Milling & Baking News - November 2, 2004 - 8

E D I T O R I A L

Flour export drop relates to capacity increases

hile the latest data on global trade in flour assembled by the International Grains Council
reaffirm declining prospects for exports, close
examination reveals a buoyant and expanding milling
industry on a worldwide scale. As has been observed
for many years, expansion of milling in many countries,
especially in markets that once relied on imports, leads
directly to a drop in trade. At times in the past, new importing nations appeared to fill those gaps, but the chance
of that happening diminishes as the years go by and the
potential shrinks. The latest I.G.C. figures, though, do
underscore the degree to which milling is expanding in
parts of the world where it never before existed commercially, or if it did, had been on a primitive scale.
While it is the numbers for specific regions and countries that best portray the relationship between global
trade in wheat flour and industry development, global
figures also are revealing. According to the I.G.C., world
flour exports in 2003-04 fell to 9,050,000 tonnes in wheat
equivalent from 9,207,000 in the prior year. This was a
continuation of the downward trend that began right
after the record in global exports was set in 1996-97,
reaching 11,186,000 tonnes.
Yet in that same period of time, global food use of
wheat has risen from 410 million tonnes in 1996-97 to
429 million in the latest I.G.C. assessment. That translates into a 5 per cent increase in mill grind, which is
further enlarged by the 2 million tonnes less of flour
moving in trade. World flour exports as a share of world
food use of wheat has held consistently within a range of
2 to 2.5 per cent in recent years.
This export-consumption relationship is reinforced
by the figures for specific regions. North Africa, which
for a long time represented the prime import market for
flour moving in trade, accounted for imports of 1,145,000
tonnes in wheat equivalent in 2003-04, or less than half
of its 1996-97 total of 2,365,000. Considering that North
Africa's consumption of wheat in that period increased
by 11 per cent, from 27,752,000 tonnes to 30,725,000, the
picture thus presented of an expanding domestic milling
industry becomes striking. In the Near East, also once a

highly important flour importing region, takings in 200304 fell to 500,000 tonnes from 1,407,000 in 1996-97, but that
region's use of wheat in the same period gained 5 per cent,
to 47,445,000 tonnes. In sub-Sahara Africa, imports of flour
rose by 12 per cent, but consumption soared nearly 40 per
cent, leading to the same finding of capacity expansion.
Regardless of the positive message these data present
for milling in these regions, the trade shrinkage negatively has affected countries that once counted on exports
for large chunks of running time. That is especially the
case for the European Union, which has sustained the
brunt of the fall. E.U. flour exports in 2003-04 were down
to 2.4 million tonnes in wheat equivalent, contrasted with
6,249,000 tonnes shipped in 1996-97, the year global exports set the record. Exports from the United States also
dropped in that period, from 664,000 tonnes to 456,000,
but the American export position for several decades has
been only a fraction of the E.U. outgo. American exports
also have played a much less significant role in the wellbeing of the domestic industry than has been the case in
Europe. Other flour exporting nations either have maintained or sharply increased their flour exporting, contrary
to what the E.U. and U.S. have encountered. The United
Arab Emirates boosted its exports from 119,000 to 500,000
tonnes and Turkey held at around 750,000 tonnes. India,
shipping 500,000 tonnes, is a newcomer to global flour
trade. In the case of these nations, it was newly-built milling capacity, along with a surge in India's wheat crop, that
made this conundrum possible.
Reflecting recent trade, the I.G.C. does not expect a
turnabout in flour exports, pointing to "further contraction." Most significant in this regard is the new capacity
being built in Libya, the world's leading importer at 1.1
million tonnes in 2003-04, already down from its 2001-02
peak imports of 1,413,000 tonnes.
Many times in the past, the future of flour exporting
has been "written off," only to have a rebound occur as
one or two countries sharply increased their consumption
and needs. Yet, the number of nations with that potential,
short of natural disasters, obviously is shrinking, to the
point where doubts about this latest forecast are few.

Ethical behavior requires personal communication

recent survey undertaken by Junior Achievement
and Deloitte & Touche, the professional services
firm, found that a third of American teenagers
believe "bending the rules" is a prerequisite to success
in business. In reporting that finding, the Financial Times
contrasted this outcome with the way ethical behavior
has become central to American consciousness as a result of the array of corporate scandals in recent years.
And while grain-based foods has had a small number of
its own examples of situations where ethics have been
unheeded or forgotten, it is to the industry's credit that
these have been relatively few and that no great company has experienced anything like what has happened
to Enron and its ilk.
Many different reasons are cited for the attitudes of
those teenagers as well as for the failure of executives
leading companies to communicate effectively the commitment of an enterprise to ethical behavior. The Financial Times quotes one authority on this subject as saying,
"Many senior leaders are honest but they do not know
how to convey ethical standards to their people." This
bakingbusiness.com / world-grain.com

expert went on to say that 95 per cent of all unethical
activities are not done for personal gain, but "because
an employe thinks it is expected of him or her to keep
their job, to get the boss to like them." The answer to
this, according to most observers, is for executives to
convey as strongly as possible their belief in honesty.
This is especially important when a company is facing
difficulties; it is then that explanations need to be given
that will reinforce the importance of ethics.
Yet another reason cited for missteps is the increasing
reliance on e-mail for communications. Instant messages, it has been stated, do not carry the same personal
conviction as direct conversation, or even telephone
calls. This is important not only for communicating
about the importance of ethics, but it plays a key role in
how a company and its executives show their interest
in the well-being of employes. Personal communication
about the importance of ethical behavior will go a long
way toward assuring that a company avoids the ultimate horror of finding that rules have been bent against
insistence on the pursuit of good business behavior. MBN
Milling & Baking News, November 2, 2004 / 9

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Milling & Baking News - November 2, 2004

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