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Wheat milling grows 1% in Brazil, but mills suffer from pass-through costs

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The Brazilian Wheat Industry Association (Abitrigo) recently concluded the compilation of the results of the Brazilian Wheat Milling Survey 2020, which indicated an increase of 1% in the grinding volume, which corresponds to the increase in the consumption of wheat flour, last year.

According to the executive president of Abitrigo, Rubens Barbosa, this increase indicates the low influence of the Covid-19 pandemic and also of the economic aspects in the consumption of flour throughout 2020. “This edition of the survey had a high degree of adhesion on the part of the Brazilian mills, which contributed 77.3% of the calculated values. In addition, 13.5% of the data was obtained from official publications of companies, indicating that 91.2% of the surveys attribute great assertiveness to the numbers ”, explained Barbosa.

The survey indicated that 12,700,065 tons of wheat were ground, which corresponded to 9.5 million tons of wheat flour in the 156 industrial units that operate in Brazil. They are mostly concentrated in the southern region of Brazil, representing 65% of the total plants in the country.

According to Abitrigo, the flours produced were consumed, primarily, in the bakery segment (46.9%), which was complemented by the sectors of pasta, cookies, industrial breads, food service and household. There was an increase in consumption of flours in packages of 1kg and 5kg, for pasta and industrial breads, indicating migration of the consumption of flour for culinary use and easy to prepare.

High price of wheat and difficulties in transfer.

Affected by the appreciation of the dollar and the increase in the costs of imported wheat, factors that directly raised the prices of the national grain, the mills spent the year 2020 with difficulties to pass on these increases to the prices of flour.

Last year, Brazil imported 6.3 million tons of wheat, representing 50% of the national supply needs. ”The market was very affected by the costs of imported wheat, which, due to its appreciation on the world stage, indicated an increase of 17%, between January and December 2020. Associated with the exchange variation of 29.1% in the year (BC), this represented an increase of 50.1% ”, highlighted the president.

On the other hand, flour prices, which increased 33.3% in 2020, did not keep up with the evolution of production costs. In this scenario, the mills remain under pressure, as the production cost remains high and the transfer to the final product, wheat flour, is still not enough.

“The challenges of the Brazilian milling activity are enormous. The essentiality of wheat consumption demands concrete action for the security of supply of the grain so that domestic production can grow to, in the medium and long term, reduce or eliminate external dependence and the vulnerability of the domestic market ”, concludes Barbosa.

The information is from Attuale Cominicação.

By: Gabriel Nascimento | Safras & Mercado

This text was automatically translated from Portuguese.