I.3 Consumers' preference, retail prices and marketing channels

Demand for whole meal, bolted meal and sifted flour is function of three main factors: consumers' preference, retail prices of the different kinds of maize meal and marketing channels. These factors are briefly analysed in the light of available evidence from developing countries, especially in the African region.

Consumers' preference

It is argued that if they had a choice, consumers in developing countries would prefer to buy sifted (i.e. de-germed) flour rather than whole meal for a number of reasons, including the better appearance of sifted flour (it is whiter and finer than whole meal) and its easier utilisation in cooking (whole meal needs more energy than sifted flour, and thus takes more time to cook). On the other hand, consumers do not seem to be concerned - probably for lack of information - by the lower nutritional value of sifted flour. The above arguments do not, however, apply in all cases. In some countries (e.g. Somalia - see JASPA report, 1981), the urban population prefers whole meal whenever it is available. Large institutions such as hospitals also tend to prefer the more nutritious whole meal. Available evidence on this subject is generally limited, and it will be useful for developing countries to undertake individual surveys of consumers' preference for various types of maize meal.

For some urban areas (e.g. in Kenya) where preference for sifted flour is well established, a number of both objective and subjective reasons may explain that preference. The objective reasons include those already mentioned (i.e. attractive appearance of sifted flour, its better cooking characteristics) as well as the possibility of buying limited amounts of packaged flour at food stores close by. The apparently longer shelf-life of sifted flour does not seem to play a role in the urban consumers' choice, probably because the flour is used up in a relatively short time.

Among the subjective reasons adduced for the preference for sifted flour by urban consumers, advertising is by far the most important. Available evidence from a number of African countries (e.g. Kenya) shows that large milling firms (some of them of foreign origin) earmark large sums for major advertising campaigns in urban areas. For example, collected information from Kenya shows that in some cases marketing costs amount to as much as a third of production costs (Stewart, 1977). It is even suggested that the market for sifted flour might have been artificially created by the large roller mills (see Stewart, 1977).

Retail prices

Available evidence shows that the retail price of sifted meal is generally higher than that of whole meal, price differences varying from country to country as well as within the same country. This does not mean that the actual milling costs of sifted meal are necessarily higher than those of whole meal. Differences in retail prices may also be the result of the following factors:

1. Low extraction rates of roller mills which produce the sifted flour (i.e. less flour is produced per tonne of shelled maize than in the case of the production of whole meal). These low extraction rates, and therefore higher input of raw materials is not offset by the sale of by-products (germ and bran) since the unit prices of the by-products are generally much lower than that of whole meal;

2. The high packaging cost of sifted flour (e.g. in 1 kg or 2 kg paper bags) whereas little if any packaging is used in the case of whole meal. Custom mills (generally located in rural areas) do not package their products (the customers bring their own containers) while small merchant mills use cheap packaging;

3. Roller mills market their product through traders who must add their operating costs and profit margin to the ex-mill price.

4. For sifted meal, there are high advertising costs whereas there is no costly advertising for whole meal;

5. Transport costs associated with the production and marketing of sifted meal are generally higher than those associated with that of whole meal. Maize and sifted meal must generally be transported over long distances, whereas transport costs are cut to a minimum by the proximity of custom mills (which produce whole meal) to maize-growing areas and to the consumers.

The relatively high retail prices of sifted meal do, generally, limit consumption to the middle-income and high-income groups in urban areas. In a few exceptional cases, government subsidies and price controls have maintained retail prices of sifted meal low enough to allow consumption by low income groups.

In general, an increase in the retail price of sifted flour should not lead to an increased demand for whole meal on the part of middle-income and high-income groups. It may rather lead to an increase in demand for polished rice or other flours (e.g. wheat flour) of equivalent quality should these be locally available. On the other hand, an increase in the retail price of whole meal maize should generally increase demand for other meal of equivalent quality (e.g. sorgho meal, millet) by low-income groups. Although no firm evidence exists on the above shifts in demand, their possibility should be taken into consideration whenever government action may lead to an increase in the retail price of sifted maize flour or to a decrease in its availability for whatever reason.

Geographical distribution of demand for sifted flour and whole meal

As stated earlier, rural areas consume almost exclusively whole meal, especially in maize-growing areas. Furthermore, whole meal is either produced by households (e.g. by the use of mortar and pestle or of querns), or by custom mills for payment in cash or kind. Recourse to custom mills is not yet widespread. However, an increasing number of rural women are willing to give up the long and tedious milling of maize at home in order to be able to devote themselves to other more profitable activities.

It is doubtful whether demand for sifted flour will expand substantially in maize-growing areas for the foreseeable future. The retail price of sifted meal will generally not be competitive with that of whole meal whether the latter is produced at home or at a custom mill. On the other hand, sifted meal is in some cases marketed in rural areas which do not grow maize, especially if no other cereals are available. In some cases, the sifted meal is sold at subsidised prices because it could not be otherwise afforded by the poor in rural areas.

The situation in urban areas is different; both whole meal and sifted meal are consumed by the urban population. Whole meal is often produced by small merchant mills (e.g. hammer mills) which keep stocks of both the raw materials and the meal. These mills either retail their output directly or sell it to retailers. Some whole meal is also produced in neighbouring rural areas and sold in the urban markets. In general, the whole meal marketed in urban areas is consumed by low-income groups.

Sifted meal is in most cases marketed in urban centres. It is produced by large roller mills located in urban areas, or, if feasible, close to the maize-growing areas. Sifted meal is mostly consumed by the richer sections of the urban population and is marketed through traders. Consumption of sifted meal by the poor is rather limited since its higher price puts it in the luxury goods category.