Patricia
Woertz
and
the
New
(Old)
Thing


The
ADM
chief
executive
bet
her
company
on
biofuels.
Then
the
ethanol
bubble
burst.

What
now?



By
Ryan
Blitstein1

June
4,
2009





The
man’s
name
was
Dr.
Russell.
Among
the
hundreds
of
shareholders
at
Archer

Daniels
Midland’s
annual
meeting2
last
fall,
he
was
a
nobody.



Yet
he
stood
before
the
microphone,
looking
right
up
at
Patricia
Woertz,
ADM’s
chief

executive,
a
woman
in
charge
of
a
company
with
tentacles
in
so
many
products
–
from
the
food
in
your
pantry
to
the
chemicals
in
fire‐fighting
foam

–
that
the
title
of
her
presentation
that
day,
“Vital
to
the
World,”3
wasn’t
stretching

the
truth.



Woertz
had
just
delivered
a
healthy
dose
of
rosy
corporatespeak
to
the
audience
at

the
James
R.
Randall
Research
Center
in
Decatur,
Ill.
ADM,
surrounded
by

uncertainty
amidst
the
beginnings
of
a
historic
economic
crisis,
was
thriving,
she

said,
with
a
stellar
business
model
and
the
strongest
balance
sheet
in
its
history.



And
here
was
Dr.
Russell
from
Chicago
and
Decatur,
a
small
shareholder
for
25

years,
asking
a
garbled
laundry
list
of
questions
that
boiled
down
to
a
simple
query:


Why
did
my
ADM
stock
lose
almost
half
its
value
this
year,
and
what
are
you
gonna

do
about
it?



Woertz
empathized
with
Dr.
Russell.
She,
too,
held
stock
in
ADM,
and
on
paper,

she’d
lost
millions
in
20084.
Woertz
believed
that
people
like
Dr.
Russell
deserve

every
bit
as
much
respect
as
high‐profile
Wall
Street
money
men:
The
best
financial

results
that
executives
like
her
can
produce,
the
best
communication
they
can
offer.



























































1
This
story
was
assigned
by
Conde
Nast
Portfolio
in
fall
2008.
The
bulk
of
reporting
took
place
in


November
and
December
2008.
It
was
in
the
editing
process
when
Conde
Nast
folded
the
magazine.

The
Big
Money
(http://www.thebigmoney.com)
published
an
abbreviated
version
with
updated

reporting
on
June
1,
2009.
I
was
pretty
happy
with
it.
(For
a
variety
of
reasons,
I
was
unable
to
find
a

magazine
that
would
publish
the
longer
version
before
the
information
in
it
became
very
stale.)
This

document
is
my
best
approximation
of
what
Portfolio
might
have
published,
although
it’s
probably

more
raw
and
much
longer
than
it
would’ve
been
after
more
editing.

2
I
was
not
at
ADM’s
annual
meeting.
I
listened
to
it
online
and
reviewed
a
transcript
provided
by


ADM.
Woertz
and
ADM’s
PR
department
spoke
to
me
about
her
state
of
mind.

3
ADM
provided
a
PDF
document
of
her
slide
presentation



4
According
to
her
stock
option
awards
in
the
company’s
2008
proxy
statement.

Nevertheless,
she
responded
the
way
any
smart
chief
executive
with
financial

analysts
listening
in
would:
She
dodged.



Woertz
affirmed
the
company
line
of
price‐related
revenue
changes
and
highlighted

a
huge
one‐time
gain
during
2007,
and
then
made
non‐committal
commitments

about
expanding
the
company’s
flagging
ethanol
business.
She
promised
Dr.
Russell

a
follow‐up
question
–
but
only
if
there
was
time.



It’s
not
the
sort
of
exchange
CEOs
enjoy,
but
Woertz
knew
it
was
coming.5



Two
years
before,
almost
to
the
day,
Woertz
spoke
at
ADM’s
analyst
day
in
Chicago,

still
in
her
honeymoon
as
the
new
chief
executive
of
a
company
poised
for
financial

and
social
revitalization.
The
former
Chevron
executive
talked
of
spearheading
its

transformation
from
gorilla
of
grain
into
eco‐friendly
energy
giant.
ADM
had

revamped
its
strategic
vision
statement,
declaring
itself
“the
global
leader
in

bioenergy.”6




These
moves
targeted
an
audience
of
investors
hungry
to
stash
cash
in
anything

remotely
related
to
clean
technology
–
especially
a
company
at
ground
zero
of
the

ethanol
explosion.
Woertz
pledged
nine‐figure
investments
into
a
pair
of
new
corn

ethanol
plants.
She
would
soon
lure
two
high‐level
government
biofuels
scientists
to

join
her
executive
team.
And
the
company
stepped
up
its
applications
for

government
grants
in
next‐generation
biofuels.



But
for
a
guy
like
Dr.
Russell,
who
challenged
Woertz
with
the
benefit
of
hindsight
at

ADM’s
85th
annual
meeting,
the
CEO’s
big
idea
of
2006
couldn’t
have
seemed
too

prescient.



In
the
24
months
since,
the
ethanol
bubble
had
burst:
Unprecedented
volatility

produced
record‐high
prices,
followed
by
rapid
plunges,
in
commodities
like
corn,

turning
the
ethanol
business
model
upside
down.
Many
of
ADM’s
smaller

competitors
filed
for
bankruptcy,
but
even
the
diversified
conglomerate
took
a
huge

hit:
Its
ethanol‐heavy
bioproducts
unit
experienced
a
$432
million
yearly
drop
in

2008
operating
profits,
and
the
company
would
write
down
$60
million
in
ethanol

inventory7
in
early
2009.
Its
stock
lost
half
its
value
in
9
months
‐‐
before
the
rest
of


























































5
From
ADM’s
communications
office:
“Less
than
a
month
before
the
annual
meeting,
we
held
our
all‐

colleague
global
town
hall
at
the
nadir
of
our
valuation.
Pat
addressed
the
drop
in
valuation,
expected

to
hear
questions
about
the
stock
price.
And
–
not
surprisingly
–
during
that
event,
Pat
got
the
same

question….So,
at
the
annual
shareholders’
meeting,
we
again
absolutely
expected
questions
about
the

stock
price
and
our
actions
to
address
it.
Pat
directly
addressed
the
topic
during
her
prepared

remarks
and
was
prepared
to
discuss
the
topic
in
greater
detail
when
asked.”

6
ADM
provided
me
with
transcripts
and
slide
decks
from
the
presentation.


7
See
ADM
Q209
earnings:
http://www.adm.com/en‐

US/news/_layouts/PressReleaseDetail.aspx?ID=44

the
stock
market
took
a
nosedive.
While
ADM
was
about
to
announce
a
quarter
of

record
earnings,
much
of
its
recent
profits
stemmed
from
trading
and

merchandising
operations,
financial
black
boxes8
that
analysts
feared
were

unsustainable.



Woertz’s
response
to
these
circumstances
has
been
all
over
the
map.
Late
last
year,

she
watched
chief
technology
officer
Michael
Pacheco,
one
of
the
much‐touted

government
scientist
hires,
leave
without
replacement,
and
instituted
ADM’s
second

rebranding
in
as
many
years.
Yet
the
two
gigantic
ethanol
plants,
remnants
of
a

strategy
gone
awry,
remain
set
to
open
this
year
and
next,
and
Woertz
claims
her

plans
for
the
company
haven’t
changed.
It’s
left
ADM‐watchers
and
analysts

scratching
their
collective
heads.
In
typically
perplexed
language,
JP
Morgan
analyst

Terry
Bivens,
referring
to
ADM’s
ethanol‐focused
vision,
wrote
in
a
recent
report:

“We
believe
this
mission
may
have
put
undue
emphasis
on
bioenergy
and
we

suspect
the
company
concurs.”9



Woertz
says
it
was
all
just
a
great
big
misunderstanding.10
She
never
set
out
to

remake
ADM
into
an
energy
company
‐‐
she
only
wanted
to
expand
some
business

lines
and
pare
down
others,
making
a
few
new
investments
in
promising
markets.
It

was
the
analysts
and
reporters,
she
says,
who
latched
onto
the
biofuels
idea
without

listening
to
the
rest
of
the
company’s
overall
message
of
a
broad,
integrated

agribusiness
value
chain.
Despite
ADM’s
attempt
to
rewrite
recent
history,
though,

it’s
clear
Woertz’s
bioenergy
bet
hasn’t
quite
paid
off,
and
less
apparent
what
she

plans
to
do
about
it.



























































8
A
good
example
of
this
thinking,
from
Barclay’s
analysis
of
ADM’s
Q209
earnings:
“We
often
hear


investors
refer
to
ADM
as
a
black
box.
Following
a
fiscal
1H09
performance
in
which
the
company

bested
Street
estimates
$2.52
to
$1.33,
we
can't
help
but
share
in
this
sentiment
‐‐
as
a
presumably

meaningful,
but
unquantified
portion
of
the
upside
was
derived
from
risk
mgmt
activities.”

9
This
is
from
a
JP
Morgan
coverage
report
from
late
2008…unfortunately
I
only
have
this
in
hard


copy.

10
I
met
with
Patricia
Woertz
in
person
in
January,
but
her
public
statements
have
changed
little,
and


nothing
from
my
conversations
with
ADM’s
communications
team
since
then
indicates
a

conversation
that
happened
this
week
would
be
very
different.

On
April
29,
2006,
Patricia
Woertz
stepped
off
an
airplane
onto
the
concrete
floor
of

the
hangar
at
tiny
Decatur
Airport,
ready
to
meet
with
ADM’s
executive
team.

Despite
a
hard‐charging
reputation
earned
over
29
years
in
the
oil
industry,
she

wasn’t
the
most
likely
candidate
for
a
place
atop
the
ADM
hierarchy.



In
the
century
since
its
founding
by
George
Archer
and
John
Daniels11
the
company

had
built
up
a
sprawling
network
of
200‐plus
agricultural
and
chemical
processing

plants
around
the
globe,
connected
by
ships,
trucks,
and
railcars,
all
leading
toward

the
rural
Rome
of
Decatur.12
It’s
one
among
the
corporate
quartet
that
processes

three‐fourths
of
all
the
grain
and
oilseeds
in
the
entire
world.13



Many
of
Woertz’s
new
deputies
were
ADM
lifers,
the
kind
of
guys
who
might
joke

about
being
born
in
Decatur
with
a
corncob
in
one
hand
and
a
soybean
in
the
other.

Woertz
had
neither
agriculture
experience
nor
engineering
training.
She’d
never

been
a
CEO,
either.14



ADM’s
board,
though,
wanted
a
talented
leader
from
outside
the
traditional
old

boys’
club.
Someone
who
wasn’t
part
of
the
Andreas
family
that
had
dominated
the

company
since
the
Johnson
era,
presiding
over
an
embarrassing
1990s
price‐fixing

scandal
that
triggered
a
shareholder
revolt15
and
the
largest
antitrust
fine
in
U.S.

history.16
Woertz
fit
the
bill:
Her
hiring
made
ADM,
at
the
time,
the
largest
U.S.

company
with
a
woman
at
the
helm.



Woertz
had
managed
complex,
geographically
disparate
businesses
as
a
Chevron

executive
vice
president,
and
her
background
as
a
corporate
accountant
taught
her

how
to
value
big,
rusty
assets.17
What
intrigued
analysts
–
and
some
employees
–


























































11
Much
of
the
historical
information
I
have
here
is
from
Supermarketer
to
the
World,
a
biography
of


Dwayne
Andreas
by
E.J.
Kahn.
It’s
from
1990,
so
it’s
dated,
but
interesting.

12
A
lot
of
this
is
from
ADM’s
2008
10‐K:


http://ccbn.10kwizard.com/xml/download.php?repo=tenk&ipage=5860052&format=PDF

13
According
to
a
Barclays
Capital
change
in
earnings
forecast
on
ADM
dated
11/5/08



14
Chicago
Tribune
12/29/06
article
on
her
joining:


http://www.accessmylibrary.com/coms2/summary_0286‐30430518_ITM

15
New
York
Times
10/19/95
See
here:
http://www.nytimes.com/1995/10/19/business/a‐

shareholder‐rebellion‐investors‐demand‐answers‐from‐archer‐daniels.html.
NYT’s
Kurt
Eichenwald

also
wrote
a
very
good
but
way‐too‐long
book
on
these
events
called
The
Informant.
A
movie
version

will
be
released
in
October
2009.

16
This
according
Rats
in
the
Grain
(2000)
by
attorney/author
James
Lieber,
a
thorough
if
one‐sided


book
on
ADM’s
sketchy
past
behavior.



17
For
more
on
her
qualifications,
see
this
definitive
(but
gushing)
Fortune
profile
on
Woertz
in
her


first
months
at
ADM
10/16/06:

http://money.cnn.com/magazines/fortune/fortune_archive/2006/10/16/8390301/index.htm

most,
however,
was
that
Woertz
had
spent
so
much
time
in
the
energy
industry.
One

word
appeared
in
almost
every
research
note
and
news
article
heralding
her

ascension:
ethanol.18



The
corn‐derived
fuel
alcohol
was
just
beginning
to
remake
the
heartland
economy.

It
seemed
a
political
triple‐whammy:
creating
a
path
toward
independence
from

Middle
East
oil,
lowering
greenhouse
gas
emissions,
and
aiding
American
farmers.

ADM
had
a
long
history
in
the
biofuels
business,
having
basically
invented
the

market
during
the
late
1970s
energy
crisis.
Longtime
CEO/patriarch
Dwayne

Andreas
first
championed
ethanol
as
a
way
to
keep
its
corn
processing
plants

operating
at
full
capacity,
even
during
seasonal
periods
when
demand
for
high‐
fructose
corn
syrup
(used
in
soft
drinks)
was
low.19
In
1980,
he
predicted
that

ethanol
would
replace
half
of
America’s
imported
gas
by
the
end
of
the
decade.20
It

didn’t
even
reach
one
in
five
barrels.21




But
Andreas
kept
the
business
line
afloat,
largely
thanks
to
generous
federal

subsidies
purportedly
aimed
at
aiding
American
farmers,22
along
with
cyclical

(though
steady)
profits
from
its
traditional
agribusinesses.
It
didn’t
hurt
that
he
was

one
of
America’s
most
generous
political
donors,
maintaining
close
friendships
with

a
range
of
Washington
bigwigs
on
both
sides
of
the
aisle,
from
Democrat
Hubert

Humphrey
to
Republican
Bob
Dole,
the
self‐described
“Senator
from
ethanol.”23



Around
the
time
Woertz
gave
notice
at
Chevron,
the
market
finally
caught
up
with

Andreas’
vision.
In
February,
U.S.
Secretary
of
Energy
Samuel
Bodman
took
to
the


























































18
I
was
amazed
at
how
common
references
to
biofuels
were
among
the
2006/2007
stories
on
ADM


that
I
reviewed.
People
from
inside
the
company
confirmed
that
similar
conversations
were
going
on

internally.
ADM
maintains
that
its
executives
at
communications
people
didn’t
push
the
ethanol

meme
very
hard,
but
I
find
that
hard
to
believe,
given
that
it
spread
like
wildfire
inside
and
outside

the
company.

19
From
ADM’s
communications
team:
“Ethanol
is
made
from
starch.
When
ADM
first
considered


producing
ethanol,
the
primary
product
from
our
corn
wet
mills
was
high‐fructose
corn
syrup.

Much

of
the
HFCS
we
were
producing
was
being
used
in
soft
drinks.
More
soft
drinks
are
consumed
in
the

summer
than
in
winter,
which
resulted
in
ADM
experiencing
a
decrease
in
demand
for
HFCS
in
the

fall
and
winter
months.
To
keep
our
plants
operating
at
full
capacity,
the
Company
looked
to
ethanol

as
another
product
that
could
be
produced
from
the
starch
stream
when
demand
for
HFCS
was

slower.
Ethanol
production
would
help
to
keep
our
plants
operating
at
full
capacity.”



20
From
Supermarketer
to
the
World


21
Centers
for
Disease
Control
gasoline
toxicity
report:
www.atsdr.cdc.gov/toxprofiles/tp72‐c4.pdf


22
For
a
good
summary,
check
out
this
study
by
Wally
Tyner
and
Farzad
Taheripour:


http://www.farmfoundation.org/news/articlefiles/364‐Taheripour%20and%20Tyner_St_Louis.pdf.

In
addition
to
these
two,
Daryll
Ray
was
a
very
helpful
source
on
agricultural
economics:

http://economics.ag.utk.edu/ray.html

23
From
Rats
in
the
Grain

trading
floor
at
ADM
headquarters
to
announce
a
presidential
biofuels
initiative
and

a
government
mandate
for
ethanol
consumption.
In
May,
the
oxygenating
fuel

additive
MTBE
was
banned
from
use
in
American
gasoline.
Ethanol
was
the
only

alternative.
Demand
for
the
fuel
surged.
Futures
prices
spiked
so
high
that
if
you

could’ve
instantly
built
a
plant
(which
you
couldn’t,
they
take
at
least
two
years
to

construct),
it
would’ve
earned
a
profit
in
just
months.24



Farmers
switched
their
cropland
from
soybeans
and
wheat
to
corn
and
formed
co‐
ops
to
process
the
fuel.
Venture
capitalists
rushed
to
fund
new
plants.
The
industry

collectively
broke
ground
on
hundreds
of
new
ethanol
factories25
‐‐
two,
three,
four

plant
announcements
per
week26
‐‐
and
some
even
launched
initial
public
offerings.



“It
was
like
the
gold
rush.
It
was
phenomenal,”
said
Wally
Tyner,
an
energy
and

agriculture
economist
at
Purdue
University.



At
ADM,
which
produced
one‐third
of
the
nation’s
ethanol
supply,27
years
of
windfall

profits
seemed
a
certainty.
It
was
one
reason
the
company’s
stock
had
tripled
since

2003.




ADM
had
long
relied
on
agility
surprising
for
a
corporation
of
its
size,
capitalizing
on

quick
decisions
to
enter
and
exit
markets
at
just
the
right
time.
Yet
its
executives

had
rarely
thought
very
far
into
the
future,
or
imagined
how
the
company
might

evolve
over
the
course
of
a
decade.28
The
board
had
hired
Woertz
partly
to
create
a

long‐term
strategy.
She
was
given
free
reign
to
take
one
of
the
world’s
largest,
most

complex
companies,
flying
as
high
as
it
had
in
decades,
and
do
whatever
she
pleased.



“That
was
one
of
the
things
that
was
really
very
exciting,”
remembers
Victoria

Podesta,
Woertz’s
in‐house
public
relations
guru.
“The
opportunity
to
take
a

company
that
was
already
performing
very
well
and
see
what
could
be
done
with
it.

How
could
you
make
it
perform
even
better?”29





























































24
According
to
Wally
Tyner.
Rick
Kment,
DTN’s
ethanol
analyst,
agrees
with
the
claim.


25
The
New
York
Times
did
a
great
job
covering
these
dynamics
at
the
time.
See
especially
NYT


6/25/06:
http://www.nytimes.com/2006/06/25/business/25ethanol.html


26
This
according
to
data
provided
by
DTN.


27
For
good
numbers
analysis,
see
this
Barron’s
article
from
2006:


http://www.smartmoney.com/investing/economy/adms‐growth‐story‐19280/

28
This
assertion
is
based
partly
on
the
historical
books
and
partly
on
interviews
with
Woertz
and


Podesta.

29
I
spoke
with
Podesta
by
phone
in
the
weeks
before
I
met
with
Woertz. 

Woertz
set
out
to
determine,
as
one
ex‐ADM
marketing
employee
put
it,
“What
do

we
want
to
be
when
we
grow
up?”30



Would
ADM
become
a
bioenergy
company
with
agribusinesses
on
the
side?
Could
it

continue
down
the
road
as
a
bewilderingly
complex
conglomerate
with
units

distributed
throughout
food,
feed,
and
fuel?
Or
was
it
really
just
a
giant
chemical

company,31
selling
myriad
combinations
of
carbon
molecules,
sugars,
and
starches,

all
derived
from
plants?



To
get
to
know
the
whole
corporation,
Woertz
embarked
on
a
corporate
jet
tour
of

four
continents,
meeting
personally
with
nearly
one‐fifth
of
ADM’s
employees,
or

about
5,000
people.
In
August
2006,
she
assembled
her
senior
leadership
team
for
a

big‐think
strategy
session,
examining
how
broad
global
trends
could
impact
the

company
and
where
opportunities
might
arise.
During
the
next
several
weeks,
the

top
brass
and
their
subordinates
began
to
sort
it
all
out
–
how
to
tell
the
story
of
the

company,
where
to
invest
the
heavy
cash
flow,
which
business
lines
to
shed.



Even
if
Woertz
wanted
to,
it
would
have
been
almost
impossible
to
entirely
cast
off

ADM’s
agricultural
roots.
Ethanol
and
biodiesel
(a
vegetable
oil‐based
fuel
sold

mostly
in
Europe)
were
both
intertwined
with
the
rest
of
the
corn
and
oilseeds

processing
pipeline,
and
together
accounted
for
only
about
20
percent32
of
ADM’s

income.
Besides,
Woertz
saw
opportunity
to
grow
agribusiness
profits
by
expanding

internationally
and
diversifying
into
new
plants,
such
as
oil
palms.
Yet
biofuels
was

among
corporate
America’s
hottest
sectors,
and
despite
the
fact
that
ADM
was
the

market
leader
with
plans
for
expansion,
few
viewed
it
as
anything
like
an
energy

company.
Woertz
hoped
to
change
that.



“We
didn’t
have
to
say
we
were
going
to
become
the
leader
in
corn
processing,

because
we
are.
We
didn’t
have
to
say
we
were
going
to
be
the
starch
and

sweeteners
leader,
because
we
are,”
says
Podesta,
who
was
involved
in
the

discussions.



Fearing
an
overemphasis
on
energy
might
be
bad
for
morale,
the
company
took

great
pains
to
explain
to
employees
–
especially
the
thousands
who
don’t
work
with



























































30
This
longtime
employee
left
the
company
well
after
Woertz
joined.
The
employee
didn’t
want
their


name
used
out
of
fear
of
seeming
like
they
were
being
critical
toward
a
former
employer
(the

employee
felt
that
at
the
time,
the
decisions
made
sense).
Several
other
former
employees
who
spoke

off
the
record
confirmed
that
this
was
the
internal
thinking
at
the
time,
and
several
analysts
said
it

was
consistent
with
what
they
heard
from
ADM
publicly.

31
This
idea
was
suggested
by
a
government
agriculture
economist
who
spoke
on
background.


32
Another
analysis
from
that
time,
NYT
10/8/06


http://www.nytimes.com/2006/10/08/business/yourmoney/08adm.html

biofuels
at
all
–
that
agriculture
would
remain
a
core
part
of
the
business.33
Outside

the
corporate
town
halls,
though,
the
message
was
different.




“It
became
sexy
to
be
a
bioenergy
company,
so
why
not
play
up
that
aspect
of

ourselves?”
said
the
former
marketing
employee.
“That’s
what
they
led
with,

because
that
was
what
the
market
was
excited
about.”





The
rebranding
began
that
fall,
at
Woertz’s
first
public
speech
as
CEO,
at
a
biofuels

conference.34
It
continued
a
month
later,
at
the
company’s
analyst
day,
where

ethanol
and
biodiesel
were
all
over
her
slide
deck.
The
strategic
vision
statement

she
unveiled
was
a
mouthful,
but
it
transposed
biofuels
to
the
forefront:
“Our

commitment
is
to
be
the
global
leader
in
bioenergy,
while
expanding
our
premier

position
in
the
agricultural
processing
value
chain.”35
ADM
also
rewrote
the

boilerplate
at
the
bottom
of
all
its
press
releases
to
match.36



“Some
people
heard
the
first
half
of
that
sentence
and
stopped
hearing,”
says

Podesta.
“Maybe
we
didn’t
say
the
second
half
loud
enough.”



Woertz
public
statements
certainly
didn’t
help.



“It’s
a
mistake
to
think
that
others
can
compete
on
our
scale,”
she
bragged
to

farming
industry
rag
Top
Producer
that
December.
“Our
next
biggest
[ethanol]



























































33
Several
employees
talked
about
meetings
and
internal
memos/emails
Woertz
and
other
leaders

sent.

34
Again,
according
to
the
10/8/06
NYT
article.


35
Analyst
day
transcript
provided
by
ADM
(06analysttranscript.doc)


36
Old
version
(early
2006):
“Archer
Daniels
Midland
Company
(ADM)
is
a
world
leader
in


agricultural
processing
and
fermentation
technology.
ADM
is
one
of
the
world’s
largest
processors
of

soybeans,
corn,
wheat
and
cocoa.
ADM
is
also
a
leader
in
the
production
of
soybean
oil
and
meal,

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
240

processing
plants
and
net
sales
for
the
fiscal
year
ended
June
30,
2006
of
$36.6
billion.
Additional

information
can
be
found
on
ADM’s
Web
site
at
http://www.admworld.com.”


New
version
(late
2006):
“Archer
Daniels
Midland
Company
(ADM)
is
the
world
leader
in

BioEnergy
and
has
a
premier
position
in
the
agricultural
processing
value
chain.
ADM
is
one
of
the

world’s
largest
processors
of
soybeans,
corn,
wheat
and
cocoa.
ADM
is
a
leading
manufacturer
of

biodiesel,
ethanol,
soybean
oil
and
meal,
corn
sweeteners,
flour
and
other
value‐added
food
and
feed

ingredients.
Headquartered
in
Decatur,
Illinois,
ADM
has
over
26,000
employees,
more
than
240

processing
plants
and
net
sales
for
the
fiscal
year
ended
June
30,
2006
of
$37
billion.
Additional

information
can
be
found
on
ADM’s
Web
site
at
http://www.admworld.com/.”


competitors
are
about
the
size
of
just
one
of
our
plants.
So
there’s
a
very
large
gap

between
us
and
them.”37



Woertz
was
betting
big
money
behind
her
tough
talk,
plunging
$2
billion38
into
the

bioenergy
business.
ADM
had
recently
initiated
the
largest
construction
binge
in
its

history,39
and
the
jewels
of
the
plan
were
two
ethanol
dry
mills
–
one
each
in
Iowa

and
Nebraska
–
intended
to
add
as
much
as
550
million
gallons
of
permitted

production.40



In
April
2007,
the
company
pledged
millions
toward
U.S.
Department
of
Energy‐
funded
Purdue
University
research
to
commercialize
cellulosic
ethanol,
a
nascent

technology
that
relies
on
plants
other
than
corn,
and
may
eventually
replace
corn

ethanol41.
In
June,
it
announced
plans
to
build
a
research
and
development
center
in

Hamburg,
Germany,
one
of
its
biggest
biodiesel
markets.



Woertz
hired
Pacheco,42
then
director
of
the
DOE’s
National
Bioenergy
Center
and
a

veteran
of
several
energy
companies,
as
ADM’s
first
CTO,
sitting
on
the
company’s

strategic
planning
committee.
She
also
brought
in
DOE
researcher
Todd
Werpy
to
head

up
biofuels
and
biochemical
research.43




ADM
was
far
from
the
first
company
to
direct
money
and
marketing
toward
a
major

repositioning.
Around
the
turn
of
the
millennium,
for
example,
IBM
managed
to
shed

its
reputation
as
a
bureaucratic
software
and
hardware
company
full
of
arrogant

salesmen.
It
became
known
as
a
business
filled
with
customer‐focused
Internet
and

technology
services
experts
–
these
worldwide
changes
started
with
little
more
than

a
marketing
plan.44
More
recently,
Steve
Jobs
reinvented
computer
maker
Apple
as
a

lifestyle
brand,
selling
iPod
media
players
and
iPhone
handsets
along
with
digital

music
and
movies.


























































37
See
a
portion
here:
http://www.accessmylibrary.com/coms2/summary_0286‐28930074_ITM


38
Woertz
speech
to
Economic
Club
of
Chicago:
http://www.adm.com/en‐

US/responsibility/Documents/The‐Energy‐Evolution.pdf

39
ADM
analyst
day
Nov
2008
(transcript‐2008‐10‐07t13‐001.doc)


40
Interview
with
Patricia
Woertz


41
See
http://www.prnewswire.com/cgi‐bin/stories.pl?ACCT=104&STORY=/www/story/04‐16‐

2007/0004566218&EDATE=

42
See
http://ethanolproducer.com/article.jsp?article_id=3051


43
See
http://seekingalpha.com/article/38069‐adm‐hires‐head‐of‐department‐of‐energy‐to‐bring‐it‐

to‐finish‐line

44
One
of
many
articles
on
this:
http://www.accessmylibrary.com/coms2/summary_0286‐

6443516_ITM



Still,
Woertz
was
taking
a
gamble.
“I
get
very
concerned
when
a
company
tries
to

rebrand
itself
with
a
great
degree
of
separation
from
what
they’ve
really
been
all

about
to
what
it
is
they’re
going
to
be
about,”
says
Kevin
O’Donnell,
a
partner
at

marketing
firm
Prophet
who’s
consulted
for
other
agriculture
giants.
“It’s
a
highly

risky
proposition
to
be
that
declarative
around
a
fundamental
shift,
because
it’s
hard

to
strike
the
balance
between
getting
people
to
believe
something
completely
new

about
you,
while
also
not
walking
away
from
your
past.”45



At
the
time,
though,
there
seemed
little
grounds
for
criticizing
Woertz.
The
ethanol

boom
continued
through
2007,
and
American
farmers
responded
by
increasing

annual
corn
production
by
more
than
20
percent
to
13
billion
bushels.46
In
the
state

of
Washington,
the
crop
swelled
by
73
percent.47
During
the
second
half
of
2007,

more
than
4
billion
gallons
of
additional
ethanol
capacity
went
under
construction

in
the
U.S.,
with
almost
2
billion
gallons
announced
during
December
alone.48




It
was
a
boon
for
ADM:
The
company
doesn’t
release
its
ethanol
revenue
figures
–

they’re
hidden
in
the
bioproducts
line
of
corn
processing,
making
it
difficult
to

assess
exactly
how
well
that
part
of
the
business
is
doing.
“It’d
be
like
trying
to

figure
out
the
net
profits
that
Wal‐Mart
as
a
company
does
in
selling
shoes,”
jokes

DTN
analyst
Rick
Kment.49



On
the
strength
of
ethanol,
though,
bioproducts
operating
profits
rose
by
more
than

40
percent
in
the
fiscal
year
ending
June
2007,
with
ADM’s
overall
income
jumping

65
percent
to
a
record
$2.2
billion
(including
extraordinary
items).




An
ominous
sign
did
appear
in
the
spring:
High
corn
costs
and
lower
ethanol
volume

pushed
its
quarterly
corn
processing
unit’s
income
down
$45
million.50
The

agriculture
market
was
beginning
to
turn
against
Woertz’s
strategy.
In
profitable

times,
greedy
investors
had
chased
profits,
pumping
too
much
money
into
too
many

plants.
Between
January
2005
and
January
2008,
U.S.
ethanol
production
capacity



























































45
I
quoted
O’Donnell
by
name,
but
I
spoke
with
several
marketing
folks
for
this
section,
notably
Lisa


Bodell
of
FutureThink,
and
(via
email)
John
Gerzema
of
Young
&
Rubicam
and
Shel
Horowitz
of

Principled
Profit.

46
ADM’s
John
Rice
used
this
number
in
a
speech:


http://www.adm.com/Lists/PressRelease/Attachments/7/Rice_Sweetener_Colloquium_for_web.pdf

47
This
is
a
USDA
figure
quoted
here:
http://crosscut.com/2008/07/13/energy‐utilities/15855/


48
Futures
magazine
Dec.
07


http://findarticles.com/p/articles/mi_qa5282/is_200703/ai_n21232084/

49
We
spoke
over
the
phone.
Kment
was
unbelievably
helpful. 

50
See
ADM’s
fiscal
2007
results

would
double
to
7.2
billion
gallons
per
year.51
It
was
too
easy
to
raise
capital
–
even

small
farmers
had
stopped
selling
corn
to
grain
elevators
in
favor
of
building
their

own
ethanol
production
facilities.
52



“Everybody
in
the
industry
looked
at
that
and
stopped
and
said,
‘Wait
a
minute.
How

can
it
make
sense
long‐term
for
a
farm
to
take
corn,
turn
it
into
ethanol,
and
be
a

producer
on
a
scale
that
small?’”
remembers
Kevin
Calabrese,
an
Argus
Research

analyst
who
covered
the
market
at
the
time.53



Analysts
began
to
forecast
a
glut
in
supply
and
decreased
profit
margins
–
partly

from
too
many
plants
being
built,
and
partly
because,
without
a
pipeline,
it
was

difficult
to
transport
the
fuel
from
Midwest
farms
to
the
coasts.54



The
price
of
corn
was
swinging
wildly,
with
record
volatility55
driving
the
per‐
bushel
price
from
$2
to
$4
to
a
record
$6
and
eventually
up
to
$856.
The
unparalleled

changes
had
a
variety
of
causes:
market
speculation;
a
weak
dollar;
a
rising

developing‐world
middle
class
that
craved
meat
(which
requires
a
lot
of
grain
feed);

rising
energy
and
freight
costs.
57
At
least
one
source
was
of
ADM’s
own
making:

More
of
the
corn
crop
than
ever
before
was
being
diverted
to
ethanol,
almost
one‐
quarter
of
all
U.S.
corn,
up
from
18
percent
in
2006.58



In
November
2007,
ADM
released
the
first
quarterly
report
describing
what
would

soon
become
a
trend:
Its
ethanol
business
was
seriously
losing
steam.
Huge
sales

volumes
were
offset
by
high
corn
costs
and,
consequently,
miniscule
margins.



























































51
Congressional
Research
Service,
4/24/08:


http://www.nationalaglawcenter.org/assets/crs/RL33290.pdf
.
I
also
want
to
note
how
helpful
my

“congressional
source”
was
on
this
story.
They
know
who
they
are.

52
Interview
with
Kevin
Calabrese.
Kment
and
others
seconded
the
info.


53
Interview
with
Kevin
Calabrese


54
Amazingly,
the
Associated
Press
picked
up
on
this
as
early
as
June
2007.
See:


http://www.msnbc.msn.com/id/19214116/

55
See
USDA
figures
here:
http://www.cmegroup.com/market‐data/datamine‐historical‐

data/market‐reports/historical‐volatility/corn‐volatility.html

56
USA
Today
article
representative
of
stories
at
the
time:


http://www.usatoday.com/money/economy/2008‐04‐29‐2048612564_x.htm

57
Conclusion
made
based
on
a
synthesis
of
a
lot
of
material,
notably
Wally
Tyner
paper


http://www.agecon.purdue.edu/news/financial/Bioscience_2008_Tyner.pdf

and
interviews
with

Tyner,
Daryll
Ray,
etc

58
This
according
to
the
National
Corn
Growers
Association

Throughout
the
year59,
company
revenue
numbers
skyrocketed
due
to
high

commodity
prices,
with
respectable
income
growth.
But
ethanol
profits
were
fading.

During
the
first
three
quarters
of
2008,
bioproducts
made
barely
half
as
much
in

2008
as
during
2007.
Biodiesel
profits
decreased
during
several
quarters,
too,
as
the

price
of
soybeans
rose
‐‐
partly
because
of
tighter
supplies,
as
many
soy
farmers
had

switched
to
corn.



ADM
was
making
a
killing
in
one
area:
Merchandising
and
handling,
the
obscure

business
line
within
a
unit
called
agricultural
services,
which
had
the
power
to

hedge
bets
in
futures
markets,
and
ship
and
trade
grains
from
countries
with

surpluses
to
areas
desperate
for
food.
ADM’s
M&H
business
doubled
its
profits

during
fiscal
2008,
pulling
in
more
income
than
almost
any
other
segment.60
Woertz

acknowledged
such
gains
were
“unprecedented,”
and
Wall
Street
was
skeptical

about
the
company’s
ability
to
sustain
success
like
that
in
a
business
over
which
it

had
little
control.
They
saw
many
of
ADM’s
units
as
commodity‐dependent

businesses,
and
fretted
over
the
ethanol
market.
“That
combination
spooked

investors,”
said
Barclays
analyst
Chris
Bledsoe.
By
fall
2008,
ADM
stock
had
lost

almost
half
its
value
during
Woertz’s
reign.61



It
could
have
been
even
worse.
Last
summer,
Midwest
floods
portended
a
weak
corn

crop,
and
analysts
were
predicting
as
much
as
one‐fifth
of
the
yield
could
be

destroyed62.
Ethanol
producers
–
probably
including
ADM63
–
scrambled
to
lock
in

the
massive
supplies
they
needed
for
the
year
with
$10‐per‐bushel
futures

contracts.
They
wanted
to
be
able
to
count
on
a
delivery
price,
fearing
that
prices

might
reach
$12
by
autumn.
But
the
corn
bubble
popped
around
August64,
and
the

price
dwindled
to
$4.
Companies
that
had
committed
to
buy
corn
at
prices
almost

triple
the
market
value
saw
their
business
models
crumble,
as
gasoline
prices

dropped
compared
to
ethanol.



“What
was
considered
impractical
and
impossible
a
year
ago
has
happened,”
Kment

said
in
late
2008.




























































59
See
ADM
Q108,
Q208,
Q308
earnings
releases
available
via
edgar.sec.gov
and
at


http://www.adm.com/en‐US/news/_layouts/PressReleaseList.aspx?more=true

60
ADM
Q108
earnings
release


61
USA
Today
article
on
Q3
earnings
(link
above)
and
stock
price
data
retrived
from


finance.google.com
for
ticker
“ADM”

62
Interviews
with
Kevin
Calabrese
and
other
analysts.


63
Kment
and
others
believe
this
to
be
the
case.
ADM
wouldn’t
comment.


64
See,
for
example:
http://seekingalpha.com/article/92194‐hedge‐fund‐manager‐s‐notebook‐as‐

corn‐prices‐crash‐the‐first‐hydrogen‐hybrid‐car

ADM’s
pure‐play
ethanol
competitors
bore
the
brunt
of
the
collapse:
VeraSun

Energy,
the
second‐largest
ethanol
producer,
declared
bankruptcy
and
reported
a

third‐quarter
net
loss
of
$464
million.65
Others
shrank
to
penny
stocks:
BioFuel

Energy,
which
had
IPO’d
at
$43
per
share
in
2006,
was
trading
below
50
cents.66



“They
expected
government
support,
a
huge
basket
of
subsidies.
It
looked
like
there

was
no
way
to
lose
money.
Turns
out,
it
was
pretty
easy
to
lose
money,”
said
Michael

Tian,
who
until
recently
tracked
ADM
for
Morningstar.67



Diversified
ADM
was
somewhat
shielded
from
these
nightmare
scenarios,
and
its

executives
claim
to
have
foreseen
both
the
overbuilding
and
the
resulting
fallout,

but
it
doesn’t
look
great
when
your
CEO
seems
to
be
betting
the
company’s
future

on
an
imploding
business.
Its
bioproducts
unit
experienced
a
28
percent
drop
in

operating
profit
during
200868,
but
ADM
still
had
two
plants
that
would
increase
its

total
annual
ethanol
production
by
50
percent,
to
1.7
billion
gallons.
Weather,
labor,

and
equipment
delays
had
pushed
the
pair
back
to
coming
online
late,
in
late
2009

and
early
2010.69



ADM
has
repeatedly
maintained
that
the
plants
will
eventually
be
a
profit
center.70

Analysts
are
skeptical.71
“Underneath
it
all,
I’m
not
sure
they’d
be
doing
this

expansion”
if
they
could
stop
it
right
now,
said
Ian
Horowitz,
an
analyst
with
Soleil

Securities.72


























































65
See,
for
example:
http://quicktake.morningstar.com/Stocknet/san.aspx?id=262517


66
Interview
with
Pavel
Molchanov


67
Interview
with
Tian


68
See:
http://ccbn.10kwizard.com/xml/download.php?repo=tenk&ipage=5860052&format=PDF 

69
More
from
ADM
communications:
“The
two
ethanol
dry
mills
were
originally
scheduled
to
be


completed
in
mid‐
to
late‐2009,
not
2008.
The
new
timeframe
calls
for
the
mills
to
be
completed
in

late‐2009
into
2010.

Weather
and
parts
delays
did
require
us
to
adjust
our
timeframe
for

completion.
Also,
because
the
design
and
scale
of
these
facilities
are
unique
to
ADM,
we
made
the

decision
to
finish
the
Columbus,
Neb.,
facility
first
and
use
our
insights
from
that
process
as
we

complete
the
Cedar
Rapids
facility.
We
believe
this
approach
will
help
us
to
reduce
overall

construction
costs.”

70
See
this
earnings
call
transcript
at
SeekingAlpha.com:
http://seekingalpha.com/article/74666‐

archer‐daniels‐midland‐co‐f3q08‐qtr‐end‐3‐31‐08‐earnings‐call‐transcript

71
Interviews
with
Bledsoe,
Horowitz,
and
others


72
Interview
with
Ian
Horowitz.
ADM
communications
response:
“The
projects
are
well
on
their
way


to
completion,
and
while
the
current
market
conditions
are
very
challenging,
we
believe
we
have
a

sustainable
long‐term
advantage
in
dry
mill
ethanol.
ADM
has
network
advantages
from
sourcing
and

transporting
corn
to
processing
ethanol
in
large
corn
processing
complexes
to
transporting
ethanol

in
ADM‐owned
railcars.
These
advantages
improve
our
profit
outlook
relative
to
the
many

standalone
plants
that
have
been
constructed.”



The
same
price
volatility
that
wreaked
havoc
on
ADM’s
corn
processing
business

also
boosted
food
prices,
which
rose
more
during
2007
than
any
year
since
199073.

Food
manufacturer
Tyson
Foods
lost
$91
million
in
a
single
quarter,
largely
due
to

the
extra
cost
of
chicken
feed.74
Consumers,
too,
were
angry
–
some
in
the

developing
world
even
rioted75
‐‐
and
hunting
for
a
villain.



Despite
the
abundant
number
of
causes,
now
that
nearly
one‐third
of
the
corn

harvest
was
being
diverted
to
ethanol,
the
subsidy‐heavy
industry
became
an
easy

target.76
The
Grocery
Manufacturers
Association
–
ADM
is,
surprisingly,
a
member
–

launched
a
public
relations
offensive
arguing
that
ethanol
was
the
reason
for
high

grocery
prices.
The
trade
group
joined
a
disparate
coalition,
including
anti‐subsidy

conservatives
and
environmentalists
concerned
about
the
ecological
impact
of
land

gobbled
up
by
excess
corn
planting.
ADM
was
ensnared
in
what
came
to
be
called

the
“food
versus
fuel”
debate.



The
company
and
its
competitors
dismissed
the
arguments,
rightly
saying
that

ethanol
was
only
a
partial
cause
of
food
inflation.
Woertz
didn’t
mince
words
in

defending
her
industry:
“Retreat
from
biofuels
is
wrong.
It’s
foolish.
I
think
it's

dangerous,
it's
a
mistake,”
she
told
analysts77
in
April
2008.



Those
comments
later
proved
accurate
–
after
corn
prices
dropped,
food
prices

didn’t.78
Yet
by
the
time
the
industry
embarked
on
counter‐campaigns
that
summer,

serious
brand
damage
had
been
done.79



“Ethanol
went
from
being
a
political
idea
that
everybody
was
touting
and
flouting
to

something
that
was
being
demonized.
That
happened
in
the
course
of
a
single
year,”

Calabrese
says.80


























































73
Congressional
Research
Service
report:


http://www.nationalaglawcenter.org/assets/crs/RS22859.pdf

74
Comments
via
email
from
Tyson
Foods
PR


75
One
representative
article:


http://www.cnn.com/2008/WORLD/americas/04/14/world.food.crisis/

76
Charles
Rentschler
of
Wall
Street
Access,
who
I
ended
up
not
quoting,
was
particularly
helpful
on


the
political
information.

77
See
the
seekingalpha
transcript
linked
above
and
this
speech:


http://www.adm.com/Lists/PressRelease/Attachments/10/3‐27‐08_NGFA_final.pdf

78
Every
economist
I
spoke
with
agreed
with
her
in
retrospect,
good
summaries
of
the
facts
here


(maybe
a
little
biased):
www.growthenergy.org/2009/press/Growth‐Energy‐Food‐Fact‐Sheet.pdf



and
here:
http://www.agpolicy.org/weekcol/435.html

79
Interviews
with
Horowitz,
Bledsoe,
and
Calabrese



And
it
took
place
while
ADM
was
struggling
to
eek
out
profits
from
ethanol.
Woertz

ended
up
in
the
bizarre
situation
of
being
savaged
as
a
ruthless,
food‐wasting
energy

capitalist,
despite
mediocre
financial
returns
from
bioenergy.81



The
industry’s
diminished
political
capital
showed
up
in
the
farm
bill
enacted
in

June.82
The
ethanol
production
tax
credit
was
lowered
by
five
cents83
per
gallon
–
a

huge
figure
in
a
small‐margin/high‐volume
business
like
ethanol.
Congress
also

added
a
new,
separate
subsidy
for
cellulosic
biofuels.



“The
industry
will
continue
to
function,
but
it
won’t
grow,”
says
Tyner,
speaking
for

several
economists
and
analysts.
“Corn
ethanol
is
finished.”84



























































80
Interview
with
Argus
Research’s
Kevin
Calabrese


81
Also
helpful
in
explaining
the
dynamic
was
Jacqui
Fatka
of
the
trade
industry
mag
Feedstuffs


82
Farm
bill
analysis
by
Congressional
Research
Service


ncseonline.org/NLE/CRSreports/08Jun/RL33934.pdf

83
See:
http://www.nationalaglawcenter.org/assets/crs/RL34696.pdf 

84
Interview
with
Tyner.
ADM
communications
response:
“We
believe
there
is
a
strong
future
for


corn‐based
ethanol.

It
is
an
important
foundation
for
America’s
renewable‐energy
future.
We

continue
to
invest
in
the
construction
of
two
dry
mill
plants,
and
we
believe
that
they
remain
sound

investments.”

Woertz,
of
course,
has
good
reason
to
disagree.
The
political
climate
looks

promising
for
the
biofuels
industry
as
a
whole,
with
ADM
home
state85
native

President
Barack
Obama
in
the
White
House,
and
corn‐heavy
Iowa’s
former

Governor
Tom
Vilsack
the
new
Secretary
of
Agriculture.
The
administration
has

already
committed86
to
extending
renewable
fuel
subsidies
and
raising
fuel

standards,
though
Obama
hasn’t
made
it
clear
how
exactly
corn
ethanol
fits
in.



ADM
does
have
better
credit
ratings
than
competitors,
an
advantage
in
borrowing

capital
for
the
industry’s
ongoing
scramble
to
acquire
bankrupt
plants
on
the

cheap.87
It
also
maintains
arguably
the
strongest
infrastructure
of
any
biofuels

provider,
and
a
knowledge
network
that
translates
into
squeezing
a
few
extra
cents

per
gallon
versus
many
peers.



Yet
even
if
the
biofuels
market
fulfills
Woertz’s
hopes,
there’s
no
guarantee
ADM

will
remain
a
dominant
player
‐‐
in
March,
oil
company
Valero
outbid
them
in

purchasing
VeraSun’s
plants.88



A
more
pressing
problem
looms
for
corn
ethanol
producers:
the
blending
wall.
Most

cars
can
run
on
E10,
a
gasoline
blend
including
10
percent
ethanol,
and
gasoline

companies
legally
can’t
add
any
more
ethanol
to
their
standard
fuel.
Some
flex‐fuel

vehicles
will
run
on
ethanol‐heavy
E85
fuel,
but
they’re
a
tiny
slice
of
the
market.

Even
the
on‐site
gas
station
at
ADM
headquarters
doesn’t
offer
it.89
So
despite
a

government
standard
of
15
billion
gallons
(and
rising),
even
if
all
gasoline
in

America
was
E10,
the
total
amount
of
ethanol
used
wouldn’t
be
more
than
14
billion

gallons.90



“Unless
that
changes,”
says
Tyner,
“it’s
not
going
to
go
anywhere.
It
doesn’t
matter

about
the
[government
standards]
or
subsidies,
it
doesn’t
matter
about
anything

else.
That’s
as
far
as
you
can
grow
the
market.”




























































85
Obama
has
flown
on
ADM‐owned
corporate
jets
at
least
twice:


http://query.nytimes.com/gst/fullpage.html?res=9E04E1D61531F93BA35750C0A9609C8B63&sec=
&spon=

86
See
ADM’s
statement
re:
Obama’s
support
for
biofuels:
http://www.adm.com/en‐

US/news/Pages/Biofuels‐Statement.aspx

87
Interviews
with
Tian,
Molchanov,
Kment,
Ray


88
See
http://online.wsj.com/article/SB123740358722374797.html 

89
Interview
with
Tyner,
confirmed
by
ADM
employees
during
site
visit



90
That’s
an
upper
bound
based
on
numbers
provided
by
ADM
(based
on
EIA:


http://tonto.eia.doe.gov/dnav/pet/hist/mgfupus1A.htm).
Others,
such
as
Tyner,
set
the
number

around
12B.

Though
Vilsack
and
the
Environmental
Protection
Agency
are
considering
raising

the
blending
limit
to
15
percent91,
Washington
and
much
of
the
biofuels
industry
say

the
most
significant
expansion
opportunities
will
come
from
advanced
biofuels,
such

as
cellulosic
ethanol
made
from
biomass
like
switchgrass
or
cane
sugar.




Venture
capitalists
and
government
agencies
have
already
pumped
hundreds
of

millions
of
dollars
into
cellulosic
biofuel
projects.92
If
any
of
these
creates
fuel
cheap

enough
to
compete
with
corn
ethanol,
it
could
cut
into
profits
at
ADM,
93
which
is

conducting
all
manner
of
research
in
the
area,
but
little
with
near‐term
commercial

potential.



Woertz
has
announced
several
projects,
including
collaborations
with
Monsanto
and

John
Deere94
to
create
fuel
from
corn
stover
(part
of
the
stalk),
and
with

ConocoPhillips
to
create
biocrude,
a
biomass‐based
fuel
that
can
be
made
into

gasoline
at
existing
refineries95.
Both
are
years
away
from
affecting
ADM’s
bottom

line.
Wary
that
the
U.S.
may
drop
a
tariff
keeping
Brazilian
sugar
ethanol
out
of
the

country,
ADM
has
also
invested
in
a
joint
venture
in
South
America
focused
on
the

product,
but
the
market
there
seems
to
be
skidding
along
with
the
U.S.
one.96




Fortunately
for
Woertz,
other
investors
haven’t
seen
much
success,
either.
The

advanced
biofuels
industry
may
not
even
mature
quickly
enough
to
take
advantage

of
the
generous
subsidies
Congress
has
recently
instituted.
All
sorts
of
hurdles
have

yet
to
be
overcome,
but
an
oft‐cited
one
is
the
difficulty
of
transporting
thick,
dense

biomass
material
to
processing
plants.



“Cellulosic
ethanol
is
basically
a
science
experiment,”
says
Raymond
James
energy

analyst
Pavel
Molchanov.97


























































91
One
story
among
many
that
mentions
this:
http://www.marketwatch.com/m/Story/43d03a12‐

f7d3‐4b89‐b504‐1144467b0cbd
.

The
story
also
mentions
the
problem
of
the
carbon
footprint
of

corn
ethanol.
I
decided
not
to
address
this
in
my
article,
but
it’s
worth
noting.

92
See
this
Biocycle
story:
http://www.jgpress.com/archives/_free/001764.html


93
ADM
communications
response:
“Conversion
technology
is
just
one
part
of
the
equation
for
next‐

generation
biofuels.
Large‐scale
production
of
biofuels
from
crops
requires
significant
investment

that
extends
beyond
production
facilities.
One
of
the
reasons
it
makes
sense
for
ADM
to
pursue
the

next‐generation
biofuels
opportunity
is
our
extensive
crop
origination
and
transportation
network
as

well
as
our
product
delivery
network
including
a
large
fleet
rail
cars,
an
extensive
storage
network

and
an
unrivaled
marketing
team.”

94
See:
http://www.adm.com/en‐US/news/_layouts/PressReleaseDetail.aspx?ID=26


95
One
story
on
this:
http://afp.google.com/article/ALeqM5ibbhloqDPDfaxENZIMLYAlOAxFlw
 

96
See
AP
story:
http://abcnews.go.com/Business/WireStory?id=6300416&page=1


97
A
view
shared
by
Kment,
Tyner,
Fatka,
Cox,
and
Pacific
Northwest
Laboratory’s
(where
Werpy


used
to
work)
Holladay.
Here’s
what
ADM
communications
said
to
that:
“Aren’t
all
technologies



For
now,
ADM’s
bioenergy
strategy
seems
to
be
in
limbo
–
Woertz
hasn’t
cancelled

any
projects,
but
it’s
no
longer
a
core
focus.98
Last
summer,
her
flaks
changed
the

press
release
boilerplate
again,
burying
the
word
“energy”
amidst
a
slew
of
other

businesses.99
When
Pacheco,
the
energy‐expert
CTO,
left
after
barely
a
year,100
the

company
didn’t
announce
his
exit.
Pacheco
declined
to
comment,
citing
a
non‐
disclosure
agreement.
Woertz
claims
he
resigned
to
be
closer
to
his
family,
who

remained
in
Denver
when
he
joined
ADM.
Pacheco
wasn’t
replaced,
though
Woertz

says
Werpy
has
taken
over
his
duties.




Ethanol
now
makes
up
a
smaller
and
smaller
portion
of
ADM
income101.
During
the

most
recent
two
quarters,
bioproducts
lost
a
combined
$208
million,102
and

biodiesel
isn’t
growing
much.
After
months
of
using
euphemisms
such
as
“under

pressure”
to
describe
the
ethanol
market
to
analysts,
chief
financial
officer
Steven

Mills
finally
acknowledged
in
February
that
margins
had
“collapsed.”103



The
boring
old
businesses
that
continue
to
hum
along
–
stuff
like
oilseeds
crushing
–

are
largely
managed
by
the
same
lifers
who
were
waiting
for
her
at
the
airport
back

in
the
spring
of
2006.
For
a
company
that
pledged
to
be
on
the
cutting
edge104
of

biofuel
technology,
ADM
has
spent
remarkably
little
new
money
on
research
and

development
during
the
Woertz
era.
Its
R&D
outlay
stayed
flat
at
$45
million

between
2006
and
2007,
and
grew
only
slightly
to
$49
million
in
2008.105
For
all
the


























































“basically
science
experiment[s]”
until
they’re
commercialized?
Agriculture
can
provide
a
range
of

products
that
will
help
meet
the
world’s
energy
needs.

ADM
researchers
are
actively
evaluating
a

range
of
technologies.”

98
A
view
shared
by
Shanahan,
Horowitz,
and
Bledsoe,
among
others.



99
Here
it
is:
“Every
day,
the
27,000
people
of
Archer
Daniels
Midland
Company
(NYSE:
ADM)
turn


crops
into
renewable
products
that
meet
the
demands
of
a
growing
world.
At
more
than
240

processing
plants,
we
convert
corn,
oilseeds,
wheat
and
cocoa
into
products
for
food,
animal
feed,

chemical
and
energy
uses.
We
operate
the
world’s
premier
crop
origination
and
transportation

network,
connecting
crops
and
markets
in
more
than
60
countries.
Our
global
headquarters
is
in

Decatur,
Illinois,
and
our
net
sales
for
the
fiscal
year
ended
June
30,
2008,
were
$70
billion.
For
more

information
about
our
Company
and
our
products,
visit
www.admworld.com.”

100
Multiple
messages
left
for
Pacheco
and
the
lab’s
PR
folks,
followed
by
a
return
call
from
an


assistant
saying
he
couldn’t
talk.

101

10/7/08
Analyst
meeting
transcript
provided
by
ADM



102

Q3
earnings:
http://www.adm.com/en‐US/news/_layouts/PressReleaseDetail.aspx?ID=49 

103
This
according
to
a
review
of
the
call
by
Barclays’
Bledsoe


104
See
Mark
Matlock
2006
ADM
analyst
day,
transcript
provided
by
ADM


105
Via
email
Roman
Blahoski,
ADM
communications,
declined
to
discuss
details
of
ADM’s
research


budget
or
spending.

hoopla
around
her
bioenergy
strategy,
Woertz,
who
took
in
$17
million
worth
of

compensation
in
2008106
wasn’t
the
visionary
outsider
many
analysts
expected.107








In
the
dead
of
winter108,
the
hulking
mass
of
boxy
plants
that
dominate
ADM’s

headquarters
spew
clouds
as
large
as
any
Mother
Nature
might
create.
Visible
from

miles
away,
the
complex
evokes
something
out
of
an
environmentalist
propaganda

film,
although
what
looks
like
toxic
smoke
is
mostly
just
steam.
An
ungodly
amount

of
corn
and
soy
processing
lends
it
all
the
stench
of
a
frat
house
the
morning
after
a

party.



And
yet
the
attitude
of
employees,
from
secretaries
to
industrial
laborers,
is

optimistic,
even
jovial.
It’s
the
sort
of
place
where
the
security
guard
at
the
front

gate
is
a
middle‐aged
woman
who
calls
you,
“Honey.”



In
the
executive
building,
the
wall
of
windows
in
Patricia
Woertz’s
corner
office

offers
a
view
of
bare,
gloomy
trees
and
flat
land
toward
an
endless
horizon.
She

steps
out
from
behind
her
desk
to
sit
at
a
round
conference
table
and
make
the
case

that
at
ADM,
she’s
done
everything
she
set
out
to
do
thus
far,
without
contradiction

or
failure.



“The
strategy
hasn’t
changed,”109
she
says.
“We’ve
evolved
our
message,
not
our

strategy.”



Woertz
has
a
reputation
as
an
inspiring
coach110
of
her
subordinates,
not
a

command‐and‐control
leader,
and
it
isn’t
hard
to
see
why.
She
has
the
well‐honed,

media‐trained
ability
to
smile
when
she
thinks
you’re
wrong;
to
smile
when
she’s


























































106
See
ADM’s
2008
proxy
filing


107
I
sent
ADM
communications
a
quote
(cut
from
the
piece)
from
an
analyst
about
Woertz
not


changing
the
company
very
much.
The
response:
“…given
ADM’s
history
of
strong
performance,
I

can’t
imagine
why
anyone
would
expect
Pat
to
have
turned
the
company
into
a
‘different
animal.’
[the

analyst’s
phrase]
Pat
joined
the
company
to
build
upon
a
legacy
of
success.
The
ADM
employees
who

drove
that
success
are
still
here,
still
doing
great
work.
Certainly,
Pat
has
brought
new
energy
and

insight
to
various
areas
of
the
business
including
strategic
planning,
research,
communications,

colleague
development
and
sustainability.
She
has
also
overseen
continued
growth
in
a
number
of

product
areas,
including
biofuels.
But
anyone
who
expected
Pat
to
take
the
company
in
a
radically

new
direction
—
away
from
the
business
of
processing
crops
into
products
that
meet
global
demands

—
may
have
missed
the
point.”

108
I
went
down
to
Decatur
twice
in
a
two‐week
period
in
January.
Once
for
a
plant
tour
and
meeting


with
David
Weintraub
of
the
communications
team,
and
the
second
time
to
interview
Woertz.

109
Interview
with
Patricia
Woertz


110
Interview
with
Victoria
Podesta,
Horowitz,
Bledsoe,
etc

robotically
rattling
off
talking
points;
to
smile
when
she’s
being
a
little
bit
sarcastic;

to
smile
when
she’s
flabbergasted.
Woertz
wears
black
pearls
and
pointy
fingernails,

and
constantly
gestures
with
her
small
hands.



Woertz
claims
ADM’s
current
goals
are
the
same
as
they
were
back
in
2006,
when

she
unveiled
her
mission
to
Wall
Street.
Despite
bioenergy’s
front‐and‐center
spot
in

her
speeches,
marketing
materials,
and
other
public
statements,
she
says
it
was
just

one
part
of
a
comprehensive
plan
for
change
across
ADM.



Those
who
seized
on
ethanol
misinterpreted
her
intentions:
“What,
probably,
we

didn’t
expect
is,
like
any
communication,
when
you
put
something
out
there,
what

they
receive
is
not
necessarily
what
you’re
sending,”
she
explains.
Woertz
and
her

executive
team
talked
about
biofuels
often
only
because
analysts
were
asking
so

many
questions
about
it.
ADM,
she
says,
was
merely
responding
to
their
queries.



The
gap
between
Woertz’s
actions
and
her
after‐the‐fact
explanations
leaves
her
in
a

pickle.
The
bioenergy
strategy
was
either
oversold
or
it’s
underperforming.
She

maintains
that
the
analysts
understand
her
now,
and
yet
she’s
disappointed
(and,

though
she
doesn’t
say
it,
obviously
frustrated)
that
the
people
who
trade
ADM’s

stock
have
pushed
its
valuation
so
low.



“We
continue
to
perform
year‐on‐year
doing
better
than
ever.
We’re
in
a
space

that’s
quite
exciting.
People
need
to
eat.
We
continue
to
grow
globally.
People
need

the
products
we
make.
It’s
a
great
space
to
be
in.
Most
companies
would
give
their

right
teeth111
for
our
balance
sheet,
for
our
state
of
our
company,”
she
says.



The
processing
operations
that
have
long
formed
the
core
of
ADM’s
business
–
two‐
thirds
of
its
profits
during
2008
–
have
dropped
to
account
for
less
than
half
its

earnings.
Yet
even
as
many
of
its
agribusiness
competitors
struggle112,
ADM
has

relied
on
its
trading,
merchandising,
shipping,
and
other
forms
of
risk
management.

Profits
from
agricultural
services
have
been
earning
the
company
hundreds
of

millions
of
dollars
per
quarter,
an
order
of
magnitude
more
than
in
the
years
before

Woertz
took
over.



ADM‐watchers
don’t
fully
understand
this
surge.
The
company’s
market
bets
and

arbitrage
are
so
secretive,
analysts
visiting
the
Decatur
headquarters
aren’t
even

allowed
to
walk
through
its
trading
floor.113





























































111
I
know
it
sounds
weird,
but
“right
teeth”
is
what
she
said.
I
have
it
on
tape.
Apparently
it’s
an


obscure
Britishism.

112
Particularly
Bunge


113
Interviews
with
several
analysts,
and
a
visit
to
Chicago
Board
of
Trade

Nevertheless,
those
in
the
industry
know
how
the
money
generally
flows.
Some
of
it

is
merely
the
sort
of
trading
that
goes
on
in
markets
all
over
the
world.
When
ADM

buys
corn
futures
months
ahead
of
harvests,
for
example,
it
might
also
sell
an
option

to
hedge
against
prices
going
low.
ADM
possesses
more
agriculture
market

intelligence
than
almost
any
other
company:
A
Brazilian
trader
in
Decatur
can
talk

to
an
ADM
trader
in
Brazil,
as
well
as
the
Singapore
desk
and
the
American
desk,

even
as
he
draws
on
ADM’s
data
on
local
Brazilian
grain
elevators
and
farmers.



When
opportunities
emerge,
the
company
can
pounce
in
the
physical
world,
too.
Say

an
ADM
soybeans
shipment
is
on
its
way
to
India
for
processing.
The
Chinese

government
puts
an
order
out:
It
needs
soybeans,
and
it’s
willing
to
pay
a
premium

to
get
them
fast.
ADM
has
the
global
inventory,
the
customer
access,
and
the

shipping
infrastructure
to
get
soybeans
to
China
quickly,
and
follow
it
up
with

another
shipment
to
India.114



A
real‐world,
though
smaller‐scale,
episode
occurred
last
summer
just
outside

ADM’s
Des
Moines
plant.
Massive
flooding
had
effectively
halted
shipments
in
and

out
of
the
area.
It
toppled
nearby
Cargill
railcars
from
their
tracks,
soaking
the
corn

as
the
cars
busted
open.
The
corn
couldn’t
be
used
for
human
consumption,
but

ADM
bought
it
from
Cargill
–
a
frequent
competitor
and
collaborator
–
at
a
rock‐
bottom
price,
then
cleaned
it
up
and
processed
it
into
ethanol.




“They
saw,
in
the
midst
of
disaster,
an
opportunity,”
says
Bledsoe.
“Here
they
were,

still
thinking
entrepreneurially
about
an
arbitrage
opportunity
right
in
their

backyard.”



Profits
from
such
physical
and
virtual
trades
show
up
all
over
ADM’s
earnings

reports
–
a
smart
futures
trade
on
soybeans,
for
instance,
likely
gets
booked
in
the

oilseeds
processing
unit,
even
though
“processing”
may
not
have
taken
place.115

ADM’s
plants
also
benefit
from
that
intellectual
capital.
When
corn
prices
are
too

high,
plant
managers
can
change
the
mix
of
their
feed
products
for
swine
producers

to
wheat
or
barley.
If
the
ethanol
market
looks
dubious,
they
can
adjust
wet
mills

within
hours
to
produce
more
corn
starch
or
corn
syrup.116




























































114
This
example
is
from
Bledsoe,
but
Tian
and
Horowitz
had
similar
conception
of
how
it
works.
And


ADM’s
explanations
were
in
line
with
this.

115
Interviews
with
Horowitz,
Tian.
ADM
communications:
“Generally,
various
business
groups
within


ADM
routinely
run
positions
that
are
made
up
of
physical
positions
(including
inventories
and

purchase/sale
commitments),
as
well
as
derivative
instruments
(including
futures).
The
gains
or

losses
arising
from
these
positions
are
reported
in
that
business
group’s
respective
segment.”

116
CFO
Steve
Mills
talked
about
this
capability
on
the
10/7/08
analyst
day,
and
so
did
ADM
plant


managers
Mark
Burau.
But
they
apparently
don’t
make
changes
like
this
too
often.
ADM

communications
says
this:
“The
ability
to
adjust
production
is
not
unlimited.
We
do
have
some

flexibility
in
our
grind
and
the
ability
to
adjust
finished
rates
based
on
demand
and
margins.
We

typically
make
adjustments
like
this
4‐5
times
per
year.
For
instance,
in
the
spring
and
summer,



ADM
has
always
been
a
grain
processor
that
traded
because
it
needed
to
‐‐
unlike

old‐school
grain
merchants
like
Cargill,
whose
production
units
were
secondary.
But

that
may
be
changing:
ADM
is
taking
more
market
risk
than
ever
before,117
and
it

may
come
with
a
cost.
“Being
so
large
and
broad
in
the
market,
they
carry
a
lot
of

risk,”
says
Kment.
“They
are
tied
to
the
volatility
of
the
market
in
a
way
that
other

companies
might
not
be.
There’s
no
way
you
could
accurately
price
the
way
the

market
moves.”118 



Woertz
claims
only
a
vast
knowledge
network,
not
special
predictive
powers.
In

February,
ADM
executives
hinted
to
analysts
that
the
lucky
merchandising
and

handling
breaks
of
the
past
year
might
not
last
through
spring.
Indeed,
during
the

quarter
ending
in
March,
agricultural
services
profits
dropped
67
percent,
to
$121

million.
The
company’s
overall
income
plummeted
54
percent,
even
excluding
one‐
time
losses.



While
a
single
down
quarter
might
not
be
significant,
ADM
executives’
word
choices

have
shifted
toward
the
negative.
During
the
November
earnings
call,
they
talked

about
external
problems
in
the
economy,
but
boasted
of
being
“well‐positioned
and

confident.”
In
early
February,
they
admitted
the
downturn
is
impacting
ADM,
to
the

point
where
they’re
“adjusting
our
business
model.”
119





























































when
soda
consumption
is
higher,
we
can
put
more
of
the
starch
stream
into
HFCS.
In
the
fall
and

winter,
we
can
shift
that
starch
stream
to
make
more
ethanol.”

117
See
ADM’s
10‐K
for
2008:


http://ccbn.10kwizard.com/xml/download.php?repo=tenk&ipage=5860052&format=PDF

118
ADM
refused
to
let
me
speak
to
their
risk
management
folks.
The
communications
team
did
send


this
in
response
to
the
Kment
quote:
“While
we
can’t
comment
on
how
one
should
value
our
stock,

we
can
say
that
we
think
our
risk
management
capabilities
are
unmatched.
Here
again,
I
might
point

you
to
the
CAGNY
presentation
and
Pat’s
discussion
of
our
risk
management
capabilities:
‘Quite

simply,
I
think
we
excel
at
risk
management.
Our
business
operates
by
capturing
very
small
margins

across
very
huge
volumes.
And
you
saw
that
supply
chain.
At
every
touch
point,
we
need
to
add
value.

But
our
ability
to
manage
risk
across
that
entire
value
chain
with
various
and
large
numbers
of

counterparties
is
critical
to
our
success.
Let
me
give
you
a
couple
of
examples.
We
manage
risk
with

South
American
farmers.
We
provide
fertilizer
and
other
inputs.
They're
paid
back
with
a
portion
of

the
farmer's
crop.
We
actively
manage
our
counterparty
risk
with
customers
and
suppliers.
Our

credit
folks
sit
side
by
side
with
our
commercial
folks.
It's
a
competency
that
I
think
is
unmatched

anywhere
else.
We
hedge
commodity
inputs,
commodity
outputs.
We
turn
crops
into
a
broad

portfolio.
We
really
have
to
have
this
understanding
throughout
the
markets
and
throughout
our

value
chain
and
where
our
positions
are
at
any
point
in
the
day,
at
any
hour
of
the
day.
Our
success

depends
on
the
ability
to
continually
manage
this
risk
at
all
levels.
And
we
continue
to
believe
not

only
this
is
a
core
competency,
but
we
continue
to
work
to
improve
it.
I
think
it's
allowed
us
to

manage
very
well
in
real
time
and
capture
higher
margins
during
a
period
of
volatility.’”

119
Again,
these
differences
are
called
out
in
Bledsoe’s
Barclays
Q209
note.

Woertz
continues
to
be
vague120121
about
what
exactly
that
means.
ADM’s
expansion

and
growth
aren’t
targeted
toward
any
one
geographic
region
or
business
line,
but

everywhere
along
ADM’s
long,
complex
value
chain.
The
recent
triumphs
(and

letdowns)
in
agricultural
services
are
less
the
cornerstone
of
ADM’s
future
than

symbolic
of
where
Woertz
seems
to
be
headed.
She
is
now
managing
ADM
as
a
sort

of
hedge
fund.122
123
Some
product
lines
are
riskier
than
others,
some
will
grow

faster
than
others.
She’s
willing
to
make
a
5‐cent
sacrifice
in
one
part
of
the
ADM

world
for
a
10‐cent
gain
in
another.
Bioenergy,
she
still
hopes,
will
be
among
the

most
successful
bets,
but
even
if
it
falters,
ADM
will
survive.



It’s
a
convenient
position
for
a
CEO
who
talked
up
one
slice
of
her
vast
corporation
a

little
too
much,
and
then
watched
it
blow
up
in
her
face.
But
it
may
be
the
way
she

should’ve
been
running
‐‐
and
branding
–
ADM
from
the
beginning.



“The
industry
gets
themselves
into
trouble
when
they
try
to
pull
a
rabbit
out
of
their

hats.
If
you
stick
to
your
knitting
and
block
and
tackle
and
watch
global
population

increase
and
watch
protein
consumption
drift
down
into
new
markets,
it’ll
all
take

care
of
itself.
You’re
not
the
sexiest
company
out
there,
but
you
go
in
and
make

money
[and]
have
your
cash
flow
and
go
home,”
says
Soleil
Securities
analyst
Ian

Horowitz.



From
the
outside,
it’s
hard
to
look
at
ADM
without
viewing
a
strategy
in
retreat,
and

a
CEO
who’s
both
the
victim
and
beneficiary
of
freakish
market
movements.
Woertz,



























































120
This
is
how
many
analysts
feel.


121
See
especially
the
Seeking
Alpha
transcript
from
Q209
earnings
call,
response
to
McGlone’s


question
about
“there
is
no
point
of
focus
like
logistics
or
geography”:

http://seekingalpha.com/article/118214‐archer‐daniels‐midland‐f2q09‐qtr‐end‐12‐31‐08‐earnings‐
call‐transcript

122
Interviews
with
Horowitz
and
Bledsoe.
Woertz
didn’t
disagree.


123
See
also
this
that
ADM
communications
sent
to
me,
from
Steve
Mills’
comments
from
Consumer


Analyst
Group
of
New
York
conference
this
winter:
“These
pie
charts
show
our
segment
operating

profit
mix
for
fiscal
years
'06,
'07,
and
'08.
And
you'll
note
that
while
the
percentage
of
earnings
from

individual
business
units
changed
from
year
to
year,
overall
earnings
have
grown
each
year.
Earnings

growth
from
fiscal
'06
to
'07
came
from
every
business
unit
and
included
especially
strong

contribution
from
our
corn
processing
segment,
while
earnings
growth
from
'07
to
'08
was
led
by

our
oilseeds
processing
and
our
ag
services
segment.
As
we
look
at
the
pie
chart
for
our
most
recent

six‐month
period
as
compared
to
the
prior
year's
six
months,
our
earnings
growth
in
fiscal
'09,
as
I

mentioned
earlier,
has
come
primarily
from
our
ag
services
and
oilseed
processing
segments.
The

takeaway
here
is
that
our
value
chain
gives
us
the
ability
to
capture
profits
as
conditions
change

across
these
various
segments.
In
fact,
in
many
ways,
we
look
at
our
operations
as
one
line
of

business.
And
as
you
can
see
from
the
changing
sizes
of
our
segment
results,
profit
opportunities
can

and
do
shift
along
our
value
chain.
And
we
are
well
positioned
in
each
segment
to
benefit
from
those

opportunities
whenever
and
wherever
they
arise.”

though,
sees
something
much
larger,
more
promising:
a
complex
machine
whose

profit
potential
is
greater
than
the
sum
of
its
parts.



She
knows
not
everyone
on
Wall
Street
will
quite
see
it
that
way,
because
too
much

of
the
corporation
is
hidden
behind
a
veil.
She
has
good
reasons
for
keeping
internal

figures
and
estimates
secret:
she
must
protect
proprietary
information
from

competitors;
business
lines
are
too
integrated
to
report
results
in
fine
detail;
ADM’s

market
is
just
too
volatile
to
make
predictions.



But
that
means
that
no
matter
how
strong
ADM’s
performance,
the
models
the

analysts
run
can
never
capture
the
entirety
of
her
vision.
Their
predictions,
even
of

the
best‐case
scenarios,
seldom
reach
above
a
certain
point,
a
spot
well
below
the

one
Woertz
imagines
she’ll
eventually
reach.



“It
can
appear,”
she
says,
“that,
maybe,
that’s
as
good
as
it
gets.”



­RDB



Ryan
Blitstein
is
a
Chicago
journalist
and
a
contributing
editor
at
Miller‐McCune.
A
shorter
version
of

this
story
was
first
published
in
The
Big
Money
article

(http://www.thebigmoney.com/articles/after‐fad/2009/06/02/adm‐does‐ethanol‐
shuffle?page=full).
A
response
from
Archer
Daniels
Midland,
if
the
company
provides
one,
will
be

published
at
RyanBlitstein.com.