"Tell me," Andreas says to his number two man, who has just returned from a tour of the company's plants in Eastern Europe, "what do they do for us in Bulgaria? Do they fix the prices? Or is there some kind of a free market?"
This type of brashness typifies Andreas and his company, whether the issue is possible price-fixing in Bulgaria or influence-peddling in Washington. For no other U.S. company is so reliant on politicians and governments to butter its bread. From the postwar food-aid programs that opened new markets in the Third World to the subsidies for corn, sugar, and ethanol that are now under attack as "corporate welfare," ADM's bottom line has always been interwoven with public policy. To reinforce this relationship, Andreas has contributed impressively to the campaigns of politicians, from Richard Nixon and Hubert Humphrey to Bill Clinton and Bob Dole.
Standing just 5-foot-4 and raised a Mennonite, Andreas is a 77-year-old grandfather who, out of the context of his corporate empire, could easily be mistaken for a man of much more modest standing and concerns. This image vanishes, however, when he starts issuing opinions.
Sitting behind a lunch of soy burgers, soy taco meat, and soy cheese dessert, Andreas announces that global capitalism is a delusion. "There isn't one grain of anything in the world that is sold in a free market. Not one! The only place you see a free market is in the speeches of politicians. People who are not in the Midwest do not understand that this is a socialist country."
It might seem odd that a man with personal assets well into nine figures would be so quick to hoist the red flag of socialism over the American heartland. But Andreas is essentially right. Agriculture is the last industry where the U.S. government so routinely sets prices and determines production levels, a complex arena in which doing business often has more to do with influencing legislation than with responding to supply and demand. Prospering in this environment is ADM's forte.
"We're the biggest [food and agriculture] company in the world," Andreas explains. "How is the government going to run without people like us? We make 35 percent of the bread in this country, and that much of the margarine, and cooking oil, and all the other things."
ADM is indeed a Goliath of world food production (it calls itself the "supermarket to the world"), with 1994 reported sales of $11.3 billion and profits of $484 million. Its total stock value is $9.7 billion, $417 million of which belongs to Andreas, or is held by him in a trust for his offspring.
For all this, though, ADM still functions like an overgrown mom-and-pop outfit. Four Andreases are senior executives in the company. Another serves on the board. Vice President Howard Buffett (son of investment guru Warren Buffett) seems to be treated like family--he's called "Howie" around the boardroom.
When I spoke with Andreas and two of his sons, they were all clearly uncomfortable dealing with a reporter. Michael Andreas said, only half-jokingly, "I never knew what a reporter looked like."
In addition to the executives' devotion to anonymity, the company markets no products under its own name, so ADM is familiar to most people only through the ads it runs on shows like "The MacNeil/Lehrer NewsHour." But ADM products are present in literally thousands of items found in supermarkets, liquor stores, even gas stations. In addition to milling much of the country's flour and manufacturing margarines and oils for such big-name brands as Crisco and Mazola, ADM processes ingredients found in such products as Nabisco Cheese Nips, Life cereal, and Reese's Peanut Butter Cups.
ADM's protein enhancers are common in pet foods, and its texturized vegetable protein is the stuff burritos and meatless burgers are made of. If you look at the side of a can of Coca-Cola you will see that ADM corn sweetener is the second ingredient listed, after water. If you tank up on gasohol, the odds are 60 percent that the ethanol in the blend is made by ADM. And if you decide to get tanked on martinis, you will find that ADM is also the nation's largest producer of the grain alcohol used to make gin, vodka, and liqueurs.
"Did somebody dream there is some way that the government doesn't need us?" Andreas continues. "What in the hell would they do with the farm program without us?"
For all ADM's size, the question now is not whether the government can survive without ADM but whether ADM can survive without the government. Three subsidies that the company relies on are now being targeted by watchdogs ranging from Ralph Nader to the libertarian Cato Institute.
The first subsidy is the Agriculture Department's corn-price support program. Despite ADM's close association with corn, this is the least important subsidy to the company. In the short run, ADM might actually benefit if this program is cut back since it might reduce the price the company pays for raw corn. But over time, the lack of a government regulation could lead to wild price fluctuations that would make long-term planning difficult for the company.
Of more benefit to ADM is the Agriculture Department's sugar program. The program runs like a mini-OPEC: setting prices, limiting production, and forcing Americans to spend $1.4 billion per year more for sugar, according to the General Accounting Office. The irony is that, aside from a small subsidiary in Metairie, La., ADM has no interest in sugar. Its concern is to keep sugar prices high to prevent Coke and all the other ADM customers that replaced cane sugar with corn sweeteners from switching back. "The sugar program acts as an umbrella for them," says Tom Hammer, president of the Sweetener Users Association. "It protects them from economic competition."
The third subsidy that ADM depends on is the 54-cent-per-gallon tax credit the federal government allows to refiners of the corn-derived ethanol used in auto fuel. For this subsidy, the federal government pays $3.5 billion over five years. Since ADM makes 60 percent of all the ethanol in the country, the government is essentially contributing $2.1 billion to ADM's bottom line. No other subsidy in the federal government's box of goodies is so concentrated in the hands of a single company.
Robert Shapiro, author of a corporate welfare report for the Progressive Policy Institute, describes ADM's federally supported journey this way: "ADM begins by buying the corn at subsidized prices. Then it uses the corn to make corn sweeteners, which are subsidized by the sugar program. Then it uses the remainder for the big subsidy, which is ethanol."
The grease--or perhaps oleo--that helps keep these kinds of programs going is the money Andreas, his family, his company, and his company's subsidiaries provide politicians who have influence over agricultural policy. During the 1992 election, Andreas gave more than $1.4 million in "soft money" (which goes to party organizations rather than individual candidates, and is exempt from limits) and $345,650 more in contributions to congressional and senatorial candidates, using multiple donors in his family and his companies. In the nonpresidential 1994 election, the company and its people gave $656,768 in soft money and another $224,170 in contributions to individual candidates. More recently, Speaker Newt Gingrich's GOPAC received at least $70,000 from Andreas. (Gingrich has released the names of individual donors, but not yet of corporate ones.) "These guys are state-of-the-art," says Fred Wertheimer, the longtime Common Cause president who recently stepped down. "They play this game to the hilt."
ADM's next challenge is the 1996 presidential race. President Clinton has been extraordinarily generous to ADM, last year pushing through a mandate that 30 percent of the gasoline sold in the nation's most polluted cities contain ethanol products by 1996--and receiving a $100,000 check at essentially the same time. (Andreas insists the timing was coincidental.) Sen. Phil Gramm has not shown up on ADM's radar screen yet, but the company has begun to show up on his. Last summer, Gramm stunned his home-state oil companies by stalling on his position on the ethanol mandate. Although he eventually announced that he would support the oil companies against the mandate, he made a point of stating that there was really no good way to vote.
ADM's ultimate presidential candidate, though, is Bob Dole, who has long been one of ethanol's biggest champions. He promoted the 54-cent subsidy and helped keep it from applying to methanol as well. In 1980 he sponsored a tariff on imported alcohol fuels. During the 1990 Clean Air Act debate and the 1992 national energy strategy debate, he pushed pro-ethanol amendments. Dole also has close personal ties with Andreas. Andreas contributes to Dole's foundation for helping the disabled and frequently vacations with him, sometimes providing his own airplane for the trips. In 1982, Andreas helped expedite Dole's purchase of a condominium in the Sea View Hotel in Bal Harbour, Fla. Sea View is managed by an Andreas-owned company, and Andreas also has a condo in the building. Other past and present Sea View tenants include former Tennessee Senator Howard Baker, the late House Speaker Tip O'Neill, television journalist David Brinkley, and ADM board member and Washington superlawyer Robert Strauss.
Andreas has a long history of political philanthropy. In a recently released deposition, Richard Nixon's secretary, Rose Mary Woods, recalled a 1972 personal visit from Andreas in which he delivered an unmarked envelope containing $100,000 in $100 bills. The cash spent a year or so in a White House safe before Nixon, with the Watergate investigation closing in around him, decided to give it back.
Another $25,000 of Andreas' money, however, was traced to a bank account used by the Watergate burglars. This was a revelation--and no doubt a disappointment--to Nixon's presidential opponent, Hubert Humphrey, who had been close friends with Andreas for years. The two, neighbors in Minneapolis in the 1940s and 1950s, had traveled the world together promoting food-aid programs. (Both the Watergate money and the envelope full of cash came at an inopportune time. Andreas had just been indicted, though never convicted, for making illegal campaign contributions.)
Andreas portrays his large gifts as a necessity to silence the pleas of powerful people. Often, he says, solicitations come through someone affiliated with a major ADM customer. Take the $100,000 check to Clinton, says Andreas. The solicitation came from Vernon Jordan, Clinton's transition chief and golfing buddy--and a member of the board of ADM customer Sara Lee. "What are you going to say to Vernon Jordan: 'We've decided to quit you guys'? Of course, I gave him the money."
These protestations leave ADM's detractors unimpressed. "If Mr. Andreas thinks this whole system is a political shakedown, then he should join us in fighting for campaign reform," says Common Cause's Wertheimer.
Recently ADM has been sending signals it wants to spend more of its time and energy seeking greener pastures abroad. Whether this is because Andreas sees an end to the corporate welfare gravy train here, or simply because the growth potential is greater abroad is not clear. But ADM claims to have plants in every single former Warsaw Pact country, is selling ever-increasing amounts of food to China, and is working hand in glove with the European Union.
But the most intriguing--and perhaps most ominous--push ADM is making is in biotechnology. Instead of having to buy soybeans, the company wants to make its own protein in giant vats that are the functional equivalent of cow stomachs. If ADM can pull this off, Andreas might not be so upset when he finds out that Bulgaria doesn't fix prices. With a monopoly on human-engineered protein, ADM will be able to fix its own.
Dan Carney is a freelance writer based in Washington, D.C.
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