Last updated: Sept 2010
Leonie Nimmo investigates Cargill Incorporated, the food company that’s profiting from rising food prices.
The world’s largest grain merchant is truly massive. Though you may never have heard of Cargill, you are likely to have consumed something that it produced, processed or distributed fairly recently. From fats, fertilizers and fnancial services, to coal, cocoa, cotton, container shipping and chickens, Cargill’s portfolio is as broad as it is deep. The largest private company in the USA, in 2009 it had a turnover of $116.6 billion. (1)
If this was Gross Domestic Product, it would have been the 54th richest country in the world, just after New Zealand. (2) But the company wields power far beyond that of nations.
Cargill is one of a terrifyingly few companies that have control of the global grain trade: as of 2007 three companies controlled nearly 90% of it. (3)
Buying where it’s cheap and selling where and when prices rise, Cargill exercises its market muscle ruthlessly. Whilst the price of staple foods, which Cargill sells, has risen dramatically in recent years, the price of tropical crops such as cocoa and cotton, which Cargill buys, have hardly risen at all. Cotton and cocoa had lower nominal prices in June 2008 than in 1995, the year the World Trade Organization was established. (4)
During the food crisis of 2008, the World Food Programme (WFP) released an urgent appeal for aid, stating that nearly a billion people faced hunger as a result of high food and fuel prices. According to US-based consumer organisation Food and Water Watch, Cargill contributed to the creation of the crisis through its dominance in the global cereal market, and its trading in food and energy futures markets. (4)
The Executive Director of the UN World Food Programme testifed to a US Senate Committee in 2008 that speculation on commodity markets had signifcantly contributed to the crisis.4 As food riots broke out in many countries, Cargill’s profts soared. It reported an 86% increase in profts during the frst quarter of 2008 compared to 2007. (5)
CEO Greg Page was unapologetic: “Cargill had an opportunity to make more money in this environment, and I think that is something that we need to be very forthright about.” (6)
Addiction and dependency
Cargill has been instrumental in the introduction of genetically engineered crops, which create a situation of addiction to fertilisers and dependency on seed companies. (7)
In 1998 Cargill sold its international seed operations to Monsanto, with which it formed a worldwide joint venture, Renessen, specialising in genetically modifed animal feed. (8) The company has refused to separate genetically modifed (GM) crops from traditional ones and due to its position as a major grain processor and distributor, this has helped to create a situation where non-GM animal feed is increasingly diffcult to come by: 85% of compound animal feed in Europe now contains GM or GM-derived material. (9) ASDA recently reneged on its commitment to source non-GM animal feed in its poultry and eggs. (10)
World Trade Oligarchy
In the United States, Cargill’s 150-year history is peppered with lawsuits, many of them related to the company’s alleged price fixing,11 and monopolistic, anti-competition activity. (12)
But internationally, the company is unlikely to face repercussions: one of its former executives practically wrote the rule book for the global food trade. Daniel Amstutz, President of Cargill Investor Services from 1972 to 1978, was the US chief negotiator for agriculture in the Uruguay round of the General Agreement of Tariffs and Trade (GATT) negotiations.
The GATT Uruguay round is widely regarded as representing the most substantial liberalisation of world trade in agricultural products and paved the way for the creation of the World Trade Organization. It also brought agriculture into the global patent regime. Amstutz returned to agribusiness as a consultant soon after, but the revolving door continued to turn...
The Corporate Colonisation of Iraq
Amstutz popped up again as a diplomat in post-invasion Iraq in 2003, placed in charge of the ‘reconstruction’ of Iraqi agriculture, much to the outrage of the international community. Oxfam’s policy director Kevin Watson said: “Putting Dan Amstutz in charge of agricultural reconstruction in Iraq is like putting Saddam Hussein in the chair of a human rights commission... This guy is uniquely well-placed to advance the commercial interests of American grain companies and bust open the Iraqi market – but singularly ill-equipped to lead a reconstruction effort in a developing country”. (13)
Cargill cashed in on the post-invasion US administration’s abolition of taxes and tariffs on imported products, fooding the market with hundreds of thousands of tonnes of wheat. According to journalist Greg Palast, “For Iraqi farmers, already wounded by sanctions and war, this was devastating. They could not compete with the US and Australian surplusses dumped on them”. (14)
The Food Aid Industry:
Greed feeding Hunger
Food aid is big business. In the USA, it has accounted for 15% of rice exports and 12% of wheat exports over the last two decades.15 Cargill has been a big benefciary: since the 1950s it has become the main contractor of US food aid funded under Public Law 480. (16)
It has been estimated that seven out of ten countries receiving this aid went on to become seven of the ten best customers for US grain.17 The US aid programme has allowed Cargill to get rid of surpluses of GM crops rejected by Europe. This has created a dangerous situation of dependency for peasant farmers worldwide.
Writing in 2000, when Ethiopia was on the brink of a famine in which eight million people faced starvation, Michel Chossudovsky described how the policies of international fnancial institutions and US biotech corporations, including Cargill, had sowed the seeds of famine in the frst place. A key element of this was the contamination of indigenous seeds and landraces with genetically engineered food aid. (18)
Deforestation and biofuels
Wherever there is an agricultural commodity with notorious issues associated with it – such as cocoa and cotton, with endemic problems of child labour in their supply chains – it seems you find Cargill. Perhaps it is no surprise, then, that Cargill is a key player in the global palm oil trade. It owns plantations, exports the product and also, through various companies, imports and trades it in the USA.
It is the USA’s biggest palm oil importer. (19) In 2003 the company claimed that it exported 11% of Indonesian crude palm oil. (20) Palm oil production in Indonesia and elsewhere has had a devastating effect on local communities and environments, while the associated deforestation and the destruction of peatland is a major contributor to climate change. In 2007 Greenpeace reported that Indonesia had become the world’s third largest greenhouse gas emitter, behind only the USA and China. (21)
Cargill vehemently denied claims made by the Rainforest Action Network in May 2010 about alleged illegal clearing of Indonesian rainforest, stating they were “categorically untrue”. (22)
The campaign group stood its ground, responding: “We stand by the evidence released in our report that Cargill’s plantations in Indonesia are cutting down rainforests, violating the Roundtable on Sustainable Palm Oil (RSPO), and are out of compliance with Indonesian law.” (23)
In Brazil, the company is implicated in deforestation associated with its soy operations. Greenpeace claims that two years after the company announced plans to build two grain silos, a $20m terminal and its own port in the heart of the Amazon, satellite images showed that deforestation rates had doubled in the region. (24)
Friends of the Earth are calling on supporters to tell supermarkets that they don’t want to eat products from animals fed a GM diet, see www.foe.co.uk/get_involved/natural_resources.html and go to ‘Ask Supermarkets to stay GM free’.
Cargill: a threat to food and farmingFood and Water Watch, download from www.foodandwaterwatch.org
Eating up the Amazon Greenpeace, download from www.greenpeace.org
Cargill – Arrogance Incorporated Corporate Watch GE Briefng Series, download from http://archive.corporatewatch.org/
Invisible Giant Cargill and its Transnational Strategies Brewster Kneen, Pluto Press 2002.
2 World Development Indicators database, World Bank, 1 July 2010 3 www.spinwatch.org.uk/latest-news-mainmenu-10/154-food-industry/4477-gmo-seeds-mncs-gaining-total-control-over-farming
4 “Cargill: a threat to food and farming”, Food and Water Watch, August 2009
5 “Agrofuels: Big Profits, Ruined Lives and Ecological Destruction”, Francois Houtart, 2010 6 www.cargill.com/news-center/speeches-presentations/trusting-photosynthesis/index.jsp
7 “Invisible Giant: Cargill and
its Transnational Strategies”, Brewster Kneen, 2002.
11 MinnChem inc vs Mosaic 2008, Food and Water Watch, op. cit.
12 Kneen 2002: 21
15 “Food Aid Project: Cargill Fact Sheet”, Kellogg School of Management
17 “Cargill - the giant among grain merchants”, Research Foundation for Science, Technology and Ecology, 1998. Cited in “Cargill – Arrogance Incorporated”, Corporate Watch GE Briefing Series
20 Brochure Cargill Indonesia, Cargill Inc., Minneapolis, January 2003. Cited in “Greasy Palms: European buyers of Indonesian palm oil”, Friends of the Earth, March 2004
21 “Cooking the Climate”, Greenpeace, 2007.
23 http://ran.org/content/rainforest-action-network-stands-evidence-cargill-destroying-rainforests 24‘Eating up the Amazon’ Greenpeace 2006