Cargill's New Venture Will Improve Supply Chain Efficiencies

By Karla Paris

The nation’s largest privately held company takes up arms with Copersucar to build on both companies’ strengths and create an optimized global sugar supply chain

On Tuesday, April 8, agribusiness conglomerate, Cargill noted its net income dropped 28 percent in the fiscal third quarter and was largely tied to an increase in electricity prices. The company also notes that income fell to $319 million while revenue held steady at $32 billion. Much of the reason for the decline was tied to weather-related supply chain issues that accompanied this past long, cold winter in North America. But, it’s not all bad news for the company. With spring slowly turning the tide of winter in North America and Cargill’s capital investment program for fiscal 2014 still on track, the company is ripe to recoup its losses.

In an aggressive move, Cargill has entered into a joint venture with Copersucar, the biggest Brazilian trader of sugar, which will combine the business’ global sugar trading activities.  This venture will pool the capabilities of each company, increasing the efficiency, quality, and services in its sugar supply chain, utilizing Copersucar’s and Cargill’s strengths, as well as leveraging an in-depth understanding of the worldwide market to the benefit of its customers.

While the formation of this duo is dependent upon regulatory approval, which is expected in the second half of 2014, Cargill remains busy moving ahead with its capital investment program.  The company:

• Celebrated the grand opening of its new corn wet mill in Castro, in Brazil’s southern state of Paraná, in February;
• Broke ground on two new facilities in India: a corn wet mill in the state of Karnataka, and a dairy feed mill in the state of Punjab;
• Doubled its capacity of its European chocolate facility in Mouscron, Belgium, to serve growing demand for specialty ingredients;
• Added a new facility at its starches and sweeteners campus in Barby, Germany that will convert locally grown wheat to premium ethanol for the European beverage, cosmetic, and pharmaceutical industries;
• Completed the acquisition of two specialty chemical companies in the U.S. and Turkey that add more capacity and applications expertise to its bio-based industrial products business;
• Opened its newly expanded research and development center in Vilvoorde, Belgium, a multidisciplinary hub for food and feed ingredients science, and nonfood applications such as personal care and fermentation technology.

With Cargill’s strong focus on improving profitability through technology and expansion, the company is on track to turn around a rough quarter.