The world before and after mad cows, dioxins, GMO and palm oil free hotels.

The world before and after mad cows, dioxins, GMO and palm oil free hotels.

How much oils and fats are there in the world? Part 3

Bi-Monthly bulletin on Oils & Fats by Aveno
October 20th 2020

If you missed the previous parts, read them here:
Part 2: Something about the egg and the chicken and other things..

Versatile ingredients 

Globally food applications are still the major use for vegetable and animal oils & fats, but we’ve seen a continuous shift from food to non-food consumption, particularly to biodiesel. Today, in Europe only 46% of the demand comes from the food market. Oils & fats are used in: 
  • The FOOD market: butter, margarine, salad- or frying-oils, in mayonnaise and other sauces, biscuits, canned food, ready meals, ice creams, snacks, confectionery, etc...
  • The animal FEED industry: in the feed rations of cattle, swine, poultry, fish and pets.
  • TECHNICAL industries for the production of oleochemicals, coatings, paints and inks; soaps, cosmetics, lubricants, pharmaceuticals, metal working fluids, hydraulic fluids, chain saw lubrication, candles, ... 
  • ENERGY production like biodiesel, but also to fuel co-generation units, etc.
In less affluent societies where the daily main concern is to put food on the table, the relative use of oils and fats for non-food usage is mostly much smaller than in Europe. And since more than 70% of global oil consumption still goes to food, it will be no surprise that the main driver behind the production growth has been a growing population that lives longer and gets wealthier as economies grow.

Profitability for the farmer, climate as well as weather play a role in deciding the fate of an oil. Fluctuating yields, poor irregular supply and high prices will often be remediated by using other oils. Price and profitability are important drivers and in that respect the production, in South East Asia, of palm oil, to satisfy a growing demand for affordable edible oil, has been a tremendous success story. Further on we shall see that there is more than this driving this market. 

Maslow's hierarchy of needs, the power of public opinion and consumer choices.

American psychologist Abraham Maslov taught that humans have several needs: physiological, safety, love and belonging, esteem, self-realization, etc. and if basic needs (food, water, shelter, warmth, safety) get in the background, humans develop so called “self fulfilment needs”. Needs lower on the ladder must be satisfied before one can pay attention to higher needs. In our markets we experience that as societies get richer, consumers get pickier on what they consume, creating extra drivers for development, production and consumption of oils and fats

Many consumer concerns like health and environmental awareness are genuine and legitimate but it is easier to discuss and aspire with a full belly than with gnawing hunger about: plant-based diets becoming a holistic choice, the use of pesticides, deforestation, cleaner fuels and so on.

As concerned, confused and spoiled consumers take omega-3 fish oil pills to enhance mental health and brain performance and to compensate unhealthy behaviors, they often get stuck when it suddenly appears that after all, butter and animal fat aren’t so bad and now became almost highly sought-after expensive luxury products like the “natural and authentic butter croissants on Sundays”.

In past decades many concerns popped up on the “oils & fats scene”: environmental concerns led to the use of edible oils for biodiesel, deforestation gave palm and soybean oil bad publicity and health fads came and went. Organic markets are booming, bio-lubes were developed as clean alternatives and even bowling lane oil is often based on rapeseed oil! 

GMO, MAD COWS, DIOXINS, HEALTH CLAIMS and “hotels free of palm oil”

There were times that many thought it was impossible to make mayonnaise without soybean oil. Maybe with corn or sunflower seed oil, but certainly not with rapeseed oil. Although most producers used straight soybean oil, big mayonnaise producers blended cheaper rape with soy as they then still could label: ‘vegetable oil’ without specifying. 

But the American agriculture-biotechnology company Monsanto developed genetically engineered roundup ready soybeans which are resistant to a glyphosate-based herbicide. The America’s use these beans but Greenpeace and other activists scared the EU public with “Frankenstein food” and partly succeeded in demonizing genetically modified crops. The whole European food industry then shifted from soybean oil to non-GM rapeseed oil and today most mayonnaise in Europe is made with rapeseed oil, which now makes a big premium over soy. This boosted the development of rapeseed cultivation in Europe. 

In 1999 Belgium was struck by the dioxin affair when adulterated used cooking oil entered the food chain via animal feed. Polychlorinated biphenyls (PCB’s) were detected in mainly eggs and chickens causing recalls, export bans of Belgian food products and empty supermarket shelves. It also put (fat soluble) PCB’s and dioxin on the European agenda. In the 1980s and 90s the UK had widespread reoccurring Bovine Spongiform Encephalopathy (BSE) outbreaks which affected ruminants and over four million cows were culled in an effort to stop BSE. Allegedly 177 people died after contracting the Creutzfeldt-Jakob Disease by eating infected beef. 

This deadly disease was suspected to come from the “mad cow” disease. Eventually it spread to continental Europe and in 2000 the BSE crisis hit the French media. 

Then nobody wanted animal products. In feed rations tallow was replaced by crude palm oil. The customers of the oleochemical industry which traditionally works with animal fat to e.g. produce base products for cosmetics or detergents and soaps, only wanted vegetable oil-based products. So, the oleochemical industry had to switch from tallow to palm oil and other more expensive oils like hi-oleic sunflower seed oil.

In the 1990’s the European margarine producers were still widely using refined hydrogenated fish oil. And it was very common to use hydrogenated oils for deep frying snacks or potato chips or in bakery products and for other food uses that require a higher melting point. But partial hydrogenation of oil creates ‘trans fatty acids’. So hydrogenated oils had to be replaced and the market for palm oil quickly grew following the boycotts of trans fats in food. Palm oil is widely used around the world due to its price and its oxidative stability when used for frying. In 1990, global production of palm oil was 11 Mmt, in 2020 it exceeds 75Mmt!

News coverage of cardiovascular disease started when U.S. President Eisenhower had a heart attack in the mid-1950s. He was advised to reduce consumption of fat and increase the content of polyunsaturated fatty acids (PUFAs) in his diet. Medicinal properties of linoleic acid began to be reported, saying it could help reduce cholesterol levels, which led to a PUFA diet boom. Avoiding saturated fats meant hydrogenated oils and palm and animal fats had to go. Recently the Dutch oils & fats branch association MVO reported that in the Netherlands in 2019 89% of the frying oil used by the HORECA was liquid against only 51% in 2004. But one can also observe a trend to use ‘healthy coconut oil’ which is full of saturated fatty acids….

Source: transport & Environment

Safflower oil is the richest in polyunsaturated fatty acid (77% linoleic acid) but this health claim boosted the production of mainly sunflower seed oil which would partly replace palm oil in the EU food industry.

Also, deforestation issues started popping up in the news and in an attempt to satisfy critical consumers even some hotels started to claim their hotels were free of products made with palm oil but in Europe palm oil consumption for food dropped though it increased for biodiesel production.

But how much oils & fats are there?

As we saw previously, oil production is constantly increasing, and not in the least thanks to increases in agricultural productivity. We have not taken in the scope the so-called unconventional oils like tall oil and rice bran oil which would together add 3 Mmt to the total. And there are other oils and fats which remain under the radar for different reasons. The market works with a figure of 235-240 Mmt global oils & fats production. 

Today Asia (Indonesia, China, Malaysia, India, etc.) produces more than 50% of global oils & fats and Asia also consumes almost 50% of global production. China and India together account for about 30% of world demand. 

In many parts of the world, consumers don’t have a wide choice of different oils and fats and in many parts of the world people gratefully consume oil from genetically modified soybeans. Many countries will buy the cheapest available alternative although sometimes cultural and traditional preferences may play a role. 

Biodiesel production has also been a driver to develop oil production, mainly rapeseed in EU, and today some 40 Mmt are used to make biodiesel; that leaves us about 200 Mmt for food and other uses. We are continuously challenged to produce enough to meet the needs of growing populations and rising standards of living. In 2050, 10 billion people will require a lot more oil than we produce today!

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Unless otherwise mentioned the crude oil values quoted in these documents are prices landed in EU without import duties, handling, storage, financing, refining, packing, transport or any other cost related to bring the product to market. They are used as market trend illustration. Substitution of oils is possible but different oils have different fatty acid profiles and are not all interchangeable for all applications. One can make biodiesel from all oils and fats but one cannot make mayonnaise from coconut oil. This document is exclusively for you and does not carry any right of publication or disclosure. This document or any of its contents may not be distributed, reproduced, or used for any other purpose without the prior written consent of AVENO. The information reflects prevailing market conditions and our present judgement, which may be subject to change. It is based on public information and opinions which come from sources believed to be reliable; however, AVENO doesn’t guarantee the correctness or completeness. This document does not constitute an offer, invitation, or recommendation and may not be understood, as an advice. This document is one of a series of publications undertaken by AVENO and aims at informing broadly a targeted audience about the edible oils & fats market. AVENO’s goal is to keep this information timely and accurate however AVENO accepts no responsibility or liability whatsoever with regard to the given information.

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