Minnesota-based agribusiness Cargill said it will stop exporting Russian grains sourced by the company by the middle of this summer.
"(A)s grain export-related challenges continued to mount, Cargill will stop elevating Russian grain for export in July 2023 after the completion of the 2022-2023 season," the company said in a statement.
"Elevating" is industry parlance for the lifting of grain into export vessels. As of March 2022, Cargill still owned 25% of a vital deep sea port terminal in Novorossiysk in southwest Russia.
Cargill will stop exporting grain the company had sourced from within Russia, a spokeswoman said. But Cargill will continue buying Russian grain cargo from other companies that it will then ship to "destination markets in line with our purpose to nourish the world," the spokeswoman said.
Cargill's other business divisions, such as starches and sweeteners, oils and fats, as well as animal feed would not be affected by this announcement.
Within days of Russia's unprovoked invasion of neighboring Ukraine last year, Cargill, which charters one of the world's largest fleets of grain ships, announced it would scale back but continue operating essential food and feed facilities in Russia, a wheat-rich nation, to forestall global food insecurity.
The agribusiness' decision to continue operating inside Russia drew criticism from some, as many American and western companies pulled out of the aggressor nation as punishment for President Vladimir Putin's decision to invade Ukraine. But the privately held Cargill, which handles grain for animal feed and bread, had maintained it played a unique role in staving off skyrocketing food prices and world hunger, particularly in areas of the world experiencing famine.
This past January, in an interview with the Star Tribune, Cargill CEO Brian Sikes reaffirmed this commitment.
"We're engaged in the region," Sikes said. "We continue to operate in Ukraine. And we continue to operate in Russia, which has been controversial."
Edward Usset, a grain marketing economist at the University of Minnesota, said, "Cargill — with this war in Ukraine — has taken some grief because a lot of companies just walked out of Russia. But, well, Cargill's got bricks-and-mortar [processing plants] there. They just don't have the fifth floor of an office building [that they can easily vacate]."
Sikes, during the January interview, said two factors would lead the company to cease operating in Russia: if Cargill's facilities were nationalized by the Russian government or if the company could not provide safety to its employees.
A Cargill spokesperson on Wednesday declined to address the status of those concerns.
The Russian Agriculture Ministry, in a statement to Reuters, said the cessation of Cargill's activities will not disrupt the country's grain shipments.
The war in Ukraine triggered a spike in international grain prices in 2022, contributing to record-high annual revenue for Cargill. According to an estimate from Bloomberg, Cargill has been the 6th-largest grain trader inside Russia since July of last year, shipping just under 1.5 million tons of grain.
The announcement means Cargill will no longer load ships in Russian ports, Usset said. He said the cost of operating a terminal in the country may have become too costly for the international grain merchant.
"The Black Sea is in the middle of a war," Usset said. "This is dangerous stuff."
But he doesn't expect the announcement to result in a grain price spike in the U.S. nor lead to significant fluctuations in Black Sea markets.
"It's a hitch in the supply chain, if you will, but it's a small hitch," Usset said. "Cargill was a big player. But others continuing to export are probably happy to take on their business."
