If flour consumption is stymied, best course to follow

by Josh Sosland
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At the mid-point of 2009, one of the most difficult years in the history of the American economy, it is important for grain-based foods, as it is for other industries, to examine not just how it is faring but also to try to grasp prospects for the rest of 2009 and the immediate future. In the case of grain-based foods, the prognosis is better than for many other industries, including those in food as well as in the hard-hit industrial and retail sectors. Flour production, that most fundamental measure of how the overall industry is doing, appears to be on an even keel with the year before, when output was within a hair’s breadth of the all-time record. The same apparently goes for domestic disappearance of wheat flour where little change is seen from 2008, even as many other basic foods experience unpredictable fluctuations. The latter reflect the volatile ways consumers react to this recession marked by falling incomes and employment levels.

Indeed, it is the constancy of flour disappearance that creates a quandary for grain-based foods. Regardless of how these data are published, in numerical tables or in charts, the steadiness of total wheat flour disappearance for the past decade or longer is striking. The total first reached 400 million hundredweights in 1997 and in the eleven years that followed has been within a few percentage points of that aggregate. Thus far in the first decade of the 21st century, annual disappearance has shown little or no change, with an average annual fluctuation of less than a tenth of a percentage point. That is starkly different from the two prior decades when domestic use grew by an average rate of 7.3 million hundredweights per year. The current rate is the smallest since World War II.

While having good reason for being pleased with such a consistent performance during this troubling time, grain-based foods ought also contemplate just what has happened to the upward consumption trend it enjoyed in the last three decades of the 20th century. From a bare statistical point of view, the explanation lies with a gradual downward trend in per capita consumption offset by continued population gains, albeit at a slowing rate. Behind that analysis, though, is the stark reality of per capita not being maintained, and certainly not increasing, due to increasing consumer focus on weight control, competition from other foods that benefit from superior innovation and demographic shifts that have lessened gains attributed to factors like Hispanic preferences.

For anyone familiar with the history of flour consumption, the steadiness in the past decade harkens to the experience in the first 70 years of the 20th century. During those seven decades, annual domestic disappearance hardly varied from a range of 210 million to 230 million hundredweights, as the fall in per capita consumption in 1900-70, from 220 to 110 pounds, was almost exactly offset by a climb in population in the same period from 76 million to 205 million.

That disappearance of wheat flour came close to doubling in the last three decades of the 20th century may be accounted for by a rise in per capita use on top of continued annual growth in the population. The fast-food revolution, reflected in rising volumes of buns, pizzas and specialty products, accounts importantly for this trend. That the trend now appears to be stymied is a matter needing urgent attention from executives in grain-based foods. Obviously, it signals the need to rethink capacity planning on the part of both flour milling and baking in order to avoid the excesses that plagued the two industries in the past. More than anything else, though, this apparent halt in growth underscores how much is to be gained by successful promotion and product development that will once more assure consumers appreciate the great contributions of grain-based foods to a healthy and satisfying diet.

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