WASHINGTON, Sept. 14, 2016 - High oleic soybean oil is gaining traction in the U.S. as the way to cut out unhealthy trans fatty acids from food, but the soy industry still has plenty of work to do to gain international approval and acceptance of the product made from genetically engineered seeds.
DuPont Pioneer and Monsanto still don’t have complete approval in Europe for all the biotech traits in their high oleic soybeans, but that fight isn’t the only obstacle to gaining total market acceptance. Consumer uncertainty over biotechnology and labeling laws in some countries are complicating acceptance.
Japan, for instance, has approved the soybeans for human consumption, but the government will require labels on oil made from them because of the nature of the genetic modification. Oil made from more traditionally engineered soybeans, in which the basic properties of the oilseed haven’t been changed, don’t have to be labeled.
“Unfortunately, when it comes to high oleic soybean oil, GMO labeling was determined to be necessary,” said Akira Saito, managing director of the Japan Oilseed Processors Association. “America is going into the right path about high oleic soybean oil, but unfortunately in Japan there is some restraint” on the product’s use.
The requirement that high oleic soybean oil be labeled could have big ramifications for Japanese oil producers, and the country’s baking and restaurant industries know that Japanese consumers would likely reject products with GMO labels, Saito said.
Much of the soybean oil produced in Japan comes from genetically modified beans that were grown in the U.S. Japanese crushers in recent years have been buying about 2 million metric tons of U.S. soybeans annually, valued at roughly $1 billion.
And that’s on the rise. Japanese soybean oil production is expected to reach about 445,000 tons this year according to data from the U.S. Soybean Export Council (USSEC). That's up from 435,000 tons last year and 415,000 tons the year before.
Soybean industry representatives are working both internationally and domestically to promote production and acceptance of high oleic soybeans and the oil made from them.
On the European front, DuPont Pioneer received good news in August. The Panel on Genetically Modified Organisms of the European Food Safety Authority (EFSA) gave its official opinion that the company’s stacked traits for herbicide resistance and high oleic content in its Plenish brand soybean are safe for consumption.
That’s a significant development, said Frank Flider, a consultant for the soybean sector group Qualisoy. “The next step should be for the EU to accept the EFSA opinion and hopefully approve the variety, enabling marketing of high oleic soybeans in the EU.”
Plenish still has a major hurdle in Europe, though, said Russ Sanders, director of food and industry markets for DuPont Pioneer. He said the scientific phase of the approval is done, but now it faces the political process in the European Commission.
At home in the U.S., the success of the soybeans is paramount to regaining the restaurant and institutional market share for soybean oil, said Flider.
Commodity soybean oil consumption in the U.S. has been slipping for several years and for good reason: Makers of cakes, cookies, donuts, margarine and dairy creamer are abandoning it in favor of other oils that don’t produce heart-threatening trans fatty acids.
The soybean industry wants to see that trend reversed and the relatively new high oleic soybeans are widely viewed as the answer. Oil made from the soybeans doesn’t produce trans fatty acids when it is used to cook French fries.
In 2004 soybean oil made up about 79 percent of all the vegetable oil consumed in the U.S., Flider said, but that dropped to just 59 percent by 2015. Meanwhile, consumption of corn oil, palm oil and canola oil has been on the rise.
“The precipitous drop in soybean oil demand was a direct result of industry and consumer concerns about trans fatty acids,” Flider said.
Traditional soybean oil is partially hydrogenated to make it more stable for cooking and processing food, particularly for the production of shortening and margarine. It also extends the oil’s shelf life.
The race to give the food preparation and manufacturing industries a new soybean oil that doesn’t need to be partially hydrogenated – the process that creates trans-fatty acids – has a deadline. Not only are other oils taking up the market, but the FDA has set June 18, 2018, as the date when partially hydrogenated oils (PHOs) must be removed from food.
It was about 13 years ago when the FDA announced it would begin requiring trans fats be included on food labels by 2006, and companies began replacing soybean oil with other vegetable oils like palm oil.
At the time about half of the soybean oil used in the food and cooking industry was partially hydrogenated, said Sanders.
“We only have (high oleic soybeans) in seven states,” one industry official said. “There’s not enough production … to create enough oil to even meet a quarter of the fast food restaurants. We need to have loads more of these soybeans being grown.”
Flider said the industry is confident it can get the job done. About 140 million pounds of high oleic soybean oil will be produced this year, according to an estimate by Qualisoy. The soybean industry group is predicting that figure will more than double in 2017 as production moves swiftly upward to 9.3 billion pounds in 2024.
That kind of increased production is what the industry needs to convince international buyers that there will be enough supply to meet their needs for soybean oil, an industry representative said, but agreed it is a complex situation. At the same time, farmers often need to be shown there is sufficient demand before they agree to grow the beans.
The first step, Flider said, is to regain the U.S. market share that has been lost to other oils and the healthy nature of high oleic soybean oil will make that happen.
Just last week, DuPont Pioneer announced that agribusiness giant Bunge has doubled the acreage on which it will contract farmers to grow Plenish soybeans.
The Plenish soybeans need to be kept separate from other soybeans so that they do not inadvertently mix with oilseeds being shipped to Europe. China has already approved the Dupont Pioneer soybeans. To keep that identity preservation in place DuPont Pioneer distributes seeds to companies like Bunge, ADM and CHS, which then contract farmers. After harvest, the farmers ship the soybeans to be processed and then sold as oil.
“Some processors prefer to wait until we get that final approval done,” Sanders said. “Others like Bunge believe that the risk is low enough … that the upside is worth what small risk might exist on the stewardship side.”
The upside is that is that the high oleic soybeans are worth more to processors and farmers. Those farmers, Sanders said, get a 50-cent per bushel more for their crop and that can translate into a roughly 5 percent premium.
On the processor side, more and more companies like Nestle are willing to pay extra for the high oleic soybean oil, Sanders said.
“There is no question that the ban on PHOs had a damaging long-term effect on the market share of soybean oil,” Flider said. “Without high oleic soybean oil, 7 to 8 billion pounds of U.S. demand alone would be gone forever to be permanently replaced by other fats and oils. The availability of high oleic soybean oil will enable the market to recover what was once lost.”
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