Cargill boss loses plot over food speculators

One of the problems of working in global development is that you have to sustain a basic ability to interpret the entrails of big western finance and business corporations. We can’t go on blaming them for the troubles of the poor from a position of ignorance.

This can be particularly tough with companies like the world’s biggest agricultural trader, Minnesota-based Cargill. Such giants will have to be part of any plan for global food security, whether by persuasion or regulation. Yet, as a privately owned company, Cargill enjoys a much lower threshold of disclosure and is not hounded by institutional investors.

To further my education, I therefore went to the trouble of studying the Cargill press release announcing its financial results for the quarter ending 31st August. I was prompted by a headline that profits were down 66% on the same period last year.

I was a bit surprised by the excuses offered:

the change in Cargill’s results is due in large part to the persistently high degree of uncertainty in the global economic environment, which injected turbulence into commodity markets and limited prudent trading opportunities. The prevailing “risk-on, risk-off” dynamic in financial markets also caused capital to move in and out of commodities rapidly, which reinforced taking a disciplined approach to risk-taking.

“We got screwed by speculators who are trampling over our customary manipulation of insider market information which enables us to make trading profits,” is my plain English translation of this repetitious statement.

Is it conceivable that Cargill and other big food beasts like Bunge and Glencore could side with rabble-rousing anti-poverty campaigners who want G20 leaders to close off speculation in food markets?

I remembered that Greg Page, Cargill chairman and chief executive, gave a 20 minute interview to the BBC a couple of weeks ago. I revisited the point at which Jonathan Frewin posed a key question: “how do you feel about commodities markets being distorted by purely speculative futures trading of staple foods.”

Bearing in mind that the Cargill boss by then knew that his company had just taken a big hit, his reply was surprising to put it mildly:

“I think that other than for very short periods it’s a non-event.”

I’m not sure the Cargill finance director would agree.

The BBC interview is full of interest, not least why the company’s PR team judged it necessary to bother at all.

However, a vital question was missed, perhaps understandably so for a general audience. G20 agriculture ministers have persuaded China and India to participate in a plan to disclose market-sensitive information about food stocks. The idea is to reduce the uncertainty on which speculators thrive.

But the ministers have no powers to force private companies to share their extensive knowledge. Would Cargill participate voluntarily?

We don’t have to be corporate experts to imagine the rising heat of the lobbying in Washington corridors over coming weeks.

We’ll know the outcome after the G20 summit in France in November, the endgame for Sarkozy’s mission to achieve something meaningful for global food security.


this article was first published by OneWorld UK