Japan's flour market

by Teresa Acklin
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Flour output posts moderate growth in past 20 years.

   In a recent interview conducted in Tokyo, Osamu Shoda, president of Nisshin Flour Milling Co., Ltd., provided a current overview of flour milling in Japan. He pointed out that flour production in Japan had shown relatively modest growth in the past several decades, which he contrasted with the expansion in the U.S. flour market.

   In the year ended March 31, 1996, Japanese millers turned out 4,947,000 tonnes of flour, compared with 4,425,000 tonnes a decade earlier in 1985-86, 3,996,000 in 1975-76 and 2,997,000 in 1965-66. The Japanese output increase of 12% in the past decade and of 24% in the past 20 years contrasts with gains in U.S. flour production in the same periods of 22% and 45%, respectively.

   Japan's per capita flour consumption in the 1995-96 fiscal year was estimated at 32.5 kg, against 31.5 kg a decade ago and 31 kg 20 years ago. In the U.S., per capita consumption in 1996 was 67 kg, and the increase from the earlier years was much greater than in Japan.

   Prior to the 1970s, it was noted, Japan's flour milling industry was relatively static in the number of mills and in the number of companies. But a fundamental restructuring has occurred over the past several decades, with the number of milling companies dropping from 434 in 1965 to 137 in 1997 and the number of flour mills falling from 480 in 1965 to 174 at the end of the 1996-97 fiscal year.

   According to data from the Japanese Food Agency, Japan's flour milling industry in 1995-96 had annual wheat grind capacity of 9,862,000 tonnes, almost identical to the total of 10 years earlier and little different from 9,342,000 in 1965-66. Mills actually ground 6,229,000 tonnes of wheat in 1995-96, indicating an operating rate of 63.2% of capacity, compared with 60.9% in 1985-86 and only 45.2% in 1965-66.

   The Nisshin executives indicated that the major flour milling companies in Japan tended to operate at full capacity, which means 24-hour runs for 300 days in a year. With Nisshin accounting for 35% of the industry's production and the four leading milling companies accounting for just about 66%, the operating rate available to the other millers is very low indeed. Thus, it's no surprise that 20 milling companies went out of business in the past decade.