Q and A with Juan Luciano
Chairman and Chief Executive Officer, Archer Daniels Midland (ADM)
By Zach Shields
While agriculture may represent Decatur’s past, agriculture in general, and Decatur specifically, continues to be an important part of ADM’s future.
Decatur Magazine exists to remind us what it means to take pride in one’s hometown. Our city, like so many in the Midwest and across the nation, faces its share of challenges. By addressing complex issues head-on, thriving communities find ways to reinvent themselves decade by decade. Decatur is doing so.
We’re blessed by both geography – which permits us to serve as an inland shipping hub and national “crossroads” – and abundant resources. Chief among these is deep, black soil as fertile as any in the world. Maintaining a sense of our region’s agrarian past informs our perspective on the future.
For this, the magazine’s 100th issue, ADM Chairman and Chief Executive Officer Juan Luciano shares his thoughts on the company’s role in the global food market, as well as the importance of its Decatur roots.
Zach Shields: Juan – how did your youth in Argentina – particularly your family’s direct involvement in agriculture – inform your perspective on global food production? What did you grow, and did you work there? Does your family continue to farm?
Juan Luciano: It’s very difficult to be from Argentina and not have roots in agriculture. I was born in San Nicolas, which you could describe as the corn belt or the soybean belt of Argentina. In fact, the biggest export port for soybeans is Rosario, which is only about 40 miles from my town.
My mother’s family were farmers and we went to live with them at a young age. My grandfather, with his brothers, used to own an elevator. So, local farmers would come and unload grain and they would buy fertilizer and seeds. And, as a child, I would spend a lot of time playing around mountains of seed bags. Growing up with grandparents as farmers, every dinner conversation was about the weather, or that prices were low and what we were going to plant next season. Were we going to plant wheat? Were we going to plant sorghum? Were we going to plant soybeans? My mom is now 80 and still owns the land, but she rents it out.
ZS: ADM is big business, obviously. But the company also defines its core purpose as meeting the most basic human need. How does that philosophical approach influence your thinking on a daily basis, and when you consider moving forward and diversifying into new ventures?
JL: The global demand outlook for protein and grain remains solid and ADM will play an increasingly important role in feeding the world. In fact, there are some significant global trends that make us optimistic about our long-term future because our core model is well-positioned for global population growth.
For the very first time in history, a global middle class is emerging. And, that middle class is expected to double by the year 2030. Also, for the first time in history – in the next five years – we’re going to see the population over 65 years old become larger than the population of children under five years old. The population is getting older. In the U.S. alone, this is a market of about $3 trillion – an affluent population getting older and very interested in improving their quality of living well into their 80s.
We’ve been investing to position ADM to capitalize on these structural trends with investments around the world in key supply regions like the Danube, Ukraine, Argentina, and Brazil in order to meet global demand. We feel the responsibility of providing for a global population every day.
ZS: What’s your perspective on the company’s direct interaction with farmers in a given area? (Central Illinois and elsewhere.)
JL: ADM benefits society by efficiently and sustainably connecting the harvest to the home – what we refer to as the global food and value chain. From sourcing crops, transportation and distribution, processing those crops into food, leveraging our flavors and specialty ingredients for nutrition, function, texture and taste and everything in between. We truly are a one-stop shop for the food and food ingredient industry – and everything we do starts with the hard work and innovation of farmers.
Food, animal feed and other renewable products – none of it would be possible without the invaluable contributions of farmers. Many of ADM’s employees actually come from farm families, which means you get more than expertise and knowledge – you get the passion and experience of someone who understands farming firsthand.
ZS: What do you see for ADM as it further extends its reach into broadening international markets? The connection from field to processing plant has long been established here in the U.S., what about elsewhere?
JL: Certainly growth into international markets is a key part of our strategy. In the past 18 months, we have executed more than a dozen strategic acquisitions or investments around the world while at the same time completing or advancing various projects to expand our origination and basic-processing footprint, enhance our destination-marketing capabilities and strengthen our food- and feed-ingredient portfolios.
ZS: Agriculture represents Decatur’s past. The industry will always be central to the economic health of our region. What emerging opportunities will specifically affect this area? How do they differ from “traditional” concepts of agriculture?
JL: While agriculture may represent Decatur’s past, agriculture in general, and Decatur specifically, continues to be an important part of ADM’s future. Decatur was our hometown for more than 40 years and remains the headquarters of our North American business. It is home to our research and development center, two of the largest processing facilities in our global network and our single largest community of employees. We continue to invest in Decatur’s economic development to help ensure it flourishes economically, in its schools to foster a strong workforce pipeline, and in critical social services to enhance the quality of community life.
Last year, through ADM Cares, our social-investment arm, companywide, we provided more than $10 million dollars in grants to organizations making a meaningful difference in the areas of education, sustainable agriculture, hunger-relief and the environment. This included nearly $2 million to groups in Decatur, including Decatur Public Schools, the Boys & Girls Club, Decatur Celebration and the WSOY Community Food Drive.
As for emerging opportunities and shifts from “traditional” concepts of agriculture, for ADM, everything still starts with a very sophisticated grain origination and logistics business. This gives us access to key raw materials. This gives us the basis for the creation of a formidable basic processing company that we have in wheat milling, or in corn milling, or in soybeans. This basic processing business gives us an incredible customer base. With the establishment of our WILD Flavors and Specialty Ingredients business, or WFSI, we now have the capability – not only the physical capability, but the intellectual capital, the application development, the context to actually get deeper with customers – to be able to push even more ADM ingredients into formulations – all of which drives the importance of the ag industry to ADM.
Our ability to adapt to changing trends is a key reason why ADM has been around for 114 years. That flexibility and agility are more important today than ever before. Because both our industry and consumers are changing fast, it is our responsibility to continue adjusting our portfolio to remain relevant to our customers. Over the past two years, through our recent divestitures and acquisitions, we have successfully engineered the most significant portfolio transformation in our company’s history, and now the company is very well positioned to benefit from global consumer trends.
ZS: Given ADM’s recent local investment in National Foodworks Services, how do you perceive small entrepreneurial ventures and the role they can play as partners to giants in the industry?
JL: Our investment in National Foodworks Services (NFS) provides an opportunity to usher in a new wave of innovation for food entrepreneurs in the community. In addition to our support of NFS, ADM recently launched the Food Innovation Challenge to continue fostering growth in new industry talent and build relationships with future food innovators. Designed to connect entrepreneurs with industry experts, the competition will award a grand prize of $50,000 in seed funding and an additional $50,000 worth of services from NFS for marketing, production and commercialization.
Our commitment to the food industry has never been stronger, and we look forward to putting our food research and ingredient expertise to work in assisting food entrepreneurs in creating new and exciting food innovations. We need the help of the community, public and private sector as well as consumers to make sure NFS is a success.
This article originally appeared in the August/September 2016 issue of Decatur Magazine.
It may not be reproduced or redistributed in whole or in part without the publisher’s consent.
© Copyright 2016 Decatur Magazine – First String Productions. All rights reserved.