Cargill, a Minneapolis-based company, plans to cut thousands jobs around the world after it failed to meet its profit target.
Bloomberg reported that the world’s biggest agricultural commodities trader, based on an internal memo released by the company, will cut 5% from its 164,000 employees as part of a 2030 strategy.
The global commodities trading company’s revenues fell in its latest fiscal year, as crop prices hit multi-year lows.
Cargill and other agricultural merchants are being pressured by the low prices for the commodities that they trade such as corn, wheat, and soy beans.
Reuters reported that the crop processing margins for these crops have decreased to levels not seen in four years.
This year, there will be a reduction in the number of jobs.
In a memo, Cargill CEO Brian Sikes said that the majority of job cuts would occur this year.
Sikes wrote in the memo that:
The focus will be on streamlining the organisational structure of our company by removing unnecessary layers, increasing the scope and responsibility of our managers and reducing duplicate work.
According to reports, the cuts won’t affect executive-level workers but several top leaders will be affected at the next level.
Cargill, according to Reuters, said that the move represents a change in the 160-year-old strategy of the company.
A 5% reduction would result in 8,000 fewer jobs for the agricultural trading giant.
According to the memo, “Unfortunately this means that we will have to reduce our global workforce by about 5%.”
Cargill revenue drops
Cargill, and its trading rivals such as Bunge Global SA and Archer-Daniels-Midland, have witnessed a slump in profits after bumper crops caused corn and soybean prices to plunge.
Cargill’s revenue decline has been made worse by the US cattle herd being the smallest in 70 years.
In the past 10 years, the company aimed to be the third largest beef processor in the US.
In the memo, Chief Executive Officer Brian Sikes stated that they would focus on streamlining the organizational structure of the company by removing unnecessary layers, increasing the scope of responsibilities for our managers and reducing the duplication of tasks.
Cargill reported a revenue of only $160 billion for the fiscal year that ended in May. This was a significant drop from the $177 billion record set the year before.
Cargill cuts jobs: streamlining operations
In August of this year, Cargill told its employees it was going to streamline its operations.
The company reduced the number of business units from five to three after less than one third of its divisions achieved their earnings targets by 2024. According to Reuters this was part the company’s 2030 strategic plan.
In the memo, Sikes stated that “impacts on our frontline and operations teams will be kept at a minimum while we empower them so they can continue to deliver for our customers.”
He said:
We’ll be setting up meetings this week to explain the next steps for employees in countries that we can communicate with immediately.
As new information becomes available, this post Cargill to reduce 5% of its workforce due to low crop prices and missed profit targets may be updated.
