Cargill Profile 27 December 2005

The Cargill File:

Since Cargill continues to lead the way to the promised land of the food industry, we have decided to consolidate items into larger analytical pieces that will be published from time to time instead of reporting the latest dance of the giant step by step. This material will also appear on our website under “Cargilll Profile” as a separate blog page to make it more available to Third World resisters.

Invisible Giant Joins Visible Giant in Plastic

The biggest agribusiness and the largest food distributor in the US are now doing business together. SAM’S CLUB, a division of Wal-Mart Stores, started using Cargill’s NatureWorks PLA® for fresh-cut produce packaging at SAM’S CLUB and Wal-Mart Super Centers in November. The clear, thermoformed packaging, replacing conventional packaging for just four items, will translate to more than 100 million containers per year for Wal-Mart Stores. “With this change to packaging made from corn we will save the equivalent of 800,000 gallons of gasoline and reduce more than 11 million lbs. of green house gas emissions from polluting our environment,” said a SAM’S CLUB spokesman. A Cargill NatureWorks spokesman pointed out that “The cost of our raw material, essentially corn, has remained stable for decades.”

According to Cargill, “the technology to produce NatureWorks PLA essentially harvests the starch stored in corn into natural plant sugars. The sugar is then fermented into lactic acid, which is used to create a clear plastic called polylactide (PLA) that can be shaped into a variety of bottles, containers, trays, film and other packaging. Its production uses 68 percent less fossil fuel resources than traditional plastics.” It is marketed under the NatureWorks PLA and Ingeo™ fiber brand names and can be disposed of of in industrial composting. – cargill.com, 21/10/05

For a catchy little promo, visit www.NatureWorksPLA.com.

Re-aligning its financial operations/manipulations

Surely Cargill was aware of the condition of its buyer when, at the end of last August it sold its London-based commodity futures brokerage business, Cargill Investor Services, to New York futures broker Refco Inc. Refco paid $208 million in cash upfront and promised a payment of at least $67 million and as much as $192 million, depending on the performance of the business over two years. The sale of Cargill Investor Services was made with the agreement that Cargill would continue to clear trades through its former unit for five years

A bare two months later (October 18^th) Revco declared bankruptcy – the fourth-largest Chapter 11 filing is in US history. The company listed $48.6 billion in liabilities and $48.8 billion in assets. The bankruptcy came after the arrest of former Refco CEO Phillip Bennett on charges of hiding $430 million in debt that he owed the company.

Man Group plc, the world’s largest listed hedge fund firm, then acquired the customer accounts, balances and certain other assets of Refco's US operations, comprised primarily all of the business and employees of Refco's US regulated futures and securities businesses as well as elements of their Foreign Exchange businesses.

– Star Tribune, 21/10/05, FIW 27/10/05, Man Group plc press release 28/11/05

Cargill to build sugar refinery in Louisiana

Cargill Sugar North America announced in November a 50-50 joint venture with Louisiana Sugar Cane Products Inc. to build a $100 million sugar refinery on Cargill's 200-acre grain-shipping port on the Gulf coast at Reserve, Louisiana, USA. It will be the largest sugar refinery in the US, with the capacity to refine 1 million tons of raw sugar cane a year. Cargill already operates a soybean-processing plant on the site.

Louisiana is the second-largest sugar-producing state in the US behind Florida. The new refinery will handle about 75 percent of all of the raw sugar produced in the state and 10 percent of the nation's sugar, said Mike Daigle, chairman of Louisiana Sugar Cane Products Inc., a cooperative that represents 10 of the 13 raw sugar mills in the state and roughly 700 of the state's near-1,000 cane farmers. Cargill and the co-op have been discussing the venture for three years. – New Orleans Times Picayune, 2/11/05

Cargill’s new refinery will be well situated to received shiploads of raw sugar and cane molasses for further refining from Australia, Brazil, Central America and Mexico. “Domestic sugar demand has resumed its upward trend over the past 2-3 years, and deliveries rose last year for the first time in three years. This is due to more meals being eaten away from home, the waning of the low-carb trend, and softening of HFCS usage. . . Sugar from Mexico was 10,000 short tons raw value in FY 2004, is estimated at 70,000 tons in FY 2005, and projected at 160,000 in FY 2006. Cane molasses for further refining is imported from Australia, Brazil and Central America.” – Dyer Special Report, 22^nd International Sweetener Symposium, Aug 2005

Natural gas/fertilizer/soy

When Cargill built its nitrogen fertilizer plant at Bell Plaine, Saskatchewan, in 1989, as I noted in Invisible Giant, there were two global reasons to locate it there: the TransCanada natural gas pipeline runs through Belle Plaine and natural gas is the feedstock for nitrogen fertilizer; second, Belle Plaine is on a mainline railway that runs south to Minneapolis-St. Paul where Cargill Port can load barges and send them south to the Gulf Coast where the cargo can be loaded on ships headed for Cargill ports in Argentina, Brazil and elsewhere.

Now it has been brought to my attention that Kerry L. Hawkins, President of Cargill Ltd. (Canada) has been on the Board of Directors of TransCanada since 1996. According to its website, “TransCanada is a leader in the responsible development and reliable operation of North American energy infrastructure. TransCanada's network of approximately 41,000 kilometres (25,600 miles) of pipeline transports the majority of Western Canada's natural gas production to key Canadian and US markets. A growing independent power producer, TransCanada owns, or has interests in, approximately 6,000 megawatts of power generation in Canada and the United State. Founded in 1951 and headquartered in Calgary, Alberta, we have 2,400 employees and are also the operator and the largest unit holder of TC PipeLines, LP.”

Transcanada.com describes Cargill Limited as “grain handlers, merchants, transporters, processors of agricultural products and gas marketers since 1982,” while Cargill’s Canadian website (cargill.ca) now provides this information: “Calgary is the headquarters for Cargill Power & Gas Markets’ North American natural gas trading operations. With its strong ties to Canadian natural gas producers, CPGM is able to provide a broad range of energy and risk management solutions to both producers and consumers of natural gas in Canada and the United States. In addition to natural gas, CPGM also markets and trades electricity, weather derivatives, coal and other commodities.”

New Canadian President and Organic Certification

Cargill Limited (Canada) has named Len Penner to succeed Kerry Hawkins as president, effective December 1, 2005. Hawkins has retired after a 41 year career with Cargill. Penner was appointed Vice President of Cargill Limited in May 1998.

Prairie Malt Ltd, 60% owned by Cargill Ltd and 40% by Saskatchewan Pool, has received organic certification for the processing of malting barley and wheat. www.cargill.ca

Growing in China

Cargill has purchased a soy processing plant in China next door to a similar plant it already owns near Shanghai and is leasing a third the plant from Nantong Baogand Oils. The plants were in financial difficulty as a result of reduced demand for poultry feed after the destruction of more than 20 million birds due to the avian flu scare.