New Role for Soy

23/02/2004

A Sydney company in which Australian pharmaceuticals giant Washington H Soul Pattinson is a major shareholder is posed to process and sell soy as a natural food additive.

The move, which has the blessing of shareholders, is planned by Clover Corporation, which already converts fish oil into a powder rich in omega-3 DHA and sells the product in Australia and on world markets as a food additive.

Clover, 28.5 per cent owned by Washington H Soul Pattinson, says the move will provide the company with a natural food additive, with the flavour of the base product masked, that can be targeted at the same markets as its fish-oil product.

Under a deal approved by shareholders this week:

• Clover will establish a joint venture, intended to be on a 50-50 basis, with Moree Seed Traders, a company that trades as Austgrains International, to conduct the soy business.
• The joint venture will license for 10 years the technology, which converts soy beans to a stable food additive without any bean or bitter flavour.
• Each company will contribute $2.5 million to the joint venture, with Clover having the potential to increase its venture ownership if equity contributions are not equal over time.
• Clover will make available to the venture an additional interest-bearing shareholder loan of $3.5 million, which will convert to equity when the manufacturing facility is operating.
• Clover’s 70 per cent owned subsidiary, Nu-Mega Ingredients will initiate sales to food companies worldwide on a commission basis.

Clover says that part of Austgrains’ role in the venture will be to contract soybean growing over central Queensland and the Murrumbidgee Irrigation Area in southern NSW and manage the crop’s ultimate conversion into the food additive.

It says conversion of soy beans into the food additive will utilise technology known as processed soy matrix technology, develop[ed and patented by an Australian company, Byron Australia, which is licensing the technology to the venture.  The processed soy matrix technology is able to product a whole soybean product with all the nutraceutical benefits of soy at a low cost and with a long shelf life.

A special-purpose soy milling and storage facility is to be built on a 20ha site next to the main rail line in Moree, northern NSW, at a cost of $8 million and is expected to be commissioned during September, 2004.

Clover chairman Peter Robinson said the joint venture would give Clover an opportunity to increase its market standing as a supplier of natural food additives worldwide.

“There is a good fit in terms of product marketing for our omega-3 DHA and soy natural food additives,” he said.

“They also capitalise on health trends worldwide towards consumers wanting to add healthy components to their diets in a natural way while consuming basic foods.”

Mr Robinson said the soy food additive to be produced by the Clover venture would be certified as being from non-genetically modified crops.’

Initial target markets are bakery and baked foods, soy milk and dairy replacement, breakfast and snack foods.

Clover also considers its technology can offer consumer, food service and industrial and industrial markets a soy flour which exhibits the nutraceutical benefits of soy without the bitter bean taste.

Clover says that the estimated value of the world soy flour market is $US23 billion, with US sales of soy-based products valued at $US2.5 billion a year, and sales in Europe at $US1.5 billion a year.

The domestic soy flour market is estimated at $70 million a year and growing at 3 per cent a year.  Among Clover’s more prominent successes is the inclusion of its omega-3 DHA powder as a food additive in George Weston’s popular Tip Top Up bread, launched in 2002.

George Weston has since expanded the range to include brown bread and muffins.

Clover says its strategy is to continue to expand the use of its natural food additives in markets worldwide.

Clover is listed on the Australian Stock Exchange and AIM in London.