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Harvest of Profits: The World Empire of Cargill, Inc.

Harvest of Profits: The World Empire of Cargill, Inc. . Burbach and Flynn Alexandra Regeimbal. Overview of Cargill, INC. Some Background on the Cargills. The Contoso Corporation. Their father was a farmer Started in grain trading business

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Harvest of Profits: The World Empire of Cargill, Inc.

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  1. Harvest of Profits: The World Empire of Cargill, Inc. Burbach and Flynn Alexandra Regeimbal

  2. Overview of Cargill, INC

  3. Some Background on the Cargills The Contoso Corporation • Their father was a farmer • Started in grain trading business • In 1880s they held a monopolistic trading position • Inspired the Populist part to take root and revolt • Depression in 1900s lead to new management– John MacMillan

  4. Expansion • Thrived in 1920s opening sales offices in Europe and Argentina • Great Depression became the largest grain supplier in Chicago • ‘Cut-throat’ tactics lead to an attempt to restrict Cargill by the Chicago Board of Trade • Fixing corn pricing • US Grain regulation in WWII Cargill profited by domestic manufacturing and building tanks • Post-War relief in 1944-1948 increased wheat value • $48 million per bushel to $503 million per bushel

  5. Government Support: Public Law 480 • 1954 PL 480 was formed • Enabled Cargill to directly increase its export sales • $200 million $700 million • Open markets in new countries at smallest cost possible

  6. Commodity Credit Corporation (CCC)– allows foreign govt. to purchase grain using 1-3 yr. loans Barter– exchange grain for strategic and war materials 70% of total grain trade involving govt. concessional financing

  7. Domestic Structure • Cargill controls every aspect of the trade • Local elevators • Subterminals and terminals of major transportation crossroads • Large export elevators at US ports • Favored over county elevators and limits options • Store grain for CCC (more income) • Diverse transportation options • Expansion in ’72River and railway • Make it impossible for the smaller operations to succeed

  8. Financing the Cargill Empire • Takes more capital than even mammoth corps like Cargill need more capital • Credit lines with over 40 banks (8/10 “Big Guys”) • Very long ties– Chase Banks since 1933 • Key: small amounts of capital to acquire huge revenue • Controlling railway grain without owning trains • CCC leases earn millions for Cargill • Less expensive international trade through PL 480

  9. Foreign Market Activities “The sun never sets on Cargill’s corn.” • Operate in 36 different countries • 140 affiliates and subsidiaries • Tradax in Geneva controls many overseas operations • Cargill is the leading exporter of grains in Argentina • Canada- set up regional grain terminals to bypass county • Philippines- sugar and copra • Western Europe- Five other corporations in their control

  10. Japan- controls much of the poultry, meat, and grains • Third World- PL 480 and those “graduated” • Become acquainted through the program • Once they graduate they use small foreign exchange to meet grain demands

  11. Multinational industrial corporation • “Overnight” transition into globe • Between 1960-1970 • Nutrena (subsidiary)- 27 domestic feed mills • Peruvian fishmeal- plant and fleet • Soybeans in Spain and Netherlands • Purchased Hens- feed manufacturing in France, W. Germany, and Belgium • Breeding stock- Canada for integrated package of feed mill and poultry

  12. Third World Markets • South Korea • Breeding, feed processing, and poultry processing conglomerate • 95% of processing came from US govt. • Cooley Amendment to PL 480 allowed for loans • Those who had assisted us in Korean War were rewarded with jobs in Cargill Korea • When profits were down: deferred loan payments and asked for govt. intervention on behalf of Korea

  13. Cargill and the state • Impossible to operate without govt. support • PL 480, port facilities, tax concessions, legal and financial assistance • Very influential with politicians: Hubert Humphrey& Nixon • William Pierce deputy Special Trade rep. and headed 1973 Trade Reform Act • “Grain is the elbow of the people in the USDA” • U.S.- U.S.S.R and U.S.- China Economic Trade Council

  14. Profiteering and the Future of grain trade • Exploits small farms • Lucrative trading • 40% return off assets • Expanding to other markets • ½ sales outside of grain

  15. so that our children can enjoy the same resources and beauty that we have for generations.

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