Milling in the Americas
June 19, 2006
by Meyer Sosland
A regular supply of topquality wheat, an excellent transportation network and highly-efficient facilities keep the American milling industry moving forward
by Jonathan Bradshaw
Editor’s note: This is the third in a series of five articles that describes the different approaches to investment in milling technology in the various environments around the world, the varying application of technology, and the skills base of those who operate mills in these often complex and diverse environments.
This, the third article in the series, examines milling in the Americas. In this case, the Americas will be defined as the U.S., Canada, Central America, South America and the Caribbean.
This vast area has one common attribute — a regular supply of top-quality wheat — that makes it unique from other parts of the world , with the possible exception of Australia.
The Americas — much like Australasia — also have unique distribution facilities with waterways and excellent road and rail networks throughout their vast area. They have excellent growing conditions, fertile land and a tradition of arable farming stretching back to the early settlers.
NORTH AMERICA The milling industry in North America has shifted from being primarily family-owned to having the majority of the country’s flour production occurring in mills owned by large corporations such as Archer Daniels Midland Co. (ADM) and Cargill.
There are a number of older mills operating in North America, although new mills are starting to be constructed with greater frequency. Some of the older mills have been around for decades and the longevity of these facilities is a tribute to those who look after and maintain them.
In terms of finances, these mills were written off decades ago and will never be replaced, of course, since the economics of replacing such museum pieces is never going to be justified. They are, nevertheless, still an integral part of the rich fabric that makes up today’s American milling.
On the other end of the spectrum, there are fully automated, lights-out mills that are fed from railheads coming in off the prairies. They are some of the most efficient in the world in terms of return on capital employed. When a new mill is constructed, it is typically built to last and incorporates proven technology. The owners do not skimp on the quality of engineering, either.
Within the last two years, Mennel Milling opened a new mill in Bucyrus, Ohio, U.S. and Rogers Foods Ltd. constructed a new mill in Chilliwack, B.C., Canada. Mennel is also planning a new mill in Roanoke, Virginia, U.S. Other companies, such as King Milling Co., Lowell, Michigan, U.S., have spent millions on equipment upgrades and capacity expansions during the last couple of years.
Generally, American milling engineers believe in heavy engineering that is built to last rather than producing stateof-the-art, light-weight, high-tech machinery. That being said, the application of automation techniques has taken much of the back-breaking work out of milling. Even the oldest mills incorporate some degree of sophisticated control gear.
New consumer goods may require a quick injection of capital into a milling unit in order to get a product to market. But once the process is fully developed, sound engineering principles are applied and the machinery that is purchased is typically sturdy and reliable.
Millers in this region have access to excellent training opportunities. Kansas State University in Manhattan, Kansas, U.S. is a well-respected institution where many students have been taught the art and science of milling. Not many countries or continents can boast such an institution.
It is a credit to the North Americans that they have preserved the cereal milling industry as a healthy part of their economy. In some other parts of the world, new entrants to the industry are scarce and job numbers have fallen away.
SOUTH AMERICAIn the southern hemisphere, there are some very large mills that were built in the 1950s through to the late 1980s to make quality flour from the wheat grown on the vast expanses of perfect cereal-growing land. Proud families spared no expense in building their mills. One could almost call them edifices, with smart external appearances, marble halls and tiled floors.
In the heyday of mill engineering, when line shafts and multiple roller mill floors were to be marveled at, the South Americans built on a grand scale. They could afford to, since there was nobody to compete with them geographically. Communications and transportation were slow and ponderous. The rail network was only just becoming a serious means of transporting manufactured goods and the roadway network was nowhere near what it is today.
Fiercely patriotic, most South American bakers were very loyal — and still are today — to their local miller. This degree of cooperation has been of tremendous benefit during recent years, when they have jointly applied technology that benefits both industries.
There has been a great deal of amalgamation between millers and bakers, pasta manufacturers and semolina millers and cookie manufacturers and soft wheat millers. This has led to the emergence of some sizeable group milling companies. National milling companies are starting to emerge that have strong infrastructure within their organizations and are able to utilize this when presenting national brands of flour and buying wheat to their own specification.
The mills along the South American west coast — Ecuador, Peru and Chile — are also blessed with being able to import wheat in times of poor harvest, although the quality of the routes to and from the eastern part of the continent means they generally confine sales activities to their own immediate vicinity.
CENTRAL AMERICA/CARIBBEAN Mills in Central America and the Caribbean are mostly small and struggle with international politics and free trade agreements to survive. Several factors are working against them, including their small populations, almost exclusive reliance on imported wheat and the proliferation of frozen baked goods moving down through the islands to serve the tourist trade.
It really is a credit to mill management that they survive. Many have been taken over, in part, by larger companies that have the supply chain well organized and can provide the technical services that each of the small island mills need. I refer here mainly to the islands to the east of the Caribbean basin, the Leeward and Windward islands, the French and Dutch West Indies and the Englishspeaking Caribbean.
The other major islands to the north — Puerto Rico, Jamaica, Cuba and Haiti — all have sizeable operations that can stand alone. But because of trade embargoes, Cuba has struggled for many years with a lack of resources. While most of the machinery in Cuban mills is relatively small and of Soviet origin, there are some signs of technical advancement, but it is slow.
CAUTIOUS APPROACH While European millers are often "quick-to-react" to new technology and spend money quite readily on a theory, most milling companies in the Americas need to see a financial benefit before they will pick up and run with it.
Only proven ideas are put into practice, as reliable machinery is always the first choice and often the last choice as well. The American-based companies that supply this sturdy equipment and other services to the milling industry are still mostly family owned and operated — and run very well, I might add.
When comparing the demographics of the Americas with those of Europe, the physical distance between competing mills in the Americas is much greater than in Europe. Trade disputes between millers close enough to compete were settled many years ago, resulting in mills being very nicely situated to serve their bakery customers. In turn, the bakeries are well situated to serve the local population, which is usually growing or stable unless a major industry such as textiles or mining closes.
Such stability is envied in many other parts of the world. While there is some change taking place in South America, where the population is becoming more mobile, the vast distances involved in moving wheat and flour mean that there is not likely to be major change in the milling industry in either North America or South America.
Jonathan Bradshaw is a consultant to the agribusiness and food processing industries, specializing in project management and bespoke training programs through his company, J B Bradshaw Ltd. He has extensive experience in flour and feed milling in Africa, the Americas, Europe and the Caribbean. He may be contacted at: email@example.com.