Vegetable Oil Mills, Except Corn, Cottonseed, and Soybean

SIC 2076

Industry report:

This category covers establishments primarily engaged in manufacturing vegetable oils, cake, and meal, with the exception of corn, cottonseed, and soybean, or in processing such vegetable oils into forms other than edible cooking oils. Businesses primarily engaged in manufacturing corn oil and its byproducts are classified in SIC 2046: Wet Corn Milling; those refining vegetable oils into edible cooking oils are covered in SIC 2079: Shortening, Table Oils, Margarine, and Other Edible Fats and Oils, Not Elsewhere Classified; and those primarily refining these oils for medicinal purposes are discussed in SIC 2833: Medicinal Chemicals and Botanical Products.

Vegetable oils in this category, particularly rapeseed oil and palm oil, had remarkable fluctuations in production between the 2000 and 2007 growing seasons. In the middle of the first decade of the twenty-first century, rapeseed and palm oils were highly valued for processing for the alternative fuel industry. Because rapeseed and palm refining are far outpaced in the United States by corn and soybean milling, imports of rapeseed and palm oil soared.

Falling vegetable oil prices at the turn of the twenty-first century had lessened the contribution of processed oil to the value of seeds. The impact was reflected in curtailed production of high oil-content seeds such as rapeseed and sunflower. However, the rapeseed and sunflower processing industry soon rebounded. World rapeseed production increased from 39.4 million metric tons (MMT) in 2003 to more than 47.6 MMT in 2008. World sunflower seed production increased only slightly, from 27.0 MMT in 2004 to 27.7 MMT in 2008. Global exports remained nominal in 2008, at 7.8 MMT for rapeseed and 1.3 MMT for sunflower seed. Imports showed similar figures: 7.4 MMT for rapeseed and 1.0 MMT for sunflower seeds. In the United States, production of oil-type sunflower seeds accounted for 86 percent of the 2.9 million pounds of sunflower seeds produced in 2007.

Sunflowers can be processed using the same automated presses as corn and soybeans, but they use less water and are drought resistant. These advantages, together with the Sunflower Seed Oil Assistance Program (SOAP), which helps to offset the competitiveness of highly subsidized European Community vegetable oils, allowed the U.S. industry to overcome reduced levels of production and the loss of two major export markets in the early 1990s--Egypt and Russia. Among international producers in the early 2000s, Russia and Argentina were the largest producers and exporters.

Canola, the more familiar name for a group of rapeseed varieties, accounted for the majority of rapeseed grown in the United States and Canada. As a relatively new oil in the U.S. market, in the early 1990s canola faced an uncertain future by frequently being categorized with so-called specialty oils, alongside such products as linseed oil, coconut oil, and walnut oil. However, in the late 1990s and early 2000s, canola was sought after by the increasingly health-conscious food and edible oil industries because of its low saturated fat content--the lowest among major vegetable oils.

Most of the canola oil consumed in the United States is imported from Canada, and domestic use continued to increase as U.S. rapeseed consumption reached 649 million pounds in 2000, compared to 316 million pounds in the mid-1990s. Canola meal (originally known as rapeseed meal) has similar nutritional qualities to soybean meal, and it is often used as a cattle feed supplement. Canola also was likely to see increased industrial use: a genetically engineered variety of canola called high-lauric acid canola was being produced. Lauric acid, previously only available from coconut or palm kernel oil, is a key ingredient in soaps, detergents, lubricants, cosmetics, and confections. According to the U.S. Canola Association, production of canola oil rose rapidly from the early 1990s to the early 2000s, when production peaked at about 900,000 metric tons, then decreased somewhat to reach approximately 650,000 metric tons in 2008.

In the mid- to late 2000s, rapeseed was one of the key vegetable oils gaining extensive demand from the biofuel industry. The National Biodiesel Board estimated that 75 million gallons of biodiesel fuel were sold in 2005, three times the amount sold in 2004; by 2008, an estimated 700 million gallons of U.S. biodiesel was being produced.

Palm oil was another source prized by the biodiesel industry. World production of palm oil in 2004 was 8.4 MMT. Spurred by the increasing value of oil for biodiesel fuel, global palm oil world production reached 11.1 MMT in 2008.

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