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17/07/2015

Siro and Mercadona searching durum wheat

Ricardo Migueláñez. Agricultural Engineer. @rmiguelanez

Spain needs more than one million tons of very strong wheat (800,000 tons are imported from the US and 200,000 tones from Canada, Germany and France), but we produce barely 200,000 tons despite it being a product that is increasingly popular among flourmills, cookie-makers and dough manufacturers. It's believed that this growing demand can be met with just some small adjustments in crop management, with respect to conventional wheat, paying special attention to the division of nitrogen fertilizer.

However, if it were really that easy for farmers and, in particular, for the members who deliver their grains in the cooperatives, production would have been adapted to meet the agri-food processing industry's demand some time ago (90% of the strong wheats consumed in Spain are imported), focusing solely on profitability.

Strong wheat has always been grown in Spain, and although there's a shortfall now, that wasn't always the case. The crop dwindled for a several reasons, such as the use of non-certified seeds and the slide in profitability due to the sharp increase in production costs compared with the sales price, which was partly offset by subsidies under the Common Agricultural Policy.

Premia for quality initially contributed to the growth of durum wheat, which received more subsidies than strong common wheat, until they were phased out in the previous reform. Poor planning and productive orientation, together with excessive planting, also led to the production of durum wheat that fell short in terms of quality and which, many times, had to be used for animal feed.

The possibilities for growth linked to demand for high-value wheat by the agri-food industry were analyzed at the AgroHorizonte 2020 conference, organized by the Castile-León government's Department of Agriculture and Livestock on February 24th, in Palencia.

This initiative was based on the creation of a Working Group on the high-value herb sector in Castile-León in March 2014. The group comprised farmers, represented by professional agricultural organizations and cooperatives (Urcacyl, ACOR and Agropal), fertilizer companies (Fertiberia), and representatives from the milling and processing sector (flour mills and companies such as Siro and Gullón), who drafted a background document to be discussed at the event.

Grupo Siro Chairman Juan Manuel González Serna was in the spotlight, speaking about "Leveraging quality wheats" and encouraging the productive sector to focus on durum wheat due to notable demand by the cookie sector as well as its profitability and productivity, and to reach agreements with all players in the different products' value chains "so that producers contact sellers with a view to maximizing profitability and savings, because gains can be shared when there are savings".

Grupo Siro Chairman Juan Manuel González Serna was in the spotlight, speaking about "Leveraging quality wheats" and encouraging the productive sector to focus on durum wheat due to notable demand by the cookie sector as well as its profitability and productivity, and to reach agreements with all players in the different products' value chains "so that producers contact sellers with a view to maximizing profitability and savings, because gains can be shared when there are savings".

Grupo Siro sells 88% of its production under the Hacendado brand as an exclusive supplier for Mercadona supermarkets, and the Chairman shared additional statistics for Grupo Siro in Spain. It is the second-largest producer of cookies, with 99,000 tons (23% of the market share in terms of volume is produced for Mercadona); the second-largest producer of dough, with 75,000 tons (33% market share); the leading manufacturer of sliced bread, with 90,000 tons (31% market share); the second-largest producer of cereals, with 20,000 tons (12.3%); the second-largest producer of pastries, with 86,000 tons (32%); the leading producer of cakes, with 4,600 tons (32%); and the third-largest producer of co-products, with 44,000 tons.

The company has factories in Aguilar de Campoo (Palencia), two in Venta de Baños (Palencia); the Grupo Siro Foundation in Cevico Navero (Palencia); in Briviesca (Burgos), Montblanc (Tarragona), Paterna (Valencia); Navarrés (Valencia); Madrid, Jaén, Antequera (Málaga), Medina del Campo (Valladolid) and Toro (Zamora), as well as an R&D and Innovation center in El Espinar (Segovia).

Revenues totaled 610 million euros in 2014, a 45 million euros increase (+8%) compared with 2013 and 200 million euros more (+50%) compared with 2010. Capital expenditure amounted to 34 million euros last year, compared with 46 million in 2013. EBITDA was 97 million euros in 2014, 10 million euros (+11.5%) more than in 2013, and the company had a staff of 4,065 in 2014, an increase of 210 with respect to 2013.

Revenues totaled 610 million euros in 2014, a 45 million euros increase (+8%) compared with 2013 and 200 million euros more (+50%) compared with 2010. Capital expenditure amounted to 34 million euros last year, compared with 46 million in 2013. EBITDA was 97 million euros in 2014, 10 million euros (+11.5%) more than in 2013, and the company had a staff of 4,065 in 2014, an increase of 210 with respect to 2013.

González Serna said in his presentation that the processing industry needs 340,000 tons, which would be produced from 80,000 hectares of wheat crops, with at least 240,000 hectares in crop rotation. Of that demand for wheat, 90,000 tons correspond to common wheat for cookies (27,000 hectares), another 125,000 tons are for strong common wheat (21,000 hectares under irrigation), and 125,000 tons are durum wheat (32,000 hectares).

According to MAGRAMA, in July 2014, 47.2% of Spanish land was used to grow common wheat (883,707 hectares) in Castile-León, with an output of 2.75 million tons (48.6% of the Spanish total) and an average yield of 3,100 kilos/hectare, compared with a national average of 3,020 kg/hectare. In contrast, barely 0.5% of Spanish land is used for growing durum wheat,1,596 hectares of which are in Burgos province (Castile-León), with production totaling 4,720 tons (0.6% of the total in Spain) and an average yield of 2,960 kg/ha, compared with a national average of 2,390 kg/ha.

However, considering average figures for the last five years (2010-2014), common wheat output improved by 7% in Castile-León, to 3,540 kg/hectare, while durum wheat output in Burgos province, where it's still grown, expanded by 30% in the same period, to an average of 3,030 kg/hectare.

Therefore, the question is: can output be improved further? According to González Serna, despite wheat improvement programs implemented by various public research institutions (ITACyL, IRTA, IFAPA, ITAP) and projects such as Tricalreg (high-quality common wheat from irrigated areas in Castile-León) in 2009, the truth is that today we produce a mix of varieties and we don't know where they go or what they're used for.

Broadly speaking, this shows that there are still some discrepancies between what's really grown and produced by farmers (and they'll have their reasons for doing it one way or another), what the various improvement programs being implemented call for and, of course, what the processing industry says should be grown and produced (and what it imports).

Caspopdona Program

Grupo Siro applies the Total Quality Model to every part of the agri-food chain, starting with the primary sector. That's the Caspopdona program (Sustainable Agri-Food Chain, Supplier 0, Supplier, Mercadona), which supports the use of raw materials from Spain and direct jobs through the promotion of agreements with all parts of the food chain.

According to its Chairman, this group pursues a sustainable model of grain production in Castile-León which can be replicated throughout Spain; promotes growing varieties of wheat which bring together farming and industrial interests, achieving the highest possible value for the "boss" (consumers); working with stability in the primary sector and eliminating the risks of a volatile market; and creating a scalable work model that adds value to every part of the chain.

To that end, efforts are under way to: 1) Work with the main seed companies (Limagrain, RAGT and Marisa), field test soft wheats, barleys, triticale, rye…, and practice seed multiplication, 2) Open up lines of research to recover durum wheat in Castile-León with two test sites for this grain in Vega and Páramo with eight varieties, 3) Collaborate with Fertiberia and ITACyL to study to optimization of fertilizer in strong and medium-strong wheats, 4) Contract and distribute seeds with farmers: 100 hectares (80 hectares of durum wheat and 20 hectares of strong common wheat), and 5) Promote agri-food research through the 1st Grupo Siro Foundation Award.

The goal for this long-term strategy is to be able to recommend various types of common and durum wheats which are suitable for the soil type and climate and meet the needs of the products being made; to study the costs of crops individually, by crop and by farm; and to choose the optimal crops in rotation, meeting market demand and profitability. In short, working with the farming industry in Castile-León and collaborating on growing strong common wheat and durum wheat (wheats that add value) to meet the company's needs, serve the market, reduce volatility and operate profitably.  

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