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Challenges and Opportunities in the Grain and Food Sectors
2007-11-04
Presentation at the 1999 Trade and Transportation Summit in Sioux Falls, SD
Ron Olson
VP for Grain Operations, General Mills
How should grain fit into a food company? Do we have a strategic role in a food company to be a grain business? And if we do, how do we maximize that and how do we make it work? That was the whole philosophy. What you're going to see is four or five slides of a presentation that we made internally in General Mills to upper management to say, This is what we need to be and this is where we're going.
You need to understand that General Mills is a grain-based food company. Most of our products are grain-based, and grain accounts for about a fourth of all our costs as far as an ingredient. And sugar's a big one, and then there are about 1200 other ingredients. So there's a real mixture. And I know there was a lot of talk about, well, grain prices are cheap and I know they are. I grew up in this kind of environment. The price of grain in a box of cereal isn't much, and the box costs more than the grain. So it's a mixture of a lot of things that drive value and drive productivity and manufacturing.
This is a combination of a few messages on one chart. Going across the top we have a supply chain internally; it shows how we get products, ingredients, and make products and get them all the way to the consumer. But this is what I call the normal market supply chain here in the U.S. We start with the biotech companies, which develop and help breed things; that flows into the input seed fertilizer, goes to farmers, goes to country elevators, goes to processors, goes to food manufacturers, retailers, and eventually we hit the consumer. Most products that start with raw ingredients go through that kind of a market chain, and each piece is a little different than the other.
