FAT is Making Sense of the Oilseeds Market.
Oleic, high oleic, low oleic, linoleic, fatty acids, saturated, unsaturated, mono, poly, palm, no palm, sustainable palm: the oilseeds market is certainly not an easy one to fathom nowadays. To learn about the complex and not always so transparent oilseeds market, European Seedsat down with Fabrice TURON, Head of Research at FAT & Associés in Paris, France.
European Seed (ES): Fabrice, can you tell me a little bit about FAT & Associés?
Fabrice Turon (FT): FAT & Associés is an independent business intelligence company exclusively serving the oilseeds and oils industry since 2010. We cover the entire value chain, from production (agriculture, yeast, fungus, bacteria) to end uses (food, feed, fuel and chemicals). We offer different services: 1. Private and confidential market research tailored to our clients’ expectations, 2. Multi Clients’ Reports, and 3. International Congresses, namely the High Oleic Congress (HOC) and the Sustainable Oils & Fats International Congress (SOFIC).
ES: Your organization was created in 2010. Why was it necessary to create on organization like yours?
FT: In my previous position at Syngenta Seeds, I had the opportunity to use the services of consultants, and no one really helped me by thinking outside the box. As all-round experts, the team of FAT & Associés cultivates its excellence in delivering information and a market vision that our clients really need to move forward. We fully commit ourselves and deliver our unbiased opinion, and do not look for consensus: it is always better to tell a client that there is no future for his business model before he invests USD millions in it, and that another opportunity to tackle the market exists, one that he simply had not thought of.
ES: How is the private plant breeding and seed sector involved?
FT: Seed and crop protection is one of our primary sectors in terms of interest and clients. Thinking downstream in agribusiness usually means asking the farmers (their customers) what they would need. The agribusiness industry sometimes forgets the end consumers’ opinion, as it is remote from their activity. FAT & Associés helps them in understanding the complex equation between consumers, food and feed industries, crushers, traders and farmers. A long-term approach is of the essence, as plant breeders need 10+ years to develop a new output trait and introgress it into commercial varieties.A strong social, environmental, health and nutrition awareness is rising in consumers’ minds all around the world
ES: Sustainability is becoming ever more important in our business. How are you supporting this goal?
FT: You certainly noticed that sustainabilityis an increasing trend in the oils and fats market worldwide. Of course, we talk a lot about sustainable palm oilin the EU, which is largely adopting a certified supply chain. But sustainabilityis not limited to palm or soybean sourcing, and this trend is expanding outside European borders. A strong social, environmental and health and nutrition awareness is rising in consumers’ minds all around the world. Consequently, new sourcing, technologies, supply chains, certification systems, labelling and claims are spreading rapidly, thereby creating new business models. Surprisingly, international congresses dedicate at best one session to sustainability. We, at FAT & Associés, have decided to organize an international event: “Sustainable Oils & Fats International Congress” in order to group together all industrial and institutional actors, along with decision-makers, around the least disruptive actions surrounding sustainability.
ES: The concerns over the use of palm oil are growing, especially in Europe. Can the EU do without palm oil?
FT: You certainly heard about palm oil consumption decreasing in the European food market. The food demand for palm oil in Europe has dropped from 3 million tonnes in 2011 to less than 2.5 million tonnes in 2018. The recent palm-freelabel accounts for part of the decline, but that’s far from being the whole story. A major part of the palm oil decrease is accounted for by the out-of-palmreformulation: a silent movement from food companies which would like to prevent any negative campaign, hence they substitute palm oil in recipes with no marketing message. Moreover, the palm oil use in fuel is at risk due to the revision of post-2020 RED.A major part of the palm oil decrease is accounted for by the out-of-palm reformulation.
On the one hand, we can imagine a European market without liquid palm oil, but an immediate consequence would be an increase in the median prices of foodstuffs as the substitute liquid oils (sunflower, rapeseed, high oleic oils …) are more expensive. Is the consumer ready to pay? On the other hand, the solid palm fractions are important to formulate foodstuffs which need solid fats in recipes. You can also find substitutes (butter, cocoa butter, shea butter …), but their prices are prohibitive, and the volume is not similar to palm stearin or palm kernel oils. Whatever happens, palm oil is clearly the primary variable in the global vegetable oils price, so even if the EU is reducing its consumption in volume, the region would not reduce its dependence in terms of price, so sunflower and rapeseed producers would always consider palm oil in their price positioning.
ES: Can the plant breeders of this planet do more to create other oilseed varieties to replace palm oil?
FT: The perfect mimetic would be a solid fat. We saw an opportunity to increase stearic content in sunflower; unfortunately, the trait was strongly dependent on the environment, and the oil yield was drastically decreasing. As a consequence, you have to pay farmers a strong premium to justify segregation plus yield gap. Moreover, the price positioning was prohibitive after the collectors, crushers, refiners and traders had been paid. The lesson is that new output traits are not so easy to market, even with a good oil profile definition. Why not work on existing sources of solid fats? Coconut is an illustration: global production has been stagnating for years, and investments in breeding are very limited. Oil yield and climate adaptation should be the core focus of breeders and investors.
ES: You organize two congresses per year. Why is it important to meet face to face?
FT: We organize the High Oleic Congress (www.higholeicmarket.com) and the Sustainable Oils & Fats International Congress (https://www.fat-associes.com/en/home/) once a year. These events attract 300+ delegates from 25+ different countries in the world. You may understand the advantage in joining our congresses when you know that after the first three hours of congress, more than half our guests are starting business discussions in small groups and extensively networking with peers, clients and suppliers!
ES: The high oleic market can be confusing for new players. What is your advice to them?
FT: The high oleic oilseeds and oils is a fast moving and growing market, expanding globally and with increasing sources (sunflower, soybean, rapeseed/canola, safflower, and soon palm). The market is complex, as it is not visible: no quotation, no acreage data, no volumes of consumption and no trade data. That is why in 2012 we started to work on this ‘specialities’ market and developed our own data and models to predict both price and demand. So, my best advice is to contact us and subscribe to our reports. You would save money and time and get an accurate perspective!
Editor’s Note: Dr. Fabrice TURON has over 15 years’ experience in the oils & fats. He began his career with Danone group as an oil specialist in the formulation department. Later at Bertin, he managed the lipid products portfolio development. As oilseeds application global manager for Syngenta Seeds, he investigated various quality oil projects and he assembled a strategic output trait portfolio for oilseeds (sunflower, rapeseed, soy). Since 2010, he is leading the research activities at FAT & Associés, a specialized consultancy for the lipids, oils and fats value chain.