Milling makes 2010 a success amidst turmoil
February 22, 2011
Considering what a difficult year 2010 proved to be for the American economy, for most of the food industry and, yes, for sectors of grain-based foods, the newly issued data showing that production of wheat flour gained a fractional amount ought to be counted as victory. This is the case even though the increase equals only a single day’s grind, or less than 1 per cent over 2009. It places flour output at practically the same as in 2008 and lags 2007 and the record in the first year of the 21st century. A hard-nosed critic may be tempted to assert that flour production, as a measure of the status of grain-based foods, is going nowhere. Yet, anyone who makes his living in the business of milling wheat into flour and baking flour into bread and other products knows from the facts at hand as well as from knowledge of how the business fared in an extremely trying twelvemonth that 2010 deserves rank as one of the industry’s better years.
Thanks to the Census Bureau in the U.S. Department of Commerce, the industry has in the preliminary estimate numbers about which it may be confident. Unlike past years when wide changes often occurred between the preliminary and final data, the current output total is unlikely to be changed much in the final report that is several months away. Thus, 2010 may now be studied in terms of output totaling 416,200,000 hundredweights. That is up 1,542,000 hundredweights from the prior year and is practically the same as in 2008. It is 2,636,000 below 2007 and a little more than 5 million under the record output in 2000.
These changes largely relate to variations in flour exports. Foreign shipments in 2010 were 7 million hundredweights, which was 2 million more than in each of the two preceding years. In the record year of 2000, U.S. flour exports were 9 million larger than in 2010, more than accounting for the output difference between the two years. While flour import variations may counter these changes, the net result is the likelihood that domestic disappearance in 2010 either held its own or may have rebounded to equal the peaks of recent years. It is domestic disappearance that stands as the main measure of just how grain-based foods has done in coping with a tough consumer marketplace where it competes in an increasingly trying environment. Any food sector that held its own in 2010 may claim considerable success.
The annual flour statistics provide a whole range of data that allows 2010 to be ranked as a good year. Maintaining the flour extraction rate at a record level, 77.1 per cent, for the past two years is hugely important to the industry’s economic well-being. That achievement, measuring the percentage of wheat grind converted into wheat flour, may be credited to several factors — wise investments in modern milling technology, good quality of the wheat crop and expanding production of whole wheat flour.
While 90 per cent has long been considered the ideal milling operating average, measuring output against capacity, the past several years have seen the industry close to that goal. The shortfall has been a few percentage points. The run rate for 2010 and 2009 has been 88 per cent of six-day capacity. This mainly reflects the steadiness of domestic demand along with the restraint millers practice in matching capacity expansions with reductions, primarily of older plants.
While the highly erratic and historically volatile performance of wheat prices stems from concerns about the adequacy of supplies, particularly on a global basis, nothing like a shortfall, much less a shortage, has been evident in the continued active pursuit of flour sales to existing and new customers. Long characterized as one of the most aggressive industries based on its pursuit of flour business, milling’s showing in 2010 provides an example reflecting the best of American capitalism.