Milling & Baking News - February 7, 2004 - (Page 1)

Theinewsweeklyiofigrain-basedifoods / Bush budget calls for creation of new food security initiative WASHINGTON - An interagency initiative to improve the federal government's capability to rapidly identify and characterize a bioterrorist attack on food was proposed in the Bush administration's budget package for fiscal 2005. The increased funding for food and agriculture security in the president's $2.4trillion budget was in contrast to a cut of 8% in overall spending proposed in the U.S. Department of Agriculture and a 2% reduction at the Department of Health and Human Services. Among other agencies slated for spending cuts in the budget were the Environmental Protection Agency and the Depart- N E W S LATE ments of Transportation and Justice. The food security initiative would involve the Food and Drug Administration, the U.S.D.A. and the White House Homeland Security Council. "This proposal represents the next step in our comprehensive food security strategy," said F.D.A. Commissioner Mark B. McClellan. "The additional resources will allow us to continue our efforts to give Americans the most protection possible from deliberate or accidental food risks." Under the budget proposal, the F.D.A. would receive an additional $65 million to boost its food security activities. That Continued on Page 20 F E A T U R E 'Normal' world weather could mean lower wheat prices ahead F actors that fed volatility and supplied upward price momentum to U.S. wheat futures markets in recent months soon could be overshadowed by a more normal global crop year in 2004, analysts interviewed by Milling & Baking News said. Huge grain imports by China could take a backseat to world weather patterns as the 2004-05 crop year develops. If weather in key world wheat growing regions proves "normal," which, admittedly is a big "if," wheat futures prices could decline through the next year, the analysts suggested. By the time the U.S. winter wheat harvest is under way in June, nearby futures could be in the $3.50-per-bu range on the Chicago Board of Trade and the Kansas City Board of Trade and in the $3.50 to $3.55 range on the Minneapolis Grain Exchange, said Paul Meyers, vice-president, commodity analysis, Connell & Company, Berkeley Heights, N.J. Steve Freed, vice-president, ADM Investor Services, Chicago, also voiced a bearish price outlook. Mr. Freed, too, projected $3.50 per bu at harvest for the Chicago July wheat future, with a small premium to that price for the K.C.B.T. July and a larger, perhaps 15c, premium in the case of the M.G.E. July. Mr. Freed expected prices to trend lower as the year progresses, down to the $2.90 to $3.20 range in the third quarter and $2.70 to $2.80 in the fourth quarter of 2004. Wheat futures prices could remain strong through March, though, depending on weather in the western High Plains and exports, before trending lower, the analysts Continued on Page 23 inside FEBRUARY 10, 2004 NEWS THOMASVILLE, GA. - Capped by solid fourth-quarter profits, Flowers Foods, Inc. in the year ended Jan. 3 achieved dramatically improved financial results over 2002. Flowers net income in 2003 was $14,658,000, equal to 32c per share on the common stock, compared with a loss of $16,955,000 in 2002. Sales were $1,452,995,000, up 9%. In the fourth quarter, Flowers net income was $17,203,000, or 37c per share, compared with a loss of $9,852,000 in the fourth quarter of 2002. Sales were $348,075,000, up 14%. Results for 2002 included charges related to the discontinued dessert operations of the Continued on Page 10 Flowers ends '03 with profit surge Plaza Belmont enters Mexican food business SHAWNEE MISSION, KAS. - An investment group led by Plaza Belmont Fund II L.L.C., a private equity fund specializing in the acquisition of food companies, on Jan. 30 purchased the assets of Casa de Oro Foods from ConAgra Foods, Inc., Omaha. Now named Casa de Oro Foods L.L.C., the company is a manufacturer of flour tortillas, corn tortillas, corn tortilla chips, taco shells, pizza crust and other flat bread products. The company also makes lowcarbohydrate tortillas, flavored tortillas and taco and fajita kits. John T. Stout Jr., chief executive officer Continued on Page 11 THIS WEEK Paterakis family buys balance of Schmidt 11 Ingredient Gold Medal Bakery president dies at 58 16 Soft red winter scab damage reviewed 40 Week 30

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Milling & Baking News - February 7, 2004