By Tom Polansek
CHICAGO (Reuters) -Global commodities trader Cargill began laying off employees across its vast operations on Tuesday in a drive to slash headcount by 5%, sending U.S. workers from supply chain, inventory control and other roles to look for new jobs.
Cargill, a major grain merchant and U.S. beef processor, is facing a downturn in returns in cattle, grains and oilseeds businesses.
In Minnesota, home to its headquarters, Cargill plans to terminate 475 employees at an office center in Wayzata starting on Feb. 5, the company said in a letter to state officials. Cargill began informing staff about layoffs this week, and they are eligible for severance, according to the letter.
Cargill has more than 160,000 employees worldwide, and a spokesperson said all operating regions will be affected by cutbacks.
“The company is facing a cyclical downturn,” said Chris Johnson, agribusiness director for S&P Global Ratings. “Certainly, their exposure to beef is a reason why they have faced a significant shortfall in earnings.”
Cargill rival Archer-Daniels-Midland, which does not have a beef business, said on Tuesday it is seeking to control costs as the challenging commodities cycle is likely to continue into 2025.
The cost of cattle has soared for beef processors after drought reduced grazing lands, prompting ranchers to slash the nation’s herd to its smallest size in decades. U.S. meatpacker Tyson Foods (NYSE:TSN) said on Monday it is closing a Kansas beef and pork plant.
Cargill’s oilseed processing business is also under pressure from uncertain demand for biofuels and lower processing margins, analysts said.
Ample supplies of soybeans and corn have pushed prices for the commodity crops near four-year lows, hitting the grains handling business of Cargill, ADM and other rivals such as Bunge (NYSE:BG).
On LinkedIn, several employees in Costa Rica said they had lost their jobs in talent acquisition. U.S. employees in inventory control, marketing, supply chain analysis, and the company’s Digital Technology and Data unit also sought new jobs on the networking site.
Cargill previously said it will undergo structural changes after missing internal earnings goals. It reported revenue of $160 billion for its 2024 fiscal year that ended in May, down from a record $177 billion in the previous year.
“We think it’s more of a multi-year process for this strategic change to really impact the company’s profitability,” Johnson said.
This post is originally published on INVESTING.
