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You Are Here Sunflower Magazine > High Demand for High-Oleic Oils


Sunflower Magazine

High Demand for High-Oleic Oils
December 2004

Market demand for high oleic vegetable oils continues to increase, driven by expanding edible and industrial uses.



HO vegetable oils include safflower, canola, olive, and sunflower. HO sunflower – with an oleic level of at least 77% and preferred commercially at 85% plus – currently accounts for less than 10% of U.S. oil sunflower acreage. Thus, with roughly 2 million acres of oil sunflower produced in the U.S., less than 200,000 acres is high oleic.



However, the increasing demand for high oleic, high-value oils has prompted Technology Crops Inc (TCI, formerly Kings Inc), a global leader in the contract production of HO sunflower, to expand its contract production for HO sunflower and other specialty oil crops in 2005.



The company had a long history, established as John K King and Sons Ltd. in 1793 as a specialty seed company in the United Kingdom. Kings established a presence in North Dakota in 2000, with a field office in Carrington. Senior management of Kings Inc. acquired the business from Associated British Foods (the UK parent company) and became TCI on January 1, 2004.



President and CEO Andrew Hebard says that the change to TCI was primarily in name and ownership. The new company, headquartered in Winston Salem, N.C., continues to contract for specialty crop-derived seed oils (including HO sunflower, specialty soybeans, crambe, high erucic rapeseed, and borage). It also continues to work with the U.S. division of its former parent company, ACH Foods/Humko of Memphis, Tenn., to contract grow, process and market the specialty oils.



Familiar names continue with the company, including Sara Anderson as senior account director of TCI’s Carrington office; Tony Rosing, an agronomist based in Hawley, Minn.; and Don Bricker, West Fargo, N.D., a specialty crops coordinator. TCI recently added another specialty crops coordinator with a name that’s well-known in the Northern Plains oil crop industry: Curt Stern, a longtime field manager with Northern Sun/ADM and an active leader in the National Sunflower Association.



The addition of Stern, based in Carrington, signals TCI’s intention to gear up its high-value, high-oil crop production. The company recently announced plans for “significant production expansion” in response to increased demand from domestic and international clients for highly specialized crops used in a variety of industries, including specialty nutrition, pharmaceuticals, and industrial chemicals. These “technology crops,” as the company calls them, require careful segregation and isolation throughout the supply chain--from seed selection to extraction to delivery.



“As South American and Eastern European countries increase their agricultural production and influence commodity prices, North American growers can compete on a different set of criteria – not lowest price – but value-added quality and traceability. Our crops give U.S. growers a way to differentiate their products and expertise and reduce their risks,” Hebard says. “Demand for technology crops is growing, and we believe these crops represent a key part of future agriculture decisions in North America.”



TCI plans to contract more than 350,000 acres in 2005, for HO sunflower as well as several other premium-priced identity-preserved crops. The company has a trademarked “soil to oil” IP process called Crop Assured 365™. TCI will also expand its list of qualified elevators for production handling, add seed companies offering new genetics, and widen its base of production processors.



In addition to a guaranteed buyer and premium prices, Hebard says TCI offers growers contracts that include coverage for Acts of God and full production protection, thus virtually eliminating these major grower risks. Hebard says the company’s 2005 HO sunflower program will give the grower an opportunity to:



1. receive a premium of $1.50/cwt over the NuSun price;

2. select local delivery options;

3. select a delivery window preference (Oct-Dec; Jan-March; Apr-Jun);

4. receive on-farm storage premiums of $0.15/cwt/month after Feb;

5. Hedge a portion of their contracted crop, pricing up to 50% of the crop against canola futures, in the event that canola futures provide an even better price for the grower than the contracted price.



What’s Driving the Market



Some of TCI’s crops offer alternatives that address two major issues in the U.S. – dietary trans fats and dependence on petroleum for energy needs.



Demand for HO sunflower and other HO oils, as well as mid-oleic oils like NuSun, is increasing in part because of new laws requiring labeling of trans fats in foods by mid December, 2005 in Canada, and January, 2006, in the U.S.



HO oil is also used to make non-food products, including cosmetics, pharmaceuticals, lubricants, and industrial chemicals. The use of plant-derived chemicals (which some refer to as “oleochemicals”) is growing rapidly, as new, sustainable sources of supply are sought to replace mineral oils as fuels and lubricants.



HO sunflower oil is a key ingredient in infant formulas, high quality snack foods, high quality frying oils and personal care products. The fact that HO sunflower is not genetically-engineered is a selling point. Four years ago, Humko became the first edible oil manufacturer in the U.S. to market biotech-free shortenings made with sunflower oil, targeted at a broad range of uses, from bakery applications to spray coating oils for cereals and dried fruit, and to shortening for microwave popcorn.



A growing market for HO sunflower and other HO vegetable oils isn’t without challenges, including a limited supply and a premium price that makes some product manufacturers hesitant to switch from using cheaper oil sources. However, Bricker says TCI’s production contracts are based on firm market demand commitments, eliminating speculative production. “Our end-use customers tell us how much oil they need in pounds, and we use that as our basis to contract production with growers.”



TCI will be holding a series of grower meetings beginning in December, with dates and locations to be posted on the company’s web site (www.techcrops.com). For more information, growers can also call 1-877-780-5882 or email Bricker (dbricker@techcrops.com) and Stern (cstern@techcrops.com). – Tracy Sayler



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