Patricia A. Woertz

Truly Global

Editors’ Note

Patricia Woertz was named CEO and President in April 2006, and assumed the role of Chairman of the Board in February 2007. Woertz began her career as a Certified Public Accountant with Ernst & Ernst – later Ernst & Young – in Pittsburgh. She joined Gulf Oil Corporation in 1977, where she held various positions in refining, marketing, strategic planning, and finance. Following the merger of Gulf and Chevron in 1987, Woertz led international operations and a global workforce as President of Chevron Canada and, later, Chevron International Oil Company. With the merger of Chevron and Texaco in 2001, she was named Executive Vice President in charge of the company’s global refining, marketing, lubricant, and supply and trading operations. She serves on the Board of Directors of the Procter & Gamble Company, the International Business Council of the World Economic Forum, and The Business Council. She holds a B.S. in accounting from Pennsylvania State University.

Company Brief

Headquartered in Decatur, Illinois, Archer Daniels Midland Company (ADM; www.adm.com) operates one of the world’s largest agricultural networks: purchasing, storing, and transporting crops on six continents. Each day, at more than 230 facilities around the world, they process 3.5 million bushels of soybeans, canola, sunflower, and other oilseeds; two million bushels of corn; and one million bushels of wheat. In addition, they also grind about 15 percent of the global cocoa crop. The crops are transformed into hundreds of food ingredients, animal feed ingredients, fuels, and industrial products that are consumed and used by millions of people every day. ADM’s net sales for the fiscal year ending June 30, 2009, were $69 billion.

How much of an impact has the economic crisis had on ADM’s business?

Because ADM serves global demand for food, feed, and fuel ingredients, we have been less impacted by the downturn than many sectors – certainly less than banking, auto, retail, and housing. Food and energy are vital needs that people tend to satisfy even when spending in other areas decreases. So while we saw demand slacken in the second half of our fiscal 2009 – and we adjusted our operations accordingly – we were able to produce a year of good performance overall.

We entered the downturn in a strong financial position. Prior to the downturn, we were in a period of record crop prices, and we shored up our balance sheet to meet our increased working capital needs. Since then, crop prices have moderated, giving us strong cash flow and the financial flexibility and strength to continue to complete our large capital program and make some strategic acquisitions.

We also came into this period with very strong, long-term relationships with our customers and suppliers, and we worked to manage those relationships well as the downturn impacted their businesses.

So while we certainly haven’t been immune, we came into this period strong, having delivered from 2006 to 2008 some of the best performance in our history. We used our strong balance sheet to continue building the size and scope of our agricultural processing value chain. As we look ahead to improvement, we continue to be optimistic about our company’s opportunities serving vital needs for food and energy.

Did the downturn force you to revise or redirect your strategy?

No, we were able to continue to advance our strategy of expanding our geographic footprint and the volume and scope of our agricultural value chain. During 2009, we continued to invest in the seven projects that make up our $2.5 billion capital investment initiative – the largest in our 108-year history – and four came online: a cocoa processing facility in Hazleton, Pennsylvania; two cogeneration facilities, which produce steam and electricity for our processing facilities; and an ethanol plant in Columbus, Nebraska. Our propylene/ethylene glycol plant in Decatur, Illinois, and our PHA renewable plastics plant in Clinton, Iowa, will be fully operational in coming months. An ethanol dry mill in Cedar Rapids, Iowa, is slated to come online later this year.

At the same time, we grew our South American packaged oil business and our European oilseed operations. We expanded our U.S. oilseed processing capacity, our Brazilian biodiesel operations, and our fertilizer-blending capability in South America. We also expanded our global origination and transportation network, adding barges, silos, and five oceangoing vessels.

In addition, we formed strategic joint ventures, to enhance the value of our North American packaged oil business, and in Brazil, to produce sugar and ethanol for the growing Brazilian market for these products. So while the economic downturn created a significantly different operating landscape than we’ve seen in many years, we made strategic investments to build long-term value.

Is ADM seeing signs of the economy starting to recover?

Yes, at least to the extent that improving demand in food, feed, and fuel markets points to some recovery. We’re seeing protein-meal demand grow in Asia and elsewhere. In the U.S., ethanol pricing has improved in recent months, and we’re seeing higher sales of high fructose corn syrup to Mexico. While customers kept their inventories lean in 2009, we have seen some evidence of pent-up demand. So while you would have to look at many other factors to address the full question of recovery, these signs do signal some improvement.

Would you highlight the international business for ADM and the strength of the company in emerging markets?

ADM’s business is truly global. It starts with, essentially, six major crops that we source, trade, and transport: oilseeds, corn, cocoa, wheat, palm, and sugar. At more than 230 processing plants around the world, we process and transform roughly a third of all the crops that we source, and we use our transportation network to ship food, feed, fuel, and industrial products virtually anywhere in the world. So, we’re very well-positioned to serve our food and energy customers as they pursue growing markets.

We also continue to build our capacity to source, process, and transport crops and value-added products. We see Central Europe as a set of geographies where we continue to have a desire to grow. Two of our recent acquisitions there have helped with that footprint. In the Czech Republic, we recently acquired an oilseed crushing, refining, and biodiesel plant; and in Southern Germany, we acquired a rapeseed crushing plant. The facility’s location on the Danube River provides access to market opportunities in the Czech Republic, Hungary, and Slovakia.

South America remains a geography that has continued promise for growth, so our origination and processing additions have been important there. Our overall global transportation network – to which we’ve recently added five oceangoing vessels – adds efficiency to our global business.

How critical is the China market to your business, and would you provide an overview of ADM’s business in China?

China’s population and income growth have been the primary engine driving growing Asian demand for food – in particular proteins – and for energy, so from that perspective, the Chinese market is very important both as a market unto itself and as a driver of long-term global growth trends that represent opportunity for ADM.

We have had operations in China since 1995, when we began producing animal feed for the growing livestock industry, and we produced vegetable oil to meet growing demand. Later, we began selling a wide range of specialty food ingredients such as lecithin, vitamin E, and cocoa products to Chinese customers, and we established a trading office in Shanghai to manage the sale of these products.

A key part of our Asia strategy today is our strategic ownership interest in Wilmar International Limited, Asia’s premiere agricultural processing business. With partners, we constructed several processing plants that were then contributed to Wilmar in exchange for equity. We sit on their board and have a customer/supplier relationship with them, so we will enjoy growth with them as the Asia market continues to grow.

Brazil is the fifth most populous country in the world and the largest economy in South America. How important is Brazil to ADM’s growing global business, and what is your outlook for ADM’s business in Brazil?

Brazil is very important, and we are expanding our storage, processing, and logistical capabilities both there and throughout South America. The continent offers some of the most favorable origination opportunities in the world, given its vast amount of arable land and long growing seasons, and we see these opportunities as increasingly important to our business.

As a result, we have investments in fixed assets and commercial operations in Brazil and in several other South American countries including Argentina, Bolivia, Chile, Columbia, Ecuador, Paraguay, Peru, and Uruguay.

We began operations in Brazil in 1997, and today, we have more than 2,800 employees in the country. We originate soybeans, corn, wheat, rice, cocoa, and sorghum. We process soybeans and cocoa, and we also produce biofuels, blend fertilizer, and operate elevators and port facilities. We operate the nation’s largest biodiesel plant and largest cocoa processing facility.

Brazil has become the world’s largest distiller of ethanol from sugarcane, so that is another aspect of our focus. In 2008, we formed a joint venture to build and operate two sugar and ethanol facilities. The first facility began production in October of 2009, and the second is expected to come online in 2011.

We’re very optimistic about Brazil’s prospects and our opportunities there. In terms of the elements that contribute to growing prosperity – education, governance, infrastructure investments, resources – Brazil looks to have a very bright future.

Would you highlight ADM’s business in India?

We’ve stepped up our interest in India as of late. Our growth opportunities there may be further off than Brazil, but we do see that opportunity. Today, our principal business is processing oilseeds into edible oils, animal feeds and feed ingredients, and biodiesel. We have oilseed crushing and refining facilities, bottled oil packaging plants, and a project to manufacture biodiesel from Jatropha. We also supply food companies with our array of ingredients – more than 500 – which they use in all kinds of everyday foods and personal care products.

Are there significant research projects underway at ADM?

Our R&D efforts are focused on expanding our portfolio of value-added products. Some of this work is focused on innovative food products, such as an environmentally friendly method for producing low-trans-fat oils, and some is focused on developing next-generation biofuels. For instance, we’re looking at “drop in” fuels. This year, as part of a development agreement with ConocoPhillips, we are constructing a pilot plant to convert corn fiber into a biocrude product that can be processed into gasoline and a range of other products at traditional refineries.

In December, we were awarded a $24.8 million grant from the U.S. Department of Energy to convert biomass into fuel ethanol and ethyl acrylate, which is used in adhesives, coatings, and plastics. The funding will reduce the time frame to commercialization by about two years.

We also know that larger crop yields are going to produce greater biomass, so we are working with John Deere and Monsanto to find ways to sustainably harvest corn stover and transform it into animal feed or feedstock for biofuels.

We’re also partnering in one of the nation’s first large-scale carbon sequestration projects. We’re working with the Midwest Geological Sequestration Consortium and other partners to capture, inject, and store – deep underground – carbon dioxide from one of our corn plants. It’s a technology that can improve the carbon footprint of today’s ethanol.

ADM has been a leader in corporate responsibility and in the community. How important is this work to the culture of the brand, and would you highlight your views on the role of business leaders and leading companies in this regard?

This work isn’t just important to our culture – it’s integral to how we do business in the world. Because ADM serves vital human needs for food and energy, our work is intimately tied to our social responsibility. Our capital investments, our social investments, and our investments in people are all aimed at enhancing our ability to serve our vital purpose.

Some of this work is conducted under our social investment program, ADM Cares. Through this program, we’re helping to ensure that the crops we source are responsibly and sustainably produced. For instance, in Côte d’Ivoire, we have developed several initiatives to help cocoa farmers grow higher quality beans under environmentally and socially responsible conditions. In Brazil, we collaborate with Aliança da Terra, a leading advocate for sustainability, to help soybean growers improve their yields without expanding into ecologically sensitive areas. In India, we are partners in a program that provides guidance to farmers on soil testing, land preparation, seed selection, fertilizer application, pest management, and good cultivation practices. These kinds of positive, productive collaborations represent the multi-stakeholder partnerships that are critical to achieving real progress.

You are leading ADM during a challenging time with the global economic crisis. How critical has it been for you to communicate with your employees on your plans for ADM to help them understand the long-term vision for the company?

Communication is always critical, and even more so during times of uncertainty or challenge. In terms of my approach to leadership, there are a few key themes that have been constant, and communication – along with safety – has been one. When I joined ADM, I made it a priority to visit employees, to listen to their ideas and perspectives, and to create more opportunities to communicate directly with them.

Today, we continually update employees on our progress towards key objectives and priorities. We hold town halls and other meetings where we engage employees in discussions of strategy as well as other important topics. We know that it is important for leaders to be both vocal and visible, so we’ve established clear expectations for increased communication and for leaders to create the team culture that enables candid discussion and feedback.

As you look to 2010, what are the key priorities and areas of focus to help ADM to remain a global leader?

It starts with our overarching strategy to expand the size and scope of our global agricultural processing chain. We will expand our origination and processing activities as market demand grows, or as acquisition opportunities present themselves, and we will continue to work to identify additional opportunities that can connect to and leverage our value chain. So within our company, we are working to build our capacity to fulfill our strategy. We have four key priorities: safety, sustainability, cost management, and performance.

As we look at the long-term opportunities for our company, we also know that the world is looking to agriculture to provide for a growing list of needs, and we intend to play our part in the innovations, investments, and partnerships that will be necessary to serve those needs. With a global population that’s expected to grow 50 percent in the next 40 years, the world is going to need more food and more energy from nontraditional sources. ADM is extremely well-positioned to help answer the call.