At the company’s annual meeting earlier this month, Policinski reported another year of record earnings, despite slightly lower sales because of the struggling farm economy. In an interview, he discussed reasons for the company’s success and answered questions about what’s ahead for farmers and the ag sector during the next few years of the Trump administration, touching on trade policy, immigration and other topics. His comments have been summarized and edited for space:
Q: Tell me about your strategy at Land O’Lakes and why it has been successful.
A: It’s probably easiest to see in our food business. We’re taking consumer insights and putting them into product-based innovations, sometimes in categories that are kind of sleepy. We take butter and all of a sudden you have spreadable butter with canola oil. Or school lunch programs where most folks, including us, sell cheese products or dairy products and it’s all about price. We’re competitive on price, but we’d rather innovate to remove some salt and fat and make the product healthier and still tasty. We use our R & D skills to do that. It’s similar with our Purina animal feed business. We really make our difference by leveraging our research platform in St. Louis to help build better animals. And we listen to what the market wants.
Q: A large part of the company is your crop inputs business, formerly WinField Solutions and now called WinField United after you acquired United Suppliers of Iowa. How is that segment of Land O’Lakes changing?
A: You could look at us and say we’re a wholesaler. By and large, we sell products from some of the ag tech companies to farmers through independently owned and operated retailers and rural cooperatives. So at one level we aggregate that demand and get good pricing and pass it along. But the journey we started a dozen years ago was to be a value-added company that provides more than just showing farmers how to buy things cheaply. That’s yesterday’s game in my opinion. We’re trying to help them grow more with less: precision agriculture. It involves helping a farmer manage a crop throughout the season — not just at planting time — by providing a big data platform, remote-sensing and other in-season management tools.
Q: There’s a lot of change being discussed in Washington, and President Donald Trump has called on a number of business leaders to discuss policies. If the president invited you to the White House, what would you advise him about trade policy?
A: There’s a lot of uncertainty right now. We have a new administration open to new thoughts. If you focus on the destination and not the journey, from an agriculture and food industry perspective, the idea of lowering regulations is helpful and could stimulate growth. But I think we have to be very careful around trade.
Q: How so?
A: Ag is incredibly dependent on overseas markets. In dairy alone, plus or minus 15 percent of dairy as an industry is exported. That’s one in seven days’ worth of production that is sold overseas. To bring that down to a company perspective, we make a great deal of protein powder in some of our facilities and most of that powder does go overseas. So it’s important to us and important to jobs for our industry. Trade is vitally important, and having a rational approach to trade that doesn’t diminish our ability to compete in export markets is essential.
Q: What about the administration’s idea of shifting the approach away from multilateral trade deals such as the Trans-Pacific Partnership to bilateral agreements?
A: I think it’s important from my chair to not try and write the answer of how we get there. It is important that we continue to keep foreign markets open while we’re protecting our own interests here in the U.S. Much of the discussion around trade has unfortunately been characterized as trade being the enemy. We need to change the rhetoric to say what we hate is trade-related job loss for Americans. But there’s also a lot about trade that’s incredibly powerful as a job creator, and 95 percent of the world’s markets live outside of the United States.
Q: How about changes in immigration policies?
A: Very broadly, our economic growth depends on having a workforce. Ag is very dependent on immigrant labor, and we need to have a rational approach to that to keep our industry in good shape. So we’re very engaged through our industry associations in those discussions. A little less regulation in some areas of agriculture would be good, but I think we have to be very careful about trade and immigration as it relates to growth and how we get our work done.