Flour and Other Grain Mill Products

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SIC 2041

NAICS 311211

Manufacturers in this industry mill flour or meal from various raw grains, excluding rice. The products of flour mills may be sold plain or in the form of prepared mixes or dough for specific purposes.

INDUSTRY SNAPSHOT

This greatly diversified industry saw a general upward production trend in the late 1990s. For the flour market (the primary end use of wheat), fluctuating wheat production imposes the most critical global ramifications. As of the early 2000s more than 60 percent of the world's wheat supply was converted to flour for making breads, biscuits, cakes, and other dough products. On a consumer level, flour and grain products constitute a substantial part of the world's staple diet, since they are basic ingredients of practically every meal consumed by the world's 6.2 billion people. Fluctuating wheat production statistics largely portend the amount of food consumption and, in many parts of the world, the availability of food supply. In the United States, some 944.8 million bushels of wheat were ground for flour in 2000, but this number dropped steadily through the early 2000s, reaching 865.1 million bushels in 2004. This was the smallest amount in years, and represented the lowest per capita consumption since 1989.

A key factor affecting companies' survival in the flour industry is the ability to compete within the fluid conditions of wheat production and consumption. Companies must maintain the structural and financial stability to weather fluctuations in national currencies, weather-induced wheat shortages, and socioeconomic realities that figure so prominently in the industry. Many companies struggling to reinforce their market foothold attempt to expand their flour-based operations by acquiring new products or tapping new investment sources. Insufficient knowledge of consumer tastes and failure to take a long-term approach invariably lead to costly lessons for some companies, particularly those attempting to penetrate foreign flour markets.

ORGANIZATION AND STRUCTURE

The flow of wheat from field to table relies on a multitude of factors. The quality of a bountiful wheat crop ripe for the flour market industry depends on mild weather that lacks the extremes of cold or heat, rain or drought, wind, snow, or hail. Flour's various end uses derive from the milling process. In some parts of the world, even in the early 2000s, homemakers or local village millers still ground flour by crushing wheat between two stones or pounding wheat with a mortar and pestle. However, most modern mills employ sophisticated high-tech rollers, sifters, and purifiers for cleansing, grinding, separating, and blending wheat. Because individual flour mills normally grind only one wheat class prior to milling, several wheat varieties may be blended and tested. Hard wheats are primarily used for breads and rolls; soft wheats are used in sweet goods, crackers, and prepared mixes; while durum wheat is used in pasta noodles.

Two factors have largely determined flour utilization patterns: national food preferences and flour availability. Although wheat flour is the most popular, any grain can be converted to flour. Part of the universal appeal of wheat flour is that wheat cultivation adapts to a wide variety of climatic conditions. The global acceptance of wheat flour as a food staple resulted from its nutritional qualities. Wheat contains a unique protein called gluten. Mixed with water, gluten forms elastic dough capable of expanding several times its original volume during baking. The smaller amount of gluten protein contained in rye flour produces better dark rye breads, or if blended with wheat flour produces finer-textured light rye breads. Oat flour, the most nutritious flour, and oat meals are primarily used in breakfast food and granola-type products, while barley flour can be found in baby foods and malted milks. In some countries, large quantities of barley flour are used for bread making. Sorghum and millet flours are popular in India, Central America, and Ethiopia in the making of flat bread, tortillas, and pancakes. A small percentage of rice is converted to flour for use in baby foods and sauces. Buckwheat flour is often used in pancakes. Soybean technology has introduced soya flour and grits, which contain 50 percent protein and are adaptable to a variety of bakery products such as cereals, meat products, and soup mixes. Less appealing characteristics of soybean flour result from the multiplication of bacteria, especially during processing with steam and moisture. An excessively high bacterial count causes emission of off-odors and undesirable flavors. There has been continued research aimed to eliminate these adverse side effects.

All flour products must meet certain nutritional and cleanliness standards promulgated by various government agencies such as the U.S. Food and Drug Administration (FDA). The amount and type of additives, carbohydrates, protein, and other nutrients included in flour products derive from required nutritional and safety standards. By law, bread labeled "whole wheat" must be made from 100 percent whole wheat flour. U.S. legislation requiring truth-in-nutrition labeling mandates all food products to be labeled with a list of nutritional contents. The average composition of white flour includes 73.6 percent nitrogen-free extract and 13.5 percent water or other moisture. Millers can ill afford substandard products caused by too much or too little moisture, flour, or sugar, so most dough batches, under government controls, contain very small amounts of potassium bromate and other ingredients to enhance dough baking or other preservation qualities. Likewise the differences between bleached and unbleached flour also affect color and baking quality: bleached flour adds to baking quality and color values while unbleached flour performs better for cookies, pie crusts, and crackers. Despite numerous changes in flour composition and uses, the U.S. public's preference for white flour or bread remains undiminished—probably a carry-over from past eras when white bread symbolized a status befitting royalty.

Because grains are harvested close to the ground, sanitation factors largely determine the survival of flour mills. The Food and Drug Administration regulates sanitation controls for the United States' milling industry by defining levels for unavoidable, naturally occurring food defects considered non-hazardous to human health. High levels of flour bacteria are normally exterminated through numerous milling processes. It has been argued that the cleansing effectiveness of modern machinery not only removes all the bran and germ but also removes the part of the traditional bread flavor as well. On the other hand, some reports cite popular raw cookie dough as a contamination source because of the persistence of live microbes, apparently unaffected by milling heating or baking processes.

The primary structural change by the early 2000s was the worldwide shift of control over wheat and flour production and purchasing...

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