Cornering the market

by World Grain Staff
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With its patented stabilization process, NutraCea enjoys a monopoly on the human and animal markets for stabilized rice bran and is well positioned for global expansion.

by Arvin Donley

Although it contains more than 60% of the nutrients found in a rice kernel, rice bran has always been viewed by rice millers as nothing more than a waste product.

That’s because when traditional milling methods are applied, a rice kernel enzyme called lipase leeches into the bran, causing it to become rancid and unfit for consumption in just a matter of hours. Consequently, each year about 60 million tonnes of rice bran is discarded by rice mills or used as low-grade animal feed.

A Phoenix, Arizona, U.S.-based company named Nutra-Cea is setting out to change that. Using its patented rice stabilization technology, NutraCea is making rice bran a marketable, value-added food product for humans and animals. The process prevents rice bran from turning rancid while maintaining its nutritional profile, extending its shelf life from a few hours to more than a year.

In 2005, NutraCea merged with RiceX, which first developed the proprietary rice bran stabilization process nearly 20 years ago and had been manufacturing products mainly for the animal feed market. NutraCea, which was founded in 1998, took the process a step further by developing the means to create food and nutrition products for human consumption from the rice bran it sourced from RiceX.

"It was really kind of a novelty product until recently because our capacity was so limited," said NutraCea President and Chief Executive Officer Brad Edson.

Edson told World Grain that NutraCea, which controls 100% of the human and animal markets for stabilized rice bran, plans to increase its annual production capacity from 10,000 tonnes in 2006 to more than 70,000 by the end of 2007.

With plans to build facilities not only in the U.S., but in Europe, South America and other parts of the world, Nutra- Cea’s production capacity will continue to increase significantly over the next few years, he said. GROWTH MODE

During the past 12 months, NutraCea has doubled production capacity at its Dillon, Montana, U.S. facility, opened a new facility in Mermentau, Louisiana, U.S. (at the Louisiana Rice Mill complex), and announced an agreement with ADM Rice, a division of Archer Daniels Midland Co., in which NutraCea will implement its proprietary technology into ADM’s rice facility in Arbuckle, California, U.S. Edson added that the company plans to open a second rice bran stabilization facility in Louisiana by the end of the year.

Edson said the company expects to have at least one facility operational in Europe by the end of this year and more planned for 2008. It also has agreements to construct facilities in several countries in South America.

"Eventually, it is our goal to build facilities for our process throughout the Third World and supply them locally, because the cost of transportation becomes prohibitive to ship (stabilized rice bran) from the U.S.," Edson said.

In addition, NutraCea announced in March that it had entered into distribution agreements with all European members of the Azelis Group S.A., a large multinational conglomerate comprised of a network of market leaders specializing in Life Sciences, which includes the pharmaceutical, veterinary, food and cosmetic sectors. NutraCea said the agreement will open up distribution for the company’s stabilized rice bran products in over 27 countries in eight regions of the world.

With no debt and more than U.S.$60 million in cash, according to the company’s most recent earnings report, NutraCea is in a position for significant expansion. But since it is still a relatively small company, it currently can only meet a fraction of the demand for stabilized rice bran, which Edson estimates to be "several million tonnes."

The obvious benefit of this technology to the rice milling industry is that it now has the potential to sell a product that for many years had been considered worthless.

"There are thousands of rice mills around the world, and probably at any one time we have several dozen asking us if we can do something with them," said Edson, noting that mills with large production capacity and modern milling equipment are the best candidates for collaboration with NutraCea.

Edson said NutraCea currently operates two different types of facilities. "Stage One" facilities are located in the rice mill itself or adjacent to it. "In this case, we’re taking the bran that’s been removed from the milling process, because the rancidity problems can occur almost immediately," Edson said. "Within a few hours, and certainly after a day, bran that isn’t stabilized becomes unfit for human consumption."

NutraCea’s "Stage Two" facilities, which don’t have to be located near a rice mill, take the stabilized product from Stage One facilities and further extract its core components, such as fiber and insoluble fiber.

So what happens if the bran isn’t stabilized? Under normal milling conditions, when brown rice is milled to white rice, the oil in the germ and the potent lipase enzyme found on the surface of the bran come into contact with each other. The lipase enzyme causes very rapid hydrolysis of the oil, converting it into glycerol and free fatty acid (FFA) and rendering it unsuitable as a food or animal feed.

As the FFA content increases, the rice bran becomes unpalatable. At normal room temperature, the FFA concentration increases to 7% or 8% within the first 24 hours. Thereafter, it increases at a rate of approximately 4% to 5% per day.

Rice bran is unfit for human consumption when FFA concentration increases above 5%, typically within 12 hours of milling. Once the FFA concentration exceeds 12%, it becomes unsuitable even for cattle feed.

Several processes designed to stabilize rice bran have been used over the years, most notably parboiling, in which rice is subjected to soaking and steaming prior to being dried and milled. This process softens the rice kernel and reduces the problem of lipase-induced hydrolysis. But the bran produced from parboiled rice is only semi-stabilized and can spoil in 20 days or less. The parboiling process also eliminates most of the intrinsic nutritional value of the bran by destroying or leeching out its beneficial nutrients.

Processes using chemicals, microwave heating and variants on extrusion technology have also been used in an attempt to stabilize rice bran.

Edson said NutraCea supplies stabilized bran for use in human food, animal feed, and pharmaceutical and nutraceutical products. The animal feed segment, which includes companies like ADM and Purina, is the biggest part of Nutra-Cea’s business in terms of volume. But the pharmaceutical/nutraceutical and human food segments have been growing significantly.

"We really have unquantifiable demand in all three categories," Edson said.

With consumers in many parts of the world demanding more whole grain products, introducing stabilized rice bran to the global human food market could not have occurred at a more opportune time for NutraCea.

Although it represents only 8% of the kernel weight, rice bran contains more than 60% of the nutrients in the entire kernel. Medical studies have indicated that rice bran contains more than 100 antioxidants and can reduce the risk of intestinal cancer and help decrease blood pressure.

Rice bran includes high concentrations of B-complex vitamins, beta carotene (a precursor forVitaminA), and gamma oryzanol, all nutraceuticals with therapeutic properties. Rice bran also contains 18% to 23% oil, which is high in polyunsaturataes and monounsaturates. Rice bran oil contains significant amounts of essential fatty acids, linolenic acid and linoleic acid as well as a broad range of nutraceutical compounds.

NutraCea has developed a series of nutrient-dense products specifically designed to address the issue of world hunger and malnutrition. They include RiceAde, a specially formulated drink that has been distributed in schools in developing nations, and NutraSolve, a prepackaged food product that requires no potable water and can provide essential vitamin intake, oral rehydration, and high calorie and protein content to replace a meal.