Archer Daniels, Bunge, Cargills, and Louis Dreyfuss control 90% of the global grain trade, plus considerable parts of the food processing chain. Collectively known as the ABCD companies, they may not be as recognizable as the big four oil or tech names but approach them in their economic clout. Cargill, the highest earning of the four, earned a record $165 billion in revenue in 2022.
The ABCD companies’ activities in the biomaterials scene tend to run under the radar of many climate tech followers focused on the dynamic startup space. Yet just as we are seeing large chemicals companies branch out into climate-friendly products, the big agricultural entities have expanded their bio-based portfolios. They are doing so through partnerships with smaller, specialist firms and by drawing on their own substantial feedstock supply chains.
The grand viziers of world food production have the most important component of a biobased business right to hand: organic feedstock. One of the most active in leveraging their agricultural output for making renewable industrial goods is Archer Daniel Midlands.
Archer Daniels Midlands is the world’s second biggest multinational agribusiness company, based in Chicago, Illinois. With 270 plants, 400 procurement facilities, it controls a large segment of the human and animal feed consumed globally. It brought in $4.8 billion in operating profits in 2021. Its specialty is in oilseeds and corn.
ADM first entered the bioeconomy in the mid-2000s via both biofuels and biobased processing chemicals. From there, its interest in bio-based products have only intensified, eventually coalescing under its dedicated Biosolutions segment established in the last five years.
ADM Biosolutions segment, nestled within ADM’s wider business unit ‘Carbohydrate solutions’, contains the company’s plant-based offerings. These are all intended as petrochemical substitutes and currently contains around twelve products serving industries as far-ranging as agriculture and cosmetics – from biodiesels to emulsifiers, and from fertilisers to solvents.
ADM’s Biosolution’s portfolio is at the forefront of ADM’s strategic expansion into non-food biobased products. In 2020, the Senior VP and President of the Carbohydrate Solutions Christopher M. Cuddy described Biosolutions as the “new growth engine over the next five years” for his unit, despite its core revenues still drawing from traditional products like sweeteners and other food items.
Non-food biobased products are key future profit sources for ADM according to Cuddy, who pointed to “growing demand…for many of the products we were selling into nonfood and non-beverage applications, really driven by the global macro trend of sustainability”.
Although ADM still does not routinely report earnings from the Biosolutions portfolio as it does with its core oilseeds business, there are signs of its growing importance to overall company strategy. 2022 was one of the first times the company released concrete financial details of its biobased line, bringing in a healthy $100 million in new revenue.
Liquid bio-based industrial inputs right now dominate the Biosolutions portfolio but ADM has recently been moving into finished bioplastics. In 2022, it announced a joint venture with LGM Chem to set up a factory to commercialise bio-based Lactic Acid (LA) and Poly Lactic Acid (PLA) at 150,000 tonnes and 75,000 tonnes annually. First operations are scheduled by 2025.
Cargill is the world’s largest agribusiness and the US’ largest privately held corporation, with assets across agriculture and industry, including steel and transport.
With an immense hold over production and distribution, Cargill arguably is the global food system. A 2001 brochure expressed this well: “We are the flour in your bread, the wheat in your noodles, the salt on your fries. We are the corn in your tortillas, the chocolate in your dessert, the sweetener in your soft drink. We are the oil in your salad dressing and the beef, pork or chicken you eat for dinner”.
In a stunning show of how widely Cargill’s business interests now range, 2021 saw the grain trader acquire Croda’s bio-based industrial business. UK-based Croda itself is one of the world’s chemical leviathans with markets across Europe, the US and Asia.
Commenting on the move, which was worth over $1 billion, president of Cargill’s bioindustrial business said that “The bioindustrial space is a priority for Cargill, as we strive to support our customers with innovative, nature-based solutions that deliver real-world benefits”.
Separately, Cargills secured a buy-out of Croda International’s performance tech and industrial chemicals businesses in July 2022 to a tune of £667 million, indicating that the agricultural firm is planning to move into the chemicals business for the long-haul.
A recent venture by Croda International has been into biodegradable seed coatings for the agricultural sector. Croda formed a partnership with the smaller company Xampla to trial its plastic-free seed coatings in the field. Seed coatings are an essential tool in farming that protects seeds from pests and diseases to enhance the chances of germination, so far almost totally reliant on non-biodegradable petrochemical plastics. This development takes Cargills full circle, reconciling its new interest in bioplastics with the basic source of its profits: the arable production.
2022 saw a further addition to Cargill’s bioplastics portfolio when it acquired Arkema, an epoxides company, to “address growing demand for bio-based industrial solutions”. As a result of the deal, the company expects to produce bio-based plasticisers and polyols for use in consumer items like shower-curtain liners, tiles, carpets, and furniture.
Bunge, an American agribusiness and food company based in Bermuda and headquartered in Missouri, has core interests in oilseed processing and origination.
In the 2000s, it moved from food into biofuels. Its most prized asset in this segment until recently was BP Bunge Bioenergia, a 50-50 joint biofuel venture with Shell formed in 2019. The huge ethanol plant heralded an interesting alliance between the food and oil majors.
Despite high biofuels prices of late, the Shell-Bunge venture dissolved in 2022 when Shell suddenly put BP Bunge Bioenergia up for sale. Although Bunge retains biofuel plants in Europe and Argentina, the loss of its flagship biofuel plant leaves a large gap in its portfolio, having represented the majority of its sugar and bioenergy segment.
That’s not to say all ventures in the biospace go smoothly, even for monoliths like Bunge. In 2012, Bunge became a strategic investor in the Series E Round for Cobalt Technologies, a biotechnology firm that produced n-butanol from biomass. This came after Bunge, Cobalt, and speciality chemicals company Rhodia Poliamida demonstrated a pilot plant producing n-butanol from sugarcane bagasse feedstock. By 2015, however, Cobalt Technologies had folded.
Although Bunge is much more muted than its competitors on bioplastics. However, in 2022 came a novel partnership venture into bio-based agricultural inputs. It has teamed up with CoverCress to commercialise a new renewable oilseed-based animal feed crop. With this, Buge is striking out into new applications for its feedstock without straying too far from its core specialisms.
ABCDs specialise in the most technologically mature bioplastics
This business strategy whereby large commodities companies expand across different substeams of their supply chain has already been mastered by oil companies. The largest companies producing plastics are often subsidiaries of the oil and gas majors like Shell.
The ABCD companies are very good at one thing: mass-producing first generation bioplastics. These are bioplastics made from starchy plants like corn or sugar cane and have high technological maturity.
The choice of first-generation bioplastics makes sense – the ABCD companies have unmatched leverage over the supply chain in these traditional feedstocks. So far, none have ventured too far from their specialty base.
By contrast, the new crop of bioplastics startups are now overwhelmingly focused on compostable materials that break down quickly in any natural environment. These are made from feedstocks like seaweed, chitin, or organic waste.
Compostable third generation bio-based materials have a massive advantage from a sustainability perspective: the first-generation bioplastics generally degrades only after processing in specialised composting plants.
Still, these older bioplastics models serve a purpose. They are better suited to industrial applications, which require durability, while the third-generation products are marketed primarily at the consumer single use market where they are in demand as foodware.
Nonetheless, the ABCDs are starting to augment their traditional interest in technologically mature biofuels and bioplastics. Cargill for example has begun to explore food tech, using its existing coverage of the pea market as a springboard.
Pea protein is a major input for the vegan protein industry and since Cargills supplies around half of the North American market, it was bound to become the de facto keystone supplier of the burgeoning vegan protein industry. In 2022, Cargill began to cement this position with a joint venture with PURIS, a vegan substitute protein producer.
Food and fuels
On the one hand, the enormous capital expenditure that can be pumped into the bioplastic sector by the ABCD companies appears to be a blessing. With this backing, renewable plastics are more likely to attain price parity on the market and more quickly.
However, these huge companies are not so confident in third-generation bioplastics that are specifically targeted at tackling single-use plastic waste. These bioplastics remain in their R&D and early scale up stages. They are made from chitosan, algae, fungi, and via microbial fermentation. Generally, these are regarded as much more sustainable as the feedstocks do not compete for inputs and land with crops destined for humans or livestock consumption.
The ABCD’s increasing visibility in the first-generation bioplastics space may also be a PR downer for the bioeconomy. With mounting scrutiny on how industrial crops food crops, combined with the ABCD’s gargantuan profits during the 2021-2022 spike in food inflation, their forays into land-intensive bioplastics cultivation may threaten to cast further aspersions on the sector’s sustainability.