THE SHADOWY WORLD OF GRAIN TRADE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00806R000100200010-7
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 22, 2016
• Document Release Date: September 9, 2010
• Sequence Number: 10
• Publication Date: June 10, 1979
• Content Type: OPEN SOURCE

STAT
Shadowy
ByDan,llorgan
Z 17'7. Raprrud by peeminWnot VIE n* P"
Bev een July 5 and Aug. 9, 1972, the Soviet
Union secretly contracted to buy 1l45million
metric tons of wheat, corn, barleir-and soy-
beans from six multinational graur,companies.
Details of the transaction-probably,~the
largest commodity deal in history were'not
made public by the U.S. government at this,
time. Senior U.S. officials testified subse-
this one stamped "secret," was trans-
mitted to Assistant Secretary of Agri-
culture Carroll G. Brunthaver:
"Total (Soviet) contracts with all
countries for delivery during FY 197.3
"The impression that governments
are running the system is false," an of-
ficial of the Organization for Eco-
nomic Cooperation and Development
said of the grain companies.
In the case of the grain multination-,
als, a uniquely private, closely held
structure of ownership and control
further complicates the task of policy-
makers and regulators.
Only two of the leading five grains
multinationals-Cargill of Minneapolis
and Continental of New York City-
have their headquarters in the United
States.
Andre, which operates grain. and.
other businesses in the United States,:
is based in Lausanne, Switzerland.
Louis Dreyfus, which handles be-
tween 5 percent and 10 percent of U.S.,
grain exports, oversees a vast empires
of shipping and banking from a blue
tinted glass headquarters a few blocks}
from the Are de Triomphe. !
'Bunge, which was believed at one
time to be the largest privately owned
company in -the world, was based in.
Buenos Aires until two of its execu-'
tives were seized by guerillas in 1974
and released for a reported $60 million
ransom. Today, Bunge's high com--
mand is said to reside in Madrid and
Sao Paulo.
-In 1978, a sixth ; large grain firm,
Cook Industries of .Memphis, sold its,
major grain depots and upstream
elevators to the huge Japanese trading
house Mitsui--thereby giving Japan a
crucial foothold-in the U.S. grain sys-E
tem. Several years ago, Cargill sold Swlsal
Credit Bank a 50 percent Interest in its:
major overseas grain- trading subsidi
ary, a Geneva4ased"company `celled'
Tradax Export:-, -4
These developments have put for-i
eign companies in control of much of
the global grain trading system-a fact'
that complicates the task of U.S. raga-l
lators, tax collecters, information gath
erers and policymakers. ? ? -
To this problem is added .the-struaf
tare of family-control of the: compa-?
nies---a relic of old-style entrepeneur-i
ism that has survived into the era)
when other = baronial- capitalists. vtth;
now total 24.2 million tons worth al-
most $1.5 billion, three times the quan- i
tities imported in FY 1972 and more I
than twice the amount bought after f
the disastrous harvests of 196,3 and {
1965
The
se
t ain will
' " ? ?
quently that they did not possess the informa- '4 `be
f
b largely f from States-
rom the e United
tion. - - 17.5 million tons-with the remainder
However, these assertions of the govern- from Canada, France, Australia and
ment's ignorance of what was happening in Sweden."
the markets are contradicated by declassified The CIA had obtained the details of
i
documents of the Cent~a_][ntelllgence_ ggnev. the trading from the grain companies
The grain sales helped spur the fastest rise in through . its "domestic collections ;
food prices since the Civil War. U.S. grain branch." But the details were not con
stocks were depleted. In 1974, American food veyed to farmers, flour millers and
food processors for whom grain prices
assistance to developing countries was
and grain supplies are crucial. -
reduced because of concern over the availabil- i Seven years after the events of the
ity of grain. for flour millers and farmers at summer of 1972, the grain trade is still
home. Sen. Henry.: M. Jackson (D-Wash.) nic- ] one of the most mysterious of all bu- l
ktlamed the episode "the great grain robbery." - ( sinesses, and the multinational grain
Secretary of Agriculture Earl L. Butz was to companies still are shadowy.
testify later that he did not know the magna
tude of the transactions until they were dis-
closed by a senior official of Continental Grain
Co. at a House Agriculture subcommittee hear-
ing Sept. 19,1972 -
In a report issued July 9,1973, the Govern-
ment Accounting Office accepted the view ! weekly.
did
t
l
a
m
no
ture
ent of Agricu
rt
that the Dep
A new, independent. agency-the
know the volumes committed to the Russians Commodity Futures Trading Commis.
"Early in September (1912),.Agriculture was -sion-oversees the exchanges where
still unaware of .the quantities involved," the grain futures are traded. A new Fed.
1973 GAO report said -- - : , era( Grain Inspection Service-estab.
Officials of the,;Departmeut of Agriculture fished following indictments and dis.
also cited their lack of information to explain closures of corruption and conflict of
why they waited : until Sept 1, 1972-nearly interest in the former mixed public.
four weeks after the: sales were completed-to /Private system-certifies the quality
discontinue paying subsidies to companies that of grain destined for- customers
abroad.
exported U.S- wheat. (The subsidy program Yet the '
was devised to promote U.S. grain exports dur- major international 'grain
ing the long period of. sluggish commercial companies continue to operate with
.. broad freedom and flexibility at the
demand after World War 19.1
Yet by Sept. 1, 1972, the USDA had received center of the global food system.
two reports ftom the CIA's-office-of economic.- -Information about the companies is
research leaving no doubt about .the magna as fragmentary as data on the global
maneuverings of the major oil firms.
tude of the transactions that had taken place. - As-in oil, the grain houses kndw more
A CIA memorandum to the USDA dated than governments about the price of
Aug. 11 stated: commodities at hundreds of locations,
"In July and August, the Soviet Union nego- supply and demand for crops, and the
tiated further purchases of unprecedented loopholes in the myriad of local and
quantities of grain from U.S. companies. These federal regulations at home and
new contracts, taken together with additional abroad.
orders for Canadian and French grain, place They are prototypes of the far-flung
total purchases for fiscal 1973 at more than 2p multinationals that are integral com-
:,.ill:on tons." ponents of the world's economic'
On Aug. 31, an. even more detailed report,, power structure.
Article appeared 10 June 1979
on page K-1, 2, 3
Sanitized Copy Approved for Release 2010/09/09: CIA-RDP90-00806R000100200010-7
"I till; W AS111iNC,,l Ui` 1'U51'
stituted some modest controls over the
activities of the companies. The De-
partment of Agriculture now requires
companies to report their sales of U.S.
grain to. foreign contries, and the de-
orld of bra, in -
SP?1TINUED
Sanitized Copy Approved for Release 2010/09/09: CIA-RDP90-00806R000100200010-7