My, but how things can change in one year.
One year ago, The Eqiuery shared with our readers a press release from Land O’Lakes (which owns Purina Mills horse feed) announcing that it had a signed a letter of intent to acquire Southern States Cooperative, Inc.’s, animal feed business. The purchase was expected to be completed in January 2017.
But that did not happen.
However, on September 22, Cargill acquired the animal feed business of Southern States Cooperative, Inc. Cargill, which also owns Nutrena feeds, is an international ag-nutrition business with more than 20,000 employees at more than 275 facilities in 40 countries.
Under the agreement, Cargill purchased the assets of Southern States Cooperative’s animal feed business, including seven feed mills and its portfolio of products, brands and customer and supplier relationships. The other segments of Southern States Cooperative’s business – retail, farm supply, energy, and agronomy – are not part of the transaction.
According to a statement released by Cargill, the acquisition of Southern States animal feed strengthens Cargill’s distribution and go-to-market capabilities in the Southeast, Mid-Atlantic and Northeast regions of the U.S., and provides a pathway for continued growth across the region. In addition to the acquisition, Cargill has completed a long-term supply agreement with Southern States for Cargill to supply its retail stores with Southern States branded feed.
“We believe that our combined business will provide unique benefits to our members and customers,” said Jeff Stroburg, President and CEO of Southern States Cooperative, Inc. “We’ve brought together two best-in-class feed companies to develop solutions to meet their needs. We look forward to growing the Southern States feed business with Cargill as our partner.”
According to the September 5, 2017 edition of Forbes, Cargill is the largest privately-held corporation in the United States (ahead of Koch Industries), and has been for over 30 years, with over $109 billion in revenue for the current reporting year.
According to Fortune Magazine:
But those numbers alone don’t begin to capture the scope of Cargill’s impact on our daily lives. You don’t have to love Egg McMuffins (McDonald’s buys many of its eggs in liquid form from Cargill) or hamburgers (Cargill’s facilities can slaughter more cattle than anyone else’s in the U.S.) or sub sandwiches (No. 8 in pork, No. 3 in turkey) to ingest Cargill products on a regular basis. Whatever you ate or drank today — a candy bar, pretzels, soup from a can, ice cream, yogurt, chewing gum, beer — chances are it included a little something from Cargill’s menu of food additives. Its $50 billion “ingredients” business touches pretty much anything salted, sweetened, preserved, fortified, emulsified, or texturized, or anything whose raw taste or smell had to be masked in order to make it palatable.
Oh, but there is more!
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 ocean-going 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.
Farmers in many of the 63 countries where Cargill operates can still buy everything they need to plant their crops and feed their livestock from a local Cargill rep, as well as crop insurance, hedging instruments, and marketing advice.
The company has a long, if under-appreciated, tradition of developing innovative new businesses. Cargill was the first commodities trader to set up shop in Geneva in 1956; others followed, and today Geneva is the center of the commodities-trading universe. In 2003, Cargill created an independent subsidiary called Black River Asset Management, a $5.6 billion hedge fund that leverages the company’s unmatched global intelligence-gathering capability to make big bets on commodities and land on behalf of pension funds and university endowments. Among Cargill’s many units is one, growing 15% a year, that’s dedicated to replacing petroleum-based oils and lubricants with products made from plants. And the company recently brought to market a new no-calorie sweetener, Truvia, made from the white-flowered stevia plant, that has quickly become the No. 2-selling sugar substitute in the U.S. “We like to add new capabilities in the same way that we like to expand into new geographies,” says Cargill’s British-born vice chairman, Paul Conway.
One business Cargill is not in, curiously, is farming. With the exception of two large palm plantations in Indonesia, Cargill does not own land. That’s partly a capital-deployment choice, much like its decision to charter, not own, ships. But it’s more fundamental than that. “They’re not corporate farmers,” says Shonda Warner, a former Cargill trader who went on to Goldman Sachs and now runs an investment firm, Chess Ag Full Harvest Partners, that buys farmland. “Farming is not their business. Grain handling and grain trading — trading the produce — is their business.”
(From Fortune Magazine October 27, 2011)