Archer Daniels Midland

Archer Daniels Midland Company
Public
Traded as NYSE: ADM
S&P 500 Component
Industry Food processing
Commodities
Founded Minneapolis, Minnesota, United States (1902 (1902))
Headquarters 77 West Wacker Drive
Chicago, Illinois, United States
Key people
 Juan Luciano
(President and CEO)
Products Foods
Beverages
Feed
Ethanol
Bioenergy
Revenue Decrease US$ 81.201 billion (FY 2014)[1]
Increase US$ 4.021 billion (FY 2012)[1]
Decrease US$ 1.223 billion (FY 2012)[1]
Total assets Decrease US$ 41.553 billion (FY 2012)[1]
Total equity Decrease US$ 18.169 billion (FY 2012)[1]
Number of employees
 33,000 (June 2013)[1]
Website adm.com

The Archer Daniels Midland Company (ADM) is an American global food processing and commodities trading corporation, headquartered in Chicago, Illinois.[2][3][4] The company operates more than 270 plants and 420 crop procurement facilities worldwide, where cereal grains and oilseeds are processed into products used in food, beverage, nutraceutical, industrial, and animal feed markets worldwide.

It was named the world's most-admired food-production company by Fortune magazine for three consecutive years: 2009, 2010 and 2011.[5]

The company also provides agricultural storage and transportation services. The American River Transportation Company along with ADM Trucking, Inc., are subsidiaries of ADM.

Products

Products include oils and meal from soybeans, cottonseed, sunflower seeds, canola, peanuts, flaxseed, and Diacylglycerol (DAG) oil, as well as corn germ, corn gluten feed pellets, syrup, starch, glucose, dextrose, crystalline dextrose, high fructose corn syrup sweeteners, cocoa liquor, cocoa powder, cocoa butter, chocolate, ethanol, and wheat flour. End uses are consumption by people and livestock and additives for fuel.

Long known as a food and ingredients company, it has also invested in fuel production. ADM nearly doubled capital spending in its 2007 budget to an estimated $1.12 billion. The increase is planned for bioenergy projects, focusing on bioethanol and biodiesel.[6]

Oilseeds processing

The Oilseeds Processing segment includes global activities related to the origination, merchandising, crushing, and further processing of oilseeds such as soybeans and soft seeds (cottonseed, sunflower seed, canola, rapeseed, and flaxseed) into vegetable oils and protein meals.[7]

Corn processing

ADM's Corn Processing segment is engaged in corn wet milling and dry milling activities, with its asset base primarily located in the central part of the United States. The Corn Processing segment converts corn into sweeteners and starches, and bioproducts. Its products include ingredients used in the food and beverage industry including sweeteners, starch, syrup, glucose, and dextrose. Dextrose and starch are used by the Corn Processing segment as feedstocks for its bioproducts operations.[7]

Agricultural Services

ADM's Agricultural Services segment uses its U.S. grain elevator, global transportation network, and port operations to buy, store, clean, and transport agricultural commodities, such as oilseeds, corn, wheat, milo, oats, rice, and barley, and resells these commodities primarily as food and feed ingredients and as raw materials for the agricultural processing industry.[7]

Other products

Investor services

ADM Investor Services, Inc. is a registered futures commission merchant and a clearing member of all principal commodities exchanges in the U.S. ADM Investor Services International, Ltd., a member of commodity exchanges and clearing houses in Europe, and ADMIS Hong Kong Limited, offer broker services in Europe and Asia.[7]

Insurance services

ADM'S captive insurance services, which include Agrinational Insurance Company (Agrinational), provides insurance coverage for certain property, casualty, marine, credit, and other miscellaneous risks of the Company and participates in certain third-party reinsurance arrangements.

ADM's Crop Risk Services is a managing general agent which sells and services crop insurance policies to farmers.[7]

History

In 1902, George A. Archer and John W. Daniels began a linseed crushing business in Minneapolis, Minnesota. In 1923, Archer-Daniels Linseed Company acquired Midland Linseed Products Company, and the Archer Daniels Midland Company was formed. ADM expanded its agribusiness to include milling, processing, specialty food ingredients, and cocoa.[8]

Chief Executive Officers
StartedName
1970Dwayne Andreas
1997G. Allen Andreas
2006Patricia A. Woertz
2015Juan Luciano

In 1970, Dwayne Andreas became the chief executive officer of ADM, and is credited with transforming the firm into an industrial powerhouse. Andreas remained CEO until 1997 before his nephew G. Allen Andreas was named to this position.[9] He was one of the most prominent political campaign donors in the United States,[10] having contributed millions of dollars to Democratic and Republican candidates alike.

In 2001, Paul B. Mulhollem became the company's president.[11] Under his guidance, the company was the first U.S. company to sign a contract with Cuba since the embargo against Cuba was imposed October 1960.[12]

In May 2006, Patricia A. Woertz became the company's chief executive officer.[13][14] Formerly of Chevron, she was expected to focus on developing ethanol and biofuels. In February 2007, Ms. Woertz was elected Chairman of the Board at ADM.[15]

Starting in October 2012, the company sought to acquire strategic holdings to support serving Asian markets through acquisition of GrainCorp, an Australian grain firm with a network of storage and port facilities in Australia.[14] On 29 Nov 2013, this acquisition was blocked by the Australian Treasurer.

On July 7, 2014, the company said that it will buy Swiss-German natural ingredient company Wild Flavors for $3 billion, a move aimed at diversifying the company and helping brands appeal to consumers who increasingly favor foods with natural ingredients and flavorings.[16]

On November 5, 2014, ADM announced that effective January 1, 2015, Juan Luciano will become the company's new CEO.[17] Luciano was hired on in 2011 as the company's Chief Operating Officer. Woertz will retain the position of Chairman of the Board until 2016 when she is expecting to retire.

In October 2015, ADM announced the sale of its global cocoa business to Olam. The sale is valued at about $1.2 billion. Approximately 1,500 employees transferred to Olam with the sale.[18]

Criticism

Sherman Antitrust Law Violation

In 1920 the US Department of Justice brought suit against the National Linseed Oil Trust for violating the Sherman Antitrust Act. Several co-defendants were named, including the Archer-Daniels Manufacturing Company. The suit alleged all of these companies were acting in collusion to raise prices, citing a spike in linseed oil costs between 1916 and 1918, when the price rose from $.50 per gallon to $1.80.[19]

Price fixing

In 1993, the company was the subject of a lysine price-fixing investigation by the U.S. Justice Department. Senior ADM executives were indicted on criminal charges for engaging in price-fixing within the international lysine market. Three of ADM's top officials, including vice chairman Michael Andreas were eventually sentenced to federal prison in 1999. Moreover, in 1997, the company was fined $100 million, the largest antitrust fine in U.S. history at the time.[20] Mark Whitacre, FBI informant and whistleblower of the lysine price-fixing conspiracy, would also find himself in legal trouble for embezzling money from ADM during his time as an informant for the FBI. In addition, according to ADM's 2005 annual report, a settlement was reached under which ADM paid $400 million in 2005 to settle a class action antitrust suit.[21]

The Informant is a nonfiction thriller book [22] that documents the mid-1990s lysine price-fixing conspiracy case and the involvement of ADM executive Mark Whitacre. The book was adapted into the 2009 film The Informant!.

Violation of the Foreign Corrupt Practices Act

On December 20, 2013 the SEC announced that it had charged ADM for failing to prevent illicit payments (bribes) made by its foreign subsidiaries to Ukrainian government officials in violation of the FCPA. ADM agreed to pay more than $36 million to settle the SEC's charges.[23]

Environmental record

The company has been the subject of several major federal lawsuits related to air pollution. In 2001, it agreed to pay a $1.46 million fine for violating federal and Illinois clean-air regulations at its Decatur feed plant and to spend $1.6 million to reduce air pollution there.[24] In 2003, the company settled federal air pollution complaints related to the its efforts to avoid New Source Review provisions of the Clean Air Act that require pollution control upgrades when a plant is modernized. The company paid $4.5 million in penalties and more than $6 million to support environmental projects. In addition, ADM agreed to eliminate more than 60,000 tons of emissions of carbon monoxide, particulate matter, organic volatile chemicals and other pollutants from 42 plants in 17 states at a cost of hundreds of millions of dollars.[25]

ADM is involved in a joint project with Daimler AG and Bayer CropScience to develop jatropha as a biofuel.[26]

In an attempt to reduce its carbon footprint, the company has partnered with the Midwest Geological Sequestration Association and other organizations to test the disposal of carbon dioxide emissions underground. If testing is successful, beginning in late 2010 the company expected to dispose of 1,000 metric tons per day of carbon dioxide emissions currently being released to the atmosphere.[27]

Agricultural subsidies

The company lobbies for agricultural subsidies and price supports including sugar and ethanol. According to a 1995 report by the libertarian think tank Cato Institute, "ADM has cost the American economy billions of dollars since 1980 and has indirectly cost Americans tens of billions of dollars in higher prices and higher taxes over that same period. At least 43 percent of ADM's annual profits are from products heavily subsidized or protected by the American government. Moreover, every $1 of profits earned by ADM's corn sweetener operation costs consumers $10, and every $1 of profits earned by its bioethanol operation costs taxpayers $30."[28]

See also

References

  1. 1 2 3 4 5 6 "Archer Daniels Midland, Form 10-K, Annual Report, Filing Date Aug 27, 2012" (PDF). secdatabase.com. Retrieved January 13, 2013.
  2. ↑ "Corporate Headquarters." Archer Daniels Midland. Retrieved December 23, 2010. "Corporate Headquarters Archer Daniels Midland Company 4666 Faries Parkway Decatur, IL 62526 United States of America."
  3. ↑ "Zoning Map" (PDF). City of Decatur. March 17, 2008 Retrieved December 23, 2010.
  4. ↑ "Decatur city, Illinois." U.S. Census Bureau. Retrieved December 23, 2010.
  5. ↑ Press release (March 3, 2011). "ADM Again Named World's Most Admired Food Production Company". Archer Daniels Midland. Retrieved July 24, 2013.
  6. ↑ Fusaro, Dave (March 26, 2007). "ADM’s big bet on fuel". Food Processing . Retrieved June 6, 2007.
  7. 1 2 3 4 5 "UNITED STATES SECURITIES AND EXCHANGE COMMISSION : WASHINGTON, D. C. 20549 : FORM 10-K". Sec.gov. Retrieved 2015-11-30.
  8. ↑ "History". ADM. 2007-08-17. Retrieved 2015-11-30.
  9. ↑ "Archer Daniels Midland, Form DEF 14A, Filing Date Sep 17, 1997". secdatabase.com. Retrieved January 13, 2013.
  10. ↑ "Dwayne Andreas", So You Want to Buy a President?, Frontline
  11. ↑ "Archer Daniels Midland, Form 10-K, Annual Report, Filing Date Sep 20, 2002". secdatabase.com. Retrieved January 13, 2013.
  12. ↑ Roney, Marty (undated). "Alabama Farmers Want to Export More to Cuba". USA Today (via ABC News). Retrieved July 24, 2013.
  13. ↑ "Archer Daniels Midland, Form 8-K, Current Report, Filing Date May 1, 2006" (PDF). secdatabase.com. Retrieved January 13, 2013.
  14. 1 2 Henshaw, Caroline; Berry, Ian (December 20, 2012). "ADM, Graincorp CEOs Square Off". The Wall Street Journal. p. B2.
  15. ↑ "Archer Daniels Midland, Form 8-K, Current Report, Filing Date Feb 6, 2007". secdatabase.com. Retrieved January 13, 2013.
  16. ↑ "ADM buys ingredients company Wild Flavors for about $3 billion". Chicago Tribune. 7 July 2014.
  17. ↑ "Pat Woertz retiring; ADM names new CEO". Chicago Tribune. 6 November 2014.
  18. ↑ "ADM Completes Sale of Global Cocoa Business". Adm.com. Retrieved 2015-11-19.
  19. ↑ "Sues to dissolve Trust", New York Times. July 1, 1920. Retrieved 7/26/2015.
  20. ↑ Hunter-Gault, Charlayne (October 15, 1996). "ADM: Who's Next?". MacNeil/Lehrer Newshour (PBS). Archived from the original on September 30, 2007. Retrieved October 17, 2007.
  21. ↑ "Archer Daniels Midland Company. 2005 Annual Report". Adm.com. p. 52. Retrieved 2015-11-30.
  22. ↑ Webber, Susan (September 25, 2000). "Tale of the Tapes". The Daily Deal (Aurora Advisors, Inc.). Archived from the original on October 6, 2008. Retrieved October 2, 2008.
  23. ↑ "SEC Charges Archer-Daniels-Midland Company With FCPA Violations, Filing Date Dec 20, 2013". SEC. Retrieved December 22, 2013.
  24. ↑ "Archer Daniels Fined Over Clean-Air Rules". Los Angeles Times. January 13, 2001.
  25. ↑ Lee, Jennifer 8. (April 9, 2003). "2 Companies Said to Agree to Settle Suits on Emission". The New York Times. Retrieved July 24, 2013.
  26. ↑ "Archer Daniels Midland Company, Bayer CropScience and Daimler to Cooperate in Jatropha Biodiesel Project". DaimlerChrysler. Archived from the original on 2009-03-23.
  27. ↑ "Carbon-Sequestration Projects Put Innovative Emissions-Reduction Technology to the Test". Archer Daniels Midland. Retrieved February 26, 2010.
  28. ↑ Bovard, James (September 26, 1995). "Archer Daniels Midland: A Case Study In Corporate Welfare". Cato Policy Analysis No. 241. Cato Institute. Retrieved July 24, 2013.

External links

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