Why did Cargill buy Continental?
Cargill expects this acquisition to contribute to its ability to compete effectively in a rapidly changing market environment. The acquisition will contribute to more effective knowledge acquisition and transfer from an expanded global presence. In addition it will have a broader base of grain origination facilities in the countries where grain is produced. The grain merchandising system is a high fixed cost system. Cargill hopes to compete more effectively and keep a large share of the Continental volume, capturing economies of scale by increasing volume without equivalent changes in the costs of managing their system. Further, Cargill expects that it will be more able to reduce costs, not just by having fewer people, but by dedicating some facilities to specialized products and getting more efficiencies in operations (shorter barge turnaround times, longer runs in elevator handling, etc.). Cargill’s new joint venture with Monsanto, to arrange production and to market value-added spec
