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Monsanto plans 1,000 more job cuts

Facing increasing pressure from declining seed sales, St. Louis-based Monsanto has announced plans to cut more jobs from its global work force.

Under what the company describes as a Revised Restructuring Plan, it will eliminate 3,600 positions through the end of fiscal year 2018. Monsanto's original initiative, announced last October, called for 2,600 job cuts.

The agricultural giant says lower prices for major crops is prompting farmers to spend less, leading to lower sales. It is also coping with global currency issues, including a move late last year by the government in Argentina to devalue that country's currency by 35 percent to 40 percent. The South American country is a key international market for Monsanto.

"We now have restructuring plans and cost savings initiatives in place that align to our target to deliver $500-million in annual savings by fiscal year 18," Monsanto's Chief Operating Officer Brett Begemann told analysts Wednesday morning during a quarterly conference call.

The company is reporting a loss of $253 million for the most recent quarter, compared to a profit of $243 million for the same period a year earlier.

Industry Consolidation

Monsanto is also bracing for a seismic shift in the agricultural sector through the pending merger of two main rivals: DuPont and the Dow Chemical Co. That estimated $120 billion deal might not be a bad thing for Monsanto, which does business with both companies.

"They are also two of our largest technology licensees and we expect that to continue," says Monsanto Chief Executive Officer Hugh Grant.

Once finalized, Dow and DuPont will divide into three companies, with one focusing on agriculture.

But the pending deal increases pressure on Monsanto to seek more formal partnerships, and possibly merge, with other major players to retain its competitive position throughout the world.

That raises the prospect of re-visiting a possible combination with Switzerland-based Syngenta.

"We will continue with a disciplined approach to evaluate M&A opportunities," Grant told analysts.

Syngenta rejected a $46 billion offer from Monsanto last year. At the time the European company stated it wasn't enough money.

But Grant is not ruling out a potential combination.

"There is still significant opportunity there."

The companies are once again exploring the possibility, but Syngenta has other suitors. They include China National Chemical Corporation, more commonly known as ChemChina. The China-based, state run company increased its offer for Syngenta last month.

Some analysts say the Swiss business is waiting to see if Monsanto will submit another merger proposal.

Follow Wayne Pratt on Twitter: @wayneradio

Wayne Pratt is the Broadcast Operations Manager and former morning newscaster at St. Louis Public Radio.