Tuesday, August 4, 2020

How Cargill is researching the future of nutrition

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Düsseldorf The corona pandemic is also a stress test for Cargill, the world’s largest food company. “The global supply chains have come under considerable pressure. But we’re working around the clock to keep them going, ”said Florian Schattenmann, chief technology officer of the US family-owned company, in an interview with Handelsblatt.

For example, Cargill has temporarily shifted deliveries from catering to retail to meet the demand redirected by the closings. There were also occasional bottlenecks in the United States with meat and burger patties. Two Cargill meat plants had to close for a few weeks as a result of Corona cases, but have been back in operation for some time.

“If the virus spreads even further in Africa or South America, there could be bottlenecks in agricultural products,” says the Munich-born man and at the same time emphasizes: “Unlike the car industry, the food industry is relatively crisis-proof.”

But like the auto industry, the food industry is in the midst of a period of change. Trends such as the turning away of meat or food with added benefits are revolutionizing global nutrition. Corona acts as an accelerator. According to the Proveg International association, sales of vegetable meat alternatives have increased massively during the pandemic. Cargill, the third largest meat producer in the world, wants to play a crucial role in this.

The group employs 160,000 people worldwide and generated around $ 114 billion in 2019. In terms of sales, the company is about a fifth larger than Nestlé. But hardly anyone knows Cargill, which is one of the largest family businesses worldwide. On the one hand, this is due to the fact that the company was previously considered to be very quiet. On the other hand, Cargill does not produce food brands for consumers. However, the group travels the entire supply chain between farmers and food manufacturers.

In 1865, William Cargill laid the foundation stone for the company with a warehouse for grain. Today, farmers are supplied with feed, and raw materials from grain to meat are then processed for food manufacturers and restaurants. Cargill supplies among others Burger King and McDonald’s with burger patties. Cargill also has its own fleet of container ships. Cargill has also been active in Germany since 1955, currently 1,700 employees work at twelve locations in Germany.

“As the industry leader, Cargill has an extremely broad portfolio, which ranges from cereals to meat to food supplements. The aim is – where possible – to control the entire value chain from cultivation to the customer, ”says Carsten Gerhardt, agricultural expert and partner of the AT Kearney consultancy.

The environmental protection organization Mighty Earth calls Cargill “the worst company in the world”, among other things because it accelerates the cultivation of soy and thus the deforestation of rainforests or tolerates child labor among cocoa farmers. “Today, a privately held company may have more power to destroy or protect the climate, water, food security, public health, and human rights in the world than any other company in history,” the organization writes.

“As the largest group in the food sector, Cargill is automatically the center of attention,” says Schattenmann. “Sustainability has always been a focus. External criticism has only intensified our internal discussion about it. ”For example, Cargill wants to reduce greenhouse gas emissions by 30 percent from 2017 to 2030. According to Schattenmann, the approximately 100 shareholders of the family company also attach great importance to Cargill bringing sustainable innovations onto the market. “The family reinvested 80 percent of the profits, which is not the case in a listed company.”

Cargill is now turning to future issues that are less harmful to the climate but still lucrative. One focus is on alternative proteins as a meat substitute. “We do a lot of research and investment here,” emphasizes Schattenmann. Cargill not only researches vegetable burger patties, hack and chicken nuggets, but also vegan egg substitutes. “Unlike the Beyond Meats of this world, Cargill covers the entire supply chain from the ingredients of alternative proteins to processing,” emphasizes the head of innovation. The group has invested $ 100 million in the US company Puris. This produces pea proteins, also for the hyped vegan start-up Beyond Meat.

Invitro meat and hybrid burger

Start-ups who want to revolutionize nutrition have done it to Cargill. The young industry is coveted by investors. Worldwide, $ 930 million was invested more in alternative protein companies in the first quarter of 2020 than the previous year, the Good Food Institute said.

Cargill is also invested in Memphis Meat and Aleph Farms. The startups grow meat from cell cultures. “The trend is towards hybrid products made from animal and vegetable protein,” says Schattenmann. The Slinger Burger from the Sonic chain, for example, consists of half of beef and mushrooms. The Pattie comes from Cargill.

“Alternative proteins are a huge future market,” confirms agricultural expert Gerhardt. According to a study by AT Kearney, in 2040 only 40 percent of the meat requirement will be covered by conventional meat. Cargill is by no means the only meat producer in the world who invests heavily in alternative proteins. They also do this Tyson Foods, the German poultry producer PHW (Wiesenhof) or the Rügenwalder Mühle. Even corporations like Nestlé (Garden Gourmet) or Unilever (The Vegetarian Butcher), who previously did not produce meat, have discovered meat substitutes for themselves.

Cargill manager Florian Schattenmann

“As the largest food company, Cargill is automatically the center of attention.”

(Photo: Cargill)

Agricultural expert Gerhardt explains the hype as follows: “Meat alternatives will be significantly cheaper to produce in the long term than conventional meat.” They are also more profitable. Because with fattening, transport and slaughtering, several cost-increasing stages of value creation are eliminated. According to Gerhardt, Cargill is well positioned in the future field.

Cargill also focuses on fish farming. “A very promising trend because people eat less meat but more fish,” says Schattenmann. Fish also have a smaller carbon footprint than cattle. The group is already researching animal feed so that cows have less flatulence, that is, emit less methane. Cargill is the global market leader in shrimp and salmon feed. Artificial intelligence is now also being used. “A sensor detects when the shrimp are hungry. Then they sing, ”explains Schattenmann. Only then will they get a perfectly fitting feed.

One problem with salmon farming has been that farmed fish without krill did not produce healthy omega-3 fatty acids. But consumers value this very much. That’s why the salmon got krill oil in their feed. Cargill found a new solution: rapeseed produced rape with omega-3 fatty acids. This rapeseed oil is now mixed into the salmon feed. And fast food chains now also get healthier rapeseed oil from Cargill with almost no saturated fatty acids.

Bioactive substances as a future market

Health and special nutrition is another future market for Cargill. “How can resistance be strengthened – this topic has been given a further boost by Corona,” says Schattenmann. There are great parallels to pet food. Another innovation came about more or less by chance: Long-standing employees of the US animal feed factory Diamond V, a Cargill division since 2017, had significantly better health statistically than their colleagues in the office.

It turned out that they had come into contact with a fermentation for animal feed, which is said to increase immunity and reduce antibiotic resistance.

Shrimp farm in Thailand

Cargill also focuses on fish farming.

(Photo: Cargill)

The food supplement Epicor was developed from this. “The tablet is a hit in America,” says Schattenmann, who regularly takes it himself. “This is a relatively small division, but with huge profit potential.” Cargill is also invested in the Delacon company from Austria. It extracts bioactive substances from medicinal plants such as lavender and fenugreek. “Special nutrition is an attractive growth market, but Cargill is in competition with chemical and pharmaceutical companies,” says consultant Gerhardt.

Another future topic is the industrial utilization of organic residues from food production. The researchers have developed residual fibers from lemons with natural special rubber into an additive that makes skin creams more viscous.

In another project, vegetable fibers or grist are treated in such a way that they are used for asphalt in road construction. A plant-based electrical control solution was also developed in Cargill laboratories.

“We can use our entire breadth and diversity for research. Different divisions can work much more closely together and develop innovations together, ”says Schattenmann. And he also knows one thing: “Innovative products that reflect future trends have significantly higher margins.”

More: The largest family businesses in the world: the quiet giant Cargill

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