The competitiveness of the European flour milling sector

In Europe, a sector of mostly small and medium-sized enterprises

The European flour milling industry has always been producing on a relatively small scale compared to its counterparts, notably in the US. For ex., the average US flour mill produces 13 times as much wheat flour as the average flour mill in Europe.

With structural economic constraints

The European milling sector is facing:

  • acute pressure from 3rd countries (Turkey, Kazakhstan) on traditional wheat flour export markets
  • a structural overcapacity, as the sector is running in average at 65% of its capacity
  • a declining consumption of bread in most European countries

And higher regulatory compliance costs

The main input costs of flour production are the cost of agricultural raw materials and the cost of energy. Both costs tend to be higher in Europe than elsewhere in the world. Whilst the causes of these higher costs are partly economic, they are also linked to EU policy decisions and consumer attitudes (higher compliance costs in order to meet EU standards on e.g. labelling or contaminants and plant protection product residue max. levels, environmental and sustainability performance). These EU policy decisions may have been well intentioned. However they should not increase business uncertainty and production costs, and if they do, the cost they incur to EU millers, compared to their international competitors, must be recognised.

Flour should be excluded from market access negotiations

For all the above-mentioned reasons, we believe that the European Commission must guard against flour trade concessions that imply fundamental and irreversible damage to both the local European milling sector and the rural areas in which they operate.

In particular, the EU market must not be further opened to wheat flour from 3rd countries. In particular those supporting their milling sector with direct or indirect trade-distorting subsidies.