HARVEST OF PROFITS: THE WORLD EMPIRE OF CARGILL, INC. Burbach and Flynn

Alexandra Regeimbal

Over100 years old

Largest U.S.

corporation

Global Operation

Mysterious

OVERVIEW OF CARGILL, INC

The Contoso Corporation

Some Background on the Cargills 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

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

Government Support: Public Law 4801954 PL 480 was formedEnabled Cargill to directly increase its export sales

$200 million $700 million

Open markets in new countries at smallest cost possible

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

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 ’72River and railway Make it impossible for the smaller operations

to succeed

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

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

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

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

Third World MarketsSouth 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

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

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

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