27 Oct 2011 Cargill: Inside the quiet giant that rules the food business
Cargill is the world’s biggest private company. With $119.5 billion in revenues in its most recent fiscal year, ended May 31, Cargill is bigger by half than its nearest publicly-held rival in the food production industry, Archer Daniels Midland. If Cargill were public, it would have ranked No 18 on this year’s Fortune 500, between AIG and IBM. [This fascinating Fortune Magazine article looks behind the scenes into the world’s most pervasive and influential food player…] Over the past decade, a period when the S&P 500’s revenues have grown 31%, Cargill’s sales have more than doubled.
But those numbers alone don’t begin to capture the scope of Cargill’s impact on daily lives. In America, you don’t have to love Egg McMuffins (McDonald’s buys many of its eggs in liquid form from Cargill) or hamburgers (Cargill’s facilities can slaughter more cattle than anyone else’s in the US) or sub sandwiches (No 8 in pork, No 3 in turkey) to ingest Cargill products on a regular basis.
A candy bar, pretzels, soup from a can, ice cream, yoghurt, chewing gum, beer – chances are it included a little something from Cargill’s menu of food additives. Its $50 billion “ingredients” business touches pretty much anything salted, sweetened, preserved, fortified, emulsified, or texturised, or anything whose raw taste or smell had to be masked in order to make it palatable.
Despite Cargill’s extraordinary size, strength, and breadth, it has long been remarkably successful at keeping out of the public eye. But the days when the company could get away with saying nothing and revealing less are over.
“I think the world has curiosity about where its food comes from that is more earnest than it’s been in the past,” says Greg Page, chairmand and CEO, who earlier this year took the unprecedented step of allowing Oprah’s cameras inside a Cargill slaughterhouse (no video of the actual slaughtering, however.)
The simple fact is that the bigger Cargill gets, the more attention it draws.
Timothy Wise, research director at the Global Development and Environment Institute at Tufts University, points to several factors that have increased concerns about Cargill’s rising power, including recent wild gyrations in commodities markets, “sticky-high” prices at the supermarket, and the ever deeper integration of Big Ag with global financial markets.
Perhaps the most hot-button issue of all is food safety. In August, Cargill announced the largest poultry recall in U.S. history — 36 million pounds of ground turkey linked to a salmonella outbreak at a factory in Arkansas that sickened 107 people in 31 states and killed one.
“The public is justified in being wary of having any part of our food system controlled by a small number of large corporations,” says Wise.
With wariness comes intense scrutiny of Cargill’s motives and its means: from organisations like Rainforest Action Network, worried about Cargill’s impact on Indonesian and Brazilian ecosystems; from the US Congress, concerned about antitrust issues and speculative trading strategies; and from the international community.
Food security — the challenge of feeding the world — has recently risen to the top of the G20 agenda. The UN says that a billion people go to bed hungry every night, and that we need to double food production by 2025 just to keep up with population growth and better diets in the developing world — grim truths that concern Cargill deeply, whether Cargill believes that solving world hunger is its job or not.
“We’re not a philanthropy,” says Page, in one of a series of rare interviews that Cargill granted to Fortune over the past several months. “I think we have to be careful not to lay claim to an altruism that doesn’t exist.”
And then there’s climate change. It’s hard to think of an organisation anywhere in the world with a bigger stake in understanding potential disruptions to the food supply wrought by global warming than Cargill.
Page does not disagree, although his take may surprise you. “Clearly the volatility can be an opportunity,” he says, acknowledging that sharp price swings can play to Cargill’s vaunted trading expertise. Then he adds, “The big part of our business is the physical handling of tens of millions of tons of food. If we believe the world is headed toward a varied weather pattern, those services become more important.”
In other words, signs point to Cargill’s influence — and profits — continuing to grow. But is what’s good for Cargill good for the world?…..