South Africa's milling industry

by Teresa Acklin
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   South Africa, with an area of 1.2 million square km, has a population of about 40 million. Some 60% are urban residents, and 40% live in rural areas.

   For 75% of the population, white maize meal has been the traditional food staple. About 80 commercial maize mills process an estimated 3.5 million tonnes of white maize annually for food use.

   But consumption of maize meal has remained static in the past 10 years, even though the population has increased by about 2.5% in the same period. That's because changing consumer habits gradually have increased demand for convenience products such as bread, pasta and rice. Consequently, wheat flour production gradually has increased since 1980. International Wheat Council statistics for 1990, the most recent year available, show that South Africa's wheat flour production was 1.778 million tonnes, up 26% from 1980.

   The growth in South African wheat and flour consumption experienced a temporary setback immediately following the partial deregulation of wheat-based food prices in 1991. Although wheat prices continued to be regulated, price controls were removed on flour, bread and wheat-based confectioneries.

   To lessen the effects on consumers, bakers reduced the size of the standard bread loaf to 800 grams from 850 grams, negatively influencing flour sales. These changes temporarily halted South Africa's steady growth in wheat consumption, with the amount of wheat consumed as food in 1991-92 dipping slightly from the previous year. The changes also forced millers to intensify their focus on quality and price.

   Within a year of the lifting of price controls, millers introduced a protein grading system for wheat and began to take other steps to improve flour quality. The baking industry also began to improve its product quality and to offer a wider range of products at competitive prices.

   By last year, the longer-term growth trend for wheat foods apparently had resumed, with industry sources citing a 5% to 6% increase in 1993 flour consumption from the previous year.

   Today, the South African flour milling industry is highly concentrated, dominated by eight large companies. In 1992-93, 32 large and four small mills were in operation, with a total daily capacity of 10,680 tonnes. Wheat grind in that year was about 2.4 million tonnes, representing a 3% increase from the previous year.

   Most of the large companies have well-equipped mills using advanced technology in the grinding process and in finished products handling. Most also are involved in maize milling, baking and feed production, making them fairly well-integrated.

   The South African Wheat Board continues to control most wheat supplied to the milling industry. South Africa typically produces around 2 million tonnes annually, with the remaining supplies needed to meet demand coming from imports.

   Wheat import levels increase notably in years when production is low. In 1991-92, South Africa produced about 2.2 million tonnes of wheat and imported a mere 85,000 tonnes; but the next year, wheat production fell to only 1.3 million tonnes, and imports advanced to 1 million.

   Canada and Australia are major suppliers, with the European Union and the United States typically supplying lesser amounts.