High Oleic Soybeans: Reconquering the Oil Market

Farmer Holding Soybeans

Farmers look to secure and increase market opportunities

With high oleic soybeans coming down the pike, U.S. soybean farmers have an opportunity to meet the needs of a long-term market and add demand in key areas with new, innovative soybeans: those that produce high levels of oleic acid. The United Soybean Board (USB), along with others in the soy industry, identified high oleic as an opportunity to recover lost edible-soy-oil demand and increase uses throughout the value chain.

The Situation

USB identified trans fats as a threat to soybean demand in the late 1990s, before a law requiring foods containing trans fats to be labeled went into effect in 2006. This law encouraged food companies to reformulate their products to eradicate trans fats and avoid labeling.

That posed a challenge for soy oil. Processors use partial hydrogenation to increase soy’s stability for frying and baking. However, partial hydrogenation produces trans fats. Due to growing consumer concern with trans fats and the labeling law, food companies began seeking out other vegetable oils. They looked for oils that provided the same functionality as soy oil, but did not require any hydrogenation. The U.S. soy industry began losing market share, resulting in a loss of 4 billion of pounds of edible-oil demand annually. Additionally, the industry could lose another 700 million pounds per year if the current situation persists.

Because of its high heat stability, high oleic soy oil could help remedy this problem. USB has set an industry-wide goal to have high oleic soybeans planted on 18 million acres by 2023, which is expected to equate to 30 percent of the soybean-growing acres in the United States. To help reach this goal, USB committed to invest $12 million per year to expand varieties and broaden market development. Pending annual review, this commitment could last five years.

The History

Even before the labeling law, USB recommended development of a soybean that produces oil with improved functionality over commodity soy oil. Checkoff-funded research efforts, including mapping the soybean genome and identifying high oleic mutations naturally occurring in soybeans, played a key role in the commercial development of high oleic soybean varieties.

Both DuPont Pioneer and Monsanto developed high-yielding high oleic varieties using these discoveries. Both companies continue their pursuit of global regulatory approval, with DuPont Pioneer awaiting European Union approval and Monsanto awaiting Chinese and European Union approval.

The Opportunity

These high-yielding soybean varieties could help recoup lost demand in the edible soy-oil market and also expand markets elsewhere. High oleic soybeans have many benefits for both food and industrial end users and will help soy compete with other oils in the market.

“The demand for high oleic soy oil will be right here in the United States, where we have a strong customer base,” said Jim Stillman, USB chairman and a soybean farmer from Emmetsburg, Iowa. “We will be able to take a huge step forward in meeting those customers’ demands and be able to compete on a higher level with other types of vegetable oils.”

High oleic soy oil is more stable and has longer fry and shelf life than commodity soy oil without the need for hydrogenation. Food companies find this particularly attractive for packaged food products and frying uses. Industrial users also benefit from high oleic soy oil’s increased stability, which allows it to perform better than commodity soy oil in high-heat applications and compete more closely with petroleum applications.

USB’s support of high oleic is part of the checkoff’s commitment to increase the value of all U.S. soy oil, which would favorably impact the price all farmers receive for their soybeans.

The Program

High oleic won’t be “overnight” success – developing a new market takes time. USB’s commitment extends five years, and includes partnerships with all members of the soy value chain. The broad market strategy is expected to culminate in 25 million acres planted to high oleic by 2023.

“USB’s strategy to work with all members of the value chain is very important,” said Stillman. “It has to be a smooth operation all the way along, or else it will not work like we hope it will.”

USB is dividing its strategy into two parts: push and pull. The push strategy is intended to support the development of the varieties to make them as widely available as possible, and to encourage farmers to grow them.

The pull strategy is aimed at prospective end users, providing education and information so they will demand high oleic in their formulations.

Push Strategy – Seed Technology Partnerships

USB committed to supporting the expansion of high oleic to Maturity Groups I to V by 2023. To do this, the checkoff created strategic, innovative partnerships with DuPont Pioneer and Monsanto, the two seed-technology companies with high oleic patents ready for commercialization. Both companies are in the process of finalizing signed contracts with USB to show their commitment to high oleic and rapid expansion. These unique partnerships will help the companies expand existing technologies at a faster pace than DuPont Pioneer and Monsanto were planning to do on their own.

“The partnerships between USB and the seed-technology providers allow the companies to expand their technologies more quickly and provide a larger inventory for farmers sooner,” said Stillman. “This will enable farmers to generate the supply that food and industrial users are demanding.

Push Strategy – Farmer Outreach

Of course, there could be no high oleic market unless farmers choose to grow high oleic varieties. Once they do, that will send an important signal that downstream customers will want it before they commit to trying the new product.

To get the word out, USB is creating cohesive industry messages for farmers, processors, seed-technology companies and others along the value chain. USB and seed-technology providers will also work to increase adoption by sharing results of on-farm varietal performance.

U.S. soybean farmers want high-yielding varieties with the agronomic packages they use on their farms. USB plans to showcase the performance of high oleic soybeans through the farmers who have grown them.

“Farmers talking to farmers is very important,” said Stillman. “Those that are growing high oleic soybeans right now really need to speak up and tell the story of their performance. Other farmers want to know about high yields and providing end-use customers with the products they desire.”

Pull Strategy – End Users

The pull strategy also plays an important role, using downstream customers to pull the new product forward. End users include food manufacturers, food service operations, health professionals and industrial use (non-food) customers.

USB currently focuses on ensuring food-industry customers feel comfortable using the new product, which will have to compete with other oils on price and functionality. So, USB works with the food industry to test the oil for potential inclusion in food formulations, and reminds these customers of soy oil’s reputation as a reliable and affordable option.

“The end-use customers signaling they want high oleic soy oil is essential for success,” said Stillman. “We need farmers ready to grow it and customers ready to use it – a very important balance for high oleic to succeed.”

Industrial users will also be a key market for high oleic soybean varieties. High oleic brings benefits over commodity soy oil in areas with high-heat-stress applications.

“It is great for the entire industry to step forward and support high oleic soy,” said Stillman. “This is a better-functioning oil and it will provide benefits to everyone throughout the value chain, from the farmer who plants the seed to the food company using the end-product.