IAOM takes show to Indonesia

by Michael King
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A wide range of exhibitors and some 200 delegates from around the world came together in Jakarta, Indonesia in November for the Sixth Annual Southeast Asia District Conference and Expo organized by the International Association of Operative Millers (IAOM).

Opening the conference, Raj Kumar Garg, part of the IAOM’s Southeast Asia Leadership Council, promised attendees they would hear updates on the latest innovations in flour milling technologies from global experts as well as meet the grain suppliers on whom their businesses depended.

“The latest technologies have culminated in more efficiency and more profitability for flour mills,” said Garg, adding that it was the job of millers to provide quality, nutritious products to the millions of people in Southeast Asia that consumed them.

Aerzen, which produces blowers, screw compressors, rotary piston compressors and rotary piston gas meters, said the solution to energy efficiency was the company’s Delta Hybrid product, which it claimed represented “a new concept for air compressor technology,” able to increase energy efficiency by up to 15%.

Vibronet introduced its own “revolutionary” grain tempering systems, IMECO’s Michele Giorgetti gave a detailed analysis of automatic flour bagging systems, and Grégory Vericel, product manager at Chopin Technologies, outlined the importance of dough rheology and flour functionality in quality control. Meanwhile, lead sponsors Bühler and Alapala explained, respectively, how millers could extend value chains of their flour products and take steps to improve mill maintenance and performance.

More was also learned about the latest market conditions from grain suppliers and the challenges facing millers in Southeast Asia, as well as the IAOM’s efforts to support and aid the sector through training, cooperation and education.

Brad Allen, IAOM vice-president, said his organization’s mission was to enhance the proficiency of members in the international grain milling industry by providing education forums that helped them improve efficiency. He also said IAOM was expanding its vocational training programs across the U.S. and worldwide for milling sector employees and that IAOM would target college and high school graduates to attract outstanding candidates to the milling industry to help address shortages.

Matthew Griffiths, senior wheat trader at leading Australian grain supplier and supply chain operator CBH, the largest co-operative in Australia, said that by early October at least, the El Niño effect predicted to affect Australian grain production had not so far had a major impact on forecasts for the 2015-16 season. Although three out of the last six El Niño events had significantly reduced wheat yields, good rains in July and August had left “over 60% of the crop in good condition,” although less rain was expected in the fourth quarter.

“Western Australia wheat production is pegged at 9 million tonnes, compared to a five-year average of 7.5 million tonnes,” he added. He said other regions also had healthy estimates for grain production this season, although some states such as Victoria needed more rain, while Queensland was suffering from drought. Griffiths forecast Australian wheat crop production would reach 24.2 million tonnes this season.

Bunge official discusses markets

However, while the highlight of this year’s conference was the Day 2 speech of Franciscus ‘Franky’ Welirang, the president of Bogasari and a director of sister company IndoFood (see page 48), a thought-provoking speech by William Syers, Bunge’s senior marketing manager for milling wheat, stole the show on Day 1 with his insight into global food supply challenges which he put into the context of recent pricing, demand and supply fluctuations.

Syers noted that grain prices had been in freefall in recent months, a trend complicated for Asian consumers by large currency fluctuations, mostly driven by the global economic slowdown.

“It’s a lower price environment than before,” he added. “We’ve not had weather this good for a long time so prices have come down as stocks are at a 10-year high.”

Syers contrasted the situation to 2008 when the grain market was characterized by record high food prices and expensive fuel and freight costs. “At the time this made many think, how are we going to feed the world?” he said. “Now we have had three years of bumper crops, we have storage problems due to a lack of space and farmers are potentially switching crops. We also have very low fuel and freight prices.

“So it is clear that the market works. The best cure for high prices is high prices.”

Syers also outlined the food supply challenges facing the world’s producers, with global consumption set to rise in the decades ahead, not least due to rising meat demand from Asia’s burgeoning middle class. “The problem people were panicking about in 2008 has not gone away and you have to think that a weather problem will happen eventually,” he explained. “We’ll still have a challenge as we move forward because populations are still growing and people are continuing to consume more.”

According to Syers, the food industry faces a number of key challenges, including land use and ownership. “We’re already using half the world’s land and not everywhere do farmers own their own land, where they do tend to grow more,” he said. “Water will also present a formidable challenge over how we use it. Storage and distribution in emerging markets is another tremendous challenge – a lot of what is grown never makes it to market.

“Also, we are using too much fertilizer. Two to three times the quantity of the world’s natural gas is used for fertilizer rather than for power. And waste is a major issue because we still have 850 million people in the world starving, but so much is still wasted.”

Explaining his views in more detail, he said food production based on livestock was less efficient than that based on grain.

“It’s simple. Beef feeds less people. One hectare of rice or wheat can feed 22 people a year,” he said. “The same land can only feed one to two people if used for lamb or beef production.

“A trend we’re seeing in emerging markets is that as people have more money in their pockets, they tend to consume more meat. This means how we use the land is going to be a challenge. The proportion of meat in emerging market consumption is increasing, so increased production becomes harder.

“This is a global issue, but the rise of the Asian middle class is a big driver of all this.”

He also said fresh water use was growing at twice the rate of population growth and much of the increase was used for agriculture.

“Fruits need relatively little water per 1 kg, but meat is water intensive at four times the level of producing crops. We’re eating more meat, so we’re not using the land as well, and we’re using a lot more water to produce meat. It’s not a good combination.

“Water demand per person is going up. Water demand will double or triple versus today by 2050. Water requirements to meet food demand will in 2050 reach 10 to 13.5 trillion cubic meters per year compared to 3.8 trillion currently.

“Global waste is also a massive issue. Thirty to fifty percent of all global food production is wasted before consumption. Most of this is due to wasteful behavior in society, a lack of infrastructure, and certain political and economic behavior. But if we can eliminate some of this waste, you can feed a lot more people.

“For example, 200 million could be fed with the waste from Europe, 300 million with the waste from Latin America. Waste in developed countries is higher than the total food consumption in Sub-Saharan Africa.”

Syers emphasized that improving storage and distribution systems could generate major improvements in food supply chain management and optimization. “In South Asia, losses of wheat due to inadequate storage and distribution are approximately equal of total Australian wheat production,” he said. “A huge quantity of rice is also lost post-production due to lack of infrastructure. In emerging Africa they can experience losses of 50% for stored maize.”

He concluded that annual production of grains would continue to respond to demand growth and prices. “We, the world’s population, need to change eating habits to deal with shortages of scarce resources,” he added. “We need to eat more grains and less meat. The weather will provide bumps in the road but annual grains production will continue to respond to demand growth. But we need to improve global storage and logistics to reduce losses. We also need to change eating habits to deal with scarce resources such as land and water.”

And he, told delegates, the milling industry had a leading role in improving the global food supply chain. “The milling industry is part of the storage and distribution system, so as well as educating customers, we’re also alerting millers to the challenges that are coming,” he said. “They need to look at how new technologies can make savings and improve efficiency, how different types of wheat can add value and make best use of scarce resources. They need to eliminate waste and make better use of water. But the over-riding message is: eat more wheat, eat less meat.”

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