Arachidonic acid is an essential fatty acid that, in conjunction with DHA, an omega-3 essential fatty acid, has long been recognized as important in infant nutrition, thought to support the development of infants' brains and eyes.
Cargill Health & Food Technologies will enter the arachidonic acid (ARA) business through a new joint venture agreement with Wuhan Alking Bioengineering Co, the number one ARA producer in China serving the Chinese infant formula business.
ARA and DHA are increasingly used by infant formula makers, with most of the leading brands stocking a fortified product containing the fatty acids.
In Europe ARA is manufactured by DSM and supplied to the US-based Martek Biosciences. DSM Food Specialties said earlier this year that it is to double the volume of the fatty acid produced for Martek to meet rapidly growing demand. Last year production was hit by a power outage in Italy, restricting supply.
Cargill HFT marketing manager Pam Stauffer said the agreement with Wuhan Alking was unlikely to impact the European market.
"We will expand into other geographical markets but there are certain areas where we cannot play," she said.
The China infant formula market is however growing at approximately 9 per cent per year compared to a 4 per cent growth in the rest of the world, said Stauffer.
"We believe the combination of Alking's ARA technology and process capability coupled with Cargill's global presence will allow us to serve infant formula companies on a much broader basis," said Mr Yi, chairman of Wuhan Alking.
The joint venture is expected to be operating within the next 30 to 120 days.