London | Reuters –– Cargill Inc., one of the world’s largest privately held corporations, has launched a restructuring that includes job cuts, one company source and four industry sources said Friday, the latest casualty of a downturn in the farm economy.
The 150-year-old company, a top commodities trader, is also closing offices, two of the industry sources said.
The cutbacks at the Minnesota-based company come as global agricultural companies are under pressure from slumping commodity prices, slowing demand in China and weakness in emerging markets where Cargill has significant investments.
Cargill may eliminate as many as 4,000 jobs, which would represent about 2.5 per cent of its employees, one of the industry sources said.
The company is “working on recalibrating their business,” said another industry source, a banker.
A Cargill spokesman initially declined to comment, saying “we typically don’t comment on rumours.” He later added he had not “heard anything along the lines of the layoff numbers you mentioned or office closings.”
Cargill is among the four “ABCD” companies that dominate the flow of agricultural goods around the world, competing against rivals ADM, Bunge and Louis Dreyfus. Recently, the companies have faced new competition from trading houses in Asia.
“It seems like they’re trying to adapt and be a little bit leaner and faster,” one U.S. grain trader who interacts with Cargill said about the company.
CEO David MacLennan, who took the reins two years ago, has already taken steps to change the company. In the last six months, Cargill has sold its U.S. hog business to Brazilian meat packer JBS for $1.45 billion and paid about $1.5 billion to buy Norwegian fish feed maker Ewos (all figures US$).
The company has said it will split the company’s hedge fund arm, Black River Asset Management, into three separate employee-owned firms.
Other agricultural companies are cutting back and looking to consolidate to save money. Last month, Monsanto, the world’s biggest seed company, said it was slashing 2,600 jobs and restructuring operations.
Deere and Co., the largest maker of farm equipment, also has eliminated jobs.
In Canada, Cargill’s Winnipeg-based operations include its AgHorizons Prairie grain handling and marketing network, four port terminals for grain, two major beef packing plants, 10 feed mills, canola crushing and refining operations and a stake in barley processor Prairie Malt.
Last month, Cargill reported a 20 per cent gain in profits for its fiscal first quarter ended Aug. 31, following a loss in the fourth quarter that the company attributed in part to slowing economies in emerging markets.
Cargill’s last substantial restructuring was about 15 years ago and aimed at moving employees into positions built around product lines instead of their geographic locations, said Ken Morrison, who worked for the company for 27 years until 2003.
“Headcount reduction and Cargill just don’t go in the same sentence,” Morrison said.
Separately, Cargill said Friday that two vice-chairmen with a combined 74 years of experience at the company will retire.
— Sarah McFarlane is Reuters’ senior commodities correspondent in London, England. Writing and additional reporting for Reuters by Tom Polansek in Chicago. Includes files from AGCanada.com Network staff.