ADM sees room for international growth

by Jeff Gelski
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BOCA RATON, FLA. — Archer Daniels Midland Co. will continue to invest in international growth, which may even include ship ownership, since historical trends show the world’s inhabitants will continue to need more food, feed and energy, company executives said Feb. 17 at the Consumer Analyst Group of New York Conference (CAGNY) in Boca Raton.

"We are confident that our long-term volumes and opportunities will grow as the world will need more food, feed, and renewable energy and industrial products," said Steve Mills, executive vice-president and chief financial officer for ADM, Decatur, Ill.

He said ADM sees opportunities to expand in nearly every area of its operations.

"We see opportunities to strengthen our long-term transportation and distribution asset base through an expanded barge fleet and possibly ship ownership," Mr. Mills said. "Longer term, we will need more processing capacity. And we are selectively expanding our regional capacities as well as exploring specific acquisition opportunities.

"Bottom line, we believe that the current economic downturn may provide us with opportunities to use our financial strength to grow our global footprint in a cost-effective way."

ADM plans to expand its South American barge fleet by 50%, said John Rice, executive vice-president, Commercial and Production, for ADM. Freight rates and values are at historically low levels, Mr. Mills said.

"We are a big user of ocean freight today," he said.

ADM recently entered into a sugar joint venture in Brazil. The company also grew its palm business by consolidating joint venture operations into an investment in Wilmar, an agricultural processor in Asia, said Patricia Woertz, chief executive officer and president of ADM.

"We’re also exploring other palm opportunities outside of the Wilmar investment," she said.

Domestically, ADM will have a corn facility in Columbus, Neb., on line in the fall while work continues on an ethanol facility in Cedar Rapids, Iowa, Mr. Rice said. The two new plants, being built next to existing wet corn mills, each will produce about 275 million gallons of ethanol per year.

The ethanol market right now has about 2.9 billion gallons of overcapacity, Mr. Rice said. He said the ethanol market may become profitable in 2010.

"When you look at the long term and the number of plants shutting down, there is reason for optimism," Mr. Rice said.

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