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BayWa AG reorganises agricultural business in northern and eastern Germany

The Group aims to achieve greater efficiency and a stronger marketing position in agricultural trading in Germany

BayWa AG plans to reorganise its agricultural business in eastern Germany in order to increase its competitiveness in agricultural trading in Germany. According to the plans, the trade in agricultural inputs and the recording and marketing of agricultural products in Saxony, Saxony-Anhalt, Thuringia, Brandenburg and Mecklenburg-West Pomerania will be combined under the management of BayWa Agrarhandel GmbH, a wholly owned subsidiary of BayWa AG, from 2021. Until now, both BayWa itself and BayWa Agrarhandel GmbH have acted as agricultural trade partners in northern and eastern Germany. The planned restructuring will allow BayWa to enhance its effectiveness and the efficiency of its local activities, thereby generally strengthening its marketing position in agricultural trading in Germany. As a result, farmers in southern Germany will also benefit from a significantly optimised supply chain with connections to ports along the Baltic Sea.

“The pressure to change in agriculture is both a challenge and an opportunity for agricultural trading in Germany,” says Klaus Josef Lutz, Chief Executive Officer of BayWa AG. “Agriculture is BayWa’s DNA – that is true for every corner of our sales territory. We believe firmly that we will be able to successfully pursue our business activities going forward and will continue to be the efficient, high-performing partner for farmers that they have come to expect. In connection with the reorganisation in northern and eastern Germany, we will therefore also invest in new sales ideas and efficient logistics concepts there while transforming our locations into modern, powerful agricultural sites.”

Due to past developments, the regions in northern and eastern Germany have tremendous grain storage capacities that are no longer needed, as recording volume in the region has been falling for years. The structure of agriculture in the north-east – which differs greatly from the developments in regions with smaller operations, such as southern Germany – has led farms and other agricultural businesses to increasingly set up their own storage and logistics capacities. As a result, they are taking on an ever wider range of traditional trading functions for themselves and as a service for other agricultural operations. Climate change is also having an additional limiting effect on recording volume in the north-east. Compared to southern Germany, the regions in northern and eastern Germany have already been particularly strongly affected in recent years by extreme weather conditions, especially drought.

In the medium term, BayWa will therefore take advantage of the reorganisation to reduce storage capacity that is no longer needed and to hand it over to interested farmers that would like to continue using it in future. The number of BayWa recording locations and grain warehouses in northern and eastern Germany will be reduced from a total of 50 to 30 in 2021. As a result, almost 90 of the roughly 390 jobs at the locations will be cut. Staff in the eastern business sector region and at BayWa Agrarhandel GmbH have been informed about the necessary measures and the schedule. Negotiations with the Main Works Council concerning a reconciliation of interests and a redundancy payments scheme for those employees affected by the closures are scheduled to begin soon. The aim of all parties is to ensure that the restructuring process takes place in a socially responsible manner. BayWa expects the number of employees actually affected by job cuts to be well under 90 thanks to retirement agreements or the option to switch to vacant positions within the BayWa Group, among other measures.

BayWa Agrarhandel GmbH

BayWa Agrarhandel GmbH is a wholly owned subsidiary of BayWa AG. Its business focuses on the recording and marketing of agricultural commodities, as well as the sale of agricultural inputs and feedstuffs. Buyers of the agricultural products include processors in Germany and Europe. The company also serves export markets outside the EU through the Baltic Sea port locations in Vierow (near Greifswald) and Mukran (Rügen), in which BayWa Agrarhandel GmbH holds a stake.

 

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