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

Salerno, Tania

doi:10.1007/s10460-016-9681-8

Cited by 42 publications

(29 citation statements)

References 7 publications

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“…He analyzes the income dynamics of the largest wheat traders and concludes that in the time of the biggest price fluctuations when producers are hit hardest, the biggest traders reported a significant income increase. With reference to Murphy et al (2012) and Salerno (2016), Baines maintains that agricultural commodity traders are among the main winners from financialization, unlike small farmers and livestock producers, who are generally hit most by crises. This is due to their unique market power, access to information, storage capacity, and influence on regulators (Baines, 2017).…”

Section: Speculation and Financialization: Is Regulation Effective?mentioning

confidence: 99%

Islamic finance and food commodity trading: is there a chance to hedge against price volatility and enhance food security?

Kalimullina

Orlov

2020

Heliyon

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This paper evaluates current food commodity trading from the Shariah point of view, which is particularly relevant for the MENA region. It focuses on futures contracts as the main instrument for grain trading and analyzes the traders' activities. Through a qualitative and multifaceted approach, the paper accumulates and evaluates the suggestions for 15 Shariah-based alternatives to futures by contemporary researchers. Sukuk, commodity funds and takaful programs are among potential structures that could be developed and broadly implemented. The research compares the current criticism of futures markets with the opinions of Islamic scholars and researchers, as well as Shariah standards. The paper also evaluates several recent suggestions by researchers to raise the efficiency of the international commodity trading market for the sake of food security. The results show that there is space for cooperation taking into account Islamic financial principles and conventional commodity exchange regulations, in combining existing best practices of the latter and the rulings of the former in engineering a sounder system of grain trading for the benefit of market players and the end consumers. This would require a joint effort and support from exchanges, standard-setting bodies, and regulators. Among the areas of cooperation are the approach towards corners (ihtikar), squeezes, speculation (gharar, maysir, and najash), and defining the border between reasonable and excess speculation; financial architecture using new technologies in developing a commodity trading contract conforming to the Shariah regulations and the exchange requirements. There is a need to develop the ideas for global food contracts and grain reserve systems, and to test the contracts based on existing exchanges.

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Section: Speculation and Financialization: Is Regulation Effective?mentioning

confidence: 99%

Islamic finance and food commodity trading: is there a chance to hedge against price volatility and enhance food security?

Kalimullina

Orlov

2020

Heliyon

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“…Third, this section examines the income data of the major agricultural commodity traders, and in so doing contributes to existing analysis of the relationship between price instability and the trading houses' earnings (e.g. Baines 2014; Murphy et al 2012;Salerno 2016).…”

Section: The Distributional Dynamics Of Food Crisismentioning

confidence: 99%

“…In fact, in 2007, when agricultural price volatility increased sharply, Cargill's risk management and financial division accounted for an astounding 34 percent of the company's net income (Bloomberg 2014). As such, the agricultural commodity traders may be among the main beneficiaries of the financialization of food and the coeval decline of public grain stocks (Murphy et al 2012;Salerno 2016).…”

Section: Standardized Beta Coefficientmentioning

confidence: 99%

Accumulating through food crisis? Farmers, commodity traders and the distributional politics of financialization

Baines

2017

Review of International Political Economy

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“…Existing studies on large agricultural MNCs mostly offer a macro picture of their global operations, and in-depth studies of the ABCD traders are virtually absent for a few notable contributions by academics such as Kneen (2002), Murphy et al (2012), and Salerno (2016); certainly there has been little assessment of the ABCD traders' activities within Russian borders.…”

Section: Agro-food Corporations and Mncsmentioning

confidence: 99%

Foreign Investment Adaptations to the Changing Political and Economic Environments of the Agro-Food Sector

Lander

2016

Problems of Post-Communism

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This paper focuses on the newly developing area for Russia of food processing and trade activities downstream of the farm which, according to Jeremy Hobbs, Executive Director of Oxfam International, is a "powerful, unique and poorly understood sector" (Murphy et al., 2012: 3); it is a sector which needs to be made 'visible' "if food is to be susceptible to democratic regulation" (Friedman, 1995: 29). The paper looks to identify the well-known criticisms made in the literature of agro-food corporations, specifically foreign multinational corporations (MNCs), examining their relevance in the case of Cargill Russia, one of the global four 'ABCD' traders. Further, attempts are made to ascertain the country-specific nature of Cargill's operations, and how the company responds to these general criticisms. The 2010s have seen a shift in the Russian Government's policies, and an attempt to move towards national self-sufficiency-as indicated by the 2010 Food Security Doctrine-and this has combined with the new import substitution drive accelerated as a result of the geopolitical crisis surrounding Russia's annexation of Crimea; although this seems restrictive for international business, companies well placed and rehearsed in the practice of domestic sourcing and supply stand to benefit. The findings indicate that Cargill has modified its operations according to the unique and peculiar political and economic environment of Russia, and that its actions are mediated by country and cultural processes, resulting in variance in the way that the company's business is conducted compared to elsewhere in the world; in some cases, this contrasts with the findings of more macro, global academic studies of corporate behaviour. Further, this research finds that the Russian context has led Cargill to adopt 'soft power' strategies of conducting business with farmers, develop local supply chains, and embrace an attitude of non-preference towards export or domestic supply, contradicting the global corporate ethos of the corporation. This paper posits a 'third school' of competing discourse pervasive amongst employees of Cargill surrounding the cause of global food price volatility: that non-agricultural actors on the financial markets, as well as supply and demand dynamics, are responsible. This displays a form of exclusivism as 'Cargill the agricultural financial player'-a 'qualified' company that is 'other' to non-agricultural speculators, and one that is, therefore, supposed to be involved in financial markets-abstracting the company from any questionable role in the aforementioned volatility. Juxtaposing this competing discourse against the research of Salerno (2016: 6)-in which some of Cargill's financial subsidiaries are found to act with, and trade on behalf of, non-agricultural investors-seems to support Clapp's (2014: 10) notion that 'distancing'-even distance within a company-has made it difficult to observe the connections between financial actors and the food system, and has contributed to the creation of such competing discour...

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

Cited by 42 publications

References 7 publications

Islamic finance and food commodity trading: is there a chance to hedge against price volatility and enhance food security?

Islamic finance and food commodity trading: is there a chance to hedge against price volatility and enhance food security?

Accumulating through food crisis? Farmers, commodity traders and the distributional politics of financialization

Foreign Investment Adaptations to the Changing Political and Economic Environments of the Agro-Food Sector

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