ABCD: The Grain Giants that Make a Bonanza from Surging Prices

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ABCD is an acronym for the world’s grain giants that in recent years have made a bonanza from the surge in wholesale prices of grains, mainly wheat, corn, and oilseeds.

The acronym stands Archer Daniels Midland, Bunge, Cargill and Louis Dreyfus, the powerful but relatively unknown conglomerates that have controlled the global agricultural supply chain for decades.

In May 2022, just three months after the Russian invasion of Ukraine, the “granary of Europe”, the prices of wheat, corn and vegetable oils reached historic highs.

According to the French daily Le Figaro, Cargill reported a 23% increase in revenues to a record $165bn by mid-2022. And during the second quarter of the year, Archer Daniels Midland had its highest profits ever. Its yields soared to a 157-year high, according to statistics compiled by Bloomberg.

2022 was also a great year for US-based Archer Daniels Midland (ADM), which posted a record net profit of $4.34 billion, up 60% compared to 2021, Le Figaro says.

China’s state-owned COFCO and a couple of other contenders in Asia are now joining the ABCD to share in booming profits.

ABCD quartet controls 70% to 90% of the global grain trade

But “the ABCD quartet controls 70% to 90% of global grain trade,” Jennifer Clapp, a food security economist at the University of Waterloo in Canada, tells Le Figaro.

“It is impossible to know the exact market shares shared by these four giants. Two of them are also not listed on the stock exchange and do not publicly share detailed data on their financial returns,” adds the Canadian professor.

“At a time when the food and energy security of millions of people is in doubt due to rising food and commodity prices, the colossal groups of the international agricultural sector are making record profits,” Public Eye, a Non-Governmental Organization based in Switzerland, said in mid-January.

“If they bought wheat in January 2022 for delivery in three months, if they paid before Russia invaded Ukraine and the prices of the commodity skyrocketed, they could sell it later at an astronomically high level,” explains Jennifer Clapp.

The ABCDs have recently been targeted by NGOs and independent scientists.

“Demand for grain has not weakened since the outbreak of war and we remain well positioned to take advantage of the profit opportunities that are presented to us,” Missouri-based Bunge CEO Greg Heckman admitted in February, according to Le Figaro.

Cargill countering accusations of “opaque super-profits” reminded that it is not the one that determines food prices.

Unlike Bunge, Cargill denies it benefited from the crisis. The company claims to have contributed to the stability of the global food system, noting that it has disbursed nearly $162 million to aid humanitarian organizations.

The ABCD quartet is also drumming up the explosion in its operational costs. It claims big increases in nitrogen fertilizer prices, shipping, and fuel.

“These dinosaurs, unknown to the general public, are not mere middlemen in the global food market and supply chain. They own and exploit arable land, supply farmers with seeds and fertilizers, buy their own grain production, ship it, store it, resell it,” says Richard Fleuren of Le Figaro.