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Archer Daniels Extends Agreement With Japan-Based Spiber

Zacks Equity Research
·3 min read

Archer Daniels Midland Company ADM in collaboration with Japan-based biomaterials company Spiber recently agreed to expand the production of the latter’s innovative Brewed Protein polymers. Archer Daniels’ proficiency in large-scale fermentation technologies, engineering and extensive agricultural supply chain, when combined with Spiber’s cutting-edge structural protein-fermentation technology, will most likely make the deal fruitful.

We note that the latest extension of this collaboration comes after the successful completion of the first phase. Last year, both entities started a long-term collaboration under which Archer Daniels offered technical, engineering and process support with the access to production resources. This was supposed to build up and test Spiber’s process at scale. Apparently, this was executed successfully, followed by the latest expansion of the deal.

Under the latest collaboration extension, Archer Daniels will produce Brewed Protein in the United States with the use of plant-based dextrose as a feedstock. This will be then shipped to Spiber’s downstream facilities. Here, these will be processed into a range of materials, mainly fibers, for using in various applications and consumer products including apparel, high-performance foams and lightweight auto parts, among others. Notably, the Brewed Protein polymers are very important for developing plant-based and sustainable alternative materials.

We believe the latest agreement to efficiently cater to the burgeoning consumers’ demand for sustainable products. In addition, this begins a new phase in the commercialization of Spiber’s materials, with a wider availability of Brewed Protein at suitable costs. The new agreement, coupled with Archer Daniels’ other partnerships, efficient origination network, end-to-end capabilities, fermentation skills and other strategic efforts, poise the company well for growth.

Meanwhile, Archer Daniels’ significant progress on its three strategic pillars, namely optimize, drive and grow, looks encouraging. Moreover, the company’s Readiness goals of driving the business, standardizing functions and enriching consumers’ experience bode well. Further, the company is gaining from strength in the Nutrition segment on gains in the Human and Animal Nutrition units. Driven by these strengths, the Zacks Rank #2 (Buy) stock has gained 21.9% in the past three months and outperformed the industry’s 15.5% rally.

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