WASHINGTON, Nov. 12, 2014 – A new report from Rabobank Food & Agribusiness Research and Advisory group sees opportunities for investment in the U.S. flour milling industry, despite growth in flour consumption “that can only be described as modest.”

The report by Stephen Nicholson, a grain and oilseeds analyst, focuses on recent mergers in the flour milling industry and the effects of the mergers on wheat producers, flour buyers and the milling industry in general. The mergers covered in the report include: ConAgra’s union with Horizon Milling to form Ardent Mills; Pendleton Flour Mills, Milner Milling and Cereal Food Processors joining to form Grain Craft; and Japan-based Nisshin Mills purchase of several mills in the U.S.

Since stagnating in the early part of this century due to diet changes and other factors, flour use has been slowly increasing, driven primarily by population growth, according to the report. But the trend of modest grown is not expected to change, Nicholson writes.

“That said, we believe there  are still opportunities for the remaining millers and the potential for new investment in the U.S. flour milling industry, now that it is on the M&A radar.”

The report notes that even after consolidation, wheat producers will have the same number of mills in which to sell their wheat and that the new mill owners will be eager to prove to producers that they can be price-competitive. Millers will also have to identify new products, such as flat breads and ancient grains, and find new customers.

“The flour milling industry has demonstrated its resilience and, at the same time, attracted the attention of outside investors, showing that there are numerous opportunities remaining in the U.S. flour milling sector,” Nicholson writes.

“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,” says Nicholson.


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