US agri-food giant Cargill is reportedly planning a strategic overhaul which will see the business split into three operating units instead of the current five.
News agency Reuters, quoting a internal memo which it has seen and two unnamed company sources, wrote that Cargill, like other agri-food businesses, is facing challenges as prices of the commodity crops they trade approach four-year lows and crop processing margins have fallen.
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Reuters reported that the memo says the company intends to “reduce our costs and optimise our capital investments” and quotes CEO Brian Sykes as saying: “Our recent performance and the market trends unfolding in front of us have proven a clear and pressing case for change.”
The Minnesota-based business, a major supplier of meat and agricultural commodities which can trace its roots back to 1865, is reportedly planning to change its structure to three divisions: Food, Ag & Trading and a Specialised Portfolio, largely focusing on animal nutrition and health.
The new Food enterprise will combine Food & Bio and Protein & Salt teams, while Cargill Risk Management and Metals will be moving into the new Ag & Trading enterprise.
As a privately-held company – the largest in the US – Cargill does not release its earnings but Reuters points out that publicly-quoted peers such as Archer-Daniels-Midland and Bunge Global missed Wall Street estimates for second-quarter earnings.
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By GlobalDataJust Food has asked Cargill for a response to the Reuters story, outside US office hours.
