All good companies adapt to changing business environments, but perhaps no corporation matches Archer Daniels Midland’s adeptness at using big government to generate profits, come rain or shine.
The agribusiness giant, which has spent decades shoring up its relations with top policymakers, posted a $441 million profit in the most recent quarter — ADM’s best-ever showing — thanks to official subsidies, protective tariffs and mandates for their ethanol, exports and corn syrup businesses.
ADM is America’s top producer of ethanol, a fuel made from agricultural products, mostly from corn in the United States. Federal and state governments heavily subsidize ethanol’s production, transit and sale, and Washington protects domestic ethanol with a tariff on ethanol imports.
These subsidies raise costs for consumers, many farmers and taxpayers — often padding ADM’s bottom line. The company’s $403 million profit in the July-September quarter last year (a record at the time) was primarily driven by a federal renewable-fuels mandate, which, in 2006, raised gasoline prices by forcing ethanol on drivers....MORE