With the Grain

Within minutes after President Kennedy announced the U.S. wheat sale to Russia and its satellites, telex machines started clattering in a 63-room French provincial mansion in the woodland outside Minneapolis. From this unlikely headquarters, messages went out to the far-flung arms of the biggest U.S. grain dealer: Cargill, Inc. Though it is a secretive, inbred and inconspicuous company, Cargill (pronounced with a hard g, as in fish-gill) is a $1.5 billion-a-year giant with more than enough wheat capacity to handle the entire sale of 150 million bushels to Russia. Despite its size and predominance, it will have to be content with somewhat less than that--the Administration has declared that no company can have more than a 25% bite of the deal.

Strategic Outposts. Cargill will have a major part of it, is already active in the East-West grain trade. Its Canadian subsidiary has signed up for 20% of Canada's $500 million wheat sale to Russia, and the U.S. parent is awaiting an export license to send $6,500,000 worth to Hungary. In the U.S. transaction with Russia, Cargill will dicker privately and separately with the Soviets, as will such other big dealers as Continental Grain Co., Bunge Corp. and Louis Dreyfus Corp. Cargill will then draw part of the wheat from its grain elevators (total capacity: 160 million bushels), also buy some fresh supplies from farmers and, in all probability, buy some more from the U.S. Government's wheat hoard of more than a billion bushels. Total costs to the company for purchasing the price-supported wheat, shipping it to port and loading it aboard ships will average about $2.30 a bushel. But Cargill will sell it to the Soviets at the world market price of about $1.75 a bushel. To make up the difference, it will receive a Government export subsidy of 550 or more a bushel (payable not in cash but in grain) and stand to make about 1% profit per sales dollar.

Cargill has been prospering from thin margins on great volume ever since it was started a century ago by Will Cargill, son of a ship's master from Scotland's Orkney Islands. He set up a small grain storage shed near a rail terminal in Iowa, expanded with the railroads and the river barges; today, Cargill's 110 outposts are placed at almost every strategic transportation point in the midcontinent. The family business has been passed down through Cargill's descendants, who built huge grain elevators and expanded into everything from fish-meal processing in Peru to soybean processing in Spain.

Turning to Gold. Five Cargill heirs hold top jobs in the company today, but the current president is the first up-from-the-ranks outsider, Erwin E. Kelm, 51. With a sharp eye for the grain that can turn to gold, Kelm enthusiastically favors selling wheat to the Reds. "Trade tends to beget trade," he says, "and this might well help the relationship between the countries."

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