Management team: Elmar Nau and Lee of Interflour with some of the company’s products.
WHEN Malayan Flour opened the nation’s first mill in Lumut in 1966, the event was officiated by the then-Prime Minister, the late Tunku Abdul Rahman. During the opening speech, former Commerce and Industry Minister, the late Dr Lim Swee Aun, called it the pride of the nation. Such was the grandeur commanded by the flour industry.
During a recent interview, Interflour Holdings Malaysia chief executive officer Alex Lee talked about the flour industry in Malaysia in the early 1970s.
“There were only three major players back then. One was Malayan Flour in Lumut and another was Federal Flour Port Klang. The third was United Malayan in Seberang Prai, which mainly produced flour for its own biscuit brand, Khong Guan,” he said.
Consumption then was relatively small, at about 260,000 tonnes per year. Choices were also limited as millers mainly produced three types of flour — high, medium or low protein — and flour was sold on a cash basis only.
Flour was packed in 50lb (22.68kg) calico sacks priced at RM7.25 per unit. The empty calico bags were recycled into cleaning rags and some creative entrepreneurs also turned them into shorts, aprons, shirts, pants and caps.
There was also limited technical service for the flour users.
Loading up: A view from the skybridge showing how wheat is offloaded from a ship (right) and sent to the mill through a connecting tube.
“Back then, if the baker couldn’t produce a good product, he often had to solve the problem by himself,” Lee reminisced.
Today, the market scenario has changed dramatically.
For one, credit terms of 30 to 45 days are extended to customers.
Also, as of 2013, there are no less than 14 flour mills in the country importing some 1.5 million tonnes of wheat yearly. Nationwide, Malaysians now consume 960,000 tonnes of wheat flour per year.
From this figure, 270,000 tonnes for the consumer flour industries will come from Interflour Malaysia. As one of the largest flour millers in South-East Asia, the company’s four mills have a production capacity of 1,800 tonnes of wheat per day.
Currently, the company reports it holds about 28% of the national market share. A new mill expansion in Pasir Gudang, Johor, sitting on 2.8ha of industrial land with completion expected sometime in the first half of 2015, will increase the production capacity by 500 tonnes per day.
Bakers can also rely on flour mills to custom-make products according to usage. It is now possible to dictate the percentage levels of protein quality, mineral content and water absorption to suit the different requirements for bread, noodles, biscuits, cakes, buns or Danish pastries. In general, price levels will ascend in tandem with protein levels. Selling prices now range between RM40 to RM64 per 25kg bag.
Continuity: To ensure continuous supply, Interflour uses a network of silos to store the wheat.
To cater to all the permutations, today’s supermarket shelves may carry 40 to 50 varieties of flour catering to everything from wanton noodles and yellow mee to curry puffs, batter and even roti canai flour.
A glimpse into the testing methods show how tins of bread dough are dropped, stretched and filled with air to test the strength of the flour protein structure obtained from different kinds of wheat.
“If the dough sinks after the tin is dropped, it generally shows a ‘weak’ flour and we immediately adjust the wheat recipe to ensure consistent and correct flour quality,” revealed Prestasi quality assurance manager Grace Chang.
At the moment, Interflour’s proudest innovation is their roti canai mix, which took the technical team a year to work out. Developed two years ago, the formula only requires the addition of water and approximately three hours of resting time.
Inklings of popular acceptance were already known at the onset as studies have reported that 70,000 tonnes of flour is used to make roti canai each month. This is a direct reflection of how Malaysians can chow down an equivalent to 126 million pieces of roti canai within 30 days.
In a business that relies completely on imported wheat as a raw material, the continuity of supply is a crucial factor. At the Prestasi plant 14 silos, all about nine-storeys tall, hold about 60,000 tonnes of wheat imported from Australia, Europe, Canada and the US.
“A mill can never run out of wheat. Do that and you lose your clients’ confidence,” asserted Lee, whose company supplies major food institutions.
Close watch: Production manager Ravichandran Somaloo and senior miller Loo Wai Chee checking on the production process.
For this reason, a procurement team in Singapore is exclusively designated to guarantee supply never runs out.
“When it comes to buying wheat, it is not just a matter of price. We have to know where it comes from. For example, customers will say ‘no’ to genetically modified (GMO) wheat so we have to buy accordingly and ensure 100% traceability from our silo back to the farmers’ wheat field.
“There is also the issue of weather. In times of drought or flooding, for example, prices will escalate due to supply concerns. To manage that risk, our group procurement team is constantly analysing market and weather information. For big customers who buy forward, the team is advised to lock in the wheat so flour supply will not be affected,” revealed Lee.
As wheat is shipped, contingency plans are always in place in case a vessel is delayed or sinks. In that event, Interflour Group has the strength to transfer wheat from its sister mills, located in Indonesia, Vietnam and Turkey.
According to Lee, there are basically three sets of working capital involved in the milling industry.
One is the upfront payment for the wheat. Another is the period of storage in the silos which must be kept at a par stock of three times the mill usage. The third is in credit terms extended to customers. Only when payment is done will the deal be considered complete.
Based on the current delivered prices of US$350 to US$400(RM1120-1280) per tonne, the silos in the Prestasi mill may possibly be looking at a total capital investment of RM76,800,000 at any one time.
Lastly, comes the most important question of food safety and hygiene.
The main concern is avoiding any possibility of cross-contamination, for example in the accidental presence of metal in the product — which explains why a series of metal detectors are installed at critical control points.
“When we change a screw in the machinery, we are not as concerned to know if the new screw is already in place. More importantly, we want to know where the old screw is. We cannot have it ending up in the flour,” said Lee.
As most food manufacturers require the flour supply in bulk, deliveries are made with a fleet of 11 heavy duty stainless steel tanker trucks, with a loading capacity of 25 tonnes each, running around the clock.
In the 1980s, these tankers were made of mild steel and coated with food-grade epoxy. Due to wear and tear, bits of epoxy ended up in the flour and, though edible, spooked customers. For this reason, mild steel tankers were replaced many years ago.
Looking into the future, Lee reckoned the business has only one way to go — forward.
The only challenge now is in quality.
“Today’s customers are very exposed to new technology. They will come to the flour miller and say, ‘I want quality. You produce’. So, it is for us to meet these challenges. So far, we know we have been doing right as our pau and enriched wheat flours have won the grand gold medals in Monde Selection, an international quality label,” concluded Lee.
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