Cargill CEO: Governments to blame for food price hike

• Cargill CEO

Cargill CEO Gregory Page has helped keep his company out of the public eye, even though with 131,000 employees it ranks as one of the nation’s largest operations for converting corn into biofuels, as well as food for people and animals. (Bloomberg News Photo)

Talk about it

CHICAGO — Cargill Inc. Chief Executive Officer Greg Page, who runs the largest agricultural company in the United States, has a good idea whom to blame for the global surge in food prices at the end of 2010: governments.

Page urged delegates and guests at the National Grain and Feed Association convention in San Diego in March to take action. He said government hoarding was the biggest contributor to the rise in prices, which had soared 15 percent from October through January and pushed 44 million people into poverty, according to the World Bank.

“Ill-timed, ill planned and really a beggar-thy-neighbor strategy,” Page, 59, said of moves by Russia and others to ban grain exports as droughts and floods helped send stockpiles to their lowest levels in two generations.

Page warned that further disruptions might ratchet up costs so much that governments would jump in with more regulations — not only on grain shipments but also on energy, trade and financial markets. Such moves could discourage investing in agriculture and hurt the poor.

“We have to make sure lawmakers share our understanding,” he said, imploring the executives to increase their lobbying to keep government hands off agricultural markets.

Cargill is a big fan of the private sector — and of privacy, period. Founded in 1865 by William Cargill, son of a Scottish sea captain, the agricultural-commodities giant is in its seventh generation of family ownership, a record unmatched by any other major U.S. firm.

About 100 descendants of William Cargill control the company, which is based in the Minneapolis suburb of Wayzata, Minn. Shareholder equity — the difference between assets and liabilities on Cargill’s balance sheet — almost doubled to $29.5 billion during the 4½ years that ended in November.

Including its Mosaic Co. fertilizer unit, Cargill’s revenue jumped 15 percent to $91.8 billion in the nine months that ended in February, the month before Page called for antiintervention lobbying. Profit in the period almost doubled to $3.5 billion from a year earlier.

Through the planet’s food anxiety, Cargill has kept its name out of the public eye. There are no Cargill-branded products in supermarkets, and executives seldom speak with the press. Yet, Cargill has a huge hand in feeding the world. With 131,000 employees, it runs one of the country’s largest operations for converting corn into biofuels, as well as food for people and animals. It’s the No. 1 U.S. salt marketer and a top buyer and seller of cocoa and sugar. The No. 2 U.S. beef producer, Cargill can slice a cow 431 ways and fashion precise cuts so Walmart Stores doesn’t have to hire a butcher for every one of its shops.

“Cargill sells seed and chemicals to farmers, buys their grain, transports it to Cargill feedlots, kills the cattle and sells the beef,” says Dan Basse, president of AgResource Co. “They’re not part of the food chain; they are the chain.”

Former CEO Whitney MacMillan, 81, is among the biggest advocates for staying private, says C. Daniel Clemente. A Virginia lawyer, Clemente advised family members on governance for 11 years through 2005 and still speaks with James Cargill II, the founder’s great-grandson. The marriage of MacMillan’s grandfather and William Cargill’s daughter, Edna, in 1895 merged the families and initiated joint control of the business.

The Cargills and MacMillans faced a familycontrol dilemma when the biggest shareholder, 85-yearold matriarch Margaret Cargill, died in 2006. MacMillan and other elders opposed selling Margaret’s 17.5 percent stake to fulfill her philanthropic wishes, people familiar with the situation say. The opponents worried that once her shares hit the market, younger family members would support a public offering of the whole company, the people say.

Cargill instead shed its 64 percent stake in Mosaic, North America’s No. 2 fertilizer company. The split-off satisfied two sets of interests. Because Mosaic’s market value had surged to $30.5 billion in May from $6.1 billion when Margaret died, her trustees accepted Mosaic stock in exchange for her Cargill stake.

The move also defused potential support for an IPO by raising cash for family shareholders.

Family members and Margaret’s estate received Mosaic shares worth $11.7 billion in a May 25, 2011, distribution. Cargill itself added $7.3 billion to its treasury. Senior managers and an employee stock plan received a combined $400 million, bringing the split-off’s total value to $19.4 billion. “I can’t think of any other company that can release $19 billion without changing ownership,” says Mark Connelly, an analyst at Credit Agricole Securities in New York. “If Cargill hadn’t owned two-thirds of Mosaic, they’d be going public right now.”

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