The development of the flour industry is closely related to the sources of raw materials, that is, wheat. This is why today; the major producers of wheat are the ones who define the global milling market. Some of these countries are leaders in direct exports of wheat, and others are exporters of finished products, which is flour. In Turkey which is one of the prominent countries with its flour export, the installed capacity is 40 million tons with 710 flour mills.
Nutrition is the most important fundamental need of humanity which has not changed throughout history and will not change in the future. Wheat or grains in general, are the main sources of nutrition to address this need. Today we receive almost 60% of our daily energy need from grains or grain-based food. Wheat and its derivatives are the most common species of grain that is used in nutrition in almost every corner of the world. Therefore, milling has become an important branch of industry to process wheat around the world, which dates back to centuries ago. Its humanitarian and economic aspects has made this industry one of the most strategic and important areas today. Millions of people at thousands of facilities around the world are working to produce flour as the raw material of bread, which the indispensable item of our tables. As the editorial team of Miller Magazine, which is a part of this industry, we hope to provide an overlook on the global flour industry through our survey in the last issue of the year 2016.
GLOBAL FLOUR MARKET AND FLOUR TRADE
Statistical data demonstrate that the global flour market in 2013 had an approximate trade volume of 12 million tons, with a value of approximately 6 billion USD. The data of the United Nations Food and Agriculture Organization (FAO) indicate that the trade volume was more than 13 million tons in 2011-12. Although the data tends to fluctuate across years, the trade volume today can be assumed to be between 12 and 14 million tons.
Every country in the world aims and desire to produce and process fundamental sources of nutrition. However, there may be times when the climatic and vegetation conditions or the economic factors are not favorable for it. This may make some countries manufacturers and exporters, while others become consumers and importers. This is inevitably applicable for the flour industry. Therefore, the development of the flour industry is closely related to the sources of raw materials, that is, wheat. This is why today; the major producers of wheat are the ones who define the global milling market. Some of these countries are leaders in direct exports of wheat, and others are exporters of finished products, which is flour. The EU member countries as well as Turkey and Kazakhstan export flour to many countries.
According to the data for 2009-2013 by the FAO, Turkey and Kazakhstan are the leading exporters of flour on the basis of countries. In 2009, 2010 and 2012, Kazakhstan was the top exported of flour with an export of more than 2.2 million tons, followed by Turkey. However, in 2011 and 2013 Turkey became the number one country in the list, with its exports exceeding 2 million tons.
Pakistan has been one of the leading exporters of flour in recent years. With a major leap in 2011, Pakistan exported more than 1.2 million tons of flour. Although the amount of exports went down in 2012 and 2013, it managed to outpace many major producers around the world. India is another country that has been increasing its flour exports. Argentina, which was a major exported of flour in the past, has been lagging behind in the recent years. Argentina exported approximately 1 million tons of flour in 2009, and its exports remained at 130,000 tons in 2013. Russia, which is another major exporter, has also seen a fall in its figures. Russia exported 400,000 tons of flour in 2009, and the amount went as low as 120,000 tons in 2013.
The data of FAO demonstrate that the players other than the EU, Turkey and Kazakhstan are gradually assuming a different position in the global flour market. The main reason for this is the fact that producers of wheat have started to prefer exporting wheat instead of flour, and the importers of flour have developed their own milling industries and started to import wheat instead of flour.
In global flour imports, Uzbekistan, Iraq and Afghanistan have kept their ranks in top three among the countries. Uzbekistan imported 900,000 tons of flour in 2009, and the number went above 1 million tons in 2011 and 2012. Iraq has been constantly increasing its imports of flour. The situation in Afghanistan has been unsteady. For instance, Afghanistan imported approximately 1,3 million tons of flour in 2011, while it imported only 532,00 tons the next year, and 800,000 tons in 2013. Angola, Malaysia, Saudi Arabia and Congo have been increasing their imports of flour every day. There is a contrasting situation in Tajikistan and Indonesia. The anti-damping policy in imports of flour which is implemented to protect local industry in Indonesia has led to a decrease in imports and remarkably improved the mills in the country. Brazil was also a major importer of flour between 2009 and 2012. However, the country has seen significant a decrease in imports of flour after 2013.
FLOUR INDUSTRY IN AMERICAS
According to the study of former Chairman and CEO of North American Millers’ Association (NAMA) John C. Miller titled as "American Flour Milling"; there are 170 mills belonging to 45 companies with daily 80 thousand-ton capacity. The production of these mills constitutes 95% of the total industry production. These mills share 95 percent of the total production in the industry. When compared to the other factories in terms of quality, 68 of the mills in the country has daily processing capacity over 454 tons, 44 of them between 228 and 453 tons, 33 of them between 46 and 227 tons, 10 of them between 19 and 45 tons and 14 of them under 18 tons. The largest three companies operating in the milling industry has 56% of the total milling capacity in the country. While the milling capacity of 10 largest companies is 83%, total capacity of 24 large companies is around 94%. In other words, 94 percent of total milling capacity of USA flour milling industry is shared by 24 companies.
Canada has been making production for over 200 hundreds years in commercial-purpose grain milling industry. It is stated that Canada has approximately 55 commercial wheat and oat mills situated from Pacific to Atlantic coasts and 20% of these mills are less than 15 years old. Using state-of-the-art milling methods and technology, the grain milling facilities in the country has approximately 1.5 billion dollars capital investment. Grinding over 3.5 million tons of wheat, oats and barley each year; Canadian mills export wheat flour, semolina and other milled grain products to over 30 countries.
Every year more than 10 million tons of wheat is consumed in Brazil. According to the data of Brazilian Association of Wheat Industry (ABITRIGO), 8 million tons of flour was produced in 2013. 400 thousand tons of flour was also imported. Total flour market is around 8 million 425 thousand tons. Total number of the flour mills in Brazil is stated as 229 and 77 percent of them are in the South. In total, the mills have nearly 10 million tons of flour production process. It is possible to say that 44 percent of the flour is produced in the southern part of the country.
According to the data of Argentinian Federation of the Milling Industry (FAIM) which has hundreds of members, wheat flour production by October 2014, is estimated to be 3 million 636 tonnes. Estimated consumption amount in 2014 is 3.5 million tonnes and per capita wheat consumption is also 83 kg. It is expected Argentina which has a significant share in flour export will export 850 thousand tonnes of flour in 2016/17. There are 170 mills in Argentina, and especially half of them are in Buenos Aires and the remaining is in Cordoba, Santa Fe and Entre Rios. 4 of these mills are insured by the government.
FLOUR INDUSTRY IN EUROPEAN UNION
Every year 45 million tonnes of flour is produced in European Union and most of the flour is of local wheat and rye. EU countries like France, Germany and England are among the significant producers in Europe.
According to the 2015 UK Flour Milling Industry report of NABIM, the industry has been growing in the recent years. The reason is the increasing number of mills which have been established recently. British milling industry which is growing by this means has now 30 companies operating 50 mills. It is stated that of these companies, the four largest ones account for approximately 65% of UK flour production. Estimated flour production of UK for 2014/15 season is 5,2 million tonnes.
According to the data of Statistics Report 2014 (Fiche Statistiques – 2014) published by The French Milling Association (ANMF), there are 372 enterprises and 439 production plant producing flour in France. 275 of 439 production plants realize 92 percent of total flour production. 435 production units produced 4.38 million tons in 2013; 439 production units produced 4.27 million tons in 2014.
The number of the mills in the country changes gradually. There were 19 thousand mills in 1950 and 2.500 mills in 1980. Today, the number of mills in Germany is 550. 213 of them produce more than 1000 tons per annum and this production amount is recorded officially. Considering the city based distribution of mills that produce more than 500 tons per annum, Bayern which produces 1.336 million tons with 60 mills ranks first. Baden-Württemberg producing 776 thousand tons with 56 mills ranks second, North Rhine-Westphalia producing 1,855 million tons with 20 mills ranks third, Lower Saxony – Bremen producing 1,539 million tons with 17 mills ranks fourth. There are approximately 5,7 million tons of wheat flour and 650 thousand tons of rye flour is produced.
It is estimated that there are around 180 mills producing flour in Austria. The amount of flour produced by these mills working with the capacity of 80 percent exceeds 500 thousand tons. In Hungary, there are around 40 firms and 60 mills processing grains. One out of four of the firms in question is estimated to carry out more than 80 per cent of the flour production in the country. Hungary produced 1,2 million tons of flour in 2014.
Annual production capacity of 435 flour mills in Poland is 7 million in 2013. 40 of them has a milling capacity of 30 tonnes; 180 mills has a milling capacity between 20-100 tonnes; 215 mills has a milling capacity of more than 100 tonnes. The capacity in the industry is 65 percent and wheat flour production is 4,2 million tons and rye flour production is 850 thousand tonnes.
According to the data obtained from the European Flour Millers Association, the number of mills in Romania is 120. The processing capacity of the mentioned mills is over 150 tons per month. In addition, it is known that there are close to 200 mills with a production capacity of less than 150 tons. According to the data of 2012, flour production of Romania is 1,6 million tons. there are 200 mills which produce more than 2000 tonnes and 120 mills which produce less than 2000 tonnes per annum.
According to European Flour Millers, Spain comprises 120 flour mills. Most of them have an annual capacity of more than 2000 tons. Besides, less than 5 mills share 75% of the market. Almost the entire wheat produced in Spain is used in flour milling. Nevertheless, Spain is not self-sufficient when it comes to wheat for flour production.
FLOUR INDUSTRY IN MIDDLE EAST
According to the Grain and Feed Annual Report dated 2014 and prepared by The US Department of Agriculture, milling industry of Egypt consists of public and private sectors. Public sector represents 52 percent and private sector represents 48 percent of total milling capacity. About 70 percent of produced flour comes from public sector. The number of public mills in Egypt is 126. It is known that most of them are small and middle-scale mills. 109 of them are used for the production of 82 % flour, 10 mills for production of 76% extraction flour.
It is known that there more than 335 mills in Iran. Most of these mills belong to private sector. Consuming annually 150 kg flour per capita, Iran has one of the highest flour consumption rate compared to the other countries. It is also known that more than 10 million ton of flour is consumed in Iran.
Yemen where a couple of large companies importing wheat and rice dominate imports an important part of the wheat which is required for domestic consumption. The importers giving storage and milling services at the same time have a significant potential in terms of storing and processing wheat and wheat flour. 90-95 percent of imported wheat is processed into flour in the plants located on the sea port of the two largest companies. Including the small companies, daily milling capacity of importer mills is stated as 7-8 thousand tons.
According to sector data published in the web site of the Office of Cereals of Tunisia under the Ministry of Agriculture, there are 25 flour mills that are active members of Chambre Syndicale, a special organization established by the state in order to bring the flour industry of the country together. Annual milling capacity of these mills is 2 million tons. According the information given to us by Tunisia Millers Association, there are 28 industrial-scale mills in the country. Almost each of these mills is processing other grains as well as wheat and each of these have 400 tons/day capacity. Wheat milling capacity for total of these mills is approximately 23.1 million tons. Again, according the information provided by the association, the amount of milled soft wheat in 2013 is approximately 11.5 million quintal.
FLOUR INDUSTRY IN ASIA
According to the estimations, there are around 7 thousand mills in Russia that is one of the major wheat producers of the world. According to the data of Russian Federal State Statistics Service Rosstat until 2012, the country realizes flour production between 9 and 10 million tons every year.
Central Asian countries such as Uzbekistan, Kyrgyzstan, Tajikistan and Afghanistan depend on Kazakhstan to meet their wheat and wheat flour needs with varying amounts. Only Turkmenistan as one of the world’s most closed societies has reached to the level of self-sufficiency in wheat. When considered from this point; Kazakhstan owes this dominance in the region to proximity, an excellent railroad network, large efficient mills, low prices for high quality wheat, and supportive government policies. According to the information obtained from Evgeny Gan who is the longtime president of the Kazakhstan League of Grain Processors and Bakers as an industry association on the Kazakhstan Grain and Feed Yearbook of USDA dated as 2012, there are currently about 350 wheat milling enterprises in Kazakhstan. The trend in the country has been toward investment in larger plants and closure of smaller mills to the point where about 200 of these are above 150 tons per day capacity and only 50 have a capacity of less than 50 tons per day. Flour Millers Association of Kazakhstan states that the total number of flour mills has sharply declined in the last 10 years as consolidation has taken place. According to the data given by the association; while there were 2,300 mills in 2000, by 2010 this had fallen to just 383. According to the estimations of the association; the total capacity of mills in Kazakhstan is over 12 million tons of flour although overall production is just 50% of capacity. 3.5 million tons of this 6 million-ton flour produced with this 50% capacity is exported and the remaining 2.5 million tons is used for domestic demand.
In china of which economy has grown significantly after grains market was privatized competence in grain processing sector has risen significantly too. According to the State Administration of Grains in China; it is known that over 40,000 flour mills exist in China. However, most of these are village type mills. Over 30,000 of these mills have production capacity less than 50 tons per day. The number of registered flour mills is 4245. The number of mills producing 50 to 200 tons per day changes between 2000 and 3000. The number of mills producing 200 to 400 tons per day changes between 500 and 1000. It is possible to say that 350 flour mills produce 400 to 1000 tons of flour per day. Moreover, there are three large flour mills producing over 10,000 tons per day. The capacity of flour mills in China rose significantly between the years of 2005 and 2010; increased from 80 million tons to 170 million tons. İt is stated that the total processing capacity currently is 250 million tons. However, 60-80 million tons of grinding process is actually realized per year.
Annual report prepared by United States Department of Agriculture, Foreign Affairs Service (USDA FAS) show that the number of mills registered in India with medium to high capacity is approximately 1000. However, the actual number of mills is thought to be a lot higher than this figure. This shows that the milling sector in India has a small scale with respect to the organization. The aforementioned mills have an annual million capacity of 22-24 million tons in total. However, it is stated that only 45-50 percent of the total capacity of these mills are used.
Annual wheat production of Pakistan that is equal to 24-25 million tons is milled. Pakistan does not only produce flour in volumes sufficient to feed its high population, it also exports approximately 700 thousand tons of flour. All of the existing mills are private enterprises in Pakistan where there are approximately 1000 mills. There are no mills owned by the state. It is stated that these mills are operating at approximately 50 % of their capacities. Flour mills with majority located in the Punjab region focus their production on atta flour which is used for making village bread. It is estimated that there are numerous unregistered stone mills in Pakistan.
Flour milling in Uzbekistan is different than milling activities carried out in other countries in Middle Asia. Except for mills and small bakery shops in rural areas, substantial part of the mills and bakeries are state-owned enterprises. "Uzdonmahsulot", a state-owned joint stock company, is responsible for the purchase, grading and storage of the grains and seeds based on the needs of the state. In addition, companies of Uzdonmahsulot produce wheat flour, cattle feed, bakery products, pasta and food with sugar.
The company announced that there are 44 bakeries and 345 bakery branches, 55 large mills, 45 animal feed, 40 baking, 25 pasta, 63 product cleaning plants producing flour, grains, animal feed, bread, pasta and bakery products, and 5 grinding stone production plants operated with the purpose of meeting the domestic demand.
Most of the products cleaning plants have been modernized with the technological equipment imported from Europe and efforts were made to increase the product quality. Uzdonmahsulot Company produced 1.4 million tonnes flour, 39 thousand tonnes breaks, 22 thousand tonnes pasta and 500 thousand tonnes semolina in total in 2011. Wheat production increased by 30 thousand tonnes and reached to 6.78 million tonnes in 2013 and approximately 55 percent of this volume was in millable quality.
In addition to "Uzdonmahsulot", many privately-owned small mills started to have an active role in Uzbek market. There are 60 privately-owned mills with an annual wheat milling capacity of 1.5 million tonnes only around Tashkent.
The Philippines today has 12 flour producing companies and all of these companies belong to the Philippine Association of Flour Millers (PAFMIL) and the Chamber of Philippine Flour Millers (CHAMPFLOUR). According to PAFMIL, for 300 days in a year, total capacity is 4 million tons per year or 13 thousand 360 tons per day. Considering that averagely 2 million tons of wheat import per year, it is possible to say that the industry operates with a capacity of 50 percent. It is also possible that wheat consumption which increases in 2014/15 season when the new mills opened will continue to increase. The more the production in the country increases the less flour import will be.
Australian flour mill product manufacturing industry is highly concentrated and it is estimated that the industry’s top four players capture over 80 per cent of the market. Rationalization is expected to continue and fewer mills will service larger geographic areas. The numbers of mills in Australia have been declining over the years, while capacity utilization and output is increasing. There are currently 32 flour mills nationally, with an average capacity of 10.5 tons per hour. The trend is towards larger scale, automated operations. Capacity utilization averaged 83 per cent in 2007/08.
As it is mentioned above, In Indonesia, the consumption of wheat-based products is increasing and this enables milling industry to develop and wheat based products to be imported more. According to the Grain and Feed Report dated 2015 and published by US Department of Agriculture Foreign Agricultural Service (USDA), the number of flour mills in the country in 1998 is four. Today, there are 29 flour mills with a total capacity of 10.3 million tons per annum. It is believed that these mills running with a capacity of 75 percent in 2012 use 60-70 percent of the capacity today. The increasing competition in the market and the strong supply is believed to be the reason for this development.
66 percent of flour production in Indonesia is used by small and medium-sized operators producing wheat-based products. Small-scale producers of noodles, many street vendors, bakers and traditional Indonesian pastry sellers are included to this group. Instant noodle manufacturers, medium-sized and large bakeries, biscuit producers share the remaining 34 percent.
Looking at the milling sector in Bangladesh, it is seen that modern roller mills are replacing the commonly used "chakki" mills rapidly. But the numerical superiority still belongs to "chakki" type mills. It is estimated that there are around 2000 "chakki" mills. While the number of small and medium-sized mills is between 300 and 350, the number of large scale mills is around 20. While the wheat processing capacity of large scale mills is between 100 and 500 million tons, the wheat processing capacity of small and medium-sized mills is between 10 and 100 million tons.
Thailand milling sector consists of mainly rice mills due to the intense rice production. However; wheat milling has shown some development in the recent years. It is estimated that today there are 8-10 flour mills that have a voice in the production with a modern and developed structure.
Wheat flour demand in Thailand is met usually with direct flour import but the new investment on this direction point that wheat import will increase and flour import will decrease in the future.
According to the Cambodia Market Survey prepared by Craig MacKay for Academy for Educational Development (AED) in 2007; wheat flour is consumed by Cambodians in bread, cakes, biscuits and instant/fresh noodles. About 70% of wheat flour consumption originates through the industrial production of two local mills located in Phnom Penh. The remaining 30% is imported both legally and illegally predominantly from Vietnam. There are some small-scale rice flour producers; however, the industrial market is dominated by the production of wheat flour. As it is mentioned above, there are two flour mills operating in Cambodia. Asia Flour Mills is the larger facility with a milling capacity of 130 MT of wheat (100 MT of flour) per day, currently operating 16 hours per day, 6 days a week, running at 65% capacity. Men Sarun has a milling capacity of 120 MT (91 MT of flour) per day, currently operating 10 hours per day, 6 days a week, and is running at about 60% capacity.
FLOUR INDUSTRY IN AFRICA
According to the data of the year 2012; there are around 210 large flour mills in Ethiopia with a total of 3.7 million tons of milling capacity of flour per year. The flour mills are able to obtain the required wheat from the Ethiopia Grain Trade Enterprise (EGTE), which controls all commercial wheat imports and makes wheat available to flour mills at a government subsidized rate. These wheat imports account for roughly thirty-three percent of the wheat market. The flour mills get the remainder of the wheat supply from the local market.
CEO of El-Hamama Flour Mills as one of the most important flour mills of Sudan, Ahmet Eltigani A. Moniem Musa states that there are over 30 mills in the country but most these mills have old technology and low capacity. Telling that only 4-5 companies have the latest technology in the country, Eltigani informs that product with good quality is obtained from these mills.
Most preferred grain product as staple food is corn in Kenya. According to the "Staple Foods Value Chain Analysis Report" prepared by United States Agency for International Development (USAID), the primary miller group in the country is industrial corn millers with middle or high capacity. The second one is small mills of which number is not known. 109 of these millers included in these two groups grinds corn and wheat, as it is stated. National Cereals and Produce Board of Kenya (NCPB) stated that the number of registered millers in Kenya is 103. Installed capacity of these mills is not exactly known; however estimated installed capacity for corn is 1.77 million tons per annum. Grain Millers Association (CMA) estimated that total installed corn milling capacity is 1.62 million tons per annum. In the same report, it is stated that there are 19 mills with middle and high capacity and the capacity of them is 1.41 million tons.
White corn is primarily produced in Tanzania. It is known that primary staple food corn is initially produced for home use by farmers, sold via cooperatives right after the harvest. According to the report named "Value Chain Analysis of Rice and Maize in Selected Districts in Tanzania" which was prepared by Agricultural Council of Tanzania, most of the mills in the country are village mills in rural areas. Number of rice and corn mills in certain parts of the report is also given. Accordingly, there are 45-50 rice mills in kyela, Mbozi and Mbeya regions. 3 large rice mill in Mbarali and 3-4 large corn mill Njombe. It is estimated that there are 70-80 corn mill in Mufindi, Iringa and Morogoro regions.
FLOUR INDUSTRY IN TURKEY
Turkey has a significant role in global flour production and export. As seen in the data of FAO, Turkey which exports 2 million tons of flour every year, with this export amount is the leader in global flour export. According to the "Turkish Flour Industry Inventory" prepared by Southeast Flour Industrialists Association (GUSAD), there are 710 flour mills in Turkey. Daily wheat milling capacity of these mills is around 103 tonnes. This shows that Turkey processes nearly 22 million tons of wheat. However, it is known that the wheat milling capacity of Turkey is 40 million tons and this creates a serious idle capacity problem. This problem causes some companies stop operations from time to time. According to the inventory of GUSAD, while 476 of 710 mills in Turkey are operating actively 234 companies are waiting passively. In case of proper conditions, these 234 factories can start production.
Konya, Mardin, Gaziantep and Ankara are the four cities where the installed capacity is highest in Turkey. According to the inventory of GUSAD;
• There are 51 plants in Konya and 48 of these plants are active; 3 are passive. Installed capacity is 3.5 million tons.
• There are 33 plants in Mardin. 30 of these plants are active; 3 are passive. Installed capacity is 3.2 million tons.
• There are 28 active, 8 passive, totally 36 mills. Installed capacity is 2.8 million tonnes.
• There are 23 plants in Ankara. Installed capacity is 1.6 million tons.
Central Anatolia, Marmara and Southeast Anatolia are the prominent regions on regional basis.