Cargill Inc

Cargill Inc.

Basic information

Ownership status:

Privately held

Number of employees worldwide:

158,000

Website:

http://www.cargill.com

Tel:

952-742-7575

Corporate accountability

Brief company history:

Cargill is one of the world's agribusiness giants and one of the largest privately held companies based in the United States. It began as a grain trader and has expanded into many forms of food processing and other industries such as steel and coal.

Cargill is not shy about using its size and power to affect public policy. In his book Invisible Giant: Cargill and Its Transnational Strategies (Pluto Press, 2nd edition, 2002), Brewster Kneen writes that “Cargill has and will continue to shape the agricultural policy of as many countries and regions as it can.” Cargill has a tradition of secrecy, but in recent years it has been a bit more forthcoming about its operations.

The company dates back to 1865, when William Wallace Cargill got started in the grain business in Iowa. He later joined with his brothers Samuel and James to form Cargill Brothers, which in 1890 became the Cargill Elevator Company, headquartered in Minneapolis. William Cargill’s daughter married John Hugh MacMillan, who ended up taking control of the company, forcing out the Cargills. Although the company retained the Cargill name, it has been controlled by the MacMillans ever since.

After World War I, John MacMillan expanded from the Midwest to other parts of the country and began to establish an overseas presence. In 1930 Cargill Elevator became Cargill Inc. Six years later, John MacMillan, Jr. took over as president and aggressively expanded the company’s grain storage and transportation operations. Early in his tenure, the company was accused by the Chicago Board of Trade and the U.S. Commodity Exchange Authority of trying to corner the corn market. Cargill’s membership in the Board of Trade was suspended. In response, the company chose to operate through independent traders for the next 25 years.

When the international grain business was restricted by the Second World War, Cargill began to diversify into areas such as vegetable oil, animal feed and soybean processing. After the war, the company opened a Swiss subsidiary, Tradax, to sell grain in Europe. It eventually grew into one of the largest grain companies in the world. Cargill was willing to do business with just about any country, including the ideological foes of the United States. It started selling grain to the Soviet Union and Eastern Europe in the early 1960s, but it was a series of giant grain sales to the Soviets in the 1970s that put the company at the center of a major controversy. The ensuing rise in agricultural profits caused Cargill’s revenues to soar and gave the company the resources for a major expansion in the grain business, in other areas of agribusiness and in other industries such as steel (under the name North Star) and coal. Among its purchases was meatpacker MBPXL, later renamed Excel.

In the early 1990s there were rumors that the company would go public, but instead it sold 17 percent of its shares to an employee stock ownership plan. The company initiated a diversification program that sought to change its identify from simply a commodity merchandiser to also being a larger provider of products directly to consumers. At the same time, Cargill began moving into various types of financial services.

Cargill also expanded its alliances with other agribusiness corporations. In 1998 it formed a joint venture with Monsanto to develop genetically modified food and feed products. During this period Cargill moved out of the seed business. It sold its overseas seed business to Monsanto and announced plans to sell its domestic seed operations to the German company AgroEvo (a joint venture of Hoechst and Schering). The latter deal fell through after Cargill was sued by Pioneer Hi-Bred for misappropriating proprietary genetic traits developed by Pioneer researchers. (In May 2000 Cargill agreed to pay $100 million to settle Pioneer’s lawsuit, and several months later Cargill sold the North American seed business to Dow Agrosciences.)

In November 1998 Cargill solidified its leading position in world grain trading with the announcement of plans to acquire the grain operations of its long-time rival Continental Grain. Federal regulators allowed the deal to go through after Cargill agreed to sell off rail terminals, port facilities and grain elevators in eight states. Cargill’s next big move came in late 2000, when it struck a deal to acquire Agribrands International, an animal-nutrition business spun off from Ralston Purina, for more than $500 million.

In 2002 Cargill formed a joint venture with Hormel Foods Corp. to sell beef and pork products under the Hormel name. That same year Cargill recalled 2.8 million pounds of ground beef potentially tainted with E.coli bacteria. In 2003 Cargill attempted to boost its position in pork by bidding for the hog operations of Farmland Industries, but it was outbid by Smithfield Foods. In 2004 Cargill announced that it would merge its Cargill Crop Nutrition operation with fertilizer giant IMC Global Inc. The result was a $4 billion company (later named Mosaic) that was two-thirds-owned by Cargill, with the rest held by IMC’s shareholders. This represented the first time Cargill used a publicly traded business to raise funds in capital markets.

In March 2004 Cargill agreed to pay $24 million to settle an eight-year-old civil lawsuit charging that it and rivals conspired to rig prices for high-fructose corn syrup. That same month Cargill completed the acquisition of Agway Feed and Nutrition from Agway Inc. In 2005 Cargill bought out Dow Chemical’s interest in their joint venture Cargill Dow, which makes corn-based plastics, and it later agreed to acquire the food ingredients business of the German company Degussa AG.

Over the past few years, Cargill has made relatively small acquisitions but it has greatly expanded its involvement in biofuels such as ethanol. In 2007 Gregory Page took over from chief executive’s job from Warren Staley.

Labor:

In the United States, Cargill has collective bargaining agreements with the United Food & Commercial Workers and with the Teamsters at several of its meatpacking plants. The company’s labor relations record is mixed. In 1997 UFCW members at the Excel beef plant in Dodge City, Kansas rejected a contract offer but declined to strike. Multi-year contracts were signed with the UFCW in 2000 at the plant in Schuyler, Nebraska, and with the Teamsters in 2001 at the plant in Fort Morgan, Colorado.

The company resisted union organizing at its case-ready plants (those that produce meat in a form ready to be sold to retail customers). In May 2000 a federal judge ruled that Excel had to reinstate five employees discharged during a union organizing drive. In May 2002 Excel signed its first contract for workers at the case-ready plant in Hazelton, Pennsylvania. A new four-year pact was approved by workers in Hazelton in 2007. Later that year, a multi-year contract was signed with the UFCW at the Cargill Meat Solutions hog facility in Beardstown, Illinois.

Financial information

Detailed financial information

Total revenue:

$88.3 billion

Fiscal year:

2007

Net Income:

$2.3 billion

Location(s)

Headquarters

15407 McGinty Rd West

Wayzata (near Minneapolis), MN, 55391

United States