Milling & Baking News - May 3, 2005 - 8

E D I T O R I A L

Flour trade emphasizes integration from NAFTA

he data on wheat flour exports from the United
States in 2004 showing the smallest volume in
records extending to the mid-20th century were
heartening for many reasons. These include not just the
historical low, but also that 2004 marked the fifth consecutive year of shrinking clearances. Hardly anything proved
more disappointing than the fall of the United States from
anything like a leadership position in flour exporting,
with larger clearances not only being realized by the
European Union, the global leader for some years, but by
shippers such as Turkey, United Arab Emirates and even
India and China. Considering that America now counts
for hardly 5 per cent of world flour trade, and that at one
time it held a share above 50 per cent, the dimensions of
that fall are horrifying. Yet, out of all of these gloomy findings, one bright spot emerges, and that is that the loss of
overseas markets is being partly made up by expanded
takings of immediate continental neighbors.
It is tempting to view this emergence of Canada and
Mexico as the leading outlets for U.S. flour exports, ranking No. 1 and 2, as another sign of America's inability to
compete for business in countries that once were significant importers. And while that interpretation of how flour
exporting has evolved in recent years may be correct, it is
also important to note that the rise of these immediate
neighbors as major customers results from the 11-year-old
North American Free Trade Agreement, or NAFTA.
When NAFTA started in 1994, and indeed in the preceding years when the concept of an agreement was being hotly debated, the concept of a "new" NAFTA flour
market was not even discussed. Each NAFTA member
has a sizable milling industry, in the case of both Canada
and the United States an industry that has depended in
part on exporting. Yet, the 2004 export figures reveal this
shift, emphasized by the 30 per cent share of worldwide
U.S. shipments going to these two countries. It is the first
year that this relative importance was attained.

This development in flour exporting, which came as
a surprise to many, is a further important sign of how
NAFTA and similar agreements are changing the structure of grain-based foods. It is also proof of how trade
is facilitated, rather than hindered, by foreign direct
investment in the same industries. A large sector of the
Canadian milling industry is under the control of U.S.based companies, and the latter also are fairly largescale participants in Mexican milling. Similarly, the major role of Mexican and Canadian baking companies in
the ownership of U.S. baking capacity has not hindered,
and perhaps has encouraged, cross-border trade in the
products that these enterprises make.
While a few tariff-like obstacles, as well as geography,
stand in the way of full-scale integration, the direction is
obvious. It is not until 2008 that all of the permitted roadblocks to fully integrated trade will end. Recent moves in
the railroad industry to bring about integration between
lines serving the American market and Mexico signal
further progress, just as did prior similar consolidation
moves involving U.S. and Canadian carriers. Grain-based
foods may be grateful it is only an observer to the conflict
between the United States and Mexico over using high
fructose corn syrup as a sweetener in Mexican soft drinks.
Future negotiations will have to address the role of the
Canadian Wheat Board as a special entity benefiting the
wheat farmers of that country.
In surveying the current situation, the U.S. Department
of Agriculture recently noted, "Over the short span of a
decade, the grain and oilseed sectors of Mexico and the
United States have achieved a medium degree of integration that is starting to approach the high degree of integration between Canada and the United States." This result
certainly was the goal of the proponents of NAFTA. That
progress in integrating grain-based foods is leading the
way is heartening for all who appreciate the opportunities
of doing business in a growing North American economy.

Folic acid as central to regaining high ground

disappointing outcome from an international
study goes a long way toward proving a point
that has been central to the case being made
by those who take issue with denigrating the nutritional quality of grain-based foods. The point at issue
is whether the B vitamin, folic acid, is consumed in volumes large enough to provide protection against neural
tube defects in newborn infants. Nutritionists around
the world agree on the important role folic acid performs, at the recommended level in the diets of pregnant
women, by preventing the incidence of this disease. Its
efficacy when used in fortifying grain-based foods was
sharply revealed in a brief time between its adoption by
American bakers, mostly before the mandatory starting
date, and the finding that neural tube birth defects in the
United States declined nearly 30 per cent.
Casting doubt on the claim of critics of enriched bread
that the benefits of folic acid could easily be obtained by
taking dietary supplements is the recent international
study showing that the latter recommendation had no
measurable impact on the incidence of the disease. Since
the early 1990s, many countries in Europe have urged
pregnant women to take folic acid in supplement form
as a way of preventing birth defects. Surveys done before
and after this advice became widespread show little or no

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change in the incidence of this terrible disease. The study
declares that using fortification will "reduce this growing
and unceasing burden of preventable death and disability." The scientists doing the survey said their research
shows "the ongoing missed opportunities for prevention,"
adding that fortification of flour provides the best way of
reaching the desired outcome "quickly and at low cost."
The perception that the importance of folic acid delivered by fortification of flour, bread and other grain foods
is helpful toward regaining consumer appreciation for
grain-based foods was reinforced by the action of the
newly-launched Grain Foods Foundation in joining the
March of Dimes in its campaign to prevent birth defects.
The two organizations have pledged to work to make
sure women are aware of the importance of obtaining
sufficient folic acid intake by eating grain-based foods.
Indeed, the March of Dimes has decided to press for an
increase in the level of folic acid fortification in enrichment formulas as a way of assuring its effectiveness.
Grain-based foods must not forget the potential of this
B vitamin in other health-related aspects, focused mainly
on preventing heart disease. If this single vitamin has any
chance of being the crucial influence in regaining the high
ground for grain-based foods in the nutrition arena, then
it deserves maximum attention in every possible way. MBN
Milling & Baking News, May 3, 2005 / 9

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Milling & Baking News - May 3, 2005

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