Archer Daniels Midland
Archer Daniels Midland's headquarters in Chicago
|Traded as||NYSE: ADM|
S&P 500 Component
|Founded||Minneapolis, Minnesota, U.S.|
|Founders||George A. Archer|
John W. Daniels
|Headquarters||77 West Wacker Drive|
Chicago, Illinois, United States
(chairman and CEO)
High fructose corn syrup,
|Revenue||US$64.341 billion (2018)|
|US$1.822 billion (2016)|
|US$1.279 billion (2016)|
|Total assets||US$39.769 billion (2016)|
|Total equity||US$17.181 billion (2016)|
Number of employees
The Archer Daniels Midland Company (ADM) is an American global food processing and commodities trading corporation, headquartered in Chicago, Illinois. 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. ADM ranked No. 49 in the 2019 Fortune 500 list of the largest United States corporations (which was based on 2018 total revenue).
Products include oils and meal from soybeans, cottonseed, sunflower seeds, canola, peanuts, flaxseed, Palm kernel and 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, 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.
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, and flaxseed) into vegetable oils and protein meals.
The first quarter of 2020, during the Pandemic, saw operating profit of Ag Services and Oilseeds (ADM's biggest revenue segment) rise $422 million or 1.2%.
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 (dextrose). Dextrose and starch are used by the Corn Processing segment as feedstocks for its bioproducts operations.
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.
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.
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.
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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.
|1997||G. Allen Andreas|
|2006||Patricia A. Woertz|
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. He was one of the most prominent political campaign donors in the United States, having contributed millions of dollars to Democratic and Republican candidates alike.
In 2001, Paul B. Mulhollem became the company's president. 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.
In May 2006, Patricia A. Woertz became the company's chief executive officer. 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.
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. 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.
On November 5, 2014, ADM announced that effective January 1, 2015, Juan Luciano will become the company's new CEO. 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.
In January 2017, Archer Daniels Midland agreed to sell its crop risk services (insurance) unit to Validus Holdings for $127.5 million. On January 19, 2018, it was reported that Archer Daniels Midland Co. (ADM) had approached Bunge Ltd. about a takeover, with details "unclear." At that point, Bunge had a market value of about $9.8 billion, and was also being pursued by Glencore PLC for an acquisition, since May 2017.
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.
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. 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.
The Informant is a nonfiction thriller book  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!. This case has also been featured on episode 168 of This American Life called The Fix Is In.
A noteworthy case of transfer mispricing came to light in 2011 in Argentina involving the world's four largest grain traders: ADM, Bunge, Cargill and LDC. Argentina's revenue and customs service began an investigation into the four companies when prices for agricultural commodities spiked in 2008 and yet very little profit for the four companies had been reported to the office. As a result of the investigation, it was alleged that the companies had submitted false declarations of sales and routed profits through tax havens or through their headquarters. In some cases, they were said to have used phantom firms to buy grain and had inflated costs in Argentina in order to reduce the recorded profits earned in the country. According to the country's revenue and customs service, the outstanding taxes amounted to almost US$1 billion. The companies involved have denied the allegations. To date, the Argentinian tax authorities have not replied to the Swiss NGO Public Eye’s request regarding the current state of the case. In its 2018 annual report to the US Securities and Exchange Commission (SEC), Bunge mentioned provisions which suggest that the case is still ongoing: "[A]s of December 31, 2018, Bunge's Argentine subsidiary had received income tax assessments relating to 2006 through 2009 of approximately 1,276 million Argentine pesos (approximately $34 million), plus applicable interest on the outstanding amount of approximately 4,246 million Argentine pesos (approximately $113 million)."
The Swiss NGO Public Eye has recently elaborated on a corruption case involving grain giant ADM. An ADM subsidiary pleaded guilty and agreed to pay criminal fines in excess of USD 17 million in 2013 to resolve charges that it had paid bribes, via vendors, to Ukrainian government officials in order to obtain value-added tax refunds. In a parallel action, the grain trader consented to a judgment that ordered ADM to pay close to US$37 million in "disgorgement and pre-judgement interest", which brought the total amount of penalties to more than US$54 million. Entanglement with government officials can even go a step further. In November 2017, in the wake of the revelations dubbed the Paradise Papers about dubious offshore schemes, the French TV broadcast Cash Investigation reported on the problematic dealings of LDC in Brazil. In 2010, the Geneva-based trader joined forces with a subsidiary of the world's biggest soy producer Amaggi to form Amaggi & LD Commodities Ltda. Amaggi is owned by Blairo Maggi, former Minister of Agriculture and a large landowner known as the "king of soy" who was Governor of the state of Mato Grosso when the joint venture with LDC was established. Amaggi & LD Commodities Ltda opened a trust based in the Cayman Islands the same year. The beneficial owners of the trust were all members of the Maggi family. Blairo Maggi himself has claimed never to have received any money from the trust. But allegations against him should have raised a red flag: Maggi was under investigation by the Brazilian judiciary for corruption and money laundering for his time as Governor of Mato Grosso. The administration under Maggi "is suspected of having enforced a scheme of monthly bribes paid to state lawmakers in exchange for political support". Brazilian prosecutors filed charges against Blairo Maggi in May 2018, accusing him of orchestrating a bribery scheme in 2009. LDC thus knowingly relied on an individual classified as a PEP for its business activities in Brazil. When it set up the joint venture in 2010, Blairo Maggi had an important role in government, which he had already mixed with his private-sector activities, creating clear conflicts of interest.
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.
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. In 2003, the company settled federal air pollution complaints related to 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.
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.
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."
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