Millers faring well in tough economy

by Chris Lyddon
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The U.S. milling industry suffered when the low-carb diet craze hit in the early 2000s. At one time, 1 in 11 Americans was on the Atkins diet and sales of pasta, for example, were down 10%. Now the industry is doing much better, but concerns, particularly over issues such as the attitude of regulators to research funding and the need to ensure wheat supplies when GM varieties make maize, in particular, more attractive for farmers, remain.

“Generally things are going very well for us,” Mary Waters, president of the North American Millers Association, told World Grain. “The industry went through a problem time a few years ago with the fad diets — Atkins and other low carb diets. We have recovered from that.”

NAMA, the body she leads, is the trade association representing the wheat, corn, oat and rye milling industry. Its milling member companies operate 170 mills in 38 states and Canada. According to NAMA, its members’ aggregate production of more than 160 million pounds (around 72,500 tonnes) per day is approximately 95% of the total industry capacity.

“We have been able to maintain consumption numbers, and so generally we have been plugging along pretty well. With the economy and other issues that people have had, our industry has been doing very well,” she said. “But that having been said, we are working on a number of issues with the federal government.”

The main issues revolve around funding. The industry is not directly funded by the government. “We are not subsidized, but we are concerned about the federal commitment to research and longer term issues. So we’re been working a lot on that, on federal research dollars.”


The industry, and NAMA on its behalf, is particularly concerned about regulatory policy and research policy surrounding biotech approvals.

“We have seen a huge increase in plantings of biotech crops in the U.S. and throughout the world, and a stronger acceptance of biotechnology from consumers,” she said. “Technology provider companies are concerned that the approvals process has been very slow in the United States.”

She noted that the House Committee on Agriculture had held hearings recently on biotechnology and its potential role in achieving the 70% rise in food production that will likely be needed to feed the predicted 9.1 billion world population in 2050. The committee did recognize the importance of technology.

“Agriculture biotechnology is and will continue to be vitally important as American farmers work to feed a growing population around the globe,” said committee member Jim Costa, a Californian Democrat.

“Biotechnology can help with that if the approval process remains strong and is streamlined so that it doesn’t take so long,” said Waters. “That’s something we are talking about; how the government will handle the regulatory proposals for that. We are also very hopeful that the technology providers will be able to bring a variety of wheat to market and will expand the supply of wheat from our suppliers.”

She is convinced that consumer acceptance of biotech would not be a problem. “We have seen some positive consumer research about consumer acceptance, and people seem particularly interested in biotechnology, along with traditional breeding of course, but also about biotechnology when it comes to sustainability,” she said. “Lower input usage for farmers, lower input costs, is of interest for us.”

There is a precedent for production areas moving out of grain.

“It’s been a bit sobering to see what’s happened on oats,” she said. “I worked on oats issues. We had members in Nebraska and Iowa because they worked on oats. That’s no longer the case; they migrated northward.”

Waters has been in the job for a year, after 15 years out of the industry.

“What had happened in the intervening years is that the grain chain is working together,” she said. “We are working with the wheat growers and with the bakers and obviously with the millers in the middle. We are working on these issues hopefully to get it far enough out that we won’t reach crisis where we have a problem with the plants purchasing the wheat.”

The market has helped to focus attention. “Certainly the last couple of years of high prices have got a lot of interest in bakers and other people who may be a little bit more removed from the sourcing process,” she said. “That certainly kind of got everyone’s attention about how we do need more wheat acres. I am hoping that we do have a cooperative relationship in the grain chain.

“We’re trying to do more educational outreach, more policy outreach and just more preparation, so when the technology providers are ready to ask for approval for the products, we’ve done the educational outreach we need to do as an organization so that the regulators are ready for it and the consumers are ready for it.”


NAMA is also working, on behalf of corn millers in particular, on food aid. “Most of what our members do is wheat milling, probably 85 percent of our total production is wheat. But we do have members that mill corn, and corn/soy products are used in the food aid programs that are paid for by the federal government,” she said. “The House of Representatives passed a funding bill for that program that was much lower.

“We still see strong demand for food aid programs and the programs that use that corn and soy blend. So for our corn millers, we have been working on that issue a lot.”

The association also has a fight on its hands over the issue of the fumigants needed for plant sanitation. “The Montréal Protocol about 15 years ago started ratcheting down the use of methyl bromide,” she explained, “so we’ve been looking at alternatives to methyl bromide and one alternative is sulfuryl fluoride.

“The Environmental Protection Agency has come out with a proposal to revoke the food tolerance for that chemical because of concern that there may be overexposure to fluoride from other sources, not from the use of it in mills or anything the way we use it, but we’re sort of been swept up in this overall regulation on the use of sulfuryl fluoride. We had been making comments about that and about how it is necessary to keep alternatives, to keep tools for sanitation for our members because the major one that we use — methyl bromide — is being phased out.”

According to NAMA, flour mills have cut more than 90% of their methyl bromide usage from historical levels, switching where possible to sulfuryl fluoride and heat treatments along with a variety of integrated pest management approaches.

Nutrition policy has also been taking up a lot of NAMA’s time. “This was the year that they came out with the dietary guidelines, with recommendations of what Americans should eat and then they just came out with the graphic that goes with the guidelines, the MyPlate icon, which shows what varieties of food you should eat,” said Waters.

For an industry that reeled from the effects of fad diets on consumption, it’s a success.

“We’re very pleased that they continue to advocate six servings of grains a day along with the advice that half of those should be whole grains,” she said. “We continue to advocate both for the whole grains and enriched grains.”

One example of the industry’s cooperation which Mary Waters discussed was a joint statement which commended the U.S. Departments of Agriculture (USDA), Health and Human Services (HHS) and First Lady Michelle Obama for their work to develop the new healthy eating icon.

“The icon will be a critical tool in educating children, parents, and individuals in healthy and sensible eating,” read the statement issued jointly by NAMA with bakers, pasta makers and wheat industry groups. “With grains appropriately occupying a large portion on the dinner plate graphic, the agencies are making a strong statement regarding the importance of grains as the foundation of a healthy lifestyle. The average American should eat six servings of grain foods daily, at least half of those whole grains and the rest enriched grains, according to the U.S. Dietary Guidelines for Americans.

“We continue to hear from consumers that they are looking for simple, clear directives that are easy to follow. We believe the new icon, with its clear illustration of the portions and food groups comprising a healthy meal, will be very valuable in helping consumers integrate better nutrition choices into their daily eating habits.”

Flour has a long history as a healthy ingredient. “We are also celebrating a 70th year of enriched flour this year and we have a very strong record of disease reduction because of the nutrients that are being added, probably most dramatically folic acid, which came in 1998,” said Waters. “We have been talking a lot about that with policymakers.”

U.S. milling industry continues to consolidate
As in many developed countries, the U.S. flour milling industry has undergone consolidation in recent years as the number of wheat flour mills has decreased from nearly 240 in 1984 to less than 170 in 2011. However, during that same period of time, daily milling capacity has risen from 1.08 million cwts to 1.48 million cwts.

In terms of flour milling capacity, there are three dominant companies in the U.S. — ADM Milling Co., Horizon Milling, LLC (a division of Cargill) and ConAgra Flour Milling. In 2009, those three companies accounted for approximately 55% of the nation’s daily milling capacity, according to Sosland Publishing Co.’s Grain & Milling Annual.

Flour output by U.S. mills in 2010 aggregated 416,200,000 cwts, an increase of 0.4% over 414,658,000 in 2009. It was the fourth largest total on record, according to data from the U.S. Department of Commerce’s Bureau of the Census. The total still was down 5,072,000 cwts or 1.2%, from the record 421,270,000 in 2000.

Although a prolific flour producer, the U.S. is is not among the world’s top exporters. In June, the International Grains Council placed exports in 2010-11 at 450,000 tonnes of wheat equivalent, up 50,000 from March but 95,000 less than in the prior season and much less than the recent high of 931,000 tonnes in 2000-01.