KISSIMMEE, Fla. — U.S. soybean growers are determined to win back the considerable market share they’ve lost to Canadian canola and other oilseed crops.
The United Soybean Board, which administers the $88 million U.S. soy checkoff, is throwing its weight behind high oleic soybeans.
The USB has entered into a partnership with DuPont Pioneer and Monsanto, two developers of high oleic soybean varieties, in an effort to recapture the 28 percent of the U.S. edible oil market taken over by canola and palm oil.
“We’re going to be investing $60 million in the next five years into this program,” USB vice-chair Jim Call said during an interview at the 2013 Commodity Classic.
The money will be spent encouraging farmers to grow varieties containing the high oleic trait and promoting the oil to end users in food and industrial markets.
The goal is for high oleic varieties to comprise 30 percent of the 78 million acres planted to soybeans in the United Sates by 2020.
Dave Dzisiak, commercial leader of grains and oils at Dow AgroSciences North America, which markets Nexera canola and omega 9 oil, said the battle is on for the edible oil market.
“We got their attention, didn’t we?” he said.
Dzisiak doesn’t believe the U.S. soybean challenge spells the end for high oleic canola oil because the U.S. isn’t self-sufficient in vegetable oil.
He said what the soybean industry lost in the edible oil market, it gained in the biodiesel market, and that mandated demand isn’t about to go away. As a result, he wonders where all the extra soybean oil is going to come from.
Dzisiak said soybeans are grown for protein, and the oil is a byproduct.
“Are you going to be successful in trying to bring in a specialty oil crop into a protein based crop?” he said.
Dzisiak said high oleic canola has big advantages over its new competitor: better taste profile, lower in saturated fats and an established track record.
“To change oil is a big decision for these food companies,” he said.
There is also a much greater capacity to segregate crops on the farm and within the handling system in Canada than in the United States, which is much more of a commodity based stockpiling system.
“All of those elements come into play,” said Dzisiak.
“Now are they going to be a formidable competitor? Absolutely. You can see the kind of money that they’re talking about, and DuPont and Monsanto aren’t small companies.”
Partnering with industry to promote a specific trait or variety is a highly unusual move for USB.
“We’ve never done it before,” said Call.
The association is making an exception because it is desperate to reverse the trend of losing 1.8 million tonnes of soy oil demand each year since 2008. The USB is confident it can regain all of that lost market share.
Canola has been one of the big beneficiaries of the food industry’s shift away from partially hydrogenated soybean oil. Dzisiak said more than 50 percent of all the canola oil shipped to the U.S. in 2013-14 will be high oleic oil.
More than 80 percent of the remarkable growth in canola oil sales to the U.S. market has come from the high stability oil category.
“If we lose that market, regular canola doesn’t backfill it. We lose that market. It’s a net loss to Canadian growers,” said Dzisiak.
The demand for high oleic canola has fuelled the massive expansion in Canada’s crushing industry. Processors crushed 7.12 million tonnes of canola in 2012 compared to 3.77 million tonnes five years earlier.
Call said high oleic soybeans, which produce trans fat-free oil with increased functionality and stability, will enable the soybean industry to reconquer the U.S. market.
USB expects 3.6 million tonnes of annual demand for high oleic soy oil by 2023.
“For me it’s the most exciting thing since the Roundup Ready technology came out,” Call told reporters during a news conference announcing the partnership.
“High oleic soy oil is the future of the U.S. soybean industry.”
Commercial launch of the product is being held up by lack of approval for the trait in China and the European Union. Those approvals are expected in 2013, paving the way for a major roll out of the trait in 2014.
Growers will be paid a 50 cent per bushel premium for growing the crop. All production is being done under a strict identity preserved system because the industry doesn’t want the trait showing up in shipments to markets where it is not yet approved.
The USB estimates less than 500,000 acres of high oleic soybeans were planted in 2012. The plan is to expand to more than 20 million acres in seven years.
“With USB’s support, we’ll help make the varieties available to farmers much more quickly than without the partnerships,” said Call.
“We will encourage farmers to adopt high oleic when it becomes available to their areas.”
The plan is to launch the trait in Ohio and then head west into Indiana, Illinois and Iowa.
Call believes U.S. high oleic soy oil will have a big competitive advantage over Canadian high oleic canola oil because the soybean crushers are closer to the markets where the oil is consumed.
“It all boils down to price,” he said.
Dzisiak said the U.S. soybean industry is going to have a tough fight on its hands.
“It’s going to be an interesting number of years in front of us,” he said.