Milling & Baking News - 2012-01-24

THE NEWS WEEKLY OF GRAIN-BASED FOODS

bakingbusiness.com / foodbusinessnews.net

JANUARY 24, 2012

LATE NEWS

Continued on 5

MEXICO CITY — Grupo Bimbo, S.A.B. de C.V. said it has priced its offering of $800 million of 4.50% notes due 2022, at an issue price of 99.19%, to yield 4.602%. The notes will constitute senior unsecured obligations of Grupo Bimbo and unconditionally will be guaranteed by certain of Grupo Bimbo’s subsidiaries. Grupo Bimbo said it plans to use the proceeds from the offering “to refi nance existing indebtedness and for general corporate purposes.” Grupo Bimbo last issued debt in June 2010, when it sold $800 million of 4.875% of senior

Bimbo in $800 million 10-year bond offering

Driscoll account blames labor, many other factors for Hostess woesNEW YORK — While burdensome obligations to multiemployer pension plans have cost Hostess Brands Inc. more than $100 million a year, the company has sustained losses exceeding $100 million in each of its two full years since emerging from bankruptcy in 2009.

The role of the company’s union obligations in its fi nancial problems has been brought to the fore in recent statements and counter statements by Hostess and union representatives (see related story on Page 15). Hostess has attributed its woes “primarily to legacy pension and medical benefi t obligations and restrictive work rules.” Secondarily, the company cited the economic downturn and a more diffi cult competitive landscape.

Calling the company’s assertions “offensive,” Frank Hurt, president of the Bakery, Confectionery, Tobacco

Workers and Grain Millers International Union, said Hostess “is in dire fi nancial shape because of a string of failed business decisions made by a series of ineffective executives who have been running this company for the past decade.”

A fi ling with the United States Bankruptcy Court, Southern District of New York, by Brian J. Driscoll, president and chief executive offi cer of Hostess, paints a more complicated picture of the diffi culties facing the baking company.

The “Affi davit of Brian J. Driscoll in Support of First Day Motions” does

EDUCATION AND RESEARCH

Soft wheat studies yield key fi ndings

Story on Page 30

Researchers study fi ber content and best varieties to make whole grain fl ours

Continued on Page 8

Better near-term outlook, manychallenges seen for food sector

Marking nine decades in

partnership with grain-based foods

Driscoll

WALL STREET ANALYSTS’ OUTLOOK

have unique drivers of their businesses affecting their stock prices, and fundamental industry trends often do not apply individually,” said Mitchell B. Pinheiro, managing director, equity research, Janney Montgomery Scott, Philadelphia. “But I think you will have a much better year on average.”

In terms of share price performance, outperformance of broader market indices will not be easy to achieve in 2012, Mr. Pinheiro said. As mature a business

Continued on Page 22

While 2012 appears to be beginning on a bright note for grain-based foods companies, the footing may be shaky ahead, according to Wall Street analysts. Coming after a year of better-than-market performance, on average, for shares of the packaged foods industry, major challenges facing a range of companies may come to the fore in the new year, they said.

Profi tability generally is expected to improve in the near term, the analysts said.

“Most of the companies I follow

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4 / January 24, 2012 Milling & Baking News bakingbusiness.com / world-grain.com

Grupo Bimbo S.A.B. de C.V.

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Nov.Sept.

JulyMay

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Kraft Foods Inc.

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$35

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Better near-term outlook, many challenges seen for

food sectorStory on Page 1

Contents January 24, 2012 Vol. 90, No. 24

Ralcorp board approves plan to spin off Post

The board of directors of Ralcorp Holdings, Inc. approves the separation of the company’s subsidiary, Post Holdings, Inc.

Kraft to cut 1,600 jobs as part of realignment

Kraft Foods Inc. plans to eliminate about 1,600 jobs in North America as part of its realignment into two separate, independent public companies.

Winter wheat plantingsup 3% from a year ago

The U.S. Department of Agriculture estimates the area seeded to winter wheat for harvest in 2012 at 41,947,000 acres, up from 40,646,000 acres in 2011.

U.S.D.A. plans to close offi ces, save $150 million

The U.S. Department of Agriculture plans to close 259 domestic offi ces and seven foreign offi ces while saving about $150 million annually.

No health risk with moderate refi ned grains intake

A review in Nutrition Reviews fi nds no association with increased disease risk and recommended intake of refi ned grain foods without high levels of added fat, sugar or sodium.

Moving wheatstudies from Europea sign of difference

NEWS Comment

7 Editorial 9, 15 Business 12 Industry Activities 14 Data 20, 28 Washington 20 Financial Results 21 Nutrition and Health 29 People 30 Education and Research 33 Ingredient Week Trends 41 Supplier Innovations 46 Archive

9

10

14

20

21

DEPARTMENTS

Archer Daniels Midland Co. ..26B&G Foods ...........................18Barry Callebaut ....................41Cargill ............................20, 26ConAgra Foods, Inc. .............23Dakota Specialty Milling, Inc. ... 29Eatem Foods Corp. ...............29Flowers Foods, Inc. .........18, 24Gavilon L.L.C. .........................8

In Europe, the decision of the German chemical giant, BASF SE, to shut down its plant biotechnology research facility was called “devastating” by wheat producers and segments of the scientifi c community. Except for the happiness coming from business interests in Raleigh, N.C., where BASF will now base its plant science division, little was heard in the U.S. in celebrating this move. That difference once again underscores the great uncertainty ruling in regard to research to bring genetic modifi cation and other scientifi c advances to production of wheat and other crops.

In explaining its decision to halt such work in Germany, BASF emphasized the lack of acceptance of plant biotechnology by European consumers and politicians. “We will concentrate on the attractive markets in North and South America and the growth markets in Asia,” BASF said. In decrying this move, a spokesman for the German farm lobby appealed for a halt to withdrawals of such research, warning that Europe is sidelining itself from food gains.

BASF’s biotechnology research focuses on fi nding wheat resistant to fungal disease as well as resistant starch potatoes. Gaining the presence of BASF in behalf of improved crops is particularly important for wheat where yields have been static for too long. Hardly anything underscores that better than the latest forecast by the International Grains Council that world wheat area for the 2012 harvest will be up 1.7%, but that production probably will be slightly smaller than the 2011-12 record. MBN

COMPANIES IN THIS ISSUE

General Mills, Inc. ..........10, 27Grupo Bimbo S.A.B. de C.V. ..... 1, 18, 23, 41Hershey Co. ..........................18Hinds-Bock Corp. ..................41Hostess Brands, Inc. ...............1International Flavors & Fragrances, Inc. ..............41J&J Snack Foods Corp. ..........24

The Trans-Pacifi c Partnership and agriculture

Story on Page 28

J.M. Smucker Co. ............18, 24Kellogg Co. ...........................27Kraft Foods ............... 10, 18, 23MGP Ingredients, Inc. .............9PT Indofood Sukses Makmur ...7Pepperidge Farm, Inc. ...........18Quaker Oats Co. .....................8Ralcorp Holdings, Inc. .......9, 26Rich Products Corp. ..............29

Sara Lee Corp. ......................23Snyder’s-Lance, Inc. ..............23Tasty Baking Co. ...................29Toyota Group .........................7Unitherm Food Systems .......41Van Drunen Farms ................41

WALL STREET ANALYSTS’ OUTLOOK

energy

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© 2012 Archer Daniels Midland Company

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7 / March 13, 2007 Milling & Baking News bakingbusiness.com / world-grain.com

A close look at Toyota’s entry into fl our milling

Welcoming a new major investor to fl our

milling does not happen all that frequently

even though milling wheat into fl our is a

business that has a presence in almost every country

of the world. When the investor turns out to be one

of the world’s largest and most admired industrial

enterprises, its decision to participate in fl our

milling merits more than cursory attention. For that

reason, the announcement several months ago that

a unit of the Toyota Group, by the name of Toyota

Tsusho Corp., had become a partner in establishing

a new fl our milling company in Indonesia was

worthy of more than routine attention from fl our

millers around the globe as well as by those that

will be directly competing with this new enterprise.

Toyota Tsusho is one of many different businesses

within the Toyota Group, which is known as being

among the world’s largest vehicle manufacturers.

Set up in 1948 to handle the auto group’s interna-

tional activities, Toyota

Tsusho has grown into an

enterprise with capital of

65 billion yen ($850 mil-

lion) and with a range of

activities that focus on in-

ternational marketing of autos made by the group

in Japan, steel-making and electronics, air condi-

tioning and wheel assemblies, and of greatest in-

terest in this context, “Produce & Foodstuffs.” The

latter division initially focused on providing grain

and other ingredients for Japan’s feed manufactur-

ing industry and subsequently grew into one of

the nation’s largest grain importers operating four

large port elevators and making direct delivery to

feed plants. From this start, its business grew into

proprietary trading in wheat and other grains, deal-

ings in fl our in China and Southeast Asia, and ex-

tending into baking, frozen food manufacturing,

sugar refi ning and Bluefi n tuna culture.

The move into fl our milling came through a part-

nership with a Malayan milling company and an

Indonesian investment business. The group will

build a new mill in Jakarta with 1,500 tonnes of daily

wheat milling capacity at an estimated cost of $66

million. In announcing its participation, Toyota cited

its expanding interest in food, “particularly the grain

business, as a fi eld of concentration outside the au-

tomotive industry.” It goes on to note that Indonesia

has the potential to replace Japan as Asia’s largest

wheat importer and that it sees its entry into milling

as a way “to enhance and expand the group’s value

chain for increased stable procurement and supply.”

The implication is that helping to assure food to

meet growing demand in Asia will also help stabi-

lize Toyota’s presence.

Just as meaningful as Toyota’s entry into milling is

its choice of Indonesia. This not only refl ects Toyota’s

attention to its home continent of Asia, but also the at-

traction of emerging markets for food-related invest-

ing by international companies. Indonesia is already

home to one of the largest national milling companies

in the world, Bogasari, which is a part of the PT Indo-

food Sukses Makmur enter-

prise. In the fi rst half of this

fi scal year, Indofood posted

a sales gain of 21% and a

12% increase in net profi ts,

spurred by the success of its

instant noodles. These are replacing rice as the diet’s

mainstay because of low cost and marketing and

product enhancements.

For millers operating in the highly competitive

markets of North America and Europe, these emerg-

ing nations should also have considerable appeal.

This move by Toyota may actually serve as a wake-up

call or at least a reminder of the promise of growth

in these distant lands. In the case of Indonesia, the

world’s fourth most populous nation with 240 mil-

lion, consumption is driven more by supply than by

demand. Building the new mill will assure an expand-

ed supply to satisfy the pent-up demand that is be-

ing driven both by urbanization and income growth.

Recognizing the great success Toyota has achieved in

marketing its autos around the world should prompt

considerable scrutiny of what its entry might mean

into fl our milling. MBN

MORTON SOSLAND, EDITOR-IN-CHIEF

WE’RE EAGER TO GET YOUR FEEDBACK: E-mail [email protected] or write to us at Milling & Baking News, 4800 Main Street, Suite 100, Kansas City, Mo, 64112

EDITORIAL STAFFEditor-in-chief

Morton I. SoslandExecutive editor, markets

Neil N. SoslandEditor

L. Joshua SoslandSenior editor, markets

Jay S. SjervenManaging editor

Eric J. Schroeder

Associate editorJeff Gelski

Assistant editorRon Sterk

Internet editorAllison Gibeson

Graphic designer, market graphics, data

Christina Sullivan

PUBLISHING STAFFChairman

Charles S. SoslandVice-chairman

L. Joshua SoslandPresident and publisher

Mark SaboAssociate publisherG. Michael Gude

Vice-president, chief fi nancial offi cerMelanie Hepperly

Audience development directorDon Keating

Director of e-businessJon Hall

Director of on-lineadvertising and promotions

Carrie FlueggePromotions manager

Taré TorresAdvertising manager

Nora Wages

Director of design servicesSadowna ConarroeCirculation manager

Judith ArnoneDigital systems analyst

Marj PottsManager of advertising design

Becky White

Editorial

bakingbusiness.com / world-grain.com Milling & Baking News January 24, 2012 / 7

Recognizing the great success Toyota has achieved in marketing its autos around the world should prompt

considerable scrutiny of what its entry might mean into fl our milling.


266% of the 1982-84 average, up 5.8% from a year ago. For all food at home, the December index was 230, up 5.7% from December 2010.

WASHINGTON — The average price paid for white pan bread rose while whole wheat bread fell in December, according to the latest data from the Bureau of Labor Statistics of the U.S. Department of Labor. The national average retail price of white pan bread was 142c, up 2.1c per lb from November and up 3.4c from December 2010. At 207.3c per lb, the national average price for whole wheat bread was down 2c per lb from November but up 19.3c per lb from December 2010. The national average price of family fl our in December was 51c per lb, down 0.7c from November but up 6.9c from December 2010. It was the third straight month of lower prices.

MINNEAPOLIS — The Minneapolis Grain Exchange announced the Commodity Futures Trading Commission approved changes to the exchange’s hard red spring wheat futures contract. Beginning with the September 2012 contract, the U.S. origin condition will be removed from the contract ensuring Canadian supplies may be delivered in satisfaction of open spring wheat futures positions. Effective with the May 2013 contract, there will be a specifi cation establishing limits on vomitoxin levels in delivered wheat. Wheat with 2 parts per million vomitoxin or less may be delivered at no discount to the prevailing future’s price. Wheat with levels over 2 p.p.m. but below 3 p.p.m. may be delivered but at a 20c-per-bu discount, and wheat with vomitoxin in excess of 3 p.p.m. may not be delivered at all. MBN

unsecured notes due in 10 years. Following the announcement, Fitch Ratings assigned a rating of “BBB” to Grupo Bimbo’s pro-posed senior notes issuance. “Bimbo’s ratings are supported by its important size and scale within the global bakery industry, its strong brand recog-nition and positioning in the markets where it operates, and its extensive distribution network that provides a key competitive advantage,” Fitch said.

OMAHA — Privately-held Gavilon L.L.C., one of the largest grain, processing and merchandising companies in the United States, is being put up for sale, a c c o r d i n g to reliable sources in the company. Milling & Baking News has learned the company’s 2,000 employees received notifi cation in recent days that Gavilon’s owners were looking to sell the business. Without directly confi rming or denying the company is for sale, Jonathan Gasthalter, a Gavilon spokesperson, acknowledged strategic alternatives are under exploration at the company. Gavilon was established in 2008 with the sale by ConAgra Foods Inc. of its Trading and Merchandising business to Ospraie Management L.L.C. Special Opportunities Fund in a $2.1 billion transaction.

WASHINGTON — The Consumer Price Index for baked foods and cereal products rose 0.1% in December, according to the Bureau of Labor Statistics of the U.S. Department of Labor. The index for all food at home, meanwhile, increased 0.3%. The December index for Cereals and Bakery Products before seasonal adjustment was

Bread pricing mixed in December

C.P.I. for baked foods, cereal climbs 0.1%

Late News WEEK OF JANUARY 24

[email protected]

The U.S.D.A. on Jan. 12

forecast the 2012 soft red

winter wheat carryover

at 258 million bus, down

1 million bus from the

previous projection

but up 51% from 171

million bus in 2011.

The recent fi ve-year

average carryover was

150 million bus with a

recent low of 55 million

bus in 2008.

Gavilon employees told company may be sold

Changes made to hard spring wheat contract

Continued from Page 1


Business

Ralcorp board approves plan to spin off Post HoldingsST. LOUIS — The board of directors of Ralcorp Holdings, Inc. has approved the separation of the company’s subsidiary, Post Holdings, Inc.

“We are pleased with the progress of our separation plans for Ralcorp and Post,” said William P. Stiritz, chairman of Ralcorp’s board of directors. “The separation will enable both companies to focus on their respective business strategies, while allowing investors to select discrete themes in terms of branded and private-brand foods. The board’s actions refl ect our confi dence in the underlying strengths of these companies and their ability to create value for shareholders.”

Under terms of the separation, Ralcorp will distribute at least 80% of its outstanding shares of common stock of Post to holders of Ralcorp common stock of record as of the close of business on Jan. 30. Each such holder will receive one share of Post common stock for every two shares of Ralcorp common stock held on Jan. 30, with distribution taking effect at 11:59 p.m., Eastern Time, on Feb. 3. Ralcorp noted that if the conditions have not been satisfi ed or waived on Feb. 3, the distribution date may be extended until the conditions are satisfi ed or waived.

Approximately 34.5 million shares of Post common stock are expected to be outstanding immediately following the separation, Ralcorp said.

“No fractional shares of Post common stock will be distributed in connection with the distribution,” Ralcorp said. “Fractional shares that Ralcorp shareholders would otherwise have been entitled to receive will be aggregated and sold in the public market by the distribution agent. The aggregate net proceeds

of these sales will be distributed ratably to those shareholders who would otherwise have been entitled to receive fractional shares.

“The distribution of Post shares will be made in book-entry form, and no action or payment by Ralcorp shareholders is required to receive Post shares. No physical share certifi cates of Post will be issued. An information statement containing details of the separation and important information about Post will be mailed to Ralcorp shareholders prior to the distribution date.”

Ralcorp said the separation of Post was structured in such a manner that it will qualify as a tax-free distribution to Ralcorp shareholders for U.S. federal tax purposes. But cash received in lieu of fractional shares will be taxable, Ralcorp said, and shareholders should consult their tax advisers with respect to U.S. federal, state, local and foreign tax consequences of the Post separation.

Ralcorp shares will continue to trade on the New York Stock Exchange under the symbol “RAH” through and after the Feb. 3 distribution date. Any holders of shares of Ralcorp common stock who sell Ralcorp shares on or before Feb. 3 also will be selling their right to receive shares of Post common stock. In addition, Ralcorp said it expects its shares will trade ex-distribution (without the right to receive shares of Post common stock) on or about Jan. 26, and continue

through the distribution date under the symbol “RAH WI.”

Meanwhile, Post common stock is expected to begin “when issued” trading on the N.Y.S.E. under the symbol “POST WI” beginning on Jan. 26. On the distribution date, “when issued” POST WI trading will end and “regular-way” trading under the symbol “POST” will begin.

Earlier this month, new boards of directors of Ralcorp Holdings, Inc. and Post Holdings, Inc. were unveiled. The boards will go into place after the completion of the planned separation of the Post cereal business from Ralcorp.

The Ralcorp Hold-ings board of directors will include J. Patrick Mulcahy as chairman along with members Benjamin Ola. Akande, Bill G. Armstrong,

Jonathan E. Baum, Berry H. Beracha, Kevin J. Hunt, David W. Kemper, Patrick J. Moore and David R. Wenzel.

The Post Holdings board of directors will include William P. Stiritz as chairman along with members David R. Banks, Terence E. Block, Jay W. Brown, Edwin H. Callison, Gregory L. Curl, William H. Danforth, Robert E. Grote and David P. Skarie.

“We are very excited to have such an experienced and talented group of individuals to lead Ralcorp and Post as each company moves forward independently,” Mr. Stiritz said. “These directors have proven track records of success, and we are confi dent that their leadership and expertise, along with the commitment and passion they share for the businesses, will result in signifi cant value for our shareholders.” MBN

MGP Ingredients creates new holding companyATCHISON, KAS. — MGP Ingredients, Inc. has created a new holding company structure, but the company said its business operations and those of its subsidiaries will not change as a result of the reorganization.

As part of the reorganization, outstanding shares of the capital stock of the former parent company, which formerly was named MGP Ingredients, Inc. and now is named MGPI Processing, Inc., were converted

automatically, on a share for share basis, into identical shares of common stock and preferred stock of the new holding company. The new parent company is named MGP Ingredients, Inc.

“The articles of incorporation, the bylaws, the executive offi cers and the board of directors of the new holding company are the same as those of the former MGP Ingredients, Inc. in effect immediately prior to the reorganization,” MGPI said. “The common stock of the

new holding company will continue to be listed on the NASDAQ Global Select Market under the symbol ‘MGPI.’ The rights, privileges and interests of the company’s stockholders will remain the same with respect to the new holding company.”

Founded in 1941, MGP Ingredients, Inc. develops and produces value-added, grain-based starches, proteins and food grade alcohol products for the branded packaged goods industry. The company has facilities in Atchison and Onaga, Kas. MBN


Business

Kraft to cut 1,600 jobs as part of realignment, consolidationNORTHFIELD, ILL. — Kraft Foods Inc. plans to cut about 1,600 jobs in North America as part of its move to help ensure its North America-based snacks and grocery businesses are well-positioned to become two independent public companies before the end of 2012. Kraft said approximately 40% of the job cuts are due to realignment of the company’s U.S. Sales organization, with the rest the result of consolidation of U.S. management centers and streamlining of the corporate and business unit organizations.

“When we announced our decision to create two world-class companies last August, we said both would be leaner, more competitive organizations,” said Irene Rosenfeld, chairman and chief executive offi cer. “For the past year, the North American team has been working to streamline operations to deliver sustainable top-tier performance and continue to invest in our iconic brands. We’re confi dent that this transformational work will improve effectiveness and fuel the future growth of both companies.”

As part of the realignment of U.S. Sales, Kraft said it plans to create more focused teams, allowing each company to customize its approach to in-store sales and execution to maximize impact.

The snacks business will leverage a direct-store delivery model, with

General Mills adds more whole grains to more cerealsMINNEAPOLIS — General Mills, Inc. said more than 50 of its Big G cereals now feature the white check, which signifi es the cereal has more whole grain than any other single ingredient. Additionally, cereals with the white check also now highlight the grams of whole grain per serving on the side of the box.

“Whole grain makes a vital contribution to good health, and we know Americans value it in their cereals,” said Jeff Harmening, president of General Mills Big G cereal division. “As a company, we always strive to improve the health and nutrition of our products while never compromising taste. That’s why we’re

proud to announce that, no matter which of our more than 50 cereals people choose, they can be assured they’re getting more whole grain than any other single ingredient, with the same great taste their family loves.”

Travis Stork, emer-gency room phys-ician and host of the TV show “The Doctors,” has partnered with General Mills to help with whole grain education, including introducing Fast Lane for Whole Grain, an on-line educational game. In the game, consumers are challenged to quickly

identify products that have whole grain as the fi rst ingredient while shopping virtual grocery store aisles. Players have the option to enter a sweepstakes to win one of each of the more than 50 cereals with the white check. The sweepstakes runs through March 18, 2012, on www.WholeGrainNation.com, and 50 winners will be selected during the 10-

week sweepstakes.“We’re committed

to making it easier to choose whole grain,” said Jean Storlie, M.S., R.D., director of the General Mills Bell Institute

of Health and Nutrition. “Whole grain is a powerful nutrient package that has vitamins, minerals, phytonutrients and fi ber that are important to our diets — and too few of us are getting enough of it.” MBN

most U.S. retail sales employees shifting to the North American region of the global snacks company, Kraft said, while the grocery company will reorganize within the United States. Local retail support will be contracted

to two sales agencies, with Kraft oversight and direction.

Kraft anticipates having both U.S. Sales organizations in place by April 1.

Additionally, Kraft said it will consolidate its U.S. management center locations from four to two.

“Consolidating our management locations is a sound business move,” said Tony Vernon, executive vice-president and president, Kraft Foods North America and c.e.o. of the future grocery company. “Having the majority of our business units together in one location will provide greater development opportunities for our people and will help us continue building our brands more effi ciently and collaboratively.”

The Beverages business unit in Tarrytown, N.Y., and the Planters brand in East Hanover, N.J., will relocate to the Chicago-land area

by December 2012. Most of the employees affected by these moves will have the option to transfer with their businesses to the future grocery company headquarters in Chicago-land. Kraft also will close its Glenview, Ill., management center by the end of 2013.

The future global snacks company also will have its headquarters in the Chicago-land area, with the choice of site currently under consideration. The North American region for the global snacks company will be based at the East Hanover campus.

In Canada, both companies will retain sites in the Greater Toronto area, Kraft said, with the Kraft grocery business remaining in the current Don Mills offi ces, and the snacks business moving to recently opened offi ces in Mississauga. The Madison, Wis., management center will remain the site for the Oscar Mayer business unit.

Elaborating on the planned reduction of the 1,600 jobs, Kraft cited its efforts throughout 2011 to lower costs to provide funds to invest in its brands. About 20% of the job eliminations are currently open positions.

“Making these tough choices is never easy, and we recognize the impact these changes will have on many of our people and their families,” Mr. Vernon said. “But our plan for a more nimble company, combined with the current economic and competitive pressures, led us to this point. Taking the necessary steps now will enable us to continue investing in our beloved brands to drive growth.” MBN

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Industry Activities

With NAMA funding, Fran Churchill named milling instructor at K.S.U.WASHINGTON — Fran Churchill has been named the new North American Millers’ Association-funded instructor of milling in the Milling Science and Management program at the Grain Science and Industry Department of Kansas State University.

A graduate of Kansas State University with a bachelor’s of science degree in milling science and management, Ms. Churchill has more than 20 years of milling industry experience.

She began her career in 1984 as an assistant mill superintendent at the Pillsbury Co. mill in St. Louis. From 1989 to 2007 she held various mill management roles at such companies as ConAgra Mills, General Mills, C.H.

Guenther & Son, and The Mennel Milling Co.

Since 2010 she has been teaching mathematics in Hamblen County, Tenn., and currently is enrolled in the master of science in mathematics education program at the University of Tennessee.

“The milling industry hires many K-State graduates,” said Breck Barton, chairman of the NAMA Milling Science and Operations Committee. “Fran Churchill will provide the kind of hands on instruction and education the milling industry wants K-State graduates to have when they come to work in our mills.”

Mary Waters, president of NAMA, added, “The milling science management program is the only university program in the U.S. that provides education and training for the next generation of mill managers and technology specialists, and

the position at K-State is an investment in the human capital important to the industry.”

Dirk Maier, head of the Grain Science and Industry Department at Kansas State, said the department is excited about the addition of Ms. Churchill to the faculty.

“NAMA’s funding of this faculty position refl ects the priority its member companies place on enhancing the future workforce by recruiting, educating and preparing the next generation of milling industry professionals,” Mr. Maier said. MBN

First Lady set to unveil new federal school lunch standardsWASHINGTON — The U.S. Department of Agriculture said First Lady Michelle Obama and Secretary of Agriculture Tom Vilsack are set to unveil new nutrition standards for federally funded school lunches.

Ms. Obama and Mr. Vilsack, together with Kevin Concannon, Undersecretary for Food, Nutrition and Consumers Services, will make the announcement Jan. 25 at the Parklawn Elementary School in Alexandria, Va.

The child nutrition reauthorization bill, the Healthy, Hunger-Free Kids Act of 2010, was signed into law in December 2010. The law authorizes funding for federal school meal and child nutrition programs and is meant to increase access to healthy food for low-income children.

The 2010 law reauthorizes child nutrition programs for five years

and includes $4.5 billion in new funding for these programs over 10 years. The U.S.D.A. said the law represented the first major change in school meals in over 15 years.

“The new standards make the same kinds of changes that many parents are already encouraging at home, including ensuring kids are offered fruits and vegetables every day of the week, substantially

increasing offerings of whole grain-rich foods, offering only fat-free or low-fat milk varieties and making sure kids are getting proper portion sizes,” the U.S.D.A. said. MBN

Nominations solicited for Milling Operative of the YearKANSAS CITY — Nominations are being accepted until April 6 for the 2012 “Milling Operative of the Year ” award, which recognizes excellent performance by a miller. Established in 1986 by Milling & Baking News, the award will be presented in May to the practicing milling operative who has made the most signifi cant contribution to the progress of a

plant, a company and the industry from an operating point of view.

The 27th annual “ Milling Operative of the Year ” award will be presented on May 9 at the annual I.A.O.M. Awards Breakfast of the 116th annual technical conference and trade show of the International Association of Operative Millers, May 7-11 in Spokane, Wash. The winner will receive an inscribed

Churchill

plaque, and a scholarship will be established in the winner’s name at Kansas State University at Manhattan.

Selection of the winner will be made by the staff of Milling & Baking News. Scott Martin of ConAgra Mills received the award in 2011.

Nominations should be submitted by April 6 in a summary of not more than two pages to: Eric Schroeder, Managing Editor, Milling & Baking News, 4800 Main St., Suite 100, Kansas City, Mo. 64112; fax: (816) 756-0494; e-mail: [email protected]. MBN

‘The new standards make the same kinds of changes that many parents are already encouraging at home, including ensuring kids are offered fruits and vegetables every day of the week, substantially increasing offerings of whole grain-rich foods, offering only fat-free or low-fat milk varieties and making sure kids are getting proper portion sizes.’

— The U.S. Department of Agriculture

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Data

Winter wheat plantings up 3% from a year ago

Winter wheat seedings

1,000 Change from last yearacres 2012 2011 2010 Per cent AcresAla. 220 220 150 0% 0 Ariz. 8 7 9 14% 1 Ark. 520 620 200 -16% (100)Calif. 660 670 660 -1% (10)Colo. 2,400 2,300 2,450 4% 100 Del. 90 80 50 13% 10 Fla. 20 12 12 67% 8 Ga. 300 250 170 20% 50 Idaho 780 820 750 -5% (40)Ill. 660 800 330 -18% (140)Ind. 370 430 250 -14% (60)Iowa 28 22 15 27% 6 Kas. 9,500 8,800 8,400 8% 700 Ky. 600 540 390 11% 60 La. 290 240 125 21% 50 Md. 290 260 180 12% 30 Mich. 570 700 530 -19% (130)Minn. 50 30 65 67% 20 Miss. 500 360 125 39% 140 Mo. 770 790 370 -3% (20)Mont. 2,200 2,250 2,050 -2% (50)Neb. 1,400 1,520 1,600 -8% (120)Nev. 19 15 19 27% 4 N.J. 28 35 28 -20% (7)N.M. 460 435 470 6% 25 N.Y. 100 120 110 -17% (20)N.C. 800 700 500 14% 100 N.D. 700 400 330 75% 300 Ohio 580 880 780 -34% (300)Okla. 5,500 5,100 5,300 8% 400 Ore. 810 830 820 -2% (20)Pa. 165 185 165 -11% (20)S.C. 220 190 145 16% 30 S.D. 1,350 1,650 1,350 -18% (300)Tenn. 450 420 260 7% 30 Texas 5,900 5,300 5,700 11% 600 Utah 145 130 135 12% 15 Va. 340 270 180 26% 70 Wash. 1,720 1,760 1,750 -2% (40)W. Va. 9 10 7 -10% (1)Wis. 265 345 240 -23% (80)Wyo. 160 150 165 7% 10 U.S. 41,947 40,646 37,335 3% 1,301

WASHINGTON — The National Agri-cultural Statistics Service of the U.S. De-partment of Agriculture on Jan. 12 esti-mated the area seeded to winter wheat for harvest this summer at 41,947,000 acres, up 1,301,000 acres, or 3%, from 40,646,000 acres seeded for harvest in 2011. The U.S.D.A. number was above the average trade estimate near 41 million acres.

The U.S.D.A. in commentary ac-comp-anying its Winter Wheat Seed-ings report said, “More acres were seeded this year due to higher prices and an acreage rebound in Kansas, Oklahoma and Texas, where dry condi-tions had limited 2011 planted acres.”

The U.S.D.A. estimated the area planted to hard red winter wheat for harvest in this year at 30.1 million acres, up 1.6 million acres, or 6%, from 28.5 million acres in 2011 and com-pared with the recent fi ve-year aver-age planted area of 30.6 million acres. The estimate for the current year was above the average of pre-report trade estimates at 29.6 million acres.

Acreage increased from a year ago in all states in the hard red winter wheat-growing region except in Cali-fornia, Montana, Nebraska and South Dakota. The U.S.D.A. commented, “The dry fall limited planting in South Dakota, while winter wheat-seeded area in Nebraska is a record low.”

Wheat area in the key state of Kan-sas was estimated at 9,500,000 acres, up 8% from 8,800,000 acres in 2010 and the largest area planted to wheat in the state since 2008, when the wheat-planted area was 9,600,000 acres.

Texas and Oklahoma hard winter wheat plantings were up 11% and 8%, respectively, from 2011. The Texas winter wheat area was 5,900,000 acres, and Oklahoma winter wheat area was 5,500,000 acres.

The U.S.D.A. estimated the area planted to soft red winter wheat for harvest this year at 8.37 million acres, down 0.19 million acres, or 2%, from 8.56 million acres in 2011 and compared

with a fi ve-year average soft red win-ter wheat area of 8.4 million acres. The average of pre-report trade estimates was 7.7 million acres. The U.S.D.A. said, “While large acreage increases from last year are estimated in the Southeast, large acreage decreases oc-curred in most states in the Corn Belt and Northeast, primarily due to a late row crop harvest. In Ohio, a record low area was planted due to wet soil conditions during the fall of 2011.”

The U.S.D.A. estimated white win-ter wheat plantings at 3.49 million acres, down 0.92 million acres, or 21%, from 4.41 million acres in 2011 and compared with the recent fi ve-year average of 4.22 million acres. The trade before the seedings report estimated white winter wheat area at 3.7 million acres. The U.S.D.A. said, “Planted acreage in the Pacifi c North-west (Idaho, Oregon and Washington) is down from last year. Seeding started off slow but by the end of October was at or ahead of the fi ve-year average in all three states. By Nov. 6, seeding was virtually complete in the region with 83% of the acreage emerged in Wash-ington, 90% emerged in Idaho and 48% emerged in Oregon.”

The U.S.D.A. forecast desert durum (Arizona and California) plantings for harvest in 2012 at 230,000 acres, up 15% from 200,000 acres planted for 2011. The U.S.D.A. said, “Planting is ongoing in California’s San Joaquin and Imperial Valleys. Weather condi-tions have been good for planting.” MBN

U.S.D.A. lowers 2012 wheat carryover forecast to 870 million busWASHINGTON — The Economic Research Service of the U.S. Department of Agriculture on Jan. 12 forecast the carryover of wheat in the United States on June 1, 2012, at 870 million bus, down 8 million bus from 878 million bus as the December projection but up 8 million bus from 862 million bus in 2011. The decrease from the December forecast was the result of an increase in wheat exports projected for 2011-12 that more than offset a lower projection for domestic use in the year. The projected U.S.D.A. 2012 wheat carryover number was above the average of pre-report trade estimates at 831 million bus.

The U.S.D.A. projected domestic food use of wheat in 2011-12 at 935 million bus, down 5 million bus from December but up 9 million bus from 926 million bus in 2010-11. In commentary accompanying

the supply-and-demand data, the U.S.D.A. said, “Food use is projected 5 million bus lower based on fl our production data recently reported by the North American Millers’ Association for July-September 2011.”

Feed and residual use of wheat was projected at 145 million bus, down 15 million bus, or 9%, from 160 million bus in December but up 13 million bus, or 10%, from 132 million bus in 2010-11.

Exports of U.S. wheat during 2011-12 were projected at 950 million bus, up 25 million bus from the December forecast but down 339 million bus, or 26%, from 1,289 million bus in 2010-11.

The U.S.D.A. forecast the average farm price of wheat in the United States in 2011-12 at [email protected] a bu, compared with [email protected] as the December projection and $5.70 in 2010-11 and $4.87 in 2009-10. MBN


Business

Hostess gets go-ahead for DIP fi nancing; union leader lashes out at managementIRVING, TEXAS — Hostess Brands Inc., which fi led for bankruptcy protection on Jan. 11, said it has received authority from the U.S. Bankruptcy Court for the Southern District of New York to enter into a $75 million debtor-in-possession (DIP) fi nancing facility and access $35 million of it until a hearing scheduled for Jan. 26 for further approval for the DIP. The fi nancing will allow Hostess to continue routine operations while undertaking a comprehensive fi nancial and operational restructuring.

The fi nancing is being provided by a group of the company’s existing fi rst-lien lenders, led by Silver Point Capital, L.P.

Additionally, Judge Robert D. Drain also authorized the continuation of wages for employees without interruption and maintenance of all customer programs, among other things.

“The motions granted today will ensure that Hostess continues its operations without any disruptions so that its products will remain available and on store shelves everywhere,” said Brian Driscoll, president and chief executive offi cer. “With the access to the DIP fi nancing, Hostess will continue to provide wages and benefi ts to our employees and payments to suppliers going forward.”

The bankruptcy court said Hostess was focused on completing a successful reorganization and not on selling all or portions of the company.

“The company is strongly committed to continuing its good faith bargaining with its unions, and we remain hopeful that we can reach a consensual agreement on the terms of our labor contracts before fi ling 1113 and 1114 motions,” Mr. Driscoll said.

Expressing hope that Hostess Brands Inc. will survive in the wake of the recent bankruptcy fi ling, the leader of a principal union representing baking employees issued a strongly worded statement countering assertions the company’s fi nancial problems are due to “union contracts and pension and health benefi ts obligations.”

“I fi nd it deeply offensive and highly disingenuous for the company to claim that its fi nancial woes are the result of its union contracts and pension and health benefi ts obligations,” said Frank Hurt, president of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union. “We contend that the company is in dire fi nancial shape because of a string of failed business decisions made by a series of ineffective executives who have been running this company for the past decade.”

According to the B.C.T.G.M., the union represents about 5,000 Hostess workers.

C.e.o. fi ling: Far more than laborproblems prompted bankruptcyindeed draw a picture of “crippling” pension obligations that cover not only Hostess employees but also former baking employees of companies no longer in business. The affi davit also offers examples of workforce rules the company said puts Hostess at a signifi cant competitive disadvantage.

Still, the affi davit attributes the company’s lack of competitiveness to

factors extending far beyond issues of labor relations. Additionally, it suggests the company came out of bankruptcy in 2009 with far too much debt to succeed going forward, a factor omitted in the company’s bankruptcy announcement.

The lengthy affi davit offers a detailed look at Hostess and what precipitated the company’s return to bankruptcy. In the fi rst two years since

exiting from bankruptcy, Hostess sustained an aggregate loss totaling $479 million (a fi gure that includes $132 million in special write-off charges).

Setting the stage for the narrative, Mr. Driscoll described Hostess’s industry environment as one of “high levels of competition and related pricing pressures, thin operating margins and competitors with more sophisticated technology and signifi cant cost advantages.”

He said Hostess’s competition employs work forces that either are


Announcing the bankruptcy fi ling, Hostess said its “current cost structure is not competitive, primarily due to legacy pension and medical benefi t obligations and restrictive work rules.” The company expressed the hope it will emerge from bankruptcy with “competitive employee benefi t plans.”

According to the B.C.T.G.M., the union has been “working with Hostess for months to identify an amenable resolution that would address the company’s fi nancial diffi culties.”

“Throughout this process, the company has never provided the union with a legitimate proposal that could be taken to the membership for consideration,” he said.

Mr. Hurt expressed great concerns about the jobs at Hostess at risk and the well being of union members working at Hostess.

“We had hoped that the company would emerge from the last restructuring stronger and more competitive,” he said. “Our members sacrifi ced a great deal to try and save the company the last time.

“The B.C.T.G.M. has contracts with dozens of baking companies across the country,

including Bimbo Bakeries USA, the nation’s largest and most successful. The vast majority of those companies are doing just fi ne because they have experienced baking industry professionals managing them.”

Mr. Hurt took particular issue as highly misleading “the company’s portrayal in the media of its pension obligation problems.”

“Hostess Brands had been a longstanding participant in the industry’s Taft-Hartley multiemployer pension fund,” the union said. “The nearly $1 billion the company refers to is its withdrawal liability. Every participant in a Taft-Hartley fund has withdrawal liability, which ensures that benefi ciaries will receive negotiated pension benefi ts if a company leaves the fund.

“The contributions Hostess had paid into the fund were negotiated through the collective bargaining process and are part of an overall economic compensation package. Pension benefi ts that retirees receive each month are paid by the fund and not the individual companies.”

Ultimately, Mr. Hurt expressed the hope solutions will be found.“We remain hopeful that solutions can be found to ensure

the permanent continuation of Hostess Brands,” he said. “We will work with the stakeholders throughout the process to fi nd a solution that protects the interests of our members and helps enable the company to remain a viable business entity.” MBN


Business

not unionized or are only partly unionized. The difference allows other bakers to operate with “signifi cantly less burdensome operating restrictions and overall cost structures,” he said.

Because of its long-standing unionized workforce, Hostess has significant legacy costs, mostly as pension and medical benefit obligations that its competitors “do not share,” he said.

Of the company’s 19,000 em-ployees, 83% of union members subject to 372 collective bargaining agreements, Mr. Driscoll said. Of these, 92% are members of the International Brotherhood of Teamsters or the Bakery, Con-fectionery, Tobacco Workers and Grain Milers International Union.

“Because their workforce is heavily

unionized, the debtors (Hostess) also participate in 40 multiemployer pension plans, which, by law, exist only where one or more employers each contribute to a pension plan pursuant to one or more collectively-bargained agreements,” Mr. Driscoll said. “The debtors’ cash contribution obligations to these plans go beyond amounts attributable to the retirement benefi ts of the debtors’ own workforce; they also encompass the contributions attributable to the retirement benefi ts of the workforces of other employers who have ceased to exist or have otherwise withdrawn from the plans. By statute, the plans are structured to place the fi nancial burdens of all of the plan’s retirees upon those remaining companies that have active union employees. Over the last several decades, the number of companies and the active employee base supporting these pension plans have shrunk signifi cantly, thus increasing the burden on the companies, such as Hostess, that remain.”

As of Dec. 10, 2011, Hostess

had assets of about $1 billion and liabilities of about $1.4 billion. The latter figure does not include contingent liabilities such as the multiemployer pension obligation. The company had $592 million in long-term debt outstanding plus another $225 million in convertible notes.

In the company’s first year out of bankruptcy, the period ended May 29, 2010, Hostess sustained a loss of $138 million. In the year that followed, the company’s loss widened to $341 million, including $132 million in the write-off of “deferred debt issuance costs and debt discount.”

Explaining the deteriorating fi -nancial performance, Mr. Driscoll said the cash pension contributions

associated with the multiemployer plans are about $103 million (the fi ling also estimated the monthly cost for the plans at about $8 million ($96 million)). Hostess said it stopped paying into the plan in August.

The company also has annual retiree medical obligations that are far smaller, at about $1.4 million.

Mr. Driscoll laid out elements from a business plan he said management has developed and set the stage for long-term viability for Hostess. The plan is “premised upon achieving a competitive cost structure” and requires “systemic, dramatic change,” he said. Elements of the plan include: Complete withdrawal from multi-

employer pension plans; Addressing legacy health and

welfare costs to significantly reduce costs, bringing them in line with the competitive marketplace

Modifying existing collective bargaining agreements to relax work rules

Finding new capital investment to modernize and automate production

and distribution operations; and A significant reduction of debt

and related expensesMr. Driscoll said Hostess has

$860 million in debt outstanding in addition to its liabilities in connection with multiemployer pension plans.

“To effect the transformation changes required for their businesses, the debtors must negotiate with their lenders, unions and the trustees of the multiemployer pension plans,” Mr. Driscoll said.

He said negotiations with the unions began before the filing, adding that “liquidity pressures” forced the company to file for bankruptcy.

Taking a step back, the affi davit offers extensive background on the company, including a brief account

of its history and more detailed developments leading up to

the Jan. 12 bankruptcy fi ling.

Hostess operates 36 baking plants, 565 distribution centers, about 5,500 delivery routes and

570 bakery outlet stores throughout the

United States.Established in 1927 as Schulze

Baking Co., the company was renamed Interstate Brands Corp. in 1937 with a merger with Western Bakeries Ltd. The company grew over the next 60 years through multiple acquisitions. Mr. Driscoll said the expansion gave the company a nationwide network of operations and well known brands but also left the company “with a matrix of assets and operations that were not well integrated or streamlined and that remained burdened with the legacy labor obligations of each of its predecessors.”

Seeds of trouble in ‘90sEven though the company was the

nation’s largest wholesale baking company in the 1990s, “the excess capacity, inefficiencies and cost burdens of its 54 bakeries, more than 1,000 distribution centers and 1,200 bakery outlets across the country were ultimately not sustainable.”

The problems culminated with a 2004 bankruptcy filing with the United States Bankruptcy Court for the Western District of Missouri. The protracted bankruptcy dragged

‘Work rules require that, in some instances, even when a route representative is already visiting a customer location, that representative may not move products within that location; rather, a separate employee must visit the customer location to move products from the back room to the shelf.’

— Brian J. DriscollHostess Brands

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on for 4½ years because of litigation with public shareholders, labor strife, management turnover and a failed sale process, Mr. Driscoll said. Key outcomes from the bankruptcy, he identified, were:

• A transition to a privately-held company from a publically-held one

• A highly leveraged capital structure

• A decision to retain legacy union pension obligations “in reliance on some labor savings and anticipated operational improvements.”

Still a major player in bakingReviewing developments since

the emergence from bankruptcy, Mr. Driscoll said Hostess remains one of the largest baking companies in the United States with annual sales of $2.5 billion, about 89% of which come from route sales. The company’s products are sold nearly coast-to-coast in about 175,000 different customer locations.

In purchasing ingred-ients and other inputs, Hostess has as much as $500,000 in raw materials in transport daily. Additionally, the company stores about $6.5 million of goods in warehouses and pays storage fees of about $102,000 monthly.

As of the filing date, Hostess estimated about $50 million to $60 million is outstanding in debts to vendors, mostly for goods and services.

The affidavit offered two examples of how the company’s collective bargaining agreements put Hostess at a competitive disadvantage.

“The debtors often provide both bread and cake products to an individual customer location,” Mr. Driscoll said. “The existing work rules require that, on many routes, separate trucks must deliver the

bread and cake products to that single customer location. The work rules also require that, in some bakeries and distribution centers, a separate individual must be used to load the trucks (the debtors’ competitors have drivers who load their own trucks) and separate people must load either bread or cake on a truck.

“Finally, work rules require that, in some instances, even when a route representative is already visiting a customer location, that representative may not move products within that location; rather, a separate employee must visit the customer location to move products from the back room to the

shelf. Often this ‘pull-up’ employee cannot move both bread and cake, and thus, two ‘pull-up’ employees must make this same trip.”

Debt of unsustainable levelsIn addition to the union related

issues, Mr. Driscoll said the $860

million of secured debt it has issued is not sustainable.

Because the company is com-petitively dis-advantaged and faced a worsening financial picture, Hostess in 2010 retained Goldman Sachs and J.P. Morgan to explore

sale opportunities, Mr. Driscoll said. None emerged even after a wide range of potential buyers was contacted, including Grupo Bimbo, Flowers Foods, Hershey, J.M. Smucker, Kraft Foods Inc., Pepperidge Farm and B&G Foods. The investment banks “could not obtain any offers to purchase any portion of the debtors’ businesses.”

This failure prompted Hostess to restructure the company, leading to the creation of the current “turnaround plan,” Mr. Driscoll said.

He said elements aimed at reducing its payment obligations to the multiemployer plans are crucial.

“These and other initiatives are designed to bring the total compensation packages provided

to the debtors’ union workforce in line with those of similarly skilled domestic workers,” Mr. Driscoll said.

Union negotiations will be needed to implement a revenue generating initiative, he said.

Central to boosting revenues is

Because the company is competitively disadvantaged and faced a worsening fi nancial picture, Hostess in 2010 retained Goldman Sachs and J.P. Morgan to explore sale opportunities, Mr. Driscoll said. None emerged even after a wide range of potential buyers was contacted, including Grupo Bimbo, Flowers Foods, Hershey, Smucker, Kraft, Pepperidge Farm and B&G Foods.

‘The debtors have developed products based on their best-

selling cake items that have a longer shelf life and can withstand freezing en route to customers over longer

transportation hauls. The formulation and

regulatory process relating to these products is complete, but the products cannot be rolled out unless the debtors obtain certain modifi cations to their existing collective bargaining agreements.’

— Brian DriscollHostess Brands

Business


finding alternative ways to deliver product, a capacity restricted by current collective agreement packages. The agreements limit where and how route sales representatives are able to make deliveries.

Need access to dollar storesMany customers expressly forbid

delivery of product directly to customer store locations, the affidavit said. As a result, Hostess has been unable to enter “potentially profitable markets such as dol lar s tores , vending services and movie theaters ,” the affidavit said. Mr. Driscoll said the company would like to outsource these stops to third-party distribution operators.

Ready to rollout new products“The debtors have developed

products based on their best-selling cake items that have a longer shelf life and can withstand freezing en route to customers over longer transportation hauls,” he said. “The formulation and regulatory process relating to these products is complete, but the products cannot be rolled out unless the debtors obtain certain modifications to their existing collective bargaining agreements.”

The affidavit includes details of the plan beyond renegotiation of labor contracts. Several important moves are needed to enhance the company’s operational efficiencies, including reducing excess capacity

and making remaining capacity more efficient. Hostess plans to upgrade its aging vehicle fleet and improve its ability to manage inventory through tracking software at distribution centers.

Unprofitable bakery outlet stores need to be closed, and pricing strategies in this segment need to be reworked, Mr. Driscoll said. At the

same time Hostess sees a need to build its administrative capabilities, the company also recognizes a need to take substantial steps to “reduce other costs associated with selling, general and administrative expenses.”

The plan also calls for boosted advertising and marketing budget.

While committed to pursuing its turnaround plan, Hostess said its ability to do so was compromised by a worsening liquidity crisis. The company had more than $115 million in cash in 2009, shortly after emerging from bankruptcy, a figure that was down to $82 million a year later. By May 2011, Hostess had only $35 million in cash and had $50 million against a line of credit. Mr. Driscoll estimated the company went through $250 million in cash

from the bankruptcy emergence though the end of 2011.

Efforts to negotiate a settlement with union leaders “ramped up” in late 2010.

Teamsters vote barely fi nalHostess management negotiated

changes to the collected bargaining arrangement with Teamsters, but

in May 2011, union members voted down the proposed modifications by a vote of 52% to 48%. In September, a revised proposal was presented to the Teamsters and at least eight in-person meetings have been held. Hostess met with the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union with detailed proposals presented a month later, Mr. Driscoll said. Multiple proposal revisions have been offered and numerous meetings with union representatives have been held, Mr. Driscoll said.

As liquidity tightened, the need to resolve the outstanding labor issues heightened, Mr. Driscoll said.

Finding hinges on concessions“The debtors believed that

(investors) might be willing to make additional investments into the business if certain labor concessions could be obtained and operational goals achieved,” he said.

Toward that end, Hostess was able to secure some additional financing but not enough to “solve the debtors’ fundamental liquidity problems, Mr. Driscoll said.

“Notwithstanding every effort to preserve cash, the debtors’ cash position continued to deteriorate,” he said. “Accordingly, after consultation with its advisors, the boards of directors of the debtors authorized them to commence these chapter 11 cases.” MBN

Even though the company was the nation’s largest wholesale baking company in the 1990s, “the excess capacity, ineffi ciencies and cost burdens of its 54 bakeries, more than 1,000 distribution centers and 1,200 bakery outlets across the country were ultimately not sustainable.”

Brian J. Driscoll, president and chief executive offi cer

David A. Loeser, executive vice-president of human resources

Kent B. Magill, executive vice-president, general counsel and corporate secretary

Richard C. Seban, executive vice-president and chief marketing offi cer

John O. Stewart, executive vice-president and chief fi nancial offi cer

Gary K. Wandschneider, executive vice-president of operations.

Top management at Hostess Brands Inc. as listed in the affi davit includes:

Business


Washington

U.S.D.A. unveils plan to close 259 offi ces and save $150 million annuallyWASHINGTON — Secretary of Agriculture Tom Vilsack on Jan. 9 unveiled a plan to “streamline” U.S. Department of Agriculture operations and cut costs. The plan includes the closing of 259 domestic offi ces across the country as well as seven foreign offi ces.

“The U.S.D.A., like families and businesses across the country, cannot continue to operate like we did 50 years ago,” Mr. Vilsack said. “We must innovate, modernize, and be better stewards of the taxpayers’ dollars. We must build on the record accomplishments of farm communities in 2011 with a stronger, more effective U.S.D.A. in 2012 and beyond.”

The U.S.D.A.’s plan, the Blueprint for Stronger Service, was based on a department-wide review of operations conducted as part of the administration’s Campaign to Cut Waste, launched by President Barack Obama and Vice-President Joe Biden.

“By undertaking a thorough and thoughtful review of his department, Secretary Vilsack has saved taxpayers millions in travel and printing costs and is consolidating more than 700 different cell phone contracts into about 10,” Mr. Biden said. “What’s more, the department is fi nding signifi cant savings by consolidating more than 200 offi ces across the country while ensuring that the vital services they provide are not cut.”

Mr. Vilsack noted some of the offi ces slated for closure are no longer staffed or have very small staffs of one or two people. Many are within 20 miles of other U.S.D.A. offi ces. In other cases, technology improvements, advanced service centers, and broadband service have reduced the need for

“brick and mortar facilities.”Mr. Vilsack said when fully

implemented, these actions, along with other recommended changes, will provide effi ciencies valued at about $150 million annually and eventually more, based on a future realignment of the workforce. He said the actions

also will ensure that the U.S.D.A. continues to provide optimal service within available funding levels.

The U.S.D.A.’s Farm Service Agency will consolidate 131 county offi ces in 32 states, leaving open more than 2,100 F.S.A. offi ces open throughout the country. The Foreign Agricultural Service will close two offi ces — Stockholm and Damascus — leaving more than 95 F.A.S. offi ces operating abroad.

The Animal and Plant Health Inspection Service (APHIS) will close 15 offi ces in 11 states and fi ve offi ces in fi ve other countries. This will leave more than 560 APHIS offi ces open throughout the United States and 55 offi ces in other nations. The U.S.D.A. said, “In many cases, offi ces recommended for closures are an example of how APHIS is retooling existing operations and consolidating certain functions. For example, veterinarians and animal health technicians will continue to take samples, inspect animals and issue necessary documentation; however,

they may report to supervisors in consolidated offi ces in adjacent states.”

The Food Safety and Inspection Service will consolidate 15 district offi ces into 10.

“In many cases, improved technology and work-share agreements have reduced the need for these brick-and-mortar facilities,” the U.S.D.A. said.

The fi ve offi ces slated for closure by the end of fi scal year 2013 were those located in Lawrence, Kas.; Beltsville, Md.; Minneapolis; Albany, N.Y., and Madison Wis.

The Agricultural Research Service will close 12 programs at 10 locations in 2012. More than 240 A.R.S. programs will remain. Two southern Plains research facilities are among those to be closed. They are the Wes Watkins Agricultural Research Laboratory at Lane, Okla., and the Kika de la Garza Subtropical Agricultural Research Center at Weslaco, Texas. The Weslaco facility concentrates on citrus and vegetables, quarantine treatments for subtropical fruits and vegetables and biological controls to combat pest threats in the Rio Grande Valley. The Wes Watkins center conducts research on how production systems affect yield and quality of crops, pest management systems for crops of the southern Plains and integration of non-vegetable crops into sustainable production systems with high-value vegetable, specialty crops.

The Food, Nutrition and Consumer Services will close 31 fi eld offi ces in 28 states, consolidating their workload into 32 remaining F.N.C.S. offi ces.

Rural Development will close 43 area offi ces and sub-offi ces in 17 states and U.S. territories, leaving 450 offi ces open across the country. The Natural Resources Conservation Service (N.R.C.S.) will close 24 soil survey offi ces in 21 states. More than 2,800 N.R.C.S. offi ces will remain open. MBN

Cargill earnings drop 88% after commodity challengesMINNEAPOLIS — Cargill had $100 million in earnings from continuing operations in the second quarter ended Nov. 30, 2011, which marked an 88% decrease from $832 million in the previous year’s second quarter. Second-quarter consolidated revenues were $33.3 billion, up 17% from $28.5

billion in the previous year’s second quarter.

“The second quarter was signifi cantly below expectations, especially in contrast to last year when we posted our strongest quarter ever,” said Greg Page, chairman and chief executive offi cer of Cargill. “Our food

ingredients and agriculture service businesses generated solid earnings. At the same time, our commodity-based trading and asset management businesses faced signifi cant challenges.

“First, commodity and fi nancial markets were driven more by political uncertainties than by underlying supply and demand fundamentals. Second, our performance in the sugar market was poor. Additionally, our meat business on a combined basis

Financial Results


Nutrition and Health

Review fi nds no health risk with moderate refi ned grains intakeWOLLONGONG, AUSTRALIA — Consuming up to 50% of all grain foods as refi ned grain foods without high levels of added fat, sugar or sodium was not associated with any increased disease risk in a review published on-line Jan. 3 in Nutrition Reviews.

The review also promoted whole grain consumption. It said most consumers, in order to meet target consumption of whole grain foods, will need to reduce their consumption of refi ned grains to no more than one-third to one-half of all grains. In the United States it is estimated less than 15% of total grain consumption is whole grain and only 6% to 8% of adults meet the target of three servings of whole grain per day.

The review identifi ed 135 relevant articles from database searches of studies published between 2000 and 2010.

“The great majority found no associations between the intake of refi ned-grain foods and cardiovascular disease, diabetes, weight gain or overall mortality,” the review said. “A few studies found that very high intakes might be associated with some types of cancers, but at moderate levels of consumption the risks were not as signifi cant.”

Go Grains Health & Nutrition Ltd., an Australian center for science-based evidence on the dietary health benefi ts of grain-based foods and legumes, commissioned the independent liter-ature review. Peter G. Williams, a visiting principal fellow at the Smart Foods Centre at the University of Wollongong, was the review’s author.

He acts as a paid scientifi c adviser for Go Grains Health & Nutrition.

The review whenever possible chose studies that reported results for core refi ned-grain foods, which were defi ned as foods based on refi ned grains without signifi cant added fat, sugar or sodium. Examples included bread, breakfast cereal, pasta and rice. Refi ned cereal-based foods with large levels of added fat, sugar or sodium

were excluded. Examples were cakes, pastries, cookies, donuts and pizza.

Sixteen of the studies showed an increase in health risk at the highest level of refi ned-grain consumption. In 7 of those 16 studies, the defi nition of refi ned-grain foods included high-fat or sugar-added products like pizza or cakes, which made it impossible to draw conclusions from those results about the effect of core refi ned grains alone.

The review examined 18 cross-sectional studies that mostly reported on the risk of obesity or metabolic syndrome. Intake of refi ned grains at high levels was associated with higher visceral adipose tissue (VAT) in a Framingham Heart Study although the lowest VAT was recorded with two servings of refi ned grains and three servings of whole grains per day.

The review examined 13 case-control studies with 10 focusing on various cancers and three on ischemic heart disease.

“Overall, there is a lack of consistency in the case-control data about cancer that makes it diffi cult to draw clear conclusions,” the review said. “Some of the increased risks were only present at the very highest levels of intake, which is still consistent with safe intakes at lower levels. The few available case-control studies on the risk of ischemic heart disease do not suggest any signifi cant risk is associated with moderate levels

of refi ned-grain consumption.”In examining other reviews and

meta-analyses, the review found almost all the other reviews primarily were concerned with the health benefi ts of whole grains or of low-glycemic-index diets. None of the other reviews specifi cally examined how levels of refi ned-grain consumption may relate to health outcomes.

The review examined a systematic review by Glenn Gaesser, a professor and exercise and wellness program director for the Healthy Lifestyles Research Center at Arizona State University. He is also chairman of the scientifi c advisory board of the Grain Foods Foundation, Ridgway, Colo. Dr. Gaesser’s review concluded whole grain intake generally is associated inversely with body mass index (B.M.I), but refi ned-grain intake is not consistently linked to higher B.M.I. MBN

‘The great majority (of studies) found no associations between the intake of refi ned-grain foods and cardiovascular disease, diabetes, weight gain or overall mortality.’

— Review paper published in Nutrition Reviews

experienced one of their weakest quarters. Finally, we recognized a signifi cant number of one-time items, including asset impairments, and acquisition and integration expenses.”

The food ingredients and applications department made the largest contribution to second-quarter earnings, according to Cargill. Shrinking U.S. fed cattle supplies pressured margins in beef. Cargill’s recent acquisitions in food ingredients in Europe and Brazil and in animal protein in Central America were accretive to second-quarter earnings.

Cargill in the second quarter completed the acquisition of Provimi, a leading animal nutrition company, for an enterprise value of $2 billion. Costs related to the acquisition were recorded in the agriculture services department. Weaker results in asset management, which was due to stress in global fi nancial markets, more than offset strong performance in risk management services to customers.

For the fi rst six months of the fi scal year, Cargill had earnings from continuing operations of $336 million, which compared with $1,530

million in the same time period of the previous year, and revenues of $67.9 billion, which compared with $54.2 billion in the same time period of the previous year.

Mr. Page said Cargill is working to reduce its costs and simplify its work processes.

“Cargill has been through diffi cult cycles before, made changes and emerged stronger for it,” he said. “We are confi dent that the actions we are taking to create a more agile enterprise will better position us in the current economic environment.” MBN

Financial Results


Stock Market Analysis

Better near-term outlook, many challenges seen for food sectoras food does not tend to outperform the market year after year, particularly in periods of market appreciation, and current valuations give investors cause for caution in approaching the food sector, he said.

“From a broader market perspective, the average food company is trading at 15 times earnings,” Mr. Pinheiro said. “The S&P 500 is trading at 12. That’s a premium of 25%. Normally, food company shares trade between a 10% discount and a 10% premium.

“Depending on the broader market, whether we are trading out of a recession, it could be another so-so year for the packaged foods stocks. If we remain mired in this very sluggish economy, investors will probably stay somewhat heavily in staples as a defensive measure, and you might have a better-than-average year.”

Eric Katzman, an equity research analyst with Deutsche Bank, said food companies “performed extremely well” last year, an achievement the sector is unlikely to repeat in 2012.

“They did what they’re supposed to do in a volatile and tough market,” he said. “The defensive characteristics of the stocks, including good dividend

yields and reasonable if modest earnings growth resulted in the outperformance.

“We’re relatively cautious on the group’s ability to outperform this year. The defensive nature of the stock market has already played out in our view. It’s hard to see how food stocks outperfom from here.”

Grain-based foods companies and packaged foods companies in general enter 2012 with momentum in certain important areas that is likely to fl ag as the year progresses, said Robert Moskow, senior equity analyst, food, Credit Suisse, New York.

“Many packaged foods companies took pricing in 2011, and it’s spilling over in 2012,” he said. “As the year progresses, you’re going to lap those increases. So from a top-line perspective, you’ll have decelerating top-line growth as the year progresses. Packaged foods companies have found it easy to get the increases through, but elasticity of demand has been sharper than expected, especially in breakfast cereal but other categories as well.”

Elaborating on his concern about the ready-to-eat cereal business, Mr. Moskow said the “value proposition for consumers looks weaker and weaker.”

“Boxes are getting thinner,” he said. “Consumers don’t have a lot of choices for a value breakfast. But they are making tougher and tougher decisions about how much they are going to load up their pantries and how much they are going to eat. They are forced, too. Economics are defi nitely factoring in.”

Mr. Moskow said he is less concerned about bottom-line prospects in the food industry than about the likely pressure on sales comparisons later in the year.

“From a profi tability standpoint, the outlook is okay,” he said. “That’s because they’re all continuing to focus on productivity, restructuring, still generating good trends in emerging markets.”

The same set of factors identifi ed by Mr. Moskow takes on a slightly different aspect in the analysis of Mr. Pinheiro. In his view, 2011 was a diffi cult year for food companies and “2012 is looking a lot better.”

“Pricing has been implemented,” he said. “Wheat prices have come down more than a touch. You are probably seeing a drop of greater than 20%. If pricing holds, margins should recover.”

Commenting on major themes in the food sector, Mr. Katzman said two — food infl ation and demand

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Grain-based foods share price charts



General Mills, Inc.

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of Sara Lee’s assets in Spain was completed at a very attractive price. Additionally, the company’s Mexican baking business continues to perform solidly. On the negative side of the ledger have been costs from hedge positions and an expectation that margins may be under pressure in the next few quarters.

Mr. Alanis said that while uncertainty prevails about a number of prospective developments affecting Bimbo, the company’s strategy in North America is not uncertain.

He explained, “We know what they will not do. They will not engage in a price war. They will accelerate capital expenditure. Their strategy is clearly laid out. The Sara Lee acquisition is not about short-term synergies. It’s about bringing the strength of Bimbo’s balance sheet into better located and higher effi ciency bakeries in the U.S. It is to become the lowest cost producer in the long run because of lower cost of energy and closer distribution. We may not see margin expansion in the short term, but it makes sense in the long term. Think about what the cost of a barrel of oil was or a kilowatt hour when most of the baking plants in the United States were built. The industry was built for lower energy costs and few players have awoken to this reality.”

The decision of Kraft Foods Inc., Northfi eld, Ill., to split into two separate companies represents a basic shift from a foundational philosophy that has prevailed there for decades, Mr. Katzman said.

Flowers Foods, Inc.

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elasticity — already have played out consistently over the last two years.

“There are two others,” he continued. “First is restructuring. As the volumes have been weak across the industry because of pressure on the consumer, there is coincident pressure on companies to keep fi xed costs low. So you’re likely to see more restructuring announcements like the one just from Kraft. Most companies believe consumer changes will be a long-term affair. The new normal is resulting in the companies looking at their portfolios and brands and positioning them to this new normal. That will result in more merger and acquisition activity, whether it’s ConAgra becoming more of a private label company or Kraft splitting in two. There is a whole host of possibilities.”

While it hardly has been fl ying beneath the radar screen in recent years, attention toward Grupo Bimbo S.A.B. de C.V. is heightened going into 2012.

While currently rating Grupo Bimbo “neutral,” an analyst at J.P. Morgan is very upbeat on the company’s longer term prospects.

“In the short term, though, there are a number of things playing in their favor,” said Alan Alanis, executive director, senior analyst, Latin America food and beverage, at J.P. Morgan, New York. “But, also a number things that are not.”

On the plus side, Mr. Alanis said he was “very excited about the lower price” Bimbo was able to pay for Sara Lee with the Justice Department settlement and said the acquisition

Dunkin’ Brands Group, Inc.

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“I would say that when Kraft was part of Philip Morris many years back to its position as a public company, it’s been all about scale,” he said. “It hasn’t really worked, and the split represents a pretty big change. Not that they will be small companies, but the change will be a big strategic fork in the road. I think the growth prospects for the snack company are long-term compelling. Snacks are a good category with pretty limited competition. It’s a global business. Consumers around the world snack, which gives the snack company an opportunity to create a fair amount of value.

“The grocery company, I think it has its challenges in terms of creating value long term. It is a U.S. business in a mature industry with a lot of competition. If you look over the last 10 years, that competition has really taken it to Kraft.”

Among companies with the potential for a turn for the better in 2012 is Snyder’s-Lance, Inc., Charlotte, N.C., Mr. Pinheiro said. Because 2011 was the company’s fi rst full year after the December 2010 merger of the Snyder’s and Lance businesses, he characterized the company and the year as a “work in progress.”

“Infrastructure investment was a big theme, route engineering, was what happened last year,” Mr. Pinheiro said. “Investors are eyeing 2012 as the transition year, when they will see the benefi t of conversion of company owned routes to driver owned routes and a push of cross selling. New



J&J Snack Foods

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said. He noted food service and institutional accounts represent more than 90% of the company’s business.

“They do feel the effects of recessionary trends in some of their end markets,” he said. “Meanwhile, it is not a dirt cheap stock. From a fi nancial performance perspective, it should be a better year. We are neutral on the company, based on valuation. It is trading at a nearly 20% premium to packaged food with earnings growth somewhat in line with the group.”

Even though it retains a diverse and substantial grain-based foods business, the focus of The J.M. Smucker Co., Orrville, Ohio, has been in a different direction in recent years.

“Smucker is really a coffee company,” Mr. Pinheiro said. “Folgers dominates the company, accounting for 50% of earnings. The good news is that coffee is a very profi table business. Margins last year in the segment were 28%, versus 21% for the food business. In baking mixes, sales are up 15%, far outpacing the category.

“We’re upbeat on Smucker. One thing people forget about them is their tremendous free cash fl ow generation. This year we see free cash generation of $320 million, up to $470 million in the next year.”

He said this cash fl ow is being deployed in signifi cant and important capital investment.

Following a “tough” 2011, Flowers Foods, Inc., Thomasville, Ga., is well positioned for signifi cant improvement

Kellogg Co.

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in 2012, Mr. Pinheiro said.“In 2011 they did a good job of raising

prices,” he said. “They bought Tasty, which looks like a real meaningful earnings driver for Flowers. In 2011 it was neutral to earnings. But Tastykake is now on an additional 2,200 routes. That looks solid. So when you look at 2012, there is a lot going on. Tasty should contribute 10% of earnings, just alone. If the core business can just grow 5%, you’ll have 15% growth.”

Mr. Pinheiro is upbeat on Flowers’ prospects even as he acknowledges investor nervousness over consolidation in the baking industry and the extraordinary expansion of the largest company — Grupo Bimbo S.A.B. de C.V.

“Investors are always concerned, but Bimbo is acting very rationally, like a leader in the business from a pricing perspective,” Mr. Pinheiro said. “Flowers is a strong No. 2 and growing. Hostess to us looks like a liquidation. Bimbo couldn’t buy it. Flowers isn’t going to buy it. I can’t think of a company that wants in the fresh bread business. I expect the company sold in pieces, brands and plants. Whatever happens, it’s another good backdrop for Flowers. I really don’t see problems for Flowers, other than commodity costs, and those should begin to wane.”

While hardly an easy category, Mr. Katzman said there is reason to be optimistic about prospects for bread and for Flowers.

“I think the category has certainly been more competitive than Flowers

J.M. Smucker Co.

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information technology is being introduced at the route level all the way up. We should start to see pretty positive elements of the merger come through in 2012. I think most investors are pretty optimistic, as are we.”

Mr. Pinheiro said Lance was “hurt substantially” by commodity price moves even though thoughtful risk management programs were in place.

“They were protected on commodity purchasing,” he said. “What they can’t control is whether or when customers will accept price increases. Particularly in private label, contract baking.”

Another company struggling with commodity costs in 2011 was J&J Snack Foods Corp., Pennsauken, N.J., Mr. Pinheiro said.

“It was a tough year on the commodity side for sure,” he said. “They have now passed along some of the pricing, and we’re probably getting to the end of their pain, if we haven’t already. So 2012 looks okay.”

Strategic actions taken by J&J in recent years appear promising, Mr. Pinheiro said.

“They bought the frozen handheld business from ConAgra, and it seems to have been bought attractively,” he said. “They don’t waste a lot of time when they make an acquisition before they begin working a business harder. So, I wouldn’t be surprised to see a contribution from this sector.”

Beyond ingredient costs and acquisitions, the economy factors into the prospects for J&J, Mr. Pinheiro

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failed takeover attempt by ConAgra Foods, Inc., shares of Ralcorp fi nished 2011 on a strong note. Mr. Moskow said investors have taken a big picture look at Ralcorp and like what they see.

“Their pasta acquisition (American Italian Pasta Co.) has been excellent,” Mr. Moskow said. “Refrigerated dough (a business purchased from Sara Lee Corp.) promises to be highly accretive. Then you have a spin-off (Post cereals) many investors believe is going to create shareholder value.”

Ralcorp’s strong presence in the private label segment of breakfast cereal may seem a real positive for the

company in a weak economy, but the reality on the ground has been more challenging, Mr. Moskow said.

“Private label gets more attention, but it hasn’t been doing well in cereal lately,” he said. “During the fi rst part of the year, branded cereal was rather promotional, pressuring the market for private label.

“In the second half, we’ve seen private label rebound a bit because brands have taken price. But private label needs to take price, too.”

On the grain processing side, Mr. Moskow said prospects have become less promising in recent weeks. Poor earnings results at Cargill and layoffs both at Cargill and Archer Daniels Midland Co. have made Mr. Moskow wary of the near-term outlook for Bunge Ltd.

“I lowered my numbers on Bunge mostly because of weak soybean crush margin conditions,” he said. “I’m more pessimistic after going through the Cargill fi gures.

“There is great uncertainty around a host of questions, including when the soybean processing industry becomes more rational and the degree to which problems in the Euro zone creates agricultural market volatility and potential problems for companies like Bunge.”

While hardly bullish, Mr. Moskow’s view of ADM is less anxious. Longer term, he said the Decatur, Ill.-based company is looking to make interesting fundamental changes.

“It’s a little ‘less bad’ for ADM,” he said. “You have the benefi t in the near term of good volumes in ethanol. Margins are falling there, too. Recently they pulled forward a lot of demand into 2011. Blenders were trying to get volume done before the blender credit expired. That’s happened. So there are some expectations of volume weakness.

“I think the bigger issue for ADM is they are trying to fundamentally change the culture at the company. Their strategic push is to put more capital into emerging markets, and

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management expected,” he said. “It seems every year they begin with optimism and end, over the last couple years, with pessimism. Having said that, the combination of Bimbo and Sara Lee, the opportunity for Flowers to gain share and the return to bankruptcy of Hostess argues the category should become more rational.”

In part because the company increasingly is less reliant on its breakfast cereal business, Mr. Moskow said investors increasingly are viewing Ralcorp Holdings, Inc., St. Louis, positively. After tumbling during the summer in response to a

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a baking tradition since 1935.

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historically, 90% of their cap ex had been in the U.S. So, the challenge for ADM is to change to a more international mindset. That will require bringing in new blood. And they’re doing that. They have a new chief operating offi cer, Juan R. Luciano (from Dow Chemical), and chief fi nancial offi cer, Ray G. Young (from General Motors), both from the outside. “

While concerned about prospects for General Mills, Inc., Mr. Moskow’s worries about the company have far more to do with the company’s yogurt business than the breakfast cereal segment.

“It’s just a good solid company facing real challenges in yogurt,” Mr. Moskow said. “Greek yogurt has taken all the growth from Yoplait. Sales are now declining. This probably was the best part of the portfolio for many years. Their response with Yoplait Greek has been unimpressive.

“By contrast, cereal seems to be recapturing some market share.”

In the soup sector, Mr. Moskow said General Mills has been very aggressive, adding that’s not unusual for the company.

“My perception is that Campbell is trying to wean itself from deep discounts, but the retailers have maintained very deep discounts on Progresso,” Mr. Moskow said. “Whether that was the intent of Progresso (General Mills) is unclear. At the end of the day, Progresso is taking share again, in a weak category.“

Among packaged foods companies

he covers, Kellogg Co., Battle Creek, Mich., stands out as facing especially serious challenges, Mr. Moskow said.

“They are going through a very challenging period,” he said. “It can be traced back to denuding their supply chain in an attempt to cut costs. They eliminated head count in key areas such as quality assurance and procurement. They weren’t fast enough in addressing some contamination issues in their Eggo plant. As a result, they now have to put big investments back into the plant for renovations and headcount innovations. There is now more

scrutiny at Kellogg from the Food and Drug Administration.

“They know what they have to do, but it will take a long time before they can declare victory. It will be a signifi cant distraction. They will be thinking about this kind of issue far more than their competitors.”

Despite its challenges, Kellogg is not without signifi cant pluses, Mr. Moskow said.

“The brand has been very resilient from a consumer standpoint,” he said. “Market share for Eggo has rebounded. Breakfast cereal, too.” MBN

— L. Joshua Sosland

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Washington

The Trans-Pacifi c Partnership and agriculture

Robbin S. Johnson, a fellow with the Hubert H. Humphrey

Institute of Public Affairs, is a contributing editor at

Sosland Publishing Co.

BY ROBBIN S. JOHNSONWith the Doha Round trade negotiations now more officially shelved, attention on the agricultural trade front is shifting in new directions. For the World Trade Organization, it likely will mean thinking harder about linking trade liberalization to food security, a suggestion made here several times over the past few years. For the Obama administration, however, it likely means more focus on an initiative called the Trans-Pacific Partnership (T.P.P.) and its potential for job-creating economic growth.

An Asia-Pacific focus for U.S. trade policy actually goes back to the Clinton administration and its role in creating the Asia-Pacific Economic Cooperation (APEC) forum. Within APEC’s loose framework, senior ministers have been meeting regularly to discuss trade and related issues. APEC also has created a parallel private sector forum that has had its own work program and also has been urging political leaders to move ahead on trade reform. And, heads of state have met each fall for well over a decade, discussing common concerns and issuing a formal statement at the end of each meeting that customarily has endorsed more open, integrated economies.

But APEC was never intended as a negotiating forum. That is what the Trans-Pacific Partnership framework is intended to provide. The Obama administration’s goals in the T.P.P. were outlined in testimony delivered Dec. 14, 2011, to the House Ways and Means Subcommittee on Trade by Ambassador Demetrios J. Marantis.

Asia-Pacific as a dynamic regionOverall, the administration recog-

nizes that Asia-Pacifi c is a dynamic and economically expanding re-gion. It offers attractive market opportunities for many U.S. industries, including agriculture. It also is a region with many countries negotiating bilateral or regional free trade agreements. Unless the United States joins in, it risks facing less favorable access to Asian markets than other countries. So,

the rationale for the T.P.P. is less a full embrace of freer trade than a defensive move to avoid being left behind by others.

The first round of negotiations occurred in March 2010. Participating were eight other countries — Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam — important but not the

largest potential markets. At the APEC meeting in Honolulu last November, leaders of these nine countries “announced that their negotiating teams had reached the broad outlines of a T.P.P. agreement.”

This framework is defined by five principles: (1) a comprehensive agreement eliminating trade and investment barriers; (2) rules to facilitate trade across integrated supply chains; (3) adopting a range of approaches developed in APEC, including more regulatory transparency and reliance on science, business facilitation, accommodation of the interests of small- and medium-sized enterprises and support for accelerating economic development; (4) addressing emerging issues around the digital economy, “green” growth and state-owned enterprises; and (5) an open-ended agreement to which others can join.

What lies aheadAll of this is encouraging for

proponents of freer trade, especially those within the agricultural sector who understand that the dietary transformations occurring across the Asia-Pacific region offer tremendous export growth opportunities. Still, much work remains to finalize legal texts and to make the market-opening ushered in by the T.P.P. as comprehensive as possible. Four challenges stand out.

First, the United States is insisting that the T.P.P. include labor provisions similar to what

have been incorporated into recent bilateral trade agreements. This always poses a difficult issue for negotiators and for the Congress that must approve any final deal.

Second, it is important that the T.P.P. be a comprehensive agreement. There always are intense pressures on negotiators to exclude sensitive economic sectors from a reform agreement. The United States is no exception, facing resistance from some agricultural sectors and from the textile and apparel industries. But any agreement that holds back

on reform of such sectors loses an important part of its trade- and job-creating value and makes reform of these sectors ever more diffi cult.

Third, as tariffs have been brought down, non-tariff barriers — including

internal regulatory measures — have become more important in distorting trade and investment. This has been a particularly diffi cult issue for agriculture, where sanitary and phytosanitary rules and regulatory processes have often disrupted trade and frustrated reform efforts. Such issues are diffi cult but important to resolve, if the TPP agreement is to achieve its potential.

Finally, several important countries — including Japan, Canada and Mexico — have expressed interest in joining the T.P.P. Their interest increases the potential value of a T.P.P. agreement, but it also complicates the negotiating process, as it involves a series of bilateral consultations and then a consensus-based decision on whether to accept their participation. Their interest may well pose some hard choices between increased scope, delay and extent of reform.

All of this comes to a head in a presidential election year. This raises the political stakes while strengthening the hands of special interests. It will be a challenging environment in which to negotiate, let alone pass, a trade agreement. The next full round of T.P.P. negotiations is scheduled for March in Australia. It bears watching. MBN


People

Wendy Barth named senior v.p. of global marketing at Rich ProductsBUFFALO, N.Y. — Wendy Barth, an 11-year veteran of Rich Products Corp., has been named senior vice-president of global marketing at Rich Products. Ms. Barth will be responsible for Rich’s headquarter-based marketing team, which supports Rich’s Asia Pacifi c, Latin America, Europe/Middle East and South Africa business regions, and she also will assume global accountability for the company’s business intelligence, branding and social media strategies. In addition, she will chair Rich’s U.S./Canada region’s Marketing Leadership Team.

“Wendy’s new position has great

potential to advance marketing best practices and engender collaboration against high impact initiatives across the regions here at Rich’s,” said Richard Ferranti, executive vice-president and chief operating officer.

Ms. Barth began her marketing career in 1980 at General Mills, Inc., where she was promoted through a series of roles leading the planning and marketing initiatives on a variety of consumer brands. In 1989, she was named national director of food service for 7-Eleven and later was promoted to vice-president of marketing for 7-Eleven in 1996.

She joined Ahold Supermarket Group in 1998 as vice-president of marketing for Tops Supermarkets and later was named vice-president, Ahold USA, customer relationship marketing. In 2001, she joined Rich’s as vice-president of the bakery strategic business unit. She was promoted to senior vice-president of U.S./Canada marketing in 2004 and then to her most recent position as senior vice-president of international marketing and research and development for Rich’s International Business Group in 2007.

Ms. Barth received a bachelor of science degree in business administration from Bucknell Uni-versity and a master’s in business administration from the University of Michigan. MBN

Nelson Harris, former Tasty Baking chief executive, dies at 85LAFAYETTE HILL, PA. — Nelson G. Harris, former president and chief executive offi cer of Tasty Baking Co., died Jan. 10. He was 85 years old.

Following his service in the U.S. Navy during World War II, Mr. Harris received a bachelor’s of science degree from The Wharton School of the University of Pennsylvania in 1948 and a doctorate from the Temple

University School of Law in 1953.Mr. Harris joined Tasty Baking in

1959, and he held several positions, including vice-president and treas-urer, until leaving the company in 1968 to become president of Horn and Hardart Baking Co. He later was associated with Central Valley Co., the mortgage and title insurance subsidiary of Industrial Valley Bank

and Trust Co. in Philadelphia.Mr. Harris rejoined Tasty Baking

in 1974, and he was named president in 1979, chief executive offi cer in 1981 and chairman and c.e.o. in 1991. He retired in May 1992. He was succeeded by Carl S. Watts.

He was a member of various boards of directors and was actively involved with the Blind Relief Fund of Philadelphia for more than 42 years.

Survivors include three sons, Stephen, David and Thomas; a daughter, Patricia de Barros; a brother, Col. Frank W. Harris, III; and 10 grandchildren. He was preceded in death by his wife, Rita Jane Storrie; a son, William; and a daughter, Nancy.

A memorial service was to be held Jan. 14 at the Presbyterian Church of Chestnut Hill. MBN

Ron Savelli named president andc.e.o. of Eatem Foods Corp.VINELAND, N.J. — Ron Savelli has joined Eatem Foods Corp., a supplier of food bases, fl avors, broths and seasonings headquartered in Vineland.

Prior to coming to Eatem, Mr. Savelli spent several years with CSM Bakery Products North America, most recently as president and chief executive offi cer of H.C. Brill. He joined CSM in 2003 as vice-president of sales and marketing and was named president and c.e.o. of Caravan Ingredients in 2007.

Earlier, he spent eight years with Progressive Bagel Inc./Einstein Noah Bagel as vice-president of product development. Before that he had been with Caravan for seven years.

Owned since 2010 by Linsalata Capital Partners, based in Mayfi eld Heights, Ohio, Eatem manufactures

food base solutions and supplies savory fl avor systems, fl avor concentrates, broth concentrates and seasoning bases. The company supplies industrial and food service customers.

Eatem operates a 60,000-square-foot facility focused on roasting a wide range of savory items (including seafood, poultry, beef and vegetables) for the production of proprietary fl avor bases used for soups, gravies, sauces, dressings and other food products. The company offers natural, organic and kosher

products.Linsalata has owned food related

companies in the past and its current portfolio companies include Hospitality Mints, a North Carolina-based manufacturer of customized, individually-wrapped promotional mints and candies. MBN

Daryl Bashor promoted at Dakota Specialty MillingFARGO, N.D. — Daryl W. Bashor has been promoted to vice-president of engineering and manufacturing facilities at Dakota Specialty Milling, Inc.

Mr. Bashor joined Dakota Specialty in 1987 as plant superintendent, and he has held positions of increasing responsibility, most recently as director of manufacturing.

“Daryl has been instrumental in the design and construction of our various facilities in North Dakota, and will now lead our company’s expansion in the future,” said R.C. Axlund, president.

Mr. Bashor received a bachelor’s degree in milling science and management from Kansas State University in Manhattan. MBN

Savelli


Education and Research

Soft wheat studies yield key fi ndings

A series of whole grain fl our studies conducted by the Agricultural Research Service

of the U.S. Department of Agriculture has provided some answers as to how much dietary fi ber is in whole grain fl our made from soft wheat, and has enabled researchers to forecast what varieties of soft wheat plants are best for whole grain fl ours.

The studies were executed over fi ve years at A.R.S.’s Soft Wheat Quality Laboratory at Wooster, Ohio. The group responsible for the project included Clay Snelling, associate professor with Ohio State University’s Ohio Agricultural Research and Development Center in Wooster. He conducted the research with Mary Guttieri a research specialist, and Edward J. Souza, a former research leader and plant geneticist with the Soft Wheat Quality Laboratory.

The research team used a nationally represented sample of soft wheat whole grain fl ours to determine the dietary fi ber levels in soft wheat, whole grain fl our. For example, the team used soft wheat kernels from 13 different wheat-growing regions, according to the A.R.S. The team also studied fi ve different kinds of commercial whole grain soft-wheat fl ours.

The team sought to account for as many factors as possible, so they compared fl ours from each of two commercial wheat varieties grown at each of two sites in Ohio during three consecutive years, according to the A.R.S.

The research team found soft wheat whole grain fl ours averaged 14.8 grams of dietary fi ber in each 100 grams of fl our. The A.R.S. said the fi ndings may be used in revised editions of nutrition databases that food manufacturers consult when making nutrition labels found on packaged foods.

In addition to the fi ndings regarding the fi ber content of whole grain fl ours made from soft wheat, the team also found that some soft wheat varieties were better suited for use in whole grain fl ours.

“In soft wheat, it’s a little bit more diffi cult to make whole grain products, and so we were looking to see if there were genetic variations in soft wheats for whole grain products such that there might be some way to tailor some of the soft wheats that are better suited for whole grains,” Dr. Snelling said. “We seemed to fi nd

some varieties that were a little bit better than others, and we were able to build a model that would predict what series of parameters you might want to make a better whole grain product from soft wheat.”

The fi ndings from the A.R.S. fl our studies may help food manufacturers increase the proportion of fl our from whole grain in relation to refi ned white fl our food makers currently use. Americans currently under-consume dietary fi ber. The 2010 Dietary

Guidelines recommend 14 grams per 1,000 calories consumed, or 25 grams per day for women and 38 grams for men. Americans’ usual intake averages 15 grams per day.

“This study reveals that consumers might be receiving even more fi ber from Kellogg products than previously thought,” said Nelson Almeida, Ph.D., vice-president of Global Chemistry, Nutrition and Regulatory Sciences, Kellogg Co. “This is important because less than 1 in 10 American adults and children get enough fi ber in their diets, and most get about half the amount of fi ber they need, as recommended by the Institute of Medicine.”

Consumption of whole grains has been associated with health benefi ts. For example, a review of 25 studies published in the British Medical Journal found a high intake of dietary fi ber, especially from cereals and whole

grains, was associated with a reduced risk of colorectal cancer. Putting more whole grain fl ours into the foods that consumers buy and enjoy, such as crackers and cookies, may be one way to get consumers eating more whole grains and dietary fi ber.

“Studies like this help us continue to meet America’s fi ber defi cit,” Dr. Almeida said. “Consumers also need to understand that the amount of fi ber in whole grain products can vary greatly. They should specifi cally look for grain or whole grain foods that provide at least 3 grams of fi ber to help meet their daily requirements without increasing calories.”

Food manufacturers may also use the research to buy grains from a certain variety, Dr. Snelling said.

“It could lead to them looking at the grain that they have coming in and be able to tell fairly quickly if it might be suitable for a whole grain product,” he said. “It would at least allow them to know how to handle it, and whether they need to add other materials, other ingredients to the fl our to try to overcome inherent weaknesses or whether they can use it as is.”

Whole grain fl our comes with many benefi ts, but reaping those potential health impacts comes with challenges.

“Soft wheat is typically used for products like cookies and cakes and pies and sweet goods,” said Kirk O’Donnell, vice-president of education at AIB International, Manhattan, Kas. “The reason for it is a lighter texture and if it’s used in bread it won’t rise high enough. It won’t have enough ability to hold its shape. When you go to whole wheat, the problem gets even worse.”

Also, removing the bran and the germ from whole grain takes out some of the nutrients that come with those components. The outer, or bran layer, of a wheat kernel contains important vitamins such as selenium and B vitamins, for example, according to the A.R.S. The wheat seed, or germ, also provides B vitamins and healthful fats. The endosperm, which constitutes most of the inside of a wheat kernel, contains carbohydrates and protein.

“The biggest thing that you don’t get when you go from whole grain to white fl our whether it’s hard or soft, you’re missing the fi ber and you’re missing a lot of the fat soluble vitamins, such as A, D and E,” Mr. O’Donnell said. “Pretty much all the fat is in the wheat germ.”

However, once the bran is added back in to fl our it increases the water

Researchers study fi ber content and best varieties to make whole grain fl ours

Holiday cut-out cookies made with whole grain wheat fl our.

U.S.

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Education and Research

retention capacity of the resulting fl our.

“Usually for soft wheat we like to have a low water retention capacity in the fl our,” Dr. Snelling said. “Adding the bran makes the product more nutritious, but it also makes it diffi cult to make the type of products normally made from soft wheat.”

White fl our may be stored for longer periods than whole grain fl our

because it is more stable compared to whole grain fl our.

Another important factor food makers must consider is consumer acceptance. Can food manufacturers make a whole grain product from soft wheat that consumers will accept?

“While (consumers) want whole grain products, the current products have a different taste or feel to them,” Dr. Snelling said. MBN

Multi-million-dollar endowments to benefi t Idaho ag researchBOISE, IDAHO — The Idaho Wheat Commission has unveiled plans to create two faculty research endowments with $2 million to the University of Idaho’s College of Agricultural and Life Sciences. The endowments will help support Idaho’s 4,500 wheat growers and their $766 million-per-year harvest.

In addition to the Commission’s donation, Limagrain Cereal Seeds has agreed to collaborate with the University of Idaho on breeding new wheat varieties for Idaho and the

Pacifi c Northwest. Limagrain Cereal Seeds is a joint venture between France-based Limagrain Group, the largest cereal seed company in Europe, and Arcadia Biosciences, a biotechnology company based in Davis, Calif.

Both Limagrain and the university will contribute germplasm, technology and expertise to more rapidly develop varieties with improved productivity and tolerance to diseases and stress. To support this effort, Limagrain also is funding a signifi cant endowment for cropping systems research and graduate training at the university.

“These partnerships clearly demon-strate the power of collaboration and the value that a land-grant institution like the University of Idaho can bring to our state’s economy,” said M. Duane Nellis, president of the University of Idaho. “We deeply appreciate the confi dence that both the Idaho Wheat Commission and Limagrain Cereal Seeds have placed in our university.”

Limagrain Cereal Seeds and the university will share grain

germplasm, which will “greatly increase varietal options for Idaho and Pacifi c Northwest wheat growers,” said Dean John Hammel of the College of Agricultural and Life Sciences.

Gordon Gallup, chairman of the Idaho Wheat Commission, said partnerships with private breeders like Limagrain Cereal Seeds will provide a signifi cant boost to public programs through new technology and new germplasm.

“If wheat is to remain competitive in our state and region, growers of Idaho must look to public-private partnerships, as well as requiring increased effi ciencies in our public research programs,” Mr. Gallup said.

Donn Thill, director of the university’s Idaho Agricultural Experiment Station that oversees the institution’s statewide agricultural research, said he believes that, “by strategically combining our wheat germplasm with Limagrain Cereal Seeds’, new wheat varieties will be created for our growers that yield more wheat per acre, that are easier on the environment, more disease-resistant, and more nutritious than what we could do working alone.”

Jim Peterson, vice-president for research at Limagrain Cereal Seeds, called the collaboration “an exciting opportunity” to build on the strengths of the University of Idaho and Limagrain’s wheat programs.

“The university’s cropping systems research will help growers to better manage and capture value from new varieties that come out of the collaborative breeding effort,” Mr. Peterson said.

For 2012, the Idaho Wheat Commission endowments will be used to fund a wheat breeding and a wheat agronomist professorship, each located at the university’s Aberdeen Research and Extension Center. MBN

While planning to earn both amaster of science and doctorate

degree in biology, Norman Fox wantedsomething to do “on the side.” His “some-thing on the side,” was the Donut Denwhich turned into a 33-year success.

When Norman decided to open adoughnut shop, a friend, Herb Stewart,introduced him to Oliver Harlow, founderof Honey Flush Donuts, a 40-store chain.Stewart and Harlow helped Norman openthe Donut Den, in July, 1973, in Nashville,Tennessee. “Oliver Harlow not onlyinspired, but gave me valuable practicaladvice,” said Norman.

Harlow started using International®Bakers Services (IBS) flavorings in the1960s, and suggested that Norman do thesame. He highly recommendedCinnamon-Butter Blend. Today, that flavoris the secret ingredient in the Donut Den’sApple Fritters—their most popular prod-uct. “There is no other type of cinnamonflavoring that makes the product taste thisgood,” stated Norman.

Consistency is the key to success inany business. Maintaining a core productline and keeping up with new trends keepsregular customers coming back andattracts new customers as well. “Anothersecret to help ensure consistent quality isour own Harold Graves, the cook for theDonut Den for over 30 years,” Normanstated. But he attributes his 33 years ofsuccess to following Harlow’s recommen-dation—relying on the flavors fromInternational® Bakers Services. “Their fla-vors are consistently the best,” accordingto Norman.

Norman was a graduate student duringthe first four years of the Donut Den.After earning his doctorate degree, hetaught in university classrooms. But itwas a friend of a friend who taught himhis most valuable business lessons.Sometimes it’s who you know that helpsthe most.

If you value consistent quality, youshould get to know International® BakersServices. Contact us toll-free at (800)345-7175, by fax at (574) 287-7161, or inwriting at 1902 North Sheridan Ave.,South Bend, Indiana 46628. We have theflavors your customers deserve.

SOMETIMES IT’SWHO YOU KNOW

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33 / July 3, 2007 Milling & Baking News bakingbusiness.com / world-grain.com

Weekly Spotlight

IndexesSaltine Cracker Ingredients

Ingredient Market TrendsI.G.C. forecasts 2012-13 world wheat crop at 685 million tonnesT

he International Grains Council on Jan. 19 issued a preliminary world wheat production forecast for

2012-13. The council forecast production in the year at 685 million tonnes which would be down 5 million tonnes from the forecast record outturn of 690 million tonnes in the current year. The recent fi ve-year average world wheat outturn was 663 million tonnes.

The I.G.C. commented, “The world wheat area for the 2012 harvest is projected to expand 1.7% to 225 million hectares (ha), the largest since 1998. Most of the increase is expected in North America and the Commonwealth of Independent States (comprising nations formerly parts of the Soviet Union), boosted by attractive domestic and international prices.”

The I.G.C. said its initial forecast for 2012-13 was based on normal weather conditions for the rest of the growing season. “Aside from dryness in parts of the United States and Ukraine, the condition of winter wheat in the

Northern Hemisphere is mostly reported to be good.”

The forecast also assumed an increase in spring wheat plantings in North America and a return to average yields compared with the record high world average seen in the current year. MBN

Kansas City spot millfeedper ton

$100

$150

$200

$250

Dec.Oct.Aug.JuneAprilFeb.2011


Bagel Ingredients

Price Indicators

Pan-bread fl ourWheat futures, K.C., March

Hard winter premiums, 12.2% pro tein Millfeed, K.C., 30-day

Soybean oilCane sugarCocoa

THISWEEK

LASTWEEK

3WEEKS

AGO

2WEEKS

AGO

Ambassador Cousin to lead W.F.P.

United Nations Secretary-General Ban Ki-moon last week con-fi rmed the appointment of

Ambassador Ertharin Cousin as exec-utive director of the World Food Program. Ambassador Cousin, who currently is the U.S. ambassador to the U.N. food agencies in Rome – the W.F.P. and the Food and Agriculture Organization — will take offi ce in April and will succeed Josette Sheeran, who has held the post for the past fi ve years and has accepted a position with the World Economic Forum.

Ambassador Cousin has served in the U.S. mission in Rome since her appointment by President Barack Obama was confi rmed by the Senate in August 2009. Previously, Ms. Cousin served as executive vice-president and chief operating offi cer of Feeding America (then known as America’s Second Harvest), the nation’s largest domestic hunger organization. She led that organization’s response to Hurricane Katrina, an effort that resulted in the distribution of more than 62 million lbs of food to storm victims.

Earlier in her career, Ms. Cousin was senior vice-president of Albertsons Foods and vice-president for government and community affairs for Jewel Food stores. While at Albertsons, she also served as president and chairwoman of the company’s corporate foundation, managing the organization’s philan-thropic activities.

Ms. Cousin served in the Clinton administration for four years and in 1997 received a White House appointment to the Board for International Food and Agricultural Development. MBN

Cousin


Ingredient Week

Bakery FlourBookings of bakery fl our continued

to expand last week from the small vol-umes booked during the holidays. Prices advanced.

Bakers employed various fl at-pricing and component strategies. Individual bakers supplying food service companies who had menu pricing to protect booked at least some supply for the rest of 2012 and in exceptional instances into January-March 2013. Recent declines in wheat futures encouraged others to cover at least that component of prospective fl our bookings for April-June, July-September and even the fourth quarter of 2012.

Concerns that the cash hard winter wheat basis was ending its recent slide prodded some bread fl our buyers to cover the cash basis even if holding back from completing fl our transactions.

The crumbling millfeed market gen-erated concerns, and there was some activity in this component by bakers who feared millfeed values might erode further given the bearish undertone in corn and other feed markets in the wake of the U.S. Department of Agriculture’s surprisingly large increase in its forecast for the 2011-12 corn supply.

Activity in specialty fl our was steady. Rye fl our pricing declined with a slight slip in the cash rye price to $8.25 a bu. The rye market has been remarkably fi rm and mostly stable even as other grain markets recently declined. The fi rmness was at-tributed to a small 2011 crop with remain-ing supply in strong hands.

$11.00

$14.00

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$20.00

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$26.00

J A J O

Previous Year Current Year

Bulk, f.o.b. car, $ per cwt


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Flour grind remained heavy in most ar-eas. Mills ran six to seven days in the Up-per Midwest, Central states and North-east and fi ve to six in the Southwest and Southeast. West coast grind still was light at about fi ve days in California and fi ve to six in the Pacifi c Northwest. MBN

Family FlourSales of national and regional brands

of family fl our were limited last week. Carlot list prices were unchanged.

Shipments were routine. Some grocers and other retailers continued to work down inventories left from the holidays.

Attention was turned toward marketing approaches for Easter, which typically is the next occasion for an increase in home bak-ing beyond the norm. With wheat prices down during the past several weeks, some manufacturers considered more assertive trade activation programs. One manufac-turer suggested retail shelf offers of family fl our at two 5-lb bags for $4 may be com-monplace during the run-up to Easter.

Most private label fl our buyers have taken partial or even complete coverage of their needs through old crop. MBN

SemolinaBookings of semolina, granulars and

durum fl our were limited last week. Prices declined.

The price of choice milling hard amber durum quoted as a delivered Chicago/beyond value was $11 a bu, down 15c from the previous week. The Minne-apolis price was 30c a bu lower than the

Bakers standard, Kansas City

Spring standard, Minneapolis

Cracker fl our, Chicago

Bulk, f.o.b. car, $ per cwtBakery fl our

— Change from — Year Jan. 20 Jan. 13 Jan. 6 agoKansas City Bakers short patent 19.00 0.80 0.85 21.20Bakers standard patent 18.90 0.80 0.85 21.10Second clear 14.00 — — 12.50Third clear NA . . . . . . 5.80Minneapolis Spring short patent 21.90 1.75 2.35 24.55Spring standard patent 21.80 1.75 2.35 24.45High gluten 24.80 1.75 2.35 27.45Whole wheat 21.80 1.75 2.35 24.45Specialty whole wheat 22.15 1.75 2.35 24.80Fancy spring clear 21.65 1.75 2.35 24.30First spring clear 21.55 1.75 2.35 24.20Rye, white 21.25 -0.25 0.30 20.70Chicago Cracker 15.50 0.35 0.25 19.35Fancy cake 17.00 0.35 0.25 20.85New York Winter/spring blend 21.40 0.80 0.85 23.60Spring standard patent 24.40 2.05 2.80 27.00High gluten 27.40 2.05 2.80 30.00Fancy cake 19.00 0.35 0.25 22.85Rye, white 23.75 -0.25 0.30 23.20Los Angeles Bakers standard patent 21.90 0.80 -0.35 21.65Pastry 21.75 0.80 1.05 21.20

Bulk, f.o.b. Minneapolis, $ per cwtSemolina

No. 1 hard amber durum

DollarsNationally advertised family fl our

Jan. 20 Year agoFamily patent, 2-25s papers 24.12 22.504-10s n.a. 18.258-5s 18.62 18.4018-2s 20.64 21.76Self-rising n.a. +88c per bale

— Change from — Year Jan. 20 Jan. 13 Jan. 6 agoSemolina 26.45 -.30 -1.80 26.60Granulars 26.25 -.30 -1.80 26.40Flour 26.15 -.30 -1.80 26.30First clear 19.10 — — 13.60Second clear 13.00 — — 11.00Semolina - N.Y. 29.15 -.30 -1.80 29.30

Track, Minneapolis$ per bu

Chicago quote, or $10.70, taking into ac-count the rail freight rate differential between the two markets. It should be noted that amid a dearth of trading of spot durum, with most supply moving against contracts, pegging value was problematic. Some quotes, refl ecting bids, were much lower, even down to $10 a bu, while other quotes refl ecting offers were as high as $11.50 a bu. The Cana-dian Wheat Board offered milling durum held in storage in Thunder Bay, Ont., at the equivalent of $11.15 a bu. All agreed, though, that price likely will continue to trend lower until demand is uncovered.

Pasta manufacturers earlier cov-ered nearly all of their semolina needs through March. Millers reported “tire kicking” for quotes and additional sec-ond-quarter ownership. Coverage for April-June was estimated at about 35%. Many pasta makers were trying get a grip on how much more downside there was in the durum market.

The U.S. Department of Agriculture on Jan. 12 forecast durum plantings in Arizona and California at 230,000 acres, up 30,000 acres from 2011 and com-pared with 185,000 acres in 2010. The U.S.D.A.’s fi eld offi ce in Arizona said durum planting in that state was two-thirds completed by Jan. 15. MBN

— Change from — Year Jan. 20 Jan. 13 Jan. 6 agoChoice milling 13% 10.70 -.15 -.90 11.00cents per bu Amber discount 10.00 — — 10.00Durum discount 10@40 — — 10@40Puffi ng premium 0 — — 0

Ingredient Week


Cash Wheat HARD WINTER. Premiums on hard red winter wheat in Kansas City were unchanged to 20c a bu higher last week. The widest gains were posted on wheat with protein from 11.4% through 12.8% (10@20c a bu) and on wheat with 14% protein (10c). Five-cent gains were reg-istered on wheat with protein from 13% through 13.6%. Premiums on the lowest proteins and on 13.8% protein were un-changed and mostly untested.

Wheat movement in the spot mar-ket slowed even as mills and exporters sought to replenish pipelines. Mills re-ceived wheat deliveries for application against January contracts, but with mill grind still heavy across much of the country, many units sought additional supply from the spot market. Gulf ex-porters raised their bids on 12%-protien hard winter wheat by 7c a bu at midweek, but with some buyers out of the market at the week’s end, bids were pulled back and ended the week unchanged at 100c over the K.C. March wheat future.

In Fort Worth, nearby bids on hard red winter wheat were unchanged at the K.C. March price. Salina terminal eleva-tor truck bids were unchanged at 15c under K.C. March. Hutchinson elevator bids were 5c under K.C. March.

Snow cover was evident across the northern Plains and even much of Ne-braska, but most of the southern Plains lacked snow cover even as temperatures tumbled at midweek and into the week-end. Warmer weather was forecast, and the ups-and-downs in temperatures raised some concerns about winterkill and soil heaving.

The Texas fi eld offi ce of the U.S. Depart-ment of Agriculture rated the condition of the state’s winter wheat crop on Jan. 15 at 22% good to excellent, 32% fair and 46% poor to very poor, a decline in condition

from a week earlier when Texas wheat was rated 25% good to excellent and 40% fair. The offi ce commented, “Winter wheat condition continued to improve in the Northern High Plains due to rainfall expe-rienced over the last month. Small grains in the Blacklands are in good condition with soil moisture improving weekly, with some producers planting additional wheat in areas that were overly saturated.”

Jim Shroyer, a research and extension agronomist at Kansas State University, said in the Jan. 13 Kansas Wheat Scoop update from the Kansas Wheat Commis-sion, “There is defi nitely more reason for optimism about this year’s wheat crop than there was at planting time. But the dry subsoil could be a problem later this spring if we don’t get more rainfall. Also, if nighttime temperatures in January and February are consistently above freezing for several days in a row, the wheat could lose much of its winterhardiness and be susceptible to cold injury from a sudden drop in temperatures.” Mr. Shroyer added the latter possibility was not yet a concern.

HARD SPRING. Premiums on hard red spring wheat quoted as delivered Chi-cago/beyond values in relation to the Minneapolis March wheat future surged 25@85c a bu higher last week. Bitterly cold temperatures across the northern Plains slowed the pace of rail car load-ing, delaying some shipments of wheat destined for application against Janu-ary wheat contracts and limiting offers of wheat on the spot market. Mills and

Basis Kansas City March, cents per bu No. 1 hard winter

Exporter bids and offersFor shipment

Jan. 20Bid Offer

Year ago bid

Canadian domestic milling wheat

No. 1 Hard 11.5%, Track, PortlandBasis Kansas City future, $ per bu

Cash wheat

No. 1 Spring 14%, Track, PortlandBasis Minneapolis future, $ per bu

Jan. 20 — Change from — Year

For shipment Bid Jan. 13 Jan. 6 ago

January . . . . . . . . . …February 6.40 +.18 +.18 …March 6.42 +.18 +.17 …

No. 1 Soft White, Track, Portland$ per bu

January 0.60 +.10 +.10 -0.20February 0.65 +.13 +.13 -0.10March 0.68 +.13 +.13 0.05

January 1.30 +.10 +.10 1.70February 1.30 +.10 +.10 1.70March 1.30 +.10 +.10 1.70

Jan. 20 — Change from — Year Premium Jan. 13 Jan. 6 ago Ordinary 65 @ 80 — +20 @ +20 -52 @ -3711% 65 @ 80 — +20 @ +20 -46 @ -3111.2% 65 @ 80 — +5 @ +5 -42 @ -2711.4% 80 @ 95 +15 @ +15 +5 @ +5 -40 @ -2511.6% 90 @ 105 +20 @ +20 +5 @ +5 -35 @ -2011.8% 90 @ 105 +15 @ +15 -11 @ -11 -25 @ -1012% 101 @ 116 +16 @ +16 -10 @ -10 -8 @ 712.2% 101 @ 116 +16 @ +16 -10 @ -10 -8 @ 712.4% 101 @ 116 +16 @ +16 -10 @ -10 -5 @ 1012.6% 105 @ 120 +20 @ +20 -6 @ -6 0 @ 1512.8% 110 @ 125 +10 @ +10 -1 @ -1 5 @ 2013% 110 @ 125 +5 @ +5 -14 @ -14 66 @ 8113.2% 115 @ 130 +5 @ +5 -9 @ -9 70 @ 8513.4% 115 @ 130 +5 @ +5 -9 @ -9 75 @ 9013.6% 115 @ 130 +5 @ +5 -9 @ -9 80 @ 9513.8% 120 @ 135 — -15 @ -15 80 @ 9514% 158 @ 173 +10 @ +10 -7 @ -7 85 @ 100

Basis Minneapolis March, delivered Chicago\beyond cents per bu

No. 1 hard spring

Jan. 20 — Change from — Year Premium Jan. 13 Jan. 6 ago Ordinary . . . . . . . . . … 11% . . . . . . . . . … 12% . . . . . . . . . -65 @ -3013% 120 . . . . . . 0 @ 6513.5% . . . . . . . . . 70 @ 11014% 155 @ 190 +45 @ +75 +65 @ +85 150 @ 20014.5% . . . . . . . . . 215 @ 25015% 165 @ 250 +25 @ +85 +55 @ +120 300 @ 34016% . . . . . . . . . … 17% . . . . . . . . . …

January +100 March … … February +100 March … +50 MarchMarch +100 March … … April +100 May … …

January +62 March … +73 MarchFebruary +66 March … +73 MarchMarch +70 March 75 +73 MarchApril +55 May 62 +45 May

Western red spring 13.5% 344.27 -4.41 400.95Soft white spring 260.88 -2.63 316.09Amber durum 415.55 -21.12 405.61

In-store, Thunder Bay, Canadian $ per tonne Jan. 20

Change from Jan. 13

Yearago

U.S. $ per bu

Western red spring 13.5% 9.24 -0.02 10.97Soft white spring 7.00 — 8.65Amber durum 11.15 -0.45 11.10

No. 1 Hard 12%, Track GulfBasis Kansas City future, cents per bu

No. 2 Soft Red, c.i.f. New OrleansBasis Chicago future, cents per bu

exporters requiring supply to shore up pipelines were forced to hike bids to se-cure a portion of what was offered.

At the same time, overall domestic demand for hard red spring wheat re-mained constrained by the substitution of less expensive hard red winter wheat for spring wheat of equivalent protein to the extent practicable.

Of note were recent forward sales of hard red spring wheat to private grain companies by Canadian producers. The sales were for delivery in August-September and October-December 2012 and anticipated the end of the Canadian Wheat Board monopoly on western Ca-nadian wheat sales schedule for Aug. 1 under recent legislation.

SOFT RED. Mill bids on soft red winter wheat were fi rm to 10c a bu stronger last week. In Kansas City, No. 1 soft red bids advanced 10c and were 40c under K.C. March to 40c over. Gulf bids on soft red for January were raised 4c and were 62c over Chicago March. St. Louis mill bids held at 30c over Chicago March. Chicago mill bids were unchanged at 10c over Chicago March; new crop, 35c under July. Mill bids in Toledo for nearby were 40c over Chica-go March, unchanged; new crop, 40c over July. Elevator bids were 10c over March; new crop, 5c over July. Cincinnati nearby mill bids were 20c under Chicago March, up 5c. Elevator bids for nearby were 25c under March; new crop, 16c under July. Michigan white wheat mill bids for near-by were 15@40c over Chicago March. MBN


Ingredient Week

$4.25

$5.75

$7.25

$8.75

$10.25

J A J O


Wheat FuturesPrices of wheat futures posted mixed

price changes last week. Outside markets mostly took a backseat to supply-and-de-mand fundamentals for wheat. The U.S. dollar index declined, but equity markets registered solid gains. Corn futures de-clined, but the soy complex ended stronger.

The International Grains Council raised its forecast of 2011-12 wheat production to a record 690 million tonnes, up 7 million tonnes from its previous projection issued at the end of November and up 37 million tonnes, or 6%, from 653 million tonnes in 2010-11. World wheat consumption in the current year was forecast at a record 681 million tonnes, up 2 million tonnes from the previous projection and up 25 million tonnes, or 4%, from 2010-11. World wheat ending stocks in 2011-12 were forecast at 204 million tonnes, up 4 million tonnes from the November projection and up 9 million tonnes from 195 million tonnes in 2010-11. It would be the largest year-ending wheat inventory since 1999-00.

The Minneapolis Grain Exchange (MGEX), having received Commod-ity Futures Trading Commission ap-proval, announced changes to its hard red spring wheat contract. The U.S. ori-gin condition will be removed from the contract beginning with the September

2012 future, allowing wheat from other origins, read Canada, to be delivered against the MGEX contract as long as it meets contract specifi cations and grades. Beginning with the May 2013 future, vomitoxin levels for delivery wheat will be set. Wheat with 2 parts per million vomitoxin or less will be deliverable at the prevailing future price. Wheat with a vomitoxin level above 2 p.p.m. but below 3 p.p.m. will be deliverable at a 20c discount to that price. Wheat with vomitoxin content above 3 p.p.m. will not be deliverable. Also beginning with the May 2013 contract, storage rates for delivery wheat will be raised to 7c per month from the current 5c per month.

The U.S. Department of Agriculture indicated net export sales of U.S. wheat during the week ended Jan. 12 totaled 587,200 tonnes, up 61% from the previ-ous week and up 81% from the prior four-week average. Export sales last week were mostly routine with Japan the largest buyer. MBN

MillfeedMillfeed markets remained in turmoil

last week with prices continuing to drop in most markets but steady to fi rmer on the West coast, where light fl our grind limited nearby supply.

$ per ton, delivered rail unless notedN=Nominal

Bulk middlings

March contract, $ per buMinneapolis wheat futures

$ per bu; change in cents per buWheat futures

March contract, $ per buKansas City wheat futures

4.50

6.50

8.50

10.50

J A J O


March contract, $ per buChicago wheat futures

$4.50

$6.50

$8.50

$10.50

J A J O


— Change from — Week’s Year Jan. 20 Jan. 13 Jan. 6 High Low agoKansas City March 6.67 -3c -13c 6.78¾ 6.50¼ 9May 6.75¾ -3½c -12¾c 6.85½ 6.59½ 9.10July 6.85¼ -3½c -11¾c 6.97½ 6.68¼ 9.14¾September 6.99 -4¾c -10¾c 7.11¾ 6.83 9.23Chicago March 6.10½ +8¼c -14¼c 6.11¾ 5.90 8.24½May 6.28½ +4¼c -15¼c 6.34 6.12½ 8.50¼July 6.43¾ -2c -16½c 6.54 6.28½ 8.66¾September 6.60¼ -7¼c -16¼c 6.73¾ 6.46½ 8.81¾Minneapolis March 7.98¾ -2½c -2¼c 8.13¼ 7.94¾ 9.37¼May 7.81½ -4¼c -11¼c 7.99¼ 7.78¾ 9.43July 7.74 -3¾c -12¾c 7.89¾ 7.69½ 9.45½September 7.55¼ -9¼c -18¾c 7.73 7.51 9.39

High Low

10.14¼ (05-26-11) 5.03 (06-11-10)10.01½ (02-09-11) 5.15¼ (06-11-10)9.97½ (05-26-11) 5.90 (03-31-10)10.20¾ (02-09-11) 5.42 (06-09-10) 9.54¾ (05-26-11) 5.05 (06-11-10)9.25½ (02-09-11) 5.21 (06-11-10)9.57½ (05-26-11) 6.13 (12-15-11)9.71½ (02-09-11) 5.60½ (06-09-10) 10.55¾ (05-26-11) 5.32¼ (06-09-10)10.56 (05-26-11) 5.43¼ (06-09-10)10.55 (05-26-11) 6.74¼ (07-15-10)10.55¼ (05-26-11) 5.65 (06-11-10)

Season’s

Kansas City 110 @ 120Southwest, f.o.b. truck 125 @ 135Minneapolis 121 @ 129Upper Midwest, f.o.b. truck 117 @ 125Chicago West 134 @ 142Central states, f.o.b truck 105 @ 115Buffalo 95 @ 110Southeast 95 @ 102N. & S. California 189 @ 199Los Angeles, f.o.b. truck 185 @ 195Pacifi c Northwest 185 @ 200Upper Midwest, sacked 270 Wheat germ 295 @ 310

— Change from — Year Jan. Jan. 13 Jan. 6 ago Feb.-Mar. Apr.-June July-Sept.

110 @ 120 -15 @ -10 -50 @ -46 144 @ 150 116 @ 122 102 @ 108 102 @ 108125 @ 135 -20 @ -20 -50 @ -45 160 @ 165 136 @ 141 122 @ 127 122 @ 127122 @ 129 -7 @ -10 -27 @ -28 149 @ 159 122 @ 129 122 @ 129 128 @ 138118 @ 125 -7 @ -10 -27 @ -28 145 @ 155 118 @ 125 118 @ 125 124 @ 134135 @ 142 -7 @ -10 -27 @ -28 162 @ 172 135 @ 142 135 @ 142 141 @ 151105 @ 115 -5 @ -10 -45 @ -43 140 @ 148 115 @ 125 105 @ 115 105 @ 11595 @ 110 -20 @ -15 -45 @ -40 127 @ 137 95 @ 105 90 @ 100 90 @ 10095 @ 102 +5 @ +2 -40 @ -38 133 @ 140 98 @ 105 100 @ 107 … @ …174 @ 189 — -10 @ -10 171 @ 181 164 @ 179 137 @ 152 … @ …170 @ 185 — -10 @ -10 167 @ 177 160 @ 175 133 @ 148 … @ …185 @ 200 +5 @ +5 — 155 @ 165 175 @ 190 145 @ 160 … @ …

Strong fl our grind, with some mills running up to seven days in the Upper Midwest, Central states and Northeast, kept supply heavy in all regions east of the Rocky mountains while demand remained lackluster. Nearby values fell as much as $25 a ton in the Northeast and $15 in the Southwest with losses of about $5 in the Upper Midwest and Central states. Deferred prices were down about $2@10 a ton. With the exception of the West coast, spot millfeed prices have plunged $60@95 a ton, or 33% to 50%. Spot material traded well below quoted values in some areas so fl our mills could keep running through the weekend.

Traders held out hope of a turnaround with the onslaught of much colder and more wintry weather in many areas. They also expected millfeed would be included in more feed formulations at the lower price levels, which were well under average in relation to the value of corn.

Wheat germ prices were unchanged.Millfeed was $110 a ton in Kansas

City and $121 a ton in Minneapolis, on a rail basis, compared with corn at $223 a ton and sorghum at $204 a ton, both K.C. Corn gluten feed was up $2 at $175 a ton, distillers’ dried grain was $200 a ton and dehydrated alfalfa was $310 a ton, all K.C. MBN

Spot

Ingredient Week


Chicago corn and soy futures Soy products

Corn meal

Oats

RiceDefatted, f.o.b. Midwest plant, $ per cwt

$ per cwt — Change from — Jan. 13 Jan. 13 Jan. 6 Chicago, bulk 22.80 @ 25.68 +.27 @ +.25 -.58 @ -.65Chicago, sacked 24.57 @ 27.51 +.27 @ +.25 -.58 @ -.65New York, bulk 24.47 @ 27.41 +.27 @ +.25 -.58 @ -.65New York, sacked 26.89 @ 29.80 +.27 @ +.25 -.58 @ -.65

— Change from — Jan. 20 Jan. 13 Jan. 6Soy fl our Bulk 23.00 @ 23.94 +.42 @ +.52 +.38 @ +1.12Sacked 24.00 @ 25.94 +.42 @ +.52 +.38 @ +1.12

Minneapolis — Change from — Jan. 20 Jan. 13 Jan. 6Food grade fl akes, f.o.b., bagged, $ per cwt [email protected] +.25 -.25Milling quality oats, No. 2 heavy, $ per bu 3.24½ +12c +7¼cOat hulls, $ per ton 25@35 — —

— Change from — YearCorn Futures Jan. 20 Jan. 13 Jan. 6 ago$ per bu March 6.11½ +12 -32 6.57¼May 6.16¾ +10¼ -34 6.67July 6.20¼ +8¼ -35½ 6.71¼September 5.75½ -2½ -26¾ 6.22¾December 5.51¾ -3½ -23½ 5.87¼March 5.64 -1 -23¼ 5.95Soybeans $ per bu March 11.87 +28¾ -9½ 14.12¼May 11.95½ +27¾ -10½ 14.22¾July 12.04½ +26¾ -10 14.3August 12.01¼ +23¾ -8¼ 14.05¾September 11.91¾ +19¾ -7½ 13.75½November 11.83¾ +13¾ -7½ 13.48¼Soybean Meal $ per ton March 311.90 +10.40 -.50 379.60May 313.90 +9.40 -1.00 382.50July 316.30 +8.50 -1.50 383.30August 315.80 +7.40 -1.60 373.60September 314.10 +5.70 -2.10 363.30October 309.40 +3.90 -2.80 350.40

Offers f.o.b. mills, $ per cwt, bagged

— Change from — YearCash Jan. 20 Jan. 13 Jan. 6 agoLong grain [email protected] — -1.50 29.00Medium grain [email protected] — -2.00 34.00Parboiled [email protected] — -1.50 34.00Second heads, bulk [email protected] — — 15.00Brewers [email protected] — — 10.00f.o.b. mills, $ per ton Rice millfeed … . . . . . . 55.00Rice bran [email protected] — — 110.00Rice hulls 70.00 — — 10.00U.S.D.A. 2011 crop world price milled - $ per cwt Long grain 19.28 — -0.66 20.96Medium/short grain 18.99 — -0.46 20.68Broken 13.64 — -0.33 14.83C.B.O.T. rough rice futures - $ per cwt March 14.53½ +0.09½ -0.14½ 14.87May 14.81 +0.09½ -0.14 15.16July 15.06½ +0.08 -0.13½ 15.42September 15.05 +0.02 -0.03 15.35

Corn ProductsCorn meal sales were slow last week

as prices recovered from the prior week’s losses. Orders generally were balanced across all grit sizes, although demand for breading material typically begins to increase at this time of year. Corn mills ran about fi ve days.

Corn futures prices posted mixed results last week with old crop contracts rising modestly but new crop months (September 2012 and forward) easing. Daily price fl uctuations resulted from forecasted rain or the lack thereof in dry areas of Argentina with prospects again looking wetter at week’s end. Sharply lower crude oil futures prices and a private forecast for increased U.S. corn-planted area in 2012 weighed on new crop prices Friday, mostly offset ting support from strong weekly export sales.

Slow farmer sales of corn underpinned fi rm cash basis levels as futures prices dipped to one-month lows early last week.

The average farm price paid for corn in 2011-12 was projected at [email protected] a bu, down 20c from the December forecast and compared with $5.18 a bu in 2010-11 and $3.55 a bu in 2009-10, the U.S. Department of Agriculture said in its World Agricultural Supply and Demand Estimates.

Net export sales of U.S. corn during the week ended Jan. 12 for delivery in 2011-12 totaled 759,900 tonnes, more than twice the prior week’s amount, the U.S.D.A. said. Major buyers included Mexico, China, South Korea and Japan. MBN

OatsSales of food grade oat fl akes were

slow last week and have been running behind year-ago levels for some time, which traders attributed partly to mild

winter weather to date, although that was changing in some areas. Off-take of previously sold material was less than 100% and in some cases down about 10%, suggesting buyers were managing inventory levels because of slower-than-expected sales, one miller suggested. Prices of oats fl akes fi rmed slightly last week as oats futures prices advanced and the cash basis remained strong due to limited farmer selling. Some new crop pricing again was noted, but only a limited number of new sales resulted. MBN

RiceU.S. milled rice and rice byproduct

prices were mostly unchanged last week. U.S.D.A. 2011 crop world milled rice prices also held steady.

Milled rice stocks on Dec. 1, 2011, were 6,243,000 cwts, down 1% from a year earlier, the U.S.D.A. said in its Jan. 12 Rice Stocks report. Dec. 1 rough rice stocks totaled 146,869,000 cwts, down 15% from the previous year.

U.S. 2011 rice production was estimated at 185,009,000 cwts, down 2% from the prior forecast and down 24% from 2010, the U.S.D.A. said in its recent Crop Production 2011 Summary. Planted area of 2.69 million acres was down 26% from 2010, and harvested area of 2.62 million acres was down 28%.

Despite lower 2011 production, the U.S. rice carryover on Aug. 1, 2012, was projected at 38.5 million cwts, up 1 million cwts from the December forecast due to projected cuts of 3 million cwts in 2011-12 domestic use and 1 million cwts in exports, the U.S.D.A. said in its Jan. 12 World Agricultural Supply and Demand Estimates. Global 2011-12 production was forecast at a record 461.4 million tonnes. MBN

Soy ProductsSoy fl our sales remained slow last

week. Prices advanced. No new long-term contracts and only a few routine month-to-month sales were noted. Time needed to deliver new orders ranged from one to three weeks.

Although soy complex futures ended on a weak note, contracts posted solid price gains for the holiday-shortened week to recover much of the prior week’s losses that resulted from bearish U.S. Department of Agriculture data. Soybean futures prices rose and fell regularly last week on mixed prospects for rain in parched soybean-growing areas mainly in Argentina, where soybean production forecasts already have been trimmed. Pressure also stemmed from a sharp drop in crude oil futures prices on Friday. Some offsetting support came from renewed demand for U.S. soybeans by China, strong weekly export sales and slow soybean sales by U.S. farmers, which kept cash basis levels fi rm.

The average farm price of soybeans in 2011-12 was projected at [email protected] a bu, compared with [email protected] a bu forecast in December and $11.30 a bu in 2010-11, the U.S.D.A. said in its World Agricultural Supply and Demand Estimates on Jan. 12.

Net export sales of U.S. soybeans during the week ended Jan. 12 for delivery in 2011-12 soared to 991,100 tonnes, more than double the previous week’s amount and 95% above the prior four-week average, the U.S.D.A. said. Major buyers included China, Indonesia and “unknown destinations.” Soybean meal net export sales for 2011-12 during the week were 181,200 tonnes, nearly four times the previous week’s total and 88% above the four-week average. MBN


Ingredient Week

Beet and cane sugar

Raw cane

Sweeteners

Edible oils

Crude soybean oil

Chicago soybean oil futures

Decatur, Ill., bulk, cents per lb

Spot soybean oil

f.o.b. plant, cents per lb

*Spot raw plus 7% plus 15.4c with 2% cash discount.

— Change from — Year Jan. 20 Jan. 13 Jan. 6 agoMidwest beet 52.00 @ 54.00 — — 55.00Pacifi c beet 52.00 @ 54.00 — — 55.00Cane* 53.00 @ 56.00 — — 55.00

Delivered basis, cents per lb

1-Variations in prices often tied to tank car versus truck deliveries. 2-Prices are the lowest available to the publication. 3-Regular 42 DE/43 Baume, f.o.b. tank cars, trucks

42% HFCS spot price1 HFCS list price2 Regularcorn

syrup3 Dextrose

Jan. 20 — Change from — YearDelivery close Jan. 13 Jan. 6 agoMarch 50.43 +.14 -.69 57.56May 50.86 +.16 -.64 58.00July 51.25 +.19 -.56 58.41August 51.35 +.19 -.51 58.51September 51.42 +.17 -.47 58.59October 51.44 +.16 -.35 58.60

Delivery Decatur, Ill. Western points January 49.68 @ 49.93 48.93 @ 49.43February 49.68 @ 49.93 48.93 @ 49.43March 49.68 @ 49.93 48.93 @ 49.43April 50.15 @ 50.40 49.40 @ 49.90May 50.36 @ 50.61 49.61 @ 50.11June 50.56 @ 50.81 49.81 @ 50.31July 50.75 @ 51.00 50.00 @ 50.50

Bulk in tank cars, cents per lb

Delivered refi ner, cents per lb

— Change from — YearContract Jan. 20 Jan. 13 Jan. 6 agoNearby 34.20 -.50 -1.70 38.35February-March 34.20 -.50 -1.70 38.35April-June 35.65 +.25 -.35 38.80July-September 35.60 -.15 -.40 39.80October-December 35.00 -.50 -.75 35.40January-March 33.40 -.40 -.70 34.15

Bulk in tank cars, cents per lb — Change from — Year Jan. 20 Jan. 13 Jan. 6 agoSoybean oil, Decatur 50.00 +.25 -.50 54.50Loose lard, Chicago 49.00 -.50 — 50.25Edible tallow, Chicago 51.50 +.25 +.75 50.50Cottonseed oil, Miss. PBSY 52.00 +.50 -.25 56.50Palm oil, ports 50.00 -.25 -.75 61.00Palm kernel oil, ports 52.75 — +1.25 63.25Coconut oil 69.00 — +3.00 87.00Peanut oil, Southeast 96.00 — +.75 76.50Corn oil, Decatur 54.50 +.25 +.25 59.75Sunfl owerseed oil, Midwest 88.00 — -3.00 77.00Canola oil, Midwest 54.50 — -1.25 59.50

Bulk, cents per lb

East [email protected] [email protected] [email protected]

26.62528.17528.37527.87528.575

42% HFCS wet 55% HFCS wet23.375 27.875 net24.925 29.425 net25.125 29.625 net24.625 29.125 net25.325 26.825 net

Jan. 20 Year agoMidwest 173/8 @ 213/8 153/8 @ 193/8Northeast 18¾ @ 22¾ 16¾ @ 20¾Southeast 187/8 @ 227/8 167/8 @ 207/8Southwest 18½ @ 22½ 16½ @ 20½West 193/8 @ 233/8 173/8 @ 213/8

23.00

33.00

43.00

53.00

63.00

J A J O


SweetenersSweetener markets remained quiet

last week. Prices of bulk refi ned sugar were unchanged amid limited new sales, although some traders suggested the prior week’s U.S. Department of Ag-riculture’s World Agricultural Supply and Demand Estimates raised concerns about tight supplies in coming months.

Prices of bulk refi ned sugar held in the 52@56c a lb f.o.b. range for spot through Dec. 31, 2012. Only small amounts were said to be trading, mostly at the low end of the price range.

Concerns about supply were prompted by the U.S.D.A.’s projected 2011-12 year end stocks-to-use ratio of 5.3% in its Jan. 12 WASDE, mainly as the result of sharply lower imports from Mexico, where sugar production may come in below earlier ex-pectations. A stocks-to-use ratio of 13% to 15% is more typical. With U.S. 2011-12 pro-duction levels basically “locked in,” addi-tional supply would have to come from an increase in the tariff rate quota after April 1 and/or from Mexico. Traders thought the reduction of imports from Mexico was overstated in the WASDE because that na-tion tended to ship sugar north based on the price relationship to U.S. sugar rather than on its own supply needs. When Mexican refi ners “shorted” supply in that country by shipping large volumes to the United States in recent years, Mexico opened its own import quotas. Reports from Mexico last week indicated the

U.S.-Mexico sugar price relationship may favor an increase in shipments during February-March. In addition, Mexico has used larger amounts of U.S. high-fructose corn syrup to replace sugar.

In its Sugar and Sweeteners Outlook last week, the U.S.D.A. noted sweetener deliveries (sugar and HFCS use) in Mex-ico during the fi rst two months of 2011-12 (October and November) were up 3.5% from the same period in 2010-11 and up 6% from 2009-10. Deliveries of HFCS for the period were up 10% from 2010-11 and up 48% from 2009-10, with the HFCS share rising to 32.8% of the total from 30.8% in 2010-11 and 20.7% in 2009-10.

New York sugar futures posted mixed changes last week. Nearby March world raw futures (No. 11) moved to a two-month high above 24c a lb on weak-ness in the value of the U.S. dollar and indications of slow harvest progress in Brazil. Domestic raw futures (No. 16), meanwhile, declined to near 34c a lb on increased producer selling.

The American Crystal Sugar Co. lock-out of union members continued with replacement labor operating processing plants across the Upper Midwest.

Domestic corn sweetener markets were quiet last week. MBN

Bakery ShorteningBookings of edible fats and oils were lim-

ited last week. Price changes were mixed.Soybean oil prices advanced. Soybean

oils futures gained ground with the rest of the soy complex, which advanced on ongoing concerns about dry conditions in South America that may adversely affect soybean production there. The cash basis on soybean oil remained unchanged.

Soybean oil users put on additional coverage during the previous week that extended contract balances to about 60 days for most buyers. It was expected buying would pick up again if futures prices would dip toward 50c a lb.

Declining world vegetable oil supply provided underlying support to U.S. soybean oil values. While the market may weaken from time to time, no col-lapse in prices was envisioned.

The National Oilseed Processors As-sociation estimated the soybean crush in December at 145,420,000 bus, up from 141,277,000 bus in November but down slightly from 145,537,000 bus in Decem-ber 2010. Soybean oil stocks at the end of December were estimated at 1,938 million lbs, up from 1,855 million lbs in November and compared with 3,020 million lbs in December 2010.

Palm oil prices weakened. Palm oil futures were lower. A poll of 25 market analysts indicated most expected palm oil prices to decline this year, which would be the fi rst year of declining pric-es in three years. The analysts pointed to increasing production and worries over world demand in view of continued slow world economic growth. MBN

Ingredient Week


Certifi ed OrganicCertifi ed Organic

• Organic Soy Milk Powder

• Organic Whole Milk Powder

• Organic Nonfat Milk Powder

• Organic Yogurt Powder

• Organic Tofu Powder

• Organic Butter Powder

Contact: Fred Smith• 800-441-1001P.O. Box 335, 1407 New Road, Linwood, NJ 08221

Email: fsmith@clofi nedairy.com • www.clofi nedairy.com

Bringing you quality ingredients at competitive prices for nearly 100 years.

A century of Dairy Expertise brings youA century of Dairy Expertise brings you

Cocoa$ per lb

Dairy products — Change from — Year Jan. 20 Jan. 13 Jan. 6 agoWhey powder .69 @ .74 +1c +3c .36Lactose .82 @ .92 — +1c .32Whey protein concentrate, (34% edible) 1.50 @ 1.60 — — 1.00 (80% edible) . . . . . . . . . 3.00Whey protein isolate (90% edible) . . . . . . . . . 4.60Nonfat dry milk high-heat Central/East 1.49 @ 1.54 — -1c 1.33 West 1.41 @ 1.51 +1c +1c 1.28Nonfat dry milk medium-low heat Central/East 1.40 @ 1.45 -1c -1c 1.30 West 1.37 @ 1.42 — +2c 1.24Buttermilk powder 1.26 @ 1.36 -3c -4c 1.18Casein - acid 4.95 @ 5.10 — — 4.20Casein - rennet 4.60 @ 4.90 — — 4.10Caseinate (f.o.b. ports) 4.80 @ 5.20 — — 4.05Butter 93AA (C.M.E.) 1.57 -4¼c -3½c 2.10

Cheese $ per lb, Central Cheddar (Blocks 40#) 2.48¼ +¼c +1½c 2.23¼C.M.E. cheddar barrels 1.50¼ -4¾c -8¾c 1.51C.M.E. cheddar blocks 1.50½ -9c -10½c 1.52½Mozzarella 2.45½ +¼c +1½c 2.23¾American 5# loaf 2.14¾ -¾c +¼c 1.88¾

f.o.b. plant, $ per lb

Egg products — Change from — YearEggs Jan. 20 Jan. 13 Jan. 6 agoDelivered, cents per dozen (multiply by 30 for case price) Nest runs 47.00 @ 50.00 — -6.00 34.00Checks 32.00 @ 35.00 — -8.00 20.00Table - Grade A large 91.50 @ 106.50 -15.00 -50.00 89.50Dried products - f.o.b. plant, $ per lb Whole 2.45 @ 2.75 — -.10 2.15Whites 4.60 @ 4.85 — -.10 3.90Yolks 1.80 @ 2.00 — -.05 1.80Blends (+ sweetener) 2.05 @ 2.25 — -.10 1.90Frozen products - less than truckload, f.o.b., $ per lb Whole 0.69 @ 0.73 -.01 -.06 0.55Whites 0.72 @ 0.75 -.01 -.03 0.59Sugared yolks 0.91 @ 0.94 -.01 -.02 0.87Salted yolks 0.90 @ 0.93 -.01 -.02 0.83Liquid products - pasteurized, f.o.b., $ per lb Whole 0.44 @ 0.46 -.01 -.06 0.36Whites 0.47 @ 0.49 -.01 -.06 0.41Yolks 0.68 @ 0.70 — -.02 0.69

Dairy Products Dry dairy product and cheese prices

were mixed again last week while butter values declined.

Nonfat dry milk prices saw narrow, mixed changes last week. Production was slightly higher and inventories were building amid light to fair demand.

Buttermilk powder prices declined amid heavy production and light demand and spot sales. Inventories were moderate and building in some areas.

Prices of dry whey and 34% whey protein concentrate were fi rmer. Dry whey supplies were tight and spot offers limited while production was steady. Demand was good for both dry whey and 34% whey protein concentrate. Lactose prices were unchanged.

C.M.E. Group cheddar prices declined as manufacturers completed production of products targeted for the Super Bowl weekend in early February.

C.M.E. Group butter prices declined as churning remained strong and outpaced seasonal demand. MBN

Egg Products Egg product prices remained weak,

but the sharp price declines of the past couple of weeks slowed. Trading was moderate, slowing from a week earlier.

Dried egg prices were steady to weaker with the low end of price ranges unchanged but the top end of ranges declining 5c a lb for whites and blends and 10c for yolks. Frozen egg products declined 1c a lb for all items. Liquid whole eggs and whites fell 1c a lb, but liquid yolks held steady.

Breaking egg prices were mostly unchanged. While supplies still were ample, some traders said offers were

— Change from — Year Jan. 20 Jan. 13 Jan. 6 agoButterfat ratio N.Y. 1.10 @ 1.20 — +.05 1.55Cake ratio N.Y. 1.75 @ 1.85 — — 1.57Powder ratio N.Y. 1.95 @ 2.10 — -.28 1.52Cocoa Powder (East coast points, $ per lb) 10-12% Natural 2.05 @ 2.20 — — 2.2010-12% Alkalized 2.25 @ 2.40 — — 2.25 Red alkalized 2.35 @ 2.50 — — 2.30 Black alkalized 2.80 @ 2.95 — — 2.4516-18% Natural 2.15 @ 2.30 — — 2.3022-24% Natural 2.20 @ 2.35 — — 2.35

not as heavy as in the prior couple of weeks. The slide in graded egg prices continued, though, with average prices for large eggs down another 15c a dozen and off more than 50c, or about 35%, since the end of December. MBN

CocoaCocoa powder prices were unchanged

in slow trading last week. A few new sales of black cocoa powder were noted, but otherwise, activity was limited. Black powder supplies remained tight. Nearby supplies of natural powder were limited, but small amounts of supply could be found. Some processors noted off-take of contracted natural powder was slow.

North American fourth-quarter 2011 cocoa bean grind was 118,926 tonnes, up 1.5% from the same period a year earlier, the National Confectioners Association said. The number was below trade expectations of a 3% to 5% increase and followed disappointing European fourth-quarter cocoa bean grind that was up 1.8% as reported a week earlier.

New York cocoa bean futures prices ended about fl at giving back early gains as both North American and European grind suggested softer-than-expected demand. MBN


Ingredient Week

Specialty feed

Energy

Indexes are based on ingredient costs using standard formulas. Additional details appear on the Ingredient Week Trends page on a rotating basis.

Grain-based foods stocks

Bakery ingredient indexes

— Change from — Year Jan. 20 Jan. 13 Jan. 6 agoK.C. bulk midds 110.00 -15.00 -50.00 144.00Soybean meal, 44%, K.C. 287.90 +6.40 -5.50 363.60Soybean meal, 47½%, K.C. 295.90 +10.40 -8.50 369.60Cottonseed meal, 41%, Memphis 215.00 -2.50 +0.50 247.50Linseed meal, 35%, Minneapolis 205.00 +10.00 +12.50 260.00Sunfl ower seed meal, 28%, Minneapolis 222.50 -2.50 +15.00 207.50Dehydrated alfalfa, 17%, Alf. Center 292.50 — — 177.50Meat meal, 50%, Kansas City 290.00 — — 320.00Meat meal, 50%, Chicago 285.00 — — 325.00Corn gluten feed, 21%, Southwest 180.00 — -7.50 177.50Corn gluten meal, 60%, Southwest 505.00 — -2.50 587.50Corn gluten feed, 21%, Midwest truck 137.50 +2.50 -2.50 140.00Hominy feed, Kansas City (Northwest) 207.50 -2.50 +5.00 180.00Hominy feed, Chicago 114.00 +5.00 -5.00 104.00Hominy feed, California 259.00 +5.00 -5.00 246.00Hominy feed, Central Illinois 110.00 +5.00 -5.00 100.00Feather meal, K.C. 442.50 -5.00 +5.00 387.50Distillers dried grain 200.00 — — 190.00

— Change from — YearDiesel fuel Jan. 20 Jan. 13 Jan. 6 agoRetail, on-highway, $ per gallon East coast 3.943 +0.035 +0.099 3.448Midwest 3.746 +0.029 +0.063 3.371Gulf coast 3.777 +0.027 +0.068 3.366Rocky Mountain 3.823 -0.020 -0.013 3.374West coast 4.037 +0.011 +0.058 3.509U.S. average 3.854 +0.026 +0.071 3.407Natural gas Spot prices, $ per million BTU’s Henry hub 2.49 -0.32 -0.47 4.48New York 5.21 +2.04 +0.66 9.88Chicago 2.69 -0.26 -0.36 4.71California average 2.79 -0.30 -0.35 4.32Crude oil Spot prices, $ per barrel West Texas Intermediate 100.61 -1.63 -2.61 90.85C.B.O.T. ethanol Nearby contract, $ per gallon 2.132 +0.011 -0.091 2.332

— Change from — Year Jan. 20 Jan. 13 Jan. 6 agoBagel 264.4 +16.7 +31.6 291.3Cake donut 180.5 -0.1 -2.0 190.0Devil’s food cake 206.0 +0.2 -1.8 204.8Pasta 278.4 -3.2 -19.0 280.0Saltine cracker 189.6 +3.4 +1.6 228.4Shortbread cookie 202.2 +1.3 -0.3 219.9White pan bread 212.4 +7.2 +6.9 231.0

$ per ton

Energy Information Administration

Tables in Ingredient Week use the following symbols:

— unchanged... no quote

52-week Jan. 19 Net High Low Close change Grain-Based Foods Share Index ................. 12504 .50 7531 .57 12187 .22 + 127 .88

ADM ................................ 38 .02 23 .69 29 .22 + .29Bridgford ......................... 13 .40 6 .80 10 .00 .00Bunge ............................. 76 .13 54 .03 58 .55 - .17Campbell Soup ............... 35 .66 29 .69 32 .01 - .26ConAgra ......................... 27 .25 22 .20 27 .12 + .61Corn Products ................ 59 .50 36 .65 54 .81 + 1 .97Dunkin’ Brands ................ 31 .94 23 .24 26 .69 + .83Flowers Foods ................ 23 .13 15 .95 20 .01 + 1 .03General Mills ................... 41 .06 34 .54 41 .05 + .63Hain Celestial .................. 38 .47 26 .10 36 .62 + 1 .29J & J Snack ..................... 55 .58 41 .91 51 .70 - .66Kellogg ............................ 57 .70 48 .10 51 .16 + .75Kraft Foods ..................... 38 .84 30 .21 38 .72 + .79Krispy Kreme ................... 10 .08 5 .10 7 .07 - .23Lance .............................. 23 .24 17 .06 23 .00 + .31MGP Ingredients ............. 10 .08 4 .25 4 .85 - .13Panera Bread Co. ............ 23 .24 94 .93 151 .14 + 7 .11PepsiCo .......................... 71 .89 58 .50 64 .85 - .16Ralcorp Holdings ............. 91 .35 59 .23 87 .25 + .71J.M. Smucker ................... 81 .21 61 .16 81 .05 + 2 .24Sara Lee .......................... 20 .26 15 .66 19 .25 + .25Seaboard ......................... 2705 .00 1650 .00 1907 .22 + 11 .22

Grupo Bimbo .................. 105 .30 23 .00 29 .05 - .15George Weston Ltd. ......... 74 .07 63 .80 65 .85 - .50Maple Leaf Foods ............ 12 .49 10 .18 10 .53 - .06

One number away One number away

Custom Market DataContact Christina Sullivan for more information or a price quote.

816-756-1000 ext 871• e-mail [email protected]

...we have it!Milling & Baking News has what you need.

Historical market data for over 75 food ingredients.

from fi nding the trend?from fi nding the trend?


Supplier Innovations

Bimbo in MexicoBarry Callebaut, Zurich, Switzerland, has signed an

agreement to supply Grupo Bimbo S.A.B. de C.V. with up to 32,000 tonnes of chocolate products annually for Bimbo’s market in Mexico. The products will head to Bimbo’s Mexican factories in Toluca and Monterrey. Barry Callebaut will invest about $16 million as a result of the agreement.

“The new outsourcing agreement with Grupo Bimbo is

a further landmark in opening up the promising market potential in Mexico,” said Juergen Steinemann, chief executive officer of Barry Callebaut. “This agreement confirms the trend in outsourcing and our strategic focus on emerging markets.”

For more information, visit www.barry-callebaut.com.

For information on submitting an item for Supplier Innovations, e-mail [email protected] or contact Jeff Gelski at 816-756-1000, ext. 867.

Freeze-dried pears offer fl avor

Barry Callebaut to supply Micro-sized spiral oven has small footprint

Unitherm Food Systems, Bristow, Okla., now offers a micro-sized spiral oven that has a smaller footprint than its mini-sized spiral oven. The micro-sized oven is 5-feet wide, 7-feet long and 7-feet tall, and it has more than 60 linear feet of belt. The mini-sized oven is 8-feet wide, 8-feet long and 8-feet tall, and it has more than 180 linear feet of belt. The ovens offer an affordable alternative in the switch to large continuous cookers from small-batch cookers, according to Unitherm Food Systems.

“A food processor that is expanding production will get to the point where they need to move to a continuous cook line,” said Adam Cowherd, international sales manager for Unitherm Food Systems. “The mini spiral gives them that option sooner.”

For more information, call (918) 367-0197, e-mail [email protected] or visit www.unithermfoodsystems.com.

Van Drunen Farms, Momence, Ill., offers freeze-dried canned pears that may add flavor to baked foods, bars, snacks, hot cereal and cold cereal. Soaked in light syrup, the canned pears are available in 3mm and 3/8-inch diced sizes.

For more information, call (815) 472-3100, e-mail [email protected] or visit www.vandrunenfarms.com.

I.F.F. forms scientifi c advisory boardInternational Flavors & Fragrances Inc., New York,

has launched a new scientific advisory board to provide external perspectives on the company’s R.&D. programs, raise scientific issues and opportunities relevant to its business needs, help identify appropriate research partners, provide background in specific areas and assist in the identification and development of R.&D. personnel.

“We anticipate that (the board) will give us strong competitive advantage, not only by tapping into the minds of the board members, but by leveraging their access to a global network of academics, high-level industry members and their associates,” said Doug Tough, chairman and chief executive officer of I.F.F.

Ahmet Baydar, senior vice-president, research and development for I.F.F., will lead the board. Other members include Steven V. Ley, department head and professor of chemistry at Cambridge University in the United Kingdom; Cheryl Perkins, president and founder of Innovationedge, L.L.C.; Thomas D. Sharkey, chair of biochemistry and molecular biology at Michigan State University; Leslie Vosshall, a molecular neurobiologist with experience in olfactory receptors and olfactory perception in humans and insects; and Brian Willis, former senior vice-president of R.&D. and board member at Quest Flavors and Fragrances.

For more information, visit www.iff.com.

Ice cakes, spread sauces with depositors

Hinds-Bock Corp., Bothell, Wash., offers servo depositors that may be used for icing cakes, spreading sauces or viscous batters. Spout and depositor variations are available to customize the depositor. The depositors are available as either

pump or piston style with multiple spout units available for high speed applications.

For more information, call (877) 292-5715, e-mail [email protected] or visit www.hinds-bock.com.


Classifi eds

EMPLOYMENT

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Cain Food Industries, Inc., located in Dallas, TX, a fast paced, privately held specialty ingredient manufacturing company is looking for qualifi ed regional sales managers. The ideal candidate will have a background in hands on commercial baking and formulation,

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PROFILE: Huge growth potential for candidates with strong contacts, sound ideas and good vision in the market for industrial ingredients. Candidates are wanted for the following sales areas: East coast, Midwest and West coast and will be working in their region with support from the Decatur, IL offi ce. Candidates will be involved in developing and implementing strategic sales plans, intensifying relationships with existing customers, develop new business, visiting customers and cold-calling potential customers for food and industrial ingredients.

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THE NEWS WEEKLY OF GRAIN-BASED FOODS

bakingbusiness.com / foodbusinessnews.net

JANUARY 12, 2010

LATE NEWSContinued on Page 18

WASHINGTON — Dana Peterson,

a longtime member of the Kansas

Wheat staff, has been named chief

executive offi cer of the National

Association of Wheat Growers, ef-

fective Jan. 20. “We are absolutely

delighted to be bringing one of our

dynamic state staffers to the national

offi ce,” said Karl Scronce, president

and acting c.e.o. at NAWG. “Dana

is great to work with and showed

confi dence and poise throughout the

interview process. She has ideas and

enthusiasm that we need in Wash-

ington to help NAWG grow and

the wheat industry thrive in a very

competitive policy and production

Dana Peterson named

c.e.o. of NAWG

Grain-based foods shares rise

broadly, impressively in 2009NEW YORK — Shares of grain-based

foods companies were up sharply last

year, partly recovering from severe

losses sustained in 2008.

The Grain-Based Foods

Share Index, calculated

by Milling & Baking

News, ended the year at

10,350.06, up 13%.

Even with the dou-

ble-digit gain, the in-

dex was still beneath

the year-end closes of 2007 (11657.58),

2006 (11542.79) and 2004 (10852.64).

The 10,350.06 close was 14% be-

neath the all-time high for the index

(12018.59), reached in July 2007.

While lagging broader market in-

dex performances, the grain-based

share gain wasn’t far behind the 19%

Continued on Page 8

jump in the Dow Jones average of in-

dustrial shares. The Standard & Poor’s

500-stock index was up 24% for the

year; the Nasdaq com-

posite index was up

44% and the Russell

2000 was up 25%.

When combined with

the performance in 2008,

the Grain-Based Foods

Index outperformed the

broader market mea-

sures. For the two-years ended Dec. 31,

the grain-based index was down 10%,

versus a 21% decline in the Dow indus-

trials, a 24% drop in the S.&P. 500 and a

14% decline in the Nasdaq index.

Drilling deeper into the S.&P. 500,

the Grain-Based Share Index 2009

Bringing the heat

Story on Page 34

Private label pushing branded hot

cereal makers like never before

Continued on Page 10

Cash spring wheat basis now

quoted as delivered Chicago value

MINNEAPOLIS — Beginning Jan. 4,

the cash spring wheat basis provided

daily by the Minneapolis offi ce of the

U.S. Department of Agriculture’s Agri-

cultural Marketing Service was quoted

as a delivered Chicago/beyond value.

Previously, the cash spring wheat basis

was quoted as the Minneapolis value of

wheat traversing that gateway to des-

tinations beyond. The new cash spring

wheat basis still was determined in

relation to Minneapolis wheat futures.

The Minneapolis Grain Exchange

(MGEX), which is host to the onsite

A.M.S. offi ce posting the cash spring

wheat basis, in a Dec. 24 announce-

ment, stated: “Due to changes in rate

structures by a Class I rail carrier, ef-

fective Jan. 4, 2010, daily cash wheat

and durum basis will be quoted as a

delivered Chicago value. Applicable

freight differentials to Minneapolis/

St. Paul and Duluth/Superior delivery

points will also be provided. Prices will

continue to refl ect values of rail cars of-

fered and traded in the exchange room

of the Minneapolis Grain Exchange for

spot or immediate shipment.”

The Class I carrier involved was the

Burlington Northern-Santa Fe, which

FEATURE Stock Market Review

INGREDIENTS

Ad Index

(This index is provided as an additional service to readers. The publisher does not assume any liability for errors or omissions.)

www.bakingbusiness.com

www.world-grain.com

®

4800 Main St., Suite 100. Kansas City, Mo. 64112 Phone: (816) 756-1000

Fax: (816) 756-0494E-mail: [email protected]

www.meatpoultry.com

www.BioFuelsBusiness.com

ADM .....................................................................................6www.adm.com/milling

Brolite Products, Inc...........................................................13www.bakewithbrolite.com

Buhler, Inc. .........................................................................17www.buhlergroup.com

Bunge North America ........................................................48www.bungenorthamerica.com

Cain Food Industries, Inc......................................................3www.cainfood.com

Cereal Food Processors, Inc. ..............................................47www.cerealfood.com

CHS Inc. ................................................................................5www.chsinc.com/partner

Clofi ne Dairy & Food Products, Inc. ...................................39www.clofi nedairy.com

ConAgra Mills ....................................................................25www.conagramills.com

Corn Refi ners Association ..................................................32www.corn.org

Dakota Specialty Milling .................................................. 26www.DakotaSpecialtyMilling.com

Horizon Milling, LLC ...........................................................11www.horizonmilling.com

International Bakers Services, Inc. ....................................31www.InternationalBakers.com

Lallemand/American Yeast ..................................................2www.lallemand.com

The Mennel Milling Co. ........................................................8www.mennel.com

Shawnee Milling Co. ..........................................................46www.shawneemilling.com

B.C. Williams Bakery Service, Inc........................................27www.bcwilliams.com

Milling & Baking News, (ISSN 0091-4843) Volume 90, issue 24 is published every other week by Sosland Publishing Co., 4800 Main Street, Suite 100, Kansas City, MO 64112. Periodicals postage paid at Kansas City, MO 64108 and additional mailing offices. Canada Post International Publications Mail (Canada Distribution) Sales Agreement Number 40612608. Send returns (Canada) to Pitney Bowes International, P.O. Box 25542, Lon-don, ON, N6C 6B2. Printed in the USA. POSTMASTER: Send address changes to Milling & Baking News, PO Box 324, Con-gers, NY 10920-0324. ©2010 Sosland Publishing Co. All rights reserved. Reproduction of the whole or any part of the con-tents without written permission is prohibited. Milling & Bak-ing News assumes no responsibility for the validity of claims in items reported. Sosland Publishing Co. is a division of Sosland Companies, Inc.


senior vice-president of inves-tor relations and corporate af-fairs for Sara Lee Corp.

The Mennel Milling Co. announced that its Fosto-ria flour mill has achieved HACCP (hazard analysis and critical control point) accredi-tation from the American In-stitute of Baking International and Guelph Food Technology Centre of Canada.

Kellogg Co. announced that John Bryant has been named senior vice-president and chief financial officer, effective Feb. 1.

Hal Ross, a retired flour mill-ing executive, and his wife, Mary Lou Ross, have pledged $2 million to Kansas State University for the new Grain Science Complex at the uni-versity in Manhattan, Kas.

The board of directors of Ralston Purina Co. at its an-nual meeting completed a year-long management tran-sition by electing William P. Stiritz chairman of the board. Mr. Stiritz, who is 47, succeeds R. Hal Dean who has retired.

Dale C. Putman and B.J. (Bud) Hinkle have been elect-ed president and chief execu-tive officer and vice-chairman

2002

Archive

In a move the company said will finally give it a significant U.S. presence, Grupo Bimbo S.A. de C.V. announced Jan. 22 that it had reached an agreement to ac-quire the eastern U.S. baking business of George Weston Ltd. for $610 million.

On Jan. 11, the U.S. Depart-ment of Agriculture estimat-ed winter wheat plantings for harvest in 2002 at 41,031,000 acres, the lowest since 1971.

The largest companies in the food industry are fully engaged in integrating large recent acquisitions, and a shift in merger and acquisi-tion activity is likely ahead, according to Moody’s Inves-tor Service, New York.

Roger W. Masa, a 44-year veteran of wholesale bak-ing and allied fields, on Feb. 18 will succeed Bernard Forest as president of The Long Co.

Ralph G. Martin, 96, a pioneer in the grain fumigation busi-ness and a former grain man and fl our miller, died Jan. 17 at his home in Kansas City.

Sara Lee Bakery has introduced extended shelf life baked goods in four of its six operating re-gions, said Janet E. Bergman,

of the board and chief finan-cial officer, respectively, of Interstate Brands Corp.

Perfection Biscuit Co., Fort Wayne, Ind., has acquired the assets of Way Baking Co., Jackson, Mich., according to John F. Popp, president of Perfection.

Kern’s Inc., Knoxville, Tenn., has been named offi cial bak-ery for the 1982 World’s Fair, which will be held in Knoxville from May through October.

In his State of the Union ad-dress, President Reagan called for Congress to transfer up to 40 domestic social programs to the states, beginning in fi s-cal 1984 with the food stamp and Aid to Families with De-pendent Children programs.

Flowers Industries, Inc. has filed a registration state-ment with the Securities and Exchange Commission for a proposed secondary offer-ing of approximately 615,000 shares of common stock to be sold by certain shareholders.

With full appreciation of the critical war problems before

1982

Shawnee Milling Company

Shawnee Milling CompanyP.O. Box 1567

Shawnee, OK 74802-1567405-273-7000

Okeene Milling CompanyP.O. Box 1000,

Okeene, OK 73763580-822-4411

SHAWNEE FLOURBakers, H & R

Food Service/RetailPrivate LabelAll PurposeSelf-Rising

Whole WheatCustom Mixes

OKEENE FLOURBakers, Pastry, Whole Wheat

SHAWNEE CORN MEALWhite/Yellow

Meal, Flour, Cones, CoarseSelf Rising

[email protected]

www.shawneemilling.com

Good Millers Since 1906

the nation, the annual meet-ing of the board of governors of the American Bakers’ As-sociation in Chicago paved the way for further strength-ening of the collaboration of the baking industry with the government.

The milling industry can well prepare for the time when maximum seven-day operations may become nec-essary, commented Philip W. Pillsbury, president of the Pillsbury Flour Mills Co., Minneapolis, in a talk before members of District No. 4 of the Association of Operative Millers in Minneapolis.

Harry H.H. Brown, president and manager of Terminal Flour Mills Co., Portland, Ore., died suddenly Jan. 28 of a heart attack.

Since the war, several of the smaller flour mills that were closed down in Britain as redundant by the Ministry of Food have been re-started. The move helps compensate for the reduction in capacity that had occurred in targeted areas.

Secret mills for the conver-sion of wheat and other grains into flour are spring-ing up over Continental Eu-rope, some driven by electric-ity, some by hand and some by horse. Thousands of these mills are said to have been built. Ground flour sold clan-destinely fetches exorbitant prices on the black market. MBN

1942

Masa

Bryant

Putman Hinkle

Flour•a•bil•i•ty n:Our ability to provide the best combination of service and

product, by specializing in the milling of exceptional fl our, and by

reacting swiftly, personally and effectively to the needs of our clients.

Wherever you want to be, we can take you there.

Product Spotlight:Bakers Patent

Flours• All Purpose Hotel,

Restaurant Flours• Bakers Patent Flours• High Gluten Flours• Whole Wheat Flours

• Pastry and Cookie Flours• Pizza Flours• Tortilla Flours• Cake Flours• Family Flours

Standard hard wheat

fl our excellent for use

in many applications.

Acceptable tolerance

with medium mix

requirements.

2001 Shawnee Mission Parkway, Mission Woods, Kansas 66205 913-890-6300 • www.cerealfood.com

It’s why our customers keep coming back.

In the whole grain sector alone, Bunge Milling has

introduced a number of products to help our customers

meet growing consumer demand. New products are in

development to ensure that when consumers ask, you’ll

have the competitive edge.

At Bunge Milling, we never forget how much we

appreciate your business.

THE SHORTEST DISTANCE FROM HARVEST TO MARKET.

It’s not enough to keep up with the competition. We help you stay ahead of the curve.

Saint Louis, Missouri 314-292-2000 www.bungenorthamerica.com

Milling & Baking News - 2012-01-24

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Transcript of Milling & Baking News - 2012-01-24