National Starch Food Innovation is to raise food ingredient prices in the US across its entire product portfolio, with corn-based ingredients set to see the highest hikes.
The news comes amid a stream of similar announcements from other ingredients firms, as the industry is increasingly squeezed by higher raw material and energy costs.
The latest increases from National starch, effective December 4 2006, will range from 7 to 10 percent on specialty products, depending on the product complexity and processing required. According to the firm, price increases for unmodified corn starch products will be "considerably larger", reflecting the higher base cost of corn in these products.
The firm cited recent and significant increases in the corn market, higher costs for synthetic raw materials, transportation, packaging and utilities as the primary reasons for the increase, which comes just a few weeks after the company raised its prices in Europe.
"Based on latest USDA estimates for the 2006/7 crop production, the projected carry over for the coming year is anticipated to fall below a critical threshold, resulting in significant increases in both cash and futures prices for corn," said Anthony DeLio, the firm's divisional vice president and general manager.
And beyond a week harvest, corm prices are soaring because of supply constraints resulting from increased sourcing of the commodity for ethanol.
"The spot price for corn is 80 percent higher than last year; in addition, other suppliers are passing on price increases associated with the structural change in energy costs. While we regret the need to raise prices, we must pass along a portion of these increased costs to continue to provide the technical support and innovative new products that our customers value," said DeLio.
According to National Starch officials, the cost environment in 2007 is expected to remain quite volatile. Although supply disruption to customers is not expected, further price increases may be required if costs continue to escalate.
In addition to the general price increase, the firm said a premium of $2.00/cwt will be charged to North American customers requiring non-genetically modified (non-GMO), Identity Preserved (IP) certification for waxy-based food starches; this is similar to the existing premium for non-GMO, IP dent corn based products.
This charge is required to offset the escalation in costs associated with securing and preserving IP-certified non-GMO ingredients in North America, said National Starch.
"These rising costs, related to crop isolation, segregation, storage, shipping and testing challenges, have been exacerbated by the sharp increase in the adoption of genetically modified corn varieties by North American farmers," said DeLio.
"North American customers not requiring this degree of traceability and guaranteed assurances will not be affected."
In recent months, other major food ingredients firms that have hiked their prices include CP Kelco, FMC Biopolymer, BASF, Novozymes, Cargill, Danisco, DSM and Jungbunzlauer. These price increases affect a wide range of products, including gums, starches, citric acid, vitamins and enzymes.