China raising the quality bar
Asian food manufacturers do not understand that wheat is a product of nature and has natural variations; they demand high-quality flour with the same baking characteristics every time, whether for biscuits, noodles or Western-style breads. This was the blunt message delivered at the AWB/GRDC Industry Forum from the third-largest flour miller in China, the Lam Soon company, which has annual sales of more than 250,000 tonnes and double-digit annual growth.
This said, the company"s general manager of technical operations, Grant Lutz, said that Australian wheat growers are well placed to benefit from this growth. Lam Soon produces more than 130 flour types and wants to expand its business in the high-end segment: the Western-style breads and noodles.
Australian wheats are well able to meet this market through varietal improvements, he said: "And I don"t think the lowend segment is where Australian wheat wants to be."
However, Mr Lutz said Australian wheat breeders need to do what they can to ensure consistency from year to year. "We are grouping wheats for application - different wheats for different applications, according to the functional requirements of the customers," he said. He also said Australian producers could gain the edge over aggressive Canadian and US rivals by focusing on growing highprotein white wheats with bright colour and low ash content.
"The US is putting a lot of emphasis on white wheats with low ash content and the amount of effort they are putting in shows they are looking to the future by increasing protein levels and improving colour," he said. "There needs to be progress on developing wheat for noodle use, particularly in colour stability and consistent results. Segregation (of varieties) is very, very important.
"Australian Prime Hard (APH) is usually chosen for making bread, but often fails to meet the criteria of bakers. You need to increase protein levels and protein strength qualities, such as farionograph stability and extensograph area. We are looking for protein levels above 14.5 per cent," Mr Lutz explained. At the same time, the company is enjoying improved qualities in local Chinese grain. Mr Lutz said that even though there is less land available for graingrowing in China, the local industry has come a long way in the past five years. "We can now buy variety-specific wheat and it is available at a 10 per cent premium. For the past four years we"ve been contract farming by going to a grain research institute which coordinates a group of farmers and gives them the variety they should be planting. In China, there should be some great leaps forward in the next five years and the AWB might have some competition."
Lam Soon plans to use 3000 tonnes of APH a month this year because it is competitively priced and the quality is high. "We will use Australian hard wheat as long as protein levels of at least 11 per cent can be provided and the price is right," Mr Lutz said.
However, he said that Australian Standard White (ASW) is failing to meet many of the customer demands in China, where soft wheats are sought for steam breads and cakes. "We spend a lot of time searching for local soft wheat; we are looking for the right qualities such as good water absorption and a protein level between 9.3 and 9.7 per cent."
Lam Soon originated in Hong Kong, where it built Hong Kong"s first flour mill in 1954. Most of its production is now done in China, where it processes 1900 tonnes a day. "However, we still only have a market share of 0.6 per cent [of Chinese flour consumption] and the largest flour miller in China has a market share of 2.3 per cent. I can honestly say there is a lot of room for growth," Mr Lutz said.
China has more than 8000 flour mills, but the number is changing quickly as the industry undergoes massive consolidation, with smaller mills closing down or amalgamating. More than 70 million tonnes of flour is consumed in China a year. "It is very competitive and very tight. End users demand that quality requirements are met, across diverse applications. Colour and texture are everything."
Lam Soon holds five per cent of the premium market, but is aiming for a 10 per cent market share by concentrating on growing business in Hong Kong, southern China around Shanghai, and around Beijing.
For the premium Western-style bread market, Chinese flour millers choose Canadian Western Red Spring (CWRS), Dark Northern Spring (DNS), China Hard Wheat (CHW) or APH (with protein higher than 14 per cent). For the middle or low end of the bread market, all flour is made from Chinese varieties of lower protein.
For the high end of the noodle and dumpling market, APH and ASW (with 9.5 to 10.5 per cent protein) are purchased along with CHW, Soft White from the US, CWRS and DNS, with Chinese varieties again filling the medium and low end of the market.
"Gluten quality and quantity is the most important factor that will influence the texture and eating quality of the noodle or dumpling," Mr Lutz said. "On the other hand, the southern-style steam breads need a low gluten content and a wheat protein of between 9.3 and 9.7 per cent and to be a creamy white colour."
He explained that for millers, the most important characteristics of the grain are colour and ash content.
"This is followed by the moisture level, the amount of foreign material present and the shape, size and density of the wheat kernels. Our customers also want flours that perform to national standards of food safety. Our company does not have anything for or against GMOs (genetically-modified organisms), but our customers are scared silly about them. Nobody wants GMOs in our market."