The St Louis-based company has extended its partnership with Henan Luohe Shineway Industry Group, China's largest meat processing company, in order to facilitate the construction of the isolated soy protein plant.
"Expanding our partnership in China makes perfect sense from a business, operations and growth standpoint," said Solae CEO Tony Arnold. "We are meeting our customers' needs by providing the highest quality products at a great price."
Solae's Shineway II project, as it is called, will enable Henan Luohe Shineway to expand its local manufacturing base and offset shipping costs and other expenses.
Both Solae and Shineway recognize China's future potential as one of the largest users of soy protein. China is expected to import a record 24.5 million tonnes of soybeans in the 2004-05, a massive 45 per cent higher than the 16.9 million tonnes imported in 2003-04, according to the China National Grain and Oils Information Center (CNOGIC).
Domestic edible oil demand on the other hand, due at around 18 million tonnes in the 2004-05 marketing year, is estimated to outstrip local supply by around 4 million to 5 million tonnes, which will be largely filled by crushing imported soybeans, CNOGIC said.
Solae's interest in China also shows how the country's increasingly affluent consumers are transforming the global food ingredients business, by pushing up demand for food commodities and food products from around the world.
In addition, there is growing global interest in using soy proteins to help beverage companies manage their bottom line. According to Dairy Market News, certain commodity milk proteins, such as caseinates, have increased in costs nearly 30 percent over the last year and nearly 60 percent over the last two years.
Processors who have traditionally relied on milk proteins have seen their costs skyrocket and profits erode during this time, while continuing to manage the price volatility risk that milk proteins present. Solae argues that soy proteins, as an alternative, are more stable and predictable in pricing, and in the current economic environment, offer great potential to reduce formulation costs.
"Raw material costs present ongoing challenges for food processors, and reformulation to manage those costs has become a priority for many companies," said Jean Heggie, marketing leader for North America Food at Solae. "Our goal is to make sure that the end consumer is still getting a healthy, great tasting product but also helping food processors control their costs."
The Shineway II project expands Solae's existing partnership with the Shineway group. In April 2004, Solae and the Shineway group agreed to expand overall manufacturing capability to meet the growing global demand for soy protein. The two businesses built an innovative facility to manufacture soy protein concentrate for Shineway's use.