FMN, Olam, Dangote control 75% of flour milling industry

Flour Mills of Nigeria (FMN), Olam International and Dangote Flour Mills are Nigeria’s three biggest wheat flour millers, controlling 75 percent of the industry capacity, according to a 2016 KPMG report.

FMN is Nigeria’s biggest miller, with 32 percent capacity, while Olam International is second with 24 percent capacity. Similarly, Dangote Flour Mills has 19 percent capacity, making the firm third largest in the industry, according to the KPMG report entitled, ‘Wheat-based Consumer Foods in Nigeria’.

Firms that share the remaining 25 percent capacity in the industry include Charghoury Group (11 percent), Honeywell (10 percent) and others (four percent).

In terms of market size by revenue, FMN has 32 percent share, while others make up the remaining.

According to the United States Department of Agriculture (USDA), Nigeria is currently the thirteenth largest importer of wheat in the world, with the country bringing in the product worth $660 million annually.

Wheat consumption is estimated at 4.1 million metric tonnes (MT), while production is 60,000 MT.

Among BRICS, which includes Brazil, Russia, India and China, Nigeria is a laggard. Russia, which has exported much of its wheat to Nigeria, produces 61 million MT, while India and China have 86.5 million MT and 130.2 million MT respectively.

Nigerian millers often import wheat types such as Soft Red Winter, Hard Red Winter, Hard White and Durum Wheat.

“There is a need for public-private partnerships in storage improvement. There should be continuous and consistent research and development into the suitable varieties of wheat for Nigeria’s ecological condition,” the report suggests.

It stresses the need for improved and more effective supervision of on-going grants to ensure that disbursements are utilised for the intended purpose.

Flour millers were squeezed for much of 2016, owing to dollar crunch. Most millers resorted to the use of local cassava flour, while others scrambled for dollars at the parallel market at N480/$ to N510/$.

However, many of them have seen some respite with naira exchanging for about N360 on Central Bank of Nigeria (CBN) intervention.

Flour Mills is the largest and most diversified player in the sector, built around food, agro-allied and support services, with capacity utilisation estimated at 70 percent.

After take-over from Tiger Brands in December 2015, Dangote Flour Mills has bounced back, returning to profitability.

Its revenue for the year ended on Sept. 30, 2016, was N5.541 billion, compared with a loss of N12.7 billion in 2015. Revenue hit N78.107 billion naira against N48.026 billion in the corresponding period of 2015.

According to the KPMG report, Dangote is dominant in in the Northern region, while two marginal players, Valleumbra Flour Mill and Life Flour Mill have retained a share of the South East market.

Crown Flour Mills (CFM), a member of the Olam Group, has a five share of the South West market, through its

Mama Gold brand, as it primarily manufactures flour as an input for the group’s packaged foods subsidiaries.

After acquiring the wheat milling and pasta assets of BUA Group for $275 million, Olam has become the second largest flour producer in Nigeria in terms of capacity.

ODINAKA ANUDU