Archer Daniels Midland Company (1929 - Mid 1980s): Work with Soy


by William Shurtleff and Akiko Aoyagi


A Chapter from the Unpublished Manuscript, History of Soybeans and
Soyfoods, 1100 B.C. to the 1980s

©Copyright 2004 Soyfoods Center, Lafayette, California

The second existing major soybean crusher to enter the industry, ADM was the first to use the solvent extraction process, the first to produce both industrial and food grade lecithin, and the pioneer in the development of textured soy protein, with which their brand TVP is almost synonymous. They presently have the largest soybean crushing plant in the world at Decatur, Illinois, and are the second largest soybean processing company in the US.

The history of ADM goes back to 1902, when John W. Daniels founded the Daniels Linseed Company in Minneapolis, Minnesota. In February 1903 the first mill began crushing flaxseed for its linseed oil, which was used primarily as a drying oil in paint. Profits for the first full year in business were $72,000; the company soon became America's leading crusher of flaxseed. In August 1904, George A. Archer, who had had a 50% investment in the company from the beginning and had formerly been connected with the American Linseed Company, became director and vice president. In February 1905 it was voted to change the name of the firm to Archer-Daniels Linseed Company. Mr. Daniels (then 47 years old) and Mr. Archer (then 55) occupied facing roll-top desks in their office and gave close supervision to every detail of the business. In 1911 Shreve M. Archer, the 23-year-old son of George A. Archer, became treasurer of the company. In 1914 the firm initiated its first venture outside Minneapolis by leasing a linseed mill at Superior, Wisconsin. That year Thomas L. Daniels, son of John W. Daniels, joined the company and did the bookkeeping for the new mill (Cross 1954).

On 23 May 1923 Archer-Daniels Linseed Company and the Midlands Linseed Products Company, two of the leading firms in the industry, joined to form a new company, the Archer Daniels Midland Company. Midland, originally incorporated in 1902 at Minneapolis, had expanded very successfully by acquiring mills at Chicago, Toledo, and Edgewater, New Jersey. Its plants at Minneapolis and Edgewater adjoined those of Archer-Daniels. The new company, with assets of $7.5 million, became the world's largest producer of linseed oil. Its nine mills contained a total of 334 presses, or one out of every three in America. In November 1954 John Daniels, then 67 years old, became chairman of the board and turned over the presidency to 36-year-old Shreve Archer, who actively worked to expand ADM's share of the flax processing market; in 1928 he bought up a number of competitors. It was also decided that the company needed to diversify its operations.

Thus in 1929 ADM first started to process soybeans at its Toledo and Chicago plants; the hydraulic presses that had been used for flaxseed were used for soybeans. This move did not seem particularly momentous at the time because the US was just becoming aware of the potential of the soybean and ADM's initial soybean operations were not particularly large. In the late 1920s ADM was stumping the countryside to get farmers to grow more soybeans.

ADM made its first bold step in soybean processing when it decided in the early 1930s to install a solvent extraction system for soybeans at its Chicago plant. As early as 1926 the William O. Goodrich Company (acquired by ADM in 1928) had been experimenting with solvent extraction of soybeans and other vegetable seed oils using a Scott Batch extraction system. Thus ADM had some experience in this area. But solvent extraction had not yet been used for volume production in the US since the extractors were large and expensive, soybean supply was limited, and a satisfactory solvent had not yet been found. Furthermore, it was still the depths of the Depression and ADM's 1933 sales were the lowest they had ever been. Nevertheless, in 1933 Shreve Archer sent plant superintendent E.W. Schmidt to Europe to make a study of solvent extraction and bring back the best equipment. Solvent extraction had originated in Europe but only in recent years had it been widely used. Schmidt brought back a 150-ton-per-day capacity Hildebrandt continuous-flow, counter-current hexane solvent extractor, which was installed in June 1934. ADM now had the largest and most modern soybean processing system in America; it left only 1% of the oil in the meal (Ref??).

In 1934 ADM began to produce soy lecithin from their crude soy oil, becoming the first US company to manufacture this product. This lecithin was industrial- or feed-grade; food-grade lecithin was not offered until the mid-1940s?? The soybean meal produced by the new solvent system was 44% protein meal; the meal produced by other companies with expellers or hydraulic presses contained only 41% protein. But the lower oil content made the solvent extracted meal very hard to sell. ADM spent a tremendous amount of money doing research and marketing work on the new meal. Initially it was placed on consignment with all types of dealers and distributors over a wide area. Said vice-president Whitney H. Eastman, "We might just as well have placed it on the shelves of jewelry stores in Iceland" (Dies 1942). Years of work eventually made the product a great success in high-protein feeds. A key man who spearheaded this drive for acceptance was Dr. James W. Hayward, who had done pioneering studies on soybean meal feeding, first at Purdue, then at the University of Wisconsin. He was brought to ADM in the mid-1930s?? During all of this activity with soybeans, the two men who had founded the company died in consecutive years, John W. Daniels on 8 June 1931 at age 74 and George A. Archer on 12 November 1932 at age 82. In the late 1930s ADM started to crush soybeans in its linseed oil plant in Minneapolis on a sporadic or part time basis (Goldberg 1952).

In 1939 Shreve M. Archer made an announcement of great importance in the company's annual report, hinted at, perhaps, by the fact that the word "soybean" was spelled with a capital "S."

Because of the growing importance of the Soybean industry the Board authorized the construction of a modern plant and elevator at Decatur, Illinois. This location was chosen because of the availability of raw material and a favorable rate structure. Construction was started early in the year and the plant should be in operation this fall.

A.E. Staley now had a huge rival in his backyard. Once again Mr. Schmidt, then ADM's general superintendent, went to Europe to investigate the latest developments in solvent extraction. This time he ordered a Hansa Muehle unit which carried the flaked beans in buckets on a moving chain (the Paternoster design) inside a U-shaped tube. The unit, which had a daily capacity of 400 tons, four times the size of any that had been used in Europe, made ADM the largest soybean processor in the world! In November 1939 the plant was ready for operation. The solvent unit occupied a five-story tower; storage capacity for 5 million bushels of soybeans was provided (Cross 1954).

With this huge new plant, ADM was ready, just in time, to take full advantage of the phenomenal increase in demand for soyfoods and soybean meal that came as a result of World War II. On the eve of the war, at the end of 1940, ADM, with headquarters still in Minneapolis, had six soybean processing plants located in Decatur, Chicago, Toledo, Milwaukee, Minneapolis, and Buffalo. Soybean products were sold under the Archer brand. By 1942 ADM had become a major producer of soy flour. During the war, while the consumption of soy oil was doubling and tripling, ADM laid plans for expansion, but they could not be implemented until wartime restrictions were lifted. Thus it was 1949 before a second solvent extractor was installed that more than doubled the original capacity of the plant. This plant helped make ADM America's largest producer of soy flour.

Also in 1949 ADM made its first move into edible oils. A continuous-flow refining unit was installed and in 1950 an edible oil refinery was completed. Up to that time ADM had produced only crude soy oil for sale to margarine and shortening manufacturers. The new refinery made it possible for ADM to supply the food industry with cooking and salad oil and to furnish bulk edible soy oil to large consumers such as canners of tuna fish and sardines (Cross 1954).

In November 1950 a new 300-ton-a-day soybean solvent extraction plant went into operation at Mankato, Minnesota; it was built adjacent to ADM's feed mill. This plant, enlarged in 1953 and equipped to produce soy flour in 1956, played an important role in the rapid expansion of the soybean crop in Minnesota. In 1953 the 6,000 bushel-a-day capacity Chicago plant was closed because of its small size and proximity to the huge Decatur plant, with its 44,000 bushel-a-day capacity. Because of the demand for soy flours and edible oils, production facilities at Decatur were modernized. Also in 1953 a plant was added that used soy oil to make vinyl plasticizers. At about this same time ADM produced the first 50% protein soybean meal at its Decatur plant, for use in high-energy hog and poultry feeds. The company was vertically integrated. In 1954 the first history of ADM, an excellent book titled From Land, Sea, and Test Tube, was written by Marion E. Cross.

In the mid-1950s ADM made its first move into the modern soy protein products. It bought a plant (in Evandale [sp?? not in N.G. Atlas], Ohio, outside Cincinnati) producing industrial-grade soy protein isolates from the Drackett Company; the isolates were used mainly in paper coatings and paints. Because casein prices were low, the plant lost money, so ADM tried to create food uses for the isolates. By the early 1960s they had developed a textured soy protein isolate, made with an extruder in the shape of rods or tubes. It was produced in a small pilot plant and sold to one or two customers for use in chili; not much was sold. Eventually a patent problem arose between ADM, Swift, and Ralston Purina as to who had really invented textured isolates. This was ADM's first venture into soy texturization, and the beginning of the story of TVP. A few years later a textured concentrate was developed, but was never marketed (Horan 1981, personal communication).

The early 1960s were a slow, almost stagnant period for ADM. Net earnings declined yearly in 1963, 1964, and 1965, until the company could not cover its annual dividend. In September 1965 Shreve Archer took the lead in seeking new leadership and management. To his great credit, he invited Dwayne O. Andreas and his brother Lowell to come in and run the company. The Andreases catapulted ADM into its present position of leadership in the industry. Dwayne Andreas, born in 1918 on a 160-acre farm in Lisbon, Iowa, had been in the business of processing soybeans and other commodities constantly since 1938. Once a year from that time he would travel 300 miles to Decatur, Illinois, to negotiate the annual supply of soybean meal for the family business from the A.E. Staley Manufacturing Company. Andreas liked to tell the story of how, on a memorable day in 1938, A.E. Staley, Sr. took him to lunch and suggested that the Andreases build a soybean crushing plant in Iowa, where Iowa farmers were about to plant a lot of soybeans. Staley's people did not want to expand geographically, so here was a golden opportunity. A few days later the Andreas family contracted to build a soybean processing plant in Cedar Rapids, Iowa. Honeymead Products Company was founded; business prospered. Andreas sold the business at a nice profit, then went to work for Cargill for 7 years. In 1965, when considering the invitation to take the lead at ADM, Andreas was greatly impressed with TVP (ADM's brand name for textured vegetable protein), which ADM's labs had developed. At that time TVP was being produced only in the company's laboratories, but Andreas could see a host of possibilities from meat extenders to a key, low-cost protein source in a wide variety of foods. Dwayne Andreas has long had a deep personal interest in food, and especially in those made from the soybean. Unlike typical executives, "he likes to look at fields and talk about protein shortages and world hunger" (Ross 1973).

In early 1966 the Andreases bought 100,000 shares of ADM stock, later extending their holdings to 181,900 shares. After assuming leadership of the old-line agricultural processor, the Andreases energetically lopped off unprofitable activities and expanded soybean crushing capacity. Charting ADM's future directly into large-scale food processing and technology, the company sold all of its chemical operations in April 1967 for $65 million. With this capital ADM caught up on a generation of soybean processing technology it had missed, renovating its two soybean plants at Decatur, increasing the capacity of one plant to 4,000 tons a day (keeping it the largest in the world) and adding new capacity elsewhere. Over a 3-year period soybean crushing capacity was increased from 50 million to 120 million bushels a year.

In 1965, ADM introduced TVP brand textured soy protein. ADM had received basic patents for TVP, based on an entirely new technology for soybean processing (Refs??). TVP caught on quickly; it was widely used by 1968 and consumption skyrocketed after 1971 when it was approved for use in the school lunch program. By 1980 similar products were being produced by 12 or 13 companies in America, but ADM was far and away the leader.

During the late 1960s Decatur was built into a fully integrated, huge, soybean and soyfoods processing operation. In addition to the expanded and modernized crushing facilities and the TVP plant, hydrogenation equipment was added at Decatur (and at Lincoln) to process refined oil for use in margarine; soy flour production was also expanded. Sales were now about 60% in soybean processing, 21-28% in flour milling, and the rest in miscellaneous activities. In 1968 the company's headquarters were moved from Minneapolis to Decatur, Illinois. The same year?? ADM introduced a bacon-flavored TVP (brand-named??) and began to expand its TVP production at Decatur. Also in the late 1960s?? ADM started to produce cereal-soy blends such as CSM and WSB, for the US PL 480 program (see Chapter 45). The production headquarters for these foods became the ADM Milling Co. in Shawnee Mission, Kansas.

In 1973 Fortune magazine did an excellent story on Andreas and ADM entitled "Dwayne Andreas' Bean Has a Heart of Gold." It noted:

No individual has made a greater success of processing and merchandising the pale yellow bean than Dwayne Andreas . . . the Andreases brought ADM from No. 3 to No. 2 in the soybean industry (behind Cargill). Net sales went from $371,626,000 in fiscal 1967 to $967,710,000 in fiscal 1973, while net operating earnings rose more than 400%--from $3,225,000 to $16,895,000. Meantime, the price of the stock nearly quadrupled. . . ADM has over 50% of the textured soy protein business, and has licensed several competitors to make the product.

In 1973 ADM introduced CornSweet high fructose corn syrup into that burgeoning market. In later years it added sweeter varieties.

In a speech to the New York Society of Security Analysts in 1975, Dwayne Andreas gave a nice sketch of ADM, present and future, describing the company as having a four-horse team pulling it in a certain direction for the future. The four horses were edible soy protein products, oil for margarine, dehulled soybean meal for the poultry industry, and corn syrups. Each of these are low-cost, mass-market food items in growing demand by the world market. ADM had 17% of the US soybean crushing business and about 25% of the margarine oil business (80% of their soy and corn oil went into margarine).

In 1977 ADM celebrated its 75th birthday with an attractive brochure titled "What's New," that outlined the company's history and was sent out with the annual report. That same year ADM introduced a host of new soy protein products: (1) a soy protein concentrate, Ardex 700, used, for example, in more economical and healthful cookies; (2) a textured soy protein concentrate (TVP2); (3) a light-colored TVP product developed as a fish extender; (4) Nutrisoy Fiber, America's first soy bran, containing 41% crude fiber and 10% protein and costing about half as much as other edible cellulose products on the market; (5) new soy variety breads. Research was progressing on a new soy beverage based on new technology that was reported to taste great for use in dairy-type applications, such as milk replacers, cheese and dessert bases. ADM's soy proteins were said to be used in more than 600 brands of prepared foods sold on grocers' shelves: soups, chili, frozen dinners, pizza, gravies, and the like. In England, Cadbury's Soya Choice, based on TVP, was a "roaring success;" because of its good flavor and nutrition equivalent to meat at half the price. The latter was produced by the British Arkady Company, a subsidiary of ADM, which had been manufacturing TVP since 1975.

Financial figures were extremely impressive. Between 1968 and 1977, net sales had increased from $280 to $2,114 million (7.5 times) and net earnings or profit had increased from $4.4 to $61.4 million (14 times); a truly spectacular record. Soy processing plants included ten soybean crushing plants, two vegetable oil refineries, one vegetable oil packaging plant, three soy flour manufacturing plants, two textured soy protein plants, and one soy protein concentrate plant, plus a soy flour plant and TVP plant in Manchester, England. ADM refined oils included soy oils for margarine, shortenings, salads, and cooking, plus Yelkin lecithin. ADM protein specialties included, in addition to TVP, TVP2, and Ardex 700, Nutrisoy defatted, low-, and full-fat (whole) soy flours and Nutrisoy grits. ADM was the last major company to produce a full-fat soy flour in America; the product was dropped in 19?? In 1977 ADM Milling Co. published a brochure titled "The Growing Challenge," discussing the new breed of soy-fortified blended foods and their role in meeting protein-calorie malnutrition in Third World countries.

In 1979?? ADM created a new division?? of the company, named ADM Foods, consisting of all of its food producing operations.

In 1980, when Central Soya got out of the isolate business, they sold their Chicago plant to ADM, which rejuvenated it, and began using it to produce soy protein isolates and concentrates??

As of 1980 ADM was the second largest soybean crusher in the US and the world (behind Cargill); its Decatur plant was the largest single soybean solvent extraction plant in the world??, with a capacity of 4,000 tons a day. It was the leading producer of textured soy protein (TVP), offering 300 different sizes and flavors. And it was one of America's largest suppliers of basic foods.