In the 2024 Annual Report from Cargill, Inc., President and CEO Brian Sikes claims, “Our efforts begin with the people who grow the food the world depends on—because the success of farmers and food producers is foundational in our work to feed the future. To enable their success, Cargill is making investments to improve farmers’ livelihoods while sustainably meeting the world’s growing demand for food.”
The report continues, “The marketplace our people navigated this year was extremely challenging. With their hard work and our customers’ trust and partnership, Cargill recorded $160 billion in revenues in fiscal year 2024. As we look to the future, our teams are sharply focused on achieving greater efficiency and profitability across our businesses while driving growth and greater value for our customers and communities around the world.
“Cargill is committed to making a positive impact, globally and locally, because our future is only as strong as the communities where our people live and work. That’s why we contributed $130 million in fiscal 2024 to enable a more resilient food system while addressing our communities’ most pressing challenges, including food security, environmental sustainability, equity and inclusion, and emergency relief for people in need.”
The irony from this report is that Cargill made headlines recently for their involvement in a labor fixing settlement. The settlement is quoted at $57.4 million dollars and included Cargill, Hormel Foods and National Beef Packing Company. The settlement claims the companies engaged in secret meetings to share employment and wage data in an effort to put a lid on wage disbursement in the red meat processing facilities. Of the three companies involved, Cargill will pay $29.75 million, National will pay $14.2 million and Hormel will pay $13.5 million. Keep in mind that in March of this year, Tyson and JBS were both ordered to pay $127 million for the same issues.
The problem we see is there is always a headline for these companies fixing prices in all phases of production. It’s simple math to see that when they work together to control inputs and outputs, the teamwork that is going into play is engineering their profits. It doesn’t really matter what their annual report says when they are shelling out millions in class action suits at all levels.
Cargill has been a major force in the agricultural markets for nearly 160 years. From a single grain flat house along the railroad tracks in Conover, IA, William Wallace Cargill and his two brothers, Sam and Sylvester, grew an empire taking control of major trade areas throughout the U.S. As railways expanded, so did Cargill. Navigating turbulent times and continuing to develop a global powerhouse, they handled every major war and financial crisis, and seemingly continue to develop their way across the globe in nearly every commodity and meat market available. Today, they are the largest privately held company.
In the beef market, Cargill processes more than 7 million head of cattle annually that yields nearly 11 billion pounds of products and by products, according to a google search. Across their entire portfolio, 160,000 people in 70 countries are employed by the global giant, per Cargill.com.
Being a global giant has placed them at the table across the world, but this size has also placed them at risk. Prior to Russia’s invasion of Ukraine, Cargill owned nearly 25% of the Black Sea Russian grain terminal. It’s simple—control the ports, control the transit, control the commodity and make money along the way. Cargill agreed to sell this stake a year ago back to Russia’s Delo Group. Still, Cargill’s relationships have come with a price tag when global conflicts arise.
Recently, Cargill’s financial arm, Cargill Financial Services International, was noted in Ukraine’s debt reorganization to the tune of $700 million. The Ukrainian government has suspended efforts to make the debt right. In an article posted by the Boston Herald, Ukraine’s war efforts have drained the country’s resources and reorganized over $20 billion in debt. This isn’t surprising since the war is costing Ukraine nearly $300 million per day.
The issue here is that these companies continue to use the same tactics over and over again. These major processors constantly agree to fines, and usually it’s the same general theme. Controlling both inputs and outputs while manufacturing their revenues for profits, they continue to build their brands globally. We are in a great feeder cattle market, but what happens when supply catches up to demand and the cash market decreases? A decade ago, we saw the same factors at play but ask yourself if anything is different this time around. — LOGAN IPSEN
