By Julia Debes, USW Assistant Director of Communications
Three farmers and I tackled four countries on two continents in 14 days of intense visits to some of the best customers of U.S. wheat. From Jan. 10 to 24, this USW Board Team met with flour millers, grain traders and pasta producers in Nigeria, Ghana, Spain and Italy to learn about these important markets and provide a personal perspective on the U.S. wheat crop.
Team members included Jason Scott, soft red winter (SRW) wheat farmer from Maryland and a USW board member recently elected to serve as USW Secretary-Treasurer for 2014/15 (see story below), Lawrence Hunn, hard red winter (HRW) wheat farmer from northern California; and Brent Robertson, HRW wheat farmer from southwest Nebraska.
Our first stop was Washington, DC, for briefings from USW and USDA’s Foreign Agricultural Service.
Following a long flight to Lagos, Nigeria, USW Marketing Consultant Muyiwa Talabi and USW Assistant Regional Director Gerald Theus provided a welcome as warm as the weather. Our meetings started right away with FAS Regional Agricultural Counselor Russ Nicely, who explained to the group that the Nigerian market is based on relationships between U.S. wheat farmers and Nigerian customers who are consistently among the top U.S. wheat buyers.
“Wheat has found a home,” Nicely said, “and it is going to stay here.”
Nigerian wheat consumption continues to rise rapidly. More and more Nigerians are looking for a nutritious, convenient food and they are finding it in the fastest growing product segment — instant noodles made primarily from HRW.
To learn more, we went to the experts. Dufil Flour Mills has a 70 percent market share of the Nigerian instant noodle market. Today, Nigeria is behind only countries in Southeast Asia in per capita consumption and nearly every milling company is manufacturing instant noodles, even though they first appeared on the market less than a decade ago.
Pasta is also a popular product in northern Nigeria. The team visited BUA Flour Mills, who produces both long and short cut pasta exclusively for this market. Yet, BUA told the group they cannot keep up with demand, even while operating at more than full capacity.
Both Dufil and BUA stressed the importance of self-sufficiency or milling the wheat they need for their own products. Flour Mills of Nigeria takes that concept another step forward.
As the world’s second largest miller, Flour Mills of Nigeria operates five regional mills and two pasta production plants. It also owns a sugarcane plantation, a cassava mill, an export elevator in Corpus Christi, TX, and even 22 bulk commodity vessels. Peter Kradolfer, flour operations director, explained that the company is accelerating in-house miller and baker training while continuing to expand its operations.
Dangote Flour Mills, which recently turned over operations to South Africa-based Tiger Flour Mills, also understands the importance of training. Dangote had tough questions for our team on freight rates and price premiums but said they had implemented 90 percent of what its own personnel had learned during USW-sponsored trade teams, short courses and seminars.
Hopping west to Ghana, the theme of rapid expansion and need for training continued. Regional Agricultural Counselor Kurt Seifarth explained that flour milling is not new to Ghana, but the market is fiercely competitive.
Our hosts at Olam Flour Mills explained that small bakers who may use between half a 50-kilogram bag up to 100 bags of flour per day consume most of the flour in the country. These bakers may take their dough to a communal mixing facility or simply let it ferment anywhere between three to 12 hours. As a result, mills must sell flour that can stand up to variable conditions to produce the high-volume loaf preferred by customers. Bakers blend multiple flours to spread their risk, but if they feel one is underperforming, they will quickly switch.
Sharad Gupta, business head for wheat at Olam, said, “We cannot trade off on quality. We err on the side of higher quality, even if it comes at a higher price.”
Flour Mills of Ghana, owned by Seaboard, echoed how difficult success can be in this competitive market. General Manager Trevor Augustine said, “We are improving month by month, but every extra bag we sell here is a heck of a lot of work.”
TEMA Flour Mills is taking a different approach to the competitive nature of this market. As the smallest mill in Ghana, TEMA cannot compete on volume, so the mill uses HRS and HRW to produce high quality flour for their customers, including a baby food product produced for Nestle Ghana.
As the team moved from Africa to Europe, there was a big difference in temperature and in the nature of the wheat markets. While Africa is just learning the great taste of pasta, USW Marketing Specialist Rutger Koekoek explained that Europeans have been enjoying their bread products for centuries. Koekoek, based in the USW Rotterdam Office, joined the team in Madrid, Spain.
Steady consumption, however, is actually leading to profit challenges for Spain’s 120 flour milling companies, according to Ramón Sánchez Expósito, head of AFHSE, the national flour millers association. He explained that while the average mill size has increased 300 percent in the past 20 years, consumption has remained relatively flat, leading to 40 to 50 percent over-capacity.
Despite challenges, success is still occurring in these markets. Emilio Esteban, a family owned mill now operated by a pair of cousins, has made the mix of tradition and innovation its motto. Rather than focus on expansion, the mill works on evolving their flour offerings by working with the local university on sustainability initiatives and experimenting with adding new specialty ingredients. For their premium flour products, the mill is a high user of U.S. HRS wheat.
Emilio Esteban, the grandson of the mill’s founder and current owner, said, “We cannot mill without HRS.”
In Italy, our last stop, consumption of common wheat (all classes except durum) is also steady at 5.1 MMT per year. In addition, Italian millers use 5.2 MMT of durum wheat each year, mainly for pasta. Andrea Cagnolati of Grain Services, the largest HRS broker in Italy, explained that high protein wheat is needed for pandoro and panettone, two types of bread made and consumed around Christmas, in addition to pizza and high loaf volume bread.
Some Italian mills find the performance of HRS more valuable than the proximity of other European supplies. Aguigaro & Figna purchases HRS each month for their top products. Manager Gabriele Ferrari told the team that consistent quality is a top priority and they have 15 quality control officers in three labs.
Quality is also important for the world’s largest pasta producer by volume — Parma-based Barilla. Filippo Bertuzzi, Barilla’s senior purchasing manager, said that a blue box of Barilla pasta is the same product in all markets, no matter where it is produced. That constitutes 1.7 MMT of products in more than 100 countries.
Barilla is constantly working to improve both product quality and sustainability. Since 2008, Bertuzzi explained that Barilla has decreased its water consumption by 23 percent, CO2 emissions by 25 percent and overall energy use by 4 percent.
From the largest Italian pasta producer to a specialized Ghanaian mill one hundredth the size, our team answered tough questions on freight rates and provided personal perspectives on the winter wheat crop currently in dormancy. No matter the weather, the mill or the language, one message was clear — there is no comparison to the consistent, high quality of U.S. wheat and, more importantly, the respect for the U.S. wheat farmers who produce it year after year.
Source : uswheat.org