World Grain -- December 2013 - 71

FEATURE: oilseed & Grain trade summit

help CHS spread risk and conserve
more capital.
An example of this, he said, was
CHS' decision to earlier this year enter a
joint venture with Cargill and ConAgra
to form Ardent Mills, which will eventually become by far the largest flour
miller in the U.S. CHS previously had
25% ownership of Horizon Milling,
while Cargill owned 75% of that enterprise. In Ardent Mills, CHS will have
12% ownership.
"Why did we do that? There are several reasons," Casale said. "The economic conclusion we came to was that
we would create more economic value
for our owners having a lower ownership percentage of a much larger asset
than we could having a higher percentage of a smaller asset. We could be
independent in the flour milling business, but we could also not be relevant.
Sometimes you have to swallow your
pride in order to be relevant."
Casale said CHS has also become
more relevant by expanding from what
had been primarily a domestic-oriented
company to one with an impressive
global footprint. CHS markets its products to 65 countries around the world
and has employees in 24 countries.
"We have increasingly become a
global company because our customers demand it," he said. "To be seen as
a Tier 1 supplier of grain to the global
market, you have to be in the market
365 days per year."
He said there's no greater example of
that than what happened in 2012 when
drought severely limited corn and soybean production in the U.S. Because it
has diversified its origination base to
include countries such as Australia and
Canada as well as the Black Sea region
and Latin America, CHS was able to
meet the needs of its customers.
As part of its global strategy, CHS in
recent years has opened up trading offices in locations such as Singapore, South
Korea, Canada, Paraguay and Uruguay.
He said the "industrial tourism" approach
is rarely successful in foreign markets.
"You are not seen as credible when

Archer Daniels Midland Co. was among the nearly 80 exhibitors at the expo that was part of the Oilseed & Grain Trade Summit.

you slip in and slip out," he said. "You
have got to be committed to the market,
you have got to be there every day, and
you have to be able to generate local
market intelligence in order to be seen

ing are a bit overblown and that Chinese
demand for grains and oilseeds will continue to grow at a healthy rate for the
foreseeable future.
"They talk about China building sky-

"We could be independent in the flour milling business, but we
could also not be relevant. Sometimes you have to swallow your
pride in order to be relevant."
- Carl Casale, chief executive officer, CHS
as a credible partner in those markets."
CHS is in the process of expanding
its origination capacity in a number of
foreign markets. He said the company
is either building new port facilities or
expanding existing ones in places such
as Brazil, Romania, Ukraine and China.
Like most speakers at the Summit,
Casale touched upon China and its remarkable impact on the global grain
and oilseed markets. He believes recent
reports about China's economy weaken-

www.World-Grain.com / World Grain / December 2013

scrapers nobody is going to live in and
shopping malls nobody is going to shop
in, but it's easy to overthink this," he
said. "What they don't want is a bunch
of hungry people standing on the street
corner. That's not good for the Chinese
government. They want them working
and they want them fed.
"They have several trillion dollars
of foreign reserves that they're sitting
on now for cash, and they can do this
about as long as they want. If we were
71

http://www.World-Grain.com

World Grain -- December 2013

Table of Contents for the Digital Edition of World Grain -- December 2013