Attorney General's News Release

May 17, 1999

Attorney General Nixon opposes Cargill's acquisition of Continental Grain; cites negative effects for Bootheel farmers

Jefferson City, Mo. — Missouri Attorney General Jay Nixon today announced that he is opposed to the proposed acquisition of Continental Grain by Cargill Inc. unless the U.S. Department of Justice requires a divestiture of Continental Grain's buying facility in the Missouri Bootheel, south of Caruthersville.

Nixon said the acquisition would bring additional consolidation in the agricultural industries, a situation that is anti-competitive and bad for Missouri farmers. "The continued trend toward consolidation in agriculture hurts the traditional Missouri farmer," Nixon said. "It is bad for competition and bad for our country to have food sources controlled by only a few companies."

Nixon said the proposed acquisition of the Continental Grain Cottonwood terminal on the Mississippi River near Caruthersville would be particularly harmful to grain farmers in the Bootheel. "In the southeast Missouri market, the new Cargill would have the power to control or artificially depress the prices farmers get for their grain," Nixon said.

In a letter to the DOJ Antitrust Division, Nixon said the merger would reduce from four to three the number of grain buyers located at Mississippi river terminals in the New Madrid and Caruthersville areas. Cargill and Continental combined handle a capacity of 6.61 million bushels of grain on the Missouri side of the river, between Buffalo Island (located at the confluence of the Mississippi and Ohio rivers) and Cottonwood Point, south of Caruthersville. The remaining two competitors, Bunge Corp. and Consolidated Grain and Barge, have a combined total of only 5.29 million bushel capacity.

"By transferring the Continental facility in that area to Cargill, the new company would control at least half of the market and dangerously reduce the level of competition for river barge transportation," Nixon said.

"Cargill would have a virtually captive population of grain sellers in southeast Missouri and could unfairly and artificially depress purchase price for grain bought in that market and could run other competitors out of the market," Nixon said. "This could be extremely bad news to Missouri farmers in the area since all other modes of transporting grain are more expensive than barge transportation."

Nixon said the anti-competitive effects may also be felt outside of Missouri by reducing competition in the exporting terminals near New Orleans, where the grain sold by Missouri farmers is ultimately bound for resale.

"If Cargill has enhanced market power in those exporting facilities, it may be able to depress prices paid to terminals up and down the river, reducing prices paid to farmers in many states along the river," Nixon said.

Nixon warned that the business of buying and exporting American farmers' grain is becoming increasingly concentrated and that the merger would give the new Cargill control of 35 percent of all U.S. grain exports and 50 percent of all U.S. corn exports.

Inquiries from consumers should be directed to consumer@ago.mo.gov or 1-800-392-8222 (from within Missouri) or 573-751-3321 (outside Missouri).

All media inquiries should be directed to Press Secretary John Fougere.

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