Flour export record portrays milling dynamics

by Morton Sosland
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Considering that 450 million tonnes of wheat are used around the world each year for food, primarily through flour milling, global wheat flour exports of 12 million tonnes might seem inconsequential. Indeed, the temptation may be great to consider exports at less than 3 per cent of global output as providing little basis for measuring the state of global milling. This is similarly the case in the United States where flour exports also have shrunk to less than 3 per cent of annual output. But neglecting export’s role and what it portrays would be a mistake. The recent course of flour exporting provides insights into the state of the industry. Such a study shows that what might appear to be a static business has an underlying dynamism casting a different light on both the current state and the outlook.

Annual gains in food use of wheat recently have lagged the global population growth rate. Yearly increases have been barely 1 per cent, and in many regions of the world current consumption lags what it was a decade earlier. Based on the flour output statistics compiled by the International Grains Council, the main gains in annual output have not been in the developing nations where output expansion might be expected but have been limited for the most part to developed nations like the United States and even parts of Europe. Particularly drastic reductions have occurred in the Former Soviet Union where communism’s demise was accompanied by decreasing use of wheat for food.

Export flour statistics indicate a stark difference from global output. Exports have achieved volume records for two years in the face of recession that has cut into consumption. The latest I.G.C. data on flour export trade place the 2008-09 total at 11,975,000 tonnes in wheat equivalent, following the record of 11,842,000 set in 2007-08. Not only is the past crop year’s outgo up by more than a third from a decade earlier — a period that saw scant change in global production — it is considerably more than double flour exports of the early 1970s.

Even more revealing than the buoyancy in over-all exports are dramatic changes in the suppliers of flour for export as well as the major importers. These phenomenal shifts reveal unexpected areas where milling is obviously an exciting business. The ranking of Kazakhstan and Turkey as the top flour exporters in 2008-09 and the foremost role of Uzbekistan and Afghanistan as importers prompt the conclusion that central Asia, with its "stan" countries, is the current milling hot spot. Along with the European Union, Kazakhstan and Turkey are the sole exporters of more than 1 million tonnes, and the two leading import nations are the only buyers of more than 1 million tonnes.

For most of the post-World War II period, the story of flour exporting featured leading importing nations eventually developing their own milling industries. A secondary story revolves around the impact of food aid and military conflicts on trade patterns, which account for Afghanistan’s premiere import position as well as Iraq, once self-sufficient, now among the leading importers. And then there are countries like Libya and Brazil, which continue as sizable buyers year after year.

Global flour exports setting records for two straight years underscores the vitality of milling. While missing out on this surge is a great disappointment to millers in nations like the United States, which has lost its once leading export role, it is heartening to see the ebullient flour demand in regions that not many years ago hardly figured in the evolution of milling. These shifts in export trade provide a guide to the countries where great opportunities may exist for the venturesome as well as how foreign trade in wheat flour is not the nebulous business that many observers have long believed. The maintenance of this pace is one of the great surprises for milling in the 21st century.

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