ADM to invest in Argentine agricultural processing

Chairman Julian Luciano has said that the company is shifting its portfolio to value-add strategies by selling ethanol plants, adding that the Macri government's willingness to talk to the private sector will see ADM increase its presence in Argentina.

Archer Daniels Midland chairman Juan Luciano has said that the world’s biggest agricultural products processor will be increasing investment in Argentina and has received competitive bids for the three US dry ethanol plants it is selling.

“Argentina presents so many opportunities,” he told Bloomberg. “The world is inching towards 8 billion people and they need reliable, safe and affordable sources of food. Argentina produces calories or food for about 400 million people [and] has only 40 million inhabitants. The world needs Argentina’s bounty. Argentina needs the export markets. So this is a very symbiotic relationship.”

Luciano said that Mauricio Macri’s government has been a game changer for the company in Argentina, and that investment in the country would grow. Given the government’s willingness to work with the private sector, Luciano said, the ADM plans to take up a value-add strategy by investing in local processing.

“We originate storage and transportation of grain, but we also are in processing. So I think the next step… is processing locally, which is adding more value,” he said.

Investment in Argentine agriculture is also set to increase, with the International Finance Corporation looking to expand its footprint there and other investors seeking out opportunities in the country. ADM will continue to invest in infrastructure, providing an export outlet for producers through a growing commodities and food trading presence.

At the same time, the company has been focused on selling off its ethanol assets, having sold its Brazilian sugarcane ethanol operations to JFLim Participações, a subsidiary of Grupo FIB Marseilles, in May. It is currently studying the potential sale of three of its US dry ethanol plants.

“We have received the bids,” said Luciano, adding that offers were competitive, including some for outright purchase and others for joint ventures.

ADM had bought food ingredients provider WILD Flavors for €2.2 billion in 2014 and opened the food business incubator National Foodworks Services this year in Illinois.

“It is very complex because some of these units are very integrated to our units so we need to think about the synergies of one deal versus the other. It will depend a lot on the ancillary agreements we decide with different parties,” he said, adding that ADM does not have a preference between a joint venture or full purchase offer.

Luciano denied that the sales are a sign the company has been divesting, saying that the moves come as ADM shifts its portfolio “from things that were volatile and low return to things that was more value-added”.