Ep. 4. Coronavirus Update: "Business As Unusual," with Nutrien CEO Mike Frank

March 26, 2020

Ep. 4. Coronavirus Update: "Business As Unusual," with Nutrien CEO Mike Frank

Mar 26, 2020

Key Issues:COVID-19

Jon and Mike examine the status of farm inputs availability amid the COVID-19 Coronavirus outbreak.

 

Description: 

In response to the COVID-19 Coronavirus outbreak, the institution of social distancing protocols has left growers and ag stakeholders with more questions than answers as they head into planting season.

 

So we're interrupting your normal programming to provide a timely update with the President and CEO of inputs supplier Nutrien, Mike Frank.

 

In this episode, Mike tells NCGA CEO Jon Doggett that Nutrien is on-track to deliver all the inputs growers need to get a jump on the season, and enacting special protocols to keep staff and farmers safe.

 

Ultimately, the fate of the nation hangs on its uninterrupted food supply, and Jon has details on NCGA's efforts to ensure the supply lines remain open and farmers have the support they need.

 

 

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Transcript
 

Mike Frank:

The COVID-19 situation, it is putting pressure on the supply chain. So we're spending a lot of our time talking with our suppliers, talking with the transport companies, just making sure that we're going to have everything ready when our customers need it.

 

Jon Doggett:

I do think we're going to be stronger, we're going to be better at the end of this. But there's going to be a lot of pain in-between. All of us from time-to-time, we're going to get a little overwhelmed. So reach out to those that can help, and know that the NCGA is working on your behalf.

 

Dusty Weis:

Hello, and welcome to Wherever Jon May Roam, the National Corn Growers Association podcast. This is where leaders, growers, and stakeholders in the corn industry can turn for big picture conversations about the state of the industry and its future.

 

Dusty Weis:

I'm Dusty Weis, and I'll be introducing your host, Association CEO Jon Doggett. You can join Jon every month, as he travels the country on a mission to advocate for America's corn farmers. From the fields of the Corn Belt to the D.C. Beltway, we'll make sure that the growers who feed America have a say in the issues that are important to them, with key leaders who are shaping the future of agriculture.

 

Dusty Weis:

This week, we thought it would be appropriate to discuss how growers are preparing to plant in the midst of concerns over the COVID 19 Coronavirus. If you haven't yet, make sure you're subscribed to this podcast on your favorite app. That way you can take us with you in your truck, your combine, or on your next business trip and never miss an update from Jon.

 

Dusty Weis:

Also, make sure to follow the NCGA on Twitter at National Corn, and sign up for the National Corn Growers Association newsletter in your email at NCGA.com.

 

Dusty Weis:

With that, it's time to once again introduce Jon. Jon Doggett, the CEO of the National Corn Growers Association. Jon, the phrase that I keep seeing everywhere is, what a year this week has been. But this COVID 19 coronavirus situation is changing almost hourly, at this point. Which is part of the reason that we saw a need to do a special edition of the podcast, and put it out right away.

 

Jon Doggett:

Well, you're right. Dusty, it seems like it was, what? A month or two ago that we were having the conversation about, boy isn't it going to be great? We can turn the calendar away from 2019, and we're going to be in 2020 and things are going to be a lot more normal this year. Well, how's that working out?

 

Jon Doggett:

As you said, things are changing hourly. We want to get this podcast up soon, but by the time we do, things will probably have changed again. I think the thing that we have seen over the last few days is, this thing is really serious and we need to be very cautious about what we're doing as individuals. All of our staffs are working from home. Most of the growers I'm talking to are avoiding social contact, which is a little easier for them than some of the rest of us.

 

Jon Doggett:

But one of the things NCGA has done, is that we've put together a taskforce of growers, and state and national staff, to surface the concerns, talk about what's going on. Are there things that we can address? Are there things that are possible for our organization, with others, to alleviate some of the concerns and the problems out there? Lord knows there's, there's plenty of those.

 

Jon Doggett:

I'm going to give everyone an email address, and I'm going to give it again later on. But, if you have a concern or something that you want your organization to look at, please email us at CoronavirusInput, that's all one word, CoronavirusInput@NCGA.com. That email is monitored all the time. We will be looking to hear from folks out in the countryside, as to what's going on in their community and on their farm. Give us some suggestions, or just let us know what's going on with you and your family and your farm.

 

Jon Doggett:

With that said, we have planners running in the Southern States. Every farmer I've talked to is getting ready to get in the fields, get a crop in. Going to have 93, 94, 95 million acres of corn. One of the things that we keep hearing from farmers is, are we going to have enough inputs?

 

Jon Doggett:

We're going to have that discussion today, and I'm really happy to have Mike Frank, who's the president and CEO of Nutrien Ag Solutions. Mike, welcome.

 

Mike Frank:

Good morning. It's good to be with you.

 

Jon Doggett:

Mike, I think a lot of folks in the country are aware of your company and what they do, but maybe not under the new name. So, tell us about Nutrien.

 

Mike Frank:

Yeah, Jon, Nutrien is still a fairly new name in agriculture. We merged two companies back in January of 2018, so just over two years ago, a company called Agrium and a company called PotashCorp. Those two companies merged together, to create Nutrien. We're the world's largest producer of fertilizer, we produce about 25 million metric tons of fertilizer each year, NP&K.

 

Mike Frank:

Then, we also have the world's largest network of agricultural retail branches. We have about 2000 branches, that we operate in seven countries. Our retail businesses is headquartered in Colorado, just North of Denver. We have just under 1,000 retail branches across the the U.S. The U.S. is our number one market. And of course, as you said, this is a busy time of the year, and so we're getting ready to lean into it.

 

Jon Doggett:

Mike, tell us a little bit about yourself. I noticed that you pronounce about slightly different than the rest of us.

 

Mike Frank:

Thanks for that Jon. Well that's probably because I was born in Saskatchewan, Canada, grew up on a farm. It was a mixed farm, most of the grain, but we had livestock as well. And spent my whole career in agriculture. Worked for Monsanto for about 25 years. I've been with Nutrien now, for about two and a half years.

 

Mike Frank:

I lived in the U.S. for the last 20 years, or so. So I'm technically a dual citizen, and I guess I still have the Canadian about.

 

Jon Doggett:

Okay, well you and I were practically neighbors growing up, me and Montana and you in Saskatchewan. In that part of the world, that's being neighborly.

 

Mike Frank:

Yeah, exactly. That's exactly right.

 

Jon Doggett:

So Mike, latest USDA estimates is that farmers are going to plant 94 million acres of corn. From your perspective, and from your company's perspective, are we going to have everything we need to get that crop in the ground?

 

Mike Frank:

Yeah. I mean, the quick answer to that question Jon, is yes, the way things fit right now. I mean, when we think about fertilizer and seed, for us, all of that is really domestically or sourced from North America. Our seed order book has been really strong with corn. We're up, I would say, in the teens, from a year-over-year basis, in our corn seed bookings.

 

Mike Frank:

That would line up with the idea that there's going to be somewhere between, we would say, 93 to 95 million acres of corn planted. The fertilizer is mostly in our warehouses. We probably have about 80% of the fertilizer we need, that's already in our warehouses ready to serve our customers. And the crop protection side is also well in hand. So, the quick answer is yes.

 

Mike Frank:

That being said, I mean, going back to where you and Dusty started, obviously the COVID 19 situation is putting pressure on the supply chain. So we're spending a lot of our time talking with our suppliers, talking with the transport companies, just making sure that we're going to have everything ready when our customers need it.

 

Jon Doggett:

Should farmers have a concern if they don't have their inputs in the shed? Or how much should that input supply is on the farm now versus in your warehouses?

 

Mike Frank:

Yeah, so I would say farmers should not be concerned. Most of the product is still in our warehouses. Now, as you said, in the South, planting has already started. So most of the seed, a lot of the fertilizer's already on the ground in the South. There is some areas where it's been really wet, and so we've been delayed in a few areas in the South versus kind of normal.

 

Mike Frank:

In the Midwest, the season obviously hasn't really started. We've gotten a bit of fertilizer down, when we've had windows open up. I would say a lot of the seed is moved out, or is moving out. This is the time of the year, where normally we move seed to the farm. It takes pressure off the system later in the year, when farmers are getting fertilizer and crop protection products out.

 

Mike Frank:

We're busy getting seed delivered. Most of our customers have a storage facilities, and so that works really well. Again, from a fertilizer standpoint, we're ready. Once the ground dries up and warms up, we're ready to get fertilizer out there. Of course, it's bulky. Most of our customers don't have storage for fertilizer or for bulk chemicals.

 

Mike Frank:

Even a lot of that, we custom apply ourselves. Close to half of what we sell, especially in the Midwest, we custom apply ourselves. So, no, our customers, and I would say growers in general, don't need to be worried about getting access to products that they need to get their crop in and get the inputs on the ground this year.

 

Jon Doggett:

Well, certainly social distancing is a lot easier for farmers than most of the rest of us, as we said earlier. But when you have custom applicators coming out to apply your products, what are you telling your field reps and your applicators, and the folks that are interacting with farmers, what are you telling them, and what protections have you put in place for them and for that farmer?

 

Mike Frank:

Yeah, that's a great question. So, firstly, I think it's important for everyone to know that we're open for business. Our hours are as they normally would be, and so we haven't in any way looked at changing the hours of operation. In our branches, we're being very careful to make sure that our employees are social distancing. We're not bringing them together for meetings or discussions. Even things like the lunchroom, we're no longer having group lunches.

 

Mike Frank:

Often, as you probably know Jon, the retail store know is an area where sometimes our customers congregate and catch up over a coffee in the morning. Of course, we've cut all that out. We've asked our employees and our customers to really respect the fact, that we do need to keep a social business right now. I would say that part's going really well.

 

Mike Frank:

The other thing we've done at our branches is, we've said no visitors. And so, no supplier reps, no one else that isn't an employee or a customer is allowed on the branch. Now, we do have a lot of inbound freight at this time of the year. We're asking truck drivers when they come onto our sites, not to get out of their vehicles. We're unloading their freight, and then they're on their way.

 

Mike Frank:

We're being very careful at our branches, to make sure that we don't have an issue at a branch, and we're following CDC advice on that.

 

Mike Frank:

In the field, like you said, Jon, a lot of our products are custom applied, so we do have people coming out and applying. Again, they're going to be sitting in a fertilizer spreader or a sprayer. So it would be unusual for them anyways, to have probably contact with our customers. I would say, that's going as per normal.

 

Mike Frank:

What we're really trying to work through is, how do we continue to service our customers with our sales agronomists? We have about 4,000 sales agronomists across the U.S. Normally, what they do, is they spend their time in the pickup and calling on our customers, and really helping our customers make those decisions in the field.

 

Mike Frank:

What we've asked them to do is, firstly, wherever possible, use digital tools. If you're going to call on one of our customers, to call ahead and make sure that that's going to be okay. When you get on the farm, keep a social distance, don't do the things that we normally do, like shake hands. We're just really being conscientious about stuff like that.

 

Mike Frank:

Then today, Jon, we've got digital tools. Our customers and our sales agronomists can put orders in online. It's not like it used to be in the past, where they have to come into the branch or even call the orders in. We now have a digital platform, where customers can pay bills online, they can look at all of their account information.

 

Mike Frank:

A lot of our customers now plan their whole farm field-by-field in the digital tool. And so, when it comes time to get the seed or the fertilizer, they simply go to their, their phone or their desktop and put the order in. It's actually changing, and I think this a COVID 19 situation, what we've seen is, that it's actually accelerated the use of digital tools.

 

Mike Frank:

Let me just give you an example. In the second half of last year, about 20% of all of our orders for crop protection products came in, I would call it digitally, and 80% were done the more traditional way. In the first two and a half, almost three months of this year, we're running at about 40% of all of our orders are now coming in digitally.

 

Mike Frank:

We are seeing a change in behavior. We are seeing our salespeople, our sales agronomists, and our customers being more interested in pulling out the digital tools and conducting business that way too, if and when they want to.

 

Jon Doggett:

That change is going to is going to continue. What a time we live in, where... I was just thinking about my dad the other day, just imagine what his career in agriculture would have been like with all these digital tools. It's just really kind of amazing, what we can do now.

 

Jon Doggett:

The flip side of that is, that we're maybe too connected, and we're watching too much news and we're seeing too many things on the internet, that maybe we ought to shut it off occasionally. But it is nice to have those tools.

 

Mike Frank:

Yeah, look, I think Jon, you're right. What we've found is, some of our customers pick them up and they love them. Of course, we have customers that want to do business more traditionally, and that's fine with us as well. But like you said, I think in times like this, having the options to be able to do business with new technology and do it more virtually, I think the feedback we're getting when our customers go online and actually use the tools, they're surprised at a couple of things.

 

Mike Frank:

One, there's more information there, than just product information and pricing information or account information. There's also market information, there's field-by-field weather information, there's information that tells you whether you should be spraying or not in that field, at that moment in time.

 

Mike Frank:

And then, of course, there's the product stuff. And so, yeah, I think like a lot of the world, once people get onto a digital tool, they actually find it's a bit more convenient. Now look, in agriculture, this is still a relationship business. Our relationships with our customers are the most important thing that we value, and keeping their trust, and that's never going to change.

 

Mike Frank:

So, we still think having an agronomist that knows our customers, knows their fields, knows what our customers are trying to achieve in terms of maximizing yield, or maximizing return on investment, or minimizing risks, maximizing sustainability, these are the conversations that can't really be done digitally.

 

Mike Frank:

These are things that we have to talk through with our customers, and then talk about what are the field-by-field and product-by-product options, that a farmer can use to achieve their objectives in the field.

 

Jon Doggett:

Well, and imagine what it's going to look like 10 years from now. Mike, any bottlenecks out there? We're hearing from some folks, the bottleneck is in getting stuff up the river, or getting the trucking needed or the railroads needed, or just the the small molecules to make the bigger molecules. Any particular bottlenecks, that are starting to concern you?

 

Mike Frank:

Yeah. Let's maybe take fertilizer and crop protection chemicals separately. When we think about fertilizer, obviously the river systems are full again right now. Barges are moving, which is good. It was really this time last year, that we got all those flooding rains that really did stop the river system and created bottlenecks, especially for fertilizer that was moving up and down the river, and grain.

 

Mike Frank:

What we do is, most of our fertilizer is actually move by rail. We don't rely on the river systems maybe as much, as as maybe others do, which isn't right or wrong. We just have a pretty extensive rail system, and investments in rail cars. Again, when we think about getting 94 or so million acres of corn planted, there's still a lot of fertilizer to get down.

 

Mike Frank:

I mean, if you think about how last fall played out, for a lot of the Corn Belt, we did get more fertilizer down than we did the year before. But in the North, like in the Dakotas, in Minnesota, Wisconsin, Michigan, those States, they got winter early and the winter never left. And so, we really didn't get any fall work done up there. So, we still have a lot of fertilizer to get on the ground.

 

Mike Frank:

But generally, as long as we don't get another rain event like we did this time last year, then we don't see a bottleneck on the river system right now. And again, we move most of our fertilizer via rail cars.

 

Mike Frank:

Now, crop protection is interesting. So there definitely is a lot of crop protection products that get made in China, or there's certain components that go into a products that may be get formulated or largely manufactured in Europe or the U.S., that also rely on on China for some of the supply chain.

 

Mike Frank:

When we look at what we sell here in the U.S., we think that there's probably close to 80% of all the crop protection products that we sell that have a component or more that comes from China. Now, over the last couple of years, and it probably really started with the tariff war with China here, we, and our suppliers, have really started to diversify, I think, away from China wherever we can.

 

Mike Frank:

We now have more products that we're sourcing, that don't have a China link, which I think that's the trend right now. I think the trend's going to continue. But, we're not there yet. We do still rely on China for a lot of the crop protection products, that ultimately gets sprayed on fields across North America.

 

Mike Frank:

Again, when I think about the rest of this crop year, we have about 95% of all of our needs already procured. We've got a lot of that sitting in our warehouses. We're talking everyday to our big suppliers: Ayers, Syngenta, Corteva, BSF, FFC and others. At this point in time, none of them are indicating issues with supply chain or transportation.

 

Mike Frank:

So, again, at this point in time, we feel good about the rest of this spring and really in through the summer, and the insect and the plant health season. We think that we've got a supply chain that's going to hold up.

 

Mike Frank:

Now, of course, what's critical is that trucks still are allowed to go down the road across North America. It's been good to see, even in States and areas where they've had shelter in place orders, agriculture has been called out as an essential industry. All of us who to support farmers and serve farmers know, that what they do is the essential. It's been really good to see that governments around the world and here in the U.S. are calling this out as an essential service.

 

Mike Frank:

I think if the COVID 19 thing continues to evolve, and even if this thing tightens up a bit more over the coming weeks, provided that we get the designation of being an essential service and that transport trucks are able to go down the road, then we'll be able to to serve our customers throughout the spring and summer.

 

Jon Doggett:

It's interesting you mentioned the trucking, and we were on a call yesterday with our States. A lot of them are working with their state governments, their governors, to get those designations. So far, it seems that state and local governments have been very willing to make exceptions for agriculture, and to keep the trucks rolling and to keep other things moving along.

 

Jon Doggett:

I was on a call yesterday with Secretary Of Agriculture, Sonny Perdue, and with a couple of hundred other people, and that was one of the things that he was mentioning. And USDA is working with the Us Department Of Transportation, make sure those trucks are rolling. So, that's going to be great. Just, we have to see how many people get sick, and that's a real concern as well.

 

Jon Doggett:

But Mike, we've been talking in agriculture in recent years about resiliency. A lot of that is resiliency on the farm in the form of soil health, and to make our production practices more resilient to significant changes in weather patterns, or whatever.

 

Jon Doggett:

What kind of resiliency are you looking at, in building in your company, not just for 2020, but for 2021, 2022? Are you starting to look at things that you're going to be doing differently? You mentioned some of the issues about sourcing material from someplace other than China. But what other actions are you taking for the next two, three, four, five years?

 

Mike Frank:

One of the trends that we see is emerging, is food companies and consumers, they want to know more about what's going on at the farm. And there's an interest in having more traceability in this food supply, and the grain that's going from the farm, out of the field and into the food company.

 

Mike Frank:

Again, we're using digital tools to make this easier, and not only having ability where our customers can get... Especially if our customers can get a premium from a specific food company. So we're working in particular with AB InBev, and PepsiCo, and ADM and General Mills, where they have premium products, where they want to know what's happened in the field, so that they can make a claim around sustainability.

 

Mike Frank:

We're helping connect those supply chains, and we're doing it in conjunction with our customers and those food companies. We're kind of in-between, and we think we can play a role. Whether it's traceability, or even carbon sequestration, we see this as an emerging trend, again, as you said, over the next three to five years. Where the retail industry, I think, can be an enabler to actually help our customers a create value on their farm by leaning into these trends.

 

Mike Frank:

I think one of the other big areas that we're focused on, and I mentioned it before, is really around supply chain. We think that the agricultural supply chain on the input side can get even more efficient. The way we think about it is, if we're inefficient on our supply chain, that creates no value for our customers.

 

Mike Frank:

We're working really hard to look at our entire network of retail branches and warehouses, and we're working with our suppliers, and we're thinking about a product being produced in a chemical manufacturing plant somewhere, all the way to the field. How can we ensure that the journey that that product takes from the chemical plant to the field is that as efficient as it can be, it has as few touches?

 

Mike Frank:

We're spending a lot of time and making investments in our supply chain, in distribution, transportation, logistics, and we think that's going to benefit our customers as well.

 

Mike Frank:

Lastly, I would also just say, I think the digital era in agricultural retail and agricultural in general, is just emerging. So whether it's tools to help our customers make agronomy decisions, or a tool that creates convenience by ordering or paying online, I think these tools are going to continue to mature. And in the future, they're going to become even more prevalent and more value-adding for our customers.

 

Mike Frank:

That's what we're focused on, in terms of how can we do that? And we're making investments to try and get to that outcome.

 

Jon Doggett:

It sounds like you have a long road ahead, and you have it pretty well mapped out. Mike, what advice, or what would you want to tell farmers that are listening to this podcast, about what we haven't talked about yet?

 

Mike Frank:

Well, look, I mean most importantly, I just want to thank, firstly the National Corn Growers Association. The work you guys do has a huge impact. And just like we're talking right now, making sure that agriculture is deemed an essential service, and working with the administration and policy makers on other important policy areas, from ethanol to a number of issues that impact farmers every day. I do want to thank NCGA, and Jon, the work that you and and all the grower leaders do, to enable that.

 

Mike Frank:

And for the farmers that every day are working hard feeding the planet, being as efficient as they can be, we just appreciate what they do. Again, it's just an honor to serve them. We're not sitting still, but we also know we don't have all the answers. We look forward to getting input from our customers and our non-customers, in terms of what can we be doing better to really serve their needs.

 

Mike Frank:

Agriculture is incredibly dynamic. It was dynamic before COVID 19, and it's probably even more dynamic now. So, we want to be agile, and we want to serve our customers. And again, I just want to thank them for what they do.

 

Jon Doggett:

Well, thank you Mike, for being such a good partner. You and your company have been great to work with. No matter where our staff has touched your company, we've always had a good relationship, and we really appreciate you being on the podcast today.

 

Jon Doggett:

Before we go, what are you reading?

 

Mike Frank:

What am I reading? Well, these days I'm probably reading too many emails. The most recent book I read was a book about our railroader whose name was Hunter Harrison. An American railroader, who really transformed the railroad industry across North America, and quite a controversial figure. I love reading about business leaders, and his story was really, really interesting, so that was my most recent read.

 

Jon Doggett:

Well again, Mike, thank you so much for being on the podcast. And thank your staff, for working with our staff in getting this all put together. We really, really appreciate it.

 

Mike Frank:

My pleasure, Jon. Thanks for hosting this, and having me on today. Take care.

 

Dusty Weis:

So Jon, just as we're wrapping up, what was really a fantastic conversation there between you and Mike, do you have any final thoughts for your listeners? A lot of whom are going out into the fields right now, with perhaps more uncertainty than they've had in a generation, and that's saying something.

 

Jon Doggett:

It really is, and I think we heard it from Mike a couple times. That is, we're going to be stronger at the other side of this current situation. How long it's going to occur and how difficult it's going to be, no one knows. But I do think, and my long history of American agriculture is, we're going to be stronger. We're going to be better at the end of this, but there's going to be a lot of pain between.

 

Jon Doggett:

So, the National Corn Growers Association is working hard to address the issues that are out there. We do have a task force, and we're going to be meeting a lot. The staff is meeting a lot. We're talking to farmers every single day, almost all day long. Again, the email address that I gave earlier, CoronavirusInput@NCGA.com, if you have an issue, or a concern, a problem, suggestion, a compliment, and we will even accept complaints at that email address, and we're going to be watching that all the time.

 

Jon Doggett:

But we've weathered a lot of challenges in the past. Anybody that lived through 2019 has to be pretty strong. But everybody in this country is under a lot of stress, as is everybody around the world. This virus has people afraid, concerned. A lot of people have been feeling pretty isolated.

 

Jon Doggett:

As we've mentioned a number of times, if you're feeling overwhelmed, you're not alone. If you're feeling stressed or anxious, you're not alone. And if that starts to get to you, reach out to a friend or family member, reach out to a clergyman, give your doctor a call. There's a lot of hotlines you can call it.

 

Jon Doggett:

You're not alone. All of us to one degree or another are feeling all these things, and all of us from time-to-time are going to get a little overwhelmed. So reach out to those that can help, and know that the NCGA is working on your behalf.

 

Jon Doggett:

Appreciate you listening to the podcast. My name's Jon Doggett, I'm the CEO of the National Corn Growers Association. I look forward to talking to you again soon, on Wherever Jon May Roam, the NCGA podcast.

 

Dusty Weis:

That is going to wrap up this edition of Wherever Jon May Roam, the National Corn Growers Association podcast. New episodes arrived monthly, so make sure you subscribe in your favorite podcast app and join us again soon.

 

Dusty Weis:

Visit NCGA.com to learn more, or sign up for the association's newsletter in your email. Wherever Jon May Roam is brought to you by the National Corn Growers Association, and produced by Podcamp Media, branded podcast production for businesses, podcampmedia.com.

 

Dusty Weis:

For the National Corn Growers Association, thanks for listening. I'm Dusty Weis.