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- Supermarkup to the world [1]

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Contents

PORTRAIT OF ADM

Greasing the hand that feeds

Price fixing

Other corporate crimes

Company profile

Who owns ADM

Meet the management

ADM IN THE UK

Involvement in GM food and crops

Company info

Locations + sites

Key people

Subcontractors and services

Footnotes

MAIN BRIEFING

Control freaks - the GMO exporters

SUPPLEMENTS

Cargill briefing

ADM briefing

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Unlike the main report, this supplement does not attempt to present any new analysis. Rather it provides a set of resources for activists (especially, but not exclusively in Britain).
 

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Greasing the hand that feeds
As a grain trader, ADM dwarfs its farmer suppliers, and is able to dictate the economic terms that suit it. However ADM is less aggressive than Cargill in pushing anti-farmer policies, and has less involvement in the developing world. In fact, it extracts its earnings less from farmers (as Cargill does) than from consumers (through collusion and price-fixing) and from taxpayers. ADM, like the other grain traders, has focused heavily on the accumulation of political power - which is has largely achieved through the personal connections of former chairman and CEO Dwayne Andreas.

While Cargill has used its political influence to crack open foreign markets, and to push free trade agreements, ADM has lobbied for excessively favourable domestic treatment. ADM is infamous for its ability to obtain corporate welfare - in the form of government subsidies and tax breaks.

In 1995, Dwayne Andreas is reported to have boasted, "There isn't one grain of anything in the world that is sold in a free market. Not one! The only place you see a free market is in the speeches of politicians. People who are not in the Midwest do not understand that this is a socialist country." [2] This is a striking admission for one whose fortune comes from a trading company which relies on the removal of restrictions on trade.

According to a study by the right-wing think-tank the Cato Institute, at least 43% of ADM's annual profits are from products heavily subsidised or protected by the American government" [3].

An excellent article in Mother Jones magazine in 1995 demonstrates that "No other U.S. company is so reliant on politicians and governments to butter its bread" [4]. It notes 3 core areas where ADM is helped along by US government programs:

1) maize subsidies - these make a relatively small contribution to ADM's finances, but with its heavy focus on processing ADM benefits (unlike Cargill) from the stability they provide in a volatile market;

2) the sugar program - by limiting US sugar production, the government keeps the price high, and so keeps customers like Coca-Cola favouring ADM's maize sweeteners over cane sugar (which they used to use);

3) ethanol subsidy - this is by far the most significant, a tax credit to producers of ethanol used as car fuel, amounting to $3.5 bn over 5 years (about half of which goes to ADM) [5].

ADM pays well to ensure the continuation of such favourable treatment. For example, in the 1992 election Andreas and his associates contributed $1.4m to party organisations and $345,000 to individual candidates; in 1994 they gave $657,000 to parties and $224,000 to individuals. In 1994, at the same time as President Clinton pushed through legislation requiring 30% of petrol sold in America's most polluted cities to contain ethanol products, he was given a $100,000 donation [6]. Other beneficiaries have included Richard Nixon and Bob Dole.

A further example was revealed by Mother Jones in 1998. AARC (Alternative Agricultural Research and Commercialization) Corp is a venture capital firm wholly owned by the US Department of Agriculture, which aims to boost the development of "environmentally friendly" non-food products from farm and forest materials. In 1995, AARC Corp.'s then chairman, Martin Andreas, was found to have steered $2.4 million in research money to ADM projects or business interest [7]. Martin was a senior vice president of ADM and a nephew of Dwayne Andreas,.

The Centre for Responsive Politics reports that in the 1997/98 election cycle, ADM paid $200,500 to federal candidates (53% Republican, 47% Democrats), in 1999/2000 so far (as at 1/6/00) $142,000 (49% Democrats, 51% Republicans). As for contributions to parties, in 1997-1998 it was $518 000 (51% Democrat Party, 49% Republican Party), and so far in 1999/2000 has paid $245,000 to the Republican and $50,000 to the Democrat Party[8].

In 1993, Dwayne Andreas and his wife, Inez, were among 10 individuals who agreed to pay civil fines for exceeding campaign contribution limits in the 1988 campaign [9].

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A telling comment was made in the early 1990s by James Randall, who was ADM's president at the time:

 "We have a saying in our company: "Our competitors are our friends. Our customers are the enemy" [10].

This non-competitive approach is also illustrated by CEO Allen Andreas' warm praise of Cargill's takeover of Continental Grain:

"The Cargill-Continental combination will bring new efficiencies to that business that previously did not exist. I see the combination as being a positive step forward in terms of improving the standards of living of people around the world by providing more efficient low-cost food and nutritious feeding materials and adding to the value of farmers' crops" [11].

In 1996, ADM pleaded guilty to price-fixing in the international markets for lysine (an amino acid used as an animal feed additive) and citric acid (a food additive), and paid a record US$100m fine, in one of the biggest scandals ever to rock the corporate world.

ADM was found to have conspired with its competitors - Ajinimoto and Kyowa Hakko Kogyo of Japan, and Sewon Corporation and Cheil Jedung of Korea - to fix prices to eliminate competition and allocate sales volumes between the companies. According to admissions from an Ajinimoto executive, executives from the five companies met in hotels around the world to discuss prices and production volumes; they knew this was illegal, and tried to cover up by claiming the meetings were, for example, on environmental issues and animal rights [12].

ADM's $100m fine was part of a settlement with the US Justice Department, in which the company also agreed to co-operate with the further federal investigations. In return, ADM got [13]:

Other executives were not immune from prosecution. In 1998, three company executives were also found individually guilty for the lysine price-fixing: Michael Andreas (ADM's vice-chairman, and son of Dwayne Andreas), Terrance Wilson (group vice president in charge of corn refining) and Mark Whitacre (head of the bioproducts division, who for 3 years worked for the FBI as a 'mole', taping conversations and gathering evidence). Andreas and Wilson were each given two-year prison sentences, and ordered to pay a $350,000 fine; Whitacre was given 30 months, on top of nine years for embezzling the company whilst he was acting as a mole.

A federal grand jury in the Northern District of California is still investigating ADM in relation to lysine, citric acid and high fructose corn syrup. The European Commission has ongoing legal proceedings against ADM over citric acid and sodium gluconate. Mexico is investigating over citric acid, and Brazil over lysine. ADM is also facing many antitrust suits in the USA and Canada, mostly class actions by its direct and indirect customers: 31 suits over high fructose corn syrup; 3 over lysine; 3 over citric acid; 4 over both high fructose corn syrup and citric acid; 6 over high fructose corn syrup, citric acid and lysine; and 12 over monosodium glutamate and other flavour enhancers [16].

ADM has suffered from the scandal mainly through the loss of investor confidence: shareholders ceased to trust the management, and didn't know which of the company's earnings were from legitimate and sustainable activities, and which illegal.

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USA - WORKER SAFETY: ADM was fined $650,000 by the Occupational Safety and Health Administration in 2000, for safety violations relating to confined space procedures, at its railcar repair plant at Decatur, Illinois. Four workers died and were been hospitalised between 1993 and 1998. Describing the facility as an accident waiting to happen, OSHA had originally proposed a $1.6m fine, but reduced this when ADM agreed to change its procedures. The most serious violations involved 20 wilful violations (ie "committed with an intentional disregard of or plain indifference to") a requirement to use retrieval lifelines for workers entering confined spaces. Other issues included lack of monitoring, failure to inform the emergency services of hazards, inadequate storage of dangerous materials and lack of respiratory protection. ADM had previously been fined $690,500 by OSHA in 1996 over confined space procedures, and had agreed to make improvements [17].

USA - POLLUTION: in 2000 ADM agreed to pay fines of $1.5m to the Department of Justice and $1.1m to the State of Illinois over persistent exceedance of its pollution permits at one of its Illinois processing plants, between 1998 and 2000. In 1998, the State of Illinois filed a civil action against ADM over a major release of denatured ethanol at one of its distribution sites. In 2000, the federal Environmental Protection Agency issued a Notice of Violation on another ADM site, for emissions violations and for failing to obtain proper permits for equipment [18].

BRAZIL - POLLUTION: in 2000, ADM was fined US$5.6m by Brazil's federal environmental authorities, for the discharge of industrial wastewater from its facility in Rondonopolis (the company is appealing this sentence) [19].

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Company profile

ADM is one of the world's largest agribusiness companies. It sees itself as an extension of the farm, or alternatively the "supermarket of the world". It recently (October 2000) launched a new mission statement, "to unlock the potential of nature to improve the quality of life", which is suggestive of support for biotechnology.

ADM is somewhat smaller than its rival Cargill. For the business year ending 30/6/99 [20]:

sales ? US$ 14 bn,
income US$ 266m,
employees 23,603

ADM's major business is the handling, distribution and processing of oilseeds and grains, including the production from them of specialist processed products, including amino, lactic and citric acids, animal feeds and vegetarian foods. It is focused on a smaller number of commodities than Cargill, but puts far greater emphasis on 'adding value' by processing. Its sales in 1997 were comprised [21]:

Processed products in these areas include the following [23]:

• OILSEED PRODUCTS: vegetable oils for the food industry and meals for the animal feed industry, from soyabeans, cottonseed, sunflower seeds, rapeseed, peanuts and flaxseed; flours and grits for food and industrial products, soyamilk and nutraceuticals (food-based health products) from soyabeans (ADM was the inventor of the soya-based textured vegetable protein); cottonseed flour for the pharmaceutical industry, and cotton cellulose pulp to the chemical, paper and filter industries.

• MAIZE (corn) PRODUCTS: dry-milled and wet-milled products for the food and beverage industries, inlcuding syrup, starch, glucose, dextrose, high-fructose sweeteners, crystalline fructose and grits; maize gluten feed and distillers grains for animal feeds; ethanol for beverage or industrial use.

• WHEAT AND OTHER MILLED PRODUCTS: wheat flour for bakeries, durum flour for pasta manufacture, bulgar wheat; oat bran and oat flour for food manufacturers; milo for industrial flour used in wall board by the building industry.

• OTHER PRODUCTS: formula animal feeds; animal health and nutrition products; malt products for the food and beverage industries; consumer foods including spaghetti, noodles, vegetables and herbs.

ADM's shares of markets related to soya, maize and the products derived from them are given in appendix 3 of the main report, 'Control freaks'.

ADM became the world's largest cocoa processor in 1996, when it bought the cocoa operations of WR Grace and ED&F Man. Chocolate manufacturers were already big ADM customers for maize sweeteners, so cocoa would fit well [24].

ADM is strongly technology-focused. Shortly after his appointment, new chairman Allen Andreas commented, "In today's world, we need to direct the company to take into account the substantial advances in technology and bioscience that have surfaced over the past ten years. That means I need to do the same thing that Dwayne Andreas did - always stay on the cutting edge of the new developments that are coming along, pursue relentlessly those goals that add to our efficiencies and our business base" [25].

ADM has doubled in size over the last ten years (1989 sales: $7.9 bn; employees: 10,214 [26]). Much of this has come from acquisitions, especially in 1997, when it bought soyabean processor Moorman Manufacturing, various grain handling and exporting facilities in South America, and an 8% stake in US pork and beef packer IBP [27]. Major growth also occurred in Eastern Europe following the collapse of the Soviet Bloc. In the early 1990s, ADM bought 9 starch milling plants, including one each in Hungary, Czechoslovakia and East Germany [28].

In 1997, ADM's sales were spread geographically as follows [29]:

 The agriculture / food industry is seeing a trend towards vertical integration, to transmit value-adding seed development and processing to specialist consumer markets, and also to put a cap on the current over-capacity. Whereas Cargill itself is a vertically integrated company, ADM relies in all the countries where if operates on joint ventures and partnerships with other companies, such as in the USA with DuPont for seeds, and farmer co-operatives like Growmark and Countrymark for growing. Says ADM's CEO Allen Andreas,

"It is becoming increasingly important to global food markets that a company have seamless capability extending between the farmer who originates our foodstuffs and the consumer" [30].

Recently, ADM has been suffering through depressed agricultural markets worldwide, and especially in Asia. The company is using the opportunity to buy new plants and equipment at cheap prices, so that it will do well when the cycle turns.

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Unlike its rival Cargill, institutional shareholders in ADM hold 59% of the company [31]:

State Farm Mutual Automobile Insurance Co. ?10.1%
Capital Research and Management Company ?4.2%
Brandes Investment Partners ? 4.1%
Dodge & Cox Inc. ? 3.8%
Franklin resources Inc. ? 3.6%
Barclays Bank PLC ? 3.5%
Credit Suisse Asset Management ? 2.5%
State Street Corp ? 2.1%
Citigroup Inc ? 2.1%
FMR (Fidelity Management & Research) Corp ?2.1%

Insiders own 16% of the company, includinr [32]:

Dwayne Andreas (now chairman emeritus - see below) 3%.
John Varnier 2.2%
Michael Andreas (Senior Vice President) 1.2%. (Dwayne's son, currently in jail for the price-fixing scandal - see below).

ADM is listed on the New York Stock Exchange, Chicago Stock Exchange, Tokyo Stock Exchange, Frankfurt Stock Exchange, Swiss Exchange [33].

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James Lieber, author of 'Rats in the grain', a recent book about ADM and the price fixing scandal, says

"It's a very, very tight, centralised control, almost the style of running a private company... For all this, though, ADM still functions like an overgrown mom-and-pop outfit. Four Andreases are senior executives in the company. Another serves on the board".

The key figure in ADM for over 30 years was Dwayne Andreas. Glenn Webb, chairman and chief executive of Growmark Inc. and an ADM board member, said that in many ways the his name is synonymous with that of ADM: "It was his vision that built ADM". He took the helm in 1966, and was CEO until 1997, and chairman until 1999. When at age 79 he handed the chairmanship over to his nephew Allen, analyst Leonard Teitelbaum of Merrill Lynch called the move "a change in form, not in substance" [34]. (See also articles in Decatur Herald-Review and Mother Jones [35]).

At the top of the company now are [36]:

 Other key figures include: