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Growing ‘good fats’ demand prompts Minnesota canola plant proposal

By Caroline Scott-Thomas , 22-Sep-2010

PICO Holdings has entered into definitive agreements to build a new canola processing plant in Minnesota to help meet growing demand for canola oil, the company has said.

PICO said that demand for canola oil – which is high in monounsaturated fat – is outstripping supply in the United States, particularly amid heightened concern about trans fats.

The company said that the new plant will process up to 365,000 tons of canola seed annually and produce about 280 million pounds of high value, food grade RBD (refined, bleached and deodorized) canola oil, as well as 195,000 tons of canola meal. It is expected to be operational by the fourth quarter of 2012, PICO said. And pending additional environmental permits, the company hopes to eventually process 570,000 tons of canola seed annually at the new plant.

Trans fats in the form of partially hydrogenated oils are attractive to food manufacturers because they have a long shelf life and good flavor stability, but evidence has mounted over the past decade showing that artificial trans fats clog arteries and cause heart disease. On the back of growing concern, the Food and Drug Administration (FDA) issued a regulation that was implemented in 2006 requiring manufacturers to list trans fatty acids on the nutrition panel of foods, providing further motivation for manufacturers to cut trans fats from their products.

In addition, trans fat bans are now in place in many parts of the United States, in areas that encompass about 20 percent of the population, and manufacturers have increasingly looked to alternative oils, including canola, to meet requirements as well as consumer preference for trans-fat-free products.

Trans fat is considered to be the most harmful form of fat because it raises levels of LDL (low-density lipoprotein, or so-called ‘bad’) cholesterol, while lowering levels of HDL (high-density lipoprotein, or ‘good’) cholesterol.

PICO estimates that the total cost of the new facility, including the planned expansion, at $168 million. PICO Holdings will contribute about $60 million of equity for an 88 percent ownership interest, it said.

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