New Internationalist

Captured By The Company

Issue 267
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Delivery at an orange juice factory in Brazil: the Company gets its lion's share. Delivery at an orange juice factory in Brazil: the Company gets its lion's share. [image, unknown]
MARIA LUIZA M. CARVALHO / PANOS

Captured by the company
It’s in your fridge and in your face. Yet you don’t even know it’s there. Brewster Kneen has been
watching what a US-based transnational company has been up to.

Señora blanco of Caracas, Venezuela, is accustomed to buying high-quality pasta. Rosa, her much poorer cousin, buys a cheaper brand made by the same Company, which also makes a third brand with middle-class quality and price. The Company imports durum wheat from its affiliate in Canada and mills and manufactures it into a variety of pastas, well aware that Señora Blanco’s class constitutes a highly profitable but small market.

The Company, a very large US-based transnational, is using Venezuela as an experiment in integrated operations. Venezuela is one of the few countries where the Company is visible at the retail level. It got to be the largest pasta maker there because it recognized the class structure of the society and produces brands for each class, not just for the élite or just for the poor. Whether the Venezuelan farmers whose crop is displaced by the imported grain can afford the pasta is another question. But that is not the Company’s problem.

Orange juice is popular throughout Europe and North America. Regardless of the retail brand, there is no way of knowing who the real supplier is, although there is a 50/50 chance that it comes from one of the three companies in Brazil that control 80 per cent of Brazilian frozen concentrated orange-juice exports.

The Company that makes the Venezuelan pasta is one of these, and it despatches a custom-built tanker-load of concentrate every five days from Santos, the port of São Paulo, to terminals in Amsterdam and Elizabeth, New Jersey. From these terminals the concentrate is delivered to food manufacturers, bottlers and packagers, and dairies for retail distribution. In Brazil this Company also owns four citrus farms, the largest of which has 1.37 million trees on 13,260 acres of reclaimed ranch land, tended by a mere 400 employees. It is probably the largest single orange grove in the world.

Most of the oranges the Company processes, however, still come from ‘independent’ contract growers. Like the Company’s contract poultry producers in the US Southeast who carry all the risk of the birds dying, the orange growers carry all the risk of crop failure. The Company got into the business via dried citrus pellets that it was buying from Brazilian processors and shipping to Europe for use in its livestock-feed business.

Fortress walls
When Pieter van den Plaas joins his friends for a glass of Carlsberg beer in Amsterdam, the barley malt it was made from could well have come from the same Company that imported the orange juice he drank earlier in the day. It’s the same story when George and Mark go out for a Millers in Minneapolis. The Company is the largest producer of malt in the world.

In Sindhanoor, north of Bangalore in India, farmers were tempted into planting hybrid sunflower seed the Company had advertised as being of superior quality. Hanamana Gouda was told he would get 40 quintals per hectare. He and his neighbours got only five. This was no better, but much more costly, than the yield of his traditional seed. Hanamana Gouda got together with other farmers from nearby villages and they decided they would be better off without the seed from the Company, without a need for commercial fertilizer, and without the Company itself. So early one morning they demolished the seed-distribution facility the Company was building. The Company’s response was to rebuild, but this time surrounded by a fortress wall with guard towers to protect its plant from the farmers.

The Company, as the largest oilseed processor in the world, is always looking for new sources of cheap raw materials, and India seemed promising. It was encouraged by the Indian Government’s policies of economic ‘liberalization’ and agricultural ‘modernization’ aimed, with the encouragement of the World Bank, at turning India into a raw-materials source for processing and export. These policies assume that 700 million self-provisioning Indian farmers would be better off purchasing their food than growing it themselves.

'Your brand, our flour': the Company advertises its invisibility in a trade paper. A neighbourhood bakery in Winnipeg was surprised to find that the only salt it could get came from the Company; but it does make sense for the third largest flour miller in the US to be also a producer and supplier of salt. The ‘Leslie’ label is familiar to shoppers in the US. Most of the salt comes from Port Hedland, Australia and the San Francisco Bay region of the US. The Company claims 10 per cent of the global market.

More and more of Canada’s beef cattle are gathering in Alberta to be slaughtered in Canada’s largest packing plant at High River, owned by the Company. The finishing ration for many of the cattle is supplied by Nutrena, a subsidiary of the same Company that produces salt, orange juice, malt, hybrid seed, vegetable oils and flour.

The Company also supplies the molasses mix that is the base or ‘glue’ for livestock feeds, and since it is the largest grain trader in the world, it supplies the grain itself, whether corn or wheat, barley or rice, as well as the protein supplement of soybean or canola meal. Following in the footsteps of poultry growers and orange-grove owners, more and more of the cattle feeders are becoming contract suppliers for the Company.

Invisible giant
You’d suppose such a company, with so much power around the world, affecting so many people’s lives, would be a household name. Chances are, however, you’ve never even heard of it. It’s called Cargill Incor-porated and was established in 1865 in Minnesota, where its headquarters have remained ever since. Today it is active in 50 lines of business in 60 countries with sales of nearly $48 billion in 1994.

Much of Cargill’s activity is invisible not only to the public eye, but even to its own employees and those with whom it does business. It is corporate policy to keep a low profile. Cargill has always been a ‘private’ company, meaning that its ownership shares have never been publicly traded, with the disclosure of its finances this would require. Entirely owned by members of the Cargill and MacMillan families until 1992, the company then established an Employee Share Ownership Plan that broadens ownership but keeps the company private.

As a private company Cargill has no public responsibility. The family shareholders are so wealthy (worth over a billion dollars each) that there has been little or no pressure to increase the financial return to them. The result, as Cargill is proud of saying, is that the company can reinvest its earnings in the countries where it does business. It behaves like an oil slick, opportunistically spreading into contiguous spaces: buying into new lines of business, expanding existing ones, and all the time integrating its operations.

Futures for sale
Cargill was once known primarily as a grain trader. Currently, however, its most profitable lines of business are corn milling – a highly visible, material activity – and financial markets, the invisible trading of non-existent commodities.

In corn processing the money is made in the production of High Fructose Corn Syrup (now the primary soft-drink sweetener), ethanol, corn gluten, corn meal, corn oil, citric acid and other products. In the Financial Markets Division the money is made only partly by trading in real commodities, including most of those Cargill produces and processes. More significant these days, however, are ‘futures’ contracts on these same commodities, which speculate on levels of production and prices in the future. Cargill has now added an even more speculative level of trading to its lines of business: ‘derivatives’ and ‘financial instruments’ are traded as commodities, but they are abstractions based on the movement of stock indices, interest rates, mortgages or currencies.

With its vast experience of organizing and operating integrated agricultural systems, including trucks, barges and ships, and with its ability to source raw materials worldwide, Cargill is now putting itself forward as the new model of a ‘development agency’. In a 1993 speech Cargill chairman Whitney MacMillan said that a new institution has emerged – ‘the modern global company’ – which is ‘capable of playing a major role in attacking the world hunger problem, if allowed to do so’.

The problem is that the market economy and the transnational corporation have never shown themselves either interested in or capable of looking after the welfare of everyone. In MacMillan’s own country, the US, where Cargill’s operations are most highly developed and integrated, 10 per cent of the population remains more or less permanently outside the market economy, depending on Government food stamps for their daily bread.

It’s a win-win game for the transnational corporation that writes the rules, ensures they become government policy – as Cargill has done for years in the US and many other countries – and then carries them out on its own terms. It is not necessarily in the interests of the rest of us to become franchise farmers, labourers or customers in Cargill’s system.

Brewster Kneen is the author of a forthcoming book on Cargill to be published by Pluto. He has also written From Land to Mouth: Understanding the Food System and The Rape of Canola. He publishes The Ram’s Horn, a monthly newsletter that looks at food systems.

THE ISSUES TRADE & TRANSNATIONALs
About 20 transnational companies control most of the world’s agricultural trade. They aren’t interested in relieving hunger, they’re interested in big bucks. They manipulate markets to get the best deals, overpricing where there’s no competition, underpricing when they want to kill it. They use the produce of farmers worldwide and speculate with it. Farmers, for their part, must sell at low prices, buy their seed and fertilizers from the transnational at high prices and carry all the risks of crop failure themselves.

Governments usually encourage them. In the rich world transnationals cream off a healthy proportion of the subsidies on food. They carry out most food-aid and commercial-food transactions made by governments and are amply rewarded for these services. In the poor world they are welcomed by governments eager for investment and better technology.

They are a law unto themselves, pulling out rapidly if conditions are unfavourable in a particular country and setting up shop elsewhere, especially where local conditions allow the maximum exploitation of labour. Operating in several countries at once they manipulate financial systems. Global attempts to regulate their activities have been feeble and ineffectual.

The transnationals are now funding biotechnology research for improved plant varieties. But their concern is not with feeding the world. They invest in crops which will fetch a good price rather than staples like wheat and cassava. The largest part of this research is into new strains of plants which can cope with the agrochemicals they market.

The transnationals, far from being neutral, are the agents of unfair trade. World trade is built on the commodity dependence of poor countries who have no option but to try and increase production, thereby lowering prices. Commodity prices today are at pre-1950 levels. In 1985, when many parts of Africa suffered from famine, emergency aid worth three billion dollars was provided. That same year plummeting commodity prices meant that Africa received $19 billion less for the raw materials it sold to the West.

Working for change
Fair trade linking the North and the South in a pattern of co-operation rather than exploitation would provide more food security. The produce of small farmers in the Majority World also needs to be safeguarded against that of industrial farmers in the rich world. The latter may be cheaper, largely due to subsidies, but the former is the only way forward for food-deficient nations.

To control the corporations, poorer countries need to be in a better bargaining position – with sufficient technological and financial backup of their own. Forming trade blocs in the South would help, but poverty forces countries to compete with each other for investment.

In India change is coming through farmers who have held rallies of half a million people to oppose Cargill’s plans to replace their seeds with genetically altered hybrids. Other Indian protesters have scared off Cargill from taking over salt production in Gujarat state.

The World's Top 12 Agribusinesses. Consumer action in the West can support fair-trade products and local produce. It can also pressurize corporations to provide a better deal for their workers and producers in other countries.

Getting informed is the first step. Here are some organisations which can help:

Transnational Information Exchange
Transnational Institute
Paulus Potterstraat 20
1071 DA Amsterdam
The Netherlands
Tel: (20) 0662 6608. Fax: (20) 0675 7176
Email: tni@tni.org Web: www.tni.org

Multinational Monitor
PO Box 19405
Washington DC 20036, USA
Tel: (202) 387-8030. Email: monitor@essential.org Web: http://multinationalmonitor.org/
A monthly magazine which uncovers the dirt and publicizes the opposition.

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©Copyright: New Internationalist 1995


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