Food/Beverage

Cargill Inc.

Last edited by Phil Mattera on March 27, 2010 - 2:53pm
Company Snapshot: 

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. Amid soaring commodity prices, Cargill's profits have been growing at an astounding rate.

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.

Profile editor: 
Phil Mattera
Number of employees worldwide: 
158,000
Chief executive officer: 
Gregory R. Page
Website: 
http://www.cargill.com
Net Income: 
$2.3 billion
Total revenue: 
$88.3 billion
Corporate accountability
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.

U.S. occupational safety and health issues:

In 1997 Cargill’s Ladish Malting unit in Wisconsin was fined $450,000 for criminal violations in connection with the death of a worker who fell from a grain elevator fire escape. In 1998 Excel agreed to pay $9 million to settle a lawsuit brought by worker seriously injured at Fiona, TX plant in an accident involving a scalding-hot lye solution.

In 1999 OSHA cited Excel for 45 violations at a plant in Fort Morgan, CO and proposed $315,000 in penalties. In 2006 Cargill was fined by Iowa state investigators in connection with a fatal accident at a meat processing plant.

International:

The company is also named in a 2005 lawsuit filed by International Rights Advocates for their use of cocoa beans produced by child labor in West Africa. The lawsuit was filed under the Torture Victims Protection Act and the Alien Tort Claims Act. In October 2007, Cargill announced that it would institute a cocoa certification program with UTZ certified which will certify their cocoa beans to the farm or cooperative level, but details on the certification system are currently being developed.

Environment and product safety: 

Cargill has a less than exemplary history of environmental compliance. In 1992 the Council on Economic Priorities (CEP) said that the company had the worst environmental record in the agribusiness industry. Cargill’s record was tainted in part by the 1988 spill of 40,000 gallons of phosphoric acid by its Gardinier Inc. subsidiary into the mouth of the Alafia River in Florida. Gardinier agreed to pay a $2 million fine for the accident, which killed a large quantity of fish.

After the CEP’s designation, Cargill reportedly began taking steps to clean up its environmental practices. Yet it still had to contend with legacies of past practices in its industrial as well as its agribusiness operations. In 1995, for example, Cargill and other companies agreed to pay for the cleanup of a Superfund site along with Fox River in Illinois, where toxic chemicals had been dumped for many years.

Looking at the more recent past, Cargill’s North Star Steel subsidiary agreed in 2001 to pay $7.7 million to settle allegations that it misled Arizona officials about emissions from the company’s plant near Kingman. That same year, Cargill agreed to pay an administrative penalty of $60,000 to Linn County, Iowa, for failing to file required air pollution control reports.

In 2002 Cargill Pork agreed to pay a $1 million fine for the illegal dumping of hog manure at its facility near Martinsburg, Missouri.

In 2004 a Cargill fertilizer plant in Hillsborough, Florida dumped about 60 million gallons of toxic waste water into a creek that feeds into Tampa Bay. The company later paid a state fine of $270,000 for the incident.

In 2005 Cargill signed an agreement with the U.S. Department of Justice and the Environmental Protection Agency that settled charges that the company’s plants throughout the country had violated the Clean Air Act. Cargill agreed to pay a fine of $1.6 million and to spend $130 million on pollution reduction.

Cargill Salt’s plant in Newark, California has been the site of a series of spills of toxic brine into a canal. The company has been fined several times over the incidents, the latest being a $228,000 penalty in late 2007.

Cargill has been targeted by Greenpeace for allegedly encouraging destruction of Brazilian rainforest to allow for expanded soybean production. In May 2006 Greenpeace protesters dumped soybeans at a Cargill office near London and demonstrated at an Amazon River port in Brazil. Two months later the company responded to the pressure by saying that it would refuse to purchase soybeans grown on newly deforested land in the Amazon region.

Product safety:

Like other major meat processors, Cargill’s beef, pork and poultry operations have had problems with contamination and have periodically had to recall large quantities of food. In late 2000 Cargill had to recall nearly 17 million pounds of turkey products after an outbreak of listeria that was tied to the company’s plant in Waco, Texas. In late 2007 Cargill announced two separate recalls of ground beef totaling nearly 2 million pounds after outbreaks of e.coli poisoning. The recalls included beef that had been treated with carbon monoxide—a controversial process that makes meat look fresher for a longer period.

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History

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.

Financial information
Fiscal year: 
2007
Fiscal year: 
2007
Major lines of business/segments: 

Cargill organizes itself in five major areas:

Agricultural Services helps crop and livestock producers with grain storage, marketing, animal nutrition, etc. This segment includes Renessen Feed & Processing, a biotechnology joint venture with Monsanto.

Food Ingredients and Applications “serves global, regional and local food manufacturers, food service companies and retailers with food and beverage ingredients, meat and poultry products and new food applications.” The ingredients include grains, oils, syrups, sweeteners, acidulants, etc. Included in this segment is Horizon Milling (a flour milling joint venture with CHS Cooperatives), Sunny Fresh egg products, and Sun Valley poultry products as well as Cargill’s beef and pork operations.

The Industrial segment “supplies customers worldwide with fertilizer, salt and steel products and services, and develops industrial applications for agricultural feedstocks.” The fertilizer operations are conducted through the Mosaic Company, in which Cargill is the major investor but which also trades on the New York Stock Exchange.

Origination and Processing “connects producers and users of grain, oilseeds and other agricultural commodities through origination, processing, marketing and distribution capabilities and services.” This segment includes Cargill’s global cotton and sugar operations.

Risk Management and Financial “provides Cargill customers and the company with risk management and financial solutions in world markets.” This segment includes the company’s trading operations for coal, petroleum, natural gas and electricity.

Specialized Information
More detailed market share/concentration data: 

According to data compiled by Mary Hendrickson and William Heffernan for the National Farmers Union, Cargill ranked as follows in key U.S. agricultural markets:

No. 2 among beef packers

No. 3 among beef feedlots

No. 4 among pork packers

No.3 among turkey producers

No. 1 in flour milling