Milling & Baking News - December 28, 2004 - 6

E D I T O R I A L

Output and consumption in '04 not a happy picture

t might seem a bit premature, without final numbers,
to attempt at the year's end to take a measure of how
grain-based foods fared during 2004. The advisability
of trying to make an assessment is dictated by the very
wide range of opinions about the performance of individual companies. Leading companies in both baking
and milling have expressed satisfaction, if not pleasure,
with the past year's pace, while others have complained,
sometimes bitterly, about disappointments attributed
mainly to the continuing influence on consumers of
the now largely discredited low-carbohydrate diets.
Particularly provocative was the optimism apparent at
the October convention of the North American Millers'
Association where industry prospects were viewed as
stabilizing, writing finis to in the agonizing downward
consumption trends. Yet, the production data for wheat
flour along with an effort to translate those numbers into
domestic disappearance would seem to cast doubt as to
whether stability really has been achieved.
At this stage, the only official numbers at hand relate
to flour production in the first nine months of 2004.
Output for these three quarters fell by roughly 4 million
hundredweights from the previous year and not so incidentally was the smallest for January-September in nine
years, or since 1995. If the assumption is made that output in the fourth quarter of the year was little changed
from the disappointing output in the same period of last
year - slightly less than 100 million hundredweights
for the first time in a number of years - then output
for the twelvemonth was fractionally above 390 million
hundredweights. It is important at this stage to note that
more than a few milling observers believe the industry
will be quite lucky to end up with that output, in view of
lagging production in the final three months.
If the reduction in output for the full year is going
to hold at 4 million hundredweights, then the question
needs to be asked whether such a fall, of 1 per cent, may
be interpreted as stability. Considering the production

drop of 17 million hundredweights in 2001 and nearly
10 million in 2002 - a collapse that shocked grain-based
foods for its severity - a reduction of the indicated
amount may be seen as a modest positive.
Translating estimated 2004 output into domestic disappearance is complex. Exports of flour appear headed
for the smallest total in many decades. For the first nine
months, foreign shipments were down by about half
a million hundredweights from the abysmally small
outgo in the prior year. Another 1.6 million hundredweights of the output decrease is accounted for by
the continued fall in production of durum semolina.
Assuming that imports of flour and flour-containing
products for the year will be about the same as in 2003,
the conclusion may be reached that total domestic use
of wheat flour, less semolina, will be off about 2 million
hundredweights from 2003. That would mean domestic
disappearance of non-durum wheat flour in the range
between 360 million and 370 million hundredweights,
where it has been since 1996. So far as the total nondurum wheat flour marketplace is concerned that is
remarkable stability, considering the multitude of influences that have come to bear on consumption.
Stability in total consumption, though, also means a
shrinking per capita use, in view of the continued upward trend in U.S. population. Per capita use of non-durum wheat flour in 2003 was 126 pounds (per capita use
of all flour was 136 pounds), a drop of 10 pounds from the
recent high in 1997. It seems likely that a further fall of one
or two pounds occurred in 2004, which would reduce the
per capita to the smallest since the start of the 1990s. As
is the case with total flour production, there's little or no
cause for satisfaction with such an outcome. It represents
a serious contraction in the actual, as well as potential,
volume of grain-based foods. It provides powerful reasons for supporting the effort of the newly-launched
Grain Foods Foundation to persuade consumers of the
nutritional merits of the industry's many products.

Tomato shortage underscores power of crop shortfall

t a time when prospects are bright for the now
dormant 2005 winter wheat crop, due to good
soil moisture conditions, grain-based foods
needs reminding of how swiftly unfavorable weather
can transform such an outlook. The best recent example
of how crops are susceptible to poor conditions is provided by tomatoes, a vegetable that usually does not
receive attention from grain millers or bakers. But as
the result of an unprecedented wave of mid-to-late summer hurricanes and tropical storms that hit Florida and
excessive late summer rains in California, what looked
like a record large crop has turned out to be a disaster.
At the same time, production in Mexico, which in the
past would have provided a safety valve to boost U.S.
supplies, has been negatively impacted by insect infestations and the same rains that hurt California.
The most immediate result is a tripling and even quadrupling of tomato prices, both at retail as well as in the
processing marketplace. The latter is unique for the way
contracts cover 95 to 99 per cent of all tomatoes grown
for processing in the United States. And while Florida
participates in the processing market, it is California that
is looked to as the primary source, more than 90 per cent.
Not only has the weather been unfavorable, but begin-

bakingbusiness.com / world-grain.com

ning stocks were sorely depleted by a reduction in import supplies and a strong pace in export sales ahead of
realizing how bad weather suddenly had reversed what
appeared to be a prospect for record production.
Soaring of tomato prices at retail accounts for only a
small rise in consumer food prices in the United States.
The most negative impact struck food service, where
chains that market sandwiches with sliced tomatoes had
to face a hard reality. Commentators could not resist
the temptation to note that tomatoes, often considered a
power food rich in fiber, fat free and an excellent source
of vitamins A and C, were causing many restaurant
owners to face a heart attack. Servers of Mexican food
had especially tough problems as the prices of salsa
climbed. In Mexico, a country with a national diet more
dependent on tomatoes than any other nation, the head
of the powerful Bank of Mexico voiced concern that
the price of tomatoes may erase his country's victory
over inflation in the past seven years. He has reason to
hope, as do tomato users in America, that replacement
crops will quickly replenish the supply and bring down
prices. Such speedy recovery is not possible with a crop
like wheat, which always needs to be on the minds of
grain-based foods executives. MBN
Milling & Baking News, December 28, 2004 / 7

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Milling & Baking News - December 28, 2004

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