The “C” in the ABCD of Agriculture Behemoths

Cargill is one of the biggest companies in the agriculture industry. It was founded in Minnetonka, Minnesota. Most of their business comes from the purchase and sale of grain. They are the largest privately held company in the United States. If they were publicly traded, they would rank #12 on the Forbes list behind McKesson and ahead of AT&T. Basically they are huge.

They do not just buy and sell grain. They also raise their own livestock, buy livestock, produce feed ingredients, trade in energy, steel and transport. They have their fingers in many jars. They operate globally, with operations in every continent except Antarctica (maybe they can expand)! Nowadays the company produces feed for animals, sells grain to producers, buys grain from producers and sells and buys livestock to name but a few services.

The company started out as a family owned business. They first bought a single grain flat house, then a lumberyard. Since then they have expanded exponentially. They started in 1865 and have been going strong ever since.

Because Cargill is a privately held company they do not have to release the same amount of information as a publicly traded company would. Couple that with the fact that they try to keep a low profile and you get a company that is private. Outsiders do not know much of what goes on within Cargill. The company plays its cards close to the chest.

So how does this company effect the average farmer? In almost every way imaginable. They are massive and influence so many industries. A whole article could be dedicated to each industry that Cargill is involved in. In fact, that’s exactly what we’ll do.

Cargill does not operate as a normal company would. Since they are privately owned they do not have any shareholders that they are beholden too. As such, they do not have to release the same amount of information to the public and are able to operate with more autonomy.

In 2012 Cargill launched their specialty Asia operations to gain ground in China and India. They sell specialty food ingredients and application capabilities. These will include texturizers, health and nutrition ingredients. Cargill is clearly making a strong push to get into the Asian market. The only surprising thing about this move is that it didn’t come sooner. China alone has more people than the Americas-both of them. That’s not even counting India which also has more people than both Americas. Those two countries alone have 37.8% of the world’s population. That number of people all need to eat. As the standard of living in China grows you can expect them to want more varied and specific food choices.

For example, a recent survey from Mintel showed that 75% of Chinese people want to buy drinks with natural ingredients. That desire for natural ingredients gives Cargill the opportunity to take what they learned in other countries-such as the United States- and apply it to these markets.

This is not to say that Cargill is just now getting into Asia. Cargill is setting up its specialty division so that they can have more focus on the region, so that they can expand there and have culturally appropriate products. Culture plays a huge role when people are choosing what products to purchase. With Cargill setting up their specialty division they are minimizing the communication and cultural barriers.

This is telling the world that they are going to focus on Asia and so they should! Obviously, there is a massive population which gives them more customers, though there are major changes happening in the region that increase the demand for the products that Cargill sells.

Being an American company, Cargill understands what western countries eat. As China and India revolutionize themselves, they modernize and the populations tastes will expand, much the same way that western countries have different types of food. These countries will have expanding tastes, and someone needs to provide the supplies to make that new food. Cargill is positioning themselves to be the provider of those resources in Asia.

China and India aren’t the only countries in Asia. Cargill also recently purchased mills and production facilities in countries ranging from Vietnam to Indonesia. Their Asia specialty unit is already busy with bringing those factories and storage facilities online and becoming productive.

Cargill will be an interesting food and grain supply company to keep an eye on in the coming years as they expand into more industries becoming more competitive.

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