The “A” in the ABCD of Agriculture Behemoths
Archer Daniels Midland Company (ADM) was founded in 1902 by George A. Archer and John W. Daniels when they started their linseed crushing company. Those first years the company was successful in Minnesota and in 1915 they expanded to Buffalo, New York by building a linseed mill and a public grain elevator. From there, ADM expanded quickly across North America to the point where they are now operating more than 270 plants and 420 crop procurement facilities worldwide.
Much like Cargill they started out in the United States and expanded to Europe- ADM has expanded all over the world in fact. There is only one continent that ADM doesn’t operate on- Antarctica. This goes to show the reach of these grain and food companies. They are the behemoths operating behind the scenes, they are what helps drive so much of every economy in the world and they are what feeds us. ADM helps cold climates eat tomatoes in February and excites children chant for Cheerios in the grocery store- thanks to companies like ADM.
When ADM started out it was just John W. Daniels as president of the company but it didn’t take long for George A. Archer to join him. Many years later Daniels became chairman with Archer replacing him as president and that is how the company works now with a chairman and a president working in tandem.
Archer and Daniels business started out by crushing linseed and making linseed oil to sell. They then got into the storage of and transportation of grain and now they operate all over the world in food processing and food ingredient provider. ADM buys and sells food ingredients and process foods such as chips, sucrose or anything that requires processing (just about everything).
ADM is a publicly traded company which forces them to disclose all their profits, losses and all the other information that stockholders need to make an informed decision about investing with ADM. That difference only makes it easier for outsiders (us) to surmise what they are doing with their company. ADM isn’t the only publicly traded ABCD Agriculture company. They are accompanied by Bunge, who recently went public. On top of that is the difference in strategy and market focus. All 4 of the ABCD (ADM, Bunge, Cargill, Dreyfus)companies are expanding their operations in Asia and to a lesser degree, Africa. Each company has their market area that they thrive in; ADM is the largest cocoa producer in the world as well as being a major player in oil-seed, corn and wheat.
Once ADM purchases its ingredients, most of the movement happens in house. I used the word ingredients because they largely focus on produce that is used to create other goods- such as wheat, maize or soybeans- which are used in animal feed and bio-fuels production. The beauty of this strategy is that these ingredients can often be substituted for one another, meaning if there is a lack of supply then they can use a crop that wasn’t available or affected. This reduces the volatility that these crops are typically known for. Once the ingredients have been acquired they then have to be transported to be processed. For that reason, ADM operates its own huge logistical chain under the subsidiaries ADM Trucking and American River Transportation Company.
It is so important that they made these two companies. The American River Transportation Company (ARTCO) is responsible for shipping goods along the Mississippi River, Ohio River, Illinois River and the Madeira River in Brazil. The transportation game is so important to ADM that they created a company that would be responsible solely for shipping along river routes. The Madeira River is used almost exclusively for the transportation of cocoa since ADM is the largest producer of cocoa in the world and therefore it stands to reason that it is one of the biggest shippers of cocoa as well- the vast majority of it along that route.
For their other shipping needs, ADM utilizes their other subsidiary, ADM Trucking. While ADM Trucking is its own corporate entity, it very much operates under the ADM umbrella but does not exclusively transport ADM goods. Anyone can charter a ADM truck for their own use.
Both of those company entities are not necessarily a means to make money, rather a way to keep the logistical chain in-house and prevent other companies from taking advantage of them. On top of this, controlling their own transportation gives them the ability to determine what crops to buy in bulk and when and where to take responsibility for delays in transport which can result in loss of profits.
ADM is one of the biggest players in the commodities industry, both in America and globally. It is the single largest processor of cocoa on top of being a top three player in wheat, oil-seed and soybeans. They have an extensive logistics system that helps them reduce their losses and maximize their profits by transporting all their goods in house.
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