KANSAS CITY — As the fuel industry becomes a bigger buyer of vegetable oils, the prices for those oils — from soybean to canola to palm — have doubled and in some cases tripled over the past year. Faced with the sudden increases in input costs, companies in the food, beverage and foodservice industries have some cost-effective options.

High-oleic oils have a longer fry life, and antioxidants add to fry life as well. Other possibilities are securing supply in advance and saving on storage space and labor costs.

Soybean oil out of Decatur, Ill., was trading at 76.50¢ per lb on May 14, or about triple the price of 25.75¢ a year ago. Palm oil (RBD), ports was at 60.75¢, more than double 28.50¢ a year ago. Canola oil nearly had tripled to 95¢ from 32¢.

Finding more cost-effective alternative oils could prove difficult.

“There is not one oil that we have that has not gone up in price this year,” said John Healy, general manager for Columbus Vegetable Oils, Des Plaines, Ill.

The political situation has the fuel industry switching to vegetable oils. While the Biden administration is seeking to accelerate a transition to biofuels from petroleum-based fuels nationally, states in the West like California and Oregon are setting up biofuel mandates, said David Tillman, vice president of food ingredients for Stratas Foods, Memphis.

“If there is a mandate out there, the mandate gets the oil first,” he said. “If you’re a food company trying to run your plant, you can’t say, ‘Oh, yeah, but I’ll pay for the product.’ You can’t outspend a mandate.”

Phillips 66, Houston, and Marathon Petroleum Corp., Findlay, Ohio, are two companies becoming more active in vegetable oils.

Phillips 66 has invested in a soybean-processing plant in Iowa, which gives it a minority ownership stake in Shell Rock Soy Processing in that state. The plant will produce about 4,000 barrels of soybean oil per day. Phillips 66 has agreed to purchase 100% of the plant’s soybean oil and use it to make renewable fuels.

Marathon Petroleum Corp. plans to convert its refinery in Martinez, Calif., into a renewable fuels manufacturing facility. At full capacity, the facility is expected to produce 730 million gallons of renewable fuel per year predominantly from feedstocks such as animal fat, soybean oil and corn oil.

Higher oil costs could last a while.

“I think it’s going to be a pretty bumpy summer,” said Dave Bezenyei, sales manager for Columbus Vegetable Oils. “There are some people who think this is going
to take us through Q1 of 2022.”

Mr. Tillman added, “This is something that certainly is going to last three or four years before people start making substitutions. Food companies start using less oil. Consumers start using less oil.”

Saving money through shelf life

Choosing oil with a longer shelf life, especially in frying applications like french fries, is one way to save money.

“Saving cost is not always as straightforward as buying a lower-cost oil or shortening than what you buy today,” said Aliess Bedford, R&D development and applications team director for Bunge Loders Croklaan, a business of St. Louis-based Bunge Ltd. “For example, manufacturers can use high-oleic oils and blends, including high-oleic soybean oil, high-oleic canola oil and high-performance, non-GMO high-oleic sunflower oil, for extended fry life which can result in an improved cost-in-use vs. commodity oils.

“Similarly, interesterified soybean oil-based shortenings, which can have a greater tolerance for different usage temperatures, can make it easier to manufacture products consistently, saving money on processing loss and line efficiency.”

Marie Shen, senior research associate for Kemin Industries, Des Moines, Iowa, added, “From a manufacturer’s standpoint, if the oil they are purchasing has a longer shelf life, they are able to store it longer, which means you could potentially save on shipping by bringing in one larger truckload as opposed to multiple smaller loads.”

High-stability oils like high-oleic oils prolong fry life and thus minimize costly oil changeovers, said Jeffrey Fine, PhD, senior director, custom innovation for AAK, which has a US office in Edison, NJ.

“In baked goods, high-oleic oils can prolong the shelf life of products when used as either a spray oil or direct ingredient,” he said. “A more robust product with a longer shelf life reduces costs for producers while at the same time ensuring that their customers receive a quality product.”

Saving on labor costs

Higher oil costs have hit the foodservice industry at the same time restaurants are facing a labor shortage. A longer fry life could help with labor costs, too, said Andy Crews, vice president of foodservice for Stratas Foods. A restaurant, by switching to high-oleic oil, might need to switch out the fry oil 52 times a year, or about once per week, instead of 100 times. The reduction could save on cleaning supplies and extend the life of equipment, he added.

Polymerization makes it more difficult to clean frying equipment, but high-oleic oils cut down on polymerization, said Dave Booher, director of Phoenix-based Jensen Foods, in an April 22 webinar put on by Corteva Agriscience, Wilmington, Del. Too much polymerization also may mean more heat is required to keep the correct temperature in the frying process, he added.

“We’ve seen that happen in numerous restaurants and in food manufacturing,” Mr. Booher said. “So there is some spillover there in terms of cleaner equipment and labor costs associated with maintaining that equipment.”

Corteva Agriscience offers a calculator on its website that shows how companies may save money by switching to high-oleic oils. Companies type in the number of their locations, the average number of fryers per location and the average size of the fryers. In one example, a company with 50 locations, an average of four fryers per location and an average fryer size of 35 lbs could reduce oil use by more than 246,000 lbs over a year.

Cargill, Minneapolis, joined with Frontline International, a cooking oil management company based in Cuyahoga Falls, Ohio, to introduce Kitchen Controller, an automated oil management system for the foodservice industry. A fry vat sensor gathers oil quality data that the Kitchen Controller’s proprietary software analyzes and feeds to a touchscreen pad. Kitchen staff use green, yellow and red on-screen indicators on the touchpad to know when to take action on the oil.

“Proper oil management can have a huge impact on product quality and production costs,” said Mike Christensen, foodservice category leader for Cargill’s global edible oils business. “Identifying the best times to safely filter and replace oil has significant benefits, yet too often, kitchen staff end up guessing when to do these critical tasks. The Kitchen Controller system will be the first of several solutions we’re working on to address industry challenges and help shape foodservice kitchens of the future.”

Adding antioxidants extends shelf life, too.

“That would definitely drastically improve the frying life of your oil for a very nominal fee,” said Rick Cummisford, director of quality control for Columbus Vegetable Oils.

Ms. Shen said companies could consider using commodity oil instead of high-oleic oil and then adding antioxidants to the commodity oil.

Contracting in advance

Farmers and crushers/refiners plan to expand the availability of high-oleic soybeans and oil in the crop years 2022 and 2023, said Richard Galloway, oils consultant for the United Soybean Board, St. Louis.

“Since planning and plan implementation is a lengthy process, food and beverage companies interested in high-oleic soybean oil and shortening products should be proactive in working with their suppliers and potential suppliers now to secure needed supplies for 2022-2024,” he said.

Companies also may consider the number of oils required in the food manufacturing process at a given plant.

“By limiting the variety of oils needed, supply chains can be managed more effectively, and oil inventories can be minimized at any one time,” Mr. Galloway said. “High-oleic soybean oil can replace many of the oils currently being used in a diversified manufacturing operation.”

Companies also could consider how to reduce energy costs associated with ingredient storage, said John Satumba, PhD, global bakery technical lead and regional R&D director for North America for Cargill’s global edible oils division.

“Most fats are sensitive to temperature swings,” he said. “So (Cargill) customers need temperature-controlled storage to ensure their shortenings don’t get brittle or too soft, which can impact processing and product quality. With this challenge in mind, we developed PalmAgility, a palm-based shortening that is more temperature tolerant, which may result in lower energy costs associated with storage.”

Other oil discoveries, still unknown, could ease prices in the future.

“We’ll innovate more products,” Mr. Tillman said. “Our competitors will innovate more products. Food manufacturers will gravitate toward the ones that work.”