The corporation granted the government $ 2.5 billion for future tax revenues (another $ 1 billion was later added by the oil companies), and in return received the right to place its own Minister of Economy.
Although some Peronist ideas remained in the Bunge & Born plan, for example, price and revenue restrictions, but the role of the state in the economy has significantly decreased. Menem declared privatization of many state-owned enterprises, sharply raised tariffs for utilities and gasoline. As a result, by 1989, the budget deficit and taxes on the export of agricultural products decreased substantially.
To stimulate exports, the state has lowered the rate of austral to the dollar. As a result, the same foreign currency earnings of exporters gave them three times higher revenues when selling austral.
“We have two reasons to assist the government,” said Bunge & Born spokesman Fernandez Madero. “First, loyalty to Argentina, and secondly, if purchasing power is growing, we are growing.”
The large export-oriented agrarian capital was so pleased with the reform that, as Argentina’s newspapers wrote, even cows applauded Menem. But this was the Achilles’ heel of the program, it focused only on some of the incentives for business but did not take care of overall economic stability.
As a result, Menem with the help of Bunge & Born managed to bring down high prices for only a few months. Soon, Argentina again hit hyperinflation and then defaulted. The protege of the corporation, the Minister of Economy Nestor Rapanelli resigned, and that was the final of the BB program.
However, Bunge & Born did not lose influence in the government. Guillermo Antonio Carrasedo, the former CEO of Bunge & Born, who replaced Rapanelli as executive vice president, said that there is no consensus among business leaders on the issue of government support. “But the fact that we stood behind the economic plan gave certain guarantees to business people,” he said.
Purchase and sale
Ten years after the bright, albeit short-lived mission of Bunge & Born to save the country’s economy, there was a sharp turn in the life of the corporation. January 22, 1998, in suites of the Rihga Royal hotel in Manhattan 100 European, North American, Brazilian and Argentine shareholders Bunge International Ltd decided to sell a number of companies.
In fact, they withdrew the holding from all branches of business, not related to the sale of goods. The sixth generation of Bunge grain merchants, who started their business in Amsterdam in 1818, decided to sell it not only because of competitive pressure on the global market for processing agricultural products but also in order to get a solid profit from the liquidation of companies in the amount of $ 3 billion.
No less significant reason for the sale was the divisions between the owners’ families, disputes, and difficulties in reconciling various interests with managerial decisions. “It’s logical that this happened in a holding company with dozens of shareholders who want to run their own business, people who do not know each other and do not have a liquidity mechanism in such closed companies as Bunge & Born”, the group’s executive director said. Many managers of companies in Venezuela, Brazil, Australia, and Argentina knew about the sale only from newspapers.
Although the global trend in the world of companies is to open its capital to the public, Bunge International continued to be a closed company, its shareholder list was a real mystery. All shareholders made their decisions in an atmosphere of maximum secrecy.
After all these changes, Bunge as a global company and a brand with a history still survived. It strengthened its influence in Asia and Europe, moved its headquarters to New York and continues to deal with grains and oilseeds, as well as many other types of production. Unlike former times, the company has become more open – and now all the changes at its top become accessible to the world’s community.
In the new century, it was time for Bunge Ltd to gather stones scattered in the late 90’s. In 2004, it acquired the oil company Cereol, in 2008 – the German margarine producer Walter Rau, one year later – Raisio Group, a producer of functional food ingredients. In 2017, Bunge announced plans to purchase 70% of IOI Loders Croklaan shares for a $ 946 million Malaysian palm oil producer, IOI Corp Berhad.
The Bunche and Bourn families no longer run a business, but their achievements are still taught to new employees of the corporation. Modern Bunge has its own code of norms – it embodies the entrepreneurial spirit of the founding families, which allowed the corporation to grow and prosper for almost 200 years.
Written by: Dmitry Gromov
Part-1 is here