Archer Daniels Midland Co. has many people to
thank this year. First, of course, the Decatur-based
agribusiness giant can thank American Indians. They taught white
settlers to grow corn — and corn is a major contributor to
the ADM’s success. No other company in the world processes more
corn. ADM uses the crop to make high-fructose corn syrup, which is
used to sweeten soft drinks and other food products; ethyl alcohol,
used to fuel motor vehicles; and high-protein feed, used to fatten
the turkeys and pigs that end up on dinner tables. Next, ADM can thank its chairman and chief
executive officer, G. Allen Andreas, for turning things around from
the company’s lowest point in recent history. In 1996, ADM
was fined $100 million to settle a criminal-antitrust case for
conspiring to fix prices on lysine and citric acid. Andreas, 62,
took over the reins of the company from his uncle, Dwayne Andreas,
in 1999, and has since largely restored the company’s public
image. “We have addressed the problems of the
past and opened the door to new opportunities for the
future,” Andreas told shareholders at the company’s
annual meeting in Decatur earlier this month.
David Hoech, head of the Archer Daniels
Midland Shareholders Watch Committee, one of the most vocal critics
of ADM executives in the late ’90s, says, “I’ve
heard many good things about G. Allen Andreas, and he seems to be a
man of honesty.”
And Andreas seems to be a man who gets things
done for shareholders. During his tenure as CEO, the price of stock
has more than doubled, and net earnings for the year ended June 30
hit $1 billion on sales of almost $36 billion. Though ADM’s record earnings can be
attributed in part to increased demand for ethanol, a growing
contingent of biofuel-friendly lawmakers in Congress have certainly
helped things along. Soaring crude-oil and natural-gas prices have made
ethanol and e85, a blend of 15 percent ethanol/85 percent gasoline,
more and more attractive to consumers. And the hurricane-induced energy
crunch has softened the political environment for promoters of biofuels
and turned lawmakers from both parties into boosters. ADM’s friends in Congress, particularly
those representing the corn-growing Midwest, have been responsible
for passing several key pieces of federal legislation and tax
incentives this year favoring such sources of renewable energy as
ethanol and biodiesel, which is made from soybeans. The Renewable Fuels Standard, in the most
recent energy bill, requires that at least 7.5 billion gallons of
ethanol be used in the nation’s motor-fuel supply by 2012.
The bill also extends the biodiesel tax incentive to 2008. According to the Center for Responsive
Politics, ADM has made $1.7 million in soft-money contributions to
Democrats and Republicans and another $165,400 to individual
candidates since 2002. Together, Andreas and his wife, Toni, have
given at least $29,500. Among the top beneficiaries of ADM money are House Speaker Dennis
Hastert, R-Ill.; former House Minority Leader Dick Gephardt, D-Mo.;
Rep. Ray LaHood, R-Ill.; Sen. Tom Harkin, D-Iowa; and Sen. Dick Durbin,
D-Ill. The level of contributions from a company
that benefits from federal incentives and tax breaks has prompted
criticism from groups who charge that ADM is just another
beneficiary of corporate welfare.
Is ADM shaking down politicians, or is it the
other way around? “We have found that it goes both ways,
and the shakedown happens both in and out of Washington,
D.C.,” says Craig Holman, campaign-finance lobbyist for
Public Citizen, a Washington-based congressional-watchdog group. “I’ve yet to see a corporate
executive at Archer Daniels [Midland] — and I’m sure
some exist — give money just because they want to see
democracy flourish,” Holman says. “They’re giving money because
they have a special interest in mind and they want to make sure the
incumbent officeholder knows about that special interest and knows
that they’re willing to back it up with money.”
Patrick Basham, senior fellow at the Center
for Representative Government at the Cato Institute, explains that
contributors do not directly affect legislation so much as the
donations provide access to politicians and senior staff. “In most cases, you can’t draw a
straight line between contributions and legislation,” he
says. “When it comes right down to it, most legislators vote
based on the wishes of the party leadership, their own ideology,
and what’s best for their district.” Although ADM controls roughly 40 percent of
the nation’s $6 billion ethanol industry, it’s actually
ADM’s clients and suppliers that have reaped most of the
benefits from $5.3 billion in federal ethanol subsidies over the
past five years. But, to a large extent, the jury is still out
on whether ethanol is worth its cost to American taxpayers. Critics
say that ethanol uses more energy to produce than it puts out. This
summer, scientists released a controversial study on the issue. “The nation has been investigating
ethanol technologies for about 30 years. Unfortunately, it is a
loser. The same is true for biodiesel,” says David Pimental,
a Cornell University professor of ecology and co-author of the
study. “If one uses the USDA’s
optimistic values and then asks how much U.S. land area would be
needed to provide fuel just for automobiles, it works to be [that]
the total U.S. would have to be planted in corn.”
But those arguments are lost on growers, who
appreciate the fact that ADM is a major, reliable customer. Take
Gordy Stine, president of the Illinois Farmers Union.
“Maybe I’m talking both sides of
my mouth. We’re against corporate farming, but at the same
time [ADM] is a major buyer of our grains,” Stine says.
“Sure, I’d like to see all this ethanol made by
farmer-owned co-ops, but that’s not happening.”
“The bottom line is, I’m glad
they’re over there and I’m glad they’re buying
thousands of bushels of grain.”
This year, ADM, already the largest producer
of biodiesel in Europe, announced that it will expand those
operations to North America. Last month, partnering with
Mid-America Biofuels, ADM broke ground in Mexico, Mo., on its first
biodiesel plant in the United States, and the company has announced
plans to build its first wholly owned plant in North Dakota.
This article appears in Nov 17-23, 2005.
