CHAPTER 1 MILLING INDUSTRY A. OVERVIEW The following inferences can be drawn from the data published in the 1972 Census of Manufactures for the Flour and Other Grain Mill Products Industry (S.I.C. 2041). [See app. XV for listing of publicly held companies in S.I.C. group 2041.] (1) Between 1967 and 1972, domestic shipments of bread-type flour rose 6.2 percent. This figure is arrived at by taking a weighted average of an increase of 13.7 percent in bulk shipments and a decrease of 10.2 percent in container shipments. Table 1 shows the actual number of hundredweight sacks and amount of dollars involved. Bulk versus container statistics indicate a trend toward the servicing of larger baking establishments.' In fact, "bulk shipments accounted for 73.4 percent of the white bread-type flour moved by mills in 1972, compared with 68.6 percent in 1967." TABLE 1.-DOMESTIC SHIPMENT, BAKERS AND INSTITUTIONAL WHITE BREAD-TYPE FLOUR Source: "Census of Manufactures, Industry Series: Flour and Other Grain Mill Products," U.S. Bureau of the Census, 1967 and 1972. (2) Value of shipments of all primary flour milling industry products were up only approximately 3 percent from 1967 to 1972, from $2,173.9 million to $2,230.6 million. The volume rose 3.7 percent, from 221,266,000 hundredweight to 229,536,000 hundredweight. The volume of bread flour increase of 6.2 percent was offset by a 23.9 percent decrease in family-flour shipments, and a 23.4 percent decrease in other primary grain mill products, including mixes, refrigerated doughs, and whole wheat flour. (3) The specialization ratio increased from 93 percent in 1967 to 97 percent in 1972. Specialization ratio is the proportion of flour and other primary grain mill products to secondary products; "ratio" is 1 Bulk refers to shipping methods using no packaging material. Flour is loaded onto freight cars using the "Airslide" system (brand name of General American Transportation Co.) or the "Pusher-differential car." Both systems use air to "fluidize" the flour. Trucks engaged in bulk shipping conventionally use the "econo-flow" system. These methods were used starting in the early 1960's. Contained shipping uses sacks, or tote-bins-refrigerator-sized stainless steel vessels. More recently, Container Corp. of America has developed a collapsible fibre-board tote-bin which can be sent back to the miller flat. 2 Milling and Baking News, July 8, 1975, p. 10. expressed as a percent of primary products. The major secondary products in the flour milling industry are prepared feeds, cereal breakfast foods, and wet corn milling products. (4) The coverage ratio for the Flour and Other Grain Mill Products Industry (S.I.C. 2041) was only 74 percent in 1972, down from 78 percent in both 1967 and 1968. Coverage ratio is expressed as the percent of domestic primary flour and grain mill products fabricated by the census industry group. The cereal breakfast foods industry (General Mills, Kellogg's, etc.) and the blended/prepared flour industry accounted for most other flour and grain mill product shipments. (5) Capital expenditures in 1972 for the milling industry were $30 million, up 14.1 percent from $26.3 million in 1967. Table 2 provides a breakdown of capital expenditures. Taking into account inflation and its particular effects on construction costs, the 14 percent increase reflects at least marginal in plant and equipment investment. TABLE 2.-CAPITAL EXPENDITURES: MILLING INDUSTRY Source: "Census of Manufactures, Industry Series: Flour and Other Grain Mill Products," U.S. Bureau of the Census, 1967 and 1972. B. CONCENTRATION (1) Table 3 shows the number of milling establishments (not milling firms but plants) over time, as well as the number of establishments accounting for 97 percent of domestic grain mill production. Table 3 indicates that since 1964, the total number of mills has decreased by 18.7 percent while the number of mills accounting for 97 percent of domestic flour production has decreased by 15.2 percent. TABLE 3.-NUMBER OF DOMESTIC FLOUR MILLING ESTABLISHMENTS 1 National Commission on Food Marketing, Technical Study No. 5, June 1966. 2 "Census of Manufactures, Industry Series: Flour and Other Grain Mill Products," U.S. Bureau of the Census, 1972. (2) Census of Manufacture statistics give some sense of the size of flour milling plants over time. Unfortunately, these results do not deal with mills which produce only or primarily bread-type baking flour, but include all flour milling establishments. Table 4 shows the number of flour milling establishments over time, broken down by size. Source: "Census of Manufactures, Industry Series: Flour and Other Grain Mill Products," U.S. Bureau of the Census, 1963, 1967, and 1972. (3) Table 5 shows the number of establishments which mill wheat flour, but which do not produce blended and prepared flour. Table 5 also shows the number of establishments, over time, which have 75 percent or more specialization in wheat flour (not blended/prepared) milling. The Census of Manufactures does not break out type of milling establishment by size over time. However, it is clear from Table 5 that wheat flour mills (non-blended/prepared) have decreased as'a percentage of all flour mills, from 49.5 percent in 1963 to 40.1 percent in both 1967 and 1972. Between 1967 and 1972, wheat flour mills decreased at a rate consistent with that of the rest of the flour milling industry. Since total production has not decreased, the declining number of flour mills is directly related to the market concentration figures discussed below. Source: "Census of Manufactures, Industry Series: Flour and Other Grain Mill Products," U.S. Bureau of the Census, 1963, 1967, and 1972. C. DATA FROM MILLING DIRECTORIES (1) The Millers' Federation publishes the "Directory of Mill Executives" every other year. This Directory includes listings and daily capacities of members' mills. [The Federation alternates directory publishing years with "Milling and Baking News."] The 1974 Directory lists 112 flour mills, including the mills run by the largest domestic flour producers. Comparing this number with the 141 mills having 75 percent or more wheat flour (nonprocessed/blended) specialization, and taking into account possible closings within those two years, data collected on these 112 mills have substantial indicative value. Missing mills would tend to be smaller operations which would gain less by membership in a nationwide public relations, government liason organization like the Millers' Federation. Fifty-seven wheat flour mills listed in the 1965 directory were missing from the 1974 directory. Personnel at the Millers' National Federation have stated that listing changes are almost entirely a function of closing and acquisitions. The 57 figure does not represent changes in ownership, but actual mills which were no longer listed in any manner. Thus, with at the most, two or three exceptions, the 57 mills have ceased operations. Table 6 indicates these closings by size (daily capacity) and region. The South Atlantic and the Mountain States experienced the greatest mill attrition rates, with the toll especially great for the smaller South Atlantic Mills. Nationally, all capacity ranges save the very largest (over 13,000 cwt/daily) were affected by mill closings, and there was a marked tendency toward the closing of smaller mills. (2) Capacity listings in the Millers' Directory make it possible to ascertain a particular firm's share of the total U.S. capacity. Table 7 lists this information for the sixteen largest millers listed in the 1974 directory. It also shows the capacity-percentage history for most firms listed. |