Remarks by J. Erik Fyrwald as prepared for the World Resources Institute Conference
J. Erik Fyrwald
Group Vice President – DuPont Agriculture & Nutrition
Delivering Solutions and Building Business with Agricultural and Nutrition Technology
Eradicating Poverty through Profit – Making Business Work for the Poor,
World Resources Institute Conference
December 13, 2004
Slide 1
Good morning. It's great to be part of a conference with such an important and admirable theme.
As some of you may know, creating shareholder and societal value has been a goal of DuPont for a number of years. We responded constructively to the environmental crises of the 1970s and 1980s, and in the 1990s we turned our attention to the ultimate challenge – sustainable growth.
We've made significant progress in reducing our footprint. And today DuPont is putting science to work to create both shareholder and societal value on a number of fronts.
Businesses throughout DuPont are challenging themselves to create sustainable solutions essential to better, safer and healthier life for people everywhere. And, yes, "everywhere" includes the 4 billion poor people who live on $2,000 a year or less.
The focus of my comments today is on the opportunities we see for sustainable growth through the application of agriculture and nutrition technologies to those living in poverty.
Our sales in developing countries – such as Africa, India, China – will near $1 billion this year and is the fastest growing part of our business. That's possible because we are helping farmers increase productivity and developing products that fit local needs.
There are many who dismiss how vital the sustained productivity improvements in agriculture have been to the well being of everyone on the planet. No doubt, productivity gains are just part of the solution to feeding a hungry world. But where would we be today if in 1950 someone had decided that we had enough grain in the world and we had stopped investing in improved genetics?
Slide 2
The yellow bars on this chart represent global corn acres. They are relatively flat from 1970 through the projection in 2007. The green bars represent the increased productivity that has been realized on those acres. Since 1980 the world's corn growers have increased production by 45 percent and done it on a less than a 5 percent increase in acres. In effect, we've added 130 million virtual acres by improving corn genetics, technology and management practices. Think of the impact on our world today if we did not have those 130 million virtual acres!
So how does DuPont drive those improvements?
Slide 3
Let me take a moment to tell you about the DuPont businesses in agriculture and nutrition. This group of businesses, driven by cutting-edge science, is among the fastest growing and most profitable in DuPont. Together, we'll generate over $6 billion in revenue this year. We are uniquely positioned across the agriculture and food value chain and are serving from farmers to consumers in 70 countries.
Pioneer is the largest seed business in the world with some of the best yielding seed anywhere. DuPont Crop Protection markets some of the most environmentally friendly crop protection solutions on the market. The Solae Company brings more, great-tasting healthy soy food ingredients to consumers. We also have businesses that bring leading food safety and food packaging technologies to the market. Our downstream relationships give us an understanding of consumer needs that we use in developing products for all of the businesses.
We are delivering value to the poor with these businesses today, but we recognize that DuPont is just beginning to appreciate this market segment. We know we have a great deal to learn. We also know from experiences so far that we can make a big difference the lives of those we serve.
"Give a man a fish and he has food for a day. Teach him to fish and he has food for a lifetime." Our version of that timeless saying is, "Give a person grain and they may have food for a few days. Help a person farm better and they have food to eat and sell … and we get a new customer."
Let me share some examples that give us confidence that these are great markets to continue to develop.
Slide 4
In southern Ethiopia, Pioneer has worked closely with farmers on improved agricultural practices and plant genetics. When we started working with Dube Kufa, a 45-year old farmer supporting a family of 10, he was still planting open-pollinated corn – as U.S. growers did decades ago – that yielded about 25 bushels per acre. After we showed him how hybrid corn growing practices work and how to use fertilizers, weed and pest control, and timely harvesting, his yields jumped up to 130 bushels per acre. He's now self-sufficient, and all of his children are attending school. The Kufa family has expanded its home, replaced the thatch roof with a corrugated metal roof, built grain stores, and bought a television set. And they are setting the example for others. Our business there is growing.
Slide5
In West Africa, DuPont Crop Protection is helping cotton farmers increase revenue and improving safety with one of its newest, most environmentally friendly insecticides, indoxacarb. The countries of West Africa are among the poorest in the world. Yet, with approximately 5 million acres of cotton under cultivation, exports of cotton fiber represent their principal source of foreign currency and are the only source of income for thousands of farmers. Specifically packaged for the area in small quantities to limit exposure and waste, the insecticide increased yields and quality of the cotton.
A similar program was developed for resource-constrained cotton farmers in India. It included a process that ensured that both small and large farmers would have access to the product and helped small farmers make purchases as co-ops. Indoxacarb is now the leading insecticide in India and we expect the business to continue to grow.
Solae, working with a food company partner, is test marketing an off-the-shelf meat and soy protein specially blended product that carries the health benefits of soy, costs 30% less and tastes as good as high quality meat due to some proprietary blending technology. We're test marketing this in Mexico with some very positive results so far. If successful, we'll expand to other markets.
Slide 7
Though the projects I mentioned haven't involved ag biotechnology, I am a firm believer in the potential for this powerful tool – when used appropriately – to improve people's lives. In fact, farmers in many developing countries are already realizing the benefits of biotechnology where it is being adopted at rates faster than those in the U.S.
Growers in developing countries are adopting biotechnology for weed, insect, and disease control. They see the value of increased yield and income, safety and less need for equipment. They just plant a seed that has both the genetics and insect protection they need.
We've seen very positive statements in recent months from the United Nations to the Vatican about the value biotechnology can have to the poor. The challenge from both organizations has been to find sustainable means of bringing that value to them. With guidance from groups like WRI and in partnership with private and public organizations, we are addressing that challenge.
The biotech products on the market today are just the beginning. Consider what drought tolerance could do for farmers around the world. Water is the number one limiting factor in agriculture today. DuPont has made encouraging progress in developing drought resistance in corn. You can see in this slide the difference we found under drought conditions between the conventional corn hybrid and a corn hybrid with the drought resistant trait.
Slide 8
We in DuPont Agriculture and Nutrition are fortunate in that we already have resources on the ground and direct access to customers in many developing markets. But making the most of the opportunities will definitely challenge our thinking. Consider this: I recently met with six farmers in Brazil who in total farm about 1.5 million acres. In parts of Asia, we would have to meet with a couple million farmers to connect to the same number of acres. This work demands new and creative business models for each market.
What have we learned thus far? Keys to success include: 1.) Selecting projects that can start small, but scalable once you have proof of concept. 2.) Investing heavily in a robust understanding of the local situations – culture, practices, value chain, etc. and 3) Partnering with credible local organizations, academia, governments and public institutions to ensure the improvements are indeed sustainable.
Each of these is important if we are going to leave the community or the region better than we found it.
Another key observation is the need to take multiple paths in building a sustainable business base including pure philanthropy, product acceptance, agricultural development, community development, and downstream market creation.
Let me share two more examples that required a broad, long-term view of business development.
Slide 9
In Kenya, DuPont is working with A Harvest Foundation International to help communities by increasing the productivity with the introduction of disease-free tissue culture bananas and hybrid maize with better agronomic practices. The project's goal is to reach about 6,000 farmers in the community, with each farmer supporting an average of ten dependents. The first banana seedlings were planted in April 2004 and the first harvest will be in July or August 2005.
Slide 10
Lastly, a project in Thailand: With just 14 cents to feed each student per day, some rural schools there received only about 25 percent of the funds needed to adequately feed the students. The Pioneer Thailand business developed a program for local farmers to help supplement the schools' lunch funds by raising corn crops on land the schools owned. We donated high-yielding hybrid seed, other inputs, and agronomic education assistance to local farmers.
Farmers provided the labor and learned firsthand how to grow the improved hybrid corn crop. Local grain traders bought the high-quality crop and sold it to larger feed mills. Schools got much-needed supplemental funds for lunch programs. In the program's first year, one school reported a 12 percent decrease in nutritionally deficient students. The other reported nearly a 5 percent decline in underweight students. In 2003, the program was expanded to serve 32 schools – raising $21,280 (US) to supplement school lunch funding. This year the program serves 36 schools.
The community fields gave Pioneer the opportunity to demonstrate the value of its high yielding hybrids and gave farmers first hand experience in growing them. And with that knowledge, the farmers purchase seed from Pioneer and are able to get a better return from their own fields.
Slide 11
Perhaps the biggest step a business can take is recognizing the potential customers that exist outside the top of the economic pyramid and making the commitment to finding sustainable business approaches to serve that market.
I'm glad DuPont has made that commitment. It is good for business and, more importantly, it is good for the people we serve.
Slide 12
Let me finish by saying that it's very exciting to be part of a business that is growing revenues and earnings and is able to take care of customers, shareholder and employees while we invest in research to keep growing in the future. However, no financial results can match the satisfaction of helping deliver a greater societal good. The smile on the face of a farmer who has improved his life says it all.
