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Eichenwald, Kurt: The Informant


The lysine is then mixed with grain and food primarily for poultry and swine. The benefits of the lysine were so that every swine and cattle producer required it to get higher prices for the meats and remain competitive in the swine and poultry industries.
             Because lysine is manufactured by all firms using almost identical means, the technology used in the lysine industry has been unchanged since its development in the 1950's. The only real change was the technology of the plants, specifically regarding their size and production capacity. The Archer Daniel Midland Company's plant in Decatur, Illinois, and in the middle of the U.S. Corn Belt, was the largest ever built. It was rated to produce 250 million pounds per year of the world market demand of 390 million pounds per year. Despite the size differences, there are no differences in technology between firms, despite their variation in geographical location or time of construction. The size difference is also a factor in variations in production costs between firms. ADM's large plant was three times as big as any owned by Ajinomoto, but was more efficient in costs. Only one set of managers and executives were needed, instead of three. Transportation costs are higher for foreign companies requiring U.S. feedstock. Despite these factors, it can still be said that the production cost across firms is similar, because of the negligible differences they create.
             Before 1991 there were only four major firms in the world producing lysine: Ajinomoto, Sewon, Kyowa, and Eurolysine. Other smaller producers included Orsan, Cheil Jedang, and Miwon. The large Asian companies controlled the lysine market and engaged in price-fixing collusion through the 1980's. They had agreements with one another to only sell in specific nations and to divide the U.S. market in shares (55%:45% Ajinomoto:Kyowa.) They had plants in the U.S., Europe, and throughout Asia.


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