The company said that the increases would vary from between five and ten per cent depending upon product category. Around 95 percent of its ingredients will be affected by higher prices. Purac produces most of its basic products by fermentation on basis of carbohydrates obtained from sugar cane, sugar beet, corn and wheat. The company said that production costs have increased substantially due to higher costs for carbohydrates and energy. The surging costs for carbohydrates is explained by the restructuring of the sugar regime in the European Union and the strongly increasing demand for carbohydrates to produce bio-ethanol. Other production pressures include higher prices for energy, packaging and auxiliary chemicals. The new prices, which follow increases of a similar level last year, are effective as of this month, or on the renewal of sales contracts, said the firm, which refused to make any further comment. Purac's announcement forms part of a general industry move to try to pass on higher costs to customers. With oil prices reaching around $80 per barrel and commodity pressures also causing the price of raw materials to rise, few commodity-based businesses have remained unaffected. DSM, Jungbunzlauer and FMC Biopolymer are amongst ingredients firms recently announcing price hikes, while some of the price pressures have also traveled down the line to consumers. In the UK this year, soft drinks, fruit and vegetables and milk have been some of the most affected products. Liquid milk in supermarkets was around 15 per cent more expensive this May compared to the same period last year, according to new figures from the Milk Development Council. Several analysts have predicted more food price rises around the world in the future, as manufacturers' packaging and energy bills continue to soar on the back of high oil pirces. Increasing demand from emerging markets such as China and India is also spreading resources more thinly. Food processors can expect no relief in the near future from the sharp surge in commodity prices, pushed upward by supply shortfalls and higher global demand. Drought in Australia, adverse weather in Europe, foot and mouth in the UK are all contributing to a short fall in the normal supply of the major commodities such as grains, meats and milk. These unforeseen events on the supply side together with the increased demand from China and the squeeze is on operating budgets, and perhaps even production output. The sharp rise in the grain market has been well documented by reports from the Food and Agriculture Organisation (FAO), which forecasts no let up in the near future. And a Confederation of Food and Drink Industries of the EU (CIAA) report in July found that manufacturers were paying 35 per cent more for wheat, an average 50 per cent more for dairy products, by 25 per cent more for sunflower oil.
Purac has announced it is increasing its prices increases for lactic acid, lactates, gluconic acid and gluconates.