Solae raises soy protein prices globally
ingredients around the world by as much as 30 percent in order for
it to be able to maintain its R&D activities.
The price hikes, which will be effective immediately, come just a few days after the company's implementation of price increases for its soy lecithin ingredients. The firm is the latest in a string of ingredient suppliers attempting to pass on higher input costs to their customers. This has particularly been the case for commodity-based ingredients, where the supply-price squeeze is at its tightest. "Market pressures are continuing to challenge the food industry, and Solae is not immune to those pressures," said Michele Fite, VP of Solae's global strategy and marketing. The company said the global price increases may reach up to 30 percent and will be relative to regional market conditions. Price increases do not include changes in identity-preserved premiums and are subject to contract, said the firm. Use in foods Soy protein is said to help boost cardiovascular health, and is currently used in food products positioned for a heart-healthy diet. The ingredient is also used in the food industry as a low-fat source of protein. Because high protein goods are thought to help promote the feeling of fullness, soy protein is used in products targeting the weight loss market. In addition, soy protein isolates also provide functional properties to products including water holding, emulsification and gelling, which help to maintain or improve food quality. For example, a high-viscosity, high-gelling isolate can be formulated to produce meat substitutes that have a meat-like texture, while a low-viscosity, highly soluble isolate would be more effective to create a ready-to-drink nutritional beverage. Price pressures According to Solae, the food industry is being squeezed by higher input costs in a number of areas. Soybean prices have soared over the past year, nearly doubling in price, it said. Identity-preserved soybeans are also difficult to source as the planting of genetically modified crops increases. Higher soybean and corn prices are also placing pressure on the livestock sector, which has a knock-on effect on meat and dairy ingredients. In addition, meat and dairy products have become more popular in China, India and Latin America, which has placed more pressure on the global supply chain. Another major contributor to squeezed margins that firms often cite is the climbing cost for oil and natural gas. "The landscapes of the agricultural and food industries and economies have changed. In an era of biofuels, increased competition among crops for land, high demand for protein and global demand for natural resources, costs are rising for Solae, along with the rest of the food industry," said Fite. Innovation According to Solae, it needs to pass on some of these higher costs in order to be able to maintain a consistent level of service to customers and to continue to invest in innovation and research for "future soy solutions". The firm is also attempting to look on the bright side by comparing the relatively low price increases for soy ingredients in the face of price pressures faced in other sectors. "While the cost of soybeans is increasing, soy protein's value relative to other industries is strong," Fite said. "Rising costs are affecting the conversion of meat and milk proteins more dramatically than soy protein, meaning the relative cost increases for meat and dairy are larger." More price hikes As of April 1, Solae also raised prices for its range of soy lecithin ingredients. The company again cited the higher cost of energy and commodities as the main cause. Solae is a major producer of lecithin products, especially upgraded fluids and de-oiled lecithin products. The company's ingredients are used in applications such as instant drink mixes, infant formulas, meat sauces and gravies, dispersible oleoresins, pan releases, chewing gum and no-fat bakery and snack foods. Last month, Solae warned of the need for ingredients firms to pass on higher costs. The firm's vice-president responsible for product line management Dan Camerer told NutraIngredients-USA.com sister site FoodNavigator-USA.com that it was too early to tell how quickly most of the recent rises in input costs would be passed on. But he stressed that food price inflation was likely to continue through 2008, and that price rises would inevitably have to take place.