Sears Stocks Analysts
Sears Stocks Analysts
Archer Daniels Midland
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, ethanol, and wheat flour. End uses are consumption by people and livestock, and fuel additives.
Long known as a food and ingredients company, ADM recently 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 ethanol and biodiesel.
History
In 1902, George A. Archer and John W. Daniels began a linseed crushing business. In 1923, Archer-Daniels Linseed Company acquired Midland Linseed Products Company, and the Archer Daniels Midland Company was formed. Every decade since its corporate inception, ADM has added at least one major profit source to its agribusiness: milling, processing, specialty food ingredients, cocoa, nutrition, and more.
In September 1999, executive Marty Andreas announced, under pressure from the European agricultural industry, they were going to separate crops into genetically modified and non-genetically modified groups to give their customers a choice. Previously the company had not disclosed their crop sources.
In 2001, Paul B. Mulhollem became the President of ADM. He made history by becoming 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 CEO. Formerly of Chevron, she is expected to focus on developing ethanol and biofuels. In February 2007 Ms. Woertz was elected Chairman of the Board at ADM.
Criticism
Price fixing
In 1993, ADM 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.
Using the investigation as an example, Ronald W. Cotterill of the Food Marketing Policy Center at the University of Connecticut shows that 100 percent or more of overcharges resulting from price fixing are passed through to consumers.
The Informant is a nonfiction thriller book written by journalist Kurt Eichenwald and published in 2000 by Random House that documents the mid-1990s lysine price-fixing conspiracy case and the involvement of Archer Daniels Midland executive Mark Whitacre. A 2009 movie adaptation of the book stars Matt Damon as Mark Whitacre.
Environmental record
Archer Daniels Midland has been the subject of several major federal lawsuits related to air pollution. In 2001 the company 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. The Political Economy Research Institute ranks Archer Daniels Midland tenth among corporations emitting airborne pollutants in the United States. The ranking is based on the quantity (12.4 million pounds in 2005) and toxicity of the emissions.
In 2003, ADM settled federal air pollution complaints related to the company’s 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.
Archer Daniels Midland Company is involved in a joint project with Daimler AG and Bayer CropScience to develop jatropha as a biofuel.
In an attempt to reduce its carbon footprint, ADM has teamed up 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 ADM expects to dispose of 1,000 metric tons per day of carbon dioxide emissions currently being released to the atmosphere.
Agricultural subsidies
ADM’s receipt of federal agricultural subsidies have come under criticism. According to a 1995 report by the Cato Institute, a libertarian think tank, “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 ethanol operation costs taxpayers $30.”
Relationship with the Clinton administration
In 1994, the New York Times wrote “the Clinton Administration’s policy on emission-reducing renewable fuels in essence, ethanol made from corn is little more than a politically inspired gift to farmers and corn processors, especially the Archer Daniels Midland Company”.
Lobbying and campaign contributions
ADM’s lobbying and campaign contributions have encouraged the continuation of the United States federal sugar program (of trade barriers and price supports) by Congress, costing US consumers roughly $3 billion a year. ADM also lobbied to create and perpetuate federal ethanol subsidies. Some commentators have concluded that the ADM experience demonstrates the need for campaign finance reform.
IRLF lawsuit
In July 2005, the International Labor Rights Fund filed suit against the Nestle, Archer Daniels Midland, and Cargill companies in Federal District Court in Los Angeles on behalf of a class of Malian children who were trafficked from Mali into the Ivory Coast and forced to work twelve to fourteen hours a day with no pay, little food and sleep, and frequent beatings. The three children acting as class representative plaintiffs are proceeding anonymously, as John Does, because of feared retaliation by the farm owners where they worked. The complaint alleges their involvement in the trafficking, torture, and forced labor of children who cultivate and harvest cocoa beans that the companies import from Africa.
Corporate Equality Index
Archer Daniels Midland, along with Cracker Barrel and Nestle Purina Pet Care, achieved the lowest score (15 out of 100) of all rated Food and Beverage companies in the Human Rights Campaign’s 2008 Corporate Equality Index, a measure of Gay and Lesbian workplace equality.
Markets campaign
The company is now facing its first-ever markets campaign, as the environmental group Rainforest Action Network is imploring the halt of agricultural expansion into tropical rainforests in Brazil and Southeast Asia. Like other agribusiness, ADM only processes the raw materials from crops grown by third parties. However, ADM is a major purchaser and trader of the agricultural commodities that are motivating the destruction of rainforests and has a controlling interest in Wilmar, the company most responsible for new industrial palm oil plantation expansion in Indonesia, and one of the largest investors in biofuels. As such, ADM has the ability to significantly influence the market.
References
^ a b ADM Annual Income statement via Wikinvest
^ a b “Archer Daniels Midland Company 2008 Annual Report”. http://www.adm.com/en-US/investors/shareholder_reports/Pages/default.aspx. Retrieved 2008-10-17.
^ Fusaro, Dave. “ADM big bet on fuel”. Foodprocessing.com. Retrieved on June 6, 2007.
^ Hunter-Gault, Charlayne (October 15, 1996). “ADM: Who’s Next?”. MacNeil/Lehrer Newshour (PBS). http://www.pbs.org/newshour/bb/business/october96/adm_10-15.html. Retrieved 2007-10-17.
^ Archer Daniels Midland Company. 2005 Annual Report. p. 52, note 15. See report at
^ Cotterill, Ronald W. “Estimation of Cost Pass Through to Michigan Consumers in the ADM Price Fixing Case”. University of Connecticut. 1998. See paper at
^ Webber, Susan (2000-09-25). “Tale of the Tapes”. The Daily Deal (Aurora Advisors, Inc.). http://www.auroraadvisors.com/articles/2000-09_dailydeal.html. Retrieved 2008-10-02.
^ “Archer Daniels Fined Over Clean-Air Rules.” The Los Angeles Times, January 13, 2001.
^ “THE TOXIC 100: Top Corporate Air Polluters in the United States”. Political Economy Research Institute website. http://www.peri.umass.edu/Toxic-100-Table.265.0.html. Retrieved 2007-10-31.
^ 2 Companies Said to Agree To Settle Suits on Emission. The New York Times, April 9, 2003. Retrieved on April 4, 2008.
^ “Archer Daniels Midland Company, Bayer CropScience and Daimler to Cooperate in Jatropha Biodiesel Project”. DaimlerChrysler. http://www.daimler.com/dccom/0-5-7153-1-1035042-1-0-0-0-0-0-8-7145-0-0-0-0-0-0-1.html.
^ Archer Daniels Midland, Carbon-sequestration projects put innovative emissions-reduction technology to the test, accessed 26 February 2010
^ a b c Bovard, James. “Archer Daniels Midland: A Case Study In Corporate Welfare”. Cato Policy Analysis No. 241. CATO Institute. September 26, 1995. See study at
^ Market Place; In valuing Archer Daniels, analysts look past ethanol. – New York Times
^ http://www.laborrights.org/projects/childlab/FinalCocoa-Complaint_Jul05.pdf
^ http://www.hrc.org/documents/HRC_Corporate_Equality_Index_2008.pdf 2008 Corporate Equality Index. Accessed 27 November 2007.
^ http://ran.org/what_we_do/rainforest_agribusiness/ RAN.org. Accessed 04 January 2008.
External links
Archer Daniels Midland website
International Labor Rights Fund
Rainforest Action Network’s campaign against Rainforest Agribusiness
“Patents owned by Archer Daniels Midland”. US Patent & Trademark Office. http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&u=/netahtml/search-adv.htm&r=0&p=1&f=S&l=50&Query=an/”Archer+Daniels+Midland”&d=ptxt. Retrieved December 6, 2005.
Archer Daniels Midland: The Exxon of corn? 2006 Grist Magazine article
Archer Daniels Midland (ADM): Trade of the Week Optionszone.com Article
Archer Daniels Midland biomass timeline
Archer Daniels Midland: A Case Study In Corporate Welfare
Video Segment Showing True Story of ADM Price-Fixing Case from documentary Fair Fight in the Marketplace
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Categories: Companies listed on the New York Stock Exchange | Companies established in 1902 | Archer Daniels Midland | Chemical companies of the United States | Decatur, Illinois | Price fixing convictions | Starch companies | Food production companies of the United States | Companies based in Macon County, Illinois
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