“We plan to target animal feed first, but in the human food market, we will target dietary supplements and functional foods at the same time,” Dodson told NutraIngredients-USA.
The ingredient will be produced via a hetrotrophic (fermentation) process in a facility to be located in the United States, Dodson said. He said ADM and SGI still see significant demand for DHA going forward despite the recent market dips.
Demand still strong
“This partnership is an important example of ADM’s ongoing efforts to enhance returns by strengthening our portfolio of higher-margin products,” Dodson said. “There is still significant demand for Omega-3 DHA products. We believe there is sound science behind Omega-3s and their benefits for brain, heart and eye health in human and animals.
We are impressed with the leading-edge technologies that SGI uses to quickly turn commercial opportunities into realities, and we look forward to working with them to use those capabilities to further enhance our current portfolio of nutritional ingredients.”
Dodson said the partnership will cast as broad a net as possible for the applications for the new ingredient.
“We believe there is wide range of possible markets for Omega-3 products, and will be working with our customers as they develop specific applications,” he said.
Portfolio diversification
The deal will help ADM diversify its porfolio to give some protection from volatile crop prices. Heterotrophic algae production is pricey, but costs can be reliably predicted and demand for the resulting ingredient can by more reliably projected, too. In the fourth quarter of 2012, ADM saw its profits slashed by 25% because of high corn costs.
Founded in 2005, SGI has worked in a variety of areas in including new ingredients for human and animal nutrition as well as vaccines and synthetic DNA products. The company has also done work in algae biofuels, which is a typical point of entry for companies that then move into algal ingredients for human and animal nutrition.
This is far from the first such ingredient partnership that ADM has entered into. In 2010, ADM and Burcon joined forces to commercialize CLARISOY, a clear soy protein ingredient for beverages, with the first products reaching the market in June 2012. The ingredient went into full commercial scale production earlier this year.