Harvest of Profits The World Empire of Cargill, Inc.

Cargill is more involved in the buying and selling of commodities than in industrial production 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) Can be compared to leading merchandising firms—would rank forth (just behind K-Mart but ahead of J.C. Penny) May 31, Cargill becomes the largest grain trader in the world with worldwide sales at about $12.6 billion May 31, 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. 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 Sought profits in the slave trade 1857 moved to Wisconsin to farm 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 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 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 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 Conspired to fix grain prices To avoid the affects of farmer discontent against big business, Cargill sought constantly expand market outlets 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 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 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 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 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 Wheat and flour jumped from 48 million bushels in 1944 to 503 million in 1948But… End of 1940’s—the resurgence of agricultural production in W. Europe lessened the demand for US grain End of 1940’s—the resurgence of agricultural production in W. Europe lessened the demand for US grain

Public Law US forged law of gov’t concessional financing for continued expansion of markets US forged law of gov’t concessional financing for continued expansion of markets First: enabled the company to directly increase its export sales 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 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 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 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 $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 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 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 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 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) 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 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 1950’s- Used inland waterways for grain transport- making Cargill one of the largest shippers in the US “Rent-A-Train” (RAT): Rented the engine, train crews and railroad right-of- way for extended periods of time at special rates “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 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 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 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 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) 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 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 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 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 finance port facilities Grant tax concessions for new capital investments 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 Maintain a legal and financial system that is essential for the survival of Cargill and other monopolistic corporations