For the past nine months, ingredients suppliers have absorbed some of the recent price hikes for fuel costs and supply shortages, but no longer. Rice-based ingredients supplier BENEO-Remy is increasing its prices by 40% because of the soaring cost of raw materials. On the heals of BENEO announcement, Croda Health Care announced price increases for its Incromega range of concentrated omega-3 fish oils. The increases will be 10-20% dependent on grade, and implemented from July 1, or as contracts allow.
Croda Health Care Vice President Dave Cherry commented, "These increases are necessary to mitigate the unprecedented rise in raw material costs that we are facing. Some of our raw materials have doubled in price over the last 12 months, and we are no longer able to continue to absorb this impact."
Croda claims the increases follow unprecedented rises in costs of the base fish oil feedstocks, in addition to continued rises in energy, packing and transportation costs. Company officials say they will communicate directly and individually with customers to explain the new price levels and to discuss availability requirements.
Escalating demand and dwindling supplies are the behind the rice price increases. Beneo slapped the massive hike on its range of rice starches and flours "due to unprecedented escalating rice demand which is dramatically driving up prices," it said. The Belgium-based business said it had "worked hard to address increasing costs" and had made "many efficiency improvements," but added, "The business is now unable to absorb escalating costs which are affecting the entire food industry. Since last year the cost of rice has almost doubled due to global consumption growing faster than production."
Beneo-Remy said the situation had been exacerbated by export restrictions in Vietnam, India, Egypt, China and Cambodia, as well as other natural factors, including droughts in Australia and floods in Bangladesh. Intervention stocks in Europe were already close to depletion, and there was uncertainty about how the July to October global needs would be covered, since 80% of Europe's latest harvest alone had already been consumed, the company warned.
Vincent Caluwaerts, sales and marketing manager, added: "We are faced with a force majeure situation. Restrictions on export and natural disasters are beyond our control, so we have had no choice but to adjust prices accordingly. We pride ourselves in providing our customers with the highest quality ingredients and will therefore not compromise this in the future. With this in mind, a price increase has been unavoidable."