Cargill Has The Home Field Advantage In North America
Cargill’s most active continent is America. They have the home field advantage. After starting their company in the United States of America they expanded operations across the border to Canada within a few years. This expansion made perfect sense as the two grain markets are similar and tightly integrated.
So, what is Cargill doing to innovate within North America?
Not much. They are not making any drastic moves or acquisitions. Obviously, a company of that size is not simply sitting still but they are not doing much to get excited about. Just typical minor moves. There are several potential reasons behind the lack of activity.
Cargill does need to watch out for the Federal Trade Commission and avoid becoming a monopoly. If they acquire too much of the market they will be subject to massive fines and will have to revoke their acquisitions. At any given point, a company can only occupy 50% of the market. The FTC does this to uphold the ideals of capitalism. The fact that Cargill has to even consider this point shows you just how successful they are in capturing their market.
In North America, meat processing is a large part of Cargill’s North American strategy. However, they have not been marred by negative press or incidences. In 2012 Cargill voluntarily recalled nearly 30,000 pounds of beef which may have been contaminated with Salmonella.
Cargill also has their hands in Salt production. They purchased the Leslie Salt refining company in 1978 and have been making salt ever since.
If something is needed to make food in North America, then you can be almost sure that Cargill is involved in some shape or form. Whether it be shipping, grain production, meat production, salt production, storage, or refinement. Cargill has it hands in the process somewhere.
The North American sector has been the mainstay of the Cargill profit margins for decades. Cargill quickly made its way to Europe and is now making a big push towards the Asian markets. These expansions are funded by the consistency of the North American profits.
One of the biggest advantages that Cargill has in operating in North America are the vast tracts of farmland and the entire culture surrounding the farming community. Being based in Minnesota, Cargill rose from this culture. Cargill understands the culture. More than that culture, they know how the world is fed. No other company has such a big impact on how much our groceries cost; also, known as the grain and meat markets.
While Cargill started in the grain market, they have since expanded to every single component of food production. All of this started in North America. Therefore, it would be logical to say that North America feeds the world.
This is not actually true, but North America does a lot to feed the world and Cargill has taken advantage of that fact. Considering the fact that most of the world does not live in North America, it behooves Cargill to expand its influence to other more populated parts of the world as is evidenced by their expansion to Asia and their long-time infrastructure in Europe. Cargill has always had an aggressive expansion policy which is only benefitting them.
One thing that a lot of people don’t realize about Cargill is that they are not farmers. They simply trade, ship, and store the produce- they don’t actually own land- not because they don’t understand it, but rather as a capital deployment choice. Cargill would rather take the grain of farmers and ship it to markets that need it more.
However, Cargill also does not own ships, rather it charters them. They have owned ships in the past and may own them again in the future. They do not own any currently; which is interesting considering many consider them a shipping company. What Cargill does is much more complex than that. When they started in the 1800s Cargill was a family company (still is) that had a single grain elevator and would buy grain from surrounding farmers. Then they would sell it. In the century since then they have expanded to many different industries. All related to food.
If you eat at McDonalds, then you have had Cargill eggs and Cargill burgers. No other company in the United States can slaughter as much meat a day as Cargill. But with great power comes great responsibility. As people start to care more about where their food comes from, Cargill needs to hold their practices to a higher standard than they ever have.
On top of the increasing social responsibility comes the fact that the population is increasing at an exponential rate. The UN says that we need to double our food production by 2025 just to be able to feed the world, that’s despite the fact that currently a billion people go to bed hungry.
When speaking to Forbes, the CEO of Cargill stated that “Cargill does not have altruistic motivations”. Basically, he’s saying that despite having this enormous amount of power, it will continue to be concerned with profits, just like every other company. Do not look for Cargill to do anything that will hurt its bottom line if it can avoid it.
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