Harvest of Profits

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					Harvest of Profits




The World Empire of Cargill, Inc.
   Cargill is more involved in the buying and selling
    of commodities than in industrial production

   Can be compared to leading merchandising
    firms—would rank forth (just behind K-Mart but
    ahead of J.C. Penny)

   May 31, 1979- Cargill becomes the largest grain
    trader in the world with worldwide sales at
    about $12.6 billion
                     History
   1830’s: William D. Cargill becomes a merchant
    marine in northeastern US—was a captain in the
    merchant marine.

   Sought profits in the slave trade

   1857 moved to Wisconsin to farm

   1860’s: Three sons joined grain trading business
    and built elevators and grain storage houses in
    Iowa, MN and Wisconsin
                     Strategies
   Formed commercial partnerships w/ other grain
    merchants to build or control elevators and then bought
    out the other for complete control

   Local farmers often forced to accept Cargill prices for
    grain b/c they had the only elevator at major railroad
    stops—especially in So. MN and SD

   Conspired to fix grain prices

   To avoid the affects of farmer discontent against big
    business, Cargill sought constantly expand market
    outlets
Expansion at Home and Abroad
 Early 1920’s: established direct sale offices in
  the East—now had a completely integrated
  trading network which handled grain from small
  country elevators to final eastern markets
 1930’s: controlled largest grain export facility in
  the world (Albany, NY) and then moved to the
  Chicago market
 Established feed milling and vegetable
  processing divisions that moved into domestic
  manufacturing
            Postwar Boom
 US became the world’s principal food supplier
  through the United Nations Relief and
  Rehabilitation Administration (UNRRA) and the
  Marshall Plan
 Wheat and flour jumped from 48 million bushels
  in 1944 to 503 million in 1948

But…
 End of 1940’s—the resurgence of agricultural
  production in W. Europe lessened the demand
  for US grain
          Public Law 480
 1954- US forged law of gov’t concessional
  financing for continued expansion of
  markets
 First: enabled the company to directly
  increase its export sales
 Second: Once a market in a given country
  is opened with PL 480, it is much easier to
  follow up with direct commercial sales
           South Korea 1968
    Plans an integrated poultry operation with a
    poultry breeding farm, a large feed processing
    plant and a poultry processing unit:

 95 % of financing from US gov’t
 PL 480 loan of $500,000 from the Cooley
  amendment that allowed TNCs to use local
  currency from the proceeds of PL 480 sales to
  finance the establishment of local subsidiaries
 $1 million loan from private trade entity
  provisions of the PL 480
                     Failure
   Exhaustion of Cargill’s PL 480 credits for
    importing grain and Korea’s restrictions on the
    use of tis limited foreign exchange, Korea Cargill
    struggled to sustain operations

   South Korea gov’t becomes less responsive to
    demands of TNCs

   Korea Cargill asks for and receives permission to
    defer payments on its two PL 480 loans
―we taught people to eat wheat who didn’t eat it
       before, particularly in the Far East‖
              –former grain company official



―PL 480 enabled the companies to gain entrance
  into a market at the smallest expense possible‖
                    –grain company rep.
            Other Gov’t Help
   Commodity Credit Corporation (CCC) granted
    one- to three-year loans to foreign governments
    to purchase its surplus grain reserves

   Barter program- exchanged grain for strategic
    and war materials—provided an effective
    subsidy for US exports (Cargill)

    ―In some years 70 percent of total U.S. grain
       exports involved government concessional
           financing of one type or another.‖
         Domestic Structure
Three main points of grain collection and
   distribution:

1.   Local elevators where farmers sell the grain
2.   Subterminals and terminals at the major
     transportation crossroads
3.   Large export elevators located in major U.S.
     ports

**Limits the commercial options available to the
    small producer
Transportation
      1940’s- Opened a new access route to the
       Mississippi River by widening the MN River
       channel

      1950’s- Used inland waterways for grain
       transport- making Cargill one of the largest
       shippers in the US

      1968- ―Rent-A-Train‖ (RAT): Rented the
       engine, train crews and railroad right-of-
       way for extended periods of time at special
       rates
       **Control of railways=control of price for
       wheat because local merchants and farmers
       can’t choose to whom to sell grain and for
       what price
“When one recalls that Cargill controls much of
     the flow of grain on the railway system
   without owning a single locomotive, that it
      received millions of dollars in storage
   payments for holding CCC grain surpluses
   which it could buy and sell at a moment’s
      notice, and other government lending
  programs, then one has some understanding
   of how its commercial system is run. The
   company is a stunning example of modern
 corporate capitalism, where small amounts of
  capital are used to control vast financial and
               commercial empires.”
       “The Sun Never Sets on Cargill’s
                   Corn”
   Cargill operates in 36 countries and has 140 affiliates and
    subsidiaries

   1960’s and 1970’s: Expansion into less developed countries
    such as, El Salvador, Guatemala, the Philippines, Argentine,
    Pakistan, Brazil, Taiwan and South Korea

   Is one of five other major grain companies that dominate the
    grain markets of W. Europe

   Favors the large-scale farmers who can buy or contract for
    trailer trucks to haul their grain long distances to the terminals
    where they receive premium prices that compensate for the
    shipping costs
    Internationally, Cargill Stands For:
   Free trade and rejects gov’t regulation (but it would be
    impossible to operate w/ support)

   PL 480 that enables Cargill to sell grain to the lesser
    developed countries

   Eximbank and loans from Overseas Private Investment
    Corporation to help set up foreign subsidiaries

   American military and econ. Assistance to repressive
    regimes to help maintain the environment necessary for
    Cargill operations
Domestically, Federal and state
        governments

   finance port facilities

   Grant tax concessions for new capital
    investments

   Maintain a legal and financial system that is
    essential for the survival of Cargill and other
    monopolistic corporations

				
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posted:9/8/2011
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