Accuracy at long last in quarterly flour output data

by Morton Sosland
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At first blush, the annual summary of flour production for 2008 issued by the Bureau of the Census in the U.S. Department of Commerce may seem to merit little serious attention. Ignoring the report is tempting because the final figure on flour production by U.S. mills in the past year, at 416,283,000 hundredweights, is a miniscule 1,000 hundredweights below the initial estimate issued several months earlier. Yet, dismissal would be a mistake since the report in reality affirms important underlying strengths within milling as well as in industry leadership.

So, what’s good about a report that appears to disclose little or nothing that is half-way surprising or new about the performance of milling in 2008? To begin, the 1,000-hundredweight revision from the preliminary total is notable in that it is the smallest such change on record. During the 1990s, adjustments in the final summary frequently were jolting in their magnitude, ranging from a 6,455,000-hundredweight decrease to an 8,086,000 increase. At times, the change was dramatic enough to prompt transformation of the industry’s outlook from what preliminary figures indicated. Too often, the latter were dead wrong.

Prior to revisions in data gathering, quarterly production reports were viewed at best as questionable. Anyone familiar with these irregularities was forced to look on quarterly figures as highly tentative indications of what was happening in grain-based foods. This was so even though flour output is the primary guide to the pace of business.

That the change was so small in 2008 was not happenstance. Instead it marked the culmination of an intensive effort to improve the data. This effort was spearheaded by the North American Millers’ Association in response to concerns expressed by the editors of this publication over what appeared to be a gradual deterioration in the accuracy of data being issued by the Census Bureau. Consultations with representatives of the Census Bureau and flour millers revealed that an increasing number of milling companies were sending data on flour and millfeed production, wheat grind and daily capacity to the government on an annual basis, which is mandatory, rather than on a quarterly basis, which is voluntary. Because the Census Bureau imputes quarterly data for companies not submitting information every three months and reporting just once a year, significant adjustments occurred between imputed and final numbers. Additionally, it has been surmised that the responsibility for gathering and submitting these reports was relegated by some companies to staff who did not appreciate the need for accuracy.

Communications between NAMA and its member companies helped milling executives gain an appreciation for both the problem and to embrace a simple solution — reporting data quarterly and ensuring that each company’s data are accurate. The association’s Jane DeMarchi deserves credit for leading the effort. The staff at the Census Bureau also is praised for responding so positively.

At the end of the day, though, all users of this information — wheat growers, flour millers and flour customers, particularly — benefit from the confidence that now may be placed in the information as it is released each quarter. This is a huge step forward in gaining access to the industry’s heartbeat. It is also worth noting that this improvement reflects well upon milling’s leaders. The current generation of executives has avoided the hubris that may have led predecessors to shrug off the value of cooperating. Keeping in mind the role erroneous financial information has played in the current business downturn, grain-based foods has every reason to be grateful for this improvement in its most basic economic measure. Sure, the 2008 data would have been more pleasant if an increase, rather than the small reduction, had occurred in flour production. Beyond that, though, accuracy is absolutely essential, and that is what flour milling in cooperation with the Census Bureau has achieved.

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