9. Corporate Agriculture

ADM (Archer Daniels Midland), Bunge, Cargill, and Louis Dreyfus collectively control 50-60% of international trade in wheat, corn, and soybeans citing a study by the EU Parliament’s Agriculture Committee. None of these companies provide accurate information on the amount of raw materials and their origin. Experts estimate that Cargill’s turnover is 217 million tons, Bunge – 142 million tons, ADM – 100 million tons, Dreyfus – 83 million tons. 

 Just 10 years ago, the share of these four companies in the global market was 70-90%, but they were pushed by new competitors, primarily by the Chinese giant Cofco International (CIL), which sold 127 million tons of grains, oilseeds, and fruits in 2022. Dutch Viterra, a subsidiary of Glencore Group, has a turnover of about 100 million tons.

The Big Four are fighting with new competitors, trying to absorb them, and expanding their business areas, including biofuels, edible oils, animal feed, and food products. Since 2021, Cargill and ADM have stepped up their acquisitions of competitors, with the largest deal being the purchase of Bunge by Viterra.

CARGILL

Cargill is one of the largest agricultural companies, but is held privately. Hence little is known about it.

It is the largest privately held company in the USA in terms of revenue. It was founded in 1865. Current revenue is over $160 billion. 

Ranking at the top of the list for the big 4 agriculture companies in the world, Cargill is a USA-based private global food corporation. The family-owned business is based in Minnetonka, Minnesota, with the descendants of the founder owning over 90% of the business. Cargill is also one of the biggest employers in the USA with over 166,000 employees working for the company in over 70 countries worldwide. The company is responsible for about 25% of the grain exports from the USA. 

Just a context note from their report:

As we race to feed a fastgrowing population, our first horizon is 2030. By then the world will gain 500 million people — roughly the current population of North America. To feed them, the food system has to produce another 45 to 50 million metric tons of agricultural commodities per year. And we need to do it with less land and water, in a world increasingly challenged by climate change.

The core of the operations was trading. A little historic snapshot of Cargill: 

As the company grew, it developed a market intelligence network as it coordinated its commodities trading, processing, freight, shipping, and futures businesses. In the decades before email, the company relied on its own telex-based system for internal communication. By 1972, Cargill’s business grew with $5 billion in sales, becoming the largest agricultural trader in the world. By 1976, revenue approached $30 billion (?)

"For fiscal 1979, ending June I, fully half of the company's projected sales of $12.6 billion and about 60 percent of its predicted $150 million in profits will come from Cargill's rapidly growing non-trading activities. By contrast, in 1970, nearly 60 percent of the company's revenues were generated by Cargill's grain-trading operations. Even back then, Cargill had already diversified into such fields as corn  illing, animal feeds, chemicals, salt mining, soybean processing and insurance."

Following from 2003:  . By 1982 this figure had jumped to $29 billion, and by 1994 it had nearly doubled to $47.1 billion, $50 billion by 1999. The largest privately owned company in the world, with sales last year in excess of $50 billion. Cargill is the world’s seventh largest food company; only Nestlé, Pepsi, Coca Cola, Philip Morris, Unilever and ConAgra are bigger, all of which (Con Agra apart) you’re probably entirely familiar with. 

Given its long history, and its close link to essential items as a big player, it has been in questionable positions - where from WW1 war profiteering to Russia wheat deal, - I guess the proximity of essential items with corporate ethos doesn't work out very well. 

Following from 1979 news: For Cargill, the next few years may be every bit as turbulent as the period following the 1972 Russian wheat deal that brought a boom in worldwide grain trading. a spectacular bulge in the profits of Cargill and other traders and unwelcome publicity for a business that is still shrouded in secrecy.

 

A little snapshot of its business (from 2003)

 In 1994 a Minneapolis newspaper published figures, obviously provided by Cargill, on the changes in the firm’s business activities between 1970 and 1990. They showed that merchandising (trading in bulk commodities) had fallen from 37.3 to 17.6 per cent of Cargill’s business. Non-merchandising (processing of oil seeds and corn, and flour milling; agricultural products such as poultry, feed and seed; industrial products like steel, fertilisers and salt; and financial services) had increased from 62.7 to 82.4 per cent of its business.

This transformation was engineered in response to changes in the state of global trade. For, in spite of all the current hype about the global market, bulk trade has been slowing globally. As a consequence, the firms that used to be known primarily as trading companies have begun to diversify over the past several years so as to avoid unnecessary competition in the marketplace.

Each of what used to be called ‘the grain majors’ (Bunge, Continental, Andree, Dreyfus and Cargill) has differentiated itself from the other major players in the food sector. (One could be forgiven for thinking that this was all planned centrally, except that might be called collusion.) Bunge, for example, is now the world’s largest oil-seed processor, while Cargill has become the major glucose, fructose and starch producer. What is even more revealing is that to achieve this rationalisation firms have actually swapped facilities, and have formed partnerships or joint ventures with their erstwhile competitors further ‘downstream’.

Cargill’s use of its available capital as leverage to acquire the facilities it needs (or to control the commodity sources it desires) is reflected in its growing list of partnerships and joint ventures.

Cargill has clearly decided that joint ventures – whether with local and regional farmers’ cooperatives or with fellow multinationals like Monsanto, Dow, the Indian company Tata and Mitsubishi – are the way to go. They enable the firm to magnify the power of its capital while minimising risk (something capital avoids like the plague) and maximising control over the supply and price of the raw materials needed for its huge and increasingly complex processing facilities. Of these facilities, Cargill’s corn-processing complex at Blair, Nebraska, is the embodiment of the firm’s complex and highly interlinked network.