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Cargill, the world’s largest agricultural commodities trader, said it was slashing 5 per cent of its 164,000-strong workforce as part of a sweeping restructuring effort to restore profit margins.
The move comes after the Minneapolis-based company reported falling revenues, driven by declining crop prices.
Earlier this year chief executive Brian Sikes, who took the helm in early 2023, outlined plans to streamline Cargill’s operations to improve competitiveness and address shifting market dynamics.
The privately held company is consolidating its operations into three core divisions — food enterprise, agriculture and trading, and specialised portfolio — down from five business units.
“As we look to the future, we have laid out a clear plan to evolve and strengthen our portfolio to take advantage of compelling trends in front of us, maximise our competitiveness, and, above all, continue to deliver for our customers,” the company said in a statement on Monday.
“To strengthen Cargill’s impact, we must realign our talent and resources to align with our strategy. Unfortunately, that means reducing our global workforce by approximately 5 per cent. This difficult decision was not made lightly.”
Cargill is the C in the so-called ABCD of global food commodities traders — along with Archer Daniels Midland and Bunge from the US and Louis Dreyfus in Europe — that dominate the flow of agricultural commodities around the world. It has also become the US’s third-largest beef processor over the past decade.
The ABCD quartet thrived during the Covid-19 pandemic and the 2022 Russian invasion of Ukraine, with market volatility and high crop prices helping to bring them record profits. But since then their fortunes have reversed. Ample global crop supplies, which have driven down prices, have squeezed margins across the industry.
In August, Cargill reported a sharp drop in revenues to $160bn for the fiscal year ending May 2024, from $177bn in the previous year.
As well as declining crop prices, the company has been hit by pressure in the beef sector. Drought in the west and south of the US over the past year has forced ranchers to cut the national cattle herd to its smallest since 1951, creating challenging conditions for Cargill’s meat packing operations.
One of the largest privately owned companies in the world, Cargill is controlled by the Cargill and MacMillan families, descendants of William Wallace Cargill, who founded it as a grain-selling business in 1865.
The company’s profits fell to $2.48bn in the year to the end of May, the lowest since 2015-16, according to Bloomberg.
https://www.ft.com/content/33b3ec0e-e4d7-4eeb-9c91-b92b8bcf4211
