Archer Daniels Midland

Founded in 1902 and incorporated in 1923, Archer Daniels Midland (ADM) is one of the largest agricultural processors in the world. It supplies many of the inputs for agricultural production, buys the crops from the field, processes them into food for humans and animals, fuels, and chemicals, and sells them all over the economy—and lobbies, very successfully, to obtain and retain the legislation that makes the entire operation profitable.

It is profitable. In the fiscal year ending June 30, 2005, ADM reported net earnings of $1,044 billion, or $1.59 per share, compared with $495 million, or $0.76 per share, in the previous year. Profits were up in Europe, South America, and Asia. So the board of directors declared a cash dividend of $0.085 per share on the company's stock—ADM's 315th cash dividend and 295th consecutive quarterly payment, 73 years of uninterrupted dividends. Clearly, they are doing something right.

In addition to being profitable, ADM tries to be environmentally friendly, and often succeeds. In the same fiscal year, ADM won two United States Environmental Protection Agency Presidential Green Chemistry Awards for a way to reduce volatile toxins in paints and a way to lower trans fats and oils in vegetable oils.

It is not always easy to be good. ADM stands at the heart of an enormous network of companies and activities, owning or controlling the entire agricultural enterprise through direct ownership or joint ventures with other companies. Its position entails that it controls the entire food chain, from the decision on what to plant, from the seed, through the machine that plants the seed and the pesticides and herbicides that help that seed to prosper, through the tending and harvest of the crop, through all processing and distribution of the products, to the very shelf in the supermarket (or repose in the chuckling fat of the fast-food French fries cooker). In the course of its vertically integrated enterprises, it is often difficult to discover the market price of a product that, for instance, is created from crops on an ADM farm and immediately sent back to another ADM farm to feed hogs. Just such a product is lysine, a corn-based dietary supplement for farm animals that is widely used across several countries. Yet it turns out to be possible for one to cheat, and price fix, on this product, for that's just what ADM was caught doing in 1996; they ended up paying a record fine of $100 million for price-fixing. That wasn't the end of their problems: Two years later the government brought separate criminal charges against three top executives for conspiring in the crime, collected more fines, and sent the executives briefly to jail. Later, the European Union added its own penalties; in all, ADM had to budget over a quarter of a billion dollars for all expenses connected to the price-fixing incident.

ADM has maintained its agenda in Washington largely through very generous political contributions to both parties, amounting to some $2 million per year. A large part of its Washington lobbying [Page 107]agenda has been to urge, as the petroleum resources decline, the adoption of a provision requiring that ethanol should be a part of every gas station and oil reform. (The concern for oil scarcity has a lot to do with the fact that ethanol is produced from corn; at this point ADM controls more than 50% of the ethanol capacity in the world.) Conservatives and liberals alike have objected to this huge subsidy, but it continues.

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