Starch & Fermentation

Analysis

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Trends in rice starch shipments in the all-important US and EU markets

February 2017

The fast-growing market for rice starch In this month’s article, we review the market for rice starch. This is a niche, high value product that is prized in certain food end-uses as well as pharmaceutical and cosmetic applications.

Wet milling of rice, required to extract the starch, is relatively common in Asia, where there is a long history of using this crop as a raw material for sweetener production and fermentation. In markets outside of Asia, rice starch is used in specific functional end-uses. Output volumes are small compared to mainstream native starches (at less than 0.5 million tonnes per year) and it is an expensive food ingredient compared to products derived from grains or tubers.

However, demand growth in the all-important US and EU markets, driven mostly by its natural image, has outpaced that of other native starches. We discuss this and other developments below.

Rice starch has desirable functionalities

Table A summarises the main characteristics of rice starch and compares them with those of other native starches.

Table A: Key characteristics of selected native starches

Rice Maize Pea Potato Tapioca Wheat

Particle size (μm) 3-8 5-25 5-35 15-100 5-40 3-40 Amylose (%) 35 25 35 20 18 25 Viscosity of pastes medium medium low very high high medium Texture of pastes short short short long long short Clarity of pastes minor minor minor high high minor Heat, shear and acid resistance good moderate good minor minor moderate

Diagram A shows the particle size of the selected starches in a diagrammatic form. It highlights the small and consistently small size of rice starch particles. As we discuss below, the small particle size means that it is an ideal fat replacer in reduced-fat products.

Rice starch is produced from broken rice. In Asia, it is mainly manufactured from rice of the Indica

Diagram A: Particle size of selected native starches

0

10

20

30

40

50

60

70

80

90

100

Rice Maize Pea Potato Tapioca Wheat

Mic

rons

Page 2 © LMC International Ltd, 2017 Starch & Fermentation Analysis: February 2017

type, which has a relatively high amylose content. Rice starch with a lower amylose content (8-20%) is produced using Japonica rice; this is most common in the European rice starch industry. Waxy rice starch, generally derived from Japonica varieties, (containing 100% amylopectin) is also available.

Diagram B reveals that rice starch (from rice type Indica) has the highest amylose content of all starches (alongside pea starch). However, rice starch is available in a wide range of amylose content; this is achieved by using different types of rice.

These characteristics, as well as other appealing functional attributes, mean that rice starch is used in a wide range of food products. Its main attributes are:

Hypoallergenicity. Native rice starch is easy to digest and gluten free. This makes it highly suitable for use in baby milk powders and gluten-free foods. It is also non-GMO.

Thickening properties. Rice starch produces smooth and creamy gels. This property, together with its small particle size, makes it an excellent fat replacer. This is true, in particular, of waxy rice starch.

Neutral taste. Rice starch has a clean flavour and so does not alter the taste of food products.

Heat Stable. Unlike other native starches, rice starch (particularly waxy rice starch) is stable and can cope with food processing procedures (such as heat, freeze/thaw, high acidity and other processing stresses) without the need for chemical modification.

White Colour. Rice starch is the whitest of all starches. For this reason, it is particularly suitable for confectionery coating.

Particle Size. The small size of its particles is highly desirable in laundry applications in which the starch granule must be able to penetrate fibres. As the particle size is similar to that of fat, rice starch can replace fat to replicate the mouthfeel. Rice starch is used to replace milk fat in ice cream and other dairy products including milkshakes, yogurts and frozen desserts.

Natural image. Like all native starches, rice starch is clean label. In addition, rice starch has a clean taste and an appealing natural image. This makes it the ingredient of choice in ‘sensitive’ applications such as baby food.

Rice starch also has a sizeable range of high value non-food uses. These include:

Pharmaceutical. Because it is hypoallergenic and highly digestible, it is largely used as an excipient in tableting as well as oral rehydration products. Rice starch is also used as a coating for surgical gloves.

Cosmetics. The small granule size and the smooth feel of rice starch make it highly suitable for cosmetic uses. There is also growing evidence of the dermatological benefits of using rice starch to relieve the symptoms of dry or irritated skin common to sufferers of eczema. It is also a key ingredient in dry shampoos.

Laundry. The small particle size of rice starch allows it to penetrate more deeply into fibers. During ironing, the starch swells and protects the fibers in a light transparent film. In addition, it easily washes out.

Diagram B: Comparison of amylose content of native starches

0% 10% 20% 30% 40%

Tapioca

Potato

Maize

Wheat

Pea

Rice

r

Starch & Fermentation Analysis: February 2017 © LMC International Ltd, 2017 Page 3

Rice is a major crop but rice starch output is limited

Global rice production averaged 0.475 billion tonnes over the last three years; rice is the third largest grain by volume after maize and wheat. However, unlike maize and wheat, for which non-food uses account for significant shares of total use, rice is mainly consumed as food.

Indeed, it is a staple food for more than half of the world’s population. Most consumption takes place in Asia which also accounts for most of global rice production (Diagram C).China and India produce over half of global supply; outside of Asia, Brazil and the US are sizeable producers.

Compared to other starch raw materials, rice has a very high starch content (Diagram D). This, and its other desirable properties, would make it an ideal source of starch. Rice starch output,

however, is limited (at less than 0.5 million tonnes) because of its premium status as a food grain.

Considering the geographical distribution of rice production, it is not surprising that most processors are located in Asia. In the region, the largest players are in Thailand and China. There are also sizeable players in Vietnam and Cambodia. There are many smaller producers in Japan, Pakistan, India and Egypt. However, most of the smaller operations only manufacture starch syrups.

The largest rice starch plant outside of Asia is in Belgium. The plant is owned by Beneo, a company of the Südzucker Group, which has operations in a number of sectors spanning sugar, food ingredients, biofuels and food products.

There are no sizeable producers of rice starch in the Americas. In the US, Penford Food Ingredients (owned by Ingredion) is a major importer of rice starch from Thailand.

US imports and intra-EU trade growing rapidly

Diagrams E and F show the trends in rice starch trade over the last decade for the all-important markets of the US and the EU. (The EU is a net exporter of rice starch and so we show intra-trade volumes to provide an indication of the trends in the market).

The diagrams reveal that traded volumes have grown healthily in both markets over the last decade. In the US, annual growth (as measured

Diagram E: Trends in US rice starch imports

Diagram D: Starch content of native starches

0% 20% 40% 60% 80%

Potato

Tapioca

Wheat

Pea

Maize

Rice

Diagram C: Distribution of rice output, average 2013-2015

China 30%

India 22%

Indonesia 8%

Bangladesh 7%

Vietnam 6%

Thailand 4%

Burma 3%

Philippines 2%

Brazil 2%

Japan 2%

United States

1%

Other13%

Page 4 © LMC International Ltd, 2017 Starch & Fermentation Analysis: February 2017

by the compounded annual growth rate, CAGR) has averaged around X% per year, albeit the trajectory has not been smooth. In the EU, which is a larger market for rice starch, growth has been steadier. Rice starch shipments have grown at a CAGR of around X% per annum.

Rice starch is priced at a premium

Diagram G plots estimates of the cost of starch contained in grains and cassava (ignoring the value of the by-products which must be subtracted from this cost to obtain a true net cost of starch).

Rice, even though it has a high starch content, is a relatively expensive raw material. As mentioned above, this is because rice is a premium food grain. In addition, co-products obtained from rice processing are limited, consisting of a small quantity of rice protein and rice bran.

The high cost of raw material is reflected in the much higher price of rice starch compared to other native starches.

Diagram H depicts prices for a selection of native and modified starches, averaged over the period 2013-2015. With the only exception of rice starch, all other values are averages of the data shown in Diagram 6 (for native starches) and Table 4 (for modified starch). For rice starch, we display export unit values for the main origins: Thailand and Belgium.

The price of native rice starch for both leading producers is closer to the price of modified starch than to that of native starches. In addition to its relatively high processing costs, this is also a reflection of its desirable functionalities and nutritional benefits.

Conclusions

Rice starch demand has experienced very fast growth over the last ten years compared to other native starches. This has mostly been in high-value food and pharmaceutical applications. The driving force behind this trend has been health and wellness; rice starch has greatly benefited from its ‘natural’ image as well as its gluten-free and non-GMO status.

With the conversation about ‘what’s in my food?’ showing no sign of abating, demand for rice starch can be expected to continue its strong growth. Indeed, Ingredion, a global food ingredient provider, is in the process of acquiring Sun Flour Industry Company Limited, a rice starch and flour producer based in Thailand, to strengthen its position in this high-value, fast growing market.

Diagram G: Cost of starch in different raw materials

0

100

200

300

400

500

600

700

800

900

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

US$

/ton

ne o

f sta

rch

Broken r ice, FOB B angkok

No. 2 yello w maize, FOB U S Gulf

No.1 hard red winter wheat, FOB US Gulf

Cassava roots, NE Thailand

Diagram H: Starch prices, average 2013-2015

0 400 800 1,200 1,600

Rice starch, Belgium, EUV s

Rice starch, Thailand, EUVs

US mo dified starch (EUVs)

EU potato starch (in tra-EU UVs)

Thai c assava starc h (FOB Bangkok)

EU wh eat starch (in tra-EU UVs)

US corn starch (ex-works)

US$/tonne

Diagram F: Trends in intra-EU rice starch trade

Editors: Sara Girardello, Jenny Miller, Zak Rich, Martin Todd.

Published monthly by LMC International Ltd, © 2017 All rights are reserved and are covered by copyright law. The publication must remain confidential within the subscribing organization. No material may be reproduced or transmitted in whole or in part, in any manner, without the written consent of LMC International.

In the text, the following abbreviations are used: ton or mt = metric ton = tonne bu = bushel

bn = billion ha = hectare

mn = million kg = kilogram

lt = litre CGF = Corn gluten feed

HFCS = High Fructose Corn Syrup CGM = Corn gluten meal When we mention $, this refers to $US. Corn (US) = Maize (EU)

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Benchmarking costs of starches, syrups and ethanol: Forecasting production costs by raw material and location

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Benchmarking costs of starches, syrups and ethanol – Database coverage

Starch products

Native corn starchNative wheat starchNative cassava starchAcid‐thinned modified starchCationic modified starchOxidised modified starch

Starches Syrups

Glucose (fermentation grade)Glucose (food grade)HFS (separate costs for 42 and 55)

Ethanol

EthanolIndustrial alcohol

Raw Materials

Wet millingDry milling

Corn Wheat Cassava Molasses Sugar

Wet millingDry milling

Wet milling Direct fermentation

Direct fermentation

Cane Juice

Milling

Asia:China       IndiaIndonesia  JapanSouth Korea ThailandVietnam

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Countries

https://www.lmc.co.uk/Starch_and_Fermentation-Benchmarking_Costs_of_Starches_Syrups_and_Ethanol