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Case Title:

ADM, World’s Largest Grain Processor: Staking too high on Ethanol?

Publication Year : 2010

Authors: Ratan Roy S, Suresh K

Industry: Food, Diary and Agriculture Products


Case Code: COS0093IRC

Teaching Note: Not Available

Structured Assignment: Not Available

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Archer Daniels Midland or ADM is the world's largest grain processor, global leader in bioenergy and also a leading player in the production of cleaner burning ethanol and bio-diesel fuels. Ethanol contributes heavily to ADM's growth as in 2007 analysts estimated a 40% contribution from ethanol to the company's profit. However, the situation reversed and ethanol's profitability eroded due to the fall in global crude oil prices and global recession among many other reasons. Amidst all these tribulations, ADM went for ethanol's capacity expansion through two more plants by early 2010 to 1.9 billion gallons per year from 1.1 billion gallons a year in 2008. The case focuses on ADMs decision on sticking with ethanol at a time when everything indicates the other way around. The case also familiarises students with the global biofuel market, US ethanol industry, ethanol as an alternative source of renewable energy and the scope of other sources to replace ethanol and bio-diesel in the near future.

Pedagogical Objectives:

  • To understand the global biofuel industry.
  • To analyse the US ethanol market and the role of ethanol in ADM's growth.
  • To he challenges ahead for ADM due to its continuous dependence on ethanol from corn.

Keywords : Renewable energy; Alternative source; US; Ethanol sector; Soybean oil; Lobbying; Arab oil embargo; Bio-Butanol; Switchgrass; Global oil market; US federal mandate

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