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Ciptapangan Visitor
Largest Private Company : Going Against The Grain, Cargill
posted by admin on 09/05/06

For 137 years Cargill has stuck to the disciplined, discreet ways that have made it the world's largest and most successful private company

Down a two-lane highway that winds through oaks and evergreens 25 miles west of Minneapolis, a secluded access road turns off to the south and is marked only by a small sign: "Cargill Lake Office." There near the shores of Lake Minnetonka, amid the sedate elegance of an antique French-style mansion, Warren Staley plots a revolution at the most dominating--and obsessively private--company on the planet.

On the face of it Cargill looks like the last business in need of a shakeup. Earnings more than doubled last year. At $50 billion-plus in annual sales, Cargill is twice the size of its closest rival, Archer Daniels Midland, and bigger than Procter & Gamble or AOL Time Warner or Merrill Lynch. In sales Cargill is the 19th-largest company in America. Its 97,000 employees run more than a thousand production sites and operate out of 59 countries. They feed the world's herds and fertilize its crops. They store the harvest, process it and transport it around the globe. They finance and hedge the risk.

Cargill, or farmers working for it, raise 17% of the world's turkeys. In the U.S. it controls 22% of beef production and 25% of grain and oilseed exports. Its vast financial trading arm is a leading commodity broker and a heavyweight in sovereign debt, having reportedly controlled one-quarter of Russia's bond market. Is this behemoth too damned big for its own good? Is it too big for the good of the country?

Such suspicions run deep because Cargill goes to such lengths to keep its profile low. Some foreign outposts bear no company shingle. Its annual report contains no financial tables. Discretion is so deeply woven into the company that even former Cargillites shy away from public comments about their old employer--compliments included. Cargill has been incomparably adept at growing without having to go public and making all the compromises that would entail.

"I'd hate to have to manage this company worried we'll miss an earnings forecast by a penny a share and have 40% clipped from our value," says Staley. "It's a great advantage being private, with shareholders who understand agriculture is cyclical, returns are lumpy and not every risk will go our way." C. Daniel Clemente, a Virginia lawyer who is a Cargill family trustee, says the company is a paragon of how to stay out of the public equity markets for generations. "Cargill should be the Harvard Business School model for how to stay private," he says.

Cargill, founded in 1865 by William and Samuel Cargill, sons of a Scottish sea captain, started out as a lone grain-storage flat house in a frontier town in Iowa. Over the decades Cargill grew like bamboo, silently snaking its roots below ground only to shoot up in unexpected places and redraw the landscape. Sprouting from the grain trade, it spread its tendrils into farming, milling, flavoring, a fleeting stab at energy trading and a bizarre global mishmash of seemingly unrelated ventures, from steelmaking to viatical financing to ownership of a casino in Las Vegas. Cargill let these businesses operate separately and autonomously, each one unaware of (or unconcerned with) goings-on elsewhere in the empire.

No more. Staley, 60, chief executive since 1999 and five years from company-mandated retirement, wants to reshape Cargill into a more sensible giant with a sharper focus on its origins--the food business--and new cooperation. "To grow our opportunities we have to shrink our sandbox," Staley says in a rare interview. "That means telling our businesses, ‘We won't starve you, but we may shoot you.'"



William W. Cargill
begins operating grain-storage
flat house in
Conover, Iowa

Expands to 71 grain elevators, 2 flour mills


Willliam's son-in-law John MacMillan Sr. takes over after rescuing firm from near-bankruptcy

Sets up first foreign operations in
Canada, Italy


Barred from futures trading at Chicago Board of Trade

Becomes Navy shipbuilder, enters soy-processing business


Loads first bulk corn shipment in
Brazil's interior

Sets up financial unit in


Korea and Taiwan

Gets into steelmaking, cattle feedlot businesses


Cargill, MacMillan families sell
17% of firm to employees

Launches drive to develop high-value-added foods


That is a stunning threat in a firm where lifetime employment is the norm, especially in the highest echelon, and where employees boast that their blood runs Cargill green. Staley is shaking the place up. He has bumped dozens of managers. He is drawing new talent via acquisitions and new hires. "Making sure the right people are on the bus and in the right seats" is how he puts it.

In three years Staley has jettisoned $2 billion in businesses, from steel-pipe making to coffee trading. He has spent a few billion dollars buying competitors in key markets, building up Cargill's position as the nation's biggest flour miller and number-two turkey producer, and as the largest grain merchant and among the biggest producers of vegetable starches in the world. Staley's shopping spree will continue for a while, bankrolled by more asset sales, $700 million in cash and annual cash flow from operations of $2.3 billion. "We're keeping things bubbling," he says. "Fortunately, cash is king, so it's a very interesting time for people like us."

Source : Forbes

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