Flour trade as global intelligence source

by Morton Sosland
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In light of the massive quantity of intelligence data gathered daily, it might seem a stretch to cite a source as ordinary as export flour trade as a good way of learning what’s going on around the world. Sure, for millers and flour users, as well as keen observers of markets, export statistics provided periodically by the International Grains Council reflect the same supply-demand characteristics that influence wheat prices. Yet, in certain ways, export flour statistics reveal much more because milling is an excellent measure of how a nation’s people are being fed. Milling requires capital spending decisions, especially in countries where choices are being made between satisfying peoples’ desires for food and devoting resources to other purposes. This means that countries allocating funding to maintain and build domestic milling along with exporting are making decisions different from others. The same, in a negative way, may be said about countries that are expanding imports of flour.

Saying this about the centrality of wheat flour is relatively new, reflecting a considerable change in politics and economics. In the first four decades following World War II, the leading flour exporting nation was the United States, initially, and then the European Union. The see-saw relationship between these two mainly stemmed from competition focused on building export markets as a way of bolstering domestic milling and wheat farming. As soon as priorities evolved that no longer had agriculture as the centerpiece, the U.S. first, and more recently the E.U., abandoned programs to support milling, mainly by subsidizing exports.

Near abandonment of flour exporting by these two powers created one of the great global trade vacuums of recent memory. Looking back a quarter of a century, it is likely that no one could have foreseen what countries in the first decade of the 21st century would emerge as flour export leaders. That the principal flour exporters, together accounting for one-third to 40% of total annual trade, would be Kazakhstan and Turkey is hard to believe even when it has been the case from this century’s start. Turkey did not emerge as a force of any size in flour exporting until the 1990s, and Kazakhstan, which had been part of the Former Soviet Union, was not even counted as a separate flour shipper until the current century. The eminence these nations have gained in flour may be credited to forces like proximity. Yet, there’s also no question but that their governments have seized upon being a flour supplier as valuable to building relations. Thus, in the past year, Turkey’s aggressive export pricing built new ties to Asia.

Hardly any flour trade change seems more significant than the emergence of Afghanistan as the largest flour importer.

This Asian nation, the focus of NATO forces led by the U.S. military and the breeding ground of terrorists, imported 1,750,000 tonnes in 2009-10. This was 13% of flour trade, putting it far in the lead as the major destination. Afghanistan was not a significant importer of wheat flour until 2002, and its gaining such standing reflects the effort to assure its people appreciate how NATO wants to assure an adequate supply of bread. Iraq, which continues to rank among the leading flour importers, is another nation where supplying flour has become an essential political tool.

That 2009-10 marked the third straight year of a record being set by world flour exports stems in large part from the role that flour plays in these difficult political and economic situations. Concluding from the evolution of flour exporting thus far in the 21st century that conflict resolution and even global peace threaten the future of flour exporting is much like the assertions of several decades ago that milling expansion around the world would sharply curtail exporting. Recent experience with trade records affirms that global flour exporting has significant vitality, assuredly due in large part to expanding demand for flour-based foods.