Cargill Must Give Up Port Grain Elevator

TO WIN FEDERAL APPROVAL of plans to buy a competitor, the giant trader may leave the Port of Seattle's Terminal 86 without a tenant.

The Port of Seattle may be looking for new tenants for its landmark grain-storage facility at Terminal 86.

The site is leased by Minnesota-based Cargill, which plans to acquire Continental Grain. The Justice Department announced Thursday that for Cargill, the nation's largest privately held company, to proceed with the purchase, it would have to give up its Seattle facility along with other port and river grain elevators across the country.

In Seattle, the company stores corn and soybeans brought by rail from the Midwest before shipping them abroad.

In all, Cargill will sell four port elevators, four river elevators and one rail terminal.

Cargill pays the Port of Seattle $88,416 a month for its lease. Cargill also collects vessel dockage fees and pays 50 percent of those to the Port.

Cargill spokeswoman Lori Johnson said the Justice Department was concerned the company would have too much business concentrated in the Pacific Northwest because Continental leases a grain-storage facility in Tacoma.

"We fought the Justice Department not to include Seattle," said Johnson.

"We still need to sit down with Port officials and talk about the options and make it work for everyone," she said. "But we do have an obligation under the lease."

In November, Cargill exercised its option to lease the Terminal 86 grain facility for a five-year period beginning in November 2000, when the current lease expires. The company has leased the site since 1968.

Port of Seattle spokesman Imbert Matthee said it was too early to tell what would happen with the Cargill facility, or who might take over the lease.

Cargill hopes to complete its deal with Continental by the end of July. In all, Cargill, which owns or operates 243 grain-handling facilities, will acquire 54 U.S. and eight foreign facilities owned by Continental. The deal is expected to raise the company's share of the U.S. market for soybeans, wheat and corn from 6 percent to about 10 percent.

Cargill is the second-largest grain trader in North America in terms of storage capacity, behind Archer Daniels Midland. Last year, it had total revenue of $35 billion. The company has about 80,600 employees and sells and distributes agricultural, industrial and financial products in 65 countries.

New York-based Continental is the fifth-largest grain trader in North America with $16 billion in revenue for 1998.

When Cargill announced last year it wanted to buy Continental, some farmers raised concerns that combining the two companies would give Cargill power to artificially lower the price paid to them for their products.