VEGA News Item

Forecasts of Essential Materials Threaten the ‘Red’ Sector More Than the ‘Green’ - 26/10/2012

As bad grain harvests around the world send animal feed prices soaring, food manufacturers and cosmetics suppliers are facing higher prices for gelatine,
states The Grocer (20 October 2012).

Gelatine is widely used as a thickening agent and to add texture to foods such as confectionery, ice creams, jams and yoghurts, as well as health and beauty products. It is mostly produced as a by-product of the meat and leather industries, and the majority of edible gelatine is derived from pig skins and cattle hide and bones.

Higher feed prices are now prompting fears there will soon be fewer animals from which gelatine can be obtained, as under-pressure farmers reduce herd sizes in response to soaring input costs. Already, a shortage of pig skin and animal bone – coupled with rising global demand for leather – is putting increasing pressure on worldwide gelatine supplies, leading some gelatine factories to close due to a lack of raw material. To add further pressure, the gelatine industry is highly consolidated following a number of mergers in recent years, meaning the market is dominated by a very small number of multinational players with a considerable grip on supplies – and prices. In addition, higher production standards in China which came in at the start of 2012 – have pushed up prices.

As a result, Chinese gelatine prices – which are indicative of global levels – reached $5,300/tonne in August, up 16% from August 2011 and 42% higher than in August 2010.

Manufacturers can opt for a range of alternatives to gelatine, such as agar, but few – if any – offer the same versatility as gelatine, meaning it remains very much in demand as a key ingredient. As a result, gelatine prices are likely to continue to move in only one direction over the coming months – up.


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