It’s hard to miss the headlines—edible oil production and pricing is headed down a slippery slope. Droughts, low production, the Russian/Ukrainian war, rising prices, increased demand for biofuel usage and other complications are making a major impact on edible oils.
Jason Thomas (right), CEO of Healthy Brand Oil Corporation, recognizes the numerous challenges today. Fortunately, the new PFMA member is educating customers and helping to mitigate rising costs.
Thomas looks at what has affected the industry during two distinct timelines.
“I look at it as the 2014 to 2020 period, where crops around the world had good production, demand was pretty stable, pricing was very stable, availability was very stable,” he said. “Then I look at it from 2020 forward—the world just got thrown completely on its head in every way, shape and form.”
Thomas has been in the business since 2004. About 75 percent of their products go through food service distribution, for example restaurants or a retail setting. Approximately 25 percent of the business serves food manufacturers.
Healthy Brand Oils offer a wide variety of oils and quantities, ranging from soy, canola, sunflower, peanut, olive, avocado oils and more, plus non-GMO, organic and expeller pressed options. Oils are packaged in four sizes, ranging from one-gallon containers to 2,500-pound quantities that serve large manufacturers.
If the variety and options seem overwhelming, the website offers an Oils 101 guide. Plus, the Healthy Brand Oils team is available to walk customers through which oil makes the most sense for each use.
“There are some differences that make each product good for certain uses, maybe not for others. We talk about what you’re trying to accomplish and use the product for,” he said. “Maybe a certain oil brings a certain flavor profile, or maybe if you’re using it in a fryer—some oils will last two and three times the fry time of something that looks exactly the same.”
As different global factors impact different oils, it’s important to know where oils originate, Thomas said. For example, the U.S. provides mostly soy; Canada provides canola; olive oils originate in the Mediterranean; and grape, avocado and peanut oils largely come from Europe.
“Last year, we saw a 30 percent crop failure in the Canadian canola crop. In 2021, there was a 30 percent crop failure in the Brazilian corn crop, and this year, there is a 20 percent crop failure in the Brazilian soybean crop,” Thomas said. “These are major needle movers from the world’s largest producers.”
When crops are low or products are inaccessible, such as sunflower oil in Ukraine, customers might need to switch to another product. Despite the fact that sunflower oil is not one of the most frequently consumed oils in the U.S., countries that do rely on exports from Ukraine are now paying a premium for oils that are typically used in the states.
Another major factor impacting availability is a greater national need for biodegradable biodiesel fuel. Food-grade soybean oil is a more environmentally friendly fuel option, Thomas said, and “what a sizeable producer like ourselves can consume in a year, (biodiesel producers) are consuming it in a month.”
So now what? “We’re entering this time period that is more volatile and harder to navigate,” Thomas said. He separates the situation into two major risks: price and supply.
When there is a period where prices might double or triple, that impacts the manufacturer’s margins in a major way, he said, particularly regarding food where profit margins are already low. Health Brand Oils developed what they call “profit lock” to help customers manage fluctuating costs.
Lee Colonna (right), sales development and relationships management at Healthy Brand Oils, explains that the profit lock initiative connects them with the customer to assess their needs and goals. “We’re partnering with them to find out what works for them in the best way possible with the products we choose, while managing the expectations of what they need now and in the future.”
“If today’s pricing can ensure a profitable trade for the customer, then it’s a logical time to extend coverage and ensure that. If you don’t do that, the market can take it away,” Thomas added.
Supply risk presents a more challenging solution. Supply involves product issues, logistical issues and the impact of a global supply chain, he said. The company only commits to products for which they have a high level of confidence and know they can deliver.
“We can’t solve all the problems, but we think we can help,” Thomas said. “(The customer) might not have the internal know-how or the resources to deal with this. This is a piece of the puzzle that differentiates our offering.”
Colonna also stressed the importance of association membership. “It’s a resource. You can’t be an expert in all things. Having a resource like (PFMA) and bringing the information to your members is huge.”
Thomas anticipates the summer months to remain volatile. That volatility has a way of creeping into every aspect of a business, he said. With corn, wheat and soybean in nearly everything, he stresses the importance of understanding the current environment.
“We’re happy to do our best to help navigate what’s best for our customers,” Thomas said. “It’s something we’re looking at every day and trying to assess. It’s a complicated puzzle.”
