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Looking Ahead

By Kimberlie Clyma

December 2022

Looking
ahead

Overcoming obstacles and chasing innovation, the pet food industry prepares for its promising future.

Pet Food Processing

©Quality Stock Arts –stock.adobe.com

While no one can predict the future, taking a close look at today’s evolving industry trends can give us a potential glimpse into where we’re headed.

The pet food industry has changed substantially from the time, almost 100 years ago in 1926, when Purina launched its first dog food — Purina Dog Chow. Now pet food and treat manufacturers offer complete-and-balanced meal options found in kibble form, freeze-dried varieties and even fresh pet food alternatives sold out of refrigerated grocery cases. Today’s formulations are no longer solely made from animal proteins and byproducts, but from plants, insects and even ingredients grown in laboratories. And pet food now provides more than the standard dietary nutrients dogs and cats require — they provide ingredients to help pets with cognitive function, mobility, mood enhancement and other life-improving activities.

Pet food is so much more than it was 100 years ago. And, while no one can predict the future, it’s safe say pet food will be so much more in 100 years to come.

The innovations that have been leading the pet food and treat industry over the past 10 to 20 years will be guiding the industry in the next 20-plus years, and beyond. Transparency, sustainability, automation, humanization and premiumization are trends that are shaping the industry and the key players within it.

“Companies either can embrace and innovate — or choose to resist change and lose relevance in the market over the next several years,” said Rick Ruffolo, chief executive officer and president of Phelps Pet Products, Rockford, Ill. “It’s the right thing to do for the industry, for our customers, and ultimately, for the planet.”

Ingredient sourcing challenges have led processors to become more creative, including using upcycled ingredients, plant-based proteins and even lab-grown proteins such as this cellular-based meat broth topper for dogs from Wild Earth. Wild Earth

Challenging times

The US pet care industry is growing — and it’s growing at a rate beyond industry expectations. In 2020, the American Pet Products Association (APPA) reported that the US pet care industry reached a $100 billion milestone and was expected to grow an additional 6% in 2021. But the industry exceeded expectations and grew to $123.6 billion — a 13.5% increase. By all industry predictions, that growth will continue.

Growth will continue across all categories of pet care — $34.3 billion was spent on veterinary care and products in 2021; $29.8 billion was spent on pet supplies, live animals and OTC medication; and $9.5 billion was spent on services such as grooming, dog walking and boarding. But the most money in the pet care industry is spent each year on pet food and treats — $50 billion in the United States in 2021.

Despite the bullish outlook for the industry in coming years, it isn’t without challenges heading into the future — including ingredient sourcing, regulatory obstacles and labor shortages.

“Our challenge with innovation currently is really about ingredient sourcing — that could be a limiting factor to innovation in the future,” said Dana Brooks, president and chief executive officer, Pet Food Institute, Washington, DC.

Today’s ongoing supply chain challenges and concerns of future product shortages have led processors to look at ingredient sourcing through a more sustainable lens.
“There’s a lot of opportunities to explore upcycling,” said Seth Kaufman, co-founder and partner at Bentonville, Ark.-based BSM Partners. “We think the pet food industry has historically done a great job — much of it driven by costs — of upcycling byproduct-based materials into nutritious pet food.”

However, upcycling isn’t enough to meet the ingredient sourcing needs of the future. Alongside upcycling and utilizing ingredients not typically used for human food, the industry is looking to novel ingredients such as plant-based proteins, insect proteins and even lab-grown, cultured proteins to fulfill its ingredient sourcing requirements.

Berkeley, Calif.-based dog food company Wild Earth announced in October that it has developed a cellular-based meat broth topper for dogs, which, according to the company, will be the first cell-based meat product launched in the pet food industry. The company’s mission has always been to offer “clean” protein, nutrition-packed dog foods developed without harming any animals or the environment.

According to Wild Earth, 30% of the meat consumed in the United States is consumed by pets. The company aims to use its cell-based pet food products and other plant-based offerings to ease the environmental impact of sourcing traditional meats for the use in pet foods and treats.

“The shortage of protein is going to be the biggest challenge for the world going forward, whether it’s for humans or pets,” said John Kuenzi, chief executive officer and chairman, NQV8, Manhattan, Kan. “Protein that doesn’t compete with the human food supply is going to be a major component of future ingredient innovation. I think the ingredient streams for human and pet foods are going to become very competitive in the future. That should be at the back of our minds when we think about what’s truly sustainable for our planet.”

However, it’s not enough to just come up with new ingredients to incorporate into pet foods; getting these new ingredients approved for use in pet food products is where the true challenge lies.

“When we look at novel ingredients or any type of innovation in a formulation, our challenge goes back to the regulatory system that we operate that can hamper, prohibit and delay bringing in a new product to market,” Brooks said. “How can we get new innovative ingredients to market faster? It can take between five to 10 years from inception to formulation. We don’t want to shortchange the system to a point that we’re not creating safe or nutritious pet food, but technology and innovation is absolutely faster than the United States and state government, and that will be our limiting factor in the future.”

On Oct. 18, the US Food and Drug Administration held a listening session to hear opinions on updating the Center for Veterinary Medicine’s (CVM) Program Policy and Procedures Manual Guide 1240.3605. The American Feed Industry Association (AFIA) shared its position at the session, claiming that animal food ingredients that address animal wellness, food safety and production efficiency should be regulated as feed, not drugs. The current policy of regulating these ingredients as animal drugs is far more costly and lengthy and is interfering with new product innovation in the pet food marketplace.

“Updates to the policy would allow companies who manufacture animal food ingredients to appropriately market their ingredients,” said Louise Calderwood, director of regulatory affairs, AFIA, Arlington, Va. “In the pet food sector, we know there are ingredients that have positive impacts on cognition, mobility and mood for our pets. As pets are living longer and longer, the cognitive and mobility issues are becoming more and more important to consumers. Bringing these ingredients to market in the United States is absolutely essential for the many benefits they will afford our pets.

“As the claims issue gets resolved, we’re going to see such a breakthrough on the innovation side,” she added. “I’m very excited for the opportunities for the animal food ingredients to support our animals, so they can continue to be our active healthy companions.”

Aside from the regulatory hurdles that currently exist, the CVM is also underfunded and understaffed, Brooks said.

“It’s been challenging for the CVM to be able to recruit and retain talent,” she noted. “That’s one of our biggest challenges — making sure that the CVM is well funded in order to be able to hire the experts needed to get the work done.”

Anyone in the manufacturing industry knows, labor shortages aren’t reserved to the regulatory side of the industry. Pet food processing plants have been feeling labor pains for the past five years, and likely longer, with the COVID pandemic exacerbating the challenge even more.

“There are no pet food plants out there that are running as efficiently as they’d like to, because there is a definite workforce shortage,” said Tom Barrett, partner and vice president of business development and purchasing, Barrett Petfood Innovations, Brainerd, Minn. “I hear from other manufacturers all the time — where are the workers? Nobody wants to work.”

But some don’t see the labor shortage as being as simple as a shortage of workers.

“I think there is a labor shortage, but I don’t think the shortage itself is completely driven by a lack of labor,” Kuenzi said. “I think some of it is a case of people simply not wanting to do certain jobs anymore.”

St. Louis-based Purina PetCare has a manufacturing network consisting of 22 facilities in 15 states. A processing operation of that size takes a large workforce that needs to be trained and retained in order to maintain productivity.

“We work to develop and solidify relationships with trade and tech schools to showcase modern manufacturing as a viable and rewarding career path,” said Joe Toscano, vice president of trade and industry development for Purina. “These partnerships center around helping students better understand and embrace digital operations and technology that is a critical, yet sometimes unexpected, element of today’s manufacturing careers. Hiring and retaining top talent in our factories starts with helping potential associates envision themselves at Purina and embrace our culture and values, and then offering viable paths to development and career growth.”

Digital operations, technology and automated systems are the future of pet food processing. Artificial intelligence will also be more common on the manufacturing floor, Kuenzi said.

“A lot of the things that we thought would never be done by computers or machines are starting to be done by them right now,” he shared. “I think there’s going to be more of a combination of labor. We’ll automate a lot more manual jobs in the future.”

As a pet food processor, Barrett is looking to automated systems to improve his current and future processing facilities. Barrett Petfood Innovations will soon open a new freeze-dried plant in Little Falls, Minn. The new facility was designed with “efficiency and innovation” in mind.

“We live in a world now where automation is available to us. It’s become really efficient and much more cost-effective,” Barrett said. “The next wave of manufacturing will definitely feature a lot of automation. We’re not necessarily trying to replace workers, but we’re using a different type of skillset and we’re making our operations more efficient. Anybody in our industry who’s not fully looking toward automation is way behind the eight ball.”

Staying sustainable

What started out years ago as an industry buzzword, sustainability has turned into an ongoing mission for suppliers and manufacturers throughout the human and pet food industries. Pet food and treat processors keep sustainability top of mind throughout a range of decision-making processes, from ingredient selection to plant construction and design to packaging choices and alternatives. Sustainability is decidedly here to stay and will continue to guide the industry well into the future.

“When we first started talking about sustainability a couple of decades ago, it was certainly focused on environment. But now, sustainability covers everything from packaging and environment to workplace inclusion and business organizational values,” Brooks said. “It’s such a broad swath of things. I think we’re going to see a lot more growth in sustainability, but we’re not going to be able to whitewash it.”

Processors in the industry concur. The quest to become more sustainable now and into the future is guiding a number of operational decisions. At Barrett Petfood Innovations, Barrett is constantly looking for ways to be more sustainable.

“Our operations and innovation for the future are turning more toward sustainability and less waste. As a co-manufacturer, that’s where we focus our operations,” Barrett said. “We are continuing to ask ourselves: How can we change our operation to have a little less of a [environmental] footprint? How can we make the same amount of food with less waste? With our packaging, how can we make more of a sustainability play? We are continuing to look for more efficiency through our manufacturing.”

CRB, a Kansas City, Mo.-based provider of sustainable engineering, architecture, construction and consulting to the food and beverage and life sciences industries, took a close look at the pet food industry’s journey toward sustainability in its Horizons: Pet Food report, released last April. The report showed sustainability as a top priority among pet food and treat producers. A survey question about future plans for becoming carbon neutral showed that the majority of the respondents’ companies either have plans in the works for becoming carbon neutral, or they soon will. Fifty percent will have a plan in place within five years; 30% within 10 years; and 7% in 10 years or longer. Only 6% of respondents reported that they have yet to start working toward this goal.

While carbon neutrality and other big picture environmental impacts are long-term goals for large pet food processors and smaller players alike, smaller sustainability initiatives are being pursued right now. A continuous push toward adopting more sustainable packaging is occurring across the industry today and will undoubtedly continue into the future as more options become available to processors. Processors are demanding recyclable, compostable and refillable packaging options from packaging suppliers.

“Packaging is the logical starting point to work on for sustainability,” Brooks said. “The challenge that we have to keep in mind is, we want the packaging to be sustainable and to be recyclable, but we have to make sure, first and foremost, that the pet food in that packaging stays stable and free of contaminants — that it’s in the best packaging for your pet’s food. There’s still a lot of work to be done in that arena.”

While its member companies are typically pet food processors, Pet Food Institute invites equipment, packaging and ingredient suppliers to be associate members of PFI to encourage industry collaboration.

“It’s a great way for us to make sure we are all collaborating on ideas and technology in order to move toward a common goal of providing safe and healthy pet food,” Brooks said.

Today, more than 80% of Purina’s product portfolio by weight is packaged in recyclable materials.

“We are working to optimize our packaging with the goal of making all of our packaging reusable or recyclable by 2025,” Toscano said. “We are also working to incorporate more recycled content into our packages and eliminate unnecessary materials. The aluminum cans that our wet dog and cat food come in can be recycled endlessly, resulting in a significant decrease in waste. In fact, recycling 75% of all aluminum cans would prevent 11.8 million metric tons of CO2 emissions.”

Nicole Suteau, corporate responsibility manager, Champion Petfoods, Edmonton, Alberta, added, “While we are always reviewing new ways to improve our environmental impact at Champion, we’re focusing on three key areas that will deliver meaningful progress to the industry in the long term, including sustainable and recyclable packaging, responsible ingredient sourcing, and reducing our waste to landfills.

“As other pet food manufacturers start taking on a more concerted effort to reducing their own ecological footprint, we feel confident that the industry can collectively come together to overcome many of the challenges we see in sustainability in the next 10 to 20 years,” she said.

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Evolving consumer

According to the 2021-2022 APPA National Pet Owners Survey, there are pets in 90.5 million homes throughout the United States. Millennials are currently the largest group of pet owners (32%), followed by baby boomers (27%) and Generation X (24%). With this younger demographic of pet owners comes a changing pattern in purchasing behaviors. Alongside the internal industry push toward sustainable packaging and other systemwide initiatives is the ongoing external nudge from many pet parents who are making purchasing decisions with sustainability in mind.

“We know that Millennials own more pets than any demographic, and studies show that both Millennials and Gen Z are willing to pay more for products by sustainable brands and that they are likely to make purchase decisions based on values and principles,” Brooks said. “In addition, how sustainable a company is will have an impact on labor issues. Research shows that 70% of Millennials prefer to work for companies with strong sustainability agendas, and there is every indication that Gen Z will embrace that same attitude. Moving into the future, the truth is that sustainability is not a trend but a necessity in business.”

The younger pet parent is continuing to fuel the humanization and premiumization of pet food. These pet parents are looking for products that mirror those that they feed the human members of their families.

“That humanization of pet food is alive and well in the business continues to drive consumer behavior — ‘If I’m eating a sous vide product, maybe I should try that for my pet,’” said Jason Robertson, vice president, food and beverage for CRB. “I think you’re finding consumer buying habits are mirroring their own.”

Shoppers looking for plant-based options for their own food purchases are looking for more plant-based options for their pets as well. This trend is forcing creativity in product innovation.

“The humanization of pet food has been trending for years and there are no signs of slowing down,” said Ernie Ambrose, director of Innovation at Champion Petfoods. “As more pet parents look to feed their pets like members of the family, variety and enjoyment during mealtimes will continue to drive growth across premium pet food. We’ll continue to see innovations in all segments, from dry food to meal toppers, to wet or freeze-dried food, to custom bowls and beyond.

“Additionally, more people are invested in their pet’s food than they are in their own food. The importance of longevity and vitality will become more prevalent in the premium space with quality ingredients offering the greatest benefit for consumers,” Ambrose added.

Ultimately, pet parents all want what’s best for their pets — top-tier nutrition that will keep their four-legged family members as healthy and happy as possible, for as long as possible. If new products featuring customized nutrition and premium health benefits are the answers, then the pet food consumer will continue to push the industry toward those innovations. And as the industry continues to grow and evolve, it will get closer to meeting that demand.

“I think that over time the industry will get closer and closer to meeting the needs of what consumers want from a trust perspective, from a transparency perspective, and from a customization perspective,” Kaufmann said.

Ruffolo added, “Customers are faced with an ever-changing array of choices with competing product claims from established brands and channels, as well as from new brands and new channels. Ultimately, the consumer will have the power to determine the winners (and losers) among these brands, retailers and channels, and force the market to adapt to this new reality.”

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Tomorrow’s consumer

By Bob Sims

December 2022

Tomorrow's
Consumer

Looking ahead, producers, processors and retailers must appeal to evolving demographics

Meat+Poultry

Antonio Diaz – stock.adobe.com

The COVID-19 pandemic makes it difficult to examine or analyze consumer trends in meat consumption and the role of meat in consumer diets over the last two to three years. The pandemic and supply chain issues during the pandemic, and those that followed and still linger, skew any short-term data available. Consumers, retailers, restaurants and all involved in the supply chain from farm to table face issues not seen in recent decades. However, data, analytics and insights provide a glimpse into how consumers shopped for, and ate, meat and poultry products during that time.

Meat motivation

In a sample size of 3,822 consumers, 210 Analytics LLC’s 2022 “The Power of Meat” report found the dominant driver for meat purchase decisions was a combination of product quality/appearance (60%), price per pound (48%) and total package price (39%). The next two factors were nutritional content (25%) and attribute claims such as organic, grass-fed, no antibiotics etc., at 23%.

Anne-Marie Roerink, principal at 210 Analytics, said that while consumers sometimes focus on the above average growth/trending areas of meat and poultry, such as those that emphasize attribute and better for you claims, etc., the large scale, traditionally raised meat and poultry products are the majority of sales. In most supermarkets, club stores and supercenters at least 90% of sales are of conventionally produced and processed meat and poultry.

“For those who emphasize sustainability, it is great to see that stores also have a growing availability of items such as organic, grass fed, and humanely raised,” Roerink said. “However, there is a danger in consumers believing that only those items address their areas of concern relative to better for them, better for the animal, better for the planet, and better for the community and workers. I believe it is important for us not to demonize conventionally raised meat but instead provide as many answers and transparency as to why all meat and poultry is nutritious, delicious, and humanely and sustainably raised.”

In addition, large-scale production and processing will likely remain a necessity as the global population continues to rapidly increase. In order to meet the increased consumer demand for meat and poultry, as well as the demand for transparency, technology will need to play a large role in conventional production.

“Consumers want transparency, traceability and to know the steak or chicken breast on their plate was sustainably raised,” said Steve Hixon, vice president of customer engagement, Midan Marketing. “You will likely see fewer human hands and more automation and analytic devices on the farm and in the production facility. The integration of a secure system monitoring in real time live animal health and gain, impact on land use and land regeneration will continue to develop.”

Cultivated meat’s place in the future protein market is still unclear, but it has gained considerable ground since its first appearance.

Today and tomorrow

Although no one has a crystal ball, some things happening today can be projected into the future. The entire grocery store, including meat and poultry, is seeing higher than average inflation. Retailers have begun to experiment with different unit sizes and in recent months there has been a shift to smaller packages.

“It is important for the industry to consider where the win nets out,” Roerink said. “Providing smaller unit sizes entails a risk for the department to lose some money toward a smaller purchase, but at the same time packages that are priced too highly may take certain consumers out of the purchase altogether.”

Another issue to deal with in the future affecting all forms of meat and poultry production and processing, and humankind, is the ever-growing population. The United Nations’ Department of Economic and Social Affairs projects the world’s population to reach 9.8 billion by 2050.

“Global population is another factor that will have an impact,” Hixon said. “As the world population grows to nine billion by 2050, the industry will need to continue to develop efficiencies related to production and logistics.”

With the transparency/sustainability/label attribute, etc., mindset of consumers growing out of a trend and becoming a mainstream attitude, there is no doubt it will affect consumer purchases into the future. Alternative proteins have gained a foothold in the market around this, as well as being an option to feed the growing population, and are on the mind of all in the meat industry, both within the alternative sector and the conventional and specialty animal protein sector. While both specialty animal proteins and alternative proteins are just a fraction of sales in the overall market, they are still worthy of attention.

Plant-based alternatives showed triple-digit growth early but slowed down significantly and has seen double-digit declines over the last year. The declines caused retailers to reevaluate merchandising decisions and move these items outside of the meat department, or just offer less SKUs overall.

“I do not believe, however, that the plant-based meat alternative trend has played out altogether,” Roerink said. “We are still too early in the innovation cycle to call it. We will continue to see new items become available with superior taste, texture and smell and as long as consumers are willing to continue to try them, I think we will continue to see ebbs and flows into the plant-based meat alternative market.”

Hixon said Midan’s research echoed Roerink’s sentiment.

“In research Midan did in 2021, almost half of meat consumers had a positive initial reaction when they heard the term ‘plant-based meat alternatives,’” he said. “However, in our 2021 research, only one in five surveyed meat consumers said they consume plant-based meat alternatives once a month or more. In the last year, we have seen a dramatic downfall in the number of plant-based units in the meat case.”

Cultivated meat, still not widely available, remains a question mark in terms of its future in the market. While some consumers believe it is a viable option, many don’t trust it for various reasons.

“Cultivated meat is an interesting area,” Roerink said. “People who have some concerns over the idea of eating meat and poultry from a health, animal, or planet point of view, like the idea of taking cells from the animal and growing it in a laboratory. However, the vast majority of Americans have some concerns relative to eating cultivated meat. A lot of these concerns center on food safety, taste, texture etc.”

According to Midan’s research, consumers have yet to make strong decisions on cultivated meat. As volume increases and pricing becomes more acceptable to consumers, Midan believes adoption of cultivated meat will exceed what has been seen for plant based.

“It will take time, but traditional animal protein production needs to be thinking about how to position their products to keep majority market share,” Hixon said.

Looking ahead

For the future processors need to pay close attention to inflation and how consumers react to it regarding their purchasing habits. Creating value for shoppers will help counter the spikes in prices, but processors must also understand value means different things to different demographics.

“For some, ‘value’ means the absolute lowest cost for highest number of meals – these consumers are buying more grinds and value cuts like roasts,” Hixon said. “For others, value-added products provide new flavors and save time. Others are choosing to save their dollars by recreating restaurant meals at home, and this opens a door for premium meats.”

According to the Power of Meat, year-on-year the price of groceries increased 15% and compared to pre-pandemic levels prices are up 25-27%, reinforcing inflation and the need for industry to respond. That on top of other financial pressures will affect shopper decision making.

“They are looking for more sale specials during a time when industry is having a hard time providing specials,” Roerink said. “People are looking for smaller packages, people are looking for proteins that are a little cheaper on the price per pound basis etc. So, figuring out how to continue to keep people in the category while not eroding the purchases of others will be an important conundrum to consider.”

She added that the meat purchasers themselves will change as time goes on, and companies need to adjust by paying attention to who is spending.

“If we look at the distribution of the food dollar in today’s market, we see that boomers and Gen X are the majority spenders. But if we look at growth, we see that millennials and Gen X are the ones who are driving a lot of the new dollars. So, we need to make sure that in our merchandising we address today’s shopper, but also start engaging tomorrow’s shopper.”

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Overcoming obstacles and chasing innovation, the pet food industry prepares for its promising future.

Tomorrow’s consumer

Tomorrow’s consumer

Looking ahead, producers, processors and retailers must appeal to evolving demographics.

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Bioceres making its push with GM wheat

By Arvin Donley

November 2022

Bioceres making its
push with GM wheat

Argentina-based company has made major inroads with HB4 wheat in Argentina, has sights set on Australia and the US

World Grain

©Brian Jackson – stock.adobe.com

Hindered by climate change, supply chain dysfunction and geopolitical tensions, global wheat production and trade have leveled off the last several years, with global ending stocks now at a 10-year low. Consequently, the need for increased yields and wheat varieties that can grow in suboptimal conditions has never been greater as global food insecurity has reached unprecedented heights.

One solution would be the adoption of weather-tolerant genetically modified wheat varieties. But embracing biotechnology, particularly when it comes to a food grain like wheat, has never been simple. Despite the preponderance of scientific evidence showing that GM wheat, as well as other grains, are safe to consume, a significant and vocal minority of consumers are adamant in their disdain for all things genetically modified.

Thus, flour millers and other downstream wheat-based food processors, many of whom are privately intrigued by the possibility of GM wheat commercialization, take a cautious public stance to not upset customers or potential customers. For example, World Grain reached out to a number of people in the global flour milling community for comment on this issue but most declined.

In the eye of this stormy situation is Argentinean biotech company Bioceres Crop Solutions, the maker of HB4 wheat, a genetically modified, drought-resistant variety that during the past two years has gained acceptance and regulatory approval in several South American countries and also has cleared preliminary regulatory hurdles in Australia and the United States.

Frederico Trucco, chief executive officer of Bioceres, is optimistic that HB4 is on a trajectory for commercialization in several key wheat-producing countries in the coming years. But the payoff is rarely quick for biotechnology companies, which is something he is always reminding investors. After all, it’s taken nearly 20 years since the introduction of HB4 technology in 2003 to develop wheat varieties and start to gain regulatory approvals that may pave the way for commercialization.

“It’s been a long journey,” he said. “These technologies are developed over decades, not just a few months or a year. When investors think of technology, they probably think of the computer software sector where things get replaced very quickly. (Monsanto’s) Roundup Ready soybeans were first commercialized in Argentina in 1994 and the patent didn’t expire until 2014. It takes a long time to develop but they last for many, many years.”

Of the many stakeholders in the wheat value chain, nobody is more excited about the prospect of HB4 commercialization than the wheat growers who for many years saw corn and soybean yields skyrocket due to biotechnology while wheat yields remained stagnant with only conventional varieties available.

Bioceres said HB4 drought-tolerance technology has been shown to increase wheat yields by an average of 20% in water-limited conditions, a key adaptation that favors double-cropping systems, where water management is increasingly critical. It also has shown environmental benefits. Under no-till practices, HB4 soy-wheat rotations result in an estimated 1,650 kilograms of carbon fixed into the soil per hectare per year, compared to positive emissions from conventional soy monoculture, Bioceres said.

“GM technology is something US wheat producers have supported since they adopted that principal document,” said Dalton Henry, policy director of US Wheat Associates, referring to the USW/NAWG Principles for Commercialization document that supports customer choice and identifies important US wheat export markets that must approve new traits. “They realize the benefits of technology, especially when you think about traits like drought tolerance. It’s impossible not to have it at the front of your mind considering the year we had last year in two pretty significant growing regions in the US.”

Trucco said an aspect of HB4 that often is overlooked is it also performs well in non-drought scenarios.

“In the past, there were drought-tolerant varieties, but the plants yielded less when water was not an issue,” he said. “In practical terms this is very important because we want technology that makes improvement in all scenarios. If it only works when you have drought, you are limiting yourself to very small environments. When we say it benefits situations where there is adequate water, we are talking about yield increases that can be as high as 40% to 50%.”

Trucco

Argentina, Brazil and HB4

Not surprisingly, the first country to widely cultivate HB4 wheat, which is based on a drought-tolerant gene taken from a sunflower, came in Bioceres’ home country of Argentina. Bioceres developed the HB4 wheat strain in partnership with the National Council for Scientific and Technical Research and the National University of Litoral. While not technically commercialized in Argentina, it is being grown by many farmers under Bioceres’ supervision.

In October 2020, Argentina, the largest wheat producing country and exporter in South America, granted first approval of HB4 wheat for growth and consumption. The commercialization of HB4 wheat in Argentina was subject to Brazilian approval, as Brazil is the main export market for Argentinean wheat production.

In November 2021, after a rigorous review process, the Brazilian National Biosafety Commission unanimously endorsed biosafety conditions for flour processed from HB4 wheat. But Brazilian millers, concerned that some of their customers were not receptive to products made from HB4 wheat, threatened to stop buying Argentine wheat, vowing to turn to other countries for supplies.

But ABTRIGO, the Brazilian milling association, softened its stance after a survey of Brazilian consumers, commissioned by ABIMAPI, an association that represents biscuit, pasta, bread and cake makers, yielded a surprising result.

“A post-approval survey in Brazil showed that close to 70% of consumers had no concerns on GMO wheat, an observation that helped change the position of key groups that historically rejected transgenics in the crop,” Trucco said. “With this we are not saying that the job is done; it is far from being done. But we are obviously thrilled to see this progress and very proud of our global leadership in this front.”
Colombia is the other South American country that has approved HB4 wheat for consumption.

International strategy

Trucco acknowledged that for HB4 wheat to become a truly global product, it must expand beyond South America. So Bioceres has set its sights on Australia and the United States, two major producers that export wheat all over the world and are prone to drought.

“Australia is our most immediate international interest outside of Latin America,” Trucco said. “We are actively pursuing Australia, as it has a market twice the size of Latin America. And it is a country that traditionally is more severely affected by drought, so HB4 technology can be even more valuable to Australian growers.”

Bioceres scored a major victory in May when Food Standards Australia New Zealand approved the company’s drought tolerant strain HB4 for use in food. In June, it announced it was moving forward in its push to obtain approval to plant and produce its genetically modified drought-resistant wheat in Australia. The Office of the Gene Technology Regulator must provide approval for the planting of HB4.

Trucco said Bioceres plans to carry out field tests of its GM wheat in Australia and will seek planting approvals in 2023.

But will Australian growers embrace the technology? Brett Hosking, chairman of Grain Growers and a Victorian farmer, said growers are interested in the technology but will want to see how it performs in the field and how the variety compares to other similar ones already in the market.

“The fact that this has this drought tolerance may get lots of growers interested,” he said. “But whether they will buy a bag and try on the farm, it needs to prove itself against other varieties out there. They’ll look for paddock-based replicated trials that fit within their soil type, crop rotation, and the system they use in their farm business and climate.”

If Bioceres can secure planting approvals in Australia, it could open the door for acceptance in other major wheat producing and exporting countries such as the United States.

Just days after Bioceres received regulatory approval in Australia came word that the US Food and Drug Administration (FDA) concluded its evaluation of HB4 wheat and had “no further questions regarding the genetically modified wheat’s safety.”

Bioceres said the conclusion of the voluntary consultation program with the FDA is a key step toward commercial enablement in the United States, which is awaiting approval from the US Department of Agriculture (USDA). The United States is the fifth largest wheat producer, with an average of 15 million hectares planted every year, and the third largest exporter, holding a key position in the global wheat trade.
Trucco called the United States “probably the most attractive market.”

“So many markets depend on US wheat,” he said. “We have a strategy and idea of where the technology can be more relevant, and we’re starting to seek collaborators (in the US) that can make this happen sooner rather than later.”

Trucco said Bioceres is actively seeking US universities or companies that it can work with to do breeding work and testing.

While Henry said it was impossible to say if HB4 would ultimately be approved for commercialization in the United States, he was confident that it wouldn’t occur anytime soon.

“(Trucco) has been aggressive every time he’s asked about a timeline, and those timelines have had a tendency to slip,” he said.

While most individual millers from around the world declined comment on HB4 for this article, the North American Millers’ Association (NAMA) issued a statement following the FDA’s decision.

“The availability of high-quality, affordable wheat is essential for millers, and ultimately, consumers,” NAMA said. “There is growing demand for sustainably produced wheat that uses less water, fertilizer, fuel, and other inputs and at the same time drought has reduced wheat yields in the US and around the world. Drought-tolerant wheats like HB4 could help with global supply challenges.”

However, NAMA also noted that it “supports consumers being able to make food purchases based on their personal preferences and supported legislation requiring labeling of products that contain bioengineered food ingredients.”

Jane DeMarchi, president of NAMA, told World Grain one of the big questions that millers have about the new variety is its milling quality.

“We urge Bioceres and any company developing new varieties of wheat to do quality testing for those new varieties for milling and baking characteristics and to go through the Wheat Quality Council’s review process,” she said.

She also echoed Henry’s opinion that the introduction of HB4 into the United States “is a long way away.”

A reason for pessimism regarding the prospect of widespread commercialization of HB4 wheat is that several of the United States’ and Australia’s most loyal customers, such as Japan, have strict policies against importing unapproved varieties. A GM wheat variety inadvertently getting mixed in with a US shipment of conventional wheat to Japan in 2013 temporarily strained trade relations between the two countries.

Bioceres has stated that it will maintain its preserved identity plan and delay the commercialization of the seed until there is greater acceptance of the GM wheat and its derivatives worldwide. Trucco said he is confident that with the grain testing and sorting technology that is available, tolerance levels of 0.001% can be maintained.
“I’m not saying that contamination cannot occur; it will in the future,” Trucco said. “But it is manageable.”

DeMarchi

Arrows pointing up for Bioceres

Bioceres’ fourth-quarter and full-year earnings report, released on Sept. 8, contained plenty of good news for the Argentina-based company.

Comparable gross profit for the quarter increased 32% compared with the year-ago quarter, reaching $41.4 million. Comparable gross profit for the full fiscal year reached a record of $136.9 million, up 45% compared with fiscal year 2021. Fourth-quarter revenues were up 44% to $104 million and full-year revenue was up 62% compared with 2021 to a record $319 million.

Notably, HB4 wheat revenues were $12.4 million, a 94% increase compared with the year-ago contributed goods number.

Frederico Trucco, chief executive officer of Bioceres, said key feed and food clearances obtained during 2022 were a factor in the improved results, including China’s Ministry of Agriculture approval for HB4 Soy and the US Food and Drug Administration (FDA) favorable conclusion on HB4 wheat safety assessment. Other feed and food approvals for HB4 wheat include Brazil, Colombia, Australia, New Zealand and Nigeria for HB4 wheat.

“This is an amazing closing to an amazing year, not only reflected in our record-setting financials but also in terms of achieving gatekeeping regulatory clearances, namely feed and food approvals for HB4 wheat in Brazil and for HB4 soy in China,” Trucco said. “We are, for the first time, reporting revenues associated to the HB4 technology, resulting from the one crop where we faced the most skepticism: HB4 wheat. This technology is now not only green-lighted by a growing number of regulators, including the US FDA, but also increasingly accepted growers, industry participants and consumers at the end.

“Today we have more than 20 processors incorporating HB4 wheat in their products with a similar number being onboarded in the next few months. We have consumer brands actively addressing HB4 wheat merits, and we have successfully executed the first export operation for HB4 wheat flour to Brazil.”

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Nigeria and other developing countries

Bioceres scored another victory in mid-July when Nigeria, which is home to several of the largest flour mills in Africa, became the latest country to approve the import of HB4 wheat for food and feed use. The import permit granted by the National Biosafety Management Agency of Nigeria is valid until July 2025.

Attempts by World Grain to get a response from Nigeria’s larger flour milling company, Flour Mills of Nigeria, to the government’s decision to allow HB4 wheat imports were unsuccessful.

Trucco sees countries such as Nigeria, which is a major wheat importer and has a high per-capita wheat consumption rate, as potential beneficiaries of the new technology.

“Any technology that will fortify wheat security will be viewed very favorably in these countries,” Trucco said. “And we’re not predicating our business based on premiums so I think that should be music to the ears of countries that rely on importation such as Egypt.”

Khalid Al-Hazaa, general manager of Al-Hazaa Investment Group, which operates flour mills throughout the Middle East, was one of the few flour millers willing to discuss the topic on the record with World Grain.

While he has questions about the health consequences of consuming GM wheat and whether consumers in his region would shun GM wheat products, Al-Hazaa said it may be time to consider the merits of the technology.

“The time has come to start considering this step, especially with the current increase in the world’s population and the increased demand for grains and wheat, in particular,” Al-Hazaa said. “Also, after what we’ve witnessed during the COVID-19 pandemic and the Russia-Ukraine war that caused a global grain supply chain disruption, all these factors should raise our concerns and enhance our efforts to look for solutions that could increase global production, help in good use of current agricultural lands, and overcome the problems of drought and climate change.”

Like many millers, Al-Hazaa is eager to see if Bioceres succeeds in marketing its product beyond South America.

“If the GM wheat got approved internationally, especially in large wheat-producing countries such as Australia, the United States, the Black Sea countries and Europe, then definitely countries in the Middle East would follow, especially Egypt, as it is a large producer and consumer of wheat,” he said.

Al-Hazaa noted that Egypt is “focused heavily on increasing local wheat production,” and that adopting HB4 wheat for production could be one of the means to help the country increase its yields.

While HB4’s ability to increase yields in drought conditions are the major attraction for many developing countries, Steve Mercer, vice president of communications for USW, said the other side of the coin regarding HB4 wheat is the potential environmental and sustainability advantages that it provides regarding less water usage.

“One is the practical benefit for producers to produce more wheat and the other side is the sustainability arguments, which could be attractive in developed countries,” Mercer said.

Herbicide concerns

Although HB4 wheat has received safety approvals in several countries, environmental groups warn that commercialization would lead to higher exposure to glufosinate-ammonium because it is tolerant to the herbicide.

GRAIN, a Barcelona, Spain-based non-profit organization that supports small farmers and social movements in their struggles for community-controlled and biodiversity-based food systems, said that glufosinate-ammonium is “widely questioned and prohibited in many countries due to its high acute toxicity and its teratogenic, neurotoxic, genotoxic and cholinesterase altering effects.”

GRAIN warns that the addition of GM wheat, which is grown in different parts of the year than most other GM crops, will lead to year-round exposure to glufosinate-ammonium-based herbicides.

Trucco said HB4 is resistant to the herbicide glufosinate-ammonium because in the biotechnological process Bioceres used a glufosinate-resistant gene as the selectable marker to be able to distinguish the positive transformant from the negative transformants.

“So it’s an effect of the biotechnological tool used to achieve drought resistance,” Trucco said. “Unlike with the first wave of transgenics several years ago whose main yield differential was directly associated with the use of the herbicide, HB4 was developed to have drought resistance as its main characteristic and value.

“While this means that HB4 wheat is tolerant to glufosinate-ammonium, it does not need to use this herbicide. Just as with conventional wheat, any other agricultural herbicide can be applied in the production of HB4 wheat with no impact on the quality of the wheat. In fact, at Bioceres, we are working hard to develop biological herbicides that could in the future be applied as alternatives to chemical herbicides in seed treatments. We are actually one of the only companies globally that develops all categories of biological products for agriculture: from bio-nutrition and seed genetics, to biostimulants and bioprotection technology.”

Timing is everything

Other companies, including US-based Monsanto, before it merged with Bayer, developed GM wheat only to reverse course due to strong backlash from consumer groups and tentative regulators. But that was a different time, when there was plenty of wheat in reserve and less certainty about the impact of climate change on crop production.

Today, not only is there more widespread drought impacting yields and production, but a once-in-a-century pandemic has caused global supply chain dysfunction and two of the world’s largest wheat producers and exporters — Russia and Ukraine — are at war, limiting the amount of grain being produced and shipped from the Black Sea region.

It’s hard to imagine a better environment to be introducing a high-yielding drought-resistant genetically modified wheat variety.

“I don’t know if it’s the best possible timing to be talking about that kind of trait, but it has to be close,” Henry said.

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Sustainability Strategies

By Erica Shaffer

November 2022

Sustainability
Strategies

Today’s meat and poultry processors carefully manage expectations to feed people, preserve the planet and deliver profits in the future

Meat+Poultry

Erica Shaffer, Sosland Publishing Co.

The United Nations expects the world’s population to increase by 2 billion people in the next 30 years – to 9.7 billion by 2050 from 7.7 billion and could peak at nearly 11 billion around 2100. To feed those people, global food production will need to increase 70% by 2050.

The same agency and others continue to sound the alarm about the negative impacts of climate change. In a report on Climate Smart Agriculture, the World Bank noted the role of agriculture in combating food insecurity while calling agriculture “… a major part of the climate problem.”

“It currently generates 19–29% of total greenhouse gas (GHG) emissions,” according to the World Bank. “Without action, that percentage could rise substantially as other sectors reduce their emissions. Additionally, ⅓ of food produced globally is either lost or wasted.”

So, how will food manufacturers feed a growing world population without wrecking the planet? The future of protein production will need to be more sustainability focused than before as consumers increasingly focus on their own carbon footprint.

End-to-end sustainability

Livestock production and meat processing often are implicated for negative impacts on the environment. As a result, producers and processors are focused on implementing farm-to-fork sustainability practices and processes.

The Food and Agriculture Organization of the UN stated that total emissions from global livestock per year represent 14.5% of all “anthropogenic GHG emissions, and cattle are the animal species responsible for the most greenhouse gas emissions representing about 65% of the livestock sector’s emissions.

Industry stakeholders note that farmers and ranchers have relied on conservation and sustainable production practices for decades. Any mitigations to GHG impacts will include animal agriculture. The difference will be steps the industry is taking now to improve future outcomes for the environment. So, segment watchers can expect to hear a lot more about conservation efforts, including regenerative agriculture.

“It’s nothing new, but it’s going back to what farmers have been doing, and nature has been doing, for millennia,” said Nadine Rich, marketing director at Denver-based Teton Waters Ranch. “When you look back several hundred years ago, there were 30 to 60 million bison not to mention deer and elk – ruminant animals that were grazing and moving along and leaving behind fertilizer and airing the soil. That continued to help with soil health. So, taking those types of tenets and doing that with managed grazing of cattle is our way to mimic nature’s systems that we know work.”

Managed grazing of cattle on open pastures of grassland is part of a cycle that enables the use of land that can’t be used for growing crops, but cattle can use for sustenance to create nutrient-dense beef for consumers. At the same time, dirt is becoming soil that is significantly healthier, has more water retention and sequestering carbon “… and creating and keeping in balance an ecosystem that brings life, or biodiversity, into that system,” Rich said.

Evolving animal husbandry practices will accompany mindful stewardship of the land as more consumers express interest in regenerative agriculture and look for product labels bearing label claims and certifications such as Non-GMO, free from and natural. The 2022 Power of Meat study found that many consumers believe that meat and poultry products that are better for them, the planet, animals and/or the workers are interconnected and 86% of people look for production claims on meat packages.

“One-third of consumers specifically look for claims-based meat, particularly ‘US-raised,’ ‘no added hormones’ and ‘no antibiotics use,’” the study said. “Claims-based meat grew over the record 2020 levels (+1.6%) and sales are significantly higher versus 2019 (+17.7%).”

“I think anything, that anything that’s better-for-you – and that could be grass-fed, organic, no antibiotics, no growth hormones – the consumer wants to know more about where their food is coming from and I think that’s a really good thing,” said Dana Ehrlich, chief executive officer and co-founder of Verde Farms, a Woburn, Mass.-based producer of natural meat. “Verde as a brand is both doing a lot of consumer research and focus groups, shop-alongs, quantitative research, qualitative research, to better understand our consumers’ needs and then reaching out to them through various mechanisms. That could be packaging on the shelf, that could be social, digital media campaigns and consumers are responding.”

On the processing side, companies such as Cargill, Tyson Foods and Maple Leaf Foods, to name a few, are investing in facility improvements such as energy-saving LED lighting; smart utility meters to measure and monitor consumption of electricity, gas, water; and outside air ventilation systems with energy recovery features among other upgrades.

And initiatives such as the Protein PACT for the People, Animals and Climate of Tomorrow, a joint venture by 12 organizations representing the meat, poultry and dairy industry along with animal feed and ingredients, aim to verify progress toward sustainability goals across all animal protein sectors. The North American Meat Institute (NAMI) developed a sustainability framework of more than 100 metrics developed through work with sustainability experts, supply chain partners and NAMI members.

Makers of plant-based meat alternatives continue to develop new products to keep consumers interested, but a shakeout in the segment could lie ahead.

Ongoing innovation

While animal protein consumption carries some of the blame for the world’s climate problem, plant-based meat alternatives are marketed as a solution. But a persistent downturn in sales has thrown plant-based meat alternative producers — and the category — for a loop, especially in the past year. Consumer and market research firm IRI found that sales for refrigerated plant-based meat alternatives are decelerating.

“Year-on-year growth started slowing in the second quarter of 2021 and turned negative in the third quarter,” IRI said. “Come November 2021, refrigerated plant-based meat alternative sales decreased 6.6% over November 2020. November sales were up 29.2% over the 2019 levels, but this is much lower than the gains seen in the first few quarters of the year.

“While 2019 and 2020 achieved much of its growth through expanded distribution, assortment only increased 5.3% in 2021 — making maintaining the growth rate much harder.”

With sales of meat alternatives continuing to see pressure from waning consumer interest and inflation impacts on meat shoppers, a segment shakeout could be in the cards for plant-based meat alternative companies.

In October, El Segundo, Calif.-based Beyond Meat Inc. announced plans to lay off approximately 200 employees, or roughly 19% of its workforce. The company also announced further reductions to its fiscal 2022 sales outlook to a range of $400 million to $425 million.

Redwood, Calif.-based Impossible Foods, in the same month, announced layoffs of 6% of its workforce as part of a reorganization plan primarily affecting roles that had become redundant or were incompatible with other parts of the plant-based meat maker’s reorganization plan.

Other companies, including meat processors like Canada’s Maple Leaf Foods Inc., have walked back investments in plant-based meat alternatives. In August, the company announced it was “rightsizing” its Greenleaf Foods, plant-based subsidiary after a financial shortfall due to demand that never occurred.

“We now understand why it did not materialize, and we no longer believe that it will materialize,” said Michael McCain, president and CEO of Maple Leaf Foods, during an Aug. 4 conference call to discuss the company’s second-quarter results. “So, we are altering our business model and dialing back our investment to reflect the goal of profitable growth …”

Chicago-based Upton’s Naturals makes vegan meat alternatives using seitan, a traditional Japanese food that is made by rinsing the starch from wheat and retaining the protein or gluten. Natalie Slater, marketing manager at Upton’s Naturals, has seen this trend of growth and contraction come and go since the 90s. The current cycle stands out because of the money invested in the segment during the past five years or so.

“A lot of it was really driven by brands that were backed by huge amounts of investments or brands that were bought out by conglomerates, or meat producers buying their plant-based counterparts,” Slater said. “And then after a lot of buzz around some of those products, then came lots of copycat products.

“I think what happens is that you get a lot of buzz and trust, and people try things and then there’s burnout or there’s some cannibalization there where there’s just too many of the same product.

“For a company like us that has never really chased trends, we feel like we have a secure spot in the market because we’re just really focused on making products with simple ingredients that taste good and are easy to cook. I think that’s a proven strategy for a lot of brands — just to stick with what you know and stick with what you do well, and you can ride out a lot of those, a lot of the trends, and so far, that’s worked.”

Going forward, consumer demand for the products — although not as torrid as in previous years — will encourage producers to keep innovating and offering new products. In September, Beyond Meat and Taco Bell launched Beyond Carne Asada Steak at locations in Dayton, Ohio. And in October, Beyond Steak launched at Kroger and Walmart stores nationwide, as well as at select Albertsons and Ahold divisions and other retailers across the United States.

“Beyond Steak is a highly anticipated expansion of our popular beef platform and we’re proud to introduce this innovative product to consumers nationwide,” said Dariush Ajami, chief innovation officer, Beyond Meat. “Beyond Steak delivers the taste and texture of sliced steak in a way that is better for both people and the planet.”

Impossible Foods expanded into full meal solutions with the launch of the company’s line of frozen plant-based entrees called Impossible Bowls. The alternative meat maker partnered with consumer packaged goods, meal kit and foodservice brands for plant-based versions of sausage ravioli, pizza and tacos, among other foods.

“And like all Impossible products, these meals are also healthier for the planet: choosing to enjoy our plant-based beef, chicken and pork in each entree accounts for less water consumption, land use and greenhouse gas emissions than their animal protein counterparts,” the company said.

Cultured meat advances

In 2010, Dutch scientists created pork in a lab using stem cells from pig muscles. By 2013, the University of Maastricht in the Netherlands unveiled a hamburger patty that was grown from bovine stem cells.

Kansas City, Mo.-based CRB Group, a full-service facility design, sustainable engineering, construction and consulting firm for biotech, pharma, food and beverage, and science and technology published an analysis of alternative protein manufacturing. In its Horizons: Alternative Proteins report, CRB examined significant challenges facing the segment including scalability, regulation, product safety and sustainability.

“Cell-based and plant-based meat, egg and dairy products are riding a wave of interest among consumers,” the report said. “To capitalize on this momentum, it is imperative for companies to develop, manufacture and bring to market new offerings as quickly as possible. This will require investing in new facilities and retrofitting existing food and beverage facilities with specialized equipment. To do that — and to do it fast — companies need to move away from traditional design-bid-build project delivery and embrace the trend toward turnkey project management.”

A significant challenge facing cultured meat producers is consumer acceptance. The 2022 Power of Meat study found that fewer than three in 10 meat eaters (29%) would be willing to try cultivated meat versus 40% who would not.

“Those who are willing to try cultivated meat point to securing the food supply and feeling it would be better for their health,” the study said. “The latter tend to be people who seek out meat and poultry raised without added hormones, antibiotics and several other production attributes. Other underlying drivers are animal welfare, food safety and the planet.

“Among those not willing to try cultivated meat, 63% are concerned that it is not natural. Other big concerns are that it is too processed or unsafe.”

Still, cultured meat startups have garnered a lot of attention and investment. Companies are creating chicken, lamb and fish without animal slaughter. Aleph Farms, Steakholder Foods, Eat Just, Meatable and other startups are advancing the science behind cultivated animal proteins.

Dutch food tech company Meatable is currently working on cultivating pork products, including sausages and dumplings with plans to launch the items in restaurants in Singapore by 2024. By 2025, Meatable hopes to expand into supermarkets.

Governments are supporting research into cultivated meat as a solution to food insecurity.

Eat Just Inc. secured a $25 million investment from private equity firm C2 Capital Partners to accelerate its growth in China. Plant-based egg alternatives and cultivated meat are part of China’s national blueprint for food security.

President Joe Biden issued an executive order directing Agriculture Secretary Tom Vilsack and the US Department of Agriculture (USDA) to submit a report assessing how to use biotechnology and biomanufacturing for cultured meat. And In October 2021, the USDA awarded Tufts University $10 million to establish the National Institute for Cellular Agriculture.

Alternative proteins face significant challenges including regulation, product safety and sustainability.

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Automation Mission

By Joel Crews

October 2022

Automation
Mission

The evolution of meat processing in the future depends less on humans and more on technology

Meat+Poultry

Georgia Tech Research Institute

laughtering and processing facilities where meat and poultry are manufactured have improved dramatically over the past 100-plus years. Comparing the abhorrent treatment of livestock and the people working in the plants in the early 20th century, as chronicled in Upton Sinclair’s 1906 infamous novel, The Jungle, to the operations of today’s processing plants demonstrates how innovative solutions and a commitment to continuous improvement by industry stakeholders have made game-changing improvements. Along with addressing the well-being of livestock and plant workers by vastly improving working conditions, the industry’s supply chain infrastructure has evolved significantly since Sinclair’s portrayal of the stockyards of Chicago, which also resulted in food-safety advances, improved food quality and efficient production at processing plants that operate using sophisticated technology, and increasingly, automation.

Industry thought leaders unanimously agree the processing plants of the future will include even more technology and refinements with goals of improving operational efficiency, increasing yields, minimizing the impact on the environment, and addressing a labor shortage that has hamstrung the industry for years.

Monitoring and analyzing operations based on cloud-based data collected from facilities is already being utilized by meat and poultry processors to streamline production and artificial intelligence technology applied at plants is proving beneficial in predicting and forecasting maintenance issues and identifying opportunities for operational improvements.

Making the leap

The industry’s biggest processors have done more than just dabble in innovations that were recently thought to be technology pipe dreams and most have committed resources to continue developing even more futuristic solutions for the next generation of meat and poultry processing plants. A focus on automation is a common theme among them.

For example, within the past decade São Paulo, Brazil-based JBS S.A. embarked on learning more about how it could apply machine learning at its 300-plus processing facilities. In 2015, JBS made a multi-million-dollar investment to own a controlling share of New Zealand-based Scott Technology. This year, JBS Foods Canada announced it was investing $71 million in a project with Scott Technology to make its Brooks, Alberta, warehouse fully automated.

“This new system will help reduce storage costs and errors and deliver improved inventory turns, while also improving worker safety as one box can weigh up to 110 lbs,” said John Kippenberger, chief executive officer of Scott Technology, when the project was announced in July. “It represents significant efficiencies and cost savings for JBS Foods Canada and will be the largest project of its kind for Scott to date.”

Late this past year, during a presentation at an investor meeting, Hormel Foods Corp.’s group vice president of supply chain, Mark Coffey, said the company routinely earmarks millions for automation in each year’s budget.

“With the uncertainty of labor and this tight labor supply, we are ramping up our investments in automation,” he said.

Earlier this year, Springdale, Ark.-based Tyson Foods Inc. announced it had 12 new plants under construction in the United States, with automation playing a critical role in all of them. At the beginning of its 2022 fiscal year, the company said it budgeted approximately $1.9 billion to invest in additional capacity and automation.

One of those projects is Tyson’s bacon processing plant, a $355 million, 400,000-square-foot project underway in Bowling Green, Ky. Gregg Uecker, Tyson’s senior vice president of operations of Prepared Foods is leading the project in terms of construction, design and equipment. And automation is a big part of the plant’s operation, which is scheduled to start up in late 2023. He said projects of this scale have to be built with a future-first mindset.

“We aren’t designing the plant for today and today’s processes and today’s problems,” he said. “We’re designing a plant so that 15 and 20 years from now it is still viable and still highly competitive.

“So, you have to think way differently. Where’s the world going to be? How do I not plan myself into a corner? How can I think about looking at technology?” he said, adding that there is a balancing act between building for the future and ensuring reliability when it comes time to execute production. “When it comes time to press the green button and start the plant, it’s got to make bacon,” he said.

He said the bacon plant is an example of how new plants address today’s issues while accounting for what might be tomorrow, which depends on the future-minded approach of the project leaders. Automation is an important part of the future, but so is an operations strategy, which is data based.

“We need to look at staffing and availability of labor, the cost of labor, but also making jobs easier, more precise and really allowing control systems to run them versus people running processes,” Uecker said. “Automation is a way of life. It’s not a project anymore. It’s kind of like it’s just part of how we work.

“And I think about data the same way. We have to collect more data from the processes. We have to get more insight from these processes with more sensors and more controls on anything that we do today than we ever did five years ago, 10 years ago, and now we have to make better decisions to reduce variability and increase the speed of business with that data.”

Poultry focused

Konrad Ahlin, PhD, Georgia Tech Research Institute, Aerospace, Transportation & Advanced Systems Laboratory, believes the time for widescale utilization of automation and robotics in the poultry industry is now. And he said once a foothold is established, the future is bright.

Ahlin, who is a relative newcomer to the food industry but an established expert when it comes to automation and robotics, is quick to point out the unique challenges that are inherent in applying robotics in meat processing applications, however.

“I see food manufacturing as the next big frontier for robotics. Because if you look at a lot of the factory manufacturing and areas where robotics are typically used, including assembly lines, often the robot’s job is set pre-planned ahead of time.”

But when the focus is on a product that is variable in size, texture and shape, “it’s a very challenging problem for robotics. And that’s one of the things that really got me interested in the field. As a roboticist, how are we going to advance robotics to face the incoming challenges of food manufacturing?” Ahlin said, not the least of which is the labor shortage.

Marble Technologies is focused on developing automation solutions to address one of the most pressing challenges facing red meat processors, which is a shortage of labor.

Two-arm advantage

He said that in traditional manufacturing applications it is common to see one robot arm designed for a singular task. These arms are typically large and operated in areas that are inaccessible to humans because of their size and weight and the danger they can pose to people. And while there might be multiple arms positioned close together, they are not designed to interact with each other to perform tasks. However, the concept of a “cobot,” a collaborative robot, has become more popular for manufacturing applications because they are usually less bulky and heavy and are less dangerous than their single-arm counterparts.

“The modern, interpretation of a “cobot” is a six- or seven-degree freedom robot arm, that is made to be operated within a human workspace if it has built-in safety precautions and is less bulky and heavy,” Ahlin said. “While less powerful, it wouldn’t be desirable for it to run into people or things, it also wouldn’t be catastrophic if it were to do so. What that allows for now is instead of just a robot arm, interacting within a human’s workspace, you could have multiple robot arms interacting within a shared workspace.”

For poultry processing applications, one area of research showing promise utilizes two interacting robotic arms to rehang chicken carcasses, which has obvious benefits in terms of labor savings and efficiency. This type of “cobot” application takes advantage of pairing a human to be the decision maker in the process with a robot that specializes in the manual labor task.

“So, is there a way to marry the manual labor of the robot with the decision making of a person? And our answer for that is to have this shared collaborative environment within the virtual world where the human and the robot can share information very naturally, and the person can then direct the robot and tell it where to pick up a bird using the suction gripper,” Ahlin said.

One of the benefits of this concept that has been proven in the lab is that the task can be completed remotely, with the human-based decision-making being done in one location to direct the robotic arm to hang a chicken carcass on a cone like those used in a poultry plant cut-up line.

“You don’t need to be in the same physical location, you just need to have an internet connection,” Ahlin said.

However, utilizing this technology is still in the research phase and likely years away from widespread implementation in plants. In the meantime, Ahlin is confident that progress will be made.

“I am very optimistic that in 10 years, the poultry processing in particular will look vastly different than it does today in terms of how much automation will take place,” he said.

“I don’t think the poultry industry needs to advance to some mythical level to be good enough for robotics,” Ahlin said. “I very much feel that robotics needs to advance to meet the challenges seen within the poultry industry. And robotics just recently has gotten to a level where it can start to address those challenges.”

Red meat and robots

When it comes to meat processing and automation, Chafik Barbar, chief executive officer of Marble Technologies, has gone all-in on the opportunities. He founded the Cambridge, Mass.-based company at the height of the COVID-19 pandemic after realizing the potential solutions automation hardware and software could deliver to the country’s plants that were reeling from the backlash of the virus. His company was founded on the basis that most processors are forced to operate with about 20% fewer workers than they need. Marble creates the software ‘brains’ for hardware to automate processing tasks using artificial intelligence to deliver automated solutions that can adapt to the variation in beef and pork products.

Growing up in Nebraska and a graduate of the University of Nebraska, Barbar has a background in agriculture and food technology. As a software developer, he co-founded GrainBridge in 2009, an Omaha-based start-up that provided financial risk management for crop and livestock producers. That company was acquired by ADM and Cargill in about 2018. He then moved to Massachusetts and earned an MBA from MIT Sloan School of Management and was determined to get back into food technology again, despite graduating during the pandemic.

He soon learned that one of the biggest post-COVID pain points in the meat industry was the labor shortage and began building a team of professionals who understand meat processing with technology experts that solved similar challenges in other industries.

“I’m trying to mash up meat science with other disciplines,” Barbar said.
He said that while many in the industry would criticize it for being slow to adopt automation, the argument could be made that there is an advantage to being a late bloomer. All eyes, it seems, are on the meat industry, due in part to COVID-19, consumer interest in food sourcing and global initiatives related to animal welfare, sustainability and consolidation concerns. Barbar added that the time is right for automation in the meat industry. He said the technology has been proven in other industries and is not only more affordable than in years past, but it is also evolving to address the variability issues inherent in automating meat-processing using more sophisticated learning software and artificial intelligence. He also pointed out that the labor pool for jobs in automation is attracting more candidates to the food industry from other industries given the level of software and hardware development and engineering skills required.

He said the need for solutions in this segment is understood by engineers and they aren’t deterred by working in what was once considered a less-than-glamourous industry.

“People understand what this is; they really get it and I’m not having to explain the problem I’m solving,” he said.

He added that fortunately for automation companies like Marble, the industry’s largest players have budgeted tens of millions of dollars each year that are earmarked specifically for these solutions. Funds for enhancing and growing plant operations are also available in the form of government grants while venture capital in agri-food tech has more than quadrupled in the past five years, fueling the momentum to back any type of solutions that address supply chain problems.

He said all the factors are lining up to make this a once-in-a-lifetime opportunity to address a longtime challenge in the industry and to boost it forward by 20 years.
“Ten years from now, I want people to look at the meat industry and talk about it as an example of automation,” Barbar said.

The most obvious solutions automation offers processors, for example in the pack-off area of a meat plant is in reducing head counts but not eliminating humans from the equation altogether. Instead, Barbar is offering processors human-in-the-loop automation and going from 20 to 30 people in a product sorting area of a primary beef processing operation, for example, and reducing it to four people.

He pointed out that those four people play a crucial role in the process because they serve as quality assurance workers who are the last line of defense to give products a final look before boxing and shipping. There is still much more to the processes than just flipping a switch and walking away.

“We’re still a long time away from this technology being lights out,” Barbar said.
He said the human factor is a necessary evil in the meat processing industry, unlike the automotive industry. Because no two carcasses are alike, dealing with consistency can be an automation hiccup, but software and visioning systems are available to deal with product variability.

“Where it gets real hard with variability is not the variability of the product, it’s the variability of the process. What happens on the fabrication floor is one chaotic process. It’s my argument that it’s man-made chaos. It’s not, God-made chaos. That is something we can fix long term but not Day One.”

He said real-world applications might target one process, such as trimming on a chuck line station and either making it completely automated without humans or use technology to make the first four trimming cuts and then conveying that to a single person at the end of the line to make the final cut or two to ensure it looks correct.
“I just saved the human four swipes with a knife,” Barbar said, “but we’re still pretty far from making automation work as well as humans. Humans are just phenomenal.”
While many meat companies have converted their inventory system and order pulling processes to a light’s out, human-free operation, that level of automation can’t be expected on the fabrication side.

Barbar said when it comes to opportunities for complete automation, “You see bits and pieces; you see robots here and there in pork, but still to a large degree, it’s pretty fragmented. You see automation kind of being sprinkled all over the place, but there’s just not these complete solutions that are mature enough to go in and solve for the reality of how these plants work.”

Barbar said the most opportunities are in retrofitting automation solutions for existing plants.

“That’s where the pain is,” he said. “I can sit here and design for new facilities, but I wouldn’t really be moving the needle for the industry.”

Marble’s solutions for today address the packaging area and the pack-off operations.
“I’m going after the end of the process; I’m going to the front of the process. It’s just my best approach to how do you tackle this beast.”

Marble Technologies creates the software ‘brains’ for hardware to automate processing tasks, such as product sorting, to deliver automated solutions that can adapt to the variation in beef and pork processing.

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Future is now for milling technology

By Matt Noltemeyer

September 2022

Future is now for
milling technology

Incremental advances improve highly efficient, labor-light flour mills

World Grain

©xreflex – stock.adobe.com

Agrain professional’s device pings early on a Wednesday: A VP has a VIP in need of 30,000 cwts of bread flour, ASAP.  

Since the mill had cake flour grind scheduled today, the worker mentally tallies the steps to make the switch.

He pours a coffee, commutes to the cozy cockpit of his home office, fires up the machinery and completes an authenticator eye scan.

A few taps at the tablet and he’s put the cake flour grind on hold. A few more taps and the line, in the plant a few miles away, begins to make the necessary adjustments for milling hard red winter wheat into bread flour without ever turning the lights on. 

Another couple keystrokes and the soft WIP — work in progress — wheat is set for a few more hours in the temper bin. Next, the automated mill dutifully collects a precise volume of winter wheat, dampens it with the additive solution that will have the bran toughened just right and the endosperm appropriately mellow by the mid-morning coffee break. 

During the grind, the mill will continually monitor quality parameters and issue data on each wheat berry. Should a problem arise with the specs or a mechanical part, the mill will divert product to a holding bin while troubleshooting takes place, avoiding a mess on the floor. A self-regulating pneumatic system will convey just enough product to avoid wasting energy and adjust automatically if the flow rate deviates.  

A scene from a wheat miller’s dream? 

Yes and no.

More precisely, that tableau mixes technologies already used in many flour mills that are expected to become more refined, more efficient and more commonplace in the coming years, with what some see as “the Holy Grail of wheat milling.” 

On the occasion of its 100th year chronicling the evolution of milling in the United States and reporting on the commodity markets that feed the world, Milling & Baking News, a sister publication of World Grain, spoke with milling experts about the technological leaps, bounds and baby steps that led to the modern flour mill; where flour production technology most likely is headed next; and what improvements will transform the industry when value-added solutions to age-old problems emerge. Some milling equipment manufacturers were reluctant to be interviewed because they didn’t want to give away ideas they were working on or developing.

Millstones and pneumatics

In the beginning there were millstones. By the 15th century, millers began to work out the grind-sift-grind process to reduce the kernel, endosperm and bran into flour. Innovations such as the roller milling system in the 1870s revolutionized the industry to a degree that perhaps hasn’t yet been eclipsed. After all, rollers endure as the foundational technology in the world’s newest, largest, most efficient flour mills. 

Incremental advances consistently reduced the mill labor force, eventually eliminating such roles as smutters controlling the clearing house, bolters steering the sifting house, truckers tugging the hand carts. By the 1950s, longer-lasting parts meant equipment broke down less often. When pneumatic conveying superseded bucket elevators, mills became cleaner, safer places with fewer sweepers. 

“The genius of the gradual reduction system of milling is that a mill can produce multiple grades of flour contemporaneously, fine cake flour, pretzel flour, cookie flour,” said Richard Siemer, president of Siemer Milling, Teutopolis, Illinois, US. “We can blend it back and forth and sift it apart. Milling technology, at the heart of it, is innovations that took place in the 1700s and the middle-1800s. For the most part, in the 20th and 21st centuries, what we’ve been seeing is just refinement. If we could resurrect a good miller from a good mill who died in 1900, bring him into a modern mill today, he’d understand the process almost immediately. You would, of course, have to train him on computers, and the scarcity of mill workers would be part of his cognitive dissonance.”

For the near term, more such incremental improvements to existing technologies are expected. For example, while pneumatic cleaning systems are more sanitary, they tend to use more energy than mechanical sorting. The US power grid amply provides for that. But in other countries and with customer expectations trending green, there is an opportunity to raise the efficiency of the cleaner technology.

The new mills that have come online in the past five years are some of the largest in the world, a trend that’s likely to continue.

“If you check into Sosland’s Grain & Milling Annual archives, as I do from time to time, and you look back into the 1980s, 10,000 sacks a day, or 600 tons, was a pretty big mill, but I don’t think that would make the list of the 25 biggest mills in the states today,” said Scott Martin, senior director of technical milling with Ardent Mills, Denver, Colorado, US. “Back then, I worked at a 10,000-sack mill that had two sifter floors, 17 individual sifters, holding about 94 sifter sections. A modern 10,000-sack-a-day mill has maybe four sifters and maybe half as many sections. Fewer machines, bigger machines make for more simplicity, fewer labor resources, which are good improvements, and it’s good to see progress.”

Satake optical sorter with removable vibratory feeder system for production flexibility and sanitation.

NIR and working from afar

A flour mill today is an efficient, computerized version of the roller mill and gradual reduction systems in place for many decades. Millers who in the 1960s looked to floor spills to spot problems now have a real-time understanding of how each element in the plant is performing, all viewed from screens in a control room or even from another location. That area continues to expand with each generation of technology introduced. The miller who in the 1970s regularly replaced worn belts to avoid potential fire hazards now runs lines mostly controlled by direct drives and, increasingly, variable frequency drives to run fans, airlocks and other components intelligent enough to sense a potential stoppage and divert product before the elements likely to cause combustion align.

The arrival of NIR, or near-infrared reflectance, meant millers no longer had to manipulate samples with their fingers or take them off site to a lab where a technician with a scale and an oven took four hours to test the product. NIR shortened the wait to minutes. Moving the data analysis computer to the mill streamlined things, as did training millers to calculate their own results. The latest updates automated the process and moved it online. 

“Knowing the quality of flour is important, and if it can be done automatically, it frees the shift miller to do something that can’t be done automatically, plus the mill and its customers get a better measure of quality because we’re measuring it all the time,” Martin said. “If a quality parameter isn’t where it needs to be, we can divert that product to a different storage bin, do some troubleshooting and know we have that product isolated for corrective action. A mill has to have the resources behind it to keep the instruments calibrated, and with most now on a network, it’s all about whether the network is strong enough. It’s a pretty exciting part of where the industry is going.”

These technologies and other examples of mills essentially running themselves are the future of flour milling, experts said. Already there are autonomous mill tracks in place that can run without a human in the building. It’s commonly called lights-out milling because when the miller leaves the area and the sensor times out, darkness ensues, but the mill continues to clean, sort, sift and grind.

Multinational equipment manufacturers such as Bühler are striving to stay at the forefront of automation innovation.

“Their ambition is to create an autonomous mill that really could operate by itself if a company wanted to or needed to,” Siemer said. “You can’t eliminate the human factor, but it’s another step toward automation.” 

As the 21st century rolls on, experts foresee manufacturers such as Bühler incorporating more electronics, more sensors, and enhancing multi-point sensor-based data collection. Essentially, sensors present real-time data on the temperature of the equipment, vibration, throughput and many more that comprise a massive trove of measurements being taken every second. Mills have to figure out what data are important for their grind and how to apply it toward improving the process. That typically means using data to improve mill yield, to keep flour products within specifications and to run in the most energy efficient way possible.

“The challenge is doing something with the data to tell us more about flour quality and productivity and energy usage — that’s when the data adds value,” Martin said. “You have to have the means to analyze data and then put value into what the data tells you. We’re just on the cusp of that. We’re starting to have roller mills that can tell us about roll temperature and roll force and kilowatts consumed — all toward reaching maximum efficiency and productivity.” 

Another key benefit? Integrated control systems that join on-site and remote management enabling remote troubleshooting. 

“In our case, working with Bühler, a miller can literally dial up Switzerland or Minneapolis and ask that person to get online and view the operating parameters and consult on what to do about it,” Siemer said. “Software suppliers can open the hatch, get inside and try to diagnose your system. Millers in different locations of the same organization can also share information with each other. It’s something we’ve just been able to do within the past few years, to call on experts, reliable people from different places and have them actually participate in the troubleshooting process in real time.” 

As US flour mills continue to migrate to new technology and processes that are more autonomous, there will be a need for skilled mill workers schooled in the new and the old, said Kent Juliot, vice president of research, quality and technical services with Ardent Mills. 

“Even in 10 years, the industry will still have older mills, so you’ll need people that know both sides, those who can manually adjust mill rolls but also understand the logic of an automated controls system,” Juliot said. “With labor shortages, newer systems can reduce the number of people needed, but the pressure from the technical side will be even greater, because the education and knowledge will have to span all the way down to just above the waterwheel. The future of milling is going to be exciting and new, but we can’t forget the old.”

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Sorted and binned

The methods for removing corn, soybeans, husks, straw and other dockage from incoming wheat were once limited to a basic separator and a scourer to clean out the dust from the crease. Mechanical cleaning gave way to aspiration, which paved the way for precision grain cleaning systems such as the color, or optical, sorter. It’s the closest thing to a revolutionary technology the industry had seen in about 60 years. 

These cleaning systems combine sophisticated cameras with precision equipment using sharp blasts of air to knock out impurities that may have commingled with wheat at an elevator or aboard a rail car. It eliminates non-grain contaminants and sorts supplies by characteristic. Color sorters have improved consistently since their debut. Today, most all new plants employ them, and many older mills have retrofitted them. The technology has moved from black-and-white to color cameras and now to infrared scanning. Sorting technology today allows mills to better handle damaged wheat. For example, it can salvage more good wheat from a shipment with elevated dockage, disease such as scab and other mycotoxins, such as vomitoxin. It’s clear to experts that the future holds further refinement of optical sorting technology. 

“Mill technology keeps improving, and if we think to the future, the technology in sorters will probably blow our minds in ways we can’t even dream of right now,” Juliot said. “For example, they currently use spectral analysis that can give you an actual analysis of each individual wheat berry and, in my opinion, they’ll become amazingly high-tech in the foreseeable future.”

Cleaning out impurities relies on the color sorter, which compares kernels with references it’s already learned, and reacts quicker than any human ever could. But what of the nearly invisible threats to food safety, the mycotoxins? Cutting-edge technology on the horizon aims to eliminate them with a method more efficient and economical than ever at a time when the US Food and Drug Administration has indicated pathogens are on their radar and near the top of their list.

“Pathogens are right up there with leafy greens and everything else on FDA’s list, so having a mitigation step in place, they expect you to have it,” said Brad Allen, chief technical officer at PHM Brands, Denver. 

Several methods of handling this problem are on the horizon. One of those already operates at PHM’s Dawn, Texas, US, plant, having been adapted for the food industry by PHM Brands’ Energis Solutions in a joint venture with the technology’s inventors. Energis is manufacturing equipment that produces a treatment solution on site. It yields a similar reduction to other systems developed since the turn of the century 22 years ago, “but we’re doing the head end of the process, so you’re not making a ready-to-eat claim like other methods do, but you’re getting the brand protection and you’re not going to get a recall,” Allen said.

The advance of that and future pathogen elimination technologies could spur adoption of an industry-wide standard, a development that would please Siemer. 
“It’s not something I’d like to make any money on as a proprietary advantage,” he said. “I’d just like to have everybody agree that we’re going to use it for certain products. And I’d like to see it applied to flour rather than wheat, because that gives you a lot more flexibility. Unfortunately, none of the systems that I’m aware of right now are used on flour, they’re used on wheat before milling. It gets kind of complicated. I know it’s significant right now, and I think it’s going to become more so.”

Genomes and unknowns

Some of the innovations likely to shape and shift flour production in the future are beyond the horizon for now. Breeders manipulate wheat to create varieties more likely to thrive in certain growing environments or to increase resistance to disease pressure. At some point, experts said, biotechnology and research in the wheat genome will generate some major advances to the milling process of flour production. That may have to do with the ease of processing the kernel, adjusting qualities such as protein, reducing gluten’s impact on those afflicted with celiac disease, or increasing gluten strength for use in pizza doughs, variety bread, and perhaps even pancakes. 

“As long as wheat quality is, as they used to say, 70% nature and 30% nurture, or 30% genetics, 70% environment, you’re not going to be able to be really precise, but I believe that biotechnology will soon have the biggest impact on the wheat foods industry in a positive way,” Siemer said. “If as many resources had been put into breeding wheat as have been put into breeding corn over the past 90 years, we’d be a lot further along, but that’s our particular cross to bear.”

Near the top of Siemer’s wish list is a boost to soft wheat resistance to alpha-amylase activity. That’s an enzyme in the wheat that starts to break down the endosperm shortly after the kernel is fully ripe, especially if moisture is introduced via rain on a mature, ripe crop. It leads to sprouting, which reduces the viscosity of the flour and locks it out of some applications, such as pie crusts.

“If wheat could just sit out there in the field for a week without degrading, as distinct from sitting out there for an hour if it starts raining, that would be enormous for the milling quality of wheat and would be one factor in the attractiveness of wheat as a crop here in the eastern Corn Belt,” Siemer said. “It would be more reliable. Farmers would know when they harvested it that it would be of good quality.”

After quality is established, wheat headed for the mill typically stops off for a lengthy stay in the temper bin to ready the kernels for efficient sorting. Of all the advances in milling over the years, the temper time has proven a tough nut that’s yet to be cracked. 

“One thing that hasn’t changed over the years is the miller’s desire for 24 hours of temper time for milling hard wheat,” Martin said. “If we could find a means to achieve the physical changes to the wheat kernel in a shorter time, it would be greatly beneficial. Bigger mills require more space for work-in-progress, or tempered, wheat. Bigger bins mean greater capital investment. 

“Also, if the mill is grinding spring wheat and the flour silos get full, I still have all that spring wheat WIP in my temper bins. I can’t change to another grist, so the mill has to stop and wait for space to come available in the flour silos. Mills with a 24-hour temper time have to know what they’re going to do tomorrow today. They can’t turn the mill on a dime so to speak.”

There have only been marginal improvements in tempering over the past few years. A step-change in technology to shorten the planning cycle or the development of an additive to reduce temper time to just a few hours but retain the effects for optimal grind is seen by the industry as a Holy Grail because of the flexibility it would enable. 

“If there were a way to do that,” Juliot said, “it would be transformative.” 
Until such an innovation comes along, improvements in flour milling efficiency, efficacy and food safety will continue to be incremental, millers and grain industry leaders say. And that’s not a bad thing, Siemer noted.

“I heard a miller say 45 years ago in one of my first months in the business, ‘I’d hate to be the person known for building the last grind-and-sift flour mill,’” he said. “But honestly, we’ve gone for all these decades, and nobody has come up with a better way of making flour, so we’ll see what happens.” 

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A look ahead

By Michelle Smith

August 2022

A look
ahead

Technology that promotes sustainability, efficiency and connectedness will take the baking industry into the future.

Baking & Snack

Aspire Bakeries

The bakery of the future will be about making connections. It will, of course, boast the latest technology, helping companies enhance efficiency, protect the planet and improve conditions for workers. But it’s also about the connections made between factions inside the bakery and to the outside world, including suppliers, customers and consumers, creating greater transparency and understanding.

“For the bakery of the future, there are basically four areas of focus. First is trying to get even better around improving safety and conditions for associates, with unwavering focus on food quality and safety,” said Brett Buatti, chief supply chain and operations officer, Aspire Bakeries, Los Angeles. “It’s also about a focus on sustainability and about improving efficiency and costs. And finally, there is this notion of connectedness, which helps with all these priorities as well as engagement with your people. Sensor technology and the Internet of Things enable the ability to connect within a bakery, to see more, to be aware of more, and to stay highly engaged with your associates. And it also allows you to actually connect the inside of the bakery to the outside world, whether that be suppliers, equipment manufacturers and service people, customers or even consumers.”

Promising technology is not only on the horizon but is already part of bakeries now, although much of it is complex and systems are still being perfected.

It’s not easy being green

Large companies are setting ambitious goals to reduce their carbon footprints through reduced packaging waste, energy and water.

“Bakers always strive to be more efficient across the board to make the best use of the resources they have. Energy and energy costs are always top of mind, in particular today with the many global uncertainties that are at hand,” said Rasma Zvaners, vice president, regulatory and technical service, American Bakers Association. “The baking industry already has a tremendous track record for making facilities more energy efficient. Most bakers have assessed their facilities’ efficiencies and Scope 1 emissions (greenhouse gas emissions at their facilities). Now they are looking directly at Scope 2 opportunities — indirect emissions associated with the purchase of electricity, steam, heat or cooling.”

Grupo Bimbo SAB de CV, Mexico City, announced new sustainability goals in a May conference call that included becoming a net zero carbon emissions company by 2050, obtaining 100% of key ingredients through crop cultivation using regenerative agriculture practices by 2050, and ensuring that 100% of its packaging supports a circular economy by 2030. That comes on top of goals the company has already set, including using 100% renewable energy by 2025.

“We are in a decade of action, and this means we need to increase our speed to reach our sustainability goals,” Daniel J. Servitje, chairman and chief executive officer of Grupo Bimbo, said during the call. “In many areas, such as climate change and water management, [if] the world does not act more boldly, it may be too late. We want to be a part of this acceleration, and that is how I can sum up everything that nourishing a better world is. It means nourishing the well-being of people and nature at the same time because we can only make things better if we do both. It is about the planet and about the people that live on it.”

Earlier this year, Hostess Brands Inc., Lenexa, Kan., announced it would invest $120 million to $140 million to transform an idled bakery plant in Arkadelphia, Ark., into a state-of-the-art facility. The bakery will become the company’s most efficient and flexible operation and is expected to increase capacity for Donettes and other products by 20%, said Kevin Sandefur, vice president, operations strategy.

“We are building this bakery with a sustainability-first approach, and we are committed to making it the greenest Hostess bakery we have,” he said. “We’ve outlined our sustainability goals for our company in the Hostess Corporate Responsibility Report that we issued in May, and we expect our Arkadelphia bakery to lead the way in achieving those goals.”

The company is working to make its other bakeries more sustainable and efficient, Mr. Sandefur said, through the reduction of water, energy usage, packaging waste and other waste.

“At Hostess, we will focus on sustainability at our bakeries as we look forward,” he added. “From development to execution, we will approach manufacturing expansion in a sustainable way.”

Barry Edwards, vice president, corporate responsibility and sustainability, Aspire Bakeries, said that bakeries should follow LEED green energy standards when building and adopting standards that move them toward lower net carbon emissions. He also stressed the importance of building in the right place.

“Logistics are forever,” Mr. Edwards said. “There are a lot of miles involved in transporting any product, and the more you can think about where you can locate your facility to try and minimize the miles, whether incoming with raw materials or outgoing to the customer, the better off you’ll be. It makes sense to look at that and try to minimize as much as you can. It’s a long-term amount of miles that you’re going to be creating.”

Employing connected systems that provide real-time access to data will help facilities better manage resources and find problems right away, Mr. Buatti said, rather than seeing a spike in usage a week or month later when it’s too late to act on it.

“You can use the data in a lot of ways, including efficiency and quality,” he said. “It’s a natural extension to use it on sustainability-focused activities, too. So you can catch energy usage while it’s happening, you can catch wastewater discharge while it’s happening, and you can catch water usage while it’s happening.”

It’s clear bakeries understand that sustainability is an important part of future operations.

“Anything that reduces your overall impact to the environment, whether emissions or energy usage or waste, those are must-haves in the future,” Mr. Buatti said.

Charles Fleischmann with his brother Max and partner James Gaff created the first commercialized yeast for the baking industry. AB Mauri North America

Automation and engagement

The bakeries of the future will have more advanced tools in the forms of robotics, data-capturing equipment, artificial intelligence (AI) and other technologies. This will involve high-speed internet and the use of the Industrial Internet of Things (IIoT) to connect bakeries to the outside world.

Bakeries large and small are turning to more complex and sophisticated forms of automation with a tight labor market and the need to run as fast and efficiently as possible.

“There’s old-school automation, which is sensors and motors, and there’s more advanced systems like robotics,” Mr. Buatti said. “Classic automation can be a bit limited in that it usually ends up doing a lot of the same thing very fast. However, that can really limit flexibility and can limit your product range or ability to innovate.  You’ve got to balance the trade-off between efficiency and flexibility. What helps is when robotics advance enough to be flexible at really high speeds. There are applications in the present, but that’s when it becomes futuristic. How can we do all kinds of things but do it really fast?”

He stressed that it’s not about eliminating jobs in the bakery but making them more engaging. For instance, instead of an employee packaging items by hand, that person could be trained to oversee packaging machinery and robots. This improves skills and reduces repetitive motion injuries.

Real-time connectivity will help bakeries keep in close contact with suppliers and customers.

“That technology is out there; it’s just not fully perfected and realized within the four walls of the bakery,” Mr. Buatti said. “I can pull up on my screen right now what’s happening in the factories. What lines are running, what lines are down, how well they’ve run today. The notion of allowing customers access to something, even as simple as, ‘Yes, your product is running and here’s how much we’ve made,’ is very doable. But it’s a big question as to whether you’d want to or how you’d do it and what you’d share.”

He also sees better connectedness within the bakery benefitting the company and employees.

“If you get the right programmer, set it up the right way, you can have people see a piece of data, tag it and send it to someone who has another device in the bakery, saying, ‘Hey, I think you might be sending me product from upfront that’s too dry. You’ve got to adjust your moisture levels,’ ” he said. “Or they can say, ‘This is making a weird noise. Let me use my wireless device to turn on the camera that can show the mechanic who’s on the other side of the bakery what’s going on here.’ ”

These tools could link teams together and improve engagement by not just educating about problems to watch for but also celebrating successes with other team members. Mr. Edwards said these connections can make jobs more meaningful.

“People want to be a part of something bigger,” he said. “And in the long run, it helps the business because they’re noticing things that might not be right that they can get fixed in the process.”

Dough improvers have been around since the beginning of commercial baking to ensure dough endures the stresses of industrial baking. Corbion

Data collection and AI

Companies are using systems to tie in data from multiple production lines at multiple sites across the globe to help improve processes, said Jon Gilchrist, engineering manager at Sightline Process Control Inc., a KPM Analytics brand, which among other things provides vision systems for bakeries.

“We’ve seen deployments of these data systems where across the globe specific lines are being pulled into one data structure that’s presented for both decision-making and analysis purposes as well as just monitoring,” he said. “So being able to extract things like counts and common production issues from the data are a critical part of it.”

Collecting and analyzing data are enabling companies to make better decisions and identify causes of inconsistences that they otherwise would not have been able to identify, Mr. Gilchrist said.

“The real benefit is in that data, analyzing that and being able to identify where things are going wrong and solve those to actually reduce waste and increase your output,” he said. “That’s the critical side of it.”

The benefit of AI is to help bakeries break down copious complex data and make it useful, said Liran Akavia, co-founder and chief operating officer of Seebo, now part of Augury.

“Waste and quality are the two main challenges we see in particular that baked goods manufacturers want to address most urgently — and it’s here we see artificial intelligence providing major value,” he said. “These losses can take many forms: from overweight to size and shape inconsistencies, color variances, packaging errors and more. But the common thread is these losses are always due to inefficiencies within the production process itself, as opposed to asset-related issues, for example.”

Using AI in a bakery begins with defining business objectives, Mr. Akavia said. It’s the most critical phase because it allows all parties to focus on a concrete, measurable business goal, which is key to seeing the value of AI.

“I should emphasize that you don’t need to extract all possible data,” he said. “In fact, one important part of the adoption process is that our team guides the manufacturing team to extract precisely the data they need, which makes the time to benefit far quicker.”

Once implemented, the company’s algorithms learn the process and begin providing insights.

“Process experts gain the insights into why losses are happening and how to prevent them, and operators receive real-time alerts on when and how to act to prevent process inefficiencies and losses before they occur,” Mr. Akavia said.

As bakeries delve further into collecting data and sharing information, cybersecurity will be paramount.

“These sites have a duty to their own company and to their clients to maintain data security,” Mr. Gilchrist said. “That often means working with established processes or establishing new processes to deal with some of the changing requirements that come with integrating such a large data pool. … We’re seeing that enhanced push to get these pieces of equipment on the network, have access to them both from external and internal resources, and that definitely takes a lot of careful planning and consideration.”

He suggested that bakeries concerned about security partner with their suppliers as they have likely helped others with similar issues.

“The more we can align as an industry on solutions and adopt shared practices, I think that’s the best path forward and makes life easier for everybody,” Mr. Gilchrist said.

As companies set ambitious goals for sustainability, increased output and efficiency, they have many tools to help them improve their companies while helping employees and the planet. They just need to decide what they want their bakery of the future to look like.

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From chalkboards to computers, futures evolve with the market

By Ron Sterk

July 26, 2022

Future is now:

From chalkboards to computers,
futures evolve with the market

Milling & Baking News

Library of Congress

One hundred years ago grain futures markets depended on hand signals, observers and chalkboards with posted prices to keep traders on the floor aware of the most recent prices. There was lots of yelling, pushing and shoving and the occasional fistfight, but the process worked amazingly well. Over the past few decades, trading “pits” mostly have given way to computer screens, global instant price updates, funds executing large trading blocks and trading volumes that would have staggered participants a century ago. Agriculture, the industry that started grain exchanges and futures markets, now accounts for only about 3% of global futures and options trading volume. What the next 100 years will bring is hard to fathom amid the rapid-fire changes in the past few decades.

The first 125 years of organized commodities trading saw limited advances — trading was done through open outcry, on trading floors that became known as pits because they were a series of multi-sided downward steps designed to maximize trader visibility and organization by trading period, often with physical samples of the grain being traded to evaluate quality.

The next 25 years laid the groundwork for expansion beyond agricultural and other physical commodities such as crude oil and metals into financial instruments such as contracts on equity indexes, currencies and interest rates and options on agricultural futures, something that was long prohibited. The last 25 years has seen an explosion of activity and volume brought about largely by technology, not the least of which is nearly instant global access to data and near 24-hour trading in many contracts.

What hasn’t changed (arguably) is the purpose of futures markets — to provide a tool to mitigate risk for commodity (and financial instrument) buyers and sellers. Some would argue that the prominence of commodity funds and trading algorithms (as examples) has distorted the original intent of futures markets, from a tool to mitigate risk on commodities to just another investment for large traders. Some acknowledge the critical role played by futures markets but note the vast majority of agricultural commodities and ingredients aren’t traded on futures exchanges. Others maintain that futures remain a legitimate and widely available tool used by producers, processors and food manufacturers (among other industries) to mitigate risk as indicated by soaring volume around the world. All acknowledge the vast volatility in the markets. The process undoubtedly has changed, as have volumes and other key elements of futures markets made possible by technology.

“Due to inflation fears and the devaluing of the dollar’s purchasing power the past 20 years, commodities have become an asset class that investors want to fight against inflation,” said Chris Kristufek, director, Trilateral, Inc., Chicago. “This leads to more money flowing into these food commodity markets, causing more volatility. My guess is that was an unintended consequence of the FED’s monetary policy.”

Exchanges fill a need

It’s been nearly 175 years since the Board of Trade — long the foundation of grain futures trading — was conceived and formed by a group of Chicago merchants to help farmers and commodity consumers manage risk by removing price uncertainty from agricultural products such as wheat and corn. The Board of Trade of Chicago was founded on April 3, 1848, but initially involved only cash trading. The earliest version of the Board of Trade was a group of men who met voluntarily with no legal standing in the city or state. Fittingly for Milling & Baking News, the Board of Trade got its start in rented space above the Gage and Haines’ flour store at 105 South Water Street for $110 per year and included a brick warehouse to store grain. The purpose was to “meet there to consult markets, transact business, etc.,” according to the Chicago Daily Journal. Futures contracts were created in 1865. The Chicago Mercantile Exchange was founded several years later in 1898 with early contracts on butter and eggs, later adding livestock and meat. The CME Clearinghouse was established in 1919.

Then the timeline jumps forward about 50 years to the next major event — the launch of foreign exchange futures in 1972 followed by Eurodollar futures in 1981. The first options on futures contracts were introduced in 1982. Ten years later the first electronic trading system was launched — CME Globex. That changed everything. The CME and CBOT merged in 2007 to establish the CME Group, which also acquired the New York Mercantile Exchange two years later. The newest major derivatives market is the Intercontinental Exchange. Formed in 2000 and launched with electronic trading only, ICE quickly became a global market force with contracts on soft commodities, metals, financial instruments and many others, clearing operations and other services.

While forward thinking merchants brought the Board of Trade to life, the markets eventually developed a life of their own and evolved, with other exchanges around the world, in some cases becoming massive financial institutions that would play a key role in determining the price that producers are paid for raw commodities to what consumers pay for food.

Today there are about 100 exchanges worldwide trading mostly in three broad categories: agricultural commodities, non-agricultural commodities (energy, industrial and precious metals, for example) and financial instruments. The vast majority are traded electronically. Some exchanges trade a single item while others trade nearly all categories. Many trade both futures contracts and options on those futures, among other types of contracts.

Agricultural futures and options include grains, oilseeds and oilseed products, softs (sugar, coffee, cocoa, tea), lumber, cotton and others. Non-agricultural commodity futures and options include precious and industrial metals, crude oil and petroleum products, energy/power (coal, natural gas, electricity, renewables and others), minerals, chemicals, nanomaterials, climate (emissions, carbon offsets and others), freight and others. Financial futures and options include contracts on interest rates, swaps, stock and commodity indexes, individual stocks, treasury bonds, currencies and many others.

Major futures exchanges listed in order of annual volume include the National Stock Exchange of India, B3 (Latin America), CME Group (Chicago Board of Trade, Chicago Mercantile Exchange, New York Mercantile Exchange, Commodity Exchange Inc., Kansas City Board of Trade and NEX Group), and Intercontinental Exchange (ICE, which includes ICE Futures US, ICE Futures Canada, ICE Futures Europe, and others). Dozens of smaller exchanges are scattered around the world, including the key Bursa Malaysia exchange that is the primary palm oil trading market.

Library of Congress

Market concerns persist

Futures markets have never been without their critics. Many farmers have long distrusted futures in part because of the role of the speculator (who is needed to provide liquidity). Others “knew” someone who lost money in the markets. One legitimate concern has been the impact of weather on crops and not absolutely knowing if there would be a crop at the end of the season to deliver or cash settle the contract at or before expiration.

One of the long-running concerns about commodity and ingredient buyers and sellers is that only about 10% of the world’s commodities are listed on a futures exchange. Over time, some of that has been compensated for by forward contracting between producer at some point along the food manufacturing chain mainly on a cash level, and through other creative ways. The same goes for food manufacturers selling their products, often through the use of brokers, wholesalers or distributors.
Stable USA Inc. is implementing a new concept.

“In the world of agriculture, only 16% can be managed with listed futures contracts,” said Jim Sullivan, vice president, Commercial Development, Stable USA Inc. “For some commodities there may be a cross hedge strategy that has mixed effectiveness. What this means is that for most commodities there are no direct tools to use to reliably and effectively manage price risk. Making things more difficult is the fact that exchange-listed futures contracts require active, two-sided liquidity at all times. That is very difficult to achieve in newer or niche commodities and as such, over 95% of new ag futures contracts fail.”

Failures over the years have been numerous, such as the former Kansas City Board of Trade’s millfeed contract, the Minneapolis Grain Exchange’s tiger shrimp contract, and many others. Some have been phased out or revised as the underlying markets changed. For example, the CME started with eggs and butter. Eggs haven’t been traded for decades in large part because the industry transitioned from separate growers and processors into mostly vertically integrated processors, resulting in a loss of liquidity from a two-sided market.

“As the world continues to evolve and commodities become more specialized, correlations deteriorate and cross hedges stop working,” Mr. Sullivan said. “With this specialization comes basis risk. That means that the futures contract that may have previously been correlated to your commodity has now broken down, thus introducing more risk. Live cattle futures versus beef prices is a very recent and perfect example of this problem as COVID disconnected the price of slaughter cattle from the price of meat in the grocer case.”

Stable’s risk management tool is referred to as commodity price insurance. It involves hosting third-party prices (called indexes) that are vetted by Stable analysts and making individual contracts seen as commodity price insurance. The process involves the user selecting the index that best matches their needs, choosing a call spread if the concern is a price increase or a put spread if the concern is a price decrease, customizing the strike price, setting a price limit and the time period to protect. Stable and the customer agree on the price protection, and Stable offsets the risk with A-rated counterparties (insurance). Upon expiration, the contract is settled. It has some aspects of trading options on futures, but it includes non-exchange traded commodities and carries the insurance protection.

Another source at a major grain company expressed concern about the direction futures markets have been heading for some time.

“I personally do not think the day-to-day market is a good risk management tool,” he said. “Is today’s close an accurate value of world grain? Maybe, considering COVID reducing food and fuel demand, threat of Ukraine war increase inflation and recession concern. Funds are trading headlines and momentum, not cash fundamentals. Some would argue the CBOT is catering to funds at the expense of commercials and farmers.”

And he doesn’t expect that situation to get better in the future.

“More of the same,” he said. “Can’t change a large rock that is moving straight downhill.”

Explosive growth

tures and their related derivatives has grown exponentially, suggesting in part that they are working.

“The futures markets, although more volatile recently, have worked quite well,” Mr. Kristufek said. “Ask anyone that took advantage of the price declines due to COVID lockdowns or a forward thinking flour buyer that saw the value in wheat at $5.30 to $5.50, along with its upside potential to $8 that used the futures markets to extend coverage further than normal and avoided many headaches and lock in margins. Without the futures market, many of these long-term opportunities are not available. Used properly, the futures markets can help save companies that would have gone belly up to rising input costs. The futures provide price transparency and solve a huge problem no one talks about — default risk.”

Mr. Kristufek agreed that funds have added difficulty, “as trends can be pushed beyond what he market may think is fundamental value.”

Worldwide exchange-traded derivative volume in May totaled 6,305 million contracts, up 8% from April, up 39% from May 2021 and the second highest month on record, according to the Futures Industry Association, a global trade organization for the futures, options and centrally-cleared derivatives markets. January-May volume totaled 31,273 million contracts, up 31% from the same period in 2021, with most of the increase in equity index contracts. Of the January-May futures and options traded, 72% were equity related (55% equity indexes and 17% individual equities), 9% were currencies, 7% were interest rates, about 3% were energy, about 2% were non-precious metals, about 1% were precious metals and about 3% were other. Agricultural futures and options made up just over 3% of the total. While volume on equity indexes soared 76% from a year ago during the January-May period, agricultural volume declined 20% while prices of many commodities soared to multi-year or even record highs. The Asia-Pacific region accounted for the largest geographic area of trading during January-May with 56% of the total, followed by North America with 23%, Latin America with 11%, Europe with 7% and other areas with about 3%. CME Group ranked second by volume in 2020 followed by B3. In 2021, B3 passed the CME Group for second place.

For all of 2021, exchanges in the Asia Pacific region traded a total volume of 30.55 billion contracts, up 52% from 2020 and nearly double the North American volume of 15.38 billion contracts, followed by Latin America with 8.89 billion contracts and Europe with 5.45 billion contracts.

The National Stock Exchange of India remains the largest market by volume with 17.26 billion contracts in 2021, followed by Brazil’s B3 with 8.76 billion contracts, the CME Group with 4.94 billion contracts, the Intercontinental Exchange with 3.32 billion contracts and Nasdaq with 3.29 billion contracts, according to the FIA.

The exchanges constantly are looking for new contracts and new types of contracts to entice traders and boost earnings.

The CME Group in late June said it will introduce “event contracts” on Sept. 19, aimed at the non-professional trader.

“Designed especially for the retail audience, these contracts will allow individuals to trade their views on daily up or down price moves in some of the world’s most widely quoted benchmark futures markets, beginning with E-mini S&P, E-mini Nasdaq 100, E-mini Dow Jones Industrial Average, E-mini Russell 200, crude oil, natural gas, gold silver, copper and Euro FX,” the CME said. “These new daily options contracts will offer short-term trading opportunities for individuals seeking to take a position on daily price moves and will allow participants to know their maximum profit or loss when entering a trade. Each event contract is valued up to $20 per contract.” No agricultural contracts are included.

The CME Group event contracts appear to be one of the first moves by an exchange into the “retail” market, one that largely is untapped currently. Participants still will need to open an account with a brokerage firm that supports event contracts, and fees will be involved. While the risk or gain per trade is limited and spelled out for the participant, a total of 250 contracts can be traded in a single order, so gains or losses could be significant.

“I feel the commodity markets are functioning fairly well,” said Robert Bresnahan, president of Trilateral, Inc., Chicago. “The problem is extreme volatility. That has been brought about by the computerization of trading; 70% to 80% of trades are thought to be done by computers without human intervention.

“Going forward, end users will have to adapt to the money flows of commodity funds, similarly to how commercial firms adjusted to the first commodity funds in the early 1980s. I see end users/hedgers moving more quickly toward utilizing options or option strategies to protect themselves from extreme volatility. Bottom line, the personality of commodity markets hasn’t changed, it’s just the amount of money and size of the players have grown larger.”

With change also comes risk. Mr. Kristufek said he doesn’t expect major structural changes in futures markets any time soon. He noted that financial regulation tends to occur in waves depending on the mood of the people, and one should be aware that could happen. “But nothing I see on the horizon.”

“Changing one or two elements in a complex, multi-faceted system often leads to unintended consequences,” Mr. Kristufek said.

“A buyer’s job has become more difficult,” Mr. Kristufek said. “They need to educate themselves on the language of the markets, including fund positions. Those that will, most likely will prosper. Those that do not, will find it increasingly difficult to understand price moves. The best thing to change is that market participants, especially commodity buyers, become more educated on how financial markets work and empower themselves with the knowledge and know-how to navigate it better. One big reason financial markets are so dynamic is that many participants have little knowledge and no value system for the product they are trading when entering a market.  Without knowledge or values, you are prone to act with the herd. Commodity buyers have a competitive advantage because they need to use their product (versus pure speculation); thus, they have a value system. If they buy too high, at least they can take delivery and use it, then average down. A speculator has to liquidate and take loss. A buyer also knows what price works for his/her company. This value system should help them make better decisions and avoid the herd.”

No one can predict where trading will be 100 years from now, or even 50 years from now. Even at the turn of the century, few if any in the year 2000 foresaw markets where they are at today with Asia and Latin America displacing North America (mainly Chicago) as the largest derivatives markets. Is the future in retail? Is it in creatively finding ways to mitigate risk outside of derivative markets for the vast number of non-exchange traded products? Or more likely, is it something no one has even thought of yet?

The Chicago Mercantile Exchange was founded in 1898 with early contracts on butter and eggs, later adding livestock and meat.

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Wheat futures markets vastly different from 100 years ago

Commodity exchanges that trade wheat futures and options nearly are unrecognizable from 50 years ago, not to mention a century ago.

Early markets typically developed trading of wheat and other commodities grown within a geographic region nearest the city or exchange: soft red winter wheat grown in the eastern and Central states traded in Chicago, hard red winter wheat grown mainly in the Southern Plains traded in Kansas City, hard red spring wheat grown mainly in the Upper Midwest traded in Minneapolis, Canadian spring wheat grown in the Prairie Provinces traded in Winnipeg, European milling wheat traded in Paris, etc. In the earliest markets, the physical commodity was traded between farmers and millers or other users. When futures contracts were created in the second half of the 19th century, the exchanges developed trading floors, or pits, that allowed for open outcry trading between buyers and sellers, including floor traders who provided much-needed liquidity.

Early exchanges were called the Chamber of Commerce in some cities (Kansas City and Minneapolis) because of their importance to regional commerce, but names later were changed because of confusion with the Chamber of Commerce business organization. While each exchange set the benchmark for its specific type of wheat, volume on the Chicago Board of Trade eclipsed the other exchanges, drawing away much needed liquidity to keep trading floors viable.

The commodity stayed the same, but the advent of electronic trading changed everything about the trading process.

Trading floors or pits no longer were needed as buyers and sellers were matched on electronic trading platforms, such as the Chicago Mercantile Exchange’s Globex System and the Chicago Board of Trade’s e-cbot platform. The liquidity-starved smaller exchanges now had a way to maintain the integrity of their specific type of wheat while gaining the liquidity of a much broader trading universe if they participated in the larger exchanges’ electronic platforms.

The Winnipeg Commodity Exchange was the first North American market to go fully electronic on the Intercontinental Exchange (ICE) in 2007. The Kansas City Board of trade first was listed on the CBOT’s e-cbot system in 2004 and transitioned to the CME’s Globex platform in 2007 with the merger of the CME and the CBOT. The Minneapolis Grain Exchange was acquired by Miami International Holdings, Inc., in 2020 and trades on that platform. Matif now is part of Euronext.

The era of open outcry grain trading in North America ended when the CME Group permanently closed most of its physical trading pits in 2021.

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Leveraging news: The Food Business News story

By Laurie Gorton

July 5, 2022

Leveraging news -
The Food Business News story

Business intelligence and market analysis address the needs of readers throughout the food processing industry.

Food Business News

Intelligence is among the most basic needs of a business — information about its industry, competitors, suppliers, customers, innovations and consumer trends — plus, of course, analysis of how each impacts an individual business. That’s the assignment Sosland Publishing gave to Food Business News.

“The goal of Food Business News is to keep its readers fully abreast of developments within the food industry that will determine the well-being of their businesses,” wrote the magazine’s founding editorial team, Morton Sosland, editor-in-chief; Josh Sosland, editor; and Keith Nunes, executive editor, in comments opening its first issue, March 8, 2005.

When Sosland Publishing created Food Business News, the company did something extraordinary in the business-to-business publishing world. It took its flagship grain-based news magazine, Milling & Baking News, and reduced its weekly publishing frequency by half. Then it created a new title with broad circulation across the entire food industry to slide into those alternate weeks. It extended the expertise of its editors, reporters and market specialists into broader coverage areas but kept the continuity of a weekly schedule.

“We decided to be about the business of food and beverage product development,” Mr. Nunes, now editor of Food Business News, said. “The competing magazines deal with processing methods and science, respectively, but we deal with the business — the strategies, the supply chain and the products.”

A risk that paid off

Within two years of its founding, Food Business News vied for the No. 2 spot among the six magazines that then comprised the market. Today, 17 years later, it is clearly the leader. Counting its print and digital editions, e-newsletters, page views and pass-along circulation, Sosland Publishing claims more than 2.2 million average monthly opportunities for advertisers to reach customers.

“After the first two years with Food Business News, we never looked back,” said Bruce Webster, associate publisher. “We became the leaders, certainly in competitive terms. The food trade press went from a six-horse race to maybe three titles.”

What prompted Sosland Publishing to launch Food Business News?

As its editors explained in their opening editorial, two powerful currents combined to create the new title: “One is the realization by the publishers of Milling & Baking News that its coverage of the grain-based foods industry has gradually stretched beyond the once narrow confines of wheat markets, flour milling and baking. (Its) readership has likewise expanded to include executives who were once not even considered likely subscribers.”

The company’s Purchasing Seminar, too, showed the same trends: more attendees from the food industry and more topics beyond bakery commodities.

From a revenue standpoint, suppliers to the $900 billion food processing market offered Sosland’s sales staff opportunities to court advertisers who had never been in the pages of the company’s magazines before.

Mark Sabo, then president of Sosland Publishing, had these facts in mind when he called a strategic planning session in the early 2000s.

“Mark drove this process, and Food Business News was the result,” Josh Sosland, editor of Milling & Baking News said.

Until then, Sosland Publishing had no product to attract the massive ingredient advertising segment, said Dave DePaul, associate publisher, Food Business News.

“Thus, we positioned Food Business News as an R&D, marketing and management reach that offered timely industry news, new product and new ingredient technologies to attract those ingredient advertisers,” he said. “At the time, all other ingredient-oriented magazines were monthly, and digital products were not as prevalent as they are today. There were new product books but none that presented timely content to the ingredient buying teams. Our audience gained momentum very quickly.”

Mr. DePaul, who joined Sosland Publishing at about the same time, had previously served as the associate publisher for a competitor magazine also in the food processing space.

“He gave us immediate credibility and controlled a huge portion of that business,” said Mike Gude, publisher of Food Business News, Milling & Baking News and Baking & Snack. “He helped jumpstart our foray into food ingredients.”

Managers also studied how potential readers might view such a publication, particularly its frequency.

Mr. Webster added, “When you look at how Food Business News and Milling & Baking News work internally, we are still publishing a weekly but covering two markets, one being grain, milling and baking, and the other being the food processing industry. And when we discussed the concept with important ingredient advertisers, they loved it and supported the magazine from day one.”

Mission oriented

Food Business News is described as the food and beverage industry’s source for the latest news, trends and innovations. The platform covers the entire food and beverage supply chain, from markets and product development to manufacturing, distribution and consumer trends. Food Business News’ content targets the needs of industry executives in corporate management, general management, R&D, purchasing and marketing.

“That mission has stayed the same over our 17 years,” Mr. Nunes said. “The magazine’s strength is its commitment to news and ingredients, especially as they affect new product development.”

The magazine’s focus on news and markets is now well understood by reader and advertiser alike, Mr. Gude said.

“We are unique in our coverage in that we publish twice a month and, most importantly, in that our editorial team understands the industry well and is adept in both print and digital mediums,” he said. “No other publishing title can offer those qualities.”

Mr. Nunes noted, “We are primarily a news service for the food industry — news of companies, news of ingredients, news of commodities, news of supply chain conditions.”

That information flows into Food Business News and its daily e-newsletters and weekly Strategic Insights e-newsletter; the Food Entrepreneur supplement along with its e-newsletter and Food Entrepreneur Experience interactive events; the New Food Insider new product e-newsletter; the Food Business News website; the Sosland Morning Briefing e-newsletter; and the Purchasing Seminar and Trends and Innovations Seminar.

Readers have always self-selected their preferred media channels, and this trend is reflected in how Food Business News readers interact with the magazine and its many channels.

“I measure reader engagement by web metrics,” Mr. Nunes said. “With the internet numbers, we can gauge engagement. It is much broader today than when we started up. It involves more people and more job titles throughout the food industry’s supply chain. And we’re getting significant participation from overseas, from Europe and Asia.”

Another way to describe the acceptance of the magazine’s print and digital acceptance from readers and advertisers alike is, as Mr. Webster put it, “The barrier to entry by competitors is just too high.”

Food industry trends

The Sosland Centennial marks not only 100 years in business for the company but also a century of change affecting its audience. The period witnessed huge advances in food safety and food regulation. For most Americans, fresh and processed foods are plentiful, yet food insecurity remains a problem for some populations.

Enrichment of grain-based foods, a key advancement of modern nutrition, had a controversial start in the waning days of World War II. With the addition of folic acid 20 years ago, enrichment continues to do its good work and has been so reported by the Sosland newsweeklies. Even so, attention continues to focus on food’s problematic role in obesity and related health and nutrition matters.

Food processing has always have been marked by emerging trends, with plant based being the most recent. And debate still rages over natural vs. processed and genetically modified vs. non-GMO. The revolution underway in retailing continues, especially during pandemic. And globalization, now more than ever, affects the food processing industry’s supply chain.

From a subject matter standpoint, “the pandemic has meant more eating at home and less at foodservice,” Mr. Nunes said. “Global warming is seen through reports on renewable agriculture and sustainable sourcing.”

Global commodity markets became unstable during the Great Recession of 2008–10, Mr. Nunes said.

“Now, during the past few years, commodity markets have again become less predictable with greater price swings,” he said.

“Everything happens so much more quickly today,” Mr. Webster observed. “For example, plant-based proteins are leaping off the charts right now, and a major miller is advertising carbon-neutral flour.”

The benefits of experience

From the start, Food Business News had the advantage of experienced editors and sales staff. Born of Milling & Baking News, the new biweekly could tap Morton Sosland and Josh Sosland for its top editorial positions. Mr. Nunes, then editor of Meat+Poultry, joined as executive editor.

The new publication’s approach emphasizing news, markets and news-oriented features worked well, Mr. Nunes said.

“Josh and the Milling & Baking News staff had expertise in market coverage, bakery and grain-based foods, and I was knowledgeable about dairy, meat and poultry matters,” Mr. Nunes said.

They recruited Donna Berry, a contributing editor with expertise in dairy and ingredients. From that base, the magazine was able to fill in the other industry segments — confectionery, frozen foods, produce and so forth.

For several years, Eric Schroeder, managing editor, Milling & Baking News, acted as the new magazine’s managing editor and later executive editor. Today, Monica Watrous is managing editor.

“I am not aware of any other magazines that use a shared staff quite like Food Business News and Milling & Baking News,” Mr. Schroeder said. “The adaptability of our staff really sets us apart, and I’m always impressed by our editors’ ability to seamlessly transition from milling and baking coverage to coverage of the broader food and beverage categories on a weekly basis.

“Many publications have ‘beats’ that writers are assigned to cover. That’s just not how we operate. Our editors are expected to have a broad skill set, and I think that shows up in the quality of the product.”

Food Business News was built on the Milling & Baking News model of providing its readers accurate, timely and vital information but with important differences, said Josh Sosland.

“The new publication’s approach to this mission grew almost from the outset,” he said. “The vast scope of its coverage created challenges and, at the same time, was liberating. Because attaining the intimate, granular involvement in all the segments of the food and beverage industries would be impossible to do along the lines of the Milling & Baking News model, Food Business News is able to devote greater resources to coverage of macro issues — the major trends driving the food and beverage businesses and the explosive growth of entrepreneurship in food and beverages.”

Essential market reporting

Nowhere in Food Business News does expertise matter more than in commodity market reporting. Among the most volatile costs a food processor faces are those of its ingredients. While weather factors into harvest and yield, geopolitics plays an even bigger role in availability and supply chain.

“Market reporting gives the magazine a core focus on ingredients that is directly related to product development,” Mr. Nunes said.

Josh Sosland, who started his career at the company as a market reporter, explained further.

“Market reporting helps ground the content in each week’s issue with in-depth updates about an important driver of industry profitability,” he said. “Because their profit margins historically have been wider than is the case for baking companies, large CPG (consumer packaged goods) businesses in the past were not as interested in keeping up with ingredient market trends. But over the last 10 to 15 years, they have sharpened their focus on costs because of flattening top-line growth. The attention paid to commodity prices has heightened considerably. The timing of Food Business News’ entry into the market was ideal.”

In the scope of its subject matter, Food Business News reports on the topics of trends and technology, as do its competitors.

“But we differ by covering company strategy,” Mr. Nunes said. “We report how corporate strategies affect product development and how they apply to the supply chain.”

Digital mastery

“We have built a loyal audience in the past 17 years and found that Food Business News content plays well on the internet as well as in print,” Mr. Gude said. “We deliver content in the form that our readers choose: print, digital, mobile, etc.”


At the time Food Business News was introduced, there was nothing like it in terms of timeliness and editorial position, said Mr. DePaul.


“Fast forward to today, and our content is still timely, but as all industrial food publishers have transitioned from print to digital, the timeliness position has become less of a differentiation,” he said. “All our titles are now in the webinar, e-newsletter, eblast, run of site and podcast business.”


The magazine observes no print/digital divide. Food Business News takes an omnichannel approach to its mission, employing print and digital as well as virtual and in-person events and nearly everything in-between. It was the first title launched by Sosland Publishing after the company established its presence on the internet. Because digital is still relatively new to the trade marketplace, Sosland Publishing counsels its advertising customers on how best to reach their audiences.


“It is our role to help our marketing partners be most effective in their marketing campaigns,” said Meyer Sosland, chief operating officer of Sosland Publishing.
Sosland Publishing’s digital expertise proved to be a boon to Food Business News.


“Even as we created new digital offerings, we maintained our print revenue,” Mr. DePaul said. “Early on, we benefited from the print-to-digital shift as we expanded our creation of complementary digital products. The combination of print and digital mediums reinforced the already timely and strong content of the title.”


More generally, he observed, “the percentage of print to digital has been changing drastically over the years, which lends itself to many challenges, short term and especially long term. I tell my customers that ‘content is king,’ and however our readers — their customers — want to read our timely and important content, they have many options with Food Business News and Sosland.”

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The entrepreneurial difference

A growing number of startups entered the food and beverage marketplace in the past decade, triggering profound change across the industry. Created for executives interested in new concepts and the people who develop them, Food Entrepreneur offers insights into the disruption effected by up-and-coming brands while profiling the industry’s most successful and intriguing founders.

Food Entrepreneur debuted Jan. 7, 2020, as a supplement to Food Business News. Its content is the responsibility of Monica Watrous, managing editor, Food Business News. Its reports are posted on the website foodbusinessnews.net.

“For nearly 20 years, Food Business News has offered readers comprehensive and authoritative coverage of a rapidly changing food and beverage industry,” Ms. Watrous said. “The launch of Food Entrepreneur represents a sharper focus on the most exciting and consequential force in the sector today, offering the unparalleled reporting and analysis of developments critical for food industry executives to understand.”

Josh Sosland, president of Sosland Publishing Co., observed, “Food Entrepreneur was an organic expansion from Food Business News, based on what we saw as amazing reader response to Monica’s success in tapping into the entrepreneurial community. Her writing has attracted a following within the ecosystem of those starting up food businesses, but the reason we believe it will be financially successful is that the existing CPG industry is so keenly interested in quality content about food entrepreneurship.”

Food Entrepreneur’s content targets the many startups now entering the food and beverage marketplace. Food Entrepreneur highlights the innovation emerging from early-stage brands, while offering an inside look at the fundamentals of launching and scaling a food business.

“The people involved are not only the managers downsized by larger companies and looking for new opportunities but also a growing cohort in their 20s and 30s who are taking on roles that combined the C-suite with purchasing, processing and R&D,” said Keith Nunes, editor, Food Business News. “Through Food Entrepreneur, they can engage with their peers.”

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Dedicated to dairy

By Laurie Gorton

May/June 2022

the bake
story

This innovative publishing platform now observantly reports about the changing face of retail baking.

Dairy Processing

At less than two years old, Dairy Processing has already made real achievements, according to L. Joshua Sosland, president of Sosland Publishing Co. and editor of Milling & Baking News.

The magazine debuted in April 2021 as a quarterly and moved to a bimonthly schedule in 2022. It has a dedicated website, www.dairyprocessing.com, and a variety of digital products. The magazine reaches more than 12,000 decision makers in print and over 20,000 digitally throughout the US and Canada.

“Simply put, Dairy Processing intends to be the ‘go to’ source for news and information that will help dairy companies make better products and bring them to market safely and cost-efficiently,” said Matt O’Shea, its publisher.

The company had long considered adding a publication addressing dairy processors, the second-largest segment of the food industry (second only to meat processing). For many years, just one magazine served that market, and in 2020, it and the rest of that publisher’s portfolio went digital only. No print editions.

“That opened the door for us,” said Charlie Sosland, chairman and chief executive officer of Sosland Publishing Co. “Matt had been a publisher with a dairy magazine before he joined us, and he kept getting calls from his previous accounts suggesting that we step into the field.”

The value of print in the business-to-business market is well understood by suppliers to the dairy industry. “We saw a big point of difference and a big opportunity,” O’Shea said.

The dairy industry, like all food processing businesses, is going through rapid transformation in terms of consumer behavior, regulatory shifts, environmental concerns, workforce challenges and the introduction of new technologies.

“Dairy Processing’s mission is to bring timely news and insights to key people in the industry as that happens,” said Kristen Putch, its managing editor. “We want to tell the stories that matter to our audience, highlight innovation and provide useful information to those key decision makers.”

The magazine recruited a longtime Sosland contributing editor, Donna Berry, to write for Dairy Processing. It also brought in Pamela Accetta Smith, the former editor of a competitive dairy magazine, as a contributing editor.

The magazine takes a processor-centric approach in its editorial content. Cover stories feature major processors and have included Dairy Farmers of America, Stonyfield Organic, Bel Brands USA and Tillamook County Creamery Association.
“I don’t see any other dairy media brand delivering those stories,” O’Shea said. “People, products and companies drive readership. We’ll continue to write about innovative and successful dairy processors.”

For example, Dairy Processing embraces milk alternatives, a controversial subject treated gingerly by other dairy publications.

“Most of the plant-based ‘milks’ are actually being done by dairies,” Berry said. “You read a lot about the decline in fluid milk, but the dairy business is doing very well as it embraces milk alternatives. Dairy Processing covers milk alternatives, the plant-based dairy alternatives, as a main subject. We don’t shy away from the topic. The people who produce these items use the same type of equipment as conventional dairy products.”

The magazine has been well accepted, and the feedback that editors and publishers have received has been wholly positive. But even the careful planning for the new magazine could not anticipate a pandemic taking place in the middle of its launch.
“Starting a print magazine in today’s media environment in the midst of a pandemic is an accomplishment in and of itself,” O’Shea said. “We ended 2021 in a very good place … we have very positive momentum moving forward.”

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