Gluten sensitivity’s impact on the milling industry

gluten freeTim Luginsland, Wells Fargo Sector Manager, Grains and Oilseeds with research data contribution from Chris Eggerman, Wells Fargo Sector Analyst, Grains and Oilseeds

I vividly recall entering the first grade. It was a big step up from kindergarten because it meant a full day of school and that meant eating lunch at school. At lunch each day, the entire class would walk single file through the lunch room collecting a tray filled with food, except for one boy named Tim. He brought his lunch every day because he said he was allergic to flour. While today, we know this condition to be labeled celiac, back then it sounded devastating and scary. Our lunches featured lasagna, pizza, sandwiches, hamburgers, and hot dogs, along with desserts of cookies, cake, and cobblers. Tim’s lunch pail always contained prepared meats, hard-boiled eggs, carrots, and an apple or banana.

Tim was born with an immune system that attacked the gluten protein, causing reactions such as nausea, diarrhea, anemia, and a host of other associated autoimmune issues. Throughout our school years, we all came to recognize and accept Tim’s condition. When we had ice cream cones, Tim ate only the ice cream and tossed the cone in the trash. At McDonald’s, he put French fries on his hamburger patty, and rolled it to make a taco since he couldn’t eat the bun. And, at his birthday party, it was always an ice cream birthday cake. Thinking back, Tim was eating the Atkins diet before the Atkins diet was even popular.

For the next 25 years, I never encountered anyone else who was celiac. When I recently read that it may be more common than I realized, I thought of Tim, and how he now may have more company.

When high-protein fad diets began, prompting the questions, “What is gluten?” and “What does it do to our bodies?” research studies followed hypothesizing how gluten may hinder the human digestive tract.

Has gluten sensitivity just become an issue?

Wheat has been a staple of the human diet for thousands of years and people have managed just fine. So, why is there so much intolerance all of a sudden? Theories are vast:

  • Gluten intolerance has always existed, but medical research recently proved it and named it
  • Only people of Western European descent experience gluten intolerance
  • Plant researchers have developed stronger gluten
  • Immune systems are not as strong as they used to be because kids don’t play outside much anymore

I have heard it all, but actual numbers give us the best indication of the reality. According to the Mayo clinic, celiac disease is an autoimmune disease that affects about 1% of the U.S. population, and many have not yet been diagnosed. There is currently no cure, and the only known treatment is the avoidance of foods made with wheat, rye, or barley. While nutritionists recommend a severe reduction in gluten intake for people with celiac and other autoimmune diseases and neurological disorders, some people have decided to reduce or eliminate gluten from their diet for other health-related reasons.

Gluten-free foods
A July 2015 Gallup poll showed that 21% of Americans actively try to include gluten-free foods in their diet. Packaged Facts, a market research firm, conducted a survey in 2016 in which consumers of gluten-free foods were asked about the reasons for purchasing and using these foods:

  • 30% of respondents believe that gluten-free products are generally healthier
  • 9% said a household member has been diagnosed with celiac disease
  • 15% cited a household member with an allergy, sensitivity, or intolerance to gluten, wheat, or other ingredients
  • 11% cited other health-related issues

Motivations for Purchase Use Gluten-free Foods

The increased adoption of a gluten-free diet has driven a significant rise in the number and availability of gluten-free products as well as the sales of those products, both at restaurants and retailers. According to DataSsential MenuTrends, the words “gluten free” appeared on 23.6% of U.S. restaurant menus in 2016. This was up from 15.0% in 2014, and was higher than the use of other words on menus such as “organic” (21.0%), “locally grown/raised” (14.2%), and “all-natural” (8.9%). On the retail side, Packaged Facts estimates that sales of gluten-free foods in the U.S. tripled between 2011 and 2014 from $464 million to $1.41 billion, and further grew to $1.66 billion in 2016.

US Retail Sales of Gluten-free Foods in Key Categories

Wheat flour consumption
USDA estimates that in 1970, per-capita consumption of wheat flour was around 110 pounds per year, but increased thereafter as concerns about cholesterol and heart disease led to dietary shifts from animal products toward grain-based foods. After topping 146 pounds in the late 1990s and again in 2000, wheat flour consumption declined due to public interest in reducing intake of carbohydrates. This coincided with the popularity of the Atkins high-protein, low carbohydrate diet. More recently, the larger demand for gluten-free foods has prevented flour usage from increasing, and may be contributing to a further decline. Per-capita flour consumption for 2016 is estimated at 132 pounds, down 10% from 2000. While this decline is roughly half as large as the percentage decline seen during the same period for per-capita consumption of potatoes, high in carbohydrates, it still represents a significant decline.

US Retail Sales of Gluten-free Foods in Key Categories

A new alternative?
Most grains are annual crops, meaning they have to be planted each year. However, the Washington Post reported last fall that researchers are developing a type of wheat called Kernza that is perennial, meaning it is like a grass that establishes a thick, deep root system from which plants regrow for many years. Advocates of perennial crops value the reduction in soil erosion, which can result from tillage of the land, and the reduced need for commercial fertilizer. Another feature of Kernza is that its seed contains less gluten than conventional types of wheat. Some manufacturers and retailers have already begun to incorporate Kernza. The Perennial, A San Francisco restaurant, uses Kernza wheat to make its bread, crackers, and ice cream; some Minneapolis restaurants are using Kernza in tortillas, muffins, and pasta, among other products; Patagonia Provisions offers a beer made from Kernza called Long Root Ale; and General Mills is currently evaluating Kernza for its manufactured food products. Because the low gluten content of Kernza creates a challenge for use in breads, Kernza’s future is believed to be in unleavened foods such as crackers, tortillas, cookies, and pasta.

Because the Kernza plant funnels much of its energy into its roots and leaves, the Kernza seed is only about one-fourth the size of the conventional wheat seed, and this presents another challenge. However, one geneticist has been able to double the size of the seed in only six years.

Industry impacts
With the increase in population mostly offset by lower per-capita usage, total U.S. flour production and usage have risen only modestly since 2000. The limited growth in flour consumption has caused consolidation in the U.S. wheat milling industry with some of the older, less efficient facilities being shut down. While food use still accounts for roughly 45% of the demand for U.S. wheat, acreage has been declining since the early 1980s because U.S. exports have declined as exports from other countries have increased, plus use of flour in food has not increased much during the past 15 years. The popularity of gluten-free foods may be here to stay, and if low-carb diets remain prevalent, per-capita consumption of wheat flour could further decline in the years ahead.

Conclusion
Thanks to social media, I have stayed in touch with Tim. He still avoids gluten, and it turns out that his sister also developed a celiac condition in her 50s. Their mother also now avoids gluten, believing this leads to better health. So, it turns out that Tim actually has a lot of company among those who either must avoid or choose to avoid gluten. And the good news is that manufacturers and retailers have stepped up to make more food products available to them. Tim mentioned that his church even offers gluten-free communion wafers.

Those who must eat low-carb diets for fitness or weight-related issues will always avoid quantities of flour. However, it remains to be seen whether those who are gluten intolerant or simply adverse to gluten, remain so for the long run, or if the development of alternative types of wheat enables them to return some percentage of gluten to their diets.

Tim LuginslandTim Luginsland is a senior vice president and sector manager within the Food and Agribusiness Industry Advisors group focusing on the grain and oilseeds industry sector.

Tim joined Wells Fargo and the Agricultural industries department in 2000. Prior to Wells Fargo, he held various professional positions within the agricultural industry with Archer Daniels Midland and Bank of America.

Tim holds a bachelor of science degree from Kansas State University, and a master of science degree from the University of Arizona; both in agricultural economics. More recently, he completed a two-year agricultural leadership program, an intensive study of local, national, and international agricultural issues, for leaders from the state of Kansas.

Tim was raised on a diversified farm in Central Kansas. He serves on the Kansas City Agribusiness Council, University of Arizona College of Agriculture Board of Directors, Kansas State University Ag Advisory Council, the National Alpha Gamma Rho fraternity Finance Committee, and the Board of Directors of a youth baseball organization.