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Collaborating to Develop New Oil Alternatives to Palm Oil

Palm fruitPalm oil is a major industrial commodity today. It is economical, versatile, immensely popular, and it is being produced in an increasingly sustainable way. An industrial feedstock in food and confectionery goods, cosmetics, detergents, and biofuels, it is also an important food source in large parts of the developing world.

But a number of factors suggest that the future lies in new oils. Rapid expansion of palm oil production has destroyed areas of the rain forest, contributing to greenhouse gas emissions and eroding biodiversity. The planet cannot sustain ever-expanding production levels, which some project could nearly triple by 2050. And while in some food uses palm oil doesn’t require hydrogenation, its ubiquity in packaged foods still makes it a health concern in the developed world, where diets are high in saturated fats. Alternatives are required. Although sustainable palm oil and other vegetable oils are necessary elements in today’s oil portfolio, they are insufficient. Buyers, governments, and nongovernmental organizations need to accelerate initiatives to develop new oil sources.

A number of advances in science and agriculture have been underway to address the nutritional and genetic makeup of alternative oil sources, such as sunflower, canola, and soybean. These are being developed to be low in saturated fats and high in beneficial qualities such as omega-3 fatty acids.

Pioneer Hi-Bred, a DuPont business, expects to roll out a genetically enhanced soybean oil called Plenish for food-grade use later in 2013. Plenish oil is made with high-oleic (more than 75% oleic content) soybeans, an innovation that was made possible by a USDA deregulation in 2010 allowing these soybeans to be grown in the United States. Plenish oil provides greater flexibility in food preparation and mixing with other oils, as well as zero trans fat, less than 3% linoleic content (for improved flavor and stability), and 20% less saturated fat than commodity soybean oil.

Further out in development is a next-generation high omega-3 canola oil being produced by Cargill Inc. and BASF Plant Science. Not expected to be in the marketplace until 2020, this canola oil is anticipated to be rich in EPA and DHA, two long-chain fatty acids usually found in and associated with fish oils.

In contrast to existing vegetable oils, other new oil sources can be game changers. The emerging technologies that will produce them, currently under development but for the most part still commercially unavailable, will set the stage for the next generation of oils. Leading the pack are oils from microorganisms, specifically algae. A newcomer currently being tested by Solazyme Roquette Nutritionals is a hybrid microalgae-based product called “algal flour,” which is neither oil nor flour, but contains 50% lipids and about one-third carbohydrate. By altering the production technology, these new oils have the potential to address current health, environmental, and sustainability concerns. Focus on these oils has been growing, largely driven by the biofuels industry, but their potential use in food, personal care, and other applications is drawing more attention, especially as concerns regarding sustainability grow.

With global population and public awareness both on the rise, these new oils must be a part of the solution. But the question of which new oil will prevail and what benefits can be realized remains unknown. This uncertainty has slowed their development, as few companies and governments have been willing to invest in early-stage technologies. The natural evolution of these industries may well bring these oils to market, but it could be a matter of decades. We therefore call upon three stakeholders to provide a step change in advancing new oils:

  • Buyers: We urge buyers to create a forum that commits significant financial means, human resources, and expertise for partnerships with suppliers to enable technical feasibility and successful commercialization of new oils.
  • Governments: We press governments to issue regulations and provide incentives in the form of taxes, regulation, research, and favorable policy to promote the development and use of new oils.
  • NGOs: We ask health- and environment-related NGOs to create awareness and promote demand for new oils from buyers and end consumers.

The solution to current sustainability challenges must include sustainable palm oil, substitution using existing vegetables oils, and development of new oils. Stakeholders of all types have joined together to improve the sustainability of palm oil, and should continue to do so. The power of this collaboration has been the key to success of this movement, and the same energy should be applied—today—to the development of new oils.

James Rushing (james.rushing@atkearney.com) is Partner with A.T. Kearney.
Chui Lee (chui.lee@atkearney.com) is Principal with A.T. Kearney.
Nemanja Babic is a consultant with A.T. Kearney.

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