New possibilities for Ukraine on the world sunflower oil market
5 трав. 2017 р.
Sunflower oil is ranked 4th most consumed oil in the world, but unlike palm, soy and colza oils it is used only in food production industry. Every year Ukraine increases the production of sunflower oil as well asbroadens its export coverage.
Despite the fact that during last 15 years the global production of oil crops doubled, the current level of the proposition is still not able to satisfy the existing global demand.
The demand for palm and soy oils is the highest while the global volume of sunflower oil production is ranked 4th
The palm oil has the widest range of application as it is used not only for food production but in beauty and pharma industries as well. It’s also the most widespread oil in densely populated Asian countries. For instance, the palm oil accounts for 2/3 of the total volume of China’s import of oils.
EU countries’ consumption pattern of oils
The most often EU countries use sunflower, colza and olive oils for food production. During last 5 years, the usage of palm oil in Europe decreased by 20% due to the plunge in consumption by Great Britain, Denmark, France, and Netherlands. Key reasons behind this trend are healthcare and climate challenges. The increase in the number of palm plantations negatively affects the flora and fauna diversity in regions where it’s cultivated. Other industrial sectors are dominated by colza oil, as European countries are the world’s largest producers and consumers of biodiesel.
Ukraine leads the global production and global export of sunflower oil
Ukraine is responsible for the cultivation of 32% of the global volume of sunflower plantations. Russia and EU are the closest competitors with 24% and 20% market shares respectively. From 2010 till 2016 the agricultural lands’ area planted with sunflowers spiked from 2,5 to 6 million tons. Ukrainian climate allows growing sunflowers practically everywhere in the country. The more accurate application of fertilizers, as well as selection of plant breeds, also contributed to the yield increase from 0,9 tons to 2,2 tons per hectare.
The production volume of sunflower oil during last 6 years was 3 times higher than in 2000-2002. According to “Ukroliya” association,the production of this product in December 2016 peaked at 560 thousand tons, while its export last year amounted to 4,8 million tons, which is 123% higher than in 2015. The share of fat-and-oil industry in Ukrainian export is 30%, and 70% in the food production export. India bought 1/3 of exported Ukrainian oil.
Sunflowers’ cultivation is a very profitable business with good potential for development. Nevertheless, there are certain challenges:
- The sunflower seeds processing capacity increases faster than the production of the primary product. 25% of processing facilities aren’t used due to the lack of at least 3 million tons of sunflower seeds.
- Climate changes, provoking long droughts in summer, are another reason behind the yield decrease.
- The largest part of Ukrainian sunflower oil export goes to Asian and CIS countries while the share of EU market is quite modest. Thus, the export potential of this product is highly dependable on the demand fluctuations on unstable developing markets. Furthermore, the price of sunflower oil is defined according to palm and soy oil prices.
Cultivation of high oleic sunflower breeds is a promising sector of Ukrainian fat-and-oil industry
The popularization of the healthy lifestyle in EU and North America countries increased the demand for oleic acid-rich sunflower and colza oils. They are considered to be a cheaper alternative to olive oil. The market of oleic acid-rich oil in Ukraine is not yet created. Furthermore, there is still no standard for the determination of the oleic acid content in ready-made products. Nevertheless, taking into account the considerable export potential of such products, the market is very likely to develop quickly.
Learn more about prospects of high oleic crops market in Ukraine by visiting the meeting ofthe“High oleic club” organized by Syngenta and Baker Tilly with the support of Bunge and ADM companies.