Cereal Industries chairman predicts growth in some grain, food sectors

by Teresa Acklin
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   Since its formation in 1988, Cereal Industries Limited has evolved into an enterprise with an annual turnover of more than U.K.£1 billion. Consolidating the agricultural, grain trading and milling operations of Associated British Foods, Cereal Industries has maintained a strong position in U.K. agricultural and related food markets and has expanded its presence in export markets. So where does Cereal Industries go from here?

   Through its four principal companies covering a range of grain-based businesses, Cereal Industries is particularly well positioned to recognize areas of potential growth. Ralph Richard, Cereal Industries chairman, predicts continued expansion in the export of grain and grain-based retail products. The companies within Cereal Industries currently export to all corners of the globe, Mr. Richard said. Cereal Industries' profits in its export activities continue to improve, he said, and more growth is expected.

   Allied Mills exports specialty flours and premixes throughout Europe and the Middle East, and Westmill Foods is involved in supplying rice, flour and breakfast cereals to retail and catering markets in Europe. In grain, Allied Grain and the Fishers Group companies export more than 10% of the exportable surplus of U.K. grain, Mr. Richard said. These exports include oilseeds to Japan and Canada, malting barley to Belgium and feed wheat to South Korea and Russia.

   In keeping with its strategy of vertical integration, Cereal Industries also expects to concentrate on its grain origination activities, Mr. Richard said. As European agricultural reforms and international trade liberalizations evolve, grain origination will become increasingly important to procure raw materials of acceptable quality. One market sector likely to remain relatively static in the U.K. and Europe for the foreseeable future is flour milling, Mr. Richard said, adding that traditional flour and baking markets are mature. He said this maturity in one of Cereal Industries' core markets created even greater incentives to focus on opportunities in other value-added cereal markets.

   Mr. Richard said seizing market opportunities was only one of several issues for the future. Another focus will be to perpetuate the high standards and skill levels attained by Allied Mills' millers, he said. The skills of Allied Mills' millers and the heavy investment in automated, high technology flour milling have combined to reduce wheat import needs, Mr. Richard noted. The use of up to 85% of U.K. wheat each year has contributed significantly to the U.K.'s balance of payments and is a testament to the millers' skills, he said. Environmental issues already have affected the grain and food industries and will remain a challenge, Mr. Richard said. Although environmental pressures are more likely to affect wet processing than flour milling, he said, these issues may well provoke controversies for all grain industry segments.