ADM is taking a number of steps to invest in the Ag Services and Oilseeds side of its operations, Juan R. Luciano, chairman, president and chief executive officer of the Chicago-based company, told analysts during a Sept. 18 presentation at the JP Morgan US All Stars Conference in London.
In the grain area, there is a lot of activity in terms of helping to transform agriculture from current practices or historical practice into more regenerative practices, Mr. Luciano said. So we have a plan to grow the number of acres that we work with farmers to transform that. Its been a very enlightening exercise because you take all the farmers with all practices, but with a lot of willingness to become part of the solution to help to build a more sustainable agriculture system and also the pool from the customer side, and we find ourselves in the middle in a very good position to be able to articulate that.
Although not much capital is involved in the conversion process, it does affect a significant number of people, Mr. Luciano said.
For the first time probably in 20, 30 years, the industry is not necessarily a price-taker in grains, but the discussions have changed more from what is your price from the product or how this product has been raised or created and how much do you have available and then it becomes the pricing, Mr. Luciano said. So when you see some of the margin structures that we have now in Ag Services and the performance, a lot of that is on this growing trend. And as we get more acres brought into production that way, that becomes increasingly a part of our differentiated bushel or differentiated tonne, if you will. So thats an important consideration.
Mr. Luciano also spoke to the importance of biofuels in ADMs Ag Services and Oilseeds business. He said that ADM on Sept. 18 received soybeans at its new crushing plant in Spiritwood, ND, and expects to crush its first soybeans in the first week of October. The startup of crushing operations at the Spiritwood plant is expected to add about 1.5 million tonnes of crushing capacity to the companys footprint, he said, allowing for more production of low-carbon intensity feedstocks.
Another investment opportunity for the Ag Services and Oilseeds business involves the automation and digitization of the companys processing units.
To bring more technology into that to being able to squeeze a little bit more yield out of the grain of soybean or the grain of corn, he said.
Mr. Luciano also noted that ADM needs to be cognizant of its customers decarbonization pledges, particularly as customers push for more plant-based material.
So our ability to generate low-carbon intensity feedstocks as we decarbonize our units, we will become more an enabler of some of these products, he said. Some of these products will go to food and feed. Some of these products will go to fuel, for industrial products or consumer products. So thats a very fertile area for ADM as we go forward.