Tag Archives: Ethiopia

Flour Millers Gather In Ethiopia

For the first time, Addis Ababa, Ethiopia, Africa’s unofficial capital, hosted the International Association of Operative Millers (IAOM) Mideast and Africa (MEA) Conference and Expo, Oct. 24-27, at the Millennium Hall. The 27th rendition of the event, perhaps the weightiest gathering of the global wheat and milling industry annually, drew more than 500 participants from 46 countries for exchanges of market and technical information both in educational forums and on the trade show floor, which featured 92 exhibitors from 22 countries.

Representatives of many of the Ethiopian Millers Association’s 350 member companies were able to enjoy unprecedented contacts with leading global technical experts, traders and equipment suppliers. The country’s milling sector has been steadily industrializing to cope with 20 million tonnes of annual cereals production. A record 2 million tonnes of wheat imports came into the country in 2016 to compensate for the drop in domestic cereals production due to the worst drought in decades.

Africa Panel

The milling industry’s challenge of feeding economically growing African countries was the theme of the opening panel discussion.

“Africa is number two in the rate of wheat consumption growth after Southeast Asia,” said Dan Basse of AgResource Company. “Sub-Saharan African demand is increasing the most. Average caloric intake of rest of the world is leveling off, but Africa is still increasing.”

He added, “The world on average needs 1.8% more food per year but is producing 2.8% more.”

Panel moderator Martin Schlauri, managing director of Bühler’s African Milling School in Nairobi, pointed out that 70% of the grain used by East Africa’s industrial millers is imported, and milling to feed the region’s 330 million people accounts for nearly one-third of electricity consumption.

Brad Allen of Ardent Mills speaks at the IAOM MEA Conference.

Abubakar Bakhresa, executive director of Said Salim Bakhresa & Co. Ltd., the region’s dominant milling group, commented on the need to upgrade skills. “We used to send millers to Mysore, India or Europe for training but now can we send them to Nairobi,” Bakhresa said. “We are sending millers from all our mills.”

The key to efficiency is standardization of operations, observed Nick Hutchinson, group managing director of Unga Holding.

“We must introduce ways to measure efficiency,” he said. “Another challenge is maintenance. We need competent people.”

Local grain supply also was discussed. Esubalew Kefale of Ethiopian biscuit producer Ahadukes Food Products observed that in Ethiopia wheat is not segregated well in the marketplace.

“It is difficult to maintain quality standards,” Kefale said. “Biscuits need two types of grain quality. The flour millers’ association is providing training but the problem is raw material.”

Government Intervention

For the first time IAOM MEA directly addressed the politically sensitive and complex topic of government intervention in grain markets in the Middle East and North Africa. The panel included industry leaders from four countries.

Mohamed Reza Mortazavi, director of the Iranian Federation of Food Industries, said that in 2012 there was a brief period of market liberalization allowing millers to buy 80% of the wheat crop, but that since 2013, an election year, Iran’s government has been buying 85% of the wheat crop at above market prices, including 11.5 million tonnes of wheat from this year’s bumper crop. Farmers received $375 per tonne while government allocates the wheat at just over half that price to millers in order to keep bread and pasta prices low. Including 5 million tonnes of carryover, government stocks are at 16.5 million tonnes. But the country only needs 8 million tonnes for subsidized bread and 2 million tonnes for pasta.

From left, Merzad Jamshidi, KFF Mills; Essa Al Ghurair, Al Ghurair Foods; and Dr. Mebrahtu Meles, Ethiopia’s state minister for industry.

Essa Al Ghurair, chairman of Al Ghurair Resources, cited Egypt’s introduction of debit cards for social welfare recipients to replace heavily subsidized bread. Beneficiaries are happy to be able to buy higher quality baked goods or cooking oil. The innovation may reduce wheat consumption and wastage in the wheat import-dependent country.

Gunhan Ulusoy, chairman of the Turkish Federation of Flour Industrialists, remarked that cereals purchases and sales by the Turkish Grain Board vary according to crops and markets but are limited in most years to 2 million to 3 million tonnes, depending on the need to support farmgate prices. Turkey’s position as the world’s number one wheat flour exporter has mostly to do with logistical convenience of importing low-cost Russian wheat and a highly-efficient milling sector. Half of Turkey’s 3 million tonnes of flour exports are going to strife-torn Iraq and Syria, he said.

In Lebanon, wheat imports and wheat flour sales are mostly on a free market basis, said Patricia Bakalian, CEO of Bakalian Flour Mills. However, the government has intervened in the past to subsidize flour prices when world wheat prices have spiked.

Overabundance Of Wheat

“The world is awash in wheat,” said Basse, who moderated the market outlook sessions. “Prices are at a 10-year low. The Black Sea continues dramatic rises in production.”

Dan Basse of AgResource Company speaks during a panel discussion at the IAOM MEA Conference in Addis Ababa, Ethiopia. Photo courtesy of IAOM MEA.

Russia, with a 70-millon-tonne wheat crop, has displaced Canada and the U.S. as the top wheat supplier to the world. Global wheat prices are now set in the Black Sea, not the U.S. Gulf.

The U.S. had “practically perfect planting and harvesting conditions” said Ian Flag, regional director of U.S. Wheat Associates. “U.S. supply is 17% above the 10-year average.” HRW carryover stocks of 29.5 million tonnes are nearly a record.

Low world prices mean that Australian wheat growers will store their crop longer than usual, commented Nick Poutney, regional manager for GrainCorp.

“They will not plant as much next season,” he said. “There is a large increase in take-out of pulses in rotation. Crop size is getting large enough so bulk vessels shipments instead of container loads will become feasible.”

In contrast to other leading export origins, both France and the Baltic region saw smaller crops.

“There is a big lack of wheat in France,” Jean-Pierre Langlois-Berthelot of France Export Cereales informed the gathering. “Production of 28.2 million tonnes of milling wheat is 24% below the average. Usually the country exports more than 50% of its crop. There is a lot less wheat to export this year than in other countries.

“In France, everything went wrong in May. The cycle of vegetation of wheat was totally disrupted by rain. Average yield was 7.5 tonnes. Low radiation meant unusually low test weights. The average is 45 grams per 1,000 kernels but this year’s crop is only 37 grams. High ash content is unusual as well.”

Langlois-Berthelot also predicted that due to the low French yields combined with depressed prices from the global glut, half of French wheat growers could go bankrupt without a French government or E.U. rescue.

Indrek Aigro of Copenhagen Merchants, Denmark, noted that a cold February resulted in winter kill in Baltics. “There is 5 million tonnes smaller production so we will have 5 million fewer tonnes of exports,” he said. “There is a loss of 7 million tonnes of quality milling wheat. There is only 9 million tonnes of milling quality wheat compared to 14.5 million tonnes last year, so 5.5 million tonnes less.”

Next Year’s Event In Dubai

In his welcome speech, IAOM regional director Ali Habaj explained a revamping of the IAOM MEA website to provide a platform for new and used machinery and employment opportunities in the sector. The postings will be in English, Arabic and Persian.

Closing the conference, Habaj announced a return to Dubai, United Arab Emirates as the site of the 28th IAOM MEA Conference and Expo in in the fall of 2017.

The Glencore booth was busy with visitors during the trade show.

Merzad Jamshidi, KFF Mills, asks a question as David McKee, grain industry consultant, looks on.

Danilo Carloni, OMAS, gives a presentation on the Leonardo Rollermill.

Dr. Lutz Popper, Mühlenchemie GmbH & Co. KG, gives a talk on Nutritional and Technical Improvement of Flour for Bread and Pasta.

David Balaguer, Fundiciones Balaguer, gives a presentation on the company’s new Optical Fluting Test.

From left: Martin Schlauri, African Milling School, xxxxx, Ethiopian Millers Association; Ali Habaj, Atyab Investments & Oman Flour Mills Co.; Dr. Mebrahtu Meles, Ethiopia’s state minister of industry; Andreas Flueckiger, Bühler AG; Essa Al Ghurair, Essa Al Ghurair Investment LLC; Anas Shaar, National Flour Mills; and Adama Ekberg, Nations Unies.

Ethiopia’s Italian connection

Italy’s close past and current economic ties with Ethiopia, particularly in the agricultural and food sector, were highlighted at “Wheat, Flour, And…”, a high profile sideline event held concurrently with the IAOM MEA Conference in Addis Ababa and at Ocrim’s world headquarters in Cremona, Italy.

Ocrim SpA, the Italian embassy, and Ethiopian Millers Association co-sponsored a gathering that drew more than 120 participants and included a live video conference with a panel of Italian food entrepreneurs in Cremona. Matteo Antolini, Ocrim vice-president, noted that his company has been in Ethiopia for 35 years, having supplied many of the first industrial wheat mills in the country.

Ocrim CEO Alberto Antolini addresses attendees at the Cremona, Italy portion of Ocrim’s “Wheat, Flour and...” video conference event.

Given the presence of 12 Italian equipment companies exhibiting at the IAOM, the transfer of milling and pasta production technology was one of the main themes.

Ocrim Vice-President Sergio Antolini speaks to attendees at the Addis Abbaba, Ethiopia portion. Photos courtesy of Ocrim.

Pasta has been popular among Ethiopia’s urban consumers since its introduction after the first contacts with Italy 120 years ago. In the last decade an increasing number of food enterprises, particularly milling companies, have installed new pasta production lines, but wheat quality and availability is a constraint.

In the past, semolina millers and pasta producers could import their own durum in containers, but foreign exchange controls and the government monopoly on commercial wheat imports prevent this option now.

Tiberio Chiaria of the Italian Agency for International Cooperation (AICS) observed, “Ethiopia is importing 40,000 tonnes of pasta per year, so there is a demand for quality.”

Ethiopia is now growing an additional 50,000 tonnes of durum wheat per year, thanks in part to support from AICS, which imported 40 tonnes of improved durum seed from Italy selected for planting in Ethiopia’s Bale region. It has dry growing conditions similar to Italy, Europe’s leading durum producer with a forecast of nearly 5 million tonnes forecast in 2016-17.

Ethiopia’s state minister for industry, Mebrathu Meles, outlined Ethiopia’s ambitious goal to attract foreign direct investment and become “the leading country for light manufacturing in Africa.”

He noted that Ethiopia offers a wide range of agro-ecological zones where almost anything can be grown, and so is seeking to attract agro-processing investment. Noting that Italy is a successful model of development of light industry and high value agricultural products, he asserted, “We have a long-term relationship with Italy. We should maximize it.”

AICS general manager Ginevra Letizia said Italy has committed to invest $180 million over five years in agro-industrial support, particularly the building of infrastructure.

Meles elaborated on the government’s own support for infrastructure, outlining plans to build four major agro-industrial parks around the country to house food processing companies. The first such park is under construction.

AICS senior economist in Ethiopia, Andrea Ghione, validated the concept.

“Industrial parks are clusters for processors and a pull for producers,” Ghione said. “They can provide a steady demand for certain products with certain quality. There are opportunities for agro-processors.”

Ghione further observed that the agro-industrial parks will provide some economies of scale in warehousing and require aggregators to deliver standardized quality raw materials like grains in 16.5-tonne trucks as the minimum marketing unit.

Ocrim presented Captain of the Year awards to food manufacturers Bira Food Complex and K.O.J.J. Manufacturing, as well as the Oromia Agricultural Research Institute for their contributions to development of the cereals value chain in Ethiopia.

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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.