Global trading house Cargill said that it plans to cut around 5% of its staff, or about 8,000 jobs, after revenue slumped in its most recent fiscal year as crop prices hit multi-year lows.
Agricultural merchants including privately held Cargill are under pressure as prices of the commodity crops they trade, such as wheat, corn and soybeans, have dropped to near four-year lows and crop processing margins have shrunk.
Most of Cargill's job reductions would take place this year, the company's president and CEO, Brian Sikes, said in a memo reviewed by Reuters on Tuesday.
"They will focus on streamlining our organisational structure by removing layers, expanding the scope and responsibilities of our managers, and reducing duplication of work," Sikes said in the memo.
Shift In Strategy
The move is part of a shift in strategy at the nearly 160-year-old company, Cargill said, when asked about the memo.
"Unfortunately, that means reducing our global workforce by approximately 5%," it said.
Minnesota-based Cargill has more than 160,000 employees, which implies that a 5% cut in staff would hit about 8,000 jobs.
Unlisted Cargill reported revenue of $160 billion for its 2024 fiscal year that ended in May, down from a record $177 billion in the previous year.
Cargill does not release quarterly earnings statements, but in a memo seen by Reuters in August, it said less than one-third of its businesses met their earnings goals in the last fiscal year.
"Impacts to our operations and frontline teams will be kept to a minimum as we empower them to continue delivering for our customers," Sikes said in the memo.
Structural Changes
The move comes after Cargill said in August it would undergo structural changes after missing internal earnings goals, with plans to streamline operations into three units from five as part of its 2030 strategy, Reuters reported in August.
Sikes said the company will hold a meeting on Dec. 9 to share more information about the restructuring.
"This week, for those in countries where we can immediately communicate to employees whose roles are impacted, we'll set up meetings to explain next steps," he said.
Bloomberg News reported Cargill's job cut plan earlier.
Cargill's restructuring comes as its competitor Archer-Daniels-Midland faces its own challenges after discovering accounting irregularities and at the same time battling weaker earnings.
Meanwhile, after months of tackling competition regulators including in Canada and China, U.S. grains trader Bunge Global said in October it expects to complete its takeover of Glencore-backed Viterra by early 2025.
