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Folic acid and vitamin B12 are two ingredients facing supply challenges, says distributor Green Wave Ingredients.
China’s newly revised Environmental Protection Law means that many China-based manufacturing firms are facing the higher cost of compliance this year. For some ingredient companies, this may drive up the cost-and shorten supplies-of certain key ingredients, including folic acid and vitamin B12, says nutraceuticals ingredient distributor Green Wave Ingredients (GWI; La Mirada, CA). GWI works with roughly 200 ingredient companies producing ingredients in China.
The revised law imposes higher fines for pollution violations, more authority to regulators, and increased requirements for transparency and public disclosure of environmental impact assessments. The initial law took effect in 1989, with the revised version effective this year.
GWI says that the challenges related to China’s new EPA law touches many of its own suppliers. “This is the major trend in China, and almost all of the manufacturers are facing this challenge,” says Tony Xue, general manager of GWI’s China office.
Some companies may face supply shortages if they are forced to shut down production for a period of time in order to come into compliance. For instance, Xue says he knows of a folic acid manufacturer that had to halt production for a long period of time. As a result, he says, “The price of folic acid is extremely crazy-like 10 times as [much as] it was about two years ago,” he notes.
Xue says that over the past two years, GWI has worked with many of its suppliers to prepare for compliance, including conducting its own emissions evaluations during factory audits. “If the manufacturers have considered and prepared well before they launched the production, they can produce the product on a continued basis. If the manufacturers were taking advantage of loose control in the past, they are facing bigger challenges and may end up shutting down to control output so that the [environmental] discharges can be within the limits [of the regulation],” he adds.
Xue says that GWI also relies on more than one supplier for a particular ingredient, so the company has alternative sources to keep its supply consistent while other companies work to ensure compliance. And companies are doing so in a number of ways, including investing up front to control and treat pollution, switching to more environmentally friendly processes, gaining assistance from their respective industrial zones, or relocating to geographical locations that are more remote from city centers. Xue predicts that the process of coming into compliance will persist over the next few decades.
“Customers, producers, and distributors all have the responsibility to use ingredients produced from good manufacturers with good control of pollution, even if we pay a little [more],” Xue adds. “We are working in an industry [to] better health, and if we do something harmful to our environment for the purpose [of producing] the ingredients, it makes no sense.”
In its annual ingredient market update, GWI also offered the follow updates on 2015 ingredient prices in general:
Dipping Prices: These ingredients are benefiting from stabilizing markets as well as market competition, abundant supply, new players, and new production technologies.
Nutritional Outlook magazine