Re-strategize frying oil procurement to comply with trans fat regulations

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By: Suresh Thamotharan -- Senior Analyst, Agro Commodities

01 January, 2017

ARTICLE

Abstract

Trans-fats has been in the spotlight due to various reasons such as FDA’s requirement of labeling trans-fat content in nutrition labels and the elimination of PHO(Partially Hydrogenated Oils)for manufacturing of foods.The elimination of such oils with high levels of bad fats would cause a tectonic shift in the oils that are used for cookingapplication. The demand for oils with low trans-fatsis likely to increase along with a shift in prices based on the supply scenario of oils with good fat. Thisarticle focuses on major fryingoils, their current supply-demand scenario,the likely shift in demand for these oils that are to be used in cooking/snack food manufacturingand the competitive advantages that suppliers are developing for the future.

Introduction

Food prepared using partially hydrogenated oils contain more than 2 percent of trans-fat. So, FDA in its preliminary decision listed partially hydrogenated oils as not “generally recognized as safe” for use in food industry. In June 2015, it had set a compliance deadline for the removal of partially hydrogenated oils by June 2018.Accordingly, there was a shift in the use of oils for frying and high temperature cooking applications.

At present in the food industry, oils such aspalm oil, coconut oil, soybean oil, canola oil, sunflower oil, cotton seed oil, peanut oil, non-GMO oils and organic oils are used for frying and cooking applications. Around 70 percent of the total supplies of these oils are diverted into frying oil industry.

The recent regulation on trans-fats is likely to impact the demand trends in edible oils and in turn may impact the supply scenario of the many oils used for frying applications. Many of the snack food manufacturers are reformulating their use of oils and shifting to oils that have a high smoking temperature, while also minimizing their cost of production.

Dietary fat content of widely used frying oils

Earlier, oils with good dietary fat were used by only a small population of people. However, with increasing diet consciousness and health-related issues,consumers started to consume food items prepared using oils such as canola oil, sunflower seed oil, olive oil and peanut oil that contain good dietary fat.




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