May 27, 2004 Economics 202- 9:00 Mr. Jones Archer Daniels Midland Company The agricultural economy is not well known to many people because in our nation most people do not work for companies that are involved in agriculture and most people do not work on farms. The farm industry may be very large but it could be considered as one of the most important industries, because everyone in the world needs something produced on a farm. Most of the companies that are part of the farm or agricultural industry are large but not always well known. Most of these companies are spread throughout the whole United States, if not the world. Most companies in the agricultural industry are well put together and they have people that work for the company that know a lot about the industry and without all of these people the companies would not be what they is today. ADM is a large company that has been spreading and has had lawsuits because of the price hikes that they put on their products.
ADM has proven to be a company that knows what it is doing throughout the years but when they try to cheat to get more money out of their products they get caught. ADM has worked their way up the ladder and they find a way to get better at what they do. Even though not many people know of ADM their common everyday products can have some of the ADM products it is used in many different parts of the world. Archer Daniels Midland Company is a large company that is not known by many people it is part of the fortune 500 even though it is located in Illinois most people have not even heard of the company.
Archer Daniels Midland Company also known as (ADM) is a very successful farming company. ADM was founded in 1902 by George P. Archer and John W. Daniels. The ADM headcounters are located in Decater, Illinois even though they are based in Illinois they are incorporated in Delaware. ADM has over 270 processing plants worldwide with sales in over 40 countries and joint venture investments in 71 countries and has over 500 grain elevators.
ADM is a globalized company though most of their business is done in the United States they employ over 25,000 around the world people which is a large number all together. ADM is one of the more dominant companies in its business, ADM has been improving over the years even though it has hit a few bumps such as some lawsuits. Through these lawsuits the company has grown and expanded to be come a worldwide company. Even though ADM is not a widely known company it is still very large and it does control some of the normal products that we see in our house. Value Line says “Archer Daniels Midland is putting together a strong campaign in fiscal 2004.
The company followed up and impressive showing in the first quarter, with a 106% year over year earnings advance in the December period.” that is a positive for the company, they seem to be looking stronger over the past couple years. Value Line also says “the corn processing segment is poised for another strong showing in calendar year 2004. The ethanol division, which preformed very well last year should benefit from an expected decline (roughly 5%) in corn prices this year.” This is all positive for ADM as the company is looking good this year. Although the company seems to be doing well the Annual Report from the company says “Net earnings for fiscal 2003 decreased due principally to reduced North American and European oilseed crush volumes and margins, reduced operating results of Agricultural Services and wheat processing operations due to poor crop conditions in North America, and a reduction in the grain from the settlement of vitamin antitrust litigation.” Even though net earnings decreased net sales and operating income increased thirty-six percent from 2002 to 2003. The cost of products sold went form 8.1 billion to 29.0 billion due to recently acquired business.
ADM has many different products that it produces the most important products that it produces is; oilseed, corn, wheat, and Agricultural Servers. ADM is also in a joint venture with Lesaffre, to construct a new yeast plant in Cedar Rapids Iowa. “Archer Daniels Midland Company (ADM) is a world leader in agricultural processing. ADM is one of the world’s largest processors of soybeans, corn, wheat and cocoa. ADM is also a leader in the production of soy meal and oil, ethanol, corn sweeteners and flour.
In addition, ADM produces value-added food and feed ingredients. Headquartered in Decatur, Illinois, ADM has over 26,000 employees, more than 270 processing plants and net sales for the fiscal year ended June 30, 2003 of $30.7 billion.” (Yahoo finance) ADM has proven that it can earn a lot of money even though is not well known by common people because ADM works business to business more than most companies do so that is mostly the reason that people do not hear of AMD very often. ADM like most companies has gone through their share of lawsuits. Most recently ADM had a class action lawsuit against them. It was because of the price of corn syrup most importantly high fructose corn syrup.
ADM raised the price of their High Fructose corn syrup, due to this it forced the Cola companies to rise the price of their product. ADM was not the only company named in this lawsuit but they were the biggest company to be named in the lawsuit. “The Company along with other companies has been named as a defendant in the thirty-one antitrust suits involving the sale of high fructose corn syrup in the United States. Thirty of these actions have been brought as putative class action.” (Form 10-K Securities and Exchange Commission) There were also other lawsuits named with ADM and other companies in a lawsuit about Monosodium Glutamate.
“The company along with other companies has been named as a defendant in sixteen putative class action antitrust suits and one non-class action suit involving the sale of monosodium glutamate and/or other food flavoring enhancers in the United States and three putative class action antitrust suits involving the sale of nucleotides and monosodium glutamate in Canada. Except for the actions specifically described below, all such suits have been settled, dismissed or with drawn.” (Form 10-K Securities and Exchange Commission)So just like any other company in America ADM has had lawsuits that have made their company what it is today. The current ownership for ADM is spread through many different people and companies. The two major principal holders of voting securities is State Farm Mutual Automobile Insurance. They have 56,503,012 shares for the company they have the most amount of shares among companies. Also the other major company is Brandes Investment partners, LLC which has a dollar amount of 36,408,113 shares which is number two among all companies.
For people the top common stock holders are. Molline Hale Carter, 41 chairman, Sunflower Bank with 14,421,701 common shares which is 2.23% of all share holders. Second person on the list is J. K. Vanier who is the chief exective officer with 12,272,217 common shares which is 1.9%. The third person is G. Allan Andreas Chairman of the board which has 4,966,755 common shares. Next is D. J. Mimran who owns 2,831,624 common stock. The ADM mission statement is “To unlock the potential of nature to improve the quality of life.” To me this says that ADM is looking to advance in technology and help people improve their quality of life.
The ADM commitment is also “To make the world a better place by applying advancements in research and technology to agriculture.” This tells me that ADM is looking to be able to produce at a faster rate than they are right now. ADM is working for their costumers and they are hoping that they can help out their costumers in any way possible. The company is expanding in many ways and the mission statement also helps prove this because it is helping the technology that is used for their products. ADM seems to be moving into the 21st century very well because the way that it seems they keep looking to expand their company and they want to find new technology that will help people on all levels of the economy.
In conclusion ADM is expanding all over the world and it is helping out all of the people that buy their products. ADM is a very large company that not everyone knows about, but ADM is getting bigger and I think that more people will start to know about it. I think that ADM is going to start buying other agricultural companies. ADM is a good investment for people that are looking to buy stock and they are going to go up in the future because the people that run ADM seem to know what they are doing. ADM seems to be willing to do anything to be a more advanced company no matter what it has to do, either joint venture or buying other companies to expand.
The 2004 fiscal outlook for ADM looks good, they have increased their net sales from 2002 to 2003, now it seems that in the fiscal year 2004 they are going to be doing well and they will be working for everyone, not just their company. ADM has been around for over 100 years and there is no telling what they are going to do in the future, the company has been expanding since they started in 1902 and ADM is a large company that could one day be the biggest company in the United States. ADM is located in over 70 countries and it works for people all over the world. I am sure that we will be hearing great things about ADM in the near future because they know what type of business they want to do.