Dow AgroSciences Canada says it can take all the Nexera canola farmers can produce due to overwhelming demand for the omega 9 oil it produces.
“We’ll contract as much as we can get acres for, frankly,” said David Dzisiak, Dow’s North American commercial leader for grains and oils.
Over the past few months Dow has landed big new food company accounts hungry for the company’s high oleic canola oil.
“PepsiCo in North America is going to adopt 0mega 9 canola oil as their primary oil within their snacks business, which is a huge win for the canola industry,” said Dzisiak.
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PepsiCo owns Frito Lay, a snack food maker that generates $13 billion US in annual sales revenue. The company is a “massive consumer” of vegetable oil.
Dzisiak wouldn’t divulge names of the other new clients but said one is a large U.S. restaurant chain.
Dow has traditionally focused on servicing chains like A&W, KFC, Taco Bell, Red Lobster and Olive Garden, which each typically consume between nine to 18 million kilograms of vegetable oil annually.
In the last couple of years Dow has expanded the target market to include consumer packaged good companies, which consume four to five times the volume of oil used by a large restaurant chain.
Canola has become the second most widely used oil in the U.S. food industry. Dzisiak said 1.2 billion kilograms of the oil were used last year, more than double the consumption five years ago.
Soy oil is the reigning champion at 6.4 billion kilograms but it has steadily lost ground to canola and palm oil due to trans fat bans.
Nexera received another marketing boost on Jan. 31 when the United States Department of Agriculture and the Department of Health and Human Services released the 2010 Dietary Guidelines for Americans.
For the first time, the guidelines recommend that the consumption of saturated fats be limited by replacing them with monounsaturated and polyunsaturated fats, which is exactly what Nexera offers.
“The demand signals are very, very, very strong,” said Dzisiak.
To entice growers to plant more Nexera in 2011, the company is releasing its first hybrid seed in April. There are two new Roundup Ready and two new Clearfield varieties.
Nexera marketing specialist Mark Woloshyn said 1014 RR, 1012 RR, 2014 CL and 2012 CL will provide growers with strong early season vigor, improved lodging resistance for easier swathing and excellent harvestability.
“The big question is yield and our expectation is that the Nexera hybrids will yield five to 10 percent higher than our varieties that we have on the market now,” he said.
Farmers will get a $35 per tonne premium to grow the crop.
“It’s the most profitable canola a farmer can grow,” said Dzisiak.
Dow is putting money where its mouth is by offering producers a Healthier Profit Guarantee that 80 acres of Nexera’s Roundup Ready or Clearfield varieties will earn more than commodity Roundup Ready and Clearfield varieties grown on the same parcel of land with the same rotation and agronomic practices.
One lurking danger that could disrupt Nexera’s gathering momentum is the new lines of high oleic soybeans developed in response to high oleic canola.
“It’s definitely a competitive threat to us,” said Dzisiak.
But he doesn’t expect to see significant volumes of high oleic soybeans produced in the U.S. until 2013.
