U.S. Flour Milling Industry Faces Changes.

 

Rabobank News.

 

Several recent mergers in the U.S. flour milling industry and the impact of these mergers on  wheat producers, flour buyers and the milling industry in general  is the focus of a new report from the Rabobank Food & Agribusiness (FAR) Research and Advisory group. 

 

The report, “Ag Focus: U.S. Flour Milling: Grist for the Mills” explores the implications of, and opportunities resulting from, several recent mergers including:

 

• ConAgra and Horizon into Ardent Milling

• Pendleton Flour Mills, Milner Milling and Cereal Food Processors into Grain Craft

• Nisshin Mills entering the U.S. and purchasing several mills.

 

“The flour milling and baking industries have weathered changing diets, consolidation and rationalization due to falling demand, all in the past decade,” says report author and Rabobank Food & Agribusiness Research and Advisory (FAR) group Grain and Oilseeds Analyst, Stephen Nicholson. “Growth in flour consumption in the U.S. can best be described as modest, and that trend is not expected to change. That said, we believe there  are still opportunities for the remaining millers and the potential for new investment in the U.S. flour milling industry, now that it is on the M&A radar. ”

 

In the report, Rabobank projects that production and domestic use will continue to increase at a modest rate, driven primarily by population growth. Since stagnating in the early part of this century, flour use has been slowly increasing. 

 

The report goes on to note that wheat producers will have the same number of mills in which to sell their wheat. New mill owners and entities will be anxious to prove that they can be price-competitive to producers. Flour millers will need to —and have—identify new products (e.g. ancient grain flour, flat breads, etc.), find new customers and learn to focus on their strengths (e.g. geographic, customer service, etc.). The flour milling industry has demonstrated its resilience and, at the same time, attracted the attention of outside investors, showing that there are numerous opportunities remaining in the U.S. flour milling sector.

 

“This is an unprecedented time in the flour milling industry with huge structural changes. It’s going to be very interesting to see how everyone reacts and finds their market niche, their customer niche, and moves forward as the flour industry continues to change,” says Nicholson.