Commodity Strategies & Sustainability

By Chris Clark

More than 30 pretzel and baked snack manufacturers and suppliers gathered for the 2007 SFA Pretzel & Baked Snacks Seminar in Gettysburg, Pa., following the 2007 Management Workshop. The program began with a tour of Utz Quality Foods’ pretzel manufacturing facility in Hanover, attended by participants in both conferences, and many of the industry’s leading food ingredients suppliers also took part in a tabletop exhibit and dinner on the opening night.
The program was hosted by Paul Shaum, vice president of manufacturing at Utz Quality Foods, Inc., and featured discussions by industry experts on regulatory issues, marketing, nutritional concerns, components, hedging and sustainability.
Chip Whalen, risk manager at Commodity & Ingredients Hedging LLP, Chicago, discussed the commodity outlook for wheat and how baked snack food manufacturers can get the best price possible for wheat and other commodities in these volatile times. Whalen also reviewed historical wheat stocks and usage, as well as historical supply and demand for wheat and other factors that contribute to price. 
Whalen said increasing exports affect U.S. supply and price, adding that production losses in several key exporting countries contribute to a surge in U.S. wheat exports. 
Snack food company executives can use this data to examine fundamentally analogous years to forecast price direction as they consider utilizing hedging as part of a strategy to take advantage of historic price declines, which often occur, he said, in October and November. However, Whalen added, historical patterns do not necessarily repeat and should not be the sole basis for any trading decision. 
Scott Kran, global environment and risk manager, HJ Heinz Co., discussed Heinz’ global sustainability initiatives and their value to business. He reviewed many of the advantages his company realized with its sustainability initiatives, including:
• The economics of providing food to consumers in all types of business environments.
• The social benefits of producing safe, wholesome, nutritional products to many under-nourished consumers around the world.
• The ability to provide desirable employment opportunities in the future. 
Of key importance, he said, is the value to business in terms of corporate credibility and reputation. Consumers, Kran noted, have rising expectations about environmentally safe products and sustainable business practices, and many prospective employees base employment choices on a company’s reputation and commitment to more than just profits.
In addition, he said, sustainability initiatives have led to increases in productivity and efficiency, stimulated innovation and, in certain areas, have increased market share and revenue as well as increased access to capital.