China is rapidly emerging as the world leader and importer of vegetable oils. Argentina is also becoming the top exporter of soyabean oils. Living standards are improving in emerging economies. Population growth and changing diets will have a major impact on future development of edible oils.
Meanwhile, India’s production of edible oil will increase as we become an integral part of the globalised economy. It is expected that Indonesia and Malaysia, leading producers of palm oil, will face increasing competition from countries like Thailand. Until demand and supply reach some kind of equilibrium, ups and downs in this market will continue.
Changing weather patterns will have different geographical impacts but these can be large. Rapeseed oil, sunflower oil, palm oil and soyabean oil will increasingly grow in prominence in the future. Olive oil faces a bleak future unless prices are brought down. In case of olive oil, prices are high, so demand in developing countries continues to be skewed and due to moderate demand, producers cannot benefit from economies of scale and this squelches the growth prospects of olive oil in the future. It is a vicious cycle.
Healthier version
By 2020, the market leader in edible oils will be one who can innovate and use technology to create a healthier version of edible oil that contains predominantly monounsaturated fatty acid. The focus will be more on oils derived from natural sources like cold press or through organic farming techniques but again unless the prices of these products are brought to reasonable levels, the scope will tend to be limited.
Today, China and India are the two countries that the world is scrutinising with very keen interest. This is particularly so on the agricultural front as both countries are big importers of edible oils. China is also the biggest importer of seeds and grains.
The issues facing Indian agriculture are very small and marginal land holdings, low penetration of technology, dependence on monsoon rains for almost 58% of the arable land, and non-availability of hybrid/certified seed. The supply chain is also very fragmented in so far as not facilitating farm produce to reach the market.
New capacities of solvent extraction plants and refining created since the 1990s were in the range of 500 tonne per day for crush and 250 tonne per day for refining. At the close of 20th century, two new developments took place – entry of low-cost palm oil in the world’s oil basket, and Wilmar joining with Indian company Adani to build a state-of-the-art refinery of 1,000 tonne per day capacity with a fractionation unit for palm oil. This immediately caught the eye of others and a series of new refineries of this size were developed. These refineries produced quality products which brought a sea of change in their market perception, resulting in production at a relatively much lower processing cost.
Imported oil
The Indian market is being flooded by imported oil – mainly palm, soybean and sunflower. The South American industries for soybean oil and Malaysia/Indonesia for palm oil have discovered India as a dumping ground for their produce. India still has an insatiable appetite for edible oil as the income levels rise.
Over the past decade, world class edible oil refineries have been set up in India where superior quality refined oil is produced at a low processing cost. The days of small-sized batch refineries of 50 t per day capacities are over. However, the capacity utilisation of Indian refineries is still at a meagre 35% of installed capacity. Thus, the Indian edible oil situation is going to persistently influence the world demand and supply to a large extent.
Sunflower oil has lost market share of total world edible oil consumption. Future projections will indicate a recovery of oil demand, but further genetic improvement, changes in crop management and adaptation to marginal regions will be necessary to reach reverse the trend. Future demand of sunflower oil will continue to be for edible purposes. Sunflower oil is a healthy choice and it is cheaper than olive oil. In the future, it is expected that the focus will be on getting higher oil yield per hectare.
70% global volume
The four largest producers (Russia, Ukraine, European Union and Argentina) account for 70% of global volume, with an exponential growth of production in the last 10 years in the Black Sea region. This enabled by an increased acreage and higher yields achieved by replacing old varieties by hybrid seeds.
Sunflower seeds are crushed mostly locally and seed world trade represents less than 10% of global production. World sunflower oil trade accounts for 30% of total consumption. The European Union is the major destination of the Ukrainian and Argentine exports.
Major challenges for the scientist community around the sunflower value chain will certainly compress genetic improvement to increase yields, enlarge ecological adaptation, improve quality and/or trans-fatty acids composition, and adjust quality to industrial usage requirements.
There is a global consensus that the healthiest oils are those rich in monounsaturated fatty acids, such as olive oil; and those rich in long-chain Omega-3 fatty acids, such as fish oils. Going forward there will be renewed focus on genetically-modified seeds, hybrid seeds that can lead to oils with a greater percentage of monounsaturated fatty acids. Academic research focus will be on developing a vegetable oil that is similar to olive oil in chemical constitution but that which can be produced in a cost-effective manner.
Nutritional quality, industrial functionality
In recent years, a significant portion of edible oils is covered by sunflower oil, with a sharp focus on its healthiest options - high nutritional quality and desired industrial functionality – such as high oleic sunflower oil. Sunflower oil is rich in vitamin E, it has antioxidant properties, it is beneficial for the eyes and it can help to prevent Parkinson’s disease. It contains short-chain Omega-3. Thus, one can expect that sunflower oil will continue to enjoy its popularity across the globe.
Of the total 95 million tonne of vegetable oil produced annually, palm oil accounts for over 28 million tonne, synthesised from oil palm, which, incidentally, is the second-largest cultivated oil crop in the world, the first being soy oil. The pressing global demands for edible oil has led to the massive plantations of oil crops, namely soy oil in South America and palm oil in the tropical countries, the two most globally consumed edible oil.
Substantial shortfall
However, under the current circumstances, cooking oil is still plagued by a substantial shortfall, which is a reflection of the fact that, the ‘Oilseeds Technology Mission’ and an enhanced oil palm plantation was unsuccessful in bringing about any discernable change in the oilseed production of our country. It seems that the call of the day is another ‘yellow revolution,’ which would undoubtedly make India, self- dependent in edible oil production, and enhance the economic as well as the agricultural growth of the country.
As of October 4, 2013, the government has announced a grant of Rs 3,507 crore, as a part of the 12th Five Year Plan, to thrust the production of oilseeds. The proposed National Mission on Oilseeds and Oil Palm also includes acquiring an area of 12.5 lakh hectare to be used exclusively for oil palm plantations. The National Mission on Oilseeds and Oil Palm will also focus on issues like diverse replacements and ‘increased Seed Replacement Ratio,’ improving irrigation in oilseed plantation areas (from the present 26 per cent to a proposed 38 per cent) and variegation of agricultural land, through replacement of low yield cereals with oilseed crops.
Fortified vegetable oils
The future of edible oil industry is bound to be more skewed towards blended vegetable oils that are full of nutrients and antioxidants. Health-consciousness among the global population is on the rise and fortified vegetable oils will be very much in demand. Palm oil seems to have a great future.
Not only is palm oil the cheapest vegetable oil in the world, but from a farmer’s perspective, it is also perhaps the most rewarding, with yields of four to six tonne of crude palm oil per hectare (compared with less than one tonne per hectare from other oilseeds; [Ministry of Agriculture, GoI 2011]). It is not surprising then, that both global demand and supply continue to skyrocket in comparison to any other vegetable oil, including soybean, rapeseed and sunflower.
India is the largest global consumer and importer of palm oil. Recent imports of palm oil—largely from the south-east Asian countries of Indonesia and Malaysia—have risen sharply, from 5.6 million tonne in 2007-08 to 8.82 million tonne in 2009-10 (Ministry of Agriculture, GoI 2011). India's increasing demand for palm oil stems from its inability to meet its domestic demand for vegetable oil; India produces less than 50% of its domestic edible oil requirements (Ministry of Agriculture, GoI 2011). So far, India has been importing cheap oil, simultaneously “exporting” the drastic and deleterious socio-economic and ecological impacts of oil palm to other developing countries.
Growing population is a positive factor for edible oil industry. But land availability for cultivation of oil seed crops is a challenge. There will be focus on growth in crop yields. Oil palm with the highest per hectare yield of all edible oils to date is bound to become the most important vegetable oil in the world. With ongoing trade liberalisation, increasing demand for edible oils from developing countries, the world market for palm oils is expected to grow strongly.
There will be pressure to convert forest land into farm land and this will be resisted by environmental NGOs. World production of palm oil is expected to increase by 32% to almost 60 million tonne by 2020. Palm oil industry has experienced rapid growth in recent decades and has become a significant contributor to the world market for vegetable oils.
Palm oil - Substitute
Demand for palm oil has further increased in recent years as many developed economies are shifting away from the use of trans fats to healthier alternatives. Palm oil has been a substitute for trans fats – few highly saturated vegetable fats that are semi-solid at room temperature and is relatively low cost.
Impact of palm oil on deforestation, carbon emissions and biodiversity loss is high. But interest in palm oil is mainly because of huge returns on investment. Some 80% of global palm oil production is used for food purposes including cooking oil, margarines, noodles and baked goods.
There has been a substantial growth in the global consumption of vegetable oil in the last few decades. Some 2/3rds of global expansion in oilseeds plantings is earmarked to occur in the developing world. Developing countries will also lead the increase in global vegetable oil output. Growing environmental constraints could alter projections. Developing countries, in particular China, and other Asian countries should continue to dominate the rise in vegetable oil consumption. Annual yield improvement is expected to slow down, compared to the last decade and the productivity gap between developing and developed countries is expected to narrow down further.
