Clarkson Soy Products has moved to alleviate the pressure on organic soy lecithin supplies by entering into a relationship with an Italian supplier, the company announced yesterday.
Clarkson said it has entered into an agreement with Molino Oleificio Manzoni S.r.l., of Vailate, Italy for exclusive North American distribution rights for their organic soy lecithin. Molino Oleificio Manzonihas been an oil producer for over 100 years, and today produces organic oil and meal from soybeans, sunflower, rapeseed, and safflower in state of the art processing facilities.
Clarkson, based in Cerro Gordo, IL, inaugurated soy lecithin as an ingredient about eight years ago, and sales ramped up only very slowly. But recently, a couple of factors have combined to create a situation in which demand for organic soy lecithin has soared, but the supply of raw material hasn’t kept pace, said Curtis Bennett, Clarkson’s vice president of sales and operations.
Field of Dreams
“What happened was two things. First, we started producing the ingredient in January of 2004; it was kind of like the Field of Dreams. We thought that if we started making this product the buyers would come to us,” Bennett told NutraIngredients-USA.
But the company hadn’t fully reckoned with the effect of organic standards as they existed at the time. Clarkson had the only organic soy lecithin available that was available then, sure. But because the ingredient was not commercially available before, the organic rules had been written with nonorganic soy lecithin on the list of what was allowable in the 5% of nonorganic ingredients. So Clarkson’s organic ingredient was a harder sell than originally anticipated.
“There were some companies that did start buying from us and our business grew. We petitioned the National Organic Program in the fall of 2008 to change the regulation now that organic lecithin was available. We petitioned again, and went before them in May 2009 and it took them from that time until March 15 of this year to actually change the regulation,” Bennett said.
Demand rises, but supplies fall
So since March there has been a clear need for organic soy lecithin. But in the meantime, at the start of the recession in late 2008 and early 2009, prices for organic soybeans started falling.
“The second part of the perfect storm was the at the start of the recession, the price of organic soybeans worldwide began to fall. As that price began to move closer to nonorganic soybean pricing we saw a worldwide reduction in the production of organic soy,” Bennett said.
Prices of organic soybeans tend to be more volatile than those for conventional crops, Bennett said. The price graphs of organic “have steeper hills and steeper valleys,” he said. And even though prices are moving up again, meaning more organic soy will be available in the future, that pulse of diminished supply continues to make its way through the market, Bennett said.
“What we’ve done is we’ve had to extend the lead time and ration supplies to everyone, and spread (the pain) equally,” Bennett said. “We’re not the only supplier that’s short. For us it hit home and for the first time ever we were not able to meet or exceed our customers’ expectations.”
With the first shipments from Molino Oleificio Manzoni expected in mid January, that situation will be eased. Clarkson intends to maintain its new relationship with the Italian company going forward, Bennett said.
The current situation, Bennett said, “is a raw material issue getting to one location. What the Italian location gives us is a second source. It gives us a contingency plan.”