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Cargill’s corporate growth in times of crises: how agro-commodity traders are increasing profits in the midst of volatility

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  • Tania Salerno

    (University of Amsterdam)

Abstract

This paper proposes two interrelated arguments: first, it is argued that agro-commodity traders are uniquely placed at the crossroads of agricultural trade to benefit from agricultural commodity speculation; and second, that the networks constituting their operations are central to their hedging activities. The case of Cargill—the largest privately owned company in the United States and one of the largest agricultural traders in the world—is used to support this argument by unpacking its operations, structure, and hedging strategies. In order to connect the operations of Cargill to its speculating strategies, this paper first traces how agriculture and finance have become increasingly intertwined leading to heightened agricultural commodity speculation. Second, Cargill will be positioned within this process by analyzing how it has financialized its own strategies and its Corporate Platform. Third, Black River Asset Management, Cargill’s private equity arm, will be analyzed to show how it uses the information moving through Cargill’s Platform to engage in hedging and/or speculation.

Suggested Citation

  • Tania Salerno, 2017. "Cargill’s corporate growth in times of crises: how agro-commodity traders are increasing profits in the midst of volatility," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 34(1), pages 211-222, March.
    • Handle: RePEc:spr:agrhuv:v:34:y:2017:i:1:d:10.1007_s10460-016-9681-8
    DOI: 10.1007/s10460-016-9681-8
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    References listed on IDEAS

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    1. Irwin, Scott H. & Sanders, Dwight R. & Merrin, Robert P., 2009. "Devil or Angel? The Role of Speculation in the Recent Commodity Price Boom (and Bust)," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 41(2), August.
    2. Scott H. Irwin & Dwight R. Sanders, 2010. "The Impact of Index and Swap Funds on Commodity Futures Markets: Preliminary Results," OECD Food, Agriculture and Fisheries Papers 27, OECD Publishing.
    3. James Crotty, 2009. "Structural causes of the global financial crisis: a critical assessment of the 'new financial architecture'," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 33(4), pages 563-580, July.
    4. Jennifer Clapp & Eric Helleiner, 2012. "Troubled futures? The global food crisis and the politics of agricultural derivatives regulation," Review of International Political Economy, Taylor & Francis Journals, vol. 19(2), pages 181-207.
    5. Tania Salerno, 2014. "Capitalising on the financialisation of agriculture: Cargill’s land investment techniques in the Philippines," Third World Quarterly, Taylor & Francis Journals, vol. 35(9), pages 1709-1727, October.
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    Cited by:

    1. Alessandro Paolo Rigamonti & Giulio Greco & Mariarita Pierotti & Alessandro Capocchi, 2024. "Macroeconomic uncertainty and earnings management: evidence from commodity firms," Review of Quantitative Finance and Accounting, Springer, vol. 62(4), pages 1615-1649, May.
    2. Baines, Joseph & Hager, Sandy Brian, 2021. "Commodity Traders in a Storm: Financialization, Corporate Power and Ecological Crisis," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue Latest Ar.
    3. Claudia Coral & Dagmar Mithöfer, 2023. "Contemporary narratives about asymmetries in responsibility in global agri-food value chains: the case of the Ecuadorian stakeholders in the banana value chain," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 40(3), pages 1019-1038, September.
    4. Justyna Agnieszka Franc-Dabrowskaa, 2019. "Crawling financialization in Central and Eastern Europe using the example of Agriculture," Economia agro-alimentare, FrancoAngeli Editore, vol. 21(3), pages 677-696.
    5. Janina Grabs & Sophia Louise Carodenuto, 2021. "Traders as sustainability governance actors in global food supply chains: A research agenda," Business Strategy and the Environment, Wiley Blackwell, vol. 30(2), pages 1314-1332, February.
    6. Loka Ashwood & Andy Pilny & John Canfield & Mariyam Jamila & Ryan Thomson, 2022. "From Big Ag to Big Finance: a market network approach to power in agriculture," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 39(4), pages 1421-1434, December.
    7. Newman, Susan & Van Huellen, Sophie, 2022. "Understanding commodity markets to effectively address price increases and volatility in a post-COVID-19 world," Working Papers 70, Austrian Foundation for Development Research (ÖFSE).

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