The representation of high-oleic crops on international markets permanently grows. This type of oil is usually purchased by cafes, restaurants, and canteens – in many countries, such provisions are even stipulated by the legislation. For instance, in the EU and USA certain legislative restrictions were imposed on the application of particular types of oils, especially trans-fats. This encourages producers to search for alternative and qualitative but less expensive than olive oil sources of fat, such as high-oleic oils, for example. High-oleic sunflower oil contains even more oleic acid than olive oil. It’s also used in the beauty industry, for production of technical oils and biofuel. Experts estimate that the global demand for such oil is around 2,5 million tons per year, with EU having the largest share – 800 000 tons. Currently, such oil is 13% more expensive than standard sunflower oil.
Advantages of high-oleic sunflower: profitable for producers good for consumers’ health
Thanks to the high oxidative stability, such sunflower oil doesn’t require hydrogenation and has 5 times longer expiry date than standard oils. It allows producers to save money on storage of high-oleic oil.
At the same time, such oil is less harmful to the health of consumers, as the consumption of high-oleic oil instead of trans-fats which are obtained during hydrogenation, as well as low level of carcinogens emerging during the heat treatment, decrease the risk of cardiac disease. Furthermore, high-oleic oils have a concentration of Vitamin E (45mg/100gr) as well as oleic acid (Omega 9) which participates in many biochemical processes inside our body.
The USA and the most advanced EU countries have already switched to high-oleic sunflower
Currently, the world’s largest producers of high-oleic crops are USA and EU countries: France, Portugal, Spain, Italy, and Austria. These countries have the highest percentage of arable lands planted with these crops. For instance, in the USA this figure is 100%, while 60% in France and 41% in Portugal. Leading exporters of high-oleic sunflower oil are Netherlands (22%), Great Britain (19%), Italy (16%) and Spain (13%).
On the one hand, it means that the market is already well-developed, on the other that the potential for growth is still huge as the demand for such oil increases steadily. This demand may be satisfied by countries with substantial potential for the development of high-oleic crops industry: Argentina and CIS countries. Though, while 15% of arable lands are planted with such crops in Argentina, only 2% of Ukrainian fields are planted with it.
Ukraine steadily increases the production of high-oleic sunflower
During last three years a steady increase of areas planted with high-oleic breeds of sunflower is observed in Ukraine. We faced a 1,4% increase within the aforementioned time period, while in physical terms the volume increased by 110 thousand hectares and currently amounts to 260 thousand hectares – almost two-fold increase.
The production of high-oleic sunflower oil increases as well. During these three years, it has practically doubled: 225 thousand tons were produced in 2014-2015, while 473 thousand tons were made in 2016-2017.
These trends stand behind the increase of high-oleic sunflower oil export. In 2017 120 thousand tons were exported which is almost three times more than in 2013 (45,9 tones). This year was also marked by the diversification of the export: 83% of the oil was exported to European countries in 2017, while 92% last year.
High-oleic oil invaded European market, with the Asian coming next
Europe has already gone through the process of substitution of the palm oil with high-oleic oil. In 2014 several EU countries introduced new labeling standards and forbade the trans-fat acids. In 2016 they also adopted the obligatory indication of the saturated fats’ content in products. As a result, today the large volume of sunflower oil in Italian and Spanish shops is high-oleic. Producers of food are also actively searching for the replacement of palm oil. High-oleic sunflower oil can become such replacement thanks to its outstanding nutritional and taste qualities.
Asian countries recently joined the trend as well. It’s expected that the palm oil will become cheaper, the production of spread will increase and thus an issue with meeting the demand will emerge. If to put it in figures, till 2020 the consumption of high-oleic oil is expected to increase worldwide up to 8,1% and up to 10,2% in the EU. Every year the amount of byproducts with a high concentration of oleic acid will increase by 19%. The market of blended oils may also appear to ensure prices and proposition flexibility.
High-oleic oil also perfectly fits within the global trend of healthy eating. This product can potentially make Ukraine become the largest exporter of added-value agricultural products.
The Ukrainian oil production sector is a positive example of an industry’s development. During last 15-17 years, our country evolved from being the largest exporter of sunflower seeds to become the largest exporter of sunflower oil. Controlling over 50% of the world oil market is a real success. Though, one shouldn’t forget about competition created by the palm and soy oil producers. It’s very important for us to protect Ukrainian sunflower on the world market in order to ensure the stable control over our share of the international oil market. High-oleic sunflower might be a solution as its fatty-acid composition makes the product highly competitive.
This year’s macroeconomic situation seems to be favorable for the sunflower production. Furthermore, unlike other products, the market is positive about sunflower oil, while prices for palm, soy, and colza oil are very likely to decrease.
By looking at bonus allocation trends of the current and following seasons, one can say that bonuses will increase. The bonus for the sunflower seeds may increase up to $25-30. There are already several processing enterprises in Ukraine which pay $25 bonus to producers of high-oleic sunflower seeds and in such way support popularization of this crop.
Thus, favorable conditions for production of high-oleic sunflower are already in place in Ukraine, while the potential for the market growth makes this culture worth investing in.
The “Ukrainian Agribusiness” guide will be published thanks to Baker Tilly Ukraine, PJSC “CREDIT AGRICOLE BANK”, and law firm AEQUO. This infographics guide was developed by the experts of the content-marketing agency Top Lead and as well as Agro Media Holding Latifundist Media.