Cargill
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| Type | Private |
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| Founded | 1865 |
| Headquarters | Minnetonka, Minnesota, U.S. ( Wayzata Post Office area) |
| Key people | Gregory R. Page (CEO) |
| Industry | Agriculture |
| Products | Crop & Livestock, Food, Health & Pharmaceutical, Industrial and Financial & Risk Management, Electricity and Gas |
| Revenue | ▲$120 billion USD |
| Employees | 160, 000 |
| Website | http://www.cargill.com/ |
Cargill, Incorporated is a privately held, multinational corporation, and is based in the state of Minnesota in the United States. It was founded in 1865, and has grown into the country's largest privately held corporation (in terms of revenue).[1] Were it a publicly held company, it would rank in the top 10 companies in the Fortune 500. Cargill's business activities include purchasing, processing, and distributing grain and other agricultural commodities, and the manufacture and sale of livestock feed and ingredients for processed foods and pharmaceuticals. It also operates a large financial services arm, which manages financial risks in the commodity markets for the company. In 2003 it split out a portion of its financial operations into a hedge fund called Black River Asset Management, with about $10 billion of assets and liabilities[2]. It owns 2/3 of the shares of The Mosaic Company, one of the world's leading producers and marketers of concentrated phosphate and potash crop nutrients.
Currently the largest privately owned company in the United States[3], Cargill declared revenues of $120 billion USD, and earnings of $3.64 billion USD in the 2008 fiscal year.[4] Employing over 160, 000 employees at 1, 100 locations in 67 countries[1], it is responsible for 25 percent of all United States grain exports. The company also supplies approximately 22 percent of the United States domestic meat market, exporting more product from Argentina than any other company and is the largest poultry producer in Thailand. All of the eggs used in McDonald's restaurants in the United States pass through Cargill's plants. It is the only producer of Alberger process salt in the U.S.A., which is highly prized in the fast and prepared food industries. It operates a unique (and antique) plant in St. Clair in the Thumb of Michigan.
Despite its size, the corporation is still a family owned business; descendants of the founder (from the Cargill and MacMillan families) own over 85% of the company.[5] This means that most of its growth has been due to reinvestment of the company's own earnings, rather than public financing. Greg Page is the chief executive officer of Cargill; he succeeded Warren Staley in mid 2007.
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[edit] History
Cargill was founded in 1865 by W. W. Cargill when he bought a grain flat house in Conover, Iowa. A year later W.W. was joined by his brother Sam forming W. W. Cargill and Brother. They built grain flat houses and opened a lumberyard. In 1875 W.W. moved to La Crosse, Wisconsin and brother James joined the family business. The city of La Crosse was strategically located at the junction of the Milwaukee Road and the Southern Minnesota Division. Sam left La Crosse in 1887 and moved to Minneapolis to manage the office there, which was identified as an important emerging grain center. Three years later the Minneapolis operation incorporated under Cargill Elevator Co., years after that the La Crosse operation was incorporated under W. W. Cargill Company of La Crosse, Wisconsin. In 1898 John H. MacMillan, Sr. and his brother Daniel began working for W.W. John Sr. would marry W.W.'s eldest daughter, Edna. Upon Sam's death in 1903, W.W. became the solo owner of the La Crosse office. John Sr. was named as general manager of Cargill Elevator Co. and moved his family to Minneapolis. W.W. died in 1909 creating a fiscal crisis for the company. John Sr. worked to resolve the credit issues and to force his brother-in-law, William S. out of the company. The current owners are descended from John Sr.'s two sons, John H. MacMillan Jr. and Cargill MacMillan Sr., and his youngest brother-in-law, Austen S. Cargill I.
John Sr. ran the company until his retirement in 1936. Under his leadership Cargill grew several fold, expanding out of the Midwest by opening its first East coast offices in New York in 1923 and first Canadian, European and Latin American offices in 1928, 1929 and 1930. During this time Cargill saw both record profits and major cash crunches. The first of these crises was the debt left by the death of W.W. The company issued $2.25 million in Gold Notes, backed by Cargill stock to pay off its creditors. The Gold Notes were due in 1917, but thanks for record grain prices caused by World War I all debts were paid back in 1915. As World War I continued into 1917 Cargill made record earnings and faced criticisms of war profiteering. Four years later as a fallout from the financial crash of 1920 Cargill posted its first loss.
One of the company's biggest criticisms has been its perceived arrogance. The MacMillans' aggressive management style led to a decades long feud with the Chicago Board of Trade. The feud began in 1934 when Cargill was denied membership by the Board. The U.S. government overturned the Board's ruling and forced them to accept Cargill as a member. The 1936 corn corp failed and with the 1937 crop unavailable until October, the Chicago Board of Trade ordered Cargill to sell some of its corn. Cargill refused to comply. Cargill was then accused of trying to corner the corn market by the U.S. Commodity Exchange Authority and Chicago Board of Trade. In 1938 the Chicago Board of Trade suspended Cargill and three of its officers from the trading floor. When the Board lifted its suspension a few years later, Cargill refused to rejoin. Cargill instead traded through independent traders. In 1962 Cargill did rejoin the Chicago Board of Trade, two years after the death of John Jr. During World War II, John Jr. continued to expand the company, which boomed as it stored and transported grain and built ship for the United States Navy.[6]
In 1960, Erwin Kelm became the first nonfamily chief executive. Aiming expansion downstream, he led the company into milling, starches and syrups. As the company got larger, it developed among the market intelligence of any in the world 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 to connect the company.[6]
When the Soviet Union entered the grain markets in the 1970s, the drove demand to unprecedented levels, to the benefit of Cargill. When Whitney MacMillan, nephew of John Jr., took over the company from Kelm in 1976, revenue approached $30 billion. When the US government put pressure on big grain exporters on allegations of manipulating the market, Cargill was a major target; however it emerged without any major changes.[6]
Tensions arose with the companies private shareholders, as Cargill typically put 80% of earnings back into the business. By the early 1990s, members of the Cargill and MacMillan families became upset that their shares in the company were only giving back mediocre dividends. Demands rose for an initial public offering to turn the company public. The company responded with an employee stock ownership plan, and in 1993 reportedly paid $730 million in cash to 72 Cargills and MacMillans in exchange for 17% of the firm, using that stake to begin the employee stock plan. The company's board of directors was reorganized to reduce the number of relatives to six, alongside six independents and five managers.[6]
Ernest Micek took over as chief executive in August 1995. Cargill underwent turmoil in the following years as its financial unit lost hundreds of millions of dollars in 1998 when Russia defaulted on debt and developing countries began to have financial issues. The commodities and ingredients business, which was 75% of Cargill's total revenue, was harmed by the late-1990s Asian Financial Crisis.[6] Revenues fell by double-digit percentages for two years in a row: from $55.7 billion in 1997 to $51.4 billion in 1998 and $45.7 billion in 1999, while net income fell from $814 million in 1997 to $468 million in 1998, and $220 million in 1999.[5] By 1999 the company had $4 billion in debt. After a reduction in previously strong [bond credit rating]], Micek announced he would step down a year early.[6]
Warren Staley became chief executive and continued expanding the company and it rebounded. By 2002, Cargill had over $50 billion in annual sales, twice the size of its closest rival, Archer Daniels Midland, and had 97,000 employees running more than a thousand production sites and out of 59 countries.[6] One June 1, 2007, Staley was succeeded by Gregory R. Page.
Cargill's quarterly profits crossed $1 billion for the first time during the quarter ending on February 29, 2008 ($1.03 billion); the 86% rise was credited to global food shortages and the expanding biofuels industry that in turn caused a rise in demand for Cargill's core areas of agricultural commodities and technology.[7]
[edit] Business strategy
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This section may contain original research or unverified claims. Please improve the article by adding references. See the talk page for details. (March 2009) |
Cargill's long-term business strategy is to shift its business from trading and processing large volumes of agricultural commodities, to higher margin activities. One of them is the research and development of advanced processing techniques, particularly at its plant in Eddyville, Iowa. For example, in a joint venture with Hoffman-LaRoche, it has developed a process for converting a waste by-product of soybean oil refining into vitamin E. It also produces fuel-grade ethanol, citric acid, and phytosterol esters from grain. The company intends to work as consultants for its customers to create new ingredients and new food processing methods.
[edit] Political and economic views
Cargill is an active proponent of free trade policies. It lobbied for China's membership in WTO, as well as for increased trade with Cuba and Brazil. Cargill's position is based on its strong support of neo-liberal economic principles. First, lesser trade barriers in countries where Cargill does business will lower prices on Cargill's products, and likely increase their volume of business. Second, the decreases in the cost of food in developing countries theoretically result indirectly in higher income per capita but lower income for local farmers. Cargill benefits from increases in consumer income, because better-paid consumers become inclined to eat a diet higher in wheat, protein, vegetable oil, and processed foods. This improves opportunities for Cargill to sell its products. Cargill's economists have reasoned that this is true of the lower income countries in particular. As a developing country grows from $1,000 to $6,000 in mean income per capita, Cargill expects the greatest profit growth from its businesses in that country.
Cargill has maintained a 100% rating on the Corporate Equality Index (CEI) released by the Human Rights Campaign since 2003.
[edit] Countries of operation
[edit] Asia
Australia, China, India, Indonesia, Japan, Malaysia, Pakistan, Philippines, South Korea, Singapore, Taiwan, Thailand, Vietnam
[edit] Africa
Cote d'Ivoire, Ghana, Kenya, Malawi, Morocco, Nigeria, South Africa, Tanzania, Zimbabwe
[edit] Central America and the Caribbean
Bonaire, Costa Rica, Dominican Republic, Guatemala, Honduras, Nicaragua
[edit] Europe
Austria, Belgium, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Netherlands, Poland, Portugal, Romania, Russian Federation, Spain, Sweden, Switzerland, Turkey, Ukraine, United Kingdom
[edit] Middle East
[edit] North America
Canada, Mexico, United States of America
[edit] South America
Argentina, Bolivia, Brazil, Chile, Colombia, Paraguay, Peru, Uruguay, Venezuela
[edit] Criticism
Cargill has been subject to numerous criticisms over a number of topics including environmental issues, contamination and humans rights abuses. Further, as a private company, Cargill is not required to release the same amount of information as a publicly-traded company and, as a business practice, keeps a relatively low profile, creating suspicion.[6][5]
[edit] Notes
[edit] References
- ^ Forbes.com - The Largest Private Companies
- ^ UKdata.com
- ^ The Ten Largest Private Companies - Forbes.com
- ^ Cargill reports fourth-quarter and fiscal 2008 earnings
- ^ a b c Caroline Daniel, Château Cargill throws open its halls, Financial Times, February 26, 2004, Accessed June 15, 2009.
- ^ a b c d e f g h i Neil Weinberg with Brandon Copple, Going Against The Grain, Forbes.com, November 25, 2002, Accessed June 12, 2009.
- ^ Matt McKinney, At $471,611 an hour, Cargill posts fine quarter, Star Tribune, April 15, 2008.
[edit] See also
[edit] External links
- Cargill official site
- Cargill history
- Yahoo! - Cargill, Incorporated company profile
- Cargill audio profile
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