Cargill and food prices
We've written a lot about Cargill, the privately-held conglomerate that is key oligopoly worldwide food industry. It is constantly in the news. It has been recently declared Australia's leading whet exporter. It was the victim of partial takeover (of its rice operations) in Hugo Chavez's Venezuela, where it had been the largest food distributor, with over one fourth of Venezuela's food imports.
Cargill more than any current American company (except for the shaky financial sector) is at the center of the world economy than any other US company. It is in every way in the middle of the current world food crisis.
As one source notes
The food giant employs or exploits over 160,000 employees at 1,100 locations in 67 countries. It is responsible for 25% of all United States grain exports. The company also supplies approximately 22% of the United States domestic meat market, exporting more meat product from Argentina than any other company and is one of the world's largest poultry producers. All of the eggs used in McDonald's restaurants in the United States pass through Cargill's plants.
Another article notes that
With $120 billion in annual revenues, Cargill is bigger than the economies of more than two-thirds of the world's countries, including Kuwait, Peru and Vietnam. Its sales exceed those of Disney, Kraft Foods and PepsiCo -- combined -- and it is nearly twice as large as its next closest competitor, Archer Daniels Midland.
The same article sees the consequence of this size on the consumer
The food system is so centralized that, when a food crisis hits like it did this year, we are less able to react," said Eric Holt Gimenez, executive director of Food First/Institute for Food and Development Policy. "We get these tremendous spikes in commodity prices. ... It also shows up at the cash register."
It's one reason why prices of many staple food items, including beef, rice and flour, have remained high even though the prices of the underlying commodities have plunged since the spring, said Timothy Wise, deputy director of the Global Development and Environment Institute at Tufts University. "Once prices go up, they tend not to fall back to their previous levels for quite some time," he said.
Closely held, Cargill can get through the ups and downs of the economy far better than public rivals. The company is also so widespread and so involved in all aspects of its indutry (supplying farmers, manufacturing food products, and distribution) that itis extramely resilient. And while people may stop buying houses, cars, or computers, they'll keep buying beef, wheat, and eggs even in teh worst of times.
