Low corn prices have cut into Monsanto's seed and herbicide business.
When Air France announced last week that it will cut 2,900 jobs, the employees retaliated by storming the corporate headquarters. A violent mob forced Air France managers to flee -- their shirts were ripped from their backs, and they had to scale fences to escape.
Meanwhile in the United States, Monsanto announced today that it will eliminate 2,600 jobs as part of a "cost-saving plan." The company is currently dealing with falling sales of its biotech seeds and herbicides, and by cutting workers, executives hope to bring the company out of the red. So far, no employees have protested this decision.
The Associated Press reports "the job cuts will reduce the company's 22,500-employee workforce of by about 12 percent over the next two years." The decision is estimated to generate between $275 million and $300 million in annual savings by the end of fiscal 2017.
So why has Monsanto struggled in recent quarters? Corn prices have slumped due to an over-abundance of the crop, which in turn has created less demand for Monsanto's bestselling product: genetically-enhanced corn seeds.
Farmers are shifting acres to harvest other crops due to a surplus of corn from last year's harvest.
Even with that shift, 2015 is expected to bring the third-largest corn harvest on record, guaranteed to squash prices further, limiting farmers' and Monsanto's profits.
With so much corn (and not enough demand), it might be a good time to revisit ethanol production and creating bio-diesel fuel from corn.
The views and opinions expressed herein are those of the authors alone and do not necessarily reflect the views of Ora Media, LLC its affiliates, or its employees.
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