A King Of Agriculture

Few companies are as well established as Cargill, the Minnesota-based agricultural powerhouse. Its history stretches back to the 1860s, and today it has 160,000 employees and more than $120 billion in annual revenue. But unlike most companies its size, Cargill's stock isn't traded on any exchange. Instead, Cargill is owned by descendants of its founders and a wide swath of employees, making it America's second largest privately held company. In the latest in his series of interviews as part of NEWSWEEK's partnership with the Kaplan University M.B.A. program, NEWSWEEK Chairman Richard M. Smith spoke with Cargill CEO Gregory Page about managing a sprawling business at a time of heightened concern about food prices and the environment. Edited excerpts:

SMITH: For a private company, you put out a lot of financial information. Why did you decide to become so transparent?
PAGE: In the early 1990s, we instituted an employee stock-ownership program. We had about 25,000 eligible employees, and by law we had to communicate with them [about the financials]. But I think the bigger idea was that if you don't go out and explain yourself, you'll be defined by your mistakes, whether you have a fire or an employee sues you, some negative event. We do too many good things and there are too many ideas that benefit mankind that are originated by thoughtful employees. Cargill now publishes its earnings, and we have a call with the media once a quarter to talk through a lot of issues.

Cargill remains huge in grain, meat, poultry and agricultural finance, but you ' ve also made an effort to move up the food chain a bit. Can you describe this strategy?
We use "connectivity" to describe how we try to make businesses we've elected to stay in matter to each other. Take our cocoa business, in which we deal with confectioners. We ask, "What can we build out of that cocoa-based relationship with confectioners?" We can sell products like erythritol for sugar-free chocolates … At its root, it's not about being a conglomerate in the sense of "Let's just get this disparate basket of businesses and hopefully … we'll have uncorrelated returns."

With rising food costs, changing energy needs, increased demands from developing countries and the push into biofuels, the food business has become fairly dramatic. Will that continue?
I think people's understanding of the impact of food, energy, land utilization and the environment will probably keep us more in the news than we've been in the past, but probably not to the degree we've been in the last 18 months.

Of all these issues — energy, the environment, land use, trade policy — which is your top focus?
Trust-based trade. A lot of the volatility of the past year wasn't because the food wasn't there. It was because the people that had it closed their border, and those who had trusted them, who had come to depend on them, were sorely mistreated.

Do you feel the same pull to be engaged in the dialogue about government subsidies?
In the past, in order to secure your acreage allotments, you had to grow the crops mandated by the policy. Today we have relatively free choice in what a farmer plants, and with that has come a more robust ability to respond to changes. In my home state of North Dakota, where a person was in the past compelled to grow wheat ... today they're growing canola and sunflower, and they'll switch back and forth to barley … So a farmer that 15 years ago had really only one choice today has seven or eight reactions he can make to the price of fertilizer, to the price of crops and to the input that people like Cargill give him about what the world needs.

What does Cargill mean when it talks about food innovation?
An array of things. In some cases it's fiber you enjoy eating. In other cases it's the sensation of sweetness that comes without a calorie burden. In some cases it's a healthfulness promise: phytosterols from soybeans, antioxidants that people are concerned about. In some cases, they're high-performance sports drinks that have a glycemic response that coincides with an athlete's needs. These are probably things that a lot of people don't think about, but there are sports beverages where our role is to understand metabolism to the level that we understand how the energy is released into the bloodstream.

What is your view on biofuels?
We have one very strong principle, which is that mandates are inherently bad. Agriculture is an outdoor sport, and it's very difficult for somebody to sit in any chamber in the world and determine what next year's weather's going to be, and therefore to mandate some specific level of any crop … And on the other side of it, we're not big supporters of subsidization, but at least it's a quantifiable set of damage. If you say you're going to pay 45 cents a gallon to have ethanol produced, you can calculate what the burden is. But with a mandate, it's incalculable.

How, as the CEO, do you ride herd over such a wide range of businesses?
You don't. And I think anybody that set out to do that would disserve the organization and the employment promise. Cargill is, at one level, a relatively loose confederation of entrepreneurial businesses, and I think it's why a lot of people work here a long time and enjoy it. At the same time, we share one balance sheet and one reputation, and so we have other principles about which we're fairly intolerant. There is this dual reality at Cargill.