Several recent mergers in the U.S. flour milling industry will impact wheat producers, flour buyers and the milling industry in general, Rabobank's Food and Agribusiness Research and Advisory group says.
The mergers include ConAgra and Horizon into Ardent Milling; Pendleton Flour Mills, Milner Milling and Cereal Food Processors into Grain Craft; and Nisshin Mills entering the U.S. and purchasing several mills.
The industry has already navigating changing diets, consolidation and rationalization due to falling demand, said report author and 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," he said, but Rabobank projects that there are still opportunities for the remaining millers and the potential for new investment in the U.S. flour milling industry.
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, and new mill owners and entities will be anxious to prove that they can be price-competitive to producers.
"They want to prove to their customers … that they can be competitive in the marketplace," Nicholson said.
Flour millers will need to have and identify new products or find new customers and learn to focus on their strengths, Rabobank said.
"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," Nicholson said.