Stabilized rice bran is a naturally rich source of vitamins, minerals, and antioxidants, yet 60 million metric tones of the rice processing by-product from which it is derived are thrown out by rice mills around the world each year or used as low-grade animal feed.
The technology to stabilize this by-product and turn it into a valuable source of nutrition was developed by RiceX, NutraCea founder Patricia McPeak's first company. NutraCea and RiceX merged earlier this year.
The agreement with Food Trading Dominicana represents NutraCea's first international joint venture, based on a business model that the company plans to replicate on an international basis.
The government of the Dominican Republic has committed to buying at least $5.4 million of NutraCea's flagship RiSolubles product a year over the next two years - that is 100,000 servings of the nutritious drink per day. These servings will form the basis of school feeding programs.
During this two-year period, the product will be shipped to the Dominican Republic from the US. Upon signature of the definitive agreement NutraCea will begin construction of a local facility, which will take between 12 and 18 months to complete, cost the company $10 million, and have a capacity to produce 1 million servings of RiSolubles a day.
"This is a very important initiative, not only from a business and economic perspective, but from a humanitarian one that we believe will benefit the most underprivileged population of our country," said Rafael Alburquerque, vice president of the Dominican Republic.
The letter of intent also provides for an increase in product procurement by Food Trading Dominicana after the second year, which will expand the feeding programs.
Margie Adelman, senior vice president of NutraCea, pointed out that the government currently feeds 1.6 million children, so the initial 100,000 servings per day represents just 10 per cent of the potential.
"This is our platform into social and school feeding programs," she said. "If you do the math, the potential is astronomical."
"Our intention is to work with our joint venture partner to create a large central procuring and processing entity with its operations anchored in the Dominican Republic for exportation of the processed and finished products throughout the Caribbean and Central and South America."
Adelman told NutraIngredients-USA.com that the company is aggressively pursuing expansion of the business model into the Latin American region and is currently in negotiations with several other countries.
She also explained that the government feeding program is just one facet of the arrangement, commercialization being the second.
Through its joint venture with NutraCea, the rice mill will share its intellectual property on formulas and its seven-strong store of patents for the use of rice bran in nutritional foods to help alleviate the symptoms of certain conditions, including hypercholesterolemia, hyperlipidemia and atherosclerosis, as a supportive therapy for diabetes, to help reduce cholesterol and joint inflammation pain. Through its existing networks the rice mill will distribute the finished product to supermarkets, and NutraCea will receive a 10 percent royalty on all sales.
What is more, RiSolubles is only one of the products coming out of the conversion process. The insoluble fiber by-product of rice processing can also be incorporated into foods and nutraceutical products.
According to Adelman, nutraceuticals is quite a developed industry in the Dominican Republic. Although she was not able to project any figures for fiber in this market, she said that any sales would be "the icing on the cake for us".
April's merger of NutraCea and RiceX created a monopoly on rice bran for the nutraceutical market. The two companies had combined sales of $5.5 million last year, and projected sales are $16.8 million, $6 million due to a contract with WF Young to be its exclusive manufacturer of equine products.