IAOM hosts event in Southeast Asia

by Michael King
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Bali, known as the Island of the Gods for its 20,000 temples and also now one of Asia’s culinary capitals, was a suitably rich cultural setting for some of the world’s foremost grain and miller executives to hear about the rapidly evolving dietary wants of Southeast Asia’s growing, and increasingly wealthy, population.
 
That was one of a number of key messages heard by delegates attending the Second Annual Southeast Asia District Conference and Expo hosted by the International Association of Operative Millers (IAOM).
 
While the U.S. and European economies have been floundering, Southeast Asia has been flourishing. Indonesia, Thailand, Malaysia, Philippines and Vietnam - known as the Asean 5 - posted real GDP growth of 6.9% last year. The International Monetary Fund projects further growth, by 5.3% this year and 5.6% in 2012.
 
“Southeast Asia has a huge population,” said Melinda Farris, IAOM executive vice-president. “Rice is the main staple, but wheat flour has continued to grow in popularity. Consumption rates are going up as the middle class grows and diets change. People are better off financially and they are buying different foods.”
 
This year’s Southeast Asia IAOM Expo, held in the Grand Hyatt Bali, attracted a “who’s who” of exhibitors unveiling the latest products and services available to the milling and grains industry. Some 180 delegates attended, representing a 50% increase compared to the 120 delegates present at the inaugural conference and expo held last year in Phuket, Thailand.
 
Farris said the IAOM had been taken aback by the surge in interest in the event. “It’s amazing that we’ve grown so quickly in just our second year,” she explained. “We’ve had very positive feedback about the event and about Bali. We had one delegate who was attending his first IAOM event, and he said how wonderful it was that the presentations had provoked so many different thoughts and ideas that he could apply at his own mill. He also said it had been great to meet other millers and talk to them.
 
“Overall it has been a pretty positive experience, and we are always the ones who hear first when there is anything negative to report.”
 
During the IAOM’s district meeting, an executive committee was formed to develop the educational program for the third annual meeting in Southeast Asia, which is scheduled for the fall of 2012.
 
“We’re encouraged by the increase in numbers at this year’s conference,” said IAOM President Joe Woodard. “The potential for a very active and robust Southeast Asia District is great.”
 
Further growth in attendance could see next year’s exhibition take place in a larger venue. “A resort might not be suitable,” said Farris. “Exhibitors are keen to bring their machinery, so a convention center might be more suitable.
 
“We haven’t confirmed a date and location for next year, but we will do soon. It depends what is available and when we decide to meet.”
 
Delegates arrived in Bali from across Southeast Asia as well as from India, Japan, Bangladesh, Hong Kong and Taiwan. Australia was also well represented with speakers from leading exporters and infrastructure operators including CBH and GrainCorp.
 
“Now, more than ever, it’s important to have meetings like these to bring millers together to discuss technical advancements in the industry, as well as opportunities for operating more efficiently in the mill,” said Woodard.
 
Educational program
 
The two-day conference featured educational presentations that ranged from flour correction through additives to fast grain analysis at receiving points, and reports on equipment modifications and upgrades to food safety and pest control practices.
 
A tabletop expo included some of the industry’s leading equipment manufacturers and service suppliers. During the breaks and unopposed expo, exhibitors told World Grain there had been much interest in their products.
 
“It has been good, yes. Southeast Asia is a growing market for equipment, so this is a good expo for us. We’ve already had many sales in the region,” said Jack Fox, head of international sales at handling giant Neuero, which has been supplying loaders and unloaders to Southeast Asia for more than 20 years.
 
Last year Neuero supplied a unit to Cebu City in the Philippines for Pilmico Food Corporation. The pneumatic ship unloader mounted on rubber wheels was rated at 300 tph and was designed for handling grain. This year the company delivered another machine to Cebu City, in this case a grain unloader rated at 600-tph capacity for deployment by Asian Grains Corporation.
 
Indonesia itself is home to Bogasari, which boasts the largest single integrated flour milling installation of its type anywhere in the world. The company is also the largest pasta producer in Southeast Asia with supplies exported as far as South Korea and Japan. As well as its own textile plant which produces polyprophelene bags used for flour shipments, Bogasari operates its own fleet of bulk carriers which are used to import wheat from both the southern and northern hemisphere.
 
The changing nature of grain markets was prominent in the presentation given by William Syers, marketing manager – milling wheat, in Bunge’s Agribusiness Singapore division.
 
He said grain market price volatility evident in the last five years was here to stay, primarily because the huge influx of investment into grain markets had made it more susceptible to external variables.
 
“This is causing a total transformation of our market,” he said. “From 2002 to 2006, trading was in the 150-cent range. Since then it has been across a 900-cent range.”
 
Rather than simply look at supply and demand, weather and other factors directly related to grain production and consumption, he explained that crude oil and ethanol markets could now produce market swings, as could mainstream financial markets, illustrated by recent fluctuations due to the European debt crisis. Minor changes in these external factors could see large amounts of money leave the market or be attracted to it as investors staked out positions.
 
In effect, people were “investing or betting on the market... taking a speculative position, not investing in grain.”
 
Illustrating his point, he said that in recent months the E.U. debt crisis had seen people lose their appetite for risk and depart the market. Also this year, the USDA finding extra corn when everybody had assumed corn would be tight had had a similar impact.
 
“If Bloomberg says the Euro debt crisis is getting worse, then the price of wheat falls because so does the appetite for risk,” he said.
 
Leith Teakle, regional manager for Southeast Asia at Australian grower co-operative CBH, a trader and Western Australia infrastructure provider, said wheat growers needed the rains of late October and early November to stop. “At the moment (the rains) are just watering the protein down, but if it continues it could deteriorate like last year.”
 
Depending on the rains, an anticipated near-record wheat crop in 2011-12 could see Australia’s seaborne exports surge to a record of 20 to 21 million tonnes, up from 18.65 million tonnes in 2010-11. Leakle said Australian Premium White would constitute almost half of production.
 
He also said that CBH’s open access storage system now had capacity for 20 million tonnes and could handle segregate grains according to quality, with up to 40 grades possible and storage available upcountry for as long as a year.
 
Mostly rail, but also truck, is used to move grain from across Western Australia to the four ports operated by CBH.
 
“We use 3,000 kilometers of rail owned by government, and we recently invested A$170 million to buy locomotives and wagons which should be operational in May 2012,” he said. “Rail is the most efficient transport, but we also use trucking companies which we contract in. All four ports can take panamax vessels, with the port of Kwinana able to load ships at up to 5,000 tonnes per hour and the others offering rates over 2,000 tonnes per hour.
 
“All bulk grain exports from Western Australia go though the four ports, and we can load 1.5 million tonnes per month across the four terminals, which means we’ll be busy this year.”
 
But despite the success of Australia’s wheat exporters, more could be done to access growing Asian markets, according to a study by Grain Growers, a not-for-profit organization that represents over 17,000 Australian growers.
 
Extensive research and interviews with flour and stock/feed manufacturers in Australia and flour millers around the world were used to compile “What The World Wants From Australian Wheat,” Dr. Ken Quail told delegates.
 
Among the findings were that Australian wheat’s white seed coat was preferred when milling flour for Asian noodles, steamed breads, dumplings and flatbreads. Its color and texture were also prized in the making of traditional Asia foods, while the low moisture content of Australian wheat also enabled safer storage.
 
However, concerns raised included consistency of delivery, screening standards and a lack of information regarding crops and grade specifications. Asian bread manufacturers were also found to favor North American wheat in bread production, while the standard of wheat exported in containers from Australia could be highly variable and was threatening the overall reputation of the wheat sector.
 
“We need to work much harder to main standards,” said Dr. Quail, who said Australian wheat needed to be developed as a brand that buyers could trust.

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