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Cargill CEO plots new course for agribusiness giant

(Tuesday, Nov. 19, 2002 -- CropChoice news) -- The following stories related to Cargill are presented courtesy of the Agribusiness Examiner (http://www.ea1.com/CARP).

BUSH NAMES CARGILL EXECUTIVE TO REPRESENT "FARMERS" ON U.S. INTERNATIONAL TRADE COMMISSION DOW JONES NEWSWIRES: President George W. Bush formally nominated Daniel Pearson yesterday to fill a seat at the International Trade Commission, a move that could clear the way for another ITC nominee delayed since June.

Pearson's career at Minneapolis-based agribusiness giant Cargill may provide agricultural expertise at the ITC as requested by Senate Finance Committee members who said they would oppose another pending nominee, Charlotte Lane, until the commission better represents the farming sector.

Sen. Bob Graham, Dem.-Florida, who put a hold on Lane's nomination, has requested a meeting with Pearson to discuss "agricultural issues and their representation at the International Trade Commission," said Graham spokesman Paul Anderson. The president has nominated Lane, a West Virginia public service commissioner, and Pearson to fill two empty seats on the six-member ITC board.

Sen. Charles Grassley, Rep-Iowa, who takes over as chairman of the Finance Committee in January, has echoed Graham's concerns about a lack of ITC representation for farmers who account for more than $50 billion in annual U.S. exports. The senators have cited 18 U.S. antidumping orders and several pending cases involving farm products, as well as an expiring "peace clause" with the EU that could lead to a surge in agriculture trade disputes at the World Trade Organization after December 31, 2003.

Pearson would serve a nine-year term expiring June 16, 2011. At Cargill, he has most recently served as assistant vice president for public affairs and has been a policy analyst in the public affairs department since 1987, focusing primarily on trade policy issues. From 1981 to 1987, Pearson was the agriculture legislative assistant to U.S. Sen. Rudy Boschwitz and worked on a family farm in Minnesota in 1979 and 1980. Pearson earned a bachelor's degree and Master's degree in agriculture economics from the University of Minnesota.


Neil Weinberg and Brandon Copple, Forbes Magazine: Down a two-lane highway that winds through oaks and evergreens 25 miles west of Minneapolis, a secluded access road turns off to the south and is marked only by a small sign: "Cargill Lake Office." There near the shores of Lake Minnetonka, amid the sedate elegance of an antique French-style mansion, Warren Staley plots a revolution at the most dominating--and obsessively private- --- company on the planet.

On the face of it Cargill looks like the last business in need of a shakeup. Earnings more than doubled last year. At $50 billion-plus in annual sales, Cargill is twice the size of its closest rival, Archer Daniels Midland, and bigger than Procter & Gamble or AOL Time Warner or Merrill Lynch.

In sales Cargill is the 19th-largest company in America. Its 97,000 employees run more than a thousand production sites and operate out of 59 countries. They feed the world's herds and fertilize its crops. They store the harvest, process it and transport it around the globe. They finance and hedge the risk.

Cargill, or farmers working for it, raise 17% of the world's turkeys. In the U.S. it controls 22% of beef production and 25% of grain and oilseed exports. Its vast financial trading arm is a leading commodity broker and a heavyweight in sovereign debt, having reportedly controlled one-quarter of Russia's bond market. Is this behemoth too damned big for its own good? Is it too big for the good of the country?

Such suspicions run deep because Cargill goes to such lengths to keep its profile low. Some foreign outposts bear no company shingle. Its annual report contains no financial tables. Discretion is so deeply woven into the company that even former Cargillites shy away from public comments about their old employer --- compliments included. Cargill has been incomparably adept at growing without having to go public and making all the compromises that would entail.

"I'd hate to have to manage this company worried we'll miss an earnings forecast by a penny a share and have 40% clipped from our value," says Staley. "It's a great advantage being private, with shareholders who understand agriculture is cyclical, returns are lumpy and not every risk will go our way."

C. Daniel Clemente, a Virginia lawyer who is a Cargill family trustee, says the company is a paragon of how to stay out of the public equity markets for generations. "Cargill should be the Harvard Business School model for how to stay private," he says.

Cargill, founded in 1865 by William and Samuel Cargill, sons of a Scottish sea captain, started out as a lone grain-storage flat house in a frontier town in Iowa. Over the decades Cargill grew like bamboo, silently snaking its roots below ground only to shoot up in unexpected places and redraw the landscape.

Sprouting from the grain trade, it spread its tendrils into farming, milling, flavoring, a fleeting stab at energy trading and a bizarre global mishmash of seemingly unrelated ventures, from steelmaking to viatical financing to ownership of a casino in Las Vegas. Cargill let these businesses operate separately and autonomously, each one unaware of (or unconcerned with) goings-on elsewhere in the empire.

No more. Staley, 60, chief executive since 1999 and five years from company-mandated retirement, wants to reshape Cargill into a more sensible giant with a sharper focus on its origins --- the food business --- and new cooperation. "To grow our opportunities we have to shrink our sandbox," Staley says in a rare interview. "That means telling our businesses, `We won't starve you, but we may shoot you.'"

That is a stunning threat in a firm where lifetime employment is the norm, especially in the highest echelon, and where employees boast that their blood runs Cargill green. Staley is shaking the place up. He has bumped dozens of managers. He is drawing new talent via acquisitions and new hires. "Making sure the right people are on the bus and in the right seats" is how he puts it.

In three years Staley has jettisoned $2 billion in businesses, from steel-pipe making to coffee trading. He has spent a few billion dollars buying competitors in key markets, building up Cargill's position as the nation's biggest flour miller and number-two turkey producer, and as the largest grain merchant and among the biggest producers of vegetable starches in the world. Staley's shopping spree will continue for a while, bankrolled by more asset sales, $700 million in cash and annual cash flow from operations of $2.3 billion. "We're keeping things bubbling," he says. "Fortunately, cash is king, so it's a very interesting time for people like us."


  • 1865-1890

    William W. Cargill begins operating grain-storage flat house in Conover, Iowa Expands to 71 grain elevators, two flour mills

  • 1909

    Willliam's son-in-law John MacMillan Sr. takes over after rescuing firm from near-bankruptcy.

  • 1928-1929

    Sets up first foreign operations in Canada, Italy

  • 1938

    Barred from futures trading at Chicago Board of Trade.

  • 1942-43

    Becomes Navy shipbuilder, enters soy-processing business

  • 1953

    Loads first bulk corn shipment in Brazil's interior.

  • 1955

    Sets up financial unit in Geneva

  • 1968-1969

    Enters Korea and Taiwan.

  • 1974

    Gets into steelmaking, cattle feedlot businesses.

  • 1993

    Cargill, MacMillan families sell 17% of firm to employees.

  • 1999

    Launches drive to develop high-value-added foods