Cargill cuts 5 percent of workforce amid falling profits

DAILY Bites

• Cargill is cutting 8,000 jobs, or 5% of its global workforce, amid declining profits and restructuring efforts.

• The company is consolidating into three core divisions to streamline operations and improve competitiveness.

• Falling crop prices and a shrinking U.S. cattle herd have significantly impacted Cargill’s margins.

DAILY Discussion

Cargill is making a 5 percent workforce reduction — approximately 8,000 jobs — amid a “strategic shift” to streamline operations and adapt to changing market conditions. 

The company made the announcement as profits for the fiscal year ending May 2024 fell to $2.5 billion, marking a 36 percent drop from the previous year and the lowest levels since 2015-16.

CEO Brian Sikes, who took over in early 2023, announced earlier this year the need to consolidate Cargill’s five business units into three core divisions: food enterprise, agriculture and trading, and a specialized portfolio. The restructuring is part of the company’s broader 2030 strategy to enhance competitiveness and sustain profitability in a volatile market.

“As we look to the future, we have laid out a clear plan to evolve and strengthen our portfolio to take advantage of compelling trends in front of us, maximize our competitiveness, and, above all, continue to deliver for our customers,” the company said in a statement on Monday.

“To strengthen Cargill’s impact, we must realign our talent and resources to align with our strategy. Unfortunately, that means reducing our global workforce by approximately 5 percent. This difficult decision was not made lightly.”

The cuts will affect employees across Cargill’s global operations, with layoffs planned at all levels, including about 475 positions at its Minnetonka, Minnesota, headquarters. Sikes stated that the changes aim to “streamline organizational structure” by removing redundancies and broadening managerial roles. Employees impacted by these decisions will be notified this week, with terminations set to begin in February 2024.

According to the company, Cargill’s challenges stem from several factors, including declining crop prices and pressures in the beef sector. The U.S. cattle herd, reduced to its smallest size since 1951 due to drought, has strained meatpacking operations. While the company enjoyed record profits during the pandemic and the geopolitical turmoil of 2022, its recent earnings have returned to pre-pandemic levels.

The restructuring and workforce reductions reflect broader industry trends, as agribusinesses face mounting costs to move and process food while adjusting to post-pandemic market dynamics. Analysts suggest Cargill’s abrupt changes might also signal underlying concerns about its cash flow projections through the decade’s end.