World Grain - June 2014 - 30

FEATURE: SERVING A CHANGING MARKET

The Flour Fortification Initiative
The growing awareness of how different foods impact health is something the grains
and milling industry is now addressing. And Greg Harvey, managing director and chief
executive of Asian miller Interflour Holdings, is leading from the front in his role as chairman of the board for the Flour Fortification Initiative, a global public, private, and civic
partnership aimed at encouraging the addition of vitamins and minerals to wheat flour,
maize products, and rice.
Harvey told World Grain that some 2 billion people, 30% of the world's population,
were now anemic, mainly due to iron deficiency, while an estimated 300,000 neural
tube birth defects occur every year globally. "Most of these could be prevented," he
said. "Vitamin and mineral deficiency contributes to more than one-third of all deaths
in children under age 5."
He said fortifying grains with iron improves iron status, which in turn helps children
develop physically and mentally. "Iron is also critical for productivity and the health of a
pregnant mother and her unborn child," he said.
"Every year, an estimated 38,417 serious birth defects such as spina bifida are prevented globally where flour is fortified with folic acid. That's an average of 105 healthier
babies a day."
Comparing the cost of fortification with the cost of treating children with spina bifida,
countries report a cost-benefit ratio of at least 1:12.
"In three consecutive sessions, the Copenhagen Consensus panel of leading economists ranked providing vitamins and minerals among their top three most cost-effective
investments," he said. "Fortifying wheat, rice and maize flour is the most economical
way of getting fortified products to emerging markets where they are needed most.
"As an industry it's our moral obligation to do something about this. And as industry
we need to engage in the regulatory process globally to ensure the rules are practical.
Fortification is done in the mill, so we need to have a voice."
based around manufacturing locations
and transport economics, with capacity now being built closer to market as
trucking costs have risen and delays
due to congestion have become more
of an issue."
As competition has increased, this
has dented the profit margins achieved
by many milling firms, although they
are still doing better than most growers.
Harvey said the gross margins of a typical Asian flour mill was now down to
15-20% compared to 25-30% a decade
ago. This is now impacting on the type
of grains millers require as they attempt
to trim costs.
Although Australian wheat varieties, particularly Australian Hard Wheat,
Australian Prime Hard and Australian
Soft Wheat, remain the key ingredients
in noodle flours in Southeast Asia, millers are also now experimenting with
alternative origin cargoes with low protein sourced mainly from the Black Sea.
These can enable cheaper grist, mak30

ing it popular among millers supplying
Asia's noodle wheat market.
Harvey believes growers have much
to gain from understanding and reacting to these demand changes to ensure
they are producing the most profitable varieties for the fastest growing
markets. And he called on Australian
producers, which have a major freight
advantage on rivals in Southeast Asia,
to innovate on wheat variety endproduct performance. High yielding
Australian Standard White or even feed
wheat could be used profitably to make
cheap bulk flour for 2-minute noodles,
but was not currently widely available, he said. Australian Hard wheat
offered good water absorption, while
Australian Club wheat soft varieties
that could be blended or substituted for
Soft Western White would also appeal
to Asian buyers.
"There is a general movement towards
higher ash, lower gluten products - optimizing extraction and using less expen-

sive wheat," he said.
"These cheap general purpose flours,
or 2-minute noodle
flours, have tight margins on sales but give
bulk efficiency to a
flour mill. But we do
Harvey
sometimes struggle to
send these messages back to growers."
Harvey said that although not always the best match for product quality,
Australian wheat was, however, consistently available and offered reliable
quality parameters across a gluten range
of 23%-32%, enabling usage in a wide
range of applications, and especially in
the two-minute noodle market, a staple
of many Asian diets.
But in other markets Australian growers could improve performance. In bread
sectors, for example, North American
varieties have long held sway in Asia.
"Bread flours are a different story
to noodles and is a big area of opportunity for Australian producers," he
said. "Apart from Australian Prime
Hard, Australian wheat is not typically price competitive with Dark
Northern Spring or Canadian Western
Red Spring."
He also told Australian producers they
could do more to convince Southeast
Asian customers they would be able to
meet increasing demand from Asia by
boosting output and by understanding
the importance of front-end December
to April shipments post-harvest before
Black Sea harvests became available
later in the year.
"Australia also needs to remain cost
competitive, offer supply chain flexibility and evolve a structure that allows
price signals both up and down the supply chain," he said.
Michael King, a freelance journalist and editor,
has been writing about shipping, transport and
commodities for more than a decade. Currently
based in Indonesia, he can be reached at:
Michael@borderline.eu.com.
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June 2014 / World Grain / www.World-Grain.com

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World Grain - June 2014

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