Hope's Edge_ The Next Diet for a Small Planet - Frances Moore Lappe [36]
THE WINNERS: THE GRAIN TRADERS
If we are right, and the farm export boom has helped only a small minority of farmers, who has benefited? We have found that a disproportionate share of the benefits flow to the five major grain-trading companies—Cargill, Continental, Louis Dreyfus, Bunge and Borne, and Andre—that account for an incredible 70 to 80 percent of all U. S. grain trade. What is wrong with that? you may ask.
First, grain traders are able to capture wealth which should rightfully accrue to the farmers. In their role as transporters of farm commodities, traders guarantee themselves a profit because they can add on to their selling price the costs they incur at every transport link in the marketing chain. Because they can pass on costs, grain traders end up profiting while the income of farmers stagnates. Compare the fate of the two: the real income of farmers was about the same at the end of the 1970s as it was in the early 1960s. But the income of the largest trader, the Minneapolis-based Cargill Corporation, has gone up a whopping 441 percent since the late ’60s.17 (And that is after adjusting for inflation.)
Second, the interests of the grain traders conflict with the interests of the vast majority of the American people. What consumers and farmers want are stable prices; but traders profit from market instability. For grain traders, profit lies in the price spread; whether the price goes up or down is less important. Thus, knowledge of price differentials, between locations or between markets, is all that the major firms need to make money.
Third, even though the major grain traders are largely dependent on U.S. producers and U.S. resources, they are virtually unaccountable to the interests of our farm producers or the U.S. government. The grain traders operate in great secrecy and have made themselves immune to many U. S. laws.
Again, take Cargill, the largest. Cargill’s major trading arm is Tradax, chartered in Panama and based in Geneva. Cargill calls it an “independent subsidiary,” but it is actually 70 percent owned by Cargill and 30 percent owned by the Salevia Foundation—a trust whose beneficiaries are all members of the Cargill and MacMillan families, owners of Cargill.18 The Panamanian charter gives Tradax (Cargill) significant tax advantages. Based in Geneva, Tradax is protected by Swiss secrecy laws. (Cargill refused to provide some significant information in 1976 Senate hearings, on the grounds that it would be illegal under Swiss law.19) Transactions run through Tradax need not all be reported, either to the USDA or to the IRS for tax purposes. This secrecy is both a tax advantage and a trading advantage.
Most major grain-trading firms export grain from every major exporting country in the world. Thus, they have no loyalty to the interests of U. S. producers, and even help to pit foreign producers against U. S. producers.
Fourth, the enormous wealth of the major grain-trading firms gives them power to influence U.S. government policy and to gain access to tax support. The incredible influence of the grain trade came home to us when a high government official confided to us that if he were to question the all-out-for-export strategy, the grain companies would have him out of a job immediately.
Influence helps buy government assistance, too, such as the services of the Foreign Agriculture Service of USDA and even more direct help. Cargill Korea, for example, was started with 95 percent of its financing from the U.S. government. Public assistance has also helped Cargill expand domestically. The Indiana Port Commission, for example, raised $18 million through tax-free revenue bonds for a Cargill-controlled elevator.20
Fifth, the size of the major grain traders enables them