What’s good for Cargill: Life and death in the free market

Re: Cargill profits and food riots Due to technical difficulites, Bob Moffitt of ALA Minnesota was unable to post this comment himself, so allow me:

Had to smile a bit at your efforts to link Cargill profits, biofuels and recent turmoil around the globe regarding food prices.  First, Cargill has been a very outspoken critic of biofuels, and is considered a rather minor player in the biofuel industry.  Second, there is scant evidence – but many claims – that biofuels are the primary driver of higher food costs. The more likely villain is the weak dollar and the cost of oil (both closely linked together). Yes, I know what C Ford Runge of the U of M says. But he has been wrong about the economic impact of biofuels before, and I believe he is wrong now. Ditto for Profs. Hill and Tilman at the U, who have their own reasons for bashing corn-based ethanol at every occasion.

But I digress – Cargill, like other Minnesota corporate critics of biofuels, have been crying “foul” and claiming they are victimized by biofuels, even as they rake in VERY handsome profits during an economic downturn. Don’t get me wrong, I want these MN firms to succeed, but they protest about biofuels too much, methinks…Some examples:

Eggs

At Arden Hills-based Land O’ Lakes, for example, egg revenue in 2007 was up 29 percent to $514 million. The higher sales helped the cooperative’s egg business deliver pretax earnings of $24.6 million, compared with a loss of $40.2 million in 2006. Similarly, the nation’s largest producer of eggs – Mississippi-based Cal-Maine Foods Inc. – enjoyed increased sales and profits during 2007 that helped boost the company’s stock price. Cal-Maine shares traded at more than $34 last week, nearly triple their price in April. Source: http://www.twincitie…

Corn Flakes

General Mills posted 12% growth for its third-quarter revenue, which surged to $3.41 billion from $3.05 billion a year ago. This was above analysts’ predictions for revenue of $3.24 billion in the quarter, according to Thomson Financial. Source: http://www.bloggings…

Meat (well, Spam, actually)

Meat producer Hormel Foods Corp. said Friday, Feb. 15, strong sales of Spam and a recovery in its turkey business helped its first-quarter earnings rise 17 percent. http://www.hutchinso…

Tell the man to read the excerpt What the Strib piece explicitly says is that “an expanding biofuels industry has put a premium on agricultural commodities and technology–the mainstays of Cargill’s business.”

Coupled with the WSJ piece, what I am trying to demonstrate is that one of the most fundamental laws of capitalism–supply and demand–is at work here. People are starving in countries that don’t use the dollar for currency. Ditto, people are getting rich off the scarcity of agricultural commodities in countries that don’t use the dollar. Biofuels is not the whole story here, just a factor, and perhaps even a catalyst. But the basic point is about supply and demand, and, by extension, starvation and profit.

Re: Cargill profits and food riots Due to technical difficulites, Bob Moffitt of ALA Minnesota was unable to post this comment himself, so allow me:

Had to smile a bit at your efforts to link Cargill profits, biofuels and recent turmoil around the globe regarding food prices.  First, Cargill has been a very outspoken critic of biofuels, and is considered a rather minor player in the biofuel industry.  Second, there is scant evidence – but many claims – that biofuels are the primary driver of higher food costs. The more likely villain is the weak dollar and the cost of oil (both closely linked together). Yes, I know what C Ford Runge of the U of M says. But he has been wrong about the economic impact of biofuels before, and I believe he is wrong now. Ditto for Profs. Hill and Tilman at the U, who have their own reasons for bashing corn-based ethanol at every occasion.

But I digress – Cargill, like other Minnesota corporate critics of biofuels, have been crying “foul” and claiming they are victimized by biofuels, even as they rake in VERY handsome profits during an economic downturn. Don't get me wrong, I want these MN firms to succeed, but they protest about biofuels too much, methinks…Some examples:

Eggs

At Arden Hills-based Land O' Lakes, for example, egg revenue in 2007 was up 29 percent to $514 million. The higher sales helped the cooperative's egg business deliver pretax earnings of $24.6 million, compared with a loss of $40.2 million in 2006. Similarly, the nation's largest producer of eggs – Mississippi-based Cal-Maine Foods Inc. – enjoyed increased sales and profits during 2007 that helped boost the company's stock price. Cal-Maine shares traded at more than $34 last week, nearly triple their price in April. Source: http://www.twincitie…

Corn Flakes

General Mills posted 12% growth for its third-quarter revenue, which surged to $3.41 billion from $3.05 billion a year ago. This was above analysts' predictions for revenue of $3.24 billion in the quarter, according to Thomson Financial. Source: http://www.bloggings…

Meat (well, Spam, actually)

Meat producer Hormel Foods Corp. said Friday, Feb. 15, strong sales of Spam and a recovery in its turkey business helped its first-quarter earnings rise 17 percent. http://www.hutchinso…

Tell the man to read the excerpt What the Strib piece explicitly says is that “an expanding biofuels industry has put a premium on agricultural commodities and technology–the mainstays of Cargill's business.”

Coupled with the WSJ piece, what I am trying to demonstrate is that one of the most fundamental laws of capitalism–supply and demand–is at work here. People are starving in countries that don't use the dollar for currency. Ditto, people are getting rich off the scarcity of agricultural commodities in countries that don't use the dollar. Biofuels is not the whole story here, just a factor, and perhaps even a catalyst. But the basic point is about supply and demand, and, by extension, starvation and profit.