A Sustainable Wheat Optimization Method to Overcome Volatility in Wheat Quality and Prices
Matveeva Irina, Ph.D., Dr. Sc., Prof. Novozymes A/S
A quick look at wheat
Wheat ranks among the top three cereals in the world alongside rice and corn in terms of production and human consumption. Its popularity mainly stems from its ability to grow in a variety of soil and climatic conditions; from the southern regions of South America to the northern latitude of about 60°. But most importantly, from its unique ability to produce leavened bread and a multitude of baked products. Being the principal component of bread, quality of the wheat flour is vitally important. The wheat kernel, however, is highly heterogeneous in structure and composition and this heterogeneity arises from genotypic differences combined with environmental effects.
Global changes in climatic, soil and agronomic growing conditions further underline the fluctuating quality of wheat crops on a yearly basis. Significantly, many aspects of flour quality are a direct consequence of the quality of wheat used for milling.
Wheat prices today are at the highest levels since 2007. Events from February 24th have caused an unprecedented situation leading to an existential threat of the global wheat foods industry including farmers, farmer cooperatives, exporters, importer millers, bakers, and manufacturers.
Supply chain disruptions, exacerbated by the pandemic have also been adding to the surging prices
Harsh droughts, such as those in North America have resulted in a 30% reduction in their production. However, the US wheat price increase is not reflected in the mills’ flour prices. Dramatic wheat prices have increased by 50- 65%, whereas flour prices at bakeries are up by 10-20% only. Millers are already in a challenging situation where either miller or bakers are losing money (U.S Wheat Association, 2022).
In the 2021 season, supply decreased by 5.4% which initiated a new downtrend. The 2022 season forecast predicts another decrease of 10.0% which will contribute further to the downtrend. If realized, the continued downtrend will induce an upward price pressure (Mintec, 2022).
Numerous other factors also affect this key global commodity’s quality and supply. For example, the quality profile of the crop in Australia was impacted by a wet harvest, which resulted in a high proportion of the wheat crop being downgraded to low protein and feed grade wheats (ABARES- Department of Agriculture, Water and the Environment, Australia Government, 2022) while Argentina, the single largest wheat producer in South America has strong production output, but an export quota is in place.
The Black Sea region (Russia, Ukraine, Kazakhstan) is the major region for the world wheat market, and the current conflict means lowest ending stocks, disruption to shipping, escalation to sanctions and increased demand add to the pressure on price.
In conclusion, world demand for wheat is currently in an uptrend according to the latest USDA forecast. This is supported by the demand sectors. In the 2022 season, demand is expected to increase in all regions apart from China and Russia.
The world supply/demand balance is down trending monthly. This puts an upward pressure on wheat prices. So, the cost drivers for wheat are currently up trending which provides an upward price pressure (Mintec, 2022).
Taking into account the procurement priorities or supply chain challenges context, baking enzymes are an attractive option for gristing considerations in flour milling process. The wise choice of enzymes micro dosages is capable to bridge the gap in wheat quality in most of the cases.
The well-defined enzymes’ complex makes it possible to address deliberations about switching from current approved wheat suppliers to the more tempting options which may be 5-25% less expensive without any compromise in quality. This is possible because of enzymatic solution performance predictability. This will not only drive down wheat purchasing costs, but also improves reliability while maximizing the profitability level in the milling industry.
Unlocking the full baking performance of flour with enzymes
In essence, the concept of enzymes being the key element of gristing model, unlocking full baking potential of flour is based on rationalizing and utilizing knowledge of wheat costing, wheat quality and understanding enzyme functionality to be able to produce flour with desired characteristics in a cost-effective manner.
The main drivers for flour correction include the following:
- inconsistent wheat quality arising from genotypic differences combined with agronomic growing conditions and environmental effects
- the need to standardize flour performance to produce bread or other wheat-based products with consistent quality
- lack of flexibility to improve flour quality in industrial bakeries
- end user requirements for different flours to produce an extensive range of products
- cost savings from grist optimization and flour performance upgrade.
The author wishes to acknowledge the contributions of fellow Novozymes colleagues: European Technical Service Center Silvia Strachan, Regional Marketing Manager Nihan Ergen, Regional Sr. Communication Advisor Yiling Lu and last but not least, Hasim Sinik for his help with the Turkish translation.