China's grip on key food additive
Vitamin C prices have spiked this year. China controls 80 percent of the market.
New York and Beijing
A sharp rise in the international price of vitamin C is focusing fresh attention on the risks of the world's growing dependence on China for essential food supplies and additives.Skip to next paragraph
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China, which exports more than 80 percent of the world's ascorbic acid – also known as vitamin C and a key food preservative – appears to have cut production over the past several months, pushing prices up by more than 200 percent to a four-year high.
Customers have scrambled for supplies of the additive, found in thousands of processed foods from fruit drinks to organic hamburger rolls, from applesauce to granola.
The production cutback follows a Chinese government drive to enforce pollution limits on chemical and pharmaceutical companies, sources in the vitamin industry say. The four biggest Chinese vitamin C producers are also facing a price-fixing suit in a New York court. Since January, prices have risen from $3.40 a kilo to $11 a kilo, according to industry sources.
The reduction in world supply comes in the wake of a series of scandals surrounding Chinese food and drug exports, some of which have been found to be tainted by poisonous chemicals. The Chinese have charged that US exports are tainted and have banned some of them as well. In the wake of the scandals, President Bush on Wednesday appointed an imports safety panel that will report to him in 60 days.
Though there appears to be no reason to believe that Chinese vitamin C is contaminated, the sudden shortage highlights another cause for concern over America's growing reliance on Chinese food imports. Only one Western company, DSM of the Netherlands, still makes ascorbic acid, concentrating production in Scotland since shutting down its US plant two years ago. Chinese firms have driven all other competitors out of business.
"They have virtually captured the lot, unbeknown to most people," says Leo Hepner, a London-based management consultant to the food and pharmaceutical industry. "It puts us in a very difficult situation if, say, they stopped making it."
Even some nutrition experts are surprised to learn that most of the world's vitamin C is produced in China. "We may need to figure out how it can be made closer to home," says Mara Vitolins, director of public health at Wake Forest University Baptist Medical Center in Winston-Salem, N.C. "Our own food supply is sort of vulnerable."
Ascorbic acid export figures released by the Chinese Customs Administration show that exports dropped by 24 percent in May 2007 from the month before, from 6,537 tons in April to 4,857 tons. That was 14 percent below the monthly average for the first six months of 2006.
Production has fallen, say manufacturers, because they are now being forced to abide by environmental standards that were applied only sporadically before.
"Some vitamin C producers have stopped production" to limit the waste water emitted, explains Kong Tai, former CEO and now board member of Jiangshan Pharmaceutical, one of the four big producers. "In some areas, the authorities limit the total amount of annual pollutant emission, so if you have reached that ceiling you cannot go on producing."
"The government has gone from turning a blind eye to complete panic and has blitzed the largest companies they can find and told them to do something quickly," adds David Townsend, the representative in China of DSM, which manufactures vitamins other than vitamin C in China.
"The vitamin C companies have been caught up in this," he adds.
The Chinese may also have cost pressures. One of the base materials for ascorbic acid is corn-based. The US cash price of corn is up 44 percent this year, a result of increased use for ethanol. Corn starch is used to make a form of glucose, some of which China imports to make vitamin C. China imports some of this base material. "The Chinese are not insulated from it [the price rise]," says Mr. Hepner.
The Manifold Uses of Vitamin C
•Maintains food appearance and degradation, acts as meat reddening agent, prevents drink discoloration, and improves bread texture and loaf size.
• Is used in cosmetics for its anti-aging, antioxidant, and skin-lightening properties.
Vitamin C Imports from China to US: Historic Prices (kilograms)
2003: $3.50 to $6.75
2007: (Jan-June):$3.40 -$11
Source: National Institutes of Health, Institute of Medicine, the National Academies, Linus Pauling Micronutrient Information Center, Tekeda, Business Monitor International