African Flour Millers to Assess U.S. Wheat Quality and Trade Opportunities
June 10, 2016
ARLINGTON, Virginia — Reliable ingredient sourcing and supply are key to any market functioning successfully. For 15 years, Nigerian millers have traveled to the United States to take stock of their primary supply of HRW wheat. This year, two milling executives from South Africa and Ghana are joining five Nigerians on a team that will travel to Texas, Kansas, North Dakota and Minnesota June 12 to 24, 2016, to assess trade opportunities and U.S. wheat quality.
“The milling industries in these countries rely on an uninterrupted supply of quality wheat,” said Gerald Theus, USW regional assistant director for Sub-Saharan Africa in the regional Cape Town, South Africa office. “In competitive markets where we face new challenges, there is nothing more valuable than connecting these participants directly with the farmers and other members of the supply chain.”
USW collaborated with the Texas Wheat Board, Kansas Wheat Commission, North Dakota Wheat Commission and Minnesota Research and Promotion Council to organize and host this trade team. Theus and James Ogunyemi, USW technical consultant for the Lagos, Nigeria, office, will lead the team.
In marketing year 2015/16 (June to May), Nigeria was once again one of the largest buyers of all U.S. wheat classes and is the dominant buyer in USW’s Sub-Saharan Africa region having imported more than 1 million metric tons (MMT) of hard red winter (HRW). The market development activities USW followed there provides a foundation for other nearby countries including Ghana. South Africa is a steady if not large wheat importer but with good potential.
“This team represents major milling groups in each of their respective countries,” said Theus. “Mills throughout Africa appreciate the high milling quality characteristics of U.S. wheat and its superior baking aspects.”
Bringing these buyers to see U.S. wheat quality and to discuss ways to keep their importing costs down is a very important activity during a time of very aggressive competition. Throughout the tour, the team will meet with various grain merchandisers and state wheat commissions, and visit farmers in each state to see the progress of the 2016/17 wheat crop. In Texas, the team will visit the Port of Corpus Christi and in Kansas, their stops include the Kansas Wheat Innovation Center, USDA’s Center for Grain and Animal Health Research and IGP Institute. During their travel to North Dakota and Minnesota, the team will meet with wheat breeders and tour the Alton Grain Terminal, Duluth Seaway Port Authority and CHS Export Terminal.
USW is the industry’s market development organization working in more than 100 countries. Its mission is to “develop, maintain, and expand international markets to enhance the profitability of U.S. wheat producers and their customers.” USW activities are made possible through producer checkoff dollars managed by 19 state wheat commissions and cost-share funding provided by USDA’s Foreign Agricultural Service. USW maintains 17 offices strategically located around the world to help wheat buyers, millers, bakers, wheat food processors and government officials understand the quality, value and reliability of all six classes of U.S. wheat.
2016 Regional Trade and U.S. Crop Quality Assessment Team – Members
Procurement Manager, Pure Flours Mills Ltd, Nigeria
Manager Financial Control, Honeywell Flour Mills Plc., Nigeria
General Manager, Life Flour Mill Limited (Seaboard), Nigeria
Wheat Discharge Manager, Honeywell Flour Mills Plc., Nigeria
Group Supply Chain Executive, Dangote Flour Mills, Nigeria
Manufacturing Executive, Pioneer Foods, South Africa
Chief Miller, TEMA Flour Mills, Ghana
Regional Assistant Director, U.S. Wheat Associates, South Africa
Technical Consultant, U.S. Wheat Associates, Nigeria
The U.S. Wheat Industry Relationship with Nigeria, Ghana and South Africa
Nigeria is a success story for the U.S. wheat industry. After a six-year wheat ban ended in 1992, Nigeria imported nearly 350,000 MT of U.S. wheat. Since then, the United States has re-established itself as the major supplier of wheat to the Nigerian milling industry.
On a USW sponsored trip to Nigeria in 2014, some U.S. wheat farmers heard FAS Regional Agricultural Counselor Russ Nicely suggest that, “the Nigerian market is based on relationships between U.S. wheat farmers and Nigerian customers who are consistently among the top U.S. wheat buyers. Wheat has found a home, and it is going to stay here.”
Nigerian wheat consumption continues to rise rapidly. More and more Nigerians are looking for a nutritious, convenient food and they are finding it in the fastest growing product segment — instant noodles made primarily from HRW. Today, Nigeria is behind only countries in Southeast Asia in per capita consumption and nearly every milling company is manufacturing instant noodles, even though they first appeared on the market less than a decade ago.
The United States dominates Nigeria’s wheat import market, despite a decrease in market share and increased price competition from other suppliers, including Canada, Australia and the Black Sea region. USW's in-country service office in Lagos and a commitment to technical training and exchanges have combined to build strong Nigerian loyalty to U.S.-origin wheat. Yet, Nigeria continues to have tremendous untapped potential for increased milling capacity, including for Nigerian flour exports to other West African markets like Ghana.
That commitment to building lasting trade partnerships — coupled with USW’s long-standing presence throughout the African continent — has earned U.S. wheat a reputation for high quality and reliability.
In Ghana, the market is very competitive with rapid expansion and a continued need for technical training. Also during the 2014 trip, one mill explained to the U.S. farmers that small bakers, who use between half of a 50-kilogram bag up to 100 bags of flour per day, consume most of the flour in the country. These bakers either take their dough to a communal mixing facility or simply let it ferment on-site for up to 12 hours. As a result, mills must sell flour that can perform well variable conditions to produce the high-volume loaf preferred by customers. Bakers blend multiple flours to spread their risk, but if they feel one type of flour is underperforming, they will quickly switch.
One miller said, “We cannot trade off on quality. We err on the side of higher quality, even if it comes at a higher price.”
U.S. wheat exports to Ghana are partly commercial and partly by donation. In MY 2014/15, Ghana imported 53,000 MT of U.S. wheat, including 50,000 MT of HRS and 3,000 MT of HRW. This is down from 63,000 MT in 2013/14, but right in line with the 5-year average. This represents an opportunity to help Nigerian milling customers to export the flour they product from U.S. wheat to Ghana and educate the wheat food supply chain in Ghana about the benefits of flour from U.S. wheat as a market development strategy.
Wheat consumption is related to the price of competing locally grown Ghanaian food crops including rice, cassava, tubers and potatoes. Although these crops are seasonal, bumper production years cause prices to be low in comparison to imported wheat, negatively effecting bread consumption.
South Africa is expected to import about 2.0 MMT of wheat in MY 2015/16 and is considered an opportunity market for U.S. wheat, though it faces aggressive competition for market share from Canada, Australia, Argentina, the EU, Russia and Ukraine. The South African flour milling industry is very sophisticated, and millers are both price and quality conscious.
In recent years, South Africa has imported 1.4 to 1.7 MMT of wheat annually. At the right price, the professional South African millers are not afraid to take a chance on wheat imports from new sources, and when U.S. wheat is competitively priced South African millers will buy it. Importers annually assess the quality and price of the local and world wheat crops and make buying decisions accordingly.
South Africa is the only country in sub-Saharan Africawith significant wheat production. Production has been sporadic over the past ten years, varying between 1.4 and 2.2 MMT annually because of changing weather conditions and competition from corn and soybeans.
The South African population is growing by 1.7 percent annually, with annual wheat consumption holding flat at about nearly 3.2 MMT, the highest in sub-Saharan Africa. There has been an increase in the variety and quality of fresh-baked products available to consumers. Approximately 90 percent of wheat consumption is bread — mainly high loaf pan bread — with the remaining 10 percent in buns, rolls, confectionary products, pasta and biscuits.
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