15 Sep 2023 — Agro-giant Cargill has decided to minimize its grain commodity trading business in Russia. The grain export business has been notoriously complex in the country, according to the company.
“In line with Cargill’s earlier announcement to stop the export of Russian grain in July 2023, we can confirm we have reached an agreement with Delo [Russian company] to sell our 25% stake in our KSK grain terminal in Novorossiysk,” a Cargill spokesperson, tells Food Ingredients First.
“The sale is contingent on Russian Government approval and does not affect any other Cargill operations in the country.”
Financial details of the sale have not been revealed.
Challenging market
In March, Cargill noted that it would stop exporting Russian grain.
“As grain export-related challenges continue to mount, Cargill will stop elevating Russian grain for export in July 2023 after the completion of the 2022-2023 season.”
Russia is the largest wheat exporter in the world and its exports are estimated to reach 45.5 million metric tons this season.However, the business continues shipping Russian grain for third parties toward destination markets.
Similarly, earlier in the year, Louis Dreyfus Company said it would cease grain exports “as grain export challenges continue to increase” in Russia.
Nonetheless, while grain exports are challenging, domestic agricultural production is booming. Russia is the largest wheat exporter in the world and its exports are estimated to reach 45.5 million metric tons this season.
Can’t halt operations
In April, vodka-maker Pernod Ricard explained that, without minimal business activity in the country, Russia could take advantage of its bankruptcy laws and go after its employees. Furthermore, forceful nationalization of the company could be a risk.
Companies fear that if they diminish business activity, they could risk a forceful takeover.
Moreover, the Russian government published a decree on temporary management (temporary expropriation). Companies in the country have to navigate complex intentional bankruptcy laws that can lead to criminal liabilities and potentially to forceful nationalization.
Russia has already seized control of Danone and Carlsberg subsidiaries in the country.
The country has dealt with a mass exodus of companies following Ukraine’s ongoing invasion and war.
Source : Food Igredients
