World Grain News

by Teresa Acklin
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Fischler warns of need to raise E.U. set-aside to avoid surplus

   BRUSSELS, BELGIUM — Franz Fischler, commissioner of agriculture in the European Commission, recently warned that grain farmers in the European Union face the prospect of a sharp increase in area set-aside to prevent a build-up of grain stocks. He did not disagree with estimates that the area set-aside might need to be raised to as high as 22% in the next several years to avoid a costly expansion of surpluses.

   “My objective is to ensure that new grain mountains are not formed,” Mr. Fischler said, acknowledging that he and some of his associates were concerned that the situation of the mid-1980s and early 1990s, when stocks expanded rapidly, could recur. “We need fresh decisions on the size of set-aside rates for the next marketing year.”

   He pointed out that intervention stocks of wheat and other cereal grains had dropped from a peak of 33 million tonnes at the close of the 1992-93 season to a total of 5.3 million at the start of the current crop season. In the same period, the set-aside has been reduced to 5% for 1997 from a starting level of 20% in 1993.

   Mr. Fischler cited the rapid rise in E.U. grain production in the past several years as cause for concern. Production has advanced by about 25% in each of the past two years to 202 million tonnes in 1996-97, up 27 million from the prior year. Compounding the E.U.'s problems are the Uruguay Round accords under the General Agreement on Tariffs and Trade, which allow the Community to grant export restitutions on only 30 million tonnes of grain a year. More than that would have to be exported in order to restrain stocks in response to current production levels.

   Predictions were heard in Europe that Mr. Fischler intended to point to these concerns to persuade agricultural ministers not just of the need for increasing the set-aside, but also to approve steps aimed at further reforms of the Common Agricultural Policy. He told reporters that the positive effects of the 1992 reforms, which included the set-aside authority, will have “bottomed out” by the end of the 20th century.

Soufflet opens office in U.S.

   NOGENT-SUR-SEINE, FRANCE — Groupe Soufflet has opened an office in the United States that will handle grain origination and export operations of North American grain. Soufflet U.S.A. Inc., headquartered in Minneapolis, Minnesota, is a wholly owned subsidiary of Soufflet Negoce, which is responsible for the company's worldwide trade in food and feed grains and oilseeds. Todd A. Ringhouse, formerly with Cargill, Inc., is the general manager of Soufflet's U.S. office.

Outbreak of foot and mouth disease devastates Taiwan's swine industry

   TAIPEI, TAIWAN — An outbreak of foot and mouth disease on some Taiwanese hog farms has wreaked havoc with the country's swine industry and has created uncertainty in the feed industry.

   Government officials in late March announced the discovery of the disease in about 400,000 hogs on 350 farms. After much debate, authorities decided to implement a program to kill all hogs on contaminated farms, vaccinate herds on non-contaminated farms and ban pork exports. Under the plan, farmers would be compensated at the rate of 60% of the hogs' pre-outbreak market value.

   Some 15% to 20% of the country's 10 million hogs were expected to be slaughtered under the program. It was hoped that by mid-May, sufficient doses of vaccine could be imported and administered to prevent the spread of the disease to the remaining herd and to save enough of the industry to meet domestic pork needs.

   Taiwan's feed industry was expected to lose up to 30% of the swine feed market, although anticipated increased in poultry and fishery production could offset some of the lost swine market. In 1996, Taiwan's swine sector consumed about 4.2 million tonnes of finished feed, the equivalent of 2.7 million tonnes of grain.

   The disease is expected to cut Taiwan's 1997 maize import needs to about 5 million tonnes, down 16% from the 1996 import level. Reports also indicated Taiwan's oilseed crushers were delaying soybean imports as feed demand plummeted.

   Coarse grain and feed ingredient imports in 1998 also could remain supressed, as the time that will be required to rebuild herds — and export markets — is uncertain. Indeed, some observers feared that Taiwan's swine industry might be crippled permanently by the outbreak.

   Taiwan's Ministry of Economic Affairs estimated the costs from the slaughter of all infected hogs could reach U.S.$2.9 billion, with a loss of nearly 700,000 jobs nationwide and a 1.2% decline in economic growth.

Paul Fribourg named c.e.o of Continental Grain

   NEW YORK — Paul J. Fribourg, president and chief operating officer of Continental Grain Co., has been elected chief executive officer, the company announced in early April. Mr. Fribourg will become chairman of the board on July 1.

   The sixth consecutive generation of the Fribourg family to actively manage the 184-year-old company, Mr. Fribourg succeeds Donald L. Staheli, chairman and c.e.o., who retired on March 31. Mr. Staheli will remain as chairman until June 30 and will continue to serve on the board of Continental Grain and ContiFinancial Corp., a subsidiary.

   Continental Grain also announced that James J. Bigham ahd been elected to the newly created position of vice-chairman. He will continue as chief financial officer.

Bunge acquires equity in major Mexico flour milling operation

   ST. LOUIS, MISSOURI, U.S. — Bunge Corp. has acquired an equity position in La Espiga S.A. de C.V., one of Mexico's largest flour milling operations, Bunge and La Espiga officials announced in early April.

   La Espiga currently operates two flour mills in Mexico City. The larger of the two, in Industrial Vallejo, has a daily capacity of 700 tonnes, making it the largest mill in Mexico City and the third largest in the country. Bunge officials said the mill was among the most modern in Mexico, with a state-of-the-art Buhler milling system.

   La Espiga has been owned and managed by two generations of the Gil family and is currently managed by Ignacio Gil Sanchez, general manager, and his brother, Antonio Gil Sanchez, operations manager. Bunge president John E. Klein said the relationship with the Gils and the mill's capabilities were important factors in the venture.

   "The Gils have an excellent knowledge of milling and local markets, as well as good understanding of both U.S. and Mexican customs and business practices," Mr. Klein said.

Nowakowski named president of ConAgra Four Milling

   OMAHA, NEBRASKA, U.S. — Darek M. Nowakowski has been named president of ConAgra Flour Milling Co. He previously was president of Maple Leaf Mills, Inc., the Canadian company formerly owned by Maple Leaf Foods, Inc. and ConAgra.

   Before joining Maple Leaf Mills, Mr. Nowakowski was vice-president and general manager of Janes Family Foods, Ltd. and held several management positions with International Multifoods' Robin Hood products division. He has a master's degree in food science from the University of Saskatchewan, Canada, and bachelor's in agriculture and a master's in animal science from the University of Krakow, Poland.

   ConAgra Flour Milling is the second-largest milling company in the United States, with a total daily capacity in excess of 12,000 tonnes in terms of flour.

Goodman Flelder sells European flour unit, buys Deflance Food

   SYDNEY, AUSTRALIA — Goodman Fielder, the largest flour miller and bread baker in Australia and New Zealand, has sold Meneba B.V., its European flour milling business, to venture capital group C.V.C. Capital Partners B.V. for about U.S.$235.3 million. Goodman Fielder acquired Meneba in 1989, with its European market share estimated at 12% by The Financial Times of London.

   The March 7 announcement by Goodman Fielder came on the same day it disclosed an agreement to acquire Defiance Food Industries in Christchurch, New Zealand, from Defiance Mills Ltd. for about U.S.$33.6 million.

   Goodman Fielder's acquisition of Defiance Food is conditional on approval by New Zealand's Commerce Commission and the Overseas Investment Commission. Defiance Food is the second-largest flour miller and third-largest bread baker in New Zealand. Together with Goodman Fielder and Allied Mills, the three companies are believed to have up to 85% of the New Zealand milling market. Tom O'Brien, chairman of Defiance Mills, was quoted in news reports as saying the three major owners had experienced 10 years of difficult trading in a competitive New Zealand market. In another media report, Mr. O'Brien said that the sale of its subsidiary to Goodman Fielder would net the company about U.S.$10 million and that there was nothing “now to prohibit the company from going operational in Asia.” He said that the company had sales offices in Asia and that there previously had been opportunities for joint ventures for both milling and baked foods with prominent Asian players.

Flour Mill '97 conference set for June in Moscow

   MOSCOW — Flour Mill '97, the second international conference on the Russian flour milling industry, has been scheduled for June 2-6. The conference will focus on the current status of all aspects of Russia's milling and crop production sectors as well as prospects for development.

   Additional information may be obtained by contacting Dr. Vladimir Dashevsky, Institute of Grain & Food Processing Industries, 20, Pervyl Shchipovsky per., Moscow, 113093 Russia, Tel: 7-095-237-6161, Fax: 7-095-235-9739; or Dr. Helmut Glattes, I.C.C., A-2320 Schwechat/Vienna, P.O. Box 77, Wienerstrasse 22a, Austria, Tel: 43-1-707-7202, Fax: 43-1-707-7204.

U.S. officials initiate investigation of E.U. starch subsidies

   WASHINGTON, D.C., U.S. — The U.S. Trade Representative has initiated an investigation of European Union starch subsidy programs, but has declined at this time to include E.U. gluten exports to the U.S. in the study.

   The U.S. Wheat Gluten Industry Council in January petitioned the Trade Representative's office for a study of alleged unfair trade practices and trade agreement violations involving E.U. starch and gluten exports, and Trade Representative Charlene Barshefsky agreed in March to investigate under Section 301 of the U.S. Trade Act of 1974. Under that section, if the investigation results in a finding of unfair trade practices or violations, the U.S. President must take action, including retaliation, to obtain the removal of the practices or violations.

   “I am very concerned about the difficulties that U.S. wheat gluten and starch producers are facing,” Ms. Barshefsky said in announcing the action in March.

   Ms. Barshefsky said the investigation would determine whether subsidies granted under the E.U. starch production program “are causing or threatening to cause serious prejudice to U.S. interests with respect to U.S. exports of modified starch to the E.U., or are nullifying or impairing benefits accruing to the United States under World Trade Organization agreements.”

   Regarding the allegations of subsidized exports of E.U. wheat gluten into the United States, Ms. Barshefsky invited the U.S. wheat gluten group to consider seeking additional information through procedures under the U.S. Trade Act. She said her office was prepared to continue working with the petitioners “in the development of information and analysis which may form the basis for further action.”

   Noting that other U.S. trade laws are designed specifically to address the problems of unfairly traded imports into the U.S. market, Ambassador Barshefsky said the Wheat Gluten Industry Council also might wish to more fully explore these options.

   Ms. Barshefsky said she would continue to pursue consultations with the E.U. regarding its wheat gluten exports to the United States, pursuant to a bilateral agreement on grains signed last July.

New mill to be built in California

   LOS ANGELES, CALIFORNIA, U.S. — a new U.S. mill operating under the name of Capitol Milling Co. is scheduled for construction in Colton, California, and is expected to begin operation in mid-1998, according to Douglas L. Levi, president and chief executive officer of the existing Capitol Milling Co.

   The oldest milling company in Los Angeles, Capitol Milling has been in operation for more than 100 years under the management of the Loew and Levi families. Mr. Levi said the existing company would become a holding company for its interests in the new mill when it opens.

   The new company is being formed by Mr. Levi and Kevin Kruse, president of Kruse Investment Co., Inc., Ontario, California. Also heading the new operation will be Christian F. Konsgore, president of Grain Millers, Inc., Bellevue, Washington, U.S., who is scheduled to retire from his company.

   The mill, which will have a daily capacity of about 450 tonnes in terms of flour, will produce specialty and commercial white flour and will be built on an 4.4-hectare site that currently has a 13,600-tonne elevator. Ocrim S.p.A., Cremona, Italy, and Minneapolis, Minnesota, U.S., will supply the machinery, Mr. Levi said.

Asian grain conference set for June 26-27 in Singapore

   SINGAPORE — Grain transportation challenges in Asia will be the theme of the Asia Grain Markets 1997 conference scheduled for June 26-27. Program highlights include the outlook for Asian grain supply/demand, market activities in Asia and infrastructure and transportation developments. The conference is the second organized in Singapore to recognize the strategic and economic importance of Asia.

   Additional information is available by contacting IBC Asia Ltd., 268 Orchard Rd., #18-02, Singapore 238856. Tel: 65-732-1970. Fax: 65-733-5087 or 736-4312.

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