Starch is widely used in both food and non-food industries. It is primarily used for manufacturing beer, whiskey, biofuels, and sweeteners. The most common non-food industrial application of starch is the adhesive during the paper-making process. Starch is mixed with warm water to create a thickening, stiffening, or glueing agent.
The global starch market is experiencing a CAGR of 4.4 percent in demand and is expected to be worth $11.1 billion by 2020. Currently, the starch market is not over-supplied, instead, there is a robust increase in starch demand due to a multitude of factors.
Starch Market: Global Outlook
Currently, the total starch supply is approximately 85 MMT (million metric tons). Out of the total supply, 53 percent starch is supplied to the sweeteners industry, 36 percent starch is used in native starch applications, and modified starch industries utilize the remaining 11 percent.
- Of the total starch produced, 68 percent of modified starch is from corn. A majority of sweetener starch is used as feedstock. Other variants of starch like potatoes, wheat, tapioca, rice, and sorghum-based starch are particular to production regions and satisfy industry-grade requirements.
- The largest starch suppliers are Meihua Holdings Group Co, Showa Sangyo Co Limited, Shandong Long-Live Biotech, Wilmar International Limited, Cargill Inc, AGRANA, and Pepees.
- Maize-based starch accounts for approximately 70 percent of the total starch supply (produced primarily in the USA, China, and Europe). Potato-based starch accounts for approximately 12 percent (primarily manufactured in Europe), wheat starch accounts for nearly 8 percent (primarily produced in Europe and Australia), tapioca accounts for around 9 percent (primarily produced in South-East Asia and South America), and starch made from rice, sorghum, and other ingredients accounts for approximately 1 percent of the total starch produced at the global level.
- The biggest starch suppliers are concentrated in China, the USA, Germany, Asia, and some regions of the EU. The USA produces approximately 30 percent of the global starch, closely followed by China, which produces around 28 percent of the global starch supply.
Global Starch Demand Analysis
Starch is divided into three categories depending on the basic nature of the product: modified starch, native starch, and sweeteners. Sweetener starch finds the highest demand, garnering an industry dominance at nearly 50 percent.
- The North American region accounts for the highest demand for starch-based sweeteners, both in terms of volume and value.
- India and Indonesia are the largest corn starch importers from North America and Europe. Both of the supplying regions also have a high domestic demand for starch and hence use a considerable portion of starch production to cater to the domestic demand for cornstarch.
- The Asian starch demand is expected to grow at a higher CAGR (6.4 percent) as compared to the rest of the world. Consequently, Asia will soon rival North America in terms of starch consumption. The higher CAGR in Asia can be attributed to the expansion of production facilities in the emerging Asian markets like India, China, and Malaysia. An ever-increasing demand for textile, food, and paper industry sectors in the Asian economies further supplements the projected steep rise in starch demand.
- In the EU region, Germany has a well-cemented manufacturing industry for food processing. In coordination with the growing demand, the mentioned German sector will significantly augment the demand for starch and its variants.
- Packaged food industry widely depends on starch-based sweeteners, and with a higher number of packaged food manufacturers entering new markets, the demand for starch sweeteners will further increase and consequently, will positively affect profit margins for the starch suppliers.
Starch Market: Industry Trends
The global demand for High Fructose Corn Syrup (HFCS) for use in food and beverages is increasing at a steady pace, indicating that there will be a significant increase in demand for starch-based sweeteners in the near future.
- The demand for modified starch is gaining ground. The net value of demand for modified starch is expected to be worth $15.53 billion by 2025, following a solid CAGR of 5.5 percent. The net value of the modified starch market is expected to touch $11.1 billion by the end of 2020, maintaining a minimum CAGR of 4.4 percent.
- The textile industry in China, India, and Malaysia has recently been freed from many regulations and is now contributing immensely to the growing demand for starch in the Asian region. This development is bound to attract investments and pique the interest of various starch producers across the globe.
- The usual contract period between a starch supplier and the food and pharmaceutical starch procurer may range anywhere between three months to six months. Long-term starch procurement contracts are not that standard even though some long-term contracts (one year to five years or more) may exist.
- The most important regions for further expansion are China, India, Indonesia, and Germany. The North American market is not over-supplied yet; however, the demand from the Asian regions far outweighs the demand-supply gap within North America.
Considering the current statistics and growth patterns, the future looks promising for the starch manufacturers. It is also noteworthy that unlike many of its contemporaries, the starch industry has not been particularly hit by recession or similar slow-downs. The tenacity and reliability thus exuded, complemented by a steadily rising demand for various starch products, makes the starch industry an attractive investment avenue.
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