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It’s easy to forget the immensity of McCain Foods. Being privately owned, it evades the spotlight that follows a public company’s every move. So it might be a surprise to learn that McCain produces at least one out of every four french fries sold in the world. It’s the biggest company of its kind, accounting for a quarter of the $19-billion global frozen fry industry. Every single McDonald’s fry sold in Canada comes from McCain. It supplies every major restaurant chain in North America, and the production system built to feed this demand stretches across six continents. Its potato fields cover 150,000 hectares, the equivalent of roughly 280,000 Canadian football fields. It is big.

None of this escaped the attention of Max Koeune when he left Danone SA after a nearly 15-year career to become CFO of a company he viewed as “iconic.” And when he was named CEO in 2017, Luxembourg-born Koeune was eager to expand the giant’s empire. Soon there were plans for new operations in the state of Washington, in Brazil, maybe even in Russia. Then 2020 delivered its rebuttal, and it became clear that great size was no protection against a tiny pathogen. Now as Koeune works—one hesitates to say feverishly—to steer McCain through growing challenges, he sits for his very first major interview since joining the company.

Let’s jump right to the COVID-19 crisis. A number of food processing operations have seen clusters of infection. With 51 plants around the world, what has McCain’s experience been?

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We benefitted early on from having operations in China. So on Jan. 2, I think, we went into crisis mode there. Our team developed a set of protocols for how to keep our operations safe, and that gave us the blueprint for how to run our plants safely worldwide.

What are those protocols?

First, to make sure that if you’re not feeling well, you’re staying at home and you’re getting paid. We have daily questionnaires and temperature checks, and we have reinforced all the social distancing, mask wearing, sanitation and safe practices. We’ve brought on an epidemiologist, who is advising us on keeping our operations safe. It’s not a static process. You have to constantly adapt the protocols because it’s different to operate in a period when all of the economy is in lockdown and your factory’s working because it’s an essential function, versus today, when things are gradually going back to normal. That creates a different level of risk.

Have you changed anything physically about the plants?

Yes. The canteens don’t look the same anymore. There are barriers everywhere to keep people safe, with individual booths. If you go to the break room, it will be clearly indicated where you can be and where you shouldn’t be. I could go on throughout the factory.

Do you know how many of your workers have been infected?

We monitor it on a day-to-day basis. We offer tests to our team members to proactively check. We check on everyone who’s not feeling well, making sure they get the support they need.

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Where have you had outbreaks?

I won’t disclose that, but I can tell you it’s much lower than what we’ve seen in benchmarks.

A couple of months into the pandemic, another major Canadian food producer estimated the crisis would add $20 million to its Q2 expenses. How does that compare with your experience?

We’re seeing a big disruption of our business—

I’m just asking about expenses.

Well, I really have to start with the top line, because more than half of our sales are to the restaurant, hotel and catering industry. And when that disappears overnight, the main issue is not the costs; it’s that your revenue base has taken a big hit. The other big concern we have is that our growers in Canada ended up having hundreds of millions of pounds of potatoes on their hands. Same in the U.S.; same in the whole of our operations. What are we going to do with that? Those are issues in the hundreds of millions, not the tens of millions.

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So, your restaurant and hospitality sales dried up overnight?

It depended on the country. Sit-down restaurants obviously closed down. But then depending on the legislation, country by country, some had to shut down all their drive-through and delivery facilities. But if you think about Canada, it was a pretty severe lockdown.

What did you do with all those potatoes you couldn’t sell?

The problem starts with raw potatoes. You can store some of the potatoes harvested in the fall until, say, June. In Canada, when the crisis hit, there were about 300 million pounds of raw potatoes sitting in grower stores. The sales dropped; we had to stop our factories. Then we worked with our growers to find a solution. This is not a moment to let them feel the pain of this on their own. And we realized that with massive unemployment building on a scale never seen before, the food banks were going to be overwhelmed. The last thing we wanted was to see potatoes go to waste. That would have been catastrophic. In Canada, we donated 20 million pounds to the food banks. We’ve done the same in all the countries where we operate, at different scales.

Those were raw potatoes?

We left it for the food banks to decide based on what they needed. It was about 80% raw and 20% prepared potatoes. And we made that commitment over multiple months. We also worked with the growers to find alternative channels, where we would buy the potatoes from the farmers and sell them in different forms—which came at a loss for us, but we thought it was our responsibility to get the potatoes into productive use and to get the farmers' income secured. We’re extremely proud that we were able to honour every single contract we had with every single potato farmer in Canada.

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What about the rest of the world?

The same. We’ve dealt with the crop in the U.S., in Canada, in England and in Europe, so that’s been our key focus.

When you saw the dramatic drop in demand on the restaurant side, did you see an increase in demand on the consumer side?

There was a very substantial increase on the retail side, in the grocery stores. But 70% of potatoes that are grown in Canada for processing end up being served on a plate in a restaurant or hotel, or at a caterer. So even if the retail market doubles, it’s still not making up for the biggest chunk that has disappeared.

How able is McCain to withstand the financial blow?

As a family company, we can only rely on ourselves, right? There’s no stock market to go to. So we’ve always managed the company in a prudent way. It’s a crisis, clearly, but we’re working to get out of it stronger.

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Were you forced to lay off workers?

We had to do temporary layoffs as we shut down factories, but as demand came back, we were able to bring people back. We pivoted completely for the office-based people to work from home in a matter of days, and it has redefined the way we see work.

What has the whole crisis revealed to you about the resilience of Canada’s food supply chain?

There was, of course, the frenzy of the pantry loading and all the stories around empty shelves, but that didn’t last very long. I think the food system has shown very good resilience. Everyone in the supply chain worked together to figure out how to keep the shelves stocked.

How much uncertainty is there for you now about the future demand for potatoes?

What is clouded is the health situation. Is there going to be a second wave? Where? How big? That’s really clouding our ability to forecast. The potato industry had been growing for years and years, so fundamentally, the demand is there. We’re not concerned about the long term. The uncertainty is over—you tell me—is it months? Is it years?

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Let’s talk about other challenges. What effects are you experiencing from climate change with harvests around the world?

We had two major drought episodes in Europe over the past two summers. We had two major spring floods in Canada over the past three years. Those are centennial events, except they seem to repeat themselves one year after the next. We’ve seen wildfires in Alberta much earlier than usual. I could go on like this probably in most, if not all, of the areas where we operate. And that’s clearly affecting our farmers and our operation.

Can you quantify the effects?

It’s in the tens of millions of dollars every year.

What percentage of crops do you lose to climate change every year?

In Europe—which is a big chunk of our business—two years ago, we lost 20% of the crop. Closer to home, in Manitoba, there were two consecutive years of early frost. This year, we lost 30% of the crop. We can keep going.

What are you doing to overcome all those challenges?

It starts with ourselves. We’ve published a sustainability report that sets goals for the next 10 years—on emissions, farming practices, plastic waste, water usage, et cetera. But those are big problems. We need solutions and scale. So we’ve joined or formed coalitions with like-minded companies to create more scale. To give you one example, we founded a coalition called One Planet Business for Biodiversity. As a set of businesses tied to agriculture, we want to foster regenerative agriculture and biodiversity, and continue the fight against deforestation.

In some countries, you’re working with governments that are resistant to action around climate. How do you deal with that?

That’s the benefit of having scale. As you put all those 18 companies together, we have about $500 billion in revenues. When we decide to do something, we can get the ball moving a little bit.

One of McCain’s commitments is a 25% reduction in CO2 emissions from potato farming, storage and freight, and a 50% reduction from operations by 2030. How does that compare with your competitors?

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When the Paris Agreement says here’s what needs to be done to limit climate change to 1.5 degrees, that’s where we peg our ambition—not so much on what competitors are doing. We want to make sure that as a global citizen, we do our part in the fight against climate change. And we have it audited, so it’s not just us talking to ourselves. With other potato manufacturers, I haven’t seen a report to date that makes as broad a set of targets. So, I’m a bit at a loss to answer your question.

Maple Leaf Foods, maybe not a direct competitor of yours, declared itself the first major food company in the world to be carbon neutral. You, on the other hand, called being carbon neutral an “aspiration.”

Well, we set up targets. My aspiration is that as we make progress, we realize, hey, we can do more faster.

You have 3,500 growers around the world who need to change their practices. It must be more difficult in some regions than others.

The click happens when farmers see that despite all their hard work, their yields are going down. Think about population growth—from 7.5 billion to 10 billion by 2050? The UN Food and Agriculture Organization said a food increase of 60% to 70% will be required. Collectively, as a food system, we’re already using half of the land mass for agriculture. If you want to increase that by two-thirds, that’s going to be deforestation on a massive scale. So, you have to work on the yields. Same thing with greenhouse gas emissions. If we keep doing what we’re doing, emissions will increase by 85% or 90% for that food production increase. According to the Intergovernmental Panel on Climate Change, the food system is already a third of all emissions in the world. The way we set up agriculture over the past few decades has worked really well. We have to find a different way going forward.

Of course, it’s 2020, so there’s no end to the issues, and some go beyond food. You launched something called the Diversity and Inclusion strategy three years ago. What’s the goal of that program?

Well, it’s to realize that, first, if you look at our senior ranks, it’s very obvious we have work to do.

You have 15 people on your senior leadership team. Two are women, and there are no people of colour.

That’s a fact. That’s why I’m very clear that we have work to do. The second thing is I’m absolutely convinced that to be a good company serving our customers, we need to reflect who our customers and our consumers are.

Are you giving yourself a deadline?

We started setting targets around gender diversity, because that’s the demographic information we have. We don’t have ethnic statistics. We are going to look at ways of getting that without infringing on any privacy laws. I believe you get things moving when you measure them and set objectives. And so, we’re setting objectives. We’re making it part of compensation. It’s a cultural transformation. It starts with education around biases, conscious and unconscious. Ultimately, my goal is a company where everyone feels they can be their authentic self.

1. McCain’s factory is in Harbin, in China’s northeastern province. It also has operations across Europe and North America, as well as in Tasmania, Argentina, Colombia, India and South Africa. And it is proceeding with plans to build a new plant in Brazil.

1. McCain’s factory is in Harbin, in China’s northeastern province. It also has operations across Europe and North America, as well as in Tasmania, Argentina, Colombia, India and South Africa. And it is proceeding with plans to build a new plant in Brazil.

2. The company says “nearly all” of its laid-off employees are back to work around the world.

3. According to Koeune, global demand for frozen potato products has been growing at a rate of 3% to 4% per year for the past five years.

4. McCain is also committing to a 15% improvement in water-use efficiency in water-stressed regions, 100% potato utilization in all plants, and 100% recyclable or compostable packaging by 2025. By 2030, it vows to be using 100% renewable electricity.

5. There are 18 signatory companies for OP2B, including Danone, Google, Kellogg, L’Oreal, Loblaw, Mars, Nestlé and Unilever.

6. Actually, Maple Leaf Foods is a rival. Wallace McCain was forced out of McCain Foods in the early 1990s by his brother and co-CEO, Harrison, over leadership issues.

Wallace wanted his son, Michael, to become McCain’s next CEO; Harrison and other family members did not. Wallace went on to acquire Maple Leaf Foods in 1995.

Michael has been CEO of Maple Leaf since 1999.

7. As part of its Farms of the Future program, McCain plans to build three working experimental farms to test and showcase new, more efficient practices. The company has established New Brunswick as the first location.

8. McCain has brought in a company called White Men as Full Diversity Partners to educate its senior leadership.

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