Monthly Archives: December 2015

Record Turnout In Dubai

More than 800 millers and exhibitors attend the annual IAOM Mideast & Africa Conference.

The IAOM Mideast and Africa annual conference and exposition, held Oct. 31-Nov. 3, returned to Dubai to begin its second quarter century as the region’s major platform for technical and business exchange in the milling industry. The commercially pulsating crossroads attracted a record number of over 800 registered millers and exhibitors from 60 countries for the three days of professional camaraderie and grain market and processing insights.

Organizers said 250 employees representing 130 milling companies were registered this year, marking notable progress in a key goal for the event and the 93 firms that occupied the sold out exposition space.

The forum’s content continued to reflect the rapid development of many countries into increasingly sophisticated consumer markets where there is growing demand for a greater range of packaged cereals-based foods as well as animal protein products.

Branding strategies, both personal and product oriented, were the topic of two of the management keynote speakers. They sought to provide answers to the question of how to differentiate and add value to wheat-flour based products that in much of the region are still perceived purely as a commodity.

Roy Loepp, IAOM president and Ali Habaj, regional director IAOM MEA, present an award of appreciation to Essa Al Ghurair for his quarter century of contribution to IAOM region. Emcee Rania Ali, a well-known Dubai television presenter, is seated.

Roy Loepp, IAOM president and Ali Habaj, regional director IAOM MEA, present an award of appreciation to Essa Al Ghurair for his quarter century of contribution to IAOM region. Emcee Rania Ali, a well-known Dubai television presenter, is seated.

Many Middle East and Africa wheat millers have been diversifying into animal feed production as growth in demand for eggs, broiler meat and other animal products accompanies dietary diversification resulting from increased incomes. After a successful side program on feed milling at the previous IAOM MEA in Cape Town, speakers addressing such questions as the most desirable particle sizes for maize in broiler feed were included in the main program.

Essa Al Ghurair, chairman of Al Ghurair Resources, the host of the event, opened the conference with a welcoming speech that laid out the program and innovations in the “mind sharing” and reminded the audience, “This industry touches rich and poor, young and old.” He suggested that millers continually ask themselves, “How can we be honest in what we do?” as suppliers of a key staple food.

MARKET OUTLOOKS

The highly anticipated presentations of crop and market conditions for the major wheat exporting regions were spread over two days. They painted a rosy picture of abundant wheat supply and low transportation costs for the short, medium and long term.

The results and projections for the Black Sea and the Baltic Sea were particularly significant for the grain-hungry countries of the Middle East. Hans Stoldt of Ameropa, a grain trader, boldly predicted wheat production and exports 10 years ahead to 2025-26 for the Black Sea region.

Based on a continuation of the steady yield and planting increases of recent years, he forecast that just five countries will ship 74.6 million tonnes of wheat primarily through the Bosphorus a decade from now, with Russia and Ukraine accounting for over 80%. That is a 65% increase over his estimate of 45.1 million tonnes in the 2015-16 marketing year. Since total exports of these countries, which also include Romania, Bulgaria and Serbia, have shot up from 1.4 million tonnes in 2000-01 to 39 million tonnes in 2014-15, this actually constitutes a significant slowing in the pace of growth.

The Baltic Sea region is also continuing its ascent as a major grain supply source, according to Indrek Aigro of Copenhagen Merchants, another grain trader.

Total wheat production in the eight countries has increased by over 60% since 1995 from 34 million tonnes to a repeat record of 55 million tonnes in 2015. Nearly all of this increase has become surplus available for export, given the slow rates of population growth in Germany, Poland, the three Scandinavian countries, and the three former Soviet Baltic states.

The latter will consume only 1.8 million tonnes of a record 6.8-milliontonne wheat harvest this year. The main challenge faced by shippers in the region is finding additional markets to absorb the 20 million tonnes on offer. Middle East and African countries, with annual wheat imports of nearly 70 million tonnes, are the main targets.

At the same time, as the former Soviet Bloc countries have developed into a major global supply source, a large part of U.S. wheat exports have shifted from the Middle East to other regions, according to Vincent Peterson, vice-president of overseas operations, U.S. Wheat Associates. From 1985-1990, the Middle East and North Africa took, on average, 30% of American wheat exports. Now the region accounts for just 3%. Latin America’s share has shot up from 10% to 40% of the average 25 million tonnes per year of U.S. export sales. This figure has changed little in the last 30 to 40 years.

Iranian millers, whose grinding capacity greatly exceeds domestic demand, are starting to target neighboring countries for flour exports. The chairman of GTC, Iran’s government wheat supply monopoly, stated in his presentation that exports of flour by Iranian millers to Afghanistan and Iraq could reach 1 million tonnes in the coming years, taking market share from millers in Pakistan, Kazakhstan and Turkey.

Iran’s strong contingent of milling companies is traditionally a bulwark of the IAOM MEA Conference. This year was no exception as over 30 mills were included in the 38 organizations providing 54 attendees from the country. The gradual lifting of economic sanctions means the millers have greater flexibility in equipment purchasing.

POSITIVE FEEDBACK

Exhibitors and attendees, both old and new, gave uniformly positive feedback on the conference. Copenhagen Grain Merchants’ Torben Christensen stated, “IAOM is a great conference and event where you meet existing as well as potential customers for the future.”

George Lasu, managing director of South Sudan’s only wheat mill, a 200-tonne-per-day plant being built in Juba by the Ramciel Multi-Purpose Cooperative Society, expressed his satisfaction, saying: “It was the first time for us to participate in the conference. It was very fruitful because we acquired a lot of knowledge and interacted with a lot of very experienced people in every field of milling. So we are very happy to be part of this association.”

Amer Ziyada, managing director of Millrite, Dubai, who has attended every year but one since the beginning, noted that the number of exhibitors this year was the largest he had seen.

But he added, “There should be more steps taken to increase the number of millers versus suppliers.” He suggested reducing the cost of the day pass to make the exhibition more accessible to mill staff. “When we started there were just 40 of us: 30 millers and 10 suppliers,” he said.

Another longtime participant, Nicolas Tsikhlakis, managing director of The Modern Flour Mills and Macaroni Co., Jordan, and member of the IAOM MEA Region Leadership Council, pointed out, “We had good representation of millers this year. It was a pretty balanced show with traders as well. Networking was very good.”

Seaboard Corporation senior trader Evert Ackorn called the IAOM conference “a fantastic forum for the industry to meet to discuss synergies, opportunities, and the challenges we face in an ever-changing operating environment.” He noted that his company “remains a strong advocate of these associations that provide a positive influence to millers.”

Anna Zenchuk, technical marketing manager of BioAnalyt, Germany, observed: “As a small, new company with an innovative product that simplifies measurement of Vitamin A and iron in flour, we valued the chance to speak for the first time at such a major gathering of millers.”

Another first-time participant, Steven Braco of RJ O’Brien, an independent Chicago, Illinois, U.S.-based futures commission merchant, said: “This event allowed me to interact informally with long-time clients and to better understand the risk management needs of major millers and the traders supplying them.”

REGIONAL FORUMS

To better meet the technical needs of milling professionals across the vast, culturally and economically diverse region, the IAOM MEA district this year began a series of regional milling forums. The first was staged in Nairobi in August, where 75 millers from 43 companies, including a large contingent from Ethiopia, were present for a workshop focused in part on aflatoxins in maize milling.

Ali Habaj, Oman Flour Mills CEO and IAOM MEA regional director, announced that, based on Nairobi’s resounding success, a second regional forum is planned for Algeria in 2016 where a few hundred small and medium millers comprise the bulk of the sector. It is to be IAOM’s first activity in the major wheat importing country.

IAOM MEA 2016 TO BE IN ETHIOPIA

The Dubai event concluded with the announcement of the selection for the first time of Addis Ababa, Ethiopia, sub-Saharan Africa’s de-facto political capital, as the site of the IAOM MEA Conference scheduled for October 2016. Ali Habaj observed that in a recent visit he was, “very impressed by the infrastructure and it is a fantastic market.”

Madame Abeba Tesfaye, vice-president of the Ethiopia Millers’ Association, accepted the nomination. Ethiopia’s population of 90 million is second in size after Nigeria in Africa. The country grows and consumes more cereals than all others below the Sahara. It ranks first in wheat production among them with around 3 million tonnes annually in addition to close to another million tonnes of yearly imports. There are between 200 and 300 milling companies in Ethiopia.

Many of the larger millers have been diversifying into pasta production. The annual crop of over 20 million tonnes of cereals, legumes and oilseeds still requires much in the way of improved storage and processing. Agricultural exports have boomed in recent years, underlying a high rate of annual GDP growth.

Original PDF article as appeared in the World Grain magazine.

Going from margin to mainstream

Rice importation and production have been on the rise in eastern and southern Africa.

As a cereal crop and staple food, the place of rice has rapidly shifted in many countries of eastern and southern Africa from the margin to the mainstream. Both importation and local production of rice have been on the rise.

In rapidly developing Mozambique, high quality rice is now the preferred grain of the burgeoning urban middle class. Colorfully packaged Thai varieties occupy entire aisles of shelf space in gleaming new supermarkets of Maputo, Beira and Nampula, while maize meal dominates only in public markets.

Foreign firms, sometimes backed by their governments, have acquired vast tracts of farmland for creation of rice plantations. China and Vietnam are reported to each have 100,000-hectare grants in southern Mozambique.

rice-harvesting-kpl-tanzania

Rice harvesting at Agrica’s KPL farm in Tanzania’s Kilombero Valley 450 km from Dar es Salaam. Photo courtesy of Carter Coleman.

Among the geographically and culturally diverse countries from Khartoum to Cape Town, the two top rice producing countries are Madagascar and Tanzania with 2.5 million tonnes and 1.4 million tonnes, respectively.

The top importing country is easily South Africa with 1.1 million tonnes, thanks to its big economy and large numbers of urban consumers. Three other aspiring middle-income countries each buy about 500,000 tonnes per year from outside: Mozambique, Kenya and Angola.

In all of sub-Saharan Africa, only economic giant Nigeria tops Madagascar as a producer and South Africa as an importer. A few national and sub-regional snapshots serve to illustrate the enormous variety of the rice industry in this half of sub-Saharan Africa

MADAGASCAR

Among African countries, rice plays the biggest dietary and economic role in the giant Indian Ocean island where the 23 million people consume about 300 grams daily per capita.

Milled rice production of around 2.6 million tonnes is on a par with Nigeria and accounts for nearly 20% of all rice grown south of the Sahara. Imports of around 300,000 tonnes per year ensure variety and high quality packaged rice to city dwellers while cheaper varieties and grades help keep a lid on prices. Poor farmers grow the crop as much for subsistence as for cash.

MOZAMBIQUE

In an interview with World Grain, a top manager of a leading Mozambican food importer stated that rice imports have been increasing on a year-to-year basis by 5% to 7%. Maputo accounts for 60% of the country’s total rice imports, he estimated. The rising middle class overwhelmingly prefers rice to maize meal.

Large importers bring rice in 25-kg and 50-kg bags in break bulk vessels saving $7 or $8 per tonne over containerized shipments. Vessels sizes are mostly 5,000 to 15,000 tonnes but sometimes 30,000 tonnes.

“New players are coming into the trade. Traditional wholesalers have begun their own imports in containers with their own brands,” the industry insider added. “More and more traders are now getting into rice imports.”

He estimates there are more than 50 importers now, but the top five still have a 50% market share.

KPL has a 500 kW biomass gasification plant powering 600 tonnes per day capacity silo dryers. The six MFS/Stormor silos have a total of 4,800 tonnes storage capacity. Photo courtesy of Murray Dempsey

KPL has a 500 kW biomass gasification plant powering 600 tonnes per day capacity silo dryers. The six MFS/Stormor silos have a total of 4,800 tonnes storage capacity. Photo courtesy of Murray Dempsey

In Maputo, 80% of the imported rice is from Thailand. It is almost all 5% broken, but just 10 to 15 years ago the standard grade was 25% broken, before shifting to 15% broken.

In the less prosperous center and north, the standard is still 15% broken. The share of 25% broken is now very small. There is also more Pakistan and Indian origin rice in the Beira and Nacala corridors. Basmati rice is a small but growing share of the market.

Local rice is a sweet, long grain. Production is increasing in the rain-fed southern zone where it does well and now accounts for about one third of total consumption that stands at 750,000 tonnes. Some high quality domestic rice is also available in Maputo supermarkets from various rice millers in the south.

TANZANIA

“In a good year, Tanzania is self-sufficient in rice production,” said Carter Coleman, CEO of U.K.-based Agrica Ltd, operator of a large commercial rice farm in Tanzania. He maintains that exports to neighboring Uganda, Rwanda and Burundi, all members of the EAC as well as to eastern and southern DRC, can exceed volumes of low-cost rice coming in from Asia.

Much of the incoming rice is smuggled via Zanzibar. The Tanzanian island has a special status in the EAC and is allowed to impose only a 12% duty on rice. Four or five companies bring rice legally to the island where it is rebagged and transported along the coast to small “pirate” or “dhow” ports as the local media calls them. Official data have shown Zanzibar with by far the largest per capita rice consumption in the world.

Coleman, who is also vice-chairman of the Rice Council of Tanzania, thinks that the 75% EAC import duty will be needed for some time. The Rice Council has issued a position paper that says East Africa is decades away from competing with Asian exporters of rice on a cost basis.

“Farming is rocket science and farming in Africa is like farming on Mars. You must be totally self-sufficient. You need 1.5 times the number of tractors and combines because parts are not readily available.”

Rice production in Tanzania is in four main zones including the Tsonga River Valley in the south and Arusha/Moshi area near Mount Kilimanjaro in the north.

Production is a mixture of corporate farms and smallholders. ETG’s Kapunga farm with 3,000 hectares irrigated via a 12-km canal from the Ruaha River near the Malawi border is one of the largest. It was a Japanese government project in the 1970s and was only privatized eight years ago.

Coleman remains optimistic about better government control over smuggling thanks in part to the media campaign of the Rice Council supported by its 350,000 smallholder members. Agrica’s Tanzanian farm has plans to install center pivots to increase irrigated area from 1,445 hectares to 3,037 hectares with cropping during both the rainy and dry seasons.

Small farmers have been benefiting from introduction of new varieties and better agronomic practices. In the past, rice was sown by broadcasting. Now more transplanting is being introduced. New varieties include hybrids and aromatic varieties related to basmati.

OTHER EAC

Elsewhere in the Great Lakes Region, rice has a long history as a cash crop in certain well defined areas with irrigation schemes such as the Ruzizi Plain between Lake Kivu and Lake Tangayika, straddling Burundi and South Kivu province of the Democratic Republic of Congo (DRC) as well as in Uganda on the flood plain below Mount Elgon near the southeastern border with Kenya.

Internationally funded projects carried out decades ago built dams and canals and leveled land in these areas and the local population was introduced to rice cultivation.

Indian rice producer Tilde has invested in rice farming and milling in Uganda, focusing on the basmati varieties it is known for.

In Rwanda, there has been a recent push to carve rice paddies out of the bottom of narrow river valleys throughout the country, but yields in some rain-fed highland areas can reach six tonnes per hectare.

A multitude of donors have funded projects to introduce improved seed varieties, fertilizers, mechanized farming implements, and better drying and storage facilities. The results are often mixed but progress has been made. In Bukavu, the largest city in South Kivu, the Heineken-owned Bralima brewery sources locally from the Ruzizi Plain nearly all of its rice used as an adjunct. It was still importing rice from Asia several years ago and its need has increased as beer consumption has risen sharply. In remoter parts of DRC, such as the interior of South Kivu province, rice is an important rain-fed, subsistence crop that is hand sown, manually harvested and husked. Yields rarely exceed one tonne per hectare. Kenya’s rice imports are large because it has negotiated an exemption to the EAC common external tariff that allows Pakistan rice to come in with a 35% duty in reciprocity for special treatment of Kenya’s tea exports to Pakistan.

SOUTHERN AFRICA

In South Africa, imported rice consumption mainly by middle and highincome groups in large cities has more than doubled to 1.1 million tonnes from 523,000 tonnes in 2000. Diversified food majors like Tiger Foods import and package rice under their house brands. Still, the per capita consumption figure is low among the 55-million population as maize meal remains the main staple among most groups.

The pattern is similar in other large countries like Zimbabwe and Zambia.

Oil rich, highly urbanized and food import dependent Angola has seen foreign rice consumption increase by a factor of seven in a span of 10 years from 65,000 tonnes to 450,000 tonnes.

HORN OF AFRICA

Imported rice and pasta are traditional food staples accompanying a semi-nomadic herding and trading way of life in Somalia as well as ethnically Somali Djibouti and the eastern Somali Region of Ethiopia. Smuggling is rampant so reliable import numbers are hard to come by. In Djibouti, trade data showing 120,000 tonnes of imports indicates consumption of over 120 grams per capita daily.

Rice production is a relatively new phenomenon in Ethiopia, where cereals cultivation is an ancient practice, but is starting to take hold. Planted area has increased by several times since 2005 and government is forecasting a 140,000 tonne crop for 2014-15. Foreign investors have been granted large tracts of untitled land in the water-rich tribal lowlands of the southwest to be converted to major rice plantations through costly investments in land preparation.

On the highland plain around Lake Tana, the source of the Blue Nile, in the last decade farmers have increasingly learned to take advantage of annual flooding during the summer monsoon season by sowing rice instead of seeing traditional grain crops drowned.

Gradually, local rice is becoming a part of the urban diet in Addis Ababa and regional centers, just as it is increasing its “share of stomach” in almost all large cities of Africa.

Original PDF article as appeared in the World Grain magazine.