Solae chief executive Torkel Rhenman was speaking to FoodNavigator-USA after announcing an 8% price rise across the globe to reflect surging commodity and energy prices. The move follows a 6-10% price rise introduced on April 1, 2011 and a 7-9% rise announced last November.
He said: “Respective to other proteins, soy continues to be a more stable choice for food companies.
“For example, compared to the second quarter of last year red meat protein prices have risen 15-20% according to the IMF (International Monetary Fund) and dairy proteins have increased approximately 25% according to Blimling."
Energy impacts the whole value chain
While Solae had been able to “absorb most inflationary cost pressures via internal efficiencies to mitigate these costs to our customers”, rising soybean and soymeal prices and higher energy costs meant another price rise was unavoidable, he said.
“Soybean and soybean meal prices depend on several factors: weather, acreage, availability and use, meat and dairy demand, energy prices, just to name a few. Like several economists and agricultural experts, we expect these prices to remain elevated for the near future.
“Energy impacts the whole value chain and, consequently, like our customers, we have had impacts from energy on every element of our business, both internally and also from suppliers to us.”
Elevated food prices will be the norm
The latest price wise would be effective immediately, or as contracts allowed, he said.
“We are working in a new environment where several dynamics are coming together to change the agricultural and food marketplace. In the short term, many economists are suggesting elevated food prices will be the norm.
“What we can guarantee is that Solae soy proteins will continue to be one of the most cost effective, high quality protein sources that can positively impact our customers' overall profitability.”
In a statement explaining its decision, the firm blamed the “continued trend of increasing global inflation and agricultural cost increases as well as extraordinary global demand for soybean, leading to crop scarcity that impacts underlying soy prices”.
Solae is a joint venture owned by DuPont and Bunge.