WASHINGTON (AP) – Monsanto Co. says it will eliminate 2,600 jobs as part of a cost-saving plan designed to deal with falling sales of its biotech seeds and herbicides, which pushed it quarterly losses deeper into the red.
The job cuts will reduce the company’s 22,500-employee workforce of by about 12 percent over the next two years. Its shares dropped more than 2 percent in morning trading Wednesday.
The St. Louis-based agricultural giant said the move will generate between $275 million and $300 million in annual savings by the end of fiscal 2017. The cost of the reorganization – which will streamline sales, R&D and other departments – is estimated at $850 million to $900 million.
Monsanto has struggled in recent quarters to deal with slumping corn prices in the U.S., which have reduced demand for its best-selling product: genetically-enhanced corn seeds. Farmers are shifting more acres to 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, squashing prices and limiting farmers’ profits.
Monsanto’s biotech seeds have genetically engineered traits that help farmers increase their crop yield, despite their higher costs.