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Transformation from small to large scale in German milling industry

09 October 20146 min reading
Dr. Peter Haarbeck; “German milling industry is going through a consolidation process at the moment, and this is not an issue of turnover but of the number of players on the market. There are a number of well-organized family owned companies which are successfully facing the challenges of the future. The development of the milling industry will continue with a moderate decline in company numbers over the next years, mainly as to smaller businesses.” Having one of the oldest histories of the milling industry, German Milling Association is also one of the most industrialist associations in Germany. The association has 550 members from the smallest to the large scale ones. Working mainly on risk management and public relations; the Association has also activities on education, quality and food safety, and markets. Answering our questions on German Milling Association and the industry, General Manager of the association Dr. Peter HAARBECK states that there are 218 mills processing more than 1.000 tons annually in the country. Indıcating that those mills follow the technology closely, Dr. HAARBECK says that the industry German milling industry is going through a consolidation process at the moment, and this is not an issue of turnover but of the number of players on the market. In other words, the industry is having a transformation from the small businesses with large amounts to the large businesses with fewer amounts. We obtain the details of the subject from Dr. HAARBECK. Mr. Haarbeck, firstly could you please give information about your association? How many members do you have and what are your activities as an association in the industry? In 2017 the German Milling Association will be 150 years old; it is one of the oldest industrial associations in Germany. Today we have 550 members, small and medium sized businesses as well as large scale industrial companies. Focus of our work is to lobby the interests of our members towards policy makers and partners in the grain value chain. Risk management and public relations is also a crucial part of our work. We are providing substantial information to our members. Main topics are education, quality and food safety, resources and markets as well as science and nutrition. Could you please give some information on the German flour milling industry? What can you say about the number of the mills, milling capacities, technology usage level, and manufactured product groups? There are 218 mills each of which are processing more than 1.000 tons of grains per year. The whole German milling industry is processing around 8.5 million tons of wheat, rye and durum wheat. The technical capacity may be approximately 15% higher. Products are all kinds of standardized flour for the baking industry as well as tailored raw materials for uses in countless products of the food industry. How is the approach of the milling companies towards the new technologies? Is there any increase in the recent milling and technology investments? There are continuous investments in new technologies to face the increasing requirements for food safety and product quality in the market. Do all of the mills in Germany realize their production completely for the domestic consumption? Are there any export activities of the mills in your country? If there are, which countries are the export targets and what is the amount of these exports? The total share of exports is around 11 percent. Most German milling industry’s exports are going to EU member states; the top three destinations within the EU are the Netherlands, France and Austria. Third countries export is going mainly to Africa and Middle East. What is the level of raw material in your country? How much of the raw material processed in the mills is produced in your country, and how much of it imported? Which countries do you prefer for the imports? German Mills are sourcing their grain predominantly from German fields. The average is 95 percent domestic, another 4 plus percent are coming from the European neighbors like Austria, Czech Republic, Poland, less than 1 percent of the grains are imported from overseas. So German flour is a regional product. Could you please give some information on the flour consumption amount and consumption culture of Germany? For instance; for which food products the flour is used and how is it consumed? What are the preferences of your consumers in bakery product consumption? German bread and the German bread culture are well known and respected worldwide. The German bakers have applied for German bread culture to become Intangible Cultural Heritage recognized by UNESCO. The yearly per capita consumption of bakery products is around 85 kilograms. While the consumption of flour has all in all been on the same level over the last twenty years, consumption patterns are changing. There is a trend to convenience food like pizza or hero sandwich. Another important development and driving force in the bakery market is the trend to fresh produced products on-demand. This trend plays a significant role in the structural changes in bakery and milling industries. Prebaked products are manufactured mainly at industrial scale in competition to the small bakers. What do you think about the future development of your country in terms of both the improvement of the milling industry and consumption amounts and preferences of your country? What are your future expectations about your industry? We see the consumption of bakery products on a solid level. The same goes for the flour consumption in a still very dynamically changing market for bakery products. The development of the milling industry will continue with a moderate decline in company numbers over the next years, mainly as to smaller businesses. What do you think about your position when you compare your country with other European countries in terms of milling? What do you aim in order to strengthen the position of your industry throughout the world in the future? German milling industry is going through a consolidation process at the moment, and this is not an issue of turnover but of the number of players on the market. There are a number of well-organized family owned companies which are successfully facing the challenges of the future. Compared to other European countries and North America there are only a few mills that are vertically integrated and/or connected institutionally with bakers or grain traders. We expect that German mills will be doing a quite good job for customers on a though, competitive environment. As especially an association, do you have any projects for your industry that are being realized right now or will be realized in the coming years? Risk management is one of our main tasks. We are working on an advanced issue screening and management to provide our members with the information they need to face future challenges and to enable them to discuss critical topics trustfully with their business customers and the consumer. Finally, what would you like to add about your association and the flour milling industry in your country? Grain and grain-products have a very high reputation. It must be the intention of the whole value chain to work with this credit and to turn it into value added along the whole chain.
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