Cargill can learn from grameen bank


If given the opportunity to act as Chief Innovation Officer at Cargill, I feel I could initiate meaningful change in the food production industry. Coming from Minnesota where agriculture is an integral part of our economy it’s become apparent that the rise of consolidated, contract farms have become a staple in our society. As we all saw in Food Inc. the methods used by large agriculture companies such as Cargill can often times be considered predatory or unfair to the individual farmer. The documentary detailed examples of farmers taking on huge liabilities to buy farm equipment such as tractors, poultry houses, or or other capital assets. While the access to capital can be perceived as beneficial to local farmers, they often face predatory interest rates and are locked into contracts with agricultural conglomerates such as Cargill to continue purchasing capital assets into the future. This system ultimately resembles indentured servitude whereas farmers are perpetually forced to take out more debt and work to service the interest payments. One process that appears particularly heinous is that of the poultry industry under a production contract, detailed by an excerpt from the Food and Water Watch: “In the poultry industry, growers raise birds under a “production contract”, for a processing company known as an “integrator.” Poultry growers do not own the birds; they raise them under contracts that favor the integrators. An integrator can require new equipment or upgrades, investments, or other demands on the grower at the end of each contract, some of which can be as short as 35 days, and growers are often prohibited from even discussing and comparing their contracts with other growers to see if the terms of their contracts are fair. Poultry growers who wish to leave a contract and sell their birds on the open market instead often have few, if any, options because there are so few processing plants left that buy from independent operations. Contract growers often take on significant debt to start a contract (like building new poultry houses) and are stuck with the liability of cleaning up the poultry waste and litter.”

 

As Chief Innovation Officer at Cargill I would aim to curb this practice, making it more fair for local farmers to raise and sell poultry. In order to do this, I would ask for the assistance of Muhammad Yunus and Fábio Rosa—two social entrepreneurs that found solutions to problems where no precedent existed. My first course of action would be to limit the affects of predatory lending to local farmers through the offering of small, but not quite micro loans. Yunus was able to revolutionize the practice of micro lending by offering loans at reasonable rates to those in need while offering flexible repayment plans. In a similar way, Cargill can limit their risk of lending by offering smaller loans to farmers and working with them to create more flexible repayment plans. In addition, through the help of Fábio Rosa, we could combat the problem at is source, the need for capital intensive assets by small farmers. Instead of purchasing machinery such as tractors or combines we could create some sort of equipment sharing program where a group of local farmers contribute capital to purchase equipment and then rent the equipment based on real usage. Similar to NetJets where the cost of owning a private plane is too high for one person, plane sharing incorporates the benefits of being able to use the plane when needed and only paying a portion of the startup cost. I recognize that agriculture equipment usage is very seasonal and is in high demand during certain periods of the year It’s not unreasonable to repurpose the assets during off times of the year to extend the functionality of the equipment. I think John Stuart Mill and utilitarianism would most approve of this plan because it incorporates the most good for the most amount of people. The end of predatory loans and flexible repayment plans would certainly benefit the individual farmer, giving them more personal ownership of their farm and therefore increased incentive to perform at higher levels. Cargill would also benefit through improved relationships with their local farmers leading to higher levels of output and an increased commitment to socially responsibly operations. Lastly, through an equipment sharing program, farmers would be able to benefit from capital intensive assets while paying a lower cost of usage.

https://www.foodandwaterwatch.org/sites/default/files/cargill_a_threat_to_food_and_farming.pdf

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