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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.
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.