Canola supply expected to double on health demand

By Lorraine Heller

- Last updated on GMT

Related tags Canola Trans fat

The Canadian canola industry has said it expects to more than
double production of the crop by 2015, and is counting on increased
demand for heart-healthy oils to help it reach its objectives.

The nation's Canola Council said it aims to reach production levels of 15 million tons over the next eight years, a 65 percent increase over current levels of 9.1 million tons.

The trade association has set out three major steps to help it achieve its production objectives: capitalize on rising demand for healthy foods; focus on innovation as a means to improve quality and better face competition from other oil crops; and increase yields and invest in research and development in the crop relative to its major competitor, soy.

The new production targets are designed to assure customers that supply will grow to meet an increase in demand as the canola industry enters a new market segment - biofuels.

However, according to the Canola Council's 2015 forecasts, which have been published on the group's website, food will continue to be the major use for canola, with demand for both traditional and high stability oils expected to grow.

The group said investments currently being made in Canada's crushing industry are expected to increase capacity by almost three million tons over the next two years from the current 4.7 million tons being produced for food use.

US and Canadian market demand for oils and fats is anticipated to grow by 3-4 percent per year.

And according to the Canola Council, three key factors will "disproportionately bias" demand in favor of canola in the coming years.

Top of the list comes the oil's health benefits, said the group.

"The North American diet has come under criticism as obesity and chronic disease rates rise.

Governments, health and culinary professionals are focused on educating consumers about healthy diet options.

"The canola industry is aggressively promoting canola's health benefits, which has resulted in an increased demand for the product.

Further, canola's claim that it plays a positive role in reducing the threat of coronary disease has been formally accepted by the US FDA," it said.

The council also stressed the oil's potential to penetrate the food processing sector as an alternative to trans fat oils.

"High stability canola oil does not require hydrogenation and can be used successfully as a repeat use frying oil, creating a new market segment growth opportunity.

Although canola enjoys a strong market share in the retail segment (significantly ahead of olive oil), it has not penetrated the food processing sector where partially hydrogenated soy oil is most often used.

"These trans-fat producing oils have been cited as a risk to health and as a consequence, their use is diminishing.

High stability canola oil does not require hydrogenation and can be used successfully as a repeat use frying oil, creating a new market segment growth opportunity."

Finally, the industry body said that increased production of biofuels will result in excess soy meal production, which will in turn change the economics of processing canola relative to soy for use in the vegetable oil segment.

Soy, which is currently the primary competitor to the canola industry, has more ongoing investment in end use oil profiles and protein enhancements than canola.

Indeed, much of the current investment in soy oil modification is driven towards making soy oil more competitive with canola oil for food markets.

For example, high stability canola is expected to experience competition from low linolenic soybeans in the trans-fat replacement market.

Work is also being done to reduce the level of saturated fat in soy oil (down to 7 percent from 15 percent), which would place it in direct competition with naturally low-saturated fat canola as a 'heart-healthy' oil.

The canola council also points out that attention is now focusing on increasing the oil content within the soybean itself, which would reduce canola's advantage in an oil-driven market environment.

In an effort to fight for its market share in a competitive market, the Canadian canola industry said it is focusing on those markets in which it can differentiate its functionality in order to withstand immediate competition from commodity soy.

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