Dividends and Cargill says it plans to stop grain export activities in Russia

If you love to eat fresh bread invariably you are dependent on the grain traders and in the world of grain trading 4 firms dominate the market by controlling 70-90% of the market. The 4 companies are ADM or Archer Daniels Midland, Bunge and Cargill in the US and the Netherlands company Louis Dreyfus. In addition to the private sector companies, the countries which grow the wheat have government trading companies which do country to country trading. When one of the big 4 say they are doing something or not doing something in Russia, it is important to markets.

In an article by Olga Popova and Karl Plume, Cargill said it will take a further step back from the Russian market by stopping handling Russian grain from its export terminal in July, although its shipping unit will continue to carry grain from Russian ports.

Cargill owns a stake in the grain terminal in the Black Sea port of Novorossiysk, said as grain export related challenges continue to mount, Cargill will stop elevating (lifting of grain into export vehicles) Russian grain after the completion of the 2022-23 season.

Russian Agricultural Minister said, the cessation of its export activities on the Russian market will not affect the volume of domestic grain shipments aboard. The company’s grain export assets will continue to operate regardless of who manages them.

Linking to dividend paying stocks, even in highly monopolized markets there will be alternatives, although most will not be viable under normal circumstances. In the case of Russia, the government will subsidize the movement of grain, but generally governments will not offer subsidies to competitors. Once things return to normal, it will depend on how the company did and consumers reactions to the monopoly companies. The important aspect to remember is even though your company makes a profit and can pay a dividend there are alternatives in the marketplace, as we move to Annual Meeting time ask about the alternatives in your industry.

There are more questions than answers, till the next time – to raising questions.


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