andriukaitis said. “We need to have transparent systems and traceability, and provide all the information we can to consumers.”
Plant-Based Milk Drinkers Getting ‘Nutritionally Short-Changed,’ Dairy Executive Says
James Mulhern, CEO of National Milk Producers Federation Photo: Gabe Palacio for The Wall Street Journal
The head of the National Milk Producers Federation applauded the U.S. Food and Drug Administration’s decision on Thursday to speed up its review of whether the word “milk” can be used by makers of plant-based dairy alternatives such as almond and soy milk.
“They need to be marketed on the basis of what they are,” the Federation’s CEO James Mulhern said, adding that consumers who think plant-based milk is equivalent to drinking cow’s milk are getting “nutritionally shortchanged.”
Meanwhile, the trend toward fewer, bigger farms is expected to continue, agriculture experts said. The average herd size of dairy cows in 1980 was 32; now it’s 225, according to James Mulhern, president and CEO of the National Milk Producers Federation.
Still, he said there will continue to be a variety of different-sized farms for some time, adding that 98% of dairy farms are currently family-run.
Money Flowing Into Curbing Food Waste
Chris Cochran, executive director of ReFED Photo: Gabe Palacio for The Wall Street Journal
The bad news: U.S. landfills are brimming with food waste while millions of people go hungry and food companies are losing out on opportunities for big savings.
Retailers spend more than $18 billion each year on wasted food, while 42 million Americans are food insecure. said Chris Cochran, executive director of ReFED, a nonprofit focused on reducing food waste.
The good news: Innovation and investment around food waste have grown dramatically in the past five years, with notable inventions like edible coatings to prolong the shelf life of produce and turn food waste into fertilizer.
“Food waste is a solvable problem with tremendous business potential,” Mr. Cochran said.