Fortune profiles Cargill:
Cargill's roots lie in the ancient, risky business of buying, storing, and selling grain. William Wallace Cargill, the second son of a Scottish sea captain, started with a single warehouse in Conover, Iowa, in 1865. Conover is a ghost town now, but Cargill still deals heavily in grain. Wherever it grows and wherever it goes.
Cargill ships other commodities too: soybeans and sugar from Brazil; palm oil from Indonesia; cotton from Asia, Africa, Australia, and the Deep South; beef from Argentina, Australia, and the Great Plains; and salt from all over North America, Australia, and Venezuela. The company owns and operates nearly 1,000 river barges and charters 350 oceangoing vessels that call on some 6,000 ports globally, ranking it among the world's biggest bulk shippers of commodities. "In one sense, you can think of Cargill as just a big transportation company," says Wally Falcon, deputy director at the Center on Food Security and the Environment at Stanford University. "Their game is: extremely efficient, high volumes, low margins, and just being smarter and quicker than anybody else."
Sometimes the same ship that picks up a load of soybeans at Cargill's deepwater Amazon port in Santarem, Brazil, after unloading in Shanghai, will carry coal from Australia to Japan before rinsing out its holds and returning to Brazil for more beans. In fact, Cargill's ocean-transport business moves more coal and iron ore for third parties than it does foodstuffs, oils, and animal feeds for itself, by a factor of two. "From places of surplus," to quote the Cargill mantra, "to places of need."
I live in a southwest suburb of Minneapolis. Several of my neighbors work for Cargill. I am not certain I know much about what they do but I get the impression that:
ReplyDelete1) Cargill is hyper-agressive.
2) Cargill makes its money by exploiting tiny gaps in a market. They may only make a few cents a bushel but since they deal in millions of bushels, this makes them one of the largest companies in the world.
3) Cargill may be obscenely rich, but farmers would probably get less and consumers would pay more without them.
4) While many Cargill employees are traders, many others do really important work like run steel mills and cement plants.
5) Cargill is astonishingly well-connected politically in virtually every country of the world.
I'll give them credit for reinvesting in the business, as opposed to stripping dividends out.
ReplyDeleteSpeaking of steel mills, I was told they are expanding a mini mill in NW Ohio in which they own a 50% share, plus they invested in a company with a new process for getting ore out of the tailings piles in the Iron Range.
http://afarmerinohio.blogspot.com/2011/05/company-working-over-iron-ore-tailings.html
My brother is a medium-sized construction supervisor in Florida. Last time I visited him, he showed me this LUXO hanger (dedicated limo entrances, stunning waiting areas, full-hanger fire suppression, etc.) he had built for a company that bought distressed hotel properties and dressed them up for resale. It is home to three Falcon 900 EX bizjets.
ReplyDeleteRecently I was talking with my next-door Cargill neighbor and I asked him, how many jets do they own. He said three. Difference between Florida and Minnesota, I guess. Cargill is roughly 15,000 times the size of that shitty little real estate flipping operation and they get by with the same sized air fleet. (sheesh)
That is the type of operation for which I would use my Fools and Their Money (Temporarily) post tag.
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