Cargill CEO raises concern for farmers over China-US trade deal

The CEO of US agribusiness major Cargill said Wednesday that he remained "cautiously optimistic" about last week’s US-China trade deal that is meant to result in significant purchase of US agricultural goods, but he remained “concerned about US farmers”.

Speaking to Bloomberg News at the World Economic Forum in Switzerland, Dave MacLennan said that exports were a big part of Cargill’s business and that the trade deal last week was a “good first step”.

“[The railcars] aren’t moving. The fact is the exports haven’t resumed, the tariffs are still in place and so I’m still quite concerned about the American farmer and the American ag. economy,” MacLennan said.

“I’m gonna choose to stay optimistic that there will be a phase two deal and that we will see specifics around what is it that the Chinese are going to buy as part of the commitment to buy. But again it’s still short on details and until I can see it and understand what it means, we are going to stay cautiously optimistic,” he added.

In return for a pledge by the US to cut some import tariffs on Chinese goods, China pledged to buy an additional $200 billion of US goods and services per year this year and next, including $40-50 billion of agriculture goods.

While the agreement identified meat, grains and oilseeds, alongside a whole range of other products, it did not stipulate the volume per product.

Soybeans are widely expected see the biggest increase in trade, but since the agreement has been struck, soybean futures on the Chicago Mercantile Exchange have fallen to their lowest in five weeks as Chinese purchasing has failed to materialise.

That, in turn, has raised questions about how the US will enforce the deal.

“I assume they (China) will (stick to the deal). They haven’t articulated as part of this phase one deal that what are the mechanism for enforcement if something, if either party would not stick to it,” MacLennan said.

Cargill remains one of the world’s biggest privately-owned companies and the biggest in the agriculture sector by far.

MacLennan downplayed talk that the company could list this year.

“No, because our family shareholders are very proud of their company. We are seventh generation, we’ve been privately-owned, family-owned since 1865, coming up to 155 years. They are very invested in the company both emotionally and financially. I don’t see it happening," he said.