Cargill: Chinese mill closures not exclusively tied to ASF
Despite uncertainties spurred by African swine fever, market forces — not disease — triggered Cargill plant closures
The closure of three animal nutrition plants by Cargill is not directly tied to ongoing outbreaks of African swine fever (ASF) in China, according to a company executive.
Although Reuters reported that the spread of the disease had prompted the closure of Cargill plants in China in recent months, the company issued a statement last week clarifying that market forces and shifts in company strategy — not the disease itself — triggered the closure of the three plants.
“Like all large companies, we regularly undertake strategic reviews of our operations to ensure we’re being as efficient and effective as possible to best serve our customers,” Chuck Warta, president of Cargill’s premix section, said in a statement. “Considering market shifts and the need to optimize our operations, we made a strategic decision to streamline three of our animal nutrition plants in the second half of fiscal year 2019.”
The closures, Warta continued, did not represent a loss of confidence in the Chinese region at Cargill, pointing to $90 million in new assets Cargill is developing in the region. Cargill is also working with the Chinese government and farmers to improve biosecurity and prevent the spread of ASF.
The week prior, Reuters reported that an ASF-driven loss of demand for animal feed, coupled with the ongoing U.S.-China trade war and flooding in the Midwestern U.S., had caused a 41% drop in the company’s adjusted quarterly profits. Reuters quoted Warta as saying that Cargill does not expect demand for feed in China to recover in the near term, and that Cargill had no plans to reopen the three newly closed facilities.
View our continuing coverage of the African swine fever outbreak.