Archer-Daniels-Midland Overview

Archer-Daniels-Midland

Introduction

Archer-Daniels-Midland Company is an agricultural origination and processing company. Oilseeds, corn, wheat, and other agricultural products are processed primarily by Archer-Daniels Midland. The business owns a vast network of logistical assets for storing and transporting crops worldwide. Additionally, ADM owns and operates a nutrition company that focuses on human and animal ingredients. Also, the business is a significant producer of ethanol, starches, and sweeteners based on corn. Furthermore, it provides futures commission merchant; services for commodity brokerage; securities pledged to commodity exchange clearinghouses and cash margins; as well as cash pledged as security under some insurance policies. The business is organized into three divisions: nutrition, carbohydrate solutions, and agricultural services & oilseeds. The headquarters of the business are in Chicago, Illinois, where it was established in 1902.

Archer Daniels Midland Early History

In 1878, John W. Daniels started crushing flaxseed in Ohio to make linseed oil. In 1902, he moved to Minneapolis, Minnesota, to start the Daniels Linseed Company. George A. Archer joined the company in 1903, and within a few years, it changed its name to the Archer-Daniels Linseed Company. Because Archer’s family had been crushing flaxseed since the 1830s, he also brought experience to the company. The company was incorporated as the Archer Daniels Midland Company after purchasing the Midland Linseed Products Company in 1923. Other significant shifts occurred during the 1920s. The scientific investigation into how to alter the chemical structure of linseed oil was initiated by Archer, Daniels, and Mairs. The successful research and development program started with this project. At the time, companies did not allocate funds for research and development. Milling, processing, specialty food ingredients, and cocoa were added to ADM’s agribusiness. ADM went public on the New York Stock Exchange in 1924. The Commander-Larabee Company, a major flour miller with facilities in Minnesota, Kansas, and Missouri, was acquired by Archer Daniels Midland in 1930. Commander-Larabee could make 32,000 barrels of oil per day. Dwayne Andreas became ADM’s chief executive officer in 1970, and he is credited with transforming the company into an industrial powerhouse. In 1969, ADM moved its headquarters to Decatur, Illinois, where they remained for 45 years before moving to Chicago in 2014. Andreas held the position of CEO until 1997, when his nephew G. Allen Andreas was appointed. Paul B. Mulhollem became the president of the business in 2001. Since the Cuban embargo was imposed in October 1960, ADM was the first American company to enter into a contract with the island nation. ADM acquired Hutchinson, Kansas-based Collingwood Grain Inc. in 1989, adding 48 million bushels of grain storage at 36 terminal elevators. ADM entered into a three-year agreement in January 2008 with Daimler AG and Bayer CropScience to investigate the potential utilization of jatropha as a biofuel feedstock. GrainCorp, an Australian grain company with a network of storage and port facilities in Australia, was acquired by the company in October 2012 in an effort to acquire strategic holdings to support serving Asian markets. The Australian Treasurer stopped this purchase on November 29, 2013. The acquisition of Swiss-German natural ingredient company Wild Flavors for $3 billion was announced on July 7, 2014, with the intention of broadening the company’s offerings and assisting brands in appealing to consumers who are increasingly interested in foods containing natural flavorings and ingredients. On November 5, 2014, the appointment of the current CEO, Juan R. Luciano was made public. In 2011, Luciano joined the company as executive vice president and chief operating officer, and in February 2014, he became president.

Archer Daniels Midland Product Offers

Oilseed Processing

The global activities that are associated with the origination, merchandising, crushing, and subsequent processing of oilseeds such as soybeans and soft seeds (cottonseed, sunflower seed, canola, and flaxseed) into vegetable oils and protein meals are included in the Oilseeds Processing segment.

Corn Processing

The Corn Processing segment of ADM’s business focuses on the wet and dry milling of corn, with the majority of its assets situated in the middle of the United States. Corn is processed into bioproducts, sweeteners, and starches in this segment. Sweeteners, starch, syrup, and glucose (dextrose), all of which are utilized in the food and beverage industry, are included in its products. This segment uses dextrose and starch as feedstocks for its bioproducts operations.

Agricultural Services

Agricultural commodities like oilseeds, corn, wheat, milo, oats, rice, and barley are resold primarily as food and feed ingredients and as raw materials for the agricultural processing industry by ADM’s Agricultural Services segment, which uses its U.S. grain elevator, global transportation network, and port operations.

Investor Services

ADM Investor Services, Inc. is a member of all of the major commodities exchanges in the United States and a registered futures commission merchant. ADM Investor Services International, Ltd. and ADMIS Hong Kong Limited provide broker services in Europe and Asia.

Archer Daniels Midland Scandals

Tax Avoidance

In 2011, a significant instance of transfer mispricing involving the four largest grain traders in the world was discovered in Argentina: Bunge, ADM, Cargill, and LDC. When agricultural commodity prices spiked in 2008, Argentina’s revenue and customs service began an investigation into the four businesses, but the offices had reported very little profit for the businesses. The investigation allegedly revealed that the businesses had routed profits through tax havens or their headquarters and submitted false sales declarations. In some instances, it was alleged that they had inflated costs in Argentina in order to reduce the recorded profits earned in the country and purchased grain through fictitious businesses. The allegations have been refuted by the involved businesses.

Corruption

A corruption case involving grain giant ADM was deconstructed by the Swiss NGO Public Eye. In 2013, an ADM subsidiary admitted guilt and agreed to pay criminal fines of more than USD 17 million to settle allegations that it had bribed Ukrainian government officials through vendors in order to obtain value-added tax refunds. The grain trader agreed to a judgment in a separate case requiring ADM to pay “disgorgement and prejudgment interest” totaling close to US$37 million, bringing the total amount of penalties to over US$54 million.

Sonny Perdue land sale

The Washington Post conducted an investigation in 2021 and discovered that ADM had sold land to Sonny Perdue, the new Secretary of Agriculture, in 2017 at a fraction of its estimated value. Legal and ethical lawyers were concerned about the sale and wondered if it was bribery. The Post says that ADM “sold the land at a small fraction of its estimated value just as it stood to benefit from a friendly secretary of agriculture”. This is according to the publication.

Archer Daniels Midland Key Financials

• In 2021, Archer Daniels Midland generated $85.249 billion in revenue, a 32.47% increase from 2020. The twelve months ending June 30, 2022 saw revenue of $94.364 billion from ADM, a 25.95 percent increase from the previous year.
• Net income for Archer Daniels Midland in 2021 was $2.709 billion, a 52.88% increase from 2020. For the twelve months ending June 30, 2022, ADM’s net income was $3.598 billion, an increase of 55.56% year-over-year.
• Annual operating income for Archer Daniels Midland in 2021 was $2.993 billion, a 69.48 percent increase from 2020. For the twelve months ending June 30, 2022, ADM’s operating income was $3.824 billion, an increase of 51.03 percent over the previous year.
• Shareholder equity for Archer Daniels Midland in 2021 was $22.508 billion, an increase of 12.42 percent from 2020. For the quarter that ended on June 30, 2022, ADM’s shareholder equity was $24.426 billion, up 13.07 percent from the previous year.
• Currently, ADM has a total number of 38,332 employees.