An Embarrassment of Corporate Riches

Things are rough all over. Unemployment is rising, inflation is up, foreclosures are rampant, poor countries are experiencing food riots. Today the front page of the Wall Street Journal pointed out that major agribusiness companies are facing a challenge of their own: soaring profits.

The likes of Cargill, Archer Daniels Midland and Monsanto have joined the Exxon Mobils of the world in experiencing windfall profits. Cargill, which is privately held but releases summary financial results, reported earlier this month that its net income for the quarter ending February 29 was up 86 percent over the same period last year. Monsanto beat that with an increase of more than 100 percent.

While the percentage increases are more than healthy, the absolute amounts involved—$1.1 billion in Monsanto’s latest quarter, for example—pale in comparison to the profits being raked in by the oil majors. Exxon is scheduled to announce its first quarter results tomorrow—May Day—and a gusher is expected. The company earned $11.7 billion in the fourth quarter of 2007 and more than $40 billion for the year as a whole. Only a few dozen U.S. companies have $40 billion in revenues.

The Journal also had an article today on how food and energy companies are escaping the kind of public opprobrium that followed the run-up of oil prices in the 1970s. It seems that, apart from the relatively small number of angry truckers who have been protesting fuel prices in Washington, DC, most Americans are willing to accept soaring commodity prices with little more than a grumble. According to the Journal, this is because food and energy represent a smaller share of consumer expenditures than three decades ago. But that will inevitably change as those costs continue to rise while wage and salary levels remain largely stagnant. A point may come when the energy and agribusiness giants are seen not as accidental beneficiaries but as crisis profiteers.

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