A cut in Chinese production before and after the Olympics has led to price hikes on food additives including ascorbic acid and phosphates.
Chinese factories that supply these additives were shut down from July to September last year as part of drastic government measures to improve air quality for the Olympics, which has led to the price hikes. Plants are also reported to have systematically reduced production following the Games, as China moves towards greener industries.
China produces most of the world's ascorbic acid (E300-304), a preservative and antioxidant used in products from bread to crisps. It also makes phosphates including sodium aluminium phosphate (E541) and sodium acid pyrophosphate (E450), used in cakes, processed cheese, meat products and beverages. "The two main plants for these are in Beijing in the dock area so were closed for the Olympics," said Alastair Macphie, CEO of ingredients supplier Macphie. "They started up afterwards, but to a lesser scale of production. Few knew of the closure until close to the time. So there is a stock rebuild at a time when supplies are tight."
Andy Pollard, president of the Association of Bakery Ingredient Manufacturers, added: "Ascorbic acid has been subject to huge price increases that have been absorbed by the ingredients industry. High prices have been maintained since the Olympics. People who had contracts prior to the games enjoyed consistency of pricing but those contracts have come to an end, and prices have escalated enormously."
Meanwhile, there was rising demand for phosphates for fertilisers rather than food, due to increased global demand for grain, added Pollard. "Food phosphates are not attractive for the manufacturer as they are complex and more costly to produce."