The Story of ADM Razgrad: From a Semi-Plant to Corn Products, Worth a Billion

The Belgian company Amylum makes the first major privatization deal in Bulgaria, purchasing the unfinished plant that is now part of the giant ADM.

Early 1990s. Lyuben Berov headed a government with a mandate from the MRF (Movement for Rights and Freedoms) with a commitment to privatization. Although his reign will go down in history mostly for corruption and chaos, he still managed to fulfill one part of his declaration. In 1993 the first major privatization deal in the country was concluded. The director of the Privatization Agency at the time was Alexander Bozhkov. For about 20 million dollars, equivalent to 529 million old leva, the Belgian company Amylum bought the corn processing plant in Razgrad, whose construction began before the political changes but remained unfinished. After investing twice as much again, the new owner launched the plant a year later and began producing starch and sweeteners.

Following several changes in ownership, the company is now part of the American giant Archer Daniels Midland (ADM), which had $94 billion in sales in 2023, operating under the name ADM Razgrad. It is the largest single consumer of corn in Bulgaria and the second-largest company in the food and beverage sector with a turnover of 1.2 billion leva in 2022. Its products are purchased by virtually all major food and beverage manufacturers, and its main markets are in Europe. With investments made several years ago, the plant’s capacity has doubled, and another product, ethanol, has been introduced into production.

From the socialist era to today

Construction of the corn processing plant in Razgrad began in 1985 when the state enterprise “Corn Products” was established. After the changes at the end of the 1980s, construction was halted, leaving the plant unfinished. In 1993, the enterprise was privatized by the Belgian company Amylum for USD 20 million, with the new owner investing an additional $45 million to complete construction. Production began the following year, and the plant was renamed “Tsaramil.” In 1996, the name was changed to “Amylum Bulgaria.”

In 2000, Amylum became part of the British group Tate & Lyle, and the Bulgarian company transitioned to the Dutch Eaststarch – a joint venture between Tate & Lyle and the American Archer Daniels Midland (ADM). In 2015, ADM acquired Eaststarch entirely, becoming the sole owner of “Amylum.” The international deal also included assets in Turkey and Hungary. Since 2020, the Bulgarian company has been renamed ADM Razgrad.

The Razgrad plant is the largest consumer of corn in Bulgaria, purchasing 100% of its raw material from local producers. The main activity of the company is the extraction of primary products for the food industry through deep processing of corn. The plant produces two main groups of products – sweeteners (glucose, fructose, dextrose, maltodextrin), used in the food and beverage industry as sugar substitutes in soft drinks, confectionery, food additives, etc., and starches, which are also used in other industries besides food. The company also produces animal feed. For the past two years, the company has been producing ethanol after building an installation as part of a large-scale capacity expansion project. Products are mainly sold in Southeastern and Central European countries (Bulgaria, Turkey, Romania, Germany, Czech Republic, and Poland).

The workforce is 380 employees, 55% of whom are university graduates. Another 90 employees of subcontractors also work at the plant site.

Americans in Razgrad

The plant manager, Steve Matuscak, who has been in the country since the fall of 2022, defines the entry of the American giant ADM into Bulgaria as strategic for two reasons – good location and personnel.

“The plant is located in an agricultural area. We have direct access to farmers, we know them, and we work with them. Additionally, we are close to the Danube River and Varna, so we can easily export our products,” he says. A railway line reaches the plant, used for deliveries to Europe, and everything else transported by truck can be transferred to ports and shipped anywhere in the world. “We practically have global access to all kinds of transportation from this location,” Matuscak adds.

Another advantage of Razgrad is the availability of personnel – mechanical engineers, chemical engineers, bioengineers, as well as other specialists, turning the plant into something like a regional hub in terms of the supply chain, quality control, food science, and operational management. “We have some engineers who are based here but are responsible for several of our plants in the region. We also have a key procurement team because our products are transported through different channels, so our supply chain is quite complex. Also, our quality department, our laboratory – we have very specialised equipment here and other factories in the EMEA region (Europe, Middle East and Africa) can send samples for testing. So, this is a hub in many different aspects,” Matuscak pointed out.

Not all specialists are from Razgrad since it’s not easy on the local market, clarifies the Production Manager and Chairman of the Board of Directors, Nayden Tsvetkov. “But we have colleagues from nearby cities as well, such as Shumen, Varna, Targovishte, and Ruse.” Due to the nature of production, which requires specialized knowledge, over half of the company’s employees have a bachelor’s or master’s degree.

For middle-level staff, ADM Razgrad collaborates with local vocational schools, which helps it secure workers for maintenance, mechanics, electricians, and others. Matuscak admits that the labor market is becoming a bit more challenging. However, according to him, the company’s advantage is that it has very low turnover of personnel.

An interesting practice is the training program for specialists in various plants within the group – not only for corn processing but also for oilseed crops and food additives. “Over the past two years, we have had engineers, trade, and marketing specialists from Romania, Greece, Italy, and Germany. They come here for a year, then go to another plant, then to a third. This way, they interact with different people, build their network, and develop their skills and opportunities,” explains Matuscak.

Expansion and New Product

The significant change following ADM’s entry into the country was the production expansion project, which effectively doubled the capacity for existing products and also included the construction of an ethanol plant. Implementation started in 2018 and the pandemic delayed it a bit, but it was completed at the end of 2021. Valued at over 240 million leva, this was the largest project for organic growth within the group at that time. The increased capacity also led to an increase in staff by about 50 people. With the addition of ethanol to its portfolio, the company entered a new niche – green fuels. The main part of the product is delivered to refineries in Bulgaria, Romania, Greece, and even Western Europe, where it is used as an additive to gasoline. Ethanol also has industrial and household applications – for cleaning agents, windshield washer fluid, disinfectants, etc.

Alongside the construction of new facilities, the company utilizes the project to optimize automation systems – a process that is continuously ongoing. “We strive to minimize manual labor as much as possible. Certainly, there will always be some form of manual work, some control, and supervision. But we try to add as many sensors, software, blocking systems, production data analysis, dashboards, etc., as possible,” said Matuscak.

The increase in capacity is reflected in the higher performance of the company in the first year following the completion of the project, although inflation also has some impact. In 2022, revenues almost doubled – reaching 1.2 billion leva from 658 million leva the previous year, and the company turned a profit of 74.5 million leva (compared to a loss of 10.4 million leva in 2021). Results for the past year are not yet available.

The focus now is on projects to reduce energy consumption and carbon footprint. “We generate only waste heat and work on capturing it and using it as energy in the production process, instead of relying solely on primary steam or electricity, as well as water for cooling,” explained Matuscak, adding that investments in energy consumption reduction measures are worth millions of dollars. Currently, three such projects are underway, with two more in preparation.

In the longer term, the company is considering various green initiatives such as solar panels and heat pumps. “So, we are working on two fronts – first, we are trying to reduce overall consumption, and second, we are striving to make it greener,” he said.

Overcoming the Challenges

The massive investment project proved to be the biggest challenge for the company due to the outbreak of the pandemic. “There were thousands of subcontractors working on it. Much of the equipment is imported, and with all the restrictions on work and travel, it was quite challenging for suppliers and service engineers to come,” Matuscak recounted, who at the time had not yet been to Bulgaria but had heard a lot from his colleagues. “However, the team was quite flexible and managed to continue working without exposing people to unnecessary risks,” he added. Thus, despite the headaches and slight delays, the project was successfully completed.

Another blow comes from the rising costs of energy sources, soon after the war in Ukraine and everything else. “It definitely affected our operating budgets, but it didn’t stop us from continuing to operate and remain profitable,” says Matuscak. The company is starting to work on projects to reduce energy costs and is negotiating with clients to revise prices – efforts that are met with understanding, as everyone is more or less affected. “The entire supply chain in Europe – suppliers, our clients, people in our business, people outside our business – everyone seems to understand that this is a bad situation, gas prices were high, but everyone worked together to try to minimize the effects,” he added.

The war in Ukraine has also led to another development in Razgrad. Since the ADM group has a large plant in Odessa, after the Russian invasion, the Bulgarian company did everything possible to help its Ukrainian colleagues and their families. “We accepted many refugees, accommodated them in hotels, or covered part of their rent, offered them jobs at the plant if there were vacancies,” Matuscak recounted.

The increase in grain prices two years ago and the attempts by many Bulgarian farmers to accumulate speculative profits by withholding their production also posed a challenge for the company, which uses corn for its production. “This was a complex, unprecedented situation. We worked with both farmers and importers to try to find ways to purchase corn at a price that was beneficial to everyone,” Matuscak said.

Same products with new applications

Despite the difficulties, however, the company also has its successful moments. For the plant manager, the greatest achievement is progress in health and safety. Last year, ADM Razgrad received both awards from the sector association Starch Europe, which brings together 73 starch plants in Europe – the Annual Award, given for zero lost workdays due to safety-related incidents throughout the year, and the “Million Hours” award for 1 million consecutive hours without such losses. “We also made efforts to reduce so-called near misses two or three times compared to previous years just by better understanding our equipment, adding sensors and automation, and training employees,” Matuscak explained. According to him, the company also has many programs aimed at the local community, including donations to the SOS Children’s Foundation, support for the cardiovascular center at the local hospital, assistance to the dog shelter, and various sports and cultural initiatives.

The company works directly with the farmers from whom it purchases raw materials, assisting them in preparing carbon emission reports to verify that the ethanol produced by ADM Razgrad is indeed an environmentally friendly substitute for fossil fuels. “This is a very bureaucratic and difficult task for them, so we help them,” Matuscak said. The company is also preparing to introduce the ADM group’s “Regenerative Agriculture” program, which focuses on sustainable agricultural practices such as preventing erosion, crop rotation to improve soil nutrients, etc.

The company is preparing to introduce the “Regenerative Agriculture” program of the ADM group, which is aimed at sustainable agricultural practices such as preventing erosion and crop rotation to improve soil nutrients.

Regarding the business aspect, the company reports progress due to new business strategies implemented at the group level. “We are working to protect our margins in the EMEA region, which has led to some increases. But we are also working on diversifying our products in terms of their applications,” he says. Such products are included in the BioSolutions group, with the aim of replacing non-renewable products. Modified starches, for example, can be used for the production of coatings and adhesives, while crystalline dextrose can be used for drywall and gypsum fiberboard in construction. Crystalline dextrose, starch, and ethanol find applications in pharmaceutical products, while modified liquid sweeteners are used in phytosanitary protection and agriculture. Starch is also a raw material for the production of renewable paper and packaging. In addition to all these products, the Razgrad plant also produces a soil additive, again based on an existing product, which helps plants better absorb nutrients and increase yields.

Another interesting application being worked on in North America is the production of polylactic acid from corn syrup. Essentially, it represents a biodegradable renewable plastic that can replace petroleum-based plastics. “We continue to produce our traditional products, but we are working with customers, startups, and other joint ventures to come up with renewable applications,” explains Matuscak.

On the local front, the goal is for the Razgrad plant to become the most efficient corn processing plant in Europe. “I think we’re on the right track. We are working on all these automation and energy reduction projects. We are constantly looking for ways to improve our process. Recently, we embarked on what we like to call the journey to operational excellence. The goal is to achieve a very stable, systematic approach to our business, both in managing the plant and managing the supply chain,” says Matuscak. “Every day we critically evaluate everything we do and ask ourselves if there isn’t a better way to do it.”