Cargill Inc. struck a deal to sell its crop-insurance business to Silveus Insurance Group, the agricultural conglomerate’s latest step to realign its portfolio and exit some financial functions. With the deal, Cargill’s agricultural retail division will focus more directly on buying grain from farmers and selling them other risk-management services, a Cargill spokesman said on Tuesday. Terms of the deal weren’t disclosed. Cargill’s exit from the crop-insurance business, which it entered in 2007, comes as the suburban-Minneapolis company revamps its vast portfolio of businesses. Over the past year, Cargill sold its U.S. pork operations, spun off a hedge-fund unit and acquired a Norwegian fish-feed producer, while slimming its executive leadership team in a bid to make the 150-year-old company nimbler. Cargill Chief Executive David MacLennan is steering the shift amid sharp swings in Cargill’s financial performance, as a third consecutive year of declining crop prices weighs on the U.S. farm economy. Cargill in October reported a 20% jump in fiscal first-quarter profit, after disclosing in August its first quarterly loss in 14 years. Buying Cargill’s crop-insurance business, which sells policies but doesn’t underwrite them, will expand Silveus’s position as one of the top U.S. crop-insurance agencies, according to a statement from the two companies. Cargill sold crop-insurance products that compensated farmers for crop yields lost due to bad weather and natural disasters, as well as unexpected declines in the price of grain. The business of insuring farmers’ crops against financial or physical losses has grown tougher as corn, soybeans and wheat prices have slumped over the past three years, mainly due to a string of bumper crops and benevolent weather, according to Keith Coble, a professor of agricultural economics at Mississippi State University. “Reimbursement for these companies is on a percentage of the [insurance] premium, and the premium is tied to the value of the crop,” Mr. Coble said. Futures prices for corn, the most widely grown U.S. crop, have declined nearly 50% over the past three years, while soybean and wheat futures both are down about 40%. Other players, including tractor maker Deere & Co. and biotech seed giant Monsanto Co., have sold crop-insurance units over the past year as declining crop prices have pinched farmers’ wallets and pressured profits for the companies that sell farm supplies. Wells Fargo & Co. this month agreed to sell its Rural Community Insurance Services, one of the largest U.S. crop-insurance providers, to Zurich Insurance Group AG for between $675 million and $1.05 billion. Source - http://www.wsj.com/