ABCD and beyond: From grain merchants to agricultural value chain managers

Abstract

The world of agricultural commodity trading firms has changed over the years, although corporate concentration has long been a defining feature of this sector. The four dominant agricultural trading firms-the ABCDs (ADM, Bunge, Cargill and Louis-Dreyfus)-have a long history dating back to the 1800s and early 1900s. First established as private, family-owned grain merchant companies with specific geographical specialties, these firms have since evolved to be quite complex companies. They buy and sell grain as well as a host of other agricultural and nonagricultural commodities, while they also undertake a range of activities from finance to production to processing and distribution. New entrants into this space have also taken on complex structures and activities in a bid to stay competitive.In many ways the world's major grain trading firms now operate more like cross-sectoral "value chain managers" on a truly global scale compared to their grain trade origins. High degrees of concentration combined with control over a vast array of activities give these firms enormous power to shape key aspects of the global food landscape. As a result, the agricultural commodity-trading sector has important implications for farmer livelihoods, hunger and the environment. Following a brief snapshot of the main firms that dominate global grain trading today, I examine the major trends that have reshaped the sector in the past decade. I then outline the main challenges that these changes present for the food system, and suggest possible research directions moving forward.

Commodity traders in a storm: financialization, corporate power and ecological crisis

“…Beyond these issues of data availability, we face selection dilemmas for firms which do publish relevant data as the boundaries of the commodity trading business are themselves blurred. Some of the major corporations described as commodity trading firms -such as Cargill and Louis Dreyfus -have distanced themselves from this characterization, and now increasingly identify themselves as 'supply chain managers' operating both upstream in the production of primary commodities, and downstream in the manufacture of consumer and industrial goods (Clapp, 2015;Kingsman, 2019). Another firm included in the dataset -Glencore -has departed even more radically from the traditional trading model to become an industrial conglomerate heavily engaged in mining activities.…”

El Going Out agrícola de China. Un análisis de su desarrollo en Argentina

“…Sus operaciones abarcan desde la producción, procesamiento y la distribución hasta las finanzas (Gaudreau, 2015). Además de los grandes traders, otras empresas participan en la comercialización de granos, entre ellas la holandesa Nidera: las japonesas Mitsubishi y Marubeni; la suiza Glencore; Wilmar International y Olam, de Singapur; y Noble Group, con sede en Hong Kong (Clapp, 2015).…”

The complex dynamics of agriculture as a financial asset: introduction to symposium

“…One is the difficulty of distinguishing between bona fide hedging and pure financial speculation in agricultural commodity markets. Commodity trading firms insist that any financial activity on their own account is simply hedging, but determining whether that is the case, as Salerno and others have pointed out, is difficult in practice (Clapp 2015;Murphy et al 2012). There is also a blurred understanding of farmland 'productivity'.…”

“…Meanwhile, traditional approaches to regulate speculative activity in agricultural derivatives markets have been complicated by corporate concentration along agrifood supply chains (Murphy 2008;Clapp 2012). Vertical integration by major commodity traders, combined with their increasing forays into financial markets, have further blurred the already grey distinction between speculation and hedging (Salerno, this issue; Clapp 2015). At the same time, innovations in finance have lengthened agrifood supply chains and introduced new challenges in identifying the role played by specific investors (Clapp 2014).…”