Sector News

Cargill to stop selling seeds, crop chemicals in Black Sea region

February 19, 2016
Food & Drink

Cargill Inc will stop selling seeds, fertilizer and crop chemicals to farmers in the Black Sea region, as the global trader continues to cut back operations in the face of sliding commodity prices.

The 150-year old company, one of the world’s largest privately held corporations, is in the middle of a restructuring aimed at improving the way it responds to market swings.

Cargill will immediately start winding down its crop input business in countries including Russia, Ukraine, Romania and Hungary, and completely exit the business in the region by the end of May, according to a statement on Wednesday.

The company “has been unable to realize many of the expected synergies” between selling crop inputs and buying grain, the statement said.

Exiting the business will probably impact about 180 employees, according to Cargill. The company had about 25,000 employees in Europe, the Middle East and Africa last year and 150,000 worldwide, according to a 2015 corporate fact sheet.

As the company pulls out of inputs, it will aim to increase the volume of grain it buys in the region.

“The company will refocus its attention on its grain and oilseeds origination, merchandising and trading activities in these markets,” the statement said.

Last year, Cargill began a restructuring as global agricultural companies came under pressure from slumping commodity prices, slowing demand in China and weakness in emerging markets.

A global glut of grains and oilseeds has sparked a sharp drop in crop prices that has prompted farmers worldwide to review their expenses, including spending on fertilizer, seeds and chemicals.

In Romania, Cargill entered the crop inputs market in 2001 and has distributed a wide variety of seeds, pesticides and fertilizers since 2008, according to a company website. At one point, it dedicated three warehouses in the country to the distribution of inputs.

The Black Sea is a major producer and exporter of crops including corn and wheat.

Cargill will continue to sell crop inputs in other countries, including the United States and Canada, where Cargill AgHorizons operates a network of facilities that buy grain from farmers and sell inputs.

The company said in December that it would sell its crop insurance unit and in January that it would close its London shipping office. (Reporting by Tom Polansek; Editing by Bill Rigby and Alan Crosby)

Source: Reuters

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