Oligopoly brief: Cargill
Cargill is a silent giant, even though at over $50 billion in revenue, it's one of the top 20 US companies. It has only a few products that consumers know about, yet it's on of the most powerful oligonomies in the world, especially in the areas of trading and processing agricultural commodities. It sits in the advantageous and low-risk position between farmers and ranchers on one side and food manufacturers and retailers on the other. It has grown rapidly, continues to expand, and is well protected against declines in any single sector or national economy. In fact, like other multinationals, it can play off Brazilian orange growers against Florida ones, US wheat growers against Russian ones, German oilseed farmers against Australians.
Founded as a grain storage company in 1865, Cargill is now the largest private corporation in the US: 85% of the company is owned by the heirs of the founders. It's a leader in a number of markets: the food production and processing, commodity trading, feed production, fertilizer production, and is expanding into other national resources. It steadily adds services from storage to transportation, from finance to venture capital, all focused on the central areas of its expertise.
While Cargill has some presence on retail shelves (with meat and salt products), it is even more important as a buyer, shipper, and processor of materials that are used by other companies.
What follows is a brief description of the areas the company dominates.
Food
Excel Corporation is Cargill best-known interface to consumers. It is the #2 meat processing company in the US, second only to Tyson. The company ships beef and pork to both the grocery market and the food processing industry. Its retail beef brands include SterlingSilver, AngusPride, Certified Angus Beef, Tender Choice, and Excel Ground Beef. Its retail pork brand is Sterling Silver Pork. Excel was bought by Cargill in 1979. It now has divisions in Canada and Australia. Cargill also owns Caprock, a major beef feedlot operation.
Cargill is the #2 turkey processor in the US. Cargill turkey production involves two brands: Honeysuckle White and ShadyBrook Farms. Both package and sell fresh turkey, ready-to-cook turkey-based products (like sausage) and turkey-based deli to grocery stores. In 1998 Cargill acquired Plantation, a Texas-based turkey processor (#11 in the US at the time). It sells turkeys and chickens in the UK and France, using the brand Sun Valley Foods.
Sunny Fresh processed egg products are sold to food manufacturers and food service customers.
Emmpak Foods is another Cargill-owned US meat processing company. One division, Emmber Foods, is a supplier of delicatessen meats. Wis-Pak produces frozen ground beef patties and specialty ready-to-cook foods. Wispak Transport is a trucking company that specializes in bringing Wisconsin products (including Emmpak's own) in refrigerated trucks across the US. Peck Meat Packing is a beef slaughterhouse.
Food Products
Cargill Food Products division processes and sells an amazing variety of food products, generally as supplies to food manufacturers.
One of its biggest operations is its Corn Wet Milling businesses, which produces sweeteners, food and industrial starches, various starch derivatives and wheat proteins. It has plants in the US, Western Europe, Turkey, Poland, and Russia. It is #2 in the world in this area.
Through its French-based Cerestar division (acquired 2002), it produces a wide variety of starch-derived products for the food, paper, chemical, and pharmaceutical industries. Cargill is the #1 company in the obscure but very large and profitable starch industry, with corn syrup, sugar alcohols, and other sweeteners.
Cargill also:
- produces dry corn (maize) products such as grits, corn meal and flour (#2 in the world)
- mills wheat flour in the US, India, Argentina, Brazil and Venezuela and produces pasta in Venezuela (#3 in the world).
- processes and sells malt for brewing, distilling, and food processing.
- processes cocoa through its Cargill Cacau and Gerkens Cocoa divisions. It also supplies chocolate products to the food industry through its Wilbur Chocolate Company.
- makes fruit juice from oranges in Brazil and the US and apples in Chile.
- processes peanuts and hazelnuts.
- makes oil and meal from soybeans, sunflower seed, rapeseed, peanuts, flaxseed, corn, palm, and cottonseed, as well as copra.
- processes soy flour, vegetable protein and flavored soy protein.
- manufactures Diamond Crystal salt products, for both the food industry and retail markets.
- manufacturers citric acid and lysine.
Animal feed
Cargill is the world's #2 supplier of livestock feeds. In 2000, the company purchased Agribrands, a major feed company, and joined it with Cargill Animal Nutrition. They have a total of 178 plants in 26 countries. The Animal Nutrition company has divisions that sell feed for beef, pork, dairy, poultry, and aquaculture operations. Cargo sells consulting services and feeding programs to farmers. They sell salt for animal feed, under the brands Champions Choice. They also sell phosphates for animal consumption.
Heavy industry
In recent years, Cargill has extended its interest into other manufacturing areas, away from the food industry.
North Star Steel a steel minimills in the US. It supplies specialty steels and wire rods, and has a joint venture in rolled steel with Australian BHP Steel. It also ahs an allied steel recycling company. Cargill also owns Steel and Wire service centers that produce semi-finished steel for industry.
Cargill Corn Milling produces industrial starches used in the manufacture of paper and other products. It also produces Ethanol.
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Cargill also sells rock, solar and process-evaporated salt, used for industrial production and also for municipal ice melting. It controls 10% of the world's salt supply.
Cargill mines phosphate and manufactures phosphate fertilizers; it also makes nitrogen fertilizer.
Cargill Industrial Oils & Lubricants offers lubricants and specialty chemicals for paints and coatings, inks, and pharmaceuticals.
Commerce
Cargill is a major merchandiser of a number of commodities, both agricultural and non-agricultural.
It is the #1 seller of grains in the world, followed by Archer Daniels Midland. In 1999, it bought the grain trading operations of its biggest rival, Continental Grain Company, The company now handles around a third of all US grain exports. It owns a variety of grain elevators through both North and South America. It also owns transportation systems for shipping these products. Cargill is a major supporter of genetically modified (GM) grain.
It is also a leading trader in oilseeds and soybeans (40% of US exports).
It is a leading trader of cocoa and cocoa products, with 40% worldwide market share.
Cargill Cotton buys and sells cotton from the US, Mexico, and Africa.
The company is a major trader in the areas of rice, palm and coconut oil, tallow, and sugar.
Cargill's Energy Division and Cargill-Alliant (acquired 2002) deal in crude and refined petroleum products, natural gas and electricity. The company also has risk- and asset-management programs for electrical companies.
Cargill Ferrous International trades products ranging from pig iron to finished steels.
To support its commerce, Cargill has its own transportation fleets, including trucks, railcars, and ships. Its Greenwich Marine division handles shipping and ship brokering. Its Rogers Terminal & Shipping and G&M Stevedoring provides freight handling services in the US. The Cargo Carriers group operates cargo barges in the US.
Support services
Cargill Investor Services is a commodities futures broker.
Cargill Ventures is Cargill's investment company with investments in technology for supply-chain management, food processing, animal husbandry, and materials sciences. In this way, Cargill gets in on the ground floor of innovation in its core industries.
Cargill's biosciences group develops new agricultural products based on the raw materials it processes.
Cargill's Financial Markets group specializes in trade-oriented finance.
