For the McCain empire, built on potatoes, climate change is serious business
As a closely held company, McCain Foods Ltd. is under no obligation to be chatty. And it isn’t. The world’s biggest seller of frozen french fries has issued only eight press releases this year. When your name is on display in grocery freezers in 160 countries, you don’t need to beg for publicity.
This week, the climate crisis prompted one of Canada’s most important companies to get over its shyness.
On Sept. 23, McCain announced that it had joined a coalition of food companies that is “determined to take bold action to protect and restore cultivated and natural biodiversity within their value chains.” Two days later, the Toronto-based company said it will be spending an undisclosed amount of money on “dedicated commercial farms” that will attempt an agricultural moonshot: growing potatoes at industrial scale without degrading the environment.
“It seems the pace of climate change is accelerating, and not just what you read in the news, but what the people we work with are facing and what our business has to deal with,” chief executive Max Koeune told me in a telephone interview. “If you put together the big news story and what happens every day with what we do, there’s a clear connection and clear sense of urgency in moving the needle forwards and moving the actions at a very different pace.”
The McCain announcements were timed to coincide with the latest United Nations Climate Action Summit, which triggered a new wave of dire warnings of ecological doom from expert panels, and pushback from expert contrarians.
Denialism appears to have been snuffed out of mainstream debate, but there is a core in the academy that doubts the costs associated with a warmer planet justify the pain that will come from trying to cool it.
As Canada’s political parties declared what they would do to meet the Paris commitments, and as tens of thousands of Canadians readied for climate marches, Eddy Isaacs, an executive fellow at the University of Calgary’s School of Public Policy, published a study that concludes that “despite enthusiastic support for climate mitigation, there are many serious policy and engineering obstacles to greenhouse gas reductions by mid-century.” Steve Ambler, an economics professor at Université du Québec à Montréal, argued in the Financial Post on Sept. 27 that models appear to be both overstating the rate at which the planet is warming and the economic pain that would result from doing nothing.
“We are being asked to accept major reductions in our living standards, including the living standards of today’s children, so that people alive in 2100 can be 2.2 times richer than we are rather than only twice as rich,” Ambler wrote. “Readers can judge for themselves how calamitous such a ‘catastrophe’ would be.”
This reader is generally comfortable accepting the wisdom of the crowd; but of course, the crowd can get it wrong.
However, when it comes to climate change, the contrarians tend to base their forecasts on assumptions that the future will look a lot like the past. That’s fine if you are trying to decide how many cases of olive oil to buy at Costco, or even projecting the path of inflation at a central bank.
The pace of climate change is accelerating, and not just what you read in the news, but what the people we work with are facing and what our business has to deal with.
Max Koeune, CEO, McCain Foods Ltd.
But as another academic report released this week argues, the observation that Vikings settled Greenland when the planet was similarly hot tells you nothing about the economic impact of chronic drought in India a decade from now. The worst-case scenarios associated with climate change are too terrible to dismiss simply because the math is open to interpretation. The best way to think about a climate disaster is as a black-swan event, and we need only think back a decade to the financial crisis for a reminder of why we should prepare for them. The Great Recession was decades in the making. No one would go back in time and cheer as American households and financial institutions piled on debt, but if a time traveller attempted to stop the insanity, he or she would be dismissed as a fearmonger.
“We have only one planet,” Nassim Nicholas Taleb, the author who brought the frequency of black-swan events to the world’s attention, wrote in an open letter with other thinkers. “This fact radically constrains the kinds of risks that are appropriate to take at a large scale. Even a risk with a very low probability becomes unacceptable when it affects all of us — there is no reversing mistakes of that magnitude.”
Koeune, a former Danone SA executive who joined McCain as chief financial officer in 2012 and took over as chief executive in 2017, said the company decided to take climate change seriously because “every year” the weather is destroying a potato crop somewhere in its empire. McCain, which contracts directly with farmers rather than relying on brokers, also noticed that yields in Canada, Europe and the United States had stagnated. “The reason for that, in many cases, is the soil health is getting depleted,” he said. “That’s the result of agricultural practices that have been implemented for years or decades.”
Increasing potato yields could be McCain’s biggest contribution to slowing climate change. Improving the soil requires rotating potatoes with grassy crops that also pull carbon out of the atmosphere. In theory, it would help Koeune with his “aspiration” of becoming carbon neutral. But the world’s insatiable appetite for french fries complicates the transition. In August, McCain announced a $12-million expansion of its original plant in Florenceville, N.B., and in May, it said it would spend $300 million on an expansion of a plant in Othello, Wash.
McCain will require an additional 1,000 acres of potatoes to keep the Florenceville plant busy, and it intends to secure an additional 13,000 in the U.S. northwest. The extra strain on scarce land will make rotating crops — and getting to carbon neutral — that much more difficult.
“It’s an ambitious goal,” Koeune said. “It’s a credible goal, but before we go all the way to carbon neutral, we still have some work to do.”