Partnering with a farmers’ cooperative, Cargill brings its supply chain expertise to the durum farmers of Sonora.
It might be surprising to find high-quality durum wheat growing in Yaqui Valley, Mexico. Located in the northwest state of Sonora, the valley is essentially a desert. But thanks to irrigation, it provides ideal conditions for growing durum, a unique, high-protein wheat used to create the world’s pastas and couscous—fare not traditionally found in Mexico.
It is a valuable ingredient that is arguably growing in the wrong region. It is abundant and useful, but culturally misplaced. In 1998, Yaqui Valley farmers found themselves with an abundance of durum, but very few customers. A few years earlier, the Mexican government had privatized the grain market, leaving durum farmers to take on the risks of exporting—financing, marketing and transportation—themselves. Unprepared for these challenges, many farmers sold their crops to local feed markets at a fraction of the true value.
“We can provide market analysis and logistics expertise that would be difficult for these farmers to obtain otherwise.”— Ben Smith, Grain Manager, Cargill Northwestern Mexico
At the same time, Cargill was looking for ways to buy and export grains from Mexico. Known for its global presence, the company recognized durum wheat’s potential in other food markets. But Cargill found it difficult to establish relationships in the close-knit community. Explains Ben Smith, the company’s grain manager in northwestern Mexico, “This is a culture based on deeply rooted customs and traditions. It was difficult convincing farmers to do business with a big American company that was looking to set up shop.”
To create trust with durum farmers, Cargill sought partnership with the Asociación de Organismos de Agrícultores del Sur de Sonora (AOASS), a group of seven farmer-owned cooperatives. AOASS agreed to a trial transaction of 120,000 tons of durum to see if Cargill was the right match.
After marketing and selling the wheat, Cargill offered a totally transparent view of the transaction: how it managed risks, the marketing and transportation tactics used, as well as the margins Cargill earned. That honesty won the respect of AOASS, and the two entities formed a lasting partnership. It was a collaboration that would bring durum wheat to markets around the world, removing the burden of exporting from farmers while increasing their individual incomes.
For more than ten years, Cargill has helped Mexican durum farmers export 500,000 tons of durum annually, improving profitability by over US $3 million each year. Praised by the Mexican government, the partnership is now a model for the country’s farmers, illustrating how mutually beneficial partnerships and strategic use of the open market can reap great rewards, as well as nourish people around the world.