World Market Slow to Transition to High Oleic
Oleic sunflower has been around for more than 25 years. Even though the U.S. industry has completely shifted to a combined NuSun®/high oleic, the rest of the world’s sunflower producers are much slower to make the change.
The trans fat issue was the incentive to switch to oleic-based sunflower in the U.S. NuSun or high-oleic sunflower oil does not have to be hydrogenized when used in food processing applications. It is the hydrogenation process that creates trans fats. The U.S. Food and Drug Administration finalized trans fat labeling requirements for food companies in 2003. Demand for oleic-based oils in general in the U.S. has been strong since that time as food companies have been forced away from hydrogenated soybean oil.
The rest of the world has been slower to shift to oleic-type sunflower. That largely translates to individual country food labeling law/requirements. Trans fat is a concern in many other countries, but labeling of specific vegetable oils is usually not required. In other words, the ingredient label can simply say produced in “vegetable oil.” Often, in these cases, palm oil is the oil of choice because of price, availability and functionality in processed food products. Palm oil is high in saturated fatty acids, which are also implicated in heart health. Some nutritionists argue that in many instances food companies have simply substituted palm oil for hydrogenated oils, leaving the consumer no better off.
In some large sunflower production regions of the world, like Russia and the Ukraine, there is little or no incentive for market segregation of high oleic from classic or traditional sunflower. This market needs further maturity. The bottom line is that financial incentives are required to maintain segregation at the farm level and through the entire marketing chain. That was clearly understood when the U.S. market began the transition to NuSun.
The French market has been slowly shifting to high-oleic sunflower, with about half of the nearly 2.0 million sunflower acres in France dedicated to high oleic. One of the major processors and marketers of high-oleic sunflower oil is SAIPOL. This company has been connecting demand from food companies with a supply from contracted growers.
Speaking at a recent conference, SAIPOL’s Jean-Manuel Francois said that the high-oleic strategy is to produce what the market requires and no more. He indicated that the company has a dedicated group of farmers who do an excellent job of segregation to maintain quality. Keeping those growers producing high oleic requires a consistent premium price over traditional sunflower. He further indicated that they do not want to over-produce. The market is coming to them, and they are doing a good job of supplying it.
That is not the case in the major sunflower production centers of Russia and Ukraine. Only a small percentage of the crop is high oleic. The incentive, frankly, is not there. A recent grower survey conducted by APK Inform confirms that Ukrainian and Russian farmers see little or no incentive in producing high-oleic sunflower. The survey indicates that nearly all farmers in those regions have experience with high oleic, but the majority surveyed had little or no interest in staying with high oleic because of the lack of financial incentives and designated market outlets.
Some sunflower crushers in Russia and the Ukraine report that they have received inquiries from major world food companies about producing high-oleic sunflower oil, but to date that has not translated into market incentives to grow and segregate the crop on a larger scale. Crushers say that most of these potential buyers have little knowledge of the increased cost of separate storage from the farm to the end user.
Seed companies have made great strides in developing high-oleic hybrid planting seeds that are equal or superior to traditional sunflower. The hybrid seed industry has had enough time and experience to make the transition. There is a considerable cost in producing two sets of hybrid seeds. The seed industry has made that commitment in anticipation that the market will steadily move in the direction of high oleic.
One issue impacting the Russian and Ukrainian sunflower industries is that the region has not yet fully transitioned to planting hybrids. Open-pollinated planting seeds are estimated to dominate up to half of this large market. It is a matter of cost which keeps open-pollinated planting seeds a viable choice. That is despite hybrids having a clear yield advantage. More important is the advantage of herbicide-resistant hybrids. It is anticipated that hybrids will continue to gain market share as new breeding advances are made.
As the high-oleic sunflower market further develops, there are new fatty acid versions of sunflower coming to the market. This includes high-stearic/high-oleic and high-oleic/low-saturates. The development of these specialized sunflower oils will take the same route as NuSun/high oleic. That will include contracted production, segregation throughout the market system, and a sophisticated oil market that is willing to pay the necessary premiums for these specialized oils. All of that is necessary to provide the incentive for the producer to plant and segregate the crop. That goes back to labeling requirements of processed foods so consumers can best gauge nutritional value — which all translates back into the value chain.
— Larry Kleingartner
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