While it’s probably only a coincidence that this year’s technical conference and trade show of the Association of Operative Millers is being held in the city where the marvelous radio tales from Lake Wobegon originate, that location has a definite relationship to the current state of flour milling. Millers gathering for this, the 106th conference in the A.O.M.’s long and distinguished history, cannot help but reflect the difficult times that their companies, especially in the United States and Europe, experienced in the past year. Yet, conditions in milling appear to be improving, at least to the point where the injunction that prompted the American radio show’s host Garrison Keillor to select "woe be gone" as the home town of his program, "A Prairie Home Companion," ought also come into the mind-set of millers.
It would be injudicious to assess ahead of a conference the attitudes that will prevail among the grain millers and their suppliers who will be in St. Paul. But it probably won’t be far off the mark to say that a great deal of caution will rule. Industry gatherings, like GEAPS held a few weeks earlier, reflect a high level of caution, particularly when it comes to large-scale capital projects, but also in looking at equipment and systems that offer measurable savings and at lower cost than might have ruled a short time ago.
Yet, there’s every reason to hope that the flour and other grain millers at this year’s A.O.M. will have sensed a slightly different attitude at their companies. Coming off a year and a half when conditions in U.S. milling were as difficult as any of the past half century, with average running time falling to a 30-year low and more milling capacity shut down than in a considerable period, not only is there the attitude that the bottom has been reached, but that conditions may be on the advance. In Europe, where the industry in several countries has been severely impacted by a drastic contraction in export flour business, hopes for a period of stability are high, even though most prognosticators are far from optimistic about maintaining the current export pace, much less reversing the downward trend of the past several years.
The willingness of millers to invest in new plants and new equipment — a question that rules over a conference like the A.O.M.’s — is historically driven by the relationship of capacity to prospective demand, and the latter means demand in the near-term. So far as the North American industry is concerned, export flour business has fallen to less than 3% of annual production, and thus, is much less of a factor in equipment-related decisions than it might have been at other times in the past century. Domestic demand in the United States, Canada and Mexico has lost some of the buoyancy experienced in the 1990s, but consumer trends in all three countries — growing concern about nutrition and healthy diets, recognition of the important role of fiber, and product innovation — are positive enough to indicate that consumption will rise, at least in line with population growth, and more likely at a premium pace, as it did in the 1980s and 1990s.
Spending decisions that relate only to a belief in market growth seem to imply that major outlays in milling ought only to be done when accompanied by capacity increases. This is an attitude that has ruled in U.S. milling for too long. Instead of believing that such investments may be recovered only by parallel capacity increases, attention needs to be given to the possibility of unit efficiencies that will assure an adequate return. In the current environment, increasing capacity usually causes a downward spiral in milling margins.
If millers at St. Paul will let their "woes be gone" and will look for ways of boosting their efficiency, participation in the St. Paul conference will prove rewarding beyond all expectations. It’s even a good possibility that this A.O.M. conference could help signal a new and better time for flour milling.
Morton I. Sosland