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Flour production ramps up as coronavirus drives demand

14 April 20208 min reading

The coronavirus lockdown has seen many panicked shoppers head to the supermarket in a rush to stock up on flour and pasta. In response to the surge in demand, millers ramped up production. The milling industry is working round the clock to meet demand at a sustained high level.

Consumers across the world from London to Manila have queued at super markets in March to stock up on flour and pasta. Sales of flour and pasta are surging as people cope with the coronavirus pandemic by baking bread and other goods.

Customers view flour and baking as a comfort in a time of crisis. It's also a shelf-stable item. As demand for the staple has surged, shortages of flour have been reported in grocery stores across the world.

In many countries, the issue is not being able to mill enough flour, but rather logistics and capacity to pack enough of it into bags for supermarkets.

In response to the surge in demand, millers ramped up production. They are trying to meet demand at a sustained high level.

“An extended spike of demand hit the system hard and unexpectedly,” said Robb MacKie, president and CEO of the American Bakers Association. "We could have handled twice the normal demand.

But five times the normal [demand] almost overnight — no one can prepare for that," he told to Business Insider.

The unprecedented increase in demand for flour and pasta comes amid widespread quarantines and shelter-at-home orders due to the coronavirus pandemic.

A rise in the number of people who are home baking appears to be contributing to the shortage of flour in supermarkets, although a lack of supply is not the problem.

FLOUR DEMAND DOUBLED IN UK

In the United Kingdom, The National Association of British and Irish Millers (NABIM) said the industry is “working round the clock” seven days a week in an effort to double production, although it is still struggling to meet demand.

The UK produces around 90,000 tonnes of standard flour each week, but only 12 of the 50 mills in the country are geared towards retail.

Alex Waugh, director of NABIM, said packing lines are now running at maximum capacity, but this is still only producing enough for 15 percent of households to buy a bag of flour per week.

And existing packing lines cannot easily be adapted to produce smaller retail bags, as the industry is geared towards distributing at scale. Mr. Waugh told the inews:

“There isn't a problem with production. It's just that most goes to big food brands and bakeries. Bags are usually 25kg or 16kg. To pack for consumer retail requires a different line, and people don't usually buy so much. We have plenty of flour, there's a lot of it about. It's just a question of scale. Normally people buy 2m bags of flour per week. That's doubled to 4m, and we're at the absolute max. Everyone's working overtime."

GERMANY RUNS LOW ON PASTA

The high demand ahead of anticipated lock-down and quarantine measures caused German retail sales in February to surge far beyond expectations. Demand for pasta in the country has increased sharply during the COVID-19 crisis, with giant discount retailer Aldi struggling to keep its shelves stocked.

Aldi is so concerned about running out of pasta due to the pandemic that it is sending special freight trains to Italy to stock up. The first trains carried 200 tonnes of pasta from Italy to Nuremberg.

FRENCH GRAIN INDUSTRY IN LOGISTICS SCRAMBLE

France’s grain industry is scrambling to find enough trucks and staff to keep factories and ports running as panic buying of pasta and flour because of the coronavirus pandemic coincides with a surge in wheat exports.

The French government’s designation of the food sector as a strategic priority has helped pasta manufacturers, flour mills and grain exporters get through the first week of lockdown in France, home to the biggest grain industry in Europe.

But there are concerns the logistics required to keep the grain industry ticking over will become strained as the crisis continues and other areas of the economy grind to a halt, industry groups say.

“It’s requiring a great deal of acrobatics to supply factories and customers,” said Francois Cholat, president of SNIA, an association of manufacturers of livestock feed, which is made from cereals and oilseeds.

“The logistics side is very complicated.” SNIA’s members have reported a 20% to 30% rise in orders, reflecting both precautionary purchases by customers as well as the knock-on effect on the animal feed market after consumers started buying more meat, he said.

French supermarket sales of pasta, flour and rice were worth nearly three times the amount sold in the same period last year, market research firm Nielsen estimates.

French pasta makers have boosted output by about half to respond to the surge in demand for the durum wheat staple, according to industry association SIFPAF.

Grain group Soufflet also said demand from traditional bakeries for its flour more than doubled as France moved towards a lockdown in which food stores were among the few outlets to stay open.

TURKISH FLOUR MILLERS INCREASED THEIR CAPACITY

Demand for flour in Europe has increased tremendously since the start of the novel coronavirus pandemic, said the director of the International Association of Operative Millers (IAOM) Eurasia.

While cafes and pubs have been closed to stem the spread of the virus, bakeries are doing brisk business and bread sales have increased, Eren Gunhan Ulusoy told Anadolu Agency.

Ulusoy, who is also head of the Turkish Flour Industrialists' Federation (TFIF), noted that some countries, in which industries generally operate at full capacity already, will see problems in production due to manpower, logistics and hygiene standards due to the outbreak.

But “in our country, the capacity utilization rate is at 50%. In other words, we can produce twice the total flour consumption of Turkey". He said that even if it takes months to control the pandemic, the flour sector in Turkey will continue production without any problems.

Touching on flour consumption in Turkey, he said annual consumption is 160 kilograms per person and the country is one of the largest flour consumers in the world.

In the Turkish flour sector, 82% of the flour is used by bakeries, while individuals consume only 5% of the total flour in Turkey, he said. The sector increased its capacity to meet rising domestic flour demand after the virus outbreak.

"Our flour industry continues production without interruption to prevent a disruption in flour supply," he added. As the world's largest flour exporting country, Turkey sold $1.05 billion worth of flour last year.

AMERICAN FLOUR MILLERS PRODUCE MORE RETAIL VOLUME

The global pandemic has also resulted in an unprecedented demand for flour in the USA. North American flour mills and bakeries are rushing to boost production as the spread of the new coronavirus leads to stockpiling of staples like bread and pasta.

American flour milling companies are adjusting their production runs to produce more retail volume. “We have plenty of wheat; the world is sitting on surplus volumes of wheat. It isn't an issue of not enough wheat and not enough flour. We have milling capacity and we have wheat.

It's a question of the hoarding and buying behavior we're seeing.” said Tim O’Connor, the head of the Wheat Foods Council says. O'Connor noted there's no way to predict what demand might look like in the future.

He expects the trend may last several more weeks, or longer, as COVID-19 cases hit a peak.

CANADA

Gordon Harrison, the president of the Canadian National Millers Association, said the recent surge in retail flour demand has exceeded levels usually seen in the traditional peak season from late August through Christmas.

However, he noted Canada has an "abundant supply" of milling-quality wheat, oats and other products, and his members are working hard to meet the demand.

"There is no real need to go out and buy 10 bags of flour and we have no indication that there'll be a shortage either in the near term or longer-term," he said. "The milling industry is running well nationally."

PHILIPPINES

In the Philippines, local wheat flour millers have been providing bread to Covid19 frontliners in hospitals and military and police forces manning the checkpoints in various locations.

Flour millers and other food manufacturers assured the public of stable supply of commodities amid the enhanced quarantine period in the country.

The Philippines has 22 flour mills scattered all over the country producing 83 million bags of flour annually.

“The Philippine Association of Flour Millers assures the general public that the country has enough inventory of flour and that this commodity continues to be delivered to bakeries, food manufacturers, noodle makers, and flour dealers and retailers,” PAFMIL executive director Ricardo Pinca said.

[box type="shadow" align="" class="" width=""]Brazilian mills push to scrap wheat import tariffs amid pandemic Brazilian mills are turning to wheat suppliers outside of Argentina as they seek to avoid shortages during the coronavirus pandemic, Rubens Barbosa, president of milling group Abitrigo, told Reuters. Brazil, which relies on imports for 60% of domestic wheat consumption, is pressing the government to lift sanitary restrictions on Russian wheat and temporarily drop a 10% import tariff on wheat from outside the South American trade bloc Mercosur, including Argentina, Uruguay and Paraguay.

“According to the Argentines, there will be wheat available to export to Brazil,” Barbosa said. “But the industry thinks supplies are tight and depending on Argentina’s policies, there could be a lack of Argentine wheat for Brazil.”

Mayors of dozens of towns near the Rosario grains export hub have blocked ground transport as the country locks down against the coronavirus pandemic.

The Abitrigo executive said the plan is to counter potential trade and logistics disruptions by importing more wheat from other countries. Lowering or scrapping import duties on those imports would help to make that more affordable, he said. REUTERS[/box]

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