“The cost drivers for wheat are currently up-trending which provides an upward price pressure. The shortage in wheat sources aggravated with varying wheat qualities and lower baking performance affects baked products quality, results in difficulties of manufacturing a large range of flour types and managing production costs.”

Wheat ranks among the top three cereals in the world alongside rice and corn in terms of production and human consumption. Its popularity mainly stems from its ability to grow in a variety of soil and climatic conditions; from the southern regions of South America to the northern latitude of about 60°. But most importantly, from its unique ability to produce leavened bread and a multitude of baked products. Being the principal component of bread, quality of the wheat flour is vitally important. The wheat kernel, however, is highly heterogeneous in structure and composition and this heterogeneity arises from genotypic differences combined with environmental effects.

Global changes in climatic, soil and agronomic growing conditions further underline the fluctuating quality of wheat crops on a yearly basis. Significantly, many aspects of flour quality are a direct consequence of the quality of wheat used for milling. 

Wheat prices today are at the highest levels since 2007. Events from February 24th have caused an unprecedented situation leading to an existential threat of the global wheat foods industry including farmers, farmer cooperatives, exporters, importer millers, bakers, and manufacturers. 

Supply chain disruptions, exacerbated by the pandemic have also been adding to the surging prices

Harsh droughts, such as those in North America have resulted in a 30% reduction in their production. However, the US wheat price increase is not reflected in the mills’ flour prices. Dramatic wheat prices have increased by 50- 65%, whereas flour prices at bakeries are up by 10-20% only. Millers are already in a challenging situation where either miller or bakers are losing money (U.S Wheat Association, 2022).

In the 2021 season, supply decreased by 5.4% which initiated a new downtrend. The 2022 season forecast predicts another decrease of 10.0% which will contribute further to the downtrend. If realized, the continued downtrend will induce an upward price pressure (Mintec, 2022).

Numerous other factors also affect this key global commodity’s quality and supply. For example, the quality profile of the crop in Australia was impacted by a wet harvest, which resulted in a high proportion of the wheat crop being downgraded to low protein and feed grade wheats (ABARES- Department of Agriculture, Water and the Environment, Australia Government, 2022) while Argentina, the single largest wheat producer in South America has strong production output, but an export quota is in place. 

The Black Sea region (Russia, Ukraine, Kazakhstan) is the major region for the world wheat market, and the current conflict means lowest ending stocks, disruption to shipping, escalation to sanctions and increased demand add to the pressure on price. 

In conclusion, world demand for wheat is currently in an uptrend according to the latest USDA forecast. This is supported by the demand sectors. In the 2022 season, demand is expected to increase in all regions apart from China and Russia. The world supply/demand balance is down trending monthly. This puts an upward pressure on wheat prices. So, the cost drivers for wheat are currently up trending which provides an upward price pressure (Mintec, 2022).

The wheat gristing cost optimization model – no compromise on final flour quality 

Every flour mill faces a plethora of challenges affecting its business operations. Some of the challenges may include inconsistent flour quality, required enhancement of flour quality, raw material price fluctuations, wheat purchasing costs, non-optimal flour extraction rates, new product development, and the need to innovate. 

In this article, we bring the relevant information that will help in optimizing the wheat grist cost without compromising on final flour quality, which results in unlocking the full baking potential of flour. 

Over the years, wheat milling has adapted to this heterogeneity to optimize the transformation of wheat into different types of flours with different uses in food. All desirable business outcomes are connected to three main decision criteria: wheat sourcing, wheat gristing and flour correction.The interrelationship between these three factors and business outcomes are depicted in Fig. 1.

Together, these factors and outcomes can help optimize costs, standardize flour performance, and support new product development.

Smart purchasing of wheat is vital for the profitable and sustainable running of any flour mill because it is intrinsically linked with grain price through mill operational protocols and customer expectations.

Wheat procurement and purchase, however, involve both risk and a considerable amount of investment both in time and money. The fact that wheat has become a major commodity in world markets results in high price volatility. Therefore, it becomes more important to purchase through reputable exporters or intermediaries. Inherent knowledge of the origin, source and specification of any given wheat is also extremely important.

Cost at first break is just one way of predetermining cost. There are many others – first break raw, protein on a moisture free basis (MFB), wet gluten (WG), extraction ratio and even baking score – which allude to end user considerations and expectations.

The primary driver behind sustainable wheat sourcing has always been to achieve a reduction in protein costs and to attain a positive result in mill profitability by doing so. In fact, the combination of several wheats from various origins in the gristing process is fairly common practice in the milling industry. 

The potential savings come by switching from a 100% high protein, more expensive wheat to one that contains a blend with a certain amount of lower protein, less expensive wheat. The spread in the FOB price and the resulting cost per ton of flour opens a window of opportunity, allowing an optimal combination to perform on an equal footing in terms of quality, performance, stability and fermentation tolerance. Experience has shown this can be achieved by incorporating micro ingredients to the value, which generates a delta saving being a substantial benefit to the bottom line (Fig.2).

Taking into account the procurement priorities or supply chain challenges context, baking enzymes are an attractive option for gristing considerations in flour milling process. The wise choice of enzymes micro dosages is capable to bridge the gap in wheat quality in most of the cases. The well-defined enzymes’ complex makes it possible to address deliberations about switching from current approved wheat suppliers to the more tempting options which may be 5-25% less expensive without any compromise in quality. This is possible because of enzymatic solution performance predictability. This will not only drive down wheat purchasi