Three major ingredients companies are alleging that Canadian and Chinese citric acid producers are 'dumping' the ingredient onto the US market at unfair prices, causing damage to the US industry.

Archer Daniels Midland (ADM), Cargill and Tate & Lyle Americas filed petitions Monday with the US government asking it to impose a level playing field in the domestic citric acid market.

The ingredients triumvirate brought complaints before both the US Department of Commerce and the US International Trade Commission (USITC) that imports of citric acid and certain citrate salts from Canada and China are being sold at less than fair value.

They called for antidumping and countervailing duties on imports stemming from China and antidumping measures for similar ingredients from Canada. 'Dumping' refers to charging less for material exported than for material sold domestically, or to selling for less than the cost of production.

ADM and Tate and Lyle both issued statements on the complaints but declined to give any further comment on the matter to FoodNavigator-USA.com.

The companies have not identified any parties in either Canada or China that they allege are involved in dumping, nor given an indication of the prices they deem to be fair.

However the tariffs that ADM, Cargill and Tate & Lyle are calling for are based on the percentage by which they believe prices are being cut - amounting to a 65 percent tariff for ingredients originating from Canada and a 188 percent tariff on those from China.

The current allegations come at a time when commodity prices are also exerting pressure on the margins for producing citric acid. Citric acid is a fermentation product, which means it can be made from a number of carbohydrate products including corn and sugar. 

External pressures, such as climatic effects and the growing competition for crops from the biofuel industry have resulted in raw material shortages and higher prices that in turn form a grim backdrop for citric acid producers.

The Commerce Department is expected to review the petitions and start its investigation within 20 days, while USITC has 45 days to assess the potential threat of the Canadian and Chinese citric acid. Based on USITC's decision, the Department of Commerce could issue its preliminary measures within a two- to five-month period.

Duties would be imposed on the imports at the time of entry into the US.

Citric acid producers in the US and Europe have experienced an increasingly less profitable market for their ingredients as the threat of cheaper Chinese production and continuing high raw material costs has grown. Some manufacturers have been entirely squeezed out of the market.

Last year, Tate & Lyle closed its citric acid plant in the UK. In 2006, Solaris closed its manufacturing plant in India, while ADM closed a facility in Ireland the previous year. In recent years, Aktiva shut down production in the Czech Republic and a Quimixa Mexama plant in Mexico - also owned by Tate & Lyle - was closed

In 2007 the European Commission launched an inquiry to determine whether Chinese suppliers have been dumping citric acid onto the market, based on accusations that such behavior was jeopardizing the European industry.

Citric acid currently dominates the category of organic acids. On the back of numerous applications for the ingredient, consumption is expected to grow strongly until 2009, with the market value exceeding $2 billion.

By Clarisse Douaud

15-Apr-2008

Source: www.foodnavigator-usa.com