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Senior Advisor

Cargill - The Price Of Responsibility

"In his keynote address Tuesday at the FT Commodities Summit in Switzerland, Cargill CEO Greg Page delivered a plain message: “Price is one of the most powerful signals on earth, and to be a communicator or disseminator of that price means we must accept huge responsibility.” Page urged the commodity trading world to be accountable for the social, environmental and economic consequences of business decisions. With technology making communication both global and nearly instantaneous, he said, there is nowhere for companies to hide. Nor should they seek to hide. Pointing to recent government action in the banking industry, Page called for good policy frameworks that don’t hinder the essential work of getting crops and other raw materials to where they’re needed: “We can either earn and embrace the governance and regulation we want and need, or ignore our ethical, behavioral and societal obligations and then accept the governance that all others may impose upon us.”"

 

http://www.cargill.com/news/speeches-presentations/the-price-of-responsibility/index.jsp

 

Some of his key points, as I read them:

 

"We always say that as traders we like volatility, but what we saw last year wasn’t just volatility – it was turbulence. I recently asked one of our trading leaders the difference between volatility and turbulence. His response? “One can make you money. The other can make you air-sick”!"

 

"Trading across national boundaries is a necessity, not a luxury, if the world wants to better serve the needs of its citizens. And as we face into a global population perhaps reaching 9 billion by mid century, an even greater proportion of the world’s food will need to move across oceans to feed the people. National self-sufficiency in food or in each individual food stuff will not suffice."

 

"The term “Trading” has become wrapped up and confused in the public perception with speculation, hoarding, market fixing, monopolies, cartels and bad practices."

 

"So when does it go bad?

When trading becomes divorced from the management of the supply chain and becomes driven by a short term horizon. When the management of risk and the seizing of opportunity becomes detached from its consequences. When it moves to become a purely abstract point of speculation and an outcome in its own right."

 

"Today every one of us has enormous amounts of information available and at our fingertips, instantaneously. There is no time and date advantage. Everything is totally transparent - and the skill today is in the analysis, interpretation and the insight derived from that openly available mountain of knowledge."

 

It's worth taking your time to read the entire speech.  The above excerpts are intended to whet your appetite.

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8 Replies
Senior Contributor

Re: Cargill - The Price Of Responsibility

Will he or has he put his (or his company's) money where his mouth is and what does that mean to grain farmers?
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Senior Advisor

Re: Cargill - The Price Of Responsibility

Interesting comments this fellow put out there as the  "social media " is one option that has thrown a giant curve on glossing over items that used to easily papered over and swept under the rug --- the dumbing down of the general population has hit a snag causing the big entities to rethink for the moment and look at the domestic consumer with concern --- events of the last  24 hours whether on the business  or front page unfortunately creep into every facet of life ---   

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Veteran Advisor

Re: Cargill - The Price Of Responsibility

Jim,

I was just wondering about you yesterday b/c hadn't seen a post in a while.

 

....................sounds like Cargill is sweating something. Page is complaining about the commodity markets price discovery last year?  There seems to be something about the NEW generation of prices he doesn't like.......He says last years trade made them sick?.............. Of course it did - the trading dept didn't do so well.......IMO (price discovery) was smooth as a baby's a$$, which he says he champions (open and free trade is not BAD)-----so he's defending "TRADING" in some context. IS there an attempt here to obscure their context????????? .......so I call HORSE-CHIT to that. Maybe he needs to have his "Trading leader" get his/her stomach checked out at the M.D?

 

quote from news section or fiscal-news section of their website last yr: Page said two factors accounted for much of the change in company results. “Cargill’s global market analysis of supply and demand, and our trading expertise are long-standing strengths. Even so, we did not trade as well in this year’s markets, which were driven as much by the economic and political environment as by the fundamentals. Cyclical trends in the global soybean processing and North American beef industries also were in play, decreasing margins in parts of Cargill’s oilseed processing and beef processing operations

 

don't they have a spec trading floor like any other co?.... 

 

What is your take on his speech-motive, etc., Jim, others????????

 

thanks.

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Senior Advisor

Re: Cargill - The Price Of Responsibility

I believe these are very important comments. The first paragraph is LOADED with important facts and insights for the current global situation. Yes, and it means producers have a responsibility to pay attention and learn about the information in an instantaneous world - because it levels the playing field. As for corporations, unfortunately there are global actors out there that are still trying to hide in the shadows, and a big share are on Wall St.  There are others like Rio Tinto and Glencore that operate above many nation's power and rules.

 

The recognition that trading just for speculation's sake can be unhealthy is a monumental change - and that volatility is no friend of anyone's. It's true that it becomes an important activity related to uncertainty but the overhang of huge volumes of trading not really related to physical commodities can be a hindrance to the efficiency of the  production and trading of the physical commodity it used to represent.

 

I am pleased to see these comments being made by leadership at Cargill. They are realists and I believe they have understood that trying to control policies affecting the producer's well being is behind them. They are concentrating on their own abilities and opportunities. This is all very positive. I just hope some others take the cue.

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Senior Contributor

Re: Cargill - The Price Of Responsibility

CX! I agree with you. IMO llast year was an easy trade (grain wise) after May, basically if you weren't long you were wrong. Grain prices moved almost straight up with only small pockets of profit taking.Since the fall price peak being short and selling the rally has been the trade. i think his motives is that the big grain companies have lost control of the grain markets they once enjoyed, because of the funds presence.

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Senior Contributor

Re: Cargill - The Price Of Responsibility

Did he mention the ethics involved when Cargill started contract raising livestock and put a lot of independant producers out of business.  Patrick

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Senior Contributor

Re: Cargill - The Price Of Responsibility

Guys like this wouldn't know an ethic if it were served on a plate with drawn butter, but he is clearly upset that he and his have lost some control of their markets. He says all the right things about market efficiency and information technology leveling the playing field, but I am betting the new rules he would like to see controlling speculation will heavily favor the big commercials.

Senior Contributor

Re: Cargill - The Price Of Responsibility

  Cargil,  the largest privately held company in US preaching ethics? Satan itself is standing at the alter giving the sermon. 

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