An innovative partnership in Brazil creates more efficient storage and transportation methods for farmers, helping them reach new global markets.
By the middle of the 20th century, Cargill was poised and ready to expand its global presence by entering the South American market. When the opportunity presented itself in 1948, Cargill’s president, John MacMillan, Jr., grabbed hold.
The move into South America was an unusual one for Cargill from the start. The International Basic Economy Corporation (IBEC), a company formed by Nelson Rockefeller to raise the standard of living through business, approached John Jr. about establishing a partnership. John Jr. seized the opportunity, viewing it as a chance to build a formal presence in the South American region. Together, the two created Cargill Agricola e Comercial S.A. (CACSA).
With a new company in place, the partners began work to solve a longstanding problem for grain farmers in Brazil: loss of corn crop due to insufficient storage. Corn was highly sought after for its nourishing quality, but also because corn milling had the ability to produce a range of products from starches to syrups to textiles. In an effort to protect the crop and facilitate transportation, CACSA built two grain elevators (one in Ourinhos, São Paulo, and a second in Arapongas, Paraná). These structures provided farmers with ample storage space, allowing them to protect their crops from weevils and other deterioration, as well as to delay the sale of their crops until prices improved.
“By the mid-1950s, CACSA was a major influence and a major innovator in the corn marketing picture.”— Jim Wilson, Manager, Cargill Brazil
In addition to improving storage, CACSA focused its efforts on improving communications between two of Brazil’s rail systems. The company worked with the two railroads, drafting an agreement that allowed grain to be picked up on one railroad and delivered on another without the extra effort that reloading required. To promote faster crop movement, CACSA also established a direct rail route to what would eventually become the busiest port in South America: Santos.
Despite CACSA’s positive impact on the grain business, additional problems with transportation, government regulations and a lack of futures market limited profitability. In 1957, Cargill sold its interest and exited the Brazilian market.
Although the CASCA endeavor was short-lived, it positioned the company for future success in Brazil. With a greater understanding of the country’s unique challenges and opportunities, Cargill made a successful return in 1965, introducing the more profitable hybrid seed corn crop.
Despite early challenges, John Jr.’s decision to expand into South America has proven successful, as Cargill has grown to become the largest agribusiness in Brazil. Today, the company exports millions of tons of sustainable soy each year from its state-of-the-art grain terminal built along the Amazon River in Santarém. As one of the main food producers in Brazil today and the largest cocoa processor in Latin America, Cargill has plants, warehouses, port terminals and branch offices in nearly 160 cities throughout Brazil. Applauded for its efforts by the Brazilian government, Cargill was named the country’s best consumer products company in 2012.