Tighter seaweed supplies push up prices at FMC BioPolymer

In a statement on Wednesday the Philadelphia-based emulsifier maker cited rising energy, freight and raw material costs as the major factors for passing on price increases to the market.

"Costs have risen to such a high level that FMC BioPolymer cannot continue to absorb them," said the US firm.

Today, price rises for the food industry, are arguably, the rule, rather than the exception.

While initially reticent about passing on costs to customers, ingredients manufacturers, and their customers the food makers, are today faced with little choice.

This week alone, world oil prices, both a key raw material and energy supplier for the food industry, surged to record highs - $123 dollars per barrel.

Added to the mix for FMC BioPolymer are sustained price rises, since at least 2003, for its key raw material source, seaweed.

Carrageenan, a gum used for texture and viscosity in food products, is extracted from seaweed, largely sourced from the Philippines and Indonesia.

Historically, the use of carrageenan for food has grown in industrialised countries, by at least 5 to 7 per cent per year, particularly on the back of growing demand for convenience foods.

But in recent years a strong pull in global carrageenan stocks, impacted by an increase in demand from China's booming processed food industry as consumers exhaust home-sourced carrageenan, has led to price spikes.

This week Benson Dakay, Seaweed Industry Association of the Philippines, stated that domestic supply of seaweeds continues to be low due to typhoons and danggit (spinefoot) fish that eat the seaweeds.

Dakay, also chief executive officer of semi-refined carrageenan player Shemberg, cited the impact on price as a result of the pull-down in supplies.

"The increase is almost 100 per cent" from four or five years ago, he told the Sun.

Star Cebu.

Dakay said the current price of cotonii seaweeds is between P40 ($0.94) and P50 ($1.17) per kilo, compared to P26 in 2003.

When processed, cotonii seaweed produces food-grade carrageenan used extensively in food formulations from sausages to cake glazes, to provide texture, structure and stability.

Ongoing price pressures for refined carrageenan have opened up opportunities for the semi-refined market.

While semi-refined powder contains more cellulose material than its refined, purified sister, it is easier and cheaper to produce, translating as reduced costs for the manufacturers.

FMC BioPolymer added this week that it continues to re-invest in operations "to secure long-term supply and consistent functionality of its products for its customers."

Reinvestments include expanding the microcrystalline cellulose plant in Newark, Delaware and securing access to quality raw materials through expanded sourcing practices.