Cargill chief warns against protectionist policies

The head of agricultural commodities trader Cargill, one of the biggest privately owned companies in the US, has warned that protectionist policies pose a direct threat to the world economy and risk provoking a trade war with China.

Speaking at the FT Commodities Global Summit in Lausanne, David MacLennan, Cargill chairman and chief executive, described economic nationalism as a “jaundiced viewpoint”. He added that “given the rhetoric, given the mentality and emotions in the United States, but also in the world” the risk of a trade conflict with China had “gone up”.

His comments are the starkest warning yet from a leading US company, in this case one that is ubiquitous in the US Midwestern states that largely voted for President Donald Trump. Mr Trump has promised to pursue an “America first” economic policy, which some argue could usher in a new era of protectionism.

“We are a US-based company, but we know that one-third of US farmland is planted for exports; exports that nourish people in other parts of the world,” said Mr MacLennan.

Mr Trump has already withdrawn the US from the 12-nation Trans-Pacific Partnership and pledged to rework the 23-year-old North American Free Trade Agreement (Nafta) binding the US, Canada and Mexico, which he has called a “catastrophe”.

Mr MacLennan called on the commodity industry to stand up for trade and the benefits he said it had brought to the world economy.

“Trade is good,” Mr MacLennan said. “Trade is a net jobs creator.” He added that while he acknowledged Nafta was imperfect, it had helped economic growth among its members.

“Anything that’s 24-years-old deserves to be looked at and refined, but not thrown away,” Mr MacLennan said, adding that the hoped the TPP had suffered only a “temporary demise”.

Philipp Hildebrand, vice-chairman of asset manager BlackRock and former head of the Swiss National Bank, told the conference that protectionist trade policies posed an “incredible” danger to the commodities industry and the world economy.

Few US industries have benefited more from trade deals such as Nafta as the agricultural sector. The agreements have also been a boon to companies like Cargill, which move foodstuffs from the point of production to the point of consumption.

Mr MacLennan said he was hopeful that some voices in the Trump administration would speak up for trade. “There are a lot of business people in the administration who understand global trade and the benefits that come from that,” he said.

Minnesota-based Cargill is the world’s biggest agricultural commodities merchant, moving grains and oilseeds from areas of surplus to countries that do not grow enough to feed their populations.

With annual revenues of more than $100bn, Cargill is the largest private US company by sales. Its has 150,000 employees and operates in 70 countries.

Mr MacLennan also called for an “inclusive and responsible” stance on immigration.

“It’s fear-based decisions in some cases; fear of immigration or fear of people that do bad things that come from other countries,” he said adding that many companies, including Cargill, had been caught by surprise by the new US immigration policy. “We had a lot of employees that didn’t know what this meant for them,” he said.

About a quarter of Cargill’s employees work in the US. They include foreign-born employees, from its Dutch chief financial officer to Somali Muslim refugees who cut slabs of beef.

Reporting by Neil Hume, David Sheppard and Emiko Terazono