ST. LOUIS (AP) - Agribusiness conglomerate Archer Daniels Midland Co. announced plans Wednesday to cut 1,000 jobs, or about 3 percent of its total workforce, with the majority of the positions being salaried staff.
The move will cut about 15 percent of the Decatur, Illinois-based company's corporate staff, CEO Patricia Woertz said in statement.
Archer Daniels Midland reported $2.03 billion in profits for the last fiscal year alone, but a volatile global market for crops has made for unpredictable revenue. Corn and soybean prices have seesawed violently this year, hitting near-record levels only to plunge again in a matter of months. Such swings can quickly wipe out profits, so Archer Daniels Midland is looking to cut as much overhead costs as it can.
Woertz said the job cuts will help the company be more competitive in the modern food industry. Archer Daniels Midland expects to save about $100 million in annual expenses from the cuts, along with other cost-cutting measures. The job cuts will cost between $50 and $75 million during the third quarter of the company's current fiscal year.
Archer Daniels Midland said it first will offer employees a chance to voluntarily retire early if they are at least 57 years old and meet other requirements. Employees have until the end of January to take the retirement package. After that, Archer Daniels Midland will cut the remaining number of jobs needed to meet the 1,000-mark.
Archer Daniels Midland employs 30,000 people worldwide. The company operates everything from shipping barges to ethanol plants and big factories where corn is turned into a rainbow of engineered food ingredients. The company can be both helped and hurt by big swings in crop prices. On the one hand, it can make more money by selling grain overseas. But when corn prices shot up early this summer, it meant Archer Daniels Midland had to pay a lot more for its raw ingredients, which cut the profit margin in its corn processing division.
The reasons behind big price swings for corn and soybeans vary. One of the biggest is the historically low level of grain reserves. The U.S. ethanol industry consumes about 40 percent of the U.S. corn crop, and global livestock producers are consuming more soybeans and corn to feed newly wealthy customers in Asia. Farmers have had a hard time meeting the demand. When reserves get low, global traders get jittery and bid up prices quickly.
A big part of Archer Daniel Midland's business is guessing which way those prices are going to move.