Brett Bruggeman serves as Executive Vice President and Chief Operating Officer of Land O’Lakes, Inc. where he leads the organization’s agriculture businesses, including Crop Inputs, Animal Nutrition and Truterra. In addition, he has broad enterprise responsibilities to develop, implement and monitor growth strategies and platforms consistent with the collective vision for the organization.
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John: Welcome to another edition of The Impact Podcast. I’m John Shegerian, and I’m so honored to have with us today Brett Bruggeman. He’s the executive vice president and COO of Land O’Lakes. Welcome Brett to the Impact Podcast.
Brett Bruggeman: Thank you, John. Appreciate you having us.
John: Well, since it’s your first time on the show, which we’re so excited about, we haven’t really talked about these subjects in the area that you do business in. Before we get talking about all the great work and impact you and your colleagues are doing at Land O’Lakes, let’s talk about you a little bit. Where’d you grow up and how’d you get on this journey, Brett?
Brett: Yeah. Number one, humbled to be on and so much appreciate the question you have there, and also to give Land O’Lakes the opportunity to tell our story. Actually, part of a fifth generation farm that’s operating currently, John, right now, today. My family and I, we like to call it our sanctuary. If there ever is a place where we want to go and think and get away, that’s just where we go. But my brother-in-law is at home with that operation and it allows me to stay grounded and it’s back in Carroll County. So Central Iowa is where we grew up. Kelly and I have been married almost 34 years. We have four children. We’ve moved in 12 different places. Some out of the country. Currently, we live in Minnesota and we absolutely love it, John. We were joking earlier about the Arctic Tundra but people are active up here and it’s just a great place to live and raise a family. But I’m an empty nester also, John. Which Kelly and I are also enjoying in a big way. We thought maybe that would be a tough part of our next chapter in life, but we love it and we visit our kids and I have one grandchild, Griffin, who’s two and another one on the way. So we’re starting to get the next generations going. That’s right.
John: On your family farm, what’s grown? What’s the crop on the family farm?
Brett: Mainly row crop now, corn and soybeans. It’s amazing, John. We raised a lot of cattle and a lot of hogs. If any of your listeners are back in Carroll County, I think it’s one of the highest populated cattle counties in the state. But yeah, when I left for college, all of a sudden the livestock started to leave too. So interesting enough, no, just corn and soybeans right now and that’s what they run.
John: How many years ago… you went to college, when you went to college, what was your goal then? Were you thinking about what you wanted to be or college inspired you and pushed you in a different direction?
Brett: That’s a great question, John. I’ll say just a little story, but it’s one that is… so I really got to be good friends with the Dean of Agriculture, Roger Brennie, who’s now, I think actually there’ve been two successors, so that dates me a bit. But my plan was to get go to college. My mom said, you don’t have a choice, and she dropped me off the night before classes and so glad that she did. It was the best experience ever. But my plan was to go back and farm, to answer your question, John. My dad was one of four, the only son, and I am the same. Actually, his dad had two brothers, but the reality is I was going to go back and farm. What happened is, Roger Brennie had… back, as you know in the ’80s, it was really tough to get companies to come and recruit for jobs and jobs were tough, especially with chemical companies. He said, “Hey, I need you to sit in on an interview with American Cyanamid.” And I said, “Well, Roger, that’s not going to work.” I said, “You know I’m going back to the farm.” he said, “No, I think you owe me two or three favors.” He goes, “It’s going to work. You’re going to fill the slot.” I’ll never forget it. I interviewed with two individuals from American Cyanamid, and after the interview, they said, “Hey, would you want to go out for dinner?” Well, John I was used to boloney and Velveeta and I said, “Yeah, I’d go out for dinner.” Then they offered me a job at dinner and I turned it down. I was to go to New Jersey. At the time, Kelly and I were about to be engaged, and I told her, I turned it down and she said, “You go back and tell them we’re going to New Jersey.” So that’s how it started. My dad was not very happy with me at first, but he had just passed away now it’d be four years and last night that I got to see him, he said, “You know what? You made the right decision. You get the best of both.” So the path was not as we planned, but so glad John to be able to take that journey.
John: That’s so awesome. But you still have the former DNA, which gets to continue to inspire you and also that DNA never goes away and you have the corporate experience. Which part of Jersey was that first job in, by the way?
Brett: Persephanii.
John: Awesome.
Brett: Yeah, we moved out there twice. The first apartment, we couldn’t even open the oven door because it was so small and walked past it. But we lived out there twice, Persephanii and then also Wayne.
John: Sure. So how many years ago did you join Land O’Lakes, by the way?
Brett: So, Land O’Lakes spent about half of my career. So in the 30 plus years, I spent about half of that, 15 plus in the R&D manufacturing world with Cyanamid BSF. As you know, there are a lot of different mergers in those spaces. Mainly on innovation. Account management, marketing, sales, just a great experience. They moved us every couple years to get that experience from that standpoint. Then the last 15 years, I would say, we’re in retail distribution and started with a company on that side at United Suppliers that was actually merged in and acquired… or acquired with, I should say, with Land O’Lakes. So it’s been not a lot of different companies, but a lot of different moves within a couple, three companies that had gone together because of consolidation. So I’ve gotten to your point, gotten to work for a large manufacturer company, got to work also for Boots On The Ground with the distribution, and now with Land O’Lakes being close to 17 billion in 60 countries. We get a pretty big scale. So been on both sides and love it. Never a boring day. But have gotten to experience both ends of that.
John: For our listeners and viewers who aren’t familiar with Land O’Lakes, which we’re going to go into right now. Land O’Lakes is a leading member owned cooperative specializing in Ag and food production. [inaudible] as Brett just said, 17 billion in sales in over 60 countries, but over 9,000 employees. So now you’ve been at three companies, as you say, but you’ve been in many different roles. So you’ve had the benefit of being exposed to a lot, and you still have the farmer DNA. How do you then take your farming DNA merge it with your corporate experience, which then allows you to do the great work you and your colleagues are doing at Land O’Lakes with regards to the challenges that are facing farmers now, not only in the United States, but around the world when it comes to sustainability and protecting these wonderful environment that gets to feed us all.
Brett: Yeah. Literally, it’s one of the best jobs and being a cooperative, obviously, you’re owned by your member owners. We have a saying here at Land O’Lakes that our success starts with our owner success. So it really grounds you at the end of the day, but what’s so interesting about it right now is to serve the owners in this environment. I would say, to answer your question, John, there are a couple three things that are pretty easy to see, not easy to crack and solve, but easy to see. Then there are a couple of three things that are a little more fuzzy that are coming around the corner. When you ask the question about the current landscape right now, I would tell you, if you look at the demand and supply ratios, particularly with food, fuel, fiber, they’re pretty, what I would say, oversupplied under demand. Some of that is just based on the technology and the overall abundance that the farmer, whether it’s American farmer or the Brazilian farmer does. They just do a fantastic job with that. But then you click down in there and you know that trade deficits are a big part of that demand piece that have changed specifically with the US side. So this supply demand piece, you can see that. I want to comment a little bit later on the fact that I don’t always see that in the future. We don’t always see that in the future, but right now, the stock to use ratios are pretty high. The second thing that makes it really interesting, and everybody can see this, is the cost to serve. Particularly in three or four areas. The first one for us is probably just like the unfortunate piece in California around insurance. If you look at most of our owners, our insurance premiums have gone up anywhere from 20% to 50% with less than a third of the coverage. It’s just a lot of different incidences that are making that happen on top of, we have interest costs that are not free money anymore. So those costs have hit them. Then I would say lastly, labor and logistics. They’re up anywhere from 25% to 40%. If we go back and look at pre-COVID, those are extra costs. So what’s happening is, the net farm income is reduced by about 25% or 30%, depending on the numbers from the high. It really makes return on investment and break even so, so important. So when I always say what do we do? We are big on how do we make sure we’re putting placement of products, whether it’s in the animal nutrition products with Purina or it’s in our WinField United crop input side? How do we make sure we put products in place that have predictability? In a lot of those products, we have our proprietary products to help fill that. So, every day we got to wake up and say, what’s the ROI? What’s the productivity improvement part of it? Those are easy to see in. I’ll just pause there before I go into what isn’t so easy to see and see if there are any questions you have on that, John.
John: Yeah. From a layman’s standpoint, the risk reward has gotten even more difficult to justify now post-COVID as a farmer in the United States?
Brett: Yes. The break evens, like today, you’re within $0.50 on a bushel of corn. I think we’re at a $4.60 to $4.70 number in the same way with a soybean number. So everything’s got a tick and tie and with the weather and those types of things, it’s one of those situations where those farmers are looking for help and expertise to say, how do I maximize every acre, every pound of animal that I can make sure that I get that return of grain? Now, the livestock side of the business, particularly in cattle, are extremely bullish right now, but it hasn’t always been that way. I would say the swine piece is still very, very tough, but the razor thin return on investment is always something that we take a look at.
John: Does innovation and AI, since we wake up every day, if you read the Wall Street Journal or the New York Times, look at Bloomberg or CNBC, AI is always, or usually the lead story. Is AI and innovation one of the ways that you’re leveraging technology to create more predictability in an unpredictable business?
Brett: Absolutely. Well, let’s back up a little bit on innovation. What’s so exciting about the space that we’re in in ag, AI is getting used across a lot of different sectors, but in particular, I would break it into autonomous and technology see and spray. There are a lot of new innovations coming in that space, particularly around solving the headache of labor and trying to do more with less. There’s a big part there. Then I would say there’s another part of this thing that’s evolving from an innovation standpoint around gene editing, particularly around the oil seeds and this clean energy transformation piece that’s happening. It could be particularly with biofuels, sustainable aviation fuel, but there are crops being produced or that actually can yield a higher level of yield from an outcome based standpoint and help us with the overall productivity gains whether it be on climate, whether it be on water, whether it be on other productivity gains in the marketplace. So there’s a lot of gene editing in the seed side that’s happening. Then the last piece that I would say that’s also across all of the Ag business is this probiotic treatment. In its biologicals and the crop side where they’re using biologicals to reduce stress or help plants manage through drought or other situations. The same way with the animal side, extending the life of particularly what we call lifestyle or the pet side. So a ton of innovation that’s happening there. Then the data, to your point of it, how do we take those stacks of data and use them to help advance that technology? That’s really right in our wheelhouse at Land O’Lakes.
John: So that data you’re using and creating some predictive analytics around that, that help you hedge the risk, for lack of better terms?
Brett: Yeah. So it’s very interesting. In our owner base has always been from an investment standpoint to say, we know the farmer data is owned by them. The reality is, is data privacy and collecting that data to turn it into an advantage is something that that’s what we do.
John: Understood.
Brett: Privacy and collecting the data is where we excel in. Tying it back to your question on AI, we take these stacks of data and to try to make it simple, there might be transactional data, there might be what we call research or as applied data and there might be total farm data, and we’re putting these stacks of data into what we call the AI blender, and then mapping that to what the markets are or what the weather patterns are to try to take out some of the slop or add in the predictability. We are in a unique situation, John, to offer that to our retail owners who are on the Ag side and also our dairy producer owners on the dairy side and actually carry that down all the way down to the farm level. So it’s truly a, what we would call a soil to shelf approach because obviously, we sell a lot of products on a dairy side that hit the consumer. So very data driven approach.
John: That’s so interesting. I understand gene editing then when you reference biologics and probiotics. Now, probiotics I know is something that you and I would go to Whole Foods or some other store and buy to take for our own microbiome or stomach. What do probiotics mean in the sense that you shared with us?
Brett: Same thing. I wasn’t there and I love horses. Actually, they were out at the Denver… I think it was the Denver Rodeo at Christmas time. You just said it, the gut health of a horse and making sure those performance horses in particular are set for cutting and whatever event, barrel racing, whatever event that is, that’s a big opportunity to help on that. The second part is around the plant physiology of how to condition that plant. So when adverse weather comes, maybe not. Normally you get somewhere between 26 and 30 inches of rain in the Midwest to make 250 bushel corn. Some cases, we’ve had 20 or 22 inches two years ago back in our home farm, and we made pretty good corn. I think it was probably because of the conditioning of those products, was one of the reasons why we had that. So it’s all about conditioning the system to manage through those life cycles of stress. You were spot on your analogy.
John: Well, even though I grew up in New York City and I talked pretty fast and I still was. My kids would say I have a queen’s draw a little bit or queen’s vernacular. I do have a farming background as well, like you do. One thing that’s fascinating about the use of probiotics that you just mentioned with horses, which I didn’t realize is happening, is most people don’t understand, horses can’t throw up. So if they get a stomach ache or get a stomach bug and they tie what is called tie up, it’s a very, very bad scenario for that equine animal. So that’s fascinating that you’re now leveraging biologics with regards to keeping cattle and horses just healthier and giving them a greater chance to live a happier and better and a healthier, more sustainable life.
Brett: Absolutely. It plays a big role. What’s so fun about this is we’re just scratching the surface. Because those different biologicals react in so many different environments. On the crop side, the WinField United team has a technology that’s under the roof. Back to your data question, we do like 6 million data points, particularly in the field to make sure that we look at real weather conditions. But then we simulate 12 months a year underneath the roof with a phenotyping machine that allows us to go through and look at these biologicals. I would call it, screening these biologicals in these different conditions to know where we can increase the consistency or the predictability of them working. It’s been a game changer for our teams to use that technology that way. So I just think, again, that’s kind of another… not kind of, it is another way of using AI in robotics to help accelerate these products to the consumer or farmer or livestock owner.
John: For our listeners and viewers who’ve just joined us, we’ve got Brett Bruggeman with us today. He’s executive vice president and COO, Chief Operating Officer of Land O’Lakes. To find Brett and his 9,000 or so colleagues, please go to www.landolakesinc.com. Talk about size, Brett. Land O’Lakes is one of the world’s largest cooperatives as we know, size and scale matter. There is advantages that come with that. But there’s also, of course, these downsides. How do you lean into the advantages to help make Land O’Lakes more successful and resilient and sustainable, and how do you minimize or mitigate the disadvantages?
Brett: Yeah. So great question. It’s one of those questions, I would say, every day we got to make sure that we operate think big and act small from a standpoint of agility. The thing that I love or we love the most about Land O’Lakes, I would say, the first thing is, our capital is back to the scale piece. Our capital is patient. If you look at ag, and I would say this won’t be exactly the history, but in a lot of cases, because of all the variables, you’ll have four years where you’ll make really good money, three years breakeven and above, and maybe three years then out of that 10 that you won’t make money. I think based on the level of investment, you think about the active ingredients, in a lot of cases, that’s close to $300 million you need to invest to get an active ingredient with Bayers and Syngentas and BSFs. You need to have patient capital. Then we do, we’re owned by retail here and producers are farmers. So that is a big part, a big advantage that we don’t manage the business by the quarter. We know monthly what our KPIs are, and I can tell you that we hold each other accountable to that. But we don’t make unnatural moves, which I think is a big benefit. The scale part of it, if you take a look at the scale side of it, we touch about 100 million animals on the Purina animal nutrition side. We touch about 50% of the acres. So if you’re going down the interstate, one out every two, we have some product on it from a crop input standpoint. Then we have about 13 billion pounds of milk. So if you’re sitting down to eat something, there’s probably a pretty good chance that that scale is coming with and through our infrastructure at Land O’Lakes. I would tell you the thing that’s been most advantageous to us is broadening our skillset from a global standpoint. Ag that’s happening in Brazil, Ag that’s happening in China, Ag that’s happening in Canada, right across the border has really helped us take the technologies and assets and leverage those across the different geographies. Plus, with scale, we have some built in risk management. That is a big benefit to our owners from that standpoint. I talked about the accountability piece. Because of our reverse ownership with our retail owners and our growers owning us, that’s a huge advantage. We can’t get too far into the ditch, I’ll call it, John. Our owners will call us on it and I love it. In our board meeting, they’re there. But the other thing that’s so important, we think, going down the road, I don’t think it’s a disadvantage. We don’t think it’s a disadvantage. We think it’s something we got to get better at. Number one is about building these alliances further back stream to be backward integrated or downstream back to your data piece. Also looking at those globally, we’re spending a lot of time right now saying, who should be our alliances? Should they have more of a finance fit? There’s just a lot of ways equipment companies, a lot of ways to put Ag together. It’s not just inputs. It’s the finance piece. Then I would say the second thing is, how do we make sure we are at pace with the farmer of tomorrow? The consolidation that’s happening. One quick quote that I think from your listeners that might be interesting is, in the last five years, the census work just came out and we had 7% fewer farms. A lot of people may say, “Well, that’s not a huge decline.” If you look at the last five years, not counting 2024, there are probably the string of the five best profitable years ever in farming. To have 7% consolidation is a big deal. Some of it is age, some of it is just the squeeze that you referenced right at the very beginning on return on investment and the level of risk. So we got to make sure that we’re ahead of the curve, or at least at pace. We try to stay humble because being ahead isn’t always the case. But it goes back to your question, what is the advantage? Being part of something larger gives you that lens, but it also gives you that tolerance that you have a little more business insulation, why you try to get at pace with a farmer of tomorrow. Because they’re moving fast with data and other pieces in multiple decision makers where that’s a shift that’s happened in the marketplace just in the last five to 10 years.
John: Being a farmer by DNA, which you are, but also being a business executive by training and experience, which you also are. When you merge the duality of your mindset, talk a little bit about 7% being the number that the census just showed, what should that number be that would make you feel more comfortable as to the evolution of the future farmer, but also the right mix of not losing our farming roots of this great country that we all get to really share and enjoy together.
Brett: Yeah. Putting the farmer at the center, is the piece right now and whether or not it should be five or it should be nine, John, is a question that, from a forecast standpoint, is tough. But I would say this, making sure that we have quantity and quality of food is important. I mentioned about the oversupply at the very beginning, and if you listen to some of the podcast in the Ag space, you’ll hear people talk about, we have large, large, large in the supply to end use ratios that are keeping the prices tampered down, which is true right now. But I want to share something because I think this goes back to, we might be at an inflection point like never before on the food standpoint, both from having enough from a quantity standpoint, but also a quality standpoint. Number one, globally now, we have about leveled off with global acreage. I think if you Google it today, they’d say 2.4 to 2.5 billion acres. The reason that is important is, the last 10 years, Brazil was adding five to 10 million acres a year and they were clipping right along. Now, they’re still adding, I would say, most people would say 2 million acres a year. But what’s happening is, the US and other parts of the world are actually decreasing the amount of acres. So you have acres flattening out. The second thing is the yield gains. If you go back to 1974, and you look at 1974, and the reason we did this is because that’s when they started tracking yield on corn and soybeans to 2014. So I think that’s roughly 40 years. The average gain on a per acre basis was about three bushels on corn and a bushel on soybeans. Guess what it was from 2014 to 2024.
John: I have no idea.
Brett: One bushel on corn and about 23 on soybeans. So we’ve taken the top end of yield gains and people forget that. So now you have level acreage, you’ve leveled off the yield. Here’s probably the third thing that we think about back to this innovation is water. It takes 650,000 gallons of water roughly to raise one acre of 250 bushel corn. That goes back to the 26 to 28 inches of rain in central Iowa that we get or more each year. Well, you mentioned AI. Anybody got an idea? Or what do you think how many gallons of water a data center takes per day? Somewhere between 3 million and 5 million gallons per day. We just talked about 650,000 gallons to raise an acre. So think about the tug of war on water. You think we’ve not had that water. Could we outstrip ourselves on water? We could, John. That’s where I go back to, I never want to think lazy, like we’re going to have plenty of cheap food all the time because of the three things we just talked about there. But then on top of it, Kelly and I have four kids, and I would tell you, they spend more on groceries, yes, because inflation, but also because they’re a generation, they really care what they put in their bodies.
John: That’s right.
Brett: So I think we’re at this inflection point where it’s not about quantity only, it’s about quantity and quality. It’s something in Ag that I think the sky is not falling, but we do need to pay attention to it and it ties back to your question, what is the right number? I think this next generation of farmer gets that. If we’re listening to a large farm that has two or three generations on it, there’ll be a generation or two in there that say, you know what? I want to raise some outcome based crops. I want to raise high oil soybeans or organic or something like that. There’s a market like that today where in the past, that market maybe wasn’t there or wasn’t able.
John: That’s right.
Brett: So I think it’s going to be interesting to serve that farmer of tomorrow because they think about the business. It is for sure a great lifestyle, but it’s a high stakes game, and it’s moving so fast to not just an input number two yellow corn, also an outcome based market that we got to help or need to help them with navigate through.
John: I live here in California, Central Valley, more specifically, which is big Ag Fresno, California. There’s another big Ag center of this United States, and of course, the world even. But water is a constant issue out here. I moved out here in ’88, Brett. Talk a little bit about water, though. You bring up the topic of water. I’ve had water experts on this show over the years, some of the top experts on the planet, and many of them subscribe to the notion that we don’t have really a water problem on this planet. We have a political problem. Is water less of a technology problem today, more of a political problem? Or is it still a healthy interchange mix of a little bit of both and it’s still a struggle to be able to get enough water to grow the crops we need to grow, not only here in the United States, but around the world since you have a worldview because of where you sit and the fact that you serve so many countries.
Brett: Yeah. No, we have a saying at Land O’Lakes, we always say policy not politics.
John: I’m with you and this is an apolitical show. I’m just looking what your thoughts are on that issue.
Brett: Yeah. I think the policy no doubt policy needs to be taken a look at and say, okay, what is the right policy based on the water rights? You mentioned California. So we have a lot of business out there. The square footage on a water perspective has been educational for me, growing up in a place that had plenty of water. But I would say this, there is so much we can do. The amount of irrigation, I believe since 1960 to now have doubled, acreage doubled. So you think about how these irrigation systems are being engineered and I’d call it engineered. We have a business green point in the south east part of the United States, and then one of our largest share states are in Nebraska, which I think about 70% of that geography is irrigated. But the technology advancements to tech hot wind and how much you should irrigate has been night and day, and they’re putting these sensors in the ground. So instead of just automatically running them, they’re based on this technology. Part of that is, is because it is regulated with the aquifer out there and how long it’s taking for that aquifer to actually recharge. They’re realizing there is an unlimited water. I’m more on the fact that I think there’s technologies and even if we do have unlimited water, I think we’re going to need it. So let’s use the technology to manage it. Also, in gene editing and in the seed side of things, there are a lot of different crops that take a lot of different amounts of water. Even within those crops, different hybrids and different varieties that can be much more efficient. So it’s an area, if you look at our market or the research, we’re now behind Brazil, we’re now behind China in the US as far as overall research. This is an area in water that I know Land O’Lakes, and we’re working with other manufacturers and R&D companies to say, how do we get on the leading edge of that? Because the trend is, we’re getting less rain, or when we do get rain, we’re getting so much of it, the soils can’t handle it and so it’s not being utilized. It’s more extreme, I should say it that way.
John: Understood. Given that we’re having this conversation, Brett, in January of 2025, let’s look back five or six years. One of the big issues that we’ve started covering on the show and also the media is covering a lot now, is both regenerative agriculture, but also this issue of food security. Or let’s look at the flip side, food insecurity. Where are we today? Is the world becoming more secure with regards to its food supply or less secure? How can we improve that? Given again, you’re a COO of a company that’s doing business in over 60 countries, so you have a unique view and visibility into these issues that are cross continent issues, obviously.
Brett: Yeah. I think when you look at our business in Canada, even with the fires that we’ve had the last few years, and you think about the droughts that we’ve experienced in Africa and even some of the things that are happening in Brazil, the farmer is resilient. The resilience of a farmer is just crazy. I would say, for us to say, how does security of food look today? We’re in a pretty good spot, but I would not say that that’s something that’ll happen forever just based on what we talked about with water and acreage and yield trends. I think the thing that we’ve learned, because we’re such a data-driven company and some people use sustainability, some people use regenerative. We don’t know what the right terminology is, John, but we’ve shifted to a terminology that talks about productivity gains. So whether it’s a bushel of grain, a pound of meat, or a gallon of milk, how do we make sure we do more with less? We’re pretty confident… not pretty confident because we’re on the acreage that we are, is that we can increase the productivity with certain practices. We got to get better at explaining that to the public. Because you look at no-till, for example, or cover crop, those are practices that get back to productivity gains, but they also get back to what matters to the farmer, which is important. Soil health. We’re not making any more soil. The reality is, is we’re learning that those practices of no-till really help build the regenerative parts of that soil structure, et cetera, full of microbials to your point, is another piece. So we’re bullish on the fact that, yes, we have supply today, but we’re also bullish on the innovation that’s coming that’s going to continue to help us raise more quality and quantity food into the future. I think that’s just going to be something that we’re wired to do, but I feel like we’re tilting more to the quality side because of the generations. We’re serving five different generations now as consumers. That’s an important part as a food company to make sure we understand that.
John: So as a general mission, productivity gains and doing more with less really equals, as you say, it gets to the bottom line, and the bottom line really for everything that you’re doing in sustainability technology and also community support is resilience. You are creating a more resilient organization by doing more with less.
Brett: Absolutely. What’s interesting and because of our core model, we talk about placement and proprietary and inputs and outputs, but the reality is, is 60 million, we’ll just take the US and it’s very similar to us. About one fifth of the population is rural. So you talk about community strength, and it’s at the heart of our co-op, a deeper purpose, doing meaningful work, purposeful work. There are two areas in particular that we’ve invested in and continue to think that it’s the right thing to do. The first one is around what we call American Connection Corps. We’ve worked with about 105 different, we call them, Fellows Alliances in 36 states to help bridge the divide on digital, the digital divide in the communities. It wasn’t too many years ago, in my own home farm in Carroll County, Iowa, where we didn’t have a reliable Wi-Fi, and it’s pretty hard to use autonomous driving and all the other things that come along with that until you do that. You think about school from an education standpoint, you think about medical. I was just looking at a stat earlier this morning, and even though 20% of the population live in rural areas, John, 11% of the doctors practice there. Of that 11%, this is staggering. 53% of those physicians currently practicing are looking to retire in the next five years. So you think about rural community durability and the importance of having a strong community that does raise the quality and quality of food is going to be so important. It’s part of our mission to also invest and work with those communities. A lot of cases, our cooperatives, whether, if you look at Central Valley Ag or Keystone, or I mentioned GreenPoint innovative Ag services, new co-op in Iowa, they’re the largest employer in those communities. So if they’re healthy, usually the community is healthy and it takes a village. But we feel that that’s the purposeful work we want to get up every morning thinking about.
John: So interesting. For our listeners and viewers, I should have probably started this at the top of the interview, Brett, but give a little bit of mindset when it comes to cooperative versus if you were running the same organization, but it was a publicly traded company, or the same organization, or it was a privately held organization. This is a co-op. Explain why you believe co-ops can really make the communities they serve and the businesses and the entrepreneurs and the farmers they serve better.
Brett: Yeah. The cooperative mindset, first of all, is very… it’s partnership, it’s alliance. It’s one of those things where you give and take and you hold each other accountable. That’s what I think we love the most about this model. But when you really come down to it is, what makes this cooperative sing is if we don’t duplicate what they can do locally, and we can focus on what we call scalable assets. Assets that they couldn’t get on their own, but they need exposure to. It could be captive insurance, it could be obviously tangible assets like grain or fertilizer, labels from a technology standpoint. Here’s another big one. Cybersecurity from an IT standpoint. But they’re just all those different pieces that we focus on from what we call a regional standpoint that are not duplicate to what they do on the local standpoint. What our local cooperative does is they deliver the last mile, John. They have the relationship with that grower or that livestock producer, that dairyman, that livestock, cattlemen, et cetera. Those local cooperatives serve that. I think about yesterday, it was 30 below in Minneapolis. Well, those animals got to get fed every day regardless. That’s where our retail infrastructure and us as a regional, having more of the scale presence that you talked about fit like a hand in a glove. Then having the mentality of how do you serve and strengthen multi-generations down the road, like having the ability. My dad served on a board for a cooperative for many years and got to make decisions locally about where the profits went. There aren’t too many models, John, in this world that are like that. That’s a pretty big deal. When you get to have the ability to say, how do those profits go back into the communities? You have ownership and accountability and it gives me goosebumps thinking about it because I can remember him talking about it and taking it so very seriously about stewarding those resources. That’s a type of culture and people that we have.
John: Well, I think farmers are truly the OG entrepreneurs of the United States or anywhere, really. They’re truly entrepreneurs, and as you say, it’s from soil to shelf. The great ones have figured out how to really be integrated and be either parts of great cooperatives like yours, or they’re private business people, but farmers are just the backbone of this whole great country. What’s the future look like? You have already so much history behind you and so much success, Brett, what are you focused on in the next 24 or 36 months with regards to priorities at Land O’Lakes to continue to drive, predict productivity gains?
Brett: So productivity gains, I love it. You picked it up and…
John: I got it, man.
Brett: You got it, yeah. The other saying we say is growth for breakfast, growth for lunch and growth for dinner. We’re on a growth trajectory. Our CEO, Beth Ford has put together what I would say, a team, at all levels, all corners of the organization that are saying, “Let’s take care of this base of business, $17 billion, but let’s really focus in on the growth side.” So you’ll see us lean in with this data driven approach. How do we help our retail owners stay at pace or ahead of their grower customers? It’s in those areas that I talked about with innovation, with new products, and new productivity gains in there. You’ll also see us, we’re in a very good spot from a balance sheet perspective and we’re thinking that this is the opportunity that there will be some inorganic growth opportunities that come up for us. So that is something that’s exciting and obviously, you always have to do your homework from that end of it. But we don’t see the pace when you ask what do we see going down the next five years. Just to give you a perspective, John, we used to build an annual plan, and we obviously still do build an annual plan, but the reality is, is we’re refreshing that every 100 days. The market right is moving so much faster than what we originally are thinking. So I think making sure that we have the right pace that we stay externally focused is so important. We focus on execution head downs and keeping our own front and center. When we do those things, we usually yield growth for breakfast, lunch, and dinner and it happens. The last thing I’ll say is, we can’t do it all. I’ve seen a physical shift since the time I’ve been here with our leaders and ourselves to say, how do we do alliances? How do we work with others upstream and downstream to help us move faster and scale these assets, not duplicate the cost operationally? So a lot of work to do there, but we got to keep evolving and that’s the piece that it’s exciting.
John: Brett, when you are benchmarking where you’re at as Land O’Lakes is and the progress you’re making, as you say, you’re not doing annual forecast anymore, which I so agree with you here. It’s so dynamic and the world is so fast now, doing every 100 days readjust makes so much sense. Where do you look for inspiration and information in terms of terms your industry as a whole, the Ag industry, or where do you look outside of it, the industry for inspiration to the important work that you do?
Brett: Yeah, I think it goes back to our leadership of being part of networks. Personally myself, I’m part of a COO network that just last Friday had the opportunity to ask other CEOs, tell me a little bit about what level of investment, for example, on AI that you’re doing from a benchmark standpoint. How are you doing enterprise account management? We’re not the only ones with large customers that go across multiple businesses. So I think it’s that part of it. But then we encourage each other to make sure learners are readers and we get together as an executive team now every week, and we share best practices and share current readings and learnings. So I just think the learning curves are much steeper and quicker. But there are so many more, just like your podcasts. There’s not a week that I don’t listen to three or four podcasts that educate. You can do it walking.
John: That’s right.
Brett: You can do things that make right that make you healthier or whatever your passion is. So I just think the learning tools are so much more abundant today in sharing.
John: That’s so good. Brett, thank you so much again for your time today. For our listeners and viewers, Brett Bruggeman. To find Brett and his colleagues at Land O’Lakes, please go to www.landolakesinc.com. Brett, this hour has been great. You’re always welcome back on the Impact Podcast to share the continued success and journey and the productivity gains that you continue to make. I just want to say thank you, not only for your time today, but most importantly, thank you for making the world a better place.
Brett: Thank you, John. We appreciate the opportunity. It’s our pleasure. Thank you.
John: This edition of The Impact Podcast is brought to you by Engage. Engage is a digital booking platform, revolutionizing the talent booking industry with thousands of athletes, celebrities, entrepreneurs, and business leaders. Engage is the go-to spot for booking talent, for speeches, custom experiences, live streams, and much more. For more information on Engage or to book talent today, visit letsengage.com. This edition of the Impact podcast is brought to you by ERI. ERI has a mission to protect people, the planet, and your privacy, and is the largest fully integrated IT and electronics asset disposition provider and cybersecurity focused hardware destruction company in the United States and maybe even the world. For more information on how ERI can help your business properly dispose of outdated electronic hardware devices, please visit eridirect.com.
Brett Bruggeman: Thank you, John. Appreciate you having us.
John: Well, since it’s your first time on the show, which we’re so excited about, we haven’t really talked about these subjects in the area that you do business in. Before we get talking about all the great work and impact you and your colleagues are doing at Land O’Lakes, let’s talk about you a little bit. Where’d you grow up and how’d you get on this journey, Brett?
Brett: Yeah. Number one, humbled to be on and so much appreciate the question you have there, and also to give Land O’Lakes the opportunity to tell our story. Actually, part of a fifth generation farm that’s operating currently, John, right now, today. My family and I, we like to call it our sanctuary. If there ever is a place where we want to go and think and get away, that’s just where we go. But my brother-in-law is at home with that operation and it allows me to stay grounded and it’s back in Carroll County. So Central Iowa is where we grew up. Kelly and I have been married almost 34 years. We have four children. We’ve moved in 12 different places. Some out of the country. Currently, we live in Minnesota and we absolutely love it, John. We were joking earlier about the Arctic Tundra but people are active up here and it’s just a great place to live and raise a family. But I’m an empty nester also, John. Which Kelly and I are also enjoying in a big way. We thought maybe that would be a tough part of our next chapter in life, but we love it and we visit our kids and I have one grandchild, Griffin, who’s two and another one on the way. So we’re starting to get the next generations going. That’s right.
John: On your family farm, what’s grown? What’s the crop on the family farm?
Brett: Mainly row crop now, corn and soybeans. It’s amazing, John. We raised a lot of cattle and a lot of hogs. If any of your listeners are back in Carroll County, I think it’s one of the highest populated cattle counties in the state. But yeah, when I left for college, all of a sudden the livestock started to leave too. So interesting enough, no, just corn and soybeans right now and that’s what they run.
John: How many years ago… you went to college, when you went to college, what was your goal then? Were you thinking about what you wanted to be or college inspired you and pushed you in a different direction?
Brett: That’s a great question, John. I’ll say just a little story, but it’s one that is… so I really got to be good friends with the Dean of Agriculture, Roger Brennie, who’s now, I think actually there’ve been two successors, so that dates me a bit. But my plan was to get go to college. My mom said, you don’t have a choice, and she dropped me off the night before classes and so glad that she did. It was the best experience ever. But my plan was to go back and farm, to answer your question, John. My dad was one of four, the only son, and I am the same. Actually, his dad had two brothers, but the reality is I was going to go back and farm. What happened is, Roger Brennie had… back, as you know in the ’80s, it was really tough to get companies to come and recruit for jobs and jobs were tough, especially with chemical companies. He said, “Hey, I need you to sit in on an interview with American Cyanamid.” And I said, “Well, Roger, that’s not going to work.” I said, “You know I’m going back to the farm.” he said, “No, I think you owe me two or three favors.” He goes, “It’s going to work. You’re going to fill the slot.” I’ll never forget it. I interviewed with two individuals from American Cyanamid, and after the interview, they said, “Hey, would you want to go out for dinner?” Well, John I was used to boloney and Velveeta and I said, “Yeah, I’d go out for dinner.” Then they offered me a job at dinner and I turned it down. I was to go to New Jersey. At the time, Kelly and I were about to be engaged, and I told her, I turned it down and she said, “You go back and tell them we’re going to New Jersey.” So that’s how it started. My dad was not very happy with me at first, but he had just passed away now it’d be four years and last night that I got to see him, he said, “You know what? You made the right decision. You get the best of both.” So the path was not as we planned, but so glad John to be able to take that journey.
John: That’s so awesome. But you still have the former DNA, which gets to continue to inspire you and also that DNA never goes away and you have the corporate experience. Which part of Jersey was that first job in, by the way?
Brett: Persephanii.
John: Awesome.
Brett: Yeah, we moved out there twice. The first apartment, we couldn’t even open the oven door because it was so small and walked past it. But we lived out there twice, Persephanii and then also Wayne.
John: Sure. So how many years ago did you join Land O’Lakes, by the way?
Brett: So, Land O’Lakes spent about half of my career. So in the 30 plus years, I spent about half of that, 15 plus in the R&D manufacturing world with Cyanamid BSF. As you know, there are a lot of different mergers in those spaces. Mainly on innovation. Account management, marketing, sales, just a great experience. They moved us every couple years to get that experience from that standpoint. Then the last 15 years, I would say, we’re in retail distribution and started with a company on that side at United Suppliers that was actually merged in and acquired… or acquired with, I should say, with Land O’Lakes. So it’s been not a lot of different companies, but a lot of different moves within a couple, three companies that had gone together because of consolidation. So I’ve gotten to your point, gotten to work for a large manufacturer company, got to work also for Boots On The Ground with the distribution, and now with Land O’Lakes being close to 17 billion in 60 countries. We get a pretty big scale. So been on both sides and love it. Never a boring day. But have gotten to experience both ends of that.
John: For our listeners and viewers who aren’t familiar with Land O’Lakes, which we’re going to go into right now. Land O’Lakes is a leading member owned cooperative specializing in Ag and food production. [inaudible] as Brett just said, 17 billion in sales in over 60 countries, but over 9,000 employees. So now you’ve been at three companies, as you say, but you’ve been in many different roles. So you’ve had the benefit of being exposed to a lot, and you still have the farmer DNA. How do you then take your farming DNA merge it with your corporate experience, which then allows you to do the great work you and your colleagues are doing at Land O’Lakes with regards to the challenges that are facing farmers now, not only in the United States, but around the world when it comes to sustainability and protecting these wonderful environment that gets to feed us all.
Brett: Yeah. Literally, it’s one of the best jobs and being a cooperative, obviously, you’re owned by your member owners. We have a saying here at Land O’Lakes that our success starts with our owner success. So it really grounds you at the end of the day, but what’s so interesting about it right now is to serve the owners in this environment. I would say, to answer your question, John, there are a couple three things that are pretty easy to see, not easy to crack and solve, but easy to see. Then there are a couple of three things that are a little more fuzzy that are coming around the corner. When you ask the question about the current landscape right now, I would tell you, if you look at the demand and supply ratios, particularly with food, fuel, fiber, they’re pretty, what I would say, oversupplied under demand. Some of that is just based on the technology and the overall abundance that the farmer, whether it’s American farmer or the Brazilian farmer does. They just do a fantastic job with that. But then you click down in there and you know that trade deficits are a big part of that demand piece that have changed specifically with the US side. So this supply demand piece, you can see that. I want to comment a little bit later on the fact that I don’t always see that in the future. We don’t always see that in the future, but right now, the stock to use ratios are pretty high. The second thing that makes it really interesting, and everybody can see this, is the cost to serve. Particularly in three or four areas. The first one for us is probably just like the unfortunate piece in California around insurance. If you look at most of our owners, our insurance premiums have gone up anywhere from 20% to 50% with less than a third of the coverage. It’s just a lot of different incidences that are making that happen on top of, we have interest costs that are not free money anymore. So those costs have hit them. Then I would say lastly, labor and logistics. They’re up anywhere from 25% to 40%. If we go back and look at pre-COVID, those are extra costs. So what’s happening is, the net farm income is reduced by about 25% or 30%, depending on the numbers from the high. It really makes return on investment and break even so, so important. So when I always say what do we do? We are big on how do we make sure we’re putting placement of products, whether it’s in the animal nutrition products with Purina or it’s in our WinField United crop input side? How do we make sure we put products in place that have predictability? In a lot of those products, we have our proprietary products to help fill that. So, every day we got to wake up and say, what’s the ROI? What’s the productivity improvement part of it? Those are easy to see in. I’ll just pause there before I go into what isn’t so easy to see and see if there are any questions you have on that, John.
John: Yeah. From a layman’s standpoint, the risk reward has gotten even more difficult to justify now post-COVID as a farmer in the United States?
Brett: Yes. The break evens, like today, you’re within $0.50 on a bushel of corn. I think we’re at a $4.60 to $4.70 number in the same way with a soybean number. So everything’s got a tick and tie and with the weather and those types of things, it’s one of those situations where those farmers are looking for help and expertise to say, how do I maximize every acre, every pound of animal that I can make sure that I get that return of grain? Now, the livestock side of the business, particularly in cattle, are extremely bullish right now, but it hasn’t always been that way. I would say the swine piece is still very, very tough, but the razor thin return on investment is always something that we take a look at.
John: Does innovation and AI, since we wake up every day, if you read the Wall Street Journal or the New York Times, look at Bloomberg or CNBC, AI is always, or usually the lead story. Is AI and innovation one of the ways that you’re leveraging technology to create more predictability in an unpredictable business?
Brett: Absolutely. Well, let’s back up a little bit on innovation. What’s so exciting about the space that we’re in in ag, AI is getting used across a lot of different sectors, but in particular, I would break it into autonomous and technology see and spray. There are a lot of new innovations coming in that space, particularly around solving the headache of labor and trying to do more with less. There’s a big part there. Then I would say there’s another part of this thing that’s evolving from an innovation standpoint around gene editing, particularly around the oil seeds and this clean energy transformation piece that’s happening. It could be particularly with biofuels, sustainable aviation fuel, but there are crops being produced or that actually can yield a higher level of yield from an outcome based standpoint and help us with the overall productivity gains whether it be on climate, whether it be on water, whether it be on other productivity gains in the marketplace. So there’s a lot of gene editing in the seed side that’s happening. Then the last piece that I would say that’s also across all of the Ag business is this probiotic treatment. In its biologicals and the crop side where they’re using biologicals to reduce stress or help plants manage through drought or other situations. The same way with the animal side, extending the life of particularly what we call lifestyle or the pet side. So a ton of innovation that’s happening there. Then the data, to your point of it, how do we take those stacks of data and use them to help advance that technology? That’s really right in our wheelhouse at Land O’Lakes.
John: So that data you’re using and creating some predictive analytics around that, that help you hedge the risk, for lack of better terms?
Brett: Yeah. So it’s very interesting. In our owner base has always been from an investment standpoint to say, we know the farmer data is owned by them. The reality is, is data privacy and collecting that data to turn it into an advantage is something that that’s what we do.
John: Understood.
Brett: Privacy and collecting the data is where we excel in. Tying it back to your question on AI, we take these stacks of data and to try to make it simple, there might be transactional data, there might be what we call research or as applied data and there might be total farm data, and we’re putting these stacks of data into what we call the AI blender, and then mapping that to what the markets are or what the weather patterns are to try to take out some of the slop or add in the predictability. We are in a unique situation, John, to offer that to our retail owners who are on the Ag side and also our dairy producer owners on the dairy side and actually carry that down all the way down to the farm level. So it’s truly a, what we would call a soil to shelf approach because obviously, we sell a lot of products on a dairy side that hit the consumer. So very data driven approach.
John: That’s so interesting. I understand gene editing then when you reference biologics and probiotics. Now, probiotics I know is something that you and I would go to Whole Foods or some other store and buy to take for our own microbiome or stomach. What do probiotics mean in the sense that you shared with us?
Brett: Same thing. I wasn’t there and I love horses. Actually, they were out at the Denver… I think it was the Denver Rodeo at Christmas time. You just said it, the gut health of a horse and making sure those performance horses in particular are set for cutting and whatever event, barrel racing, whatever event that is, that’s a big opportunity to help on that. The second part is around the plant physiology of how to condition that plant. So when adverse weather comes, maybe not. Normally you get somewhere between 26 and 30 inches of rain in the Midwest to make 250 bushel corn. Some cases, we’ve had 20 or 22 inches two years ago back in our home farm, and we made pretty good corn. I think it was probably because of the conditioning of those products, was one of the reasons why we had that. So it’s all about conditioning the system to manage through those life cycles of stress. You were spot on your analogy.
John: Well, even though I grew up in New York City and I talked pretty fast and I still was. My kids would say I have a queen’s draw a little bit or queen’s vernacular. I do have a farming background as well, like you do. One thing that’s fascinating about the use of probiotics that you just mentioned with horses, which I didn’t realize is happening, is most people don’t understand, horses can’t throw up. So if they get a stomach ache or get a stomach bug and they tie what is called tie up, it’s a very, very bad scenario for that equine animal. So that’s fascinating that you’re now leveraging biologics with regards to keeping cattle and horses just healthier and giving them a greater chance to live a happier and better and a healthier, more sustainable life.
Brett: Absolutely. It plays a big role. What’s so fun about this is we’re just scratching the surface. Because those different biologicals react in so many different environments. On the crop side, the WinField United team has a technology that’s under the roof. Back to your data question, we do like 6 million data points, particularly in the field to make sure that we look at real weather conditions. But then we simulate 12 months a year underneath the roof with a phenotyping machine that allows us to go through and look at these biologicals. I would call it, screening these biologicals in these different conditions to know where we can increase the consistency or the predictability of them working. It’s been a game changer for our teams to use that technology that way. So I just think, again, that’s kind of another… not kind of, it is another way of using AI in robotics to help accelerate these products to the consumer or farmer or livestock owner.
John: For our listeners and viewers who’ve just joined us, we’ve got Brett Bruggeman with us today. He’s executive vice president and COO, Chief Operating Officer of Land O’Lakes. To find Brett and his 9,000 or so colleagues, please go to www.landolakesinc.com. Talk about size, Brett. Land O’Lakes is one of the world’s largest cooperatives as we know, size and scale matter. There is advantages that come with that. But there’s also, of course, these downsides. How do you lean into the advantages to help make Land O’Lakes more successful and resilient and sustainable, and how do you minimize or mitigate the disadvantages?
Brett: Yeah. So great question. It’s one of those questions, I would say, every day we got to make sure that we operate think big and act small from a standpoint of agility. The thing that I love or we love the most about Land O’Lakes, I would say, the first thing is, our capital is back to the scale piece. Our capital is patient. If you look at ag, and I would say this won’t be exactly the history, but in a lot of cases, because of all the variables, you’ll have four years where you’ll make really good money, three years breakeven and above, and maybe three years then out of that 10 that you won’t make money. I think based on the level of investment, you think about the active ingredients, in a lot of cases, that’s close to $300 million you need to invest to get an active ingredient with Bayers and Syngentas and BSFs. You need to have patient capital. Then we do, we’re owned by retail here and producers are farmers. So that is a big part, a big advantage that we don’t manage the business by the quarter. We know monthly what our KPIs are, and I can tell you that we hold each other accountable to that. But we don’t make unnatural moves, which I think is a big benefit. The scale part of it, if you take a look at the scale side of it, we touch about 100 million animals on the Purina animal nutrition side. We touch about 50% of the acres. So if you’re going down the interstate, one out every two, we have some product on it from a crop input standpoint. Then we have about 13 billion pounds of milk. So if you’re sitting down to eat something, there’s probably a pretty good chance that that scale is coming with and through our infrastructure at Land O’Lakes. I would tell you the thing that’s been most advantageous to us is broadening our skillset from a global standpoint. Ag that’s happening in Brazil, Ag that’s happening in China, Ag that’s happening in Canada, right across the border has really helped us take the technologies and assets and leverage those across the different geographies. Plus, with scale, we have some built in risk management. That is a big benefit to our owners from that standpoint. I talked about the accountability piece. Because of our reverse ownership with our retail owners and our growers owning us, that’s a huge advantage. We can’t get too far into the ditch, I’ll call it, John. Our owners will call us on it and I love it. In our board meeting, they’re there. But the other thing that’s so important, we think, going down the road, I don’t think it’s a disadvantage. We don’t think it’s a disadvantage. We think it’s something we got to get better at. Number one is about building these alliances further back stream to be backward integrated or downstream back to your data piece. Also looking at those globally, we’re spending a lot of time right now saying, who should be our alliances? Should they have more of a finance fit? There’s just a lot of ways equipment companies, a lot of ways to put Ag together. It’s not just inputs. It’s the finance piece. Then I would say the second thing is, how do we make sure we are at pace with the farmer of tomorrow? The consolidation that’s happening. One quick quote that I think from your listeners that might be interesting is, in the last five years, the census work just came out and we had 7% fewer farms. A lot of people may say, “Well, that’s not a huge decline.” If you look at the last five years, not counting 2024, there are probably the string of the five best profitable years ever in farming. To have 7% consolidation is a big deal. Some of it is age, some of it is just the squeeze that you referenced right at the very beginning on return on investment and the level of risk. So we got to make sure that we’re ahead of the curve, or at least at pace. We try to stay humble because being ahead isn’t always the case. But it goes back to your question, what is the advantage? Being part of something larger gives you that lens, but it also gives you that tolerance that you have a little more business insulation, why you try to get at pace with a farmer of tomorrow. Because they’re moving fast with data and other pieces in multiple decision makers where that’s a shift that’s happened in the marketplace just in the last five to 10 years.
John: Being a farmer by DNA, which you are, but also being a business executive by training and experience, which you also are. When you merge the duality of your mindset, talk a little bit about 7% being the number that the census just showed, what should that number be that would make you feel more comfortable as to the evolution of the future farmer, but also the right mix of not losing our farming roots of this great country that we all get to really share and enjoy together.
Brett: Yeah. Putting the farmer at the center, is the piece right now and whether or not it should be five or it should be nine, John, is a question that, from a forecast standpoint, is tough. But I would say this, making sure that we have quantity and quality of food is important. I mentioned about the oversupply at the very beginning, and if you listen to some of the podcast in the Ag space, you’ll hear people talk about, we have large, large, large in the supply to end use ratios that are keeping the prices tampered down, which is true right now. But I want to share something because I think this goes back to, we might be at an inflection point like never before on the food standpoint, both from having enough from a quantity standpoint, but also a quality standpoint. Number one, globally now, we have about leveled off with global acreage. I think if you Google it today, they’d say 2.4 to 2.5 billion acres. The reason that is important is, the last 10 years, Brazil was adding five to 10 million acres a year and they were clipping right along. Now, they’re still adding, I would say, most people would say 2 million acres a year. But what’s happening is, the US and other parts of the world are actually decreasing the amount of acres. So you have acres flattening out. The second thing is the yield gains. If you go back to 1974, and you look at 1974, and the reason we did this is because that’s when they started tracking yield on corn and soybeans to 2014. So I think that’s roughly 40 years. The average gain on a per acre basis was about three bushels on corn and a bushel on soybeans. Guess what it was from 2014 to 2024.
John: I have no idea.
Brett: One bushel on corn and about 23 on soybeans. So we’ve taken the top end of yield gains and people forget that. So now you have level acreage, you’ve leveled off the yield. Here’s probably the third thing that we think about back to this innovation is water. It takes 650,000 gallons of water roughly to raise one acre of 250 bushel corn. That goes back to the 26 to 28 inches of rain in central Iowa that we get or more each year. Well, you mentioned AI. Anybody got an idea? Or what do you think how many gallons of water a data center takes per day? Somewhere between 3 million and 5 million gallons per day. We just talked about 650,000 gallons to raise an acre. So think about the tug of war on water. You think we’ve not had that water. Could we outstrip ourselves on water? We could, John. That’s where I go back to, I never want to think lazy, like we’re going to have plenty of cheap food all the time because of the three things we just talked about there. But then on top of it, Kelly and I have four kids, and I would tell you, they spend more on groceries, yes, because inflation, but also because they’re a generation, they really care what they put in their bodies.
John: That’s right.
Brett: So I think we’re at this inflection point where it’s not about quantity only, it’s about quantity and quality. It’s something in Ag that I think the sky is not falling, but we do need to pay attention to it and it ties back to your question, what is the right number? I think this next generation of farmer gets that. If we’re listening to a large farm that has two or three generations on it, there’ll be a generation or two in there that say, you know what? I want to raise some outcome based crops. I want to raise high oil soybeans or organic or something like that. There’s a market like that today where in the past, that market maybe wasn’t there or wasn’t able.
John: That’s right.
Brett: So I think it’s going to be interesting to serve that farmer of tomorrow because they think about the business. It is for sure a great lifestyle, but it’s a high stakes game, and it’s moving so fast to not just an input number two yellow corn, also an outcome based market that we got to help or need to help them with navigate through.
John: I live here in California, Central Valley, more specifically, which is big Ag Fresno, California. There’s another big Ag center of this United States, and of course, the world even. But water is a constant issue out here. I moved out here in ’88, Brett. Talk a little bit about water, though. You bring up the topic of water. I’ve had water experts on this show over the years, some of the top experts on the planet, and many of them subscribe to the notion that we don’t have really a water problem on this planet. We have a political problem. Is water less of a technology problem today, more of a political problem? Or is it still a healthy interchange mix of a little bit of both and it’s still a struggle to be able to get enough water to grow the crops we need to grow, not only here in the United States, but around the world since you have a worldview because of where you sit and the fact that you serve so many countries.
Brett: Yeah. No, we have a saying at Land O’Lakes, we always say policy not politics.
John: I’m with you and this is an apolitical show. I’m just looking what your thoughts are on that issue.
Brett: Yeah. I think the policy no doubt policy needs to be taken a look at and say, okay, what is the right policy based on the water rights? You mentioned California. So we have a lot of business out there. The square footage on a water perspective has been educational for me, growing up in a place that had plenty of water. But I would say this, there is so much we can do. The amount of irrigation, I believe since 1960 to now have doubled, acreage doubled. So you think about how these irrigation systems are being engineered and I’d call it engineered. We have a business green point in the south east part of the United States, and then one of our largest share states are in Nebraska, which I think about 70% of that geography is irrigated. But the technology advancements to tech hot wind and how much you should irrigate has been night and day, and they’re putting these sensors in the ground. So instead of just automatically running them, they’re based on this technology. Part of that is, is because it is regulated with the aquifer out there and how long it’s taking for that aquifer to actually recharge. They’re realizing there is an unlimited water. I’m more on the fact that I think there’s technologies and even if we do have unlimited water, I think we’re going to need it. So let’s use the technology to manage it. Also, in gene editing and in the seed side of things, there are a lot of different crops that take a lot of different amounts of water. Even within those crops, different hybrids and different varieties that can be much more efficient. So it’s an area, if you look at our market or the research, we’re now behind Brazil, we’re now behind China in the US as far as overall research. This is an area in water that I know Land O’Lakes, and we’re working with other manufacturers and R&D companies to say, how do we get on the leading edge of that? Because the trend is, we’re getting less rain, or when we do get rain, we’re getting so much of it, the soils can’t handle it and so it’s not being utilized. It’s more extreme, I should say it that way.
John: Understood. Given that we’re having this conversation, Brett, in January of 2025, let’s look back five or six years. One of the big issues that we’ve started covering on the show and also the media is covering a lot now, is both regenerative agriculture, but also this issue of food security. Or let’s look at the flip side, food insecurity. Where are we today? Is the world becoming more secure with regards to its food supply or less secure? How can we improve that? Given again, you’re a COO of a company that’s doing business in over 60 countries, so you have a unique view and visibility into these issues that are cross continent issues, obviously.
Brett: Yeah. I think when you look at our business in Canada, even with the fires that we’ve had the last few years, and you think about the droughts that we’ve experienced in Africa and even some of the things that are happening in Brazil, the farmer is resilient. The resilience of a farmer is just crazy. I would say, for us to say, how does security of food look today? We’re in a pretty good spot, but I would not say that that’s something that’ll happen forever just based on what we talked about with water and acreage and yield trends. I think the thing that we’ve learned, because we’re such a data-driven company and some people use sustainability, some people use regenerative. We don’t know what the right terminology is, John, but we’ve shifted to a terminology that talks about productivity gains. So whether it’s a bushel of grain, a pound of meat, or a gallon of milk, how do we make sure we do more with less? We’re pretty confident… not pretty confident because we’re on the acreage that we are, is that we can increase the productivity with certain practices. We got to get better at explaining that to the public. Because you look at no-till, for example, or cover crop, those are practices that get back to productivity gains, but they also get back to what matters to the farmer, which is important. Soil health. We’re not making any more soil. The reality is, is we’re learning that those practices of no-till really help build the regenerative parts of that soil structure, et cetera, full of microbials to your point, is another piece. So we’re bullish on the fact that, yes, we have supply today, but we’re also bullish on the innovation that’s coming that’s going to continue to help us raise more quality and quantity food into the future. I think that’s just going to be something that we’re wired to do, but I feel like we’re tilting more to the quality side because of the generations. We’re serving five different generations now as consumers. That’s an important part as a food company to make sure we understand that.
John: So as a general mission, productivity gains and doing more with less really equals, as you say, it gets to the bottom line, and the bottom line really for everything that you’re doing in sustainability technology and also community support is resilience. You are creating a more resilient organization by doing more with less.
Brett: Absolutely. What’s interesting and because of our core model, we talk about placement and proprietary and inputs and outputs, but the reality is, is 60 million, we’ll just take the US and it’s very similar to us. About one fifth of the population is rural. So you talk about community strength, and it’s at the heart of our co-op, a deeper purpose, doing meaningful work, purposeful work. There are two areas in particular that we’ve invested in and continue to think that it’s the right thing to do. The first one is around what we call American Connection Corps. We’ve worked with about 105 different, we call them, Fellows Alliances in 36 states to help bridge the divide on digital, the digital divide in the communities. It wasn’t too many years ago, in my own home farm in Carroll County, Iowa, where we didn’t have a reliable Wi-Fi, and it’s pretty hard to use autonomous driving and all the other things that come along with that until you do that. You think about school from an education standpoint, you think about medical. I was just looking at a stat earlier this morning, and even though 20% of the population live in rural areas, John, 11% of the doctors practice there. Of that 11%, this is staggering. 53% of those physicians currently practicing are looking to retire in the next five years. So you think about rural community durability and the importance of having a strong community that does raise the quality and quality of food is going to be so important. It’s part of our mission to also invest and work with those communities. A lot of cases, our cooperatives, whether, if you look at Central Valley Ag or Keystone, or I mentioned GreenPoint innovative Ag services, new co-op in Iowa, they’re the largest employer in those communities. So if they’re healthy, usually the community is healthy and it takes a village. But we feel that that’s the purposeful work we want to get up every morning thinking about.
John: So interesting. For our listeners and viewers, I should have probably started this at the top of the interview, Brett, but give a little bit of mindset when it comes to cooperative versus if you were running the same organization, but it was a publicly traded company, or the same organization, or it was a privately held organization. This is a co-op. Explain why you believe co-ops can really make the communities they serve and the businesses and the entrepreneurs and the farmers they serve better.
Brett: Yeah. The cooperative mindset, first of all, is very… it’s partnership, it’s alliance. It’s one of those things where you give and take and you hold each other accountable. That’s what I think we love the most about this model. But when you really come down to it is, what makes this cooperative sing is if we don’t duplicate what they can do locally, and we can focus on what we call scalable assets. Assets that they couldn’t get on their own, but they need exposure to. It could be captive insurance, it could be obviously tangible assets like grain or fertilizer, labels from a technology standpoint. Here’s another big one. Cybersecurity from an IT standpoint. But they’re just all those different pieces that we focus on from what we call a regional standpoint that are not duplicate to what they do on the local standpoint. What our local cooperative does is they deliver the last mile, John. They have the relationship with that grower or that livestock producer, that dairyman, that livestock, cattlemen, et cetera. Those local cooperatives serve that. I think about yesterday, it was 30 below in Minneapolis. Well, those animals got to get fed every day regardless. That’s where our retail infrastructure and us as a regional, having more of the scale presence that you talked about fit like a hand in a glove. Then having the mentality of how do you serve and strengthen multi-generations down the road, like having the ability. My dad served on a board for a cooperative for many years and got to make decisions locally about where the profits went. There aren’t too many models, John, in this world that are like that. That’s a pretty big deal. When you get to have the ability to say, how do those profits go back into the communities? You have ownership and accountability and it gives me goosebumps thinking about it because I can remember him talking about it and taking it so very seriously about stewarding those resources. That’s a type of culture and people that we have.
John: Well, I think farmers are truly the OG entrepreneurs of the United States or anywhere, really. They’re truly entrepreneurs, and as you say, it’s from soil to shelf. The great ones have figured out how to really be integrated and be either parts of great cooperatives like yours, or they’re private business people, but farmers are just the backbone of this whole great country. What’s the future look like? You have already so much history behind you and so much success, Brett, what are you focused on in the next 24 or 36 months with regards to priorities at Land O’Lakes to continue to drive, predict productivity gains?
Brett: So productivity gains, I love it. You picked it up and…
John: I got it, man.
Brett: You got it, yeah. The other saying we say is growth for breakfast, growth for lunch and growth for dinner. We’re on a growth trajectory. Our CEO, Beth Ford has put together what I would say, a team, at all levels, all corners of the organization that are saying, “Let’s take care of this base of business, $17 billion, but let’s really focus in on the growth side.” So you’ll see us lean in with this data driven approach. How do we help our retail owners stay at pace or ahead of their grower customers? It’s in those areas that I talked about with innovation, with new products, and new productivity gains in there. You’ll also see us, we’re in a very good spot from a balance sheet perspective and we’re thinking that this is the opportunity that there will be some inorganic growth opportunities that come up for us. So that is something that’s exciting and obviously, you always have to do your homework from that end of it. But we don’t see the pace when you ask what do we see going down the next five years. Just to give you a perspective, John, we used to build an annual plan, and we obviously still do build an annual plan, but the reality is, is we’re refreshing that every 100 days. The market right is moving so much faster than what we originally are thinking. So I think making sure that we have the right pace that we stay externally focused is so important. We focus on execution head downs and keeping our own front and center. When we do those things, we usually yield growth for breakfast, lunch, and dinner and it happens. The last thing I’ll say is, we can’t do it all. I’ve seen a physical shift since the time I’ve been here with our leaders and ourselves to say, how do we do alliances? How do we work with others upstream and downstream to help us move faster and scale these assets, not duplicate the cost operationally? So a lot of work to do there, but we got to keep evolving and that’s the piece that it’s exciting.
John: Brett, when you are benchmarking where you’re at as Land O’Lakes is and the progress you’re making, as you say, you’re not doing annual forecast anymore, which I so agree with you here. It’s so dynamic and the world is so fast now, doing every 100 days readjust makes so much sense. Where do you look for inspiration and information in terms of terms your industry as a whole, the Ag industry, or where do you look outside of it, the industry for inspiration to the important work that you do?
Brett: Yeah, I think it goes back to our leadership of being part of networks. Personally myself, I’m part of a COO network that just last Friday had the opportunity to ask other CEOs, tell me a little bit about what level of investment, for example, on AI that you’re doing from a benchmark standpoint. How are you doing enterprise account management? We’re not the only ones with large customers that go across multiple businesses. So I think it’s that part of it. But then we encourage each other to make sure learners are readers and we get together as an executive team now every week, and we share best practices and share current readings and learnings. So I just think the learning curves are much steeper and quicker. But there are so many more, just like your podcasts. There’s not a week that I don’t listen to three or four podcasts that educate. You can do it walking.
John: That’s right.
Brett: You can do things that make right that make you healthier or whatever your passion is. So I just think the learning tools are so much more abundant today in sharing.
John: That’s so good. Brett, thank you so much again for your time today. For our listeners and viewers, Brett Bruggeman. To find Brett and his colleagues at Land O’Lakes, please go to www.landolakesinc.com. Brett, this hour has been great. You’re always welcome back on the Impact Podcast to share the continued success and journey and the productivity gains that you continue to make. I just want to say thank you, not only for your time today, but most importantly, thank you for making the world a better place.
Brett: Thank you, John. We appreciate the opportunity. It’s our pleasure. Thank you.
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