Archer Daniels Midland

BY THE MID-1990s, Archer Daniels Midland (ADM) became one of the largest transnational corporate producers of food in the world, partly as the result of financial subsidies provided by the U.S. federal government. While ADM has been instrumental in the development of the technology of genetically modified food and crops, company executives were convicted corporate criminals.

In the early 1990s, ADM conspired with Asian companies to fix the prices of lysine (an amino acid), a feed additive used to increase the proportion of lean meat in farm animals, a high-fructose corn syrup (a sweetener in soft drinks), and citric acid (a common substance used to provide flavor in food) in order to improve profit.

In 1989, ADM built the world's largest lysine plant and hired Mark Whitacre to manage the production division of lysine as well as the bio-products section. Initially, ADM offered cheaper lysine than its U.S. competitors, and as a result controlled half of the market. This resulted in a large over-supply, a price war, and ADM's loss of millions of dollars monthly. ADM then brought in Terry Wilson, the president of the Corn Processing Division to assist Whitaker in his role in the company. Wilson's role was to teach Whitaker how “fix prices,” a commonly condoned practice at ADM, exemplified by former Chief Executive Officer Dwayne Andreas, who once told his son, Michael, “The competitor is our friend and the customer is our enemy.”

ADM's primary competitors in the lysine business were two Japan-based transnational corporations, Kyowa Hakko (and its United States-based subsidiary Biokyowa) and Ajinomoto with U.S. subsidiary, Heartland. Hakko and Biokyowa were the first companies to produce lysine. In the 1980s, these Japanese companies were selling $30 million a year worth of lysine to the United States, and it was cheaper than the lysine made by U.S. organic chemical companies. ADM discovered that the Asian-based companies were buying dextrose from the United States and using it to develop their cheaper version of Lysine.

While Whitaker considered not complying with this philosophy of support for price-fixing, he remained at the company to try and do things differently. By 1992, lysine prices were at the lowest point and, thus, ADM began meeting with representatives of Ajinomoto and Hakko in Tokyo to engage in a price-fixing scheme. The agreement to fix prices was initially made at a series of meetings beginning as far back as 1992 in Mexico City. At that meeting and two subsequent meetings, ADM executive Terrance Wilson told other producers of lysine that “we are not cowboys, we should be trusting and have competitive friendliness.”

[Page 51]They discussed how the low lysine prices were only benefiting the customers, not the manufacturers. So all of the companies involved agreed to raise the price of lysine. A series of additional meetings occurred throughout the year and included Korean companies as well. They formed what they called an Amino Acid Association.

Finally, six major lysine producers established sales quotas and prices for specific regions of the world. Later, ADM executives, Michael Andreas and Whitaker began to suspect that the Japanese companies were sabotaging the Decatur, Illinois, plant and brought this to the attention of the Federal Bureau of Investigation (FBI). While no evidence of actual sabotage was found, this initial relationship with the FBI led Whitaker to become concerned about the FBI discovering the price fixing, so he informed the FBI on his own initiative, and became an undercover agent for the FBI (sometimes referred to as a whistleblower).

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