Dynamic global milling in new data
Dec. 9, 2013
by Morton I. Sosland
Before commenting on how much there is to learn from the latest data of the International Grains Council (IGC) on flour production around the world, it is appropriate to thank the Council for assembling this information. Even though gathering statistics on milling may appear to be a basic responsibility of the Council, it is increasingly apparent that such a task is difficult. When one sees Italy, Australia and China as three instances of nations that do not provide the IGC with current wheat flour output information, in the face of efforts pressing for cooperation, an observer may only conclude that resistance reflects viewpoints that are difficult, if not impossible, to fathom.
While rejecting the conclusion that a nation like China may consider output a “secret,” it is much easier to blame the absence of numbers on statistical shortfalls. Providing some insight was a study done this year by the U.S. Economic Research Service on Afghanistan becoming a major importer of flour. Even though milling still ranks as the country’s largest (non-opium) agroindustry, its capacity has been decimated by constant war. Imports mainly come from neighboring Pakistan whose government subsidizes wheat prices to give its millers an advantage. Afghanistan’s mills are mainly small stone or disk grinding units with daily capacity of 1 to 3 tonnes. Consumption growth, at 9% per year, has outrun milling capacity to a degree very different from other nations.
Fundamental to examining flour output is surveying how individual nations perform compared with other nations in the same region as well as globally. Although it is some years since the IGC has made an estimate of world flour production, it comes nearest by assessing food use of wheat. The latest IGC forecast of food use is 471 million tonnes, accounting for 68% of global wheat disappearance at 690 million. While nearly all of food use represents milling or grinding, the total is impossible to convert accurately into flour. From developed nations where modern milling systems operate at extraction rates near 75% to primitive single-person grinding units that make whole wheat products, the range is so huge as to prevent a global estimate of how much flour is made. Suffice it to rely on the Council’s estimate that aggregate food use has been increasing recently at an annual pace of hardly 1%, which lags global population gains at slightly more than the single digit.
Before saying growth in global demand is disappointing, it becomes essential to differentiate between national trends. Here is where the IGC statistics are particularly valuable. They affirm that flour output in most developed nations is holding steady, if not even decreasing in a few places, contrasting with developing nations that enjoy economic growth and expanded middle classes relating directly to expanded demand for foods made from wheat flour. Central and Eastern Europe provide particularly powerful examples of economic gains, with yearly flour output increases of 23% in both Poland and the Czech Republic. Similar gains occurred in a few of the former Soviet Union satellites.
Hardly anything explains spurts in flour production better than the nations that have been supplying flour to neighboring countries that have experienced food demand growth. Turkey is among the major beneficiaries of this development, enjoying a 55% gain in flour production between 2007 and 2011. Data are missing for Pakistan that has been the prime beneficiary of population growth in war-torn Afghanistan where domestic milling has fallen into disrepair. In the Western Hemisphere, Argentina’s milling has gained from Brazil’s expanding consumption, even as the latter’s milling industry has been fast growing.
North America and Western Europe have flour totals that are relatively steady, as well as domestic industries with venerable histories that are highly competitive in a classic unfolding of the modern milling story. Based on the IGC data issued this year, it is apparent that milling continues to be dynamic, even as the industry’s course varies dramatically among countries.