Flour and Other Grain Mill Products

SIC 2041

Industry report:

Products of this industry include plain flour or mixes and doughs prepared from milled ingredients. Establishments that supply mixes and doughs prepared from purchased ingredients are categorized in SIC 2045: Prepared Flour Mixes and Doughs.

Industry Snapshot

While the industry has expanded, its customer base and marketing focus have changed radically. Domestic flour-consumption patterns shifted away from household consumers and toward commercial bakers, including fast-food outlets, especially after World War II, with rapid acceleration beginning in the 1970s. Due to general lifestyle changes and economic expansion, household baking has declined considerably as individual consumers increasingly tend to purchase their bread, dough, and mixes prepared from grocery stores and bakeries. Flour use has become more and more institutionalized. Consumer demand also waxes and wanes according to the latest health and environmental concerns such as uncertainty about genetically-modified (GM) grain and negative reports about refined carbohydrates found in white flours and sugar. The United States remained the world's leading exporter of flour and grain mill products, and exports were the industry's lifeline.

According to the Annual Survey of Manufacturers, wheat flour, excluding flour mixes made in flour mills, shipped $8.4 billion in 2008 products. Wheat mill products, except flour, added $1 billion in 2008. The other grain mill products categories, such as spelt, buckwheat, bulgar, barley, and quinoa shipped $1.5 billion in 2008. Corn mill products were also valued at $1.5 billion in 2008. Last, malt manufacturing contributed $864 million in 2008 shipments.

Organization and Structure

According to the U.S. Census Bureau's Economic Census, more than 300 mills operated in the United States in the mid-2000s. Consolidation was perhaps the most consistent trend in flour milling. Since the 1980s, the number of mills had declined, while market shares of the top companies escalated rapidly. In 1973, the top four milling companies controlled 34 percent of the nation's capacity, while the top ten accounted for 61 percent. By the early twenty-first century, six of the former top ten companies were no longer in business. The largest flour miller, Archer Daniels Midland Milling (name changed to Archer Daniels Midland Company), held nearly a quarter of total capacity. The top four firms controlled two-thirds of the market, and the top ten accounted for 83 percent.

Average milling capacity also expanded enormously, increasing about 80 percent between the early 1970s and late 1990s. By the early 2000s, most mills held a capacity of more than 45 tons. The trend toward corporate mills was driven by the goals of reducing labor and transportation costs and increasing profits, favoring those companies with large production facilities that can create economies of scale. The efficiency of the mills in place escalated along with consolidation, evidenced by the 90 percent capacity at which most mills in the United States operated. Finally, the pace of this expansion continued to grow, particularly as a faltering global economy forced companies of all kinds to implement new cost cutting initiatives.

The Milling Process

Although any grain, including rice, oats, barley, corn, millet, sorghum, and wheat, can be ground into flour, most of the world's flour is produced from wheat. Using standard milling procedures, 100 pounds of wheat yields approximately 72 pounds of white flour. In addition to flour, the milling process produces millfeeds, which are made from pieces of bran and other portions of the wheat kernel. Millfeeds are used as ingredients in livestock food.

Flour can be packaged for sale to household or bakery markets or used as an ingredient in bakery mixes, breads or doughs, and pastas. Different bread varieties are made with varying recipes but an average of 100 pounds of flour can make about 150 one-pound loaves of bread. The bread and cake industry uses approximately 75 percent of the flour milled in the United States. Other flour products include cookies, cereals, gravies, soups, whiskeys, and beers. Flour products are also used in nonfood applications such as the manufacture of plywood adhesives, industrial starches, fertilizers, paving mixes, polishes, and cosmetics. Approximately 85 percent of the flour used by industrial users is milled from hard and durum wheat varieties.

In addition, mills use a process called fractionation to separate the flour according to the fineness of its particles. Coarse fractions are reground. Intermediate fractions are used in applications requiring low amounts of protein, and fine fraction flour is blended with other flours or used alone in applications where high protein content is necessary. White flour is often bleached with agents such as potassium bromide, methyl bromide, methyl iodide, iodate, acetone peroxide, azodicarbonamide, ascorbic acid, and chlorine dioxide. In addition to providing consistent coloring, bleaching improves the condition of the flour gluten, which in turn improves its baking quality. These chemicals are often used as fumigants to defend stored flour and grains against rodents and insects, an increasing concern as storage capacity continues to increase.

White flour is made only with the endosperm portion of the wheat kernel. Farina is also made from the endosperm, but it is ground to produce a granular product. The term "wheat germ" refers to the part of the wheat kernel from which a seed sprouts. It contains oil that is sometimes extracted for separate processing. Wheat germ is also used in breakfast cereals, breads, and other bakery products. Whole wheat flour, also called graham flour, is made from the endosperm, bran, and germ combined and has a higher protein content than regular white flour. Pastas such as spaghetti, macaroni, and noodles are made from durum wheat. A popular pasta ingredient, semolina, is a granular grind of durum endosperm, comparable to farina.

The diverse end uses of flours require a wide variety of milled grain products produced from different types of wheat. Approximately 14 wheat species are grown. The three most frequently used varieties are common wheat (Triticum aestivum), club wheat (Triticum compactum), and durum wheat (Triticum durum). Together, these account for 90 percent of the wheat grown in the United States.

Wheats are classified as hard, soft, or durum. Hard wheats are used to make flours for breads and rolls. Soft wheats are used primarily in cakes, cookies, crackers, and prepared mixes. Durum wheat is almost exclusively used to make pasta products. Although a single modern flour mill might offer more than one product, it typically grinds only one class of wheat. The majority of U.S. milling capacity is devoted to hard wheat. Soft wheat mills and durum wheat account for lesser percents, and mills dedicated to whole wheat production represent only a few percent of the nation's milling capacity.

Various flour-treatment procedures exist to improve the appearance, nutritional content, and baking quality of flour during the milling process. Flour enrichment, for example, adds iron and B vitamins to stave off vitamin deficiencies. This enrichment is credited with eliminating diseases such as beriberi and pellagra in the United States. Approximately 95 percent of bread in the United States uses enriched flour.

Background and Development

Milled grains have been used as principal food staples for thousands of years. Corn is the predominant grain used by people in Latin America and the sub-Saharan regions of Africa, while many Asian nations depend on rice. Inhabitants of Europe and North America rely primarily on wheat products.

The origins of wheat farming and milling are obscure. Historians estimate that wheat cultivation began between 10,000 and 15,000 years ago, marking the beginning of civilization. Because they could be stored, stocked, and transported, grains led to the evolution of trading practices. Documents in the form of artistic depictions and early writings chronicled the development of wheat grinding technologies and baking methods in ancient Egypt, Assyria, Greece, and China.

One of the oldest known types of wheat is bulgur wheat. The earliest means employed to separate the parts of the wheat kernel involved rubbing the grain between the hands. Another method used the action of hoofed animals walking over grains that had been spread on hard ground. Winnowing was a process in which grains were tossed in the air so that the chaff would blow away. Removing the individual grains from the rest of the plant was necessary before milling could take place.

Wheat kernels are made up of three components: endosperm, bran, and germ. Endosperm represents about 83 percent of the kernel and contains the starchy portion used to make white flour. Bran accounts for about 14.5 percent of the wheat kernel and is used in whole wheat flour and animal feeds. The smallest portion of the kernel, the germ, represents only about 2.5 percent of the kernel. The most common uses of wheat germ are in human food products and in animal feeds. Historically, the germ was separated from the rest of the wheat kernel because it contained fat and did not keep well in long term storage.

Grain milling practices were developed to separate the kernel components and make flour. The first types of milling procedures involved the use of rubbing stones, mortar and pestles, or querns. Querns were devices made from two stacked, disk-shaped stones. Wheat grains were poured into the quern through a hole in the top stone. As the two stones turned against each other, the abrasive movement separated the parts of the wheat kernels and ground the endosperm into flour. The flour was then discharged between the stones.

More efficient methods of grinding grain were created as improved alternative power supplies were developed. Horses and oxen could turn millstones better than humans. Wind- and water-operated mills supplanted animal power. As the United States was settled, mills were constructed in almost every town. Typically the mill relied on water power and was, therefore, located near a source of running water.

The first continuous system for milling wheat into flour was developed during the last part of the eighteenth century by an American, Oliver Evans. Evans' mill design utilized steam technology and employed conveyors and bucket elevators to move the grain through a multi-phase milling process. Further advances in milling technology occurred during the nineteenth century. In 1865, Edmund La Croix developed a middlings purifier that separated the granular endosperm from the bran so that it could be reground to produce a better grade of flour. During the 1870s, the first roller mills in the United States were constructed. Roller mills possessed several advantages: they eliminated the need for dressing millstones; they were able to produce flour through a more gradual extraction process, which enabled millers to yield a larger percentage of better grade flour; and they lent themselves to greater efficiency, thereby making the construction of larger mills more feasible.

As Americans moved west, milling centers moved with them. Mills became larger in size but fewer in number. In 1870, an estimated 22,000 mills served the nation's population of about 30 million. One hundred and ten years later, the nation's population of 220 million was served by an estimated 150 to 250 mills. In Michigan, for instance, the number of mills fell from 534 around 1900 to only six in 1990. The consolidation of mills and the trend to facilities with greater capacities led to the creation of giant corporations such as Pillsbury Co. and General Mills, Inc. Millers began to offer a wider variety of products during the early 1900s. Self-rising flour, biscuit and cake mixes, and prepared doughs were introduced during the 1920s and 1930s but failed to gain widespread popularity until after World War II.

During the middle of the twentieth century, fundamental changes occurred in the primary location of mills. Prior to the 1950s, the cost of shipping wheat and the cost of shipping flour were approximately equal, and mills were frequently built close to wheat fields. During the early 1960s, the cost of shipping grain decreased following the introduction of hopper rail cars. At the same time, costs surrounding sanitation requirements increased the price of shipping flour. As a result, mills were constructed in close proximity to end markets rather than near the wheat fields.

Granular flour, a product made with particles of a uniform size with carefully controlled amounts of atomized moisture to reduce clumping, was introduced during the 1960s. Although granular flour was more expensive than regular flour, it offered several advantages. It had less dust, was easier to pour, did not require sifting, and dispersed in cold liquids.

During the 1970s, sales of household flour declined as society moved away from home baking and homemakers demonstrated a preference for the convenience and consistency of prepared mixes. In addition, many mixes were less expensive than individual ingredients. Baking from "scratch" ceased to be an activity of necessity and was relegated to hobby status. Demographic information revealed that households with higher incomes were more likely to use flour than lower income households. Flour volume losses within the household sector were partially offset by increases of flour sales to commercial bakers.

Although overall flour consumption dipped somewhat during the early 1970s, annual per capita flour consumption grew dramatically in the final three decades of the twentieth century. A healthy economy favorable to the baking industry, especially noted in the wild proliferation of specialty baking stores such as bagel shops, further fueled robust growth. Such skyrocketing consumption was unprecedented in U.S. history. Several factors contributed to this phenomenon, including the surge in consumption of fast foods and other flour-based convenience foods such as sandwiches and pizzas. However, growing environmental and health concerns, along with a sluggish global economy, contributed to a decline in consumption in the early 2000s. Per capita flour consumption fell from 146 pounds in 2000 to 143 pounds in 2001.

The Environmental Protection Agency (EPA) implemented regulations in 1999 aimed at reducing levels of phosphine, another fumigant typically used in grain and similar agricultural storage facilities, including flour mills, to control insects and rodents. Commonly used in the form of an aluminum or magnesium tablet, phosphide, like methyl bromide, actually penetrates the kernel or grain mass. In 40 years, 12 deaths were attributed to the chemical. Two incidences that spurred the EPA into action involved two women, one elderly and the other pregnant, who died from organophosphate poisoning after storage facilities near their homes were fumigated. While some industry players hold that such tragedies could be avoided with proper application procedures, the industry was required to adjust to the new regulations.

Potassium bromate also attracted the ire of environmentalists and health monitors. The additive, for decades a staple of the baking industry to improve dough texture, was found to cause cancer in laboratory animals. Moreover, potassium bromate is an oxidation material and oxidation generated concerns over insect infestation. The U.S. Food and Drug Administration (FDA) urged millers and bakers to cease the use of potassium bromate beginning in the early 1990s, although there is no mandate against its use. The American Bakers Association (ABA), meanwhile, maintains that potassium bromate residues can and should be eliminated with proper handling and baking techniques, without banning potassium bromate altogether. The ABA has suggested that testing of the finished products would assist in this effort.

Another major challenge facing the grain mill industry was the charge that flour performance was diminishing. Industry researchers speculated that one cause of deteriorating quality was a grain breeding program that emphasized increasing yield per acre without paying sufficient attention to the quality of the end products produced with the grain. Other possible causes included a drop in the amount of protein, a declining protein quality, an ever-increasing number of wheat varieties, the impact of agricultural practices such as irrigation and fertilizers, and milling practices that improved efficiency but with potentially inferior results.

Per capita consumption of wheat flour was down to 133.5 pounds in 2006, from 146.3 pounds in 2000. Numerous factors contributed to this decline, including the high-protein, low-carbohydrate ("low-carb") diet fads of the 2000s, as well as a nutritional shift from refined bread and pasta products to whole grain products.

In 2007, the United States rebounded to 2.07 billion bushels of wheat produced from the 2006 total of 1.81 billion bushels, which had been a sharp decline from the 2003 total of 2.34 billion bushels. Corn production jumped to 13.1 billion bushels produced in 2007 from the 2006 total of 10.5 billion bushels. World production in 2006-2007 fell to 593 mmt (million metric tons) from a high of 629 mmt in 2004-2005; however, an increase was anticipated for 2007-2008. U.S. exports of wheat flour during the 2006-2007 trade season stood at nearly 11.5 million bushels, up from the prior year total of nearly 10.0 million bushels but down significantly from the 2003-2004 total of 16.5 million bushels.

Per the Grain & Milling Annual, a total of 174 wheat flour mills operated in the United States, a decrease of three mills from the previous year, with more than 1.4 million hundredweights (cwts) overall daily capacity--a drop of 12,422 million cwts from 2004 totals. Pennsylvania led with 15 mills followed by Kansas with 14 mills; however, Kansas led in daily capacity with 136,640 million cwts, and California ranked second with overall capacity at 106,600 million cwts from its 10 mills.

A more health-conscious and increasingly diverse consumer market kept demand high for lightly-milled, sometimes called "stone-ground" or "stone-milled," and ostensibly healthier grain products. In response to consumer demand, a palpable increase in the availability of whole-grain or multi-grain blended flours, which are increasingly organic, displaced traditional packaged flours in supermarkets nationwide. Artisan breads, ethnic unleavened or flatbreads, and other trendy high-grain products replaced commercially packaged loaves of bread or pasta packages stacked up in supermarkets and groceries. However, an increasing Hispanic population as well as American's acquired taste for ethnic foods led to a 35 percent increase in the market for flour tortillas.

Finally, as of the mid-2000s, the flour milling industry remained torn between the pace of biotechnology and the inherent resistance of consumers when it came to genetically-modified (GM) grain products. While an unresolved debate over whether the world's first biotech, or GM, wheat variety should be released in North America continued to rage, test results continued to appear as the media reported traces of GM grains creeping into the U.S. wheat supplies. In June 2005, the European Union's (EU) Council of Ministers reaffirmed its ban on GM food in Europe by a vote of 22 to 3. In January 2008, the EU had yet to decide whether to end its GM import restrictions per a ruling made by the World Trade Organization (WTO).

Current Conditions

Domestic per capita consumption of wheat flour was an estimated 136.6 pounds in 2008. Wheat production totaled 2.22 billion bushels in 2009. According to the USDA, world wheat production for 2009-2010 reached 680 million metric tons, however, world production was projected to fall for the following growing season.

According to data released in the Grain & Milling Annual, the total number of wheat flour mills with operations in the United States stood at 165 in 2008, with over 1.5 million hundredweights (cwts) daily mill capacity. Kansas maintained its lead position for daily capacity with 125,833 million cwts during the first quarter of 2010, followed by Minnesota with overall capacity at 113,410 million cwts during the same period.

Baking Management reported flour mills producing "specialized flours for niche markets" was on the rise. For instance, ConAgra Mills produced Yoshon flour aimed at the Jewish community. Meanwhile, some mills were producing "ultra-fine whole wheat flour" that mimicked the taste of white flour.

Tortilla demand was still going strong in 2010 because of its health benefits as well as its versatility. "The tortilla is more than just a cross-cultural success story--it's fast becoming the bread that can do it all," noted Baking Management in August 2010.

Industry Leaders

Industry leaders included Archer Daniels Midland Co., CHS Inc., Cargill Foods, and ConAgra Inc. Archer-Daniels-Midland Company's 2010 revenues were $61.6 billion. CHS Inc. reported 2009 revenues of $25.7 billion; Cargill, Inc. reported revenues of $116.5 billion; and ConAgra Foods, Inc. reported revenues of $12 billion in 2010. CHS and Cargill continued to partner with Horizon Milling, which was busy expanding its product offering in 2010.


According to the U.S. Department of Labor's Bureau of Labor Statistics (BLS), a decrease in employment in the U.S. grain and oilseed milling industry was expected through 2014 of about 4,000 workers, after a drop of 9,000 workers from 1994 to 2004.

Safety issues for the industry's employees included dust control, noise abatement, and controlling hazards that presented risks for fire and explosions. Concentrations of grain dust above certain limits were susceptible to burning rapidly if ignited. Dust control was also necessary to limit possible worker exposure to microorganisms, pesticide residues, toxins, insect parts, and animal hairs. Some studies suggested that workers with high levels of exposure to grain dust might be susceptible to respiratory diseases such as chronic bronchitis. Noise in mills was primarily attributed to pneumatic blowers and vehicles. Finally, complications relating to fumigants, a major concern to the industry as a whole as regulatory scrutiny clamped down, was of acute concern to employees.

To control potential work place hazards, modern mills reduced dust generation by minimizing grain handling, reducing the velocity of grain movement, and installing enclosed conveyor systems. Protection from excessive noise was achieved by isolating work stations and limiting exposure.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

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