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Photo by Dan Flavin.
His love for those industries was on display in April when Mühlenchemie, part of Stern-Wywiol Gruppe, in cooperation with the International Association for Cereal Science and Technology, hosted the Global Miller’s Symposium in Hamburg, Germany. Nearly 350 people from 54 countries attended the two-day event, which featured 28 speakers and an upscale banquet.
Wywiol said the event gives Mühlenchemie the opportunity to show its appreciation for the milling industry.
“It is very important to us to show our customers that we have a lot of knowledge and we like to share that knowledge with our customers,” Wywiol said.
The sessions focused on a wide range of issues, including the latest information on global wheat markets, flour fortification, and wheat and flour quality.
Emerging wheat markets
Vito Martielli, grain and oilseeds analyst for Rabobank, said wheat production will drop in 2017-18, partly due to a 7.5% decrease in wheat acreage in the United States, while growth in consumption is expected to slow. This combination should lead to a gradual increase in wheat prices, he said.
“An increase in production in the E.U. and Argentina can’t offset production cuts in other regions of the world,” Martielli said.
He said “normalized” production from key exporters will result in 22 million fewer tonnes of wheat, a 6% decline from the previous year.
From a consumption standpoint, Martielli said Sub-Saharan Africa and Southeast Asia are poised to become major importers over the next five years. He said Sub-Saharan Africa is expected to surge past North Africa in terms of wheat imports, while Southeast Asia’s wheat consumption is expected to increase by 4.5% per year over the next four years due to rising incomes in that region as well as soaring demand for instant noodles.
The emerging player in the wheat export market in the coming years, Martielli said, will be the Black Sea region, led by Russia, Kazakhstan and Ukraine.
“The Black Sea region has increased its competitiveness recently by gaining a cost advantage from low freight costs and a weak currency,” he said.
Hans-Joachim Braun, director of the Global Wheat Program for CIMMYT, expanded on several of Martielli’s points in his presentation on the potential for growing wheat in Sub-Saharan Africa and other regions. Currently, Sub-Saharan Africa produces about 7 million tonnes of wheat, or about 1% of the world’s production. Braun said that number must rise if the world is going to meet the dramatic increase in grain production needed to feed the burgeoning population, particularly in that region where over 200 million people are currently labeled as “hungry” and the growth of 40% of all children under the age of 5 is stunted due to malnutrition.
“The African food production systems will only meet 13% of the continent’s needs by 2050 in a business-as-usual scenario,” he said.
He said wheat imports constitute about one-third of Africa’s total food import expenditures. Overall, Africa is the largest wheat importer, having brought in 40 billion tonnes in 2015 costing about $16 billion.
The good news, Braun said, is Africa has great potential for wheat production. He pointed to the transformation in Ethiopia from producing just 500,000 tonnes of wheat in 1980 to 4.3 million tonnes in 2015.
He said some of the highest spring wheat yields worldwide are in Ethiopia, Zimbabwe, Zambia and Egypt. Braun said the roadblocks to increased wheat production are not agricultural but more due to sociocultural, infrastructure and policy impediments.
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Photo courtesy of KFF Mills.
Millers’ marketing challenges
Merzad Jamshidi, managing director of KFF Mills in Iran, also touched on the African market during his presentation: Milling in a Changing Market.
He noted that between 2000 and 2016, per capita wheat consumption in Sub-Saharan Africa increased at a rate of .35 kg per year, and consumption is expected to increase at an even faster rate in the future, from between 770,000 tonnes to 1.28 million tonnes per year between 2020 and 2030.
Jamshidi said this demand will be driven by rising incomes due to the participation of women in the labor force, growing populations, urbanization and the declining price of wheat relative to other staples in countries such as Kenya and Nigeria.
He also discussed in depth the differences between business-to-business marketing and business-to-customer marketing for flour millers.
“There is plenty of common ground between business-to-business (B2B) and business-to-customer (B2C) marketing, but in order to be successful it is essential for professionals who work on either or both sides to understand these key disparities,” he said. “But at the end of the day, no matter which side of the business-to-business or business-to-customer divide a marketer works on, all marketing is person to person, despite the external differences.”
He said the biggest problems B2B marketers have are a lack of content and the time to create content. This differs from B2C marketers who would rather have a bigger advertising budget and other ways to spread the word about their products.
Jamshidi noted that the B2B audience is seeking efficiency and expertise, while the B2C audience is more likely to be seeking deals and entertainment. Accordingly, the B2B purchase process tends to be rational and logically driven, while consumer choices are typically emotionally triggered, whether by hunger, desire, status or cost.
“B2B clientele want to be educated and provided with expertise,” Jamshidi said. “They often want to look like the workplace rock stars or heroes thanks to their excellent decisions. B2C customers just want to enjoy themselves and be happy with their purchase.”
He added that the B2B buying cycle is often much longer than the B2C decision process. Therefore, it requires much more nurturing and close attention.
“B2C tends to satisfy immediate needs while B2B decisions are meant to complete long-term goals,” he said.
Drew Lerner, president and senior agricultural meteorologist with World Weather Inc., said weather over the next several months is not expected to have a negative impact on most of the world’s crop-producing regions. He said the critical issue will be when El Niño will develop, and he believes it will be later than many others have predicted.
“I believe El Niño will take place later in 2017 — June at the earliest but more likely August or September,” he said. “This will be favorable for crop production in the key crop producing areas.”
He said the eastern equatorial Pacific Ocean surface temperatures have warmed significantly off the west coast of South America recently. This has put some computer forecast models into an El Niño mode. But the evolution of El Niño, if it is really occurring, is predicted much too quickly, he said.
He said if El Niño conditions evolve in the second half of the year, important changes will include:
- Drier biases in India and Southeast Asia
- Wetter biased conditions in West-central Africa
- Timely rain in the CIS New Lands Region
- A larger area of dryness in China
“Western hemisphere changes will not be very great,” he said. “But dryness in the Central United States will likely be minimized while South America and Central America weather will change little. Southern Australia will be wetter biased for a while this autumn, but will dry down toward spring.”
However, he said if a significant El Niño event evolves prior to summer a few changes to the summer outlook will result. First, the Western Canadian Prairies may experience a drier and warmer bias, and some of that will extend in the northwestern U.S. Plains. Also, if this occurs, he said it would result in a wetter-biased pattern in the U.S. Midwest and part of the Central Plains, with temperatures trending a little cooler over time. The Delta and Southeastern U.S. would likely have the greatest bout of dryness in this scenario, Lerner said, but only if El Niño is fully in place by the start of the summer. “So far, that outlook seems a little doubtful,” he said.
||| Next page: Flour sack award |||
Photo by Dan Flavin.
Flour Sack winner
During a banquet held on April 20, Wywiol announced that Arabian Milling and Food Company, based in Egypt, was the winner of the 2016 Flour Sack of the Year award. The sack will be displayed in the FlourWorld Museum, which was founded by Wywiol about 10 years ago and features 3,400 flour sacks from 137 countries. Wywiol said the Arabian Milling and Food Company sack, which is decorated with a tiger, was chosen from 244 entries in 2016.
“The high quality of its flour is symbolized by the head of a royal tiger, which looks at the viewer with pride and confidence,” Wywiol said. “Although there are no tigers in Egypt, the tiger is a symbol of the strength and energy that the flour gives the people. The tiger symbol has an emotional impact. The attributes of the animal, like courage, speed and endurance, are carried over to the quality of flour. The success of this Egyptian mill in exporting to other countries in Africa shows that the design is effective – good sack art is a selling point.”