Potatoes & NuSun
Tuesday, August 1, 2000
filed under: Utilization/Trade: NuSun
Some things just seem to go together - like pizza and beer . . . cookies and milk . . . and, NuSun and potatoes? Indeed, it's becoming apparent that NuSun and potatoes are a perfect match.
The cover photo on this issue of The Sunflower displays a few regional and national brands of potato chips that are using NuSun. When the NuSun concept was born five years ago, the proud parents of the idea targeted the potato industry as the best potential market opportunity. Why? Because the potato chipping industry needs an oil which provides taste that consumers prefer. An oil that will stand up to the rigors of
continuous hot frying temperatures without breaking down. An oil that will provide the chip a long shelf-life, does not need to be hydrogenated, and is low in saturated fatty acids. There have been only two oils of significant volume that can meet most of those rigorous requirements: corn and cottonseed.
NuSun meets all of these requirements. And the oil received a huge vote of confidence this summer when Procter & Gamble announced it was switching its "Pringles" line of potato chips to NuSun for all its markets in North and South America, parts of Europe, and Asia. Pringles product manager Joel Evans said at the National Sunflower Association Summer Seminar that Procter & Gamble "would rapidly become the number
one customer of NuSun."
It was a ringing endorsement from a food industry giant.
More Pringles are sold worldwide than any other potato snack brand. Procter & Gamble is a well-recognized consumer product manufacturing and distribution company with global operations.
Furthermore, Proctor & Gamble has a reputation in the food industry as a company that does its homework before marketing and promoting its products. Indeed, P&G's Evans says consumer tests proved to them that consumers prefer the taste of Pringles when fried in NuSun. The oil passed all other tests of functionality and shelf-life in the year and a half the company spent testing it.
The National Sunflower Association committee that guided the NuSun project along over the past five years could only dream about a national brand commitment to help put NuSun on the product map.
Yet the Pringles development does just that. Scott Nelson, NSA president and a farmer from northeastern North Dakota, equates it to the respected farmer in the neighborhood who everyone watches. "When that farmer decides to try a new crop or a new piece of equipment, the neighbors watch closely and begin to make similar plans for the following season."
The entire potato chip and snack industry is near and dear to NuSun. It is a huge market which has been growing "leaps and bounds" over the last few decades. The U.S. potato chip market alone was $4.69 billion in 1999 (compared to the tortilla chip market value of $3.75 billion), with a growth rate of five percent, reports the Snack Food Association.
NuSun is fast establishing a unique relationship with potatoes. Most NuSun is grown and processed right in the middle of one of the largest potato-producing centers in the United States, according to Kevin Cramer, head of the North Dakota Department of Economic Development an Finance. "The Upper Midwest has generated a lot of potato-related processing in the last several years. Having a preferred frying oil produced and refined right in the heart of potato country is that 'hand-in-glove' relationship," Cramer states.
The Next Step
It was just five years ago that the NuSun concept was initiated. Since that time, hybrid seed companies have worked feverishly on developing NuSun hybrids with all the agronomic characteristics that farmers expect and need, plus the important oil characteristics that make up NuSun. It has been a tall order, but more and more hybrids are now available for farmers to choose from.
Every segment of the industry - from producer to refiner - has been part of the NuSun transition team. Maintaining quality standards and providing an adequate supply of oil at competitive prices is what the potato/snack industry needs to have.
At the other end of the spectrum is the producer, where it all starts. For producers, it is a matter of hybrid performance, competition with other crops - and price. Price is the key. When the NuSun idea originated, it was clear that using export subsidies to maintain
marketshare was going to be short-lived. Being the cheapest world oil did not generate much enthusiasm. Producing an oil with desirable characteristics for the domestic frying industry is far more appealing.
Producers react to price in their planting decisions. So far, the premium paid to producers for NuSun has varied between 40 and 80 cents per hundredweight over traditional sunflower. Will that premium increase or decrease? It is just too early to tell at this time since the volume produced is still too small to really test the market.
The marketplace is very competitive. If NuSun becomes too expensive, customers will look to alternative oils. If the price to farmers is too cheap, they will opt for other crops. The marketplace determinines what the final value will be, and the marketplace will sort this out.
Still, Procter & Gamble's commitment, along with usage by several regional chippers, is seen as a very good sign for the future of NuSun. - Larry Kleingartner