Promising EU Markets for High Value Oilseeds: Sunflower, Sesame, Safflower, Niger, Linseed, Groundnuts The EU is a major importer of high value oilseeds which are used in many different products including bakery, snacks, pharmaceuticals, animal feed and paints as well as the primary use, cooking oil. The use of seeds in food is growing in line with the trend toward more health conscious food consumption. This trend is creating new opportunities for high value oilseeds in the European market. It is essential for export success to match products to the right market Imports of high value oilseeds to the EU market are valued in excess of 2.2 billion each year. The value of high value oilseed imports increased by 21% between the years 2007 and 2011. Developing countries exported 1.89 billion of high value oilseeds to Europe in 2011 which represented 86% by value of total high value oilseeds imports. By volume the developing country share of imports in the sub sector has increased from 72% in 2007 to 81% in 2011. Market background The EU is highly dependent on the import of oilseeds and vegetable oils with imports valued at 11 billion in 2012 placing it second only to China as an importer. Europe is a producer of oilseeds such as sunflower, rapeseed and cottonseed but consumption exceeds production necessitating imports. The EU and Europe as a whole has no production of higher value oilseeds such as sesame seed, groundnuts and Niger seed and only very limited production of linseed. Worldwide production of oilseeds in general but in particular high value oilseeds is static or only slowly increasing with the exception of sunflower seed. Demand is forecast by OECD and by USDA to rise in the coming years driven by increased consumption in developing countries causing prices to rise in the long term. World trade is expanding by about 4% per annum.
Table 1: World Production Selected High Value Oilseeds million tonnes 2007/08 2012/13 Change Sunflower Seed 30 36 +20% Groundnuts 26 27 +3.8% Sesame Seed 3.7 3.7 No change Linseed 2.2 2.2 No change Niger Seed 0.325 0.45* +38% Source: Oil World Monthly www.oilworld.de, * trade sources The World supply/demand balance for high value oilseeds such as sesame seed or groundnuts is finely balanced and mismatches in any given season can cause prices to become extremely volatile. The EU market for high value oilseeds The value of the EU high value oilseeds import market rose by 22% in the period 2007 2011 with the developing countries value rising by 25% and their share by 9% in volume terms. There have been increases in value in all the high value seeds in the same period (sunflower seed +25%, sesame seed +38%, groundnut kernels +61%, linseed +17%. The growth in value reflects high market pricing over the period in response to disruption of the supply/demand balance by new markets and crop shortages. The higher value oilseeds have shown to be most resilient to price rises. Sesame seed values are up by 38% but demand remains relatively stable with a drop of less than 5%. Groundnut kernels have increased in volume by 6% despite a rise in value (mainly due to prices) of 61%. Sunflower seeds on the other hand registered a drop in volume imported of 20% in response to value increases of 28%. This was primarily due to a record EU crop in 2011/12 but may be reversed in 2012/13 in response to a poor crop. Table 2: EU Imports High Value Oilseeds and oils* Millions 2007 Tonnes Euro 2009 Tonnes Euro 2011 Tonnes Euro Total 3.20 1.80 2.60 1.80 2.28 2.20 D.C.** Share 2.30 1.51 2.08 1.46 1.84 1.90 D.C % 72% 84% 80% 81% 81% 86% *Sesame, Sunflower, Linseed, Groundnuts **D.C. Developing countries Source: UNComtrade Germany and the Netherlands are the two most important markets with France, Italy and the UK following. The general pattern is that oilseeds for crushing tend to be imported into the country in which they will be crushed but oilseeds for use in foodstuffs or birdfeed are often imported via the trade hubs of the seeds trade in Rotterdam, Netherlands and Hamburg, Germany. Figure 1: EU High Value Oilseeds Importing countries by % share Source: UNComtrade
The outlook for demand is for a return to growth stimulated by changes in food consumption habits such as the trend toward more healthy foods and the trend toward ethnic foods which is the fastest growing sector in European supermarkets www.ethnicfoodseurope.com. The drop in volume of heavy oils and a trend toward light oils is likely to continue favouring the import of high value oilseeds. The European Union does not have the climatic conditions for the production of high value oilseeds such as sesame seed and groundnuts. Acreage of sunflower seed has been stable to slightly rising in recent years which is forecast to continue 1. EU production of Linseed has varied between 130,000 tonnes 2009/10 to 180,000 tonnes in 2010/11 and a forecast 140,000 tonnes in 2012/13. Given an import of linseed approaching 450,000 tonnes in 2011 there are unlikely to be increases in EU production which will impact import volumes significantly. Uses of oilseeds in the EU The vast bulk of the 48m tonnes of oilseeds used in the EU each year is crushed for the manufacture of vegetable oils. Efforts to reverse trends toward obesity and heart disease have resulted in a reduction in the volume of oils included in food. This means that the quality of oils must improve which creates a demand trend toward higher quality oils (light oils, polyunsaturated oils and high oleic oils) and away from hard fats and palm oil. Oils made from high value oilseeds fall into this category. High value seeds tend to be used more often as food or as food ingredients. Present for over 30 years but gaining momentum in the past decade the Health and Wellness market segment has become important for high value oilseeds consumption. This segment developed as consumers started to buy food products which are perceived as either being healthier or as answering a particular health concern. Oilseeds generally but in particular sesame, linseed and sunflower are seen as healthy with many claims such as high omega 3, low saturated fats, heart healthy being particularly important. Today all sorts of seeds can be found in a range of food product such as snacks, bread, breakfast cereals, salads and prepared meals. In the high value oilseeds sector the health profile of products is usually already established so there is no need for the exporter to develop research to prove health claims. Table 3: Estimated European Uses Oilseeds 2013/14 Estimated Million % Tonnes Available Production & imports 48 Crush for oil 40 83% Food usage 1.10 2.4% Animal Feed & Seed 2.95 6.2% Closing stocks 3.20 6.8% Exports 0.75 1.6% Table 4: Veg. Oils usage Vegetable Oils by usage type % Food 46% Biodiesel 31% Industrial 10% Export 7% Stock 5% Source USDA FAS Oilseeds World Markets &Trade Jan 2013, Oil World March 2013. Promising EU markets for Uganda and Ethiopia Sesame Seed EU imports of sesame seed have been resilient in recent years with the exception of the Greek market which has fallen significantly most likely as a result of the financial crisis. The major markets of Germany and the Netherlands have performed well showing stable to moderate growth in volume but high growth in values. The value of imports has risen by 38% in the region and by 60% in Germany. This suggests strong underlying growth if the Greek position were discounted the sector would show 7% growth 2009-2011. This was during 1 FAS and Oil World
a period of high prices Worldwide with buyers in Europe agreeing that demand is price inelastic at present. Table 5 EU Sesame Seed Imports Importer 2011 Share 2011 vs. Tonnes Million Euro Tonnes Million Euro Tonnes Million Euro By Volume 2007 EU-27 108,442 97.45 106,487 137.56 103,406 134.28 - -5% Germany 27,486 27.14 22,922 34.37 31,000 43.48 30% 13% Greece 29,263 23.62 33,652 40.98 23,028 26.35 22% -21% Netherlands 17,970 15.83 12,952 20.86 17,352 21.88 17% -3% Poland 10,537 8.85 11,244 14.46 10,346 12.89 10% -2% France 8,033 9.35 8,823 14.59 10,097 16.27 10% 26% UK 7,203 7.88 7,244 11.38 8,349 14.45 8% 16% Italy 5,784 4.98 5,601 7.12 6,593 8.13 6% 14% 2011 Share 2011 vs. Exporter Tonnes Million Euro Tonnes Million Euro Tonnes Million Euro By Volume 2007 India 64,806 57.51 59,126 77.16 69,417 85.93 67% 7% Sudan 8,761 6.25 6,184 8.12 5,924 6.70 6% -32% Nigeria 1,097 0.74 4,327 5.05 3,303 4.18 3% 201% Ethiopia 11,579 8.88 14,685 15.45 3,242 3.67 3% -72% Mexico 1,081 1.41 1,078 2.12 1,724 3.30 2% 60% Uganda 1,257 1.12 600 0.86 708 0.93 1% -44% All D.C. 107,898 96.69 106,224 136.76 103,012 133.36 100% -5% D.C % 99% 99% 100% 99% 100% 99% Source UNComtrade Figure 2: Ethiopian Sesame Seed Exports to EU EU buyers interviewed reported a loss of confidence in Ethiopia as a result contract defaults following price volatility in 2008 and 2009 leading to a sharp fall in imports. Some of the smaller markets have shown growth with France, the UK and Italy all showing high rates of growth driven by food usage especially in snacks and bakery. The buyers in these growth markets prefer to buy hulled, whitish sesame seed but the diversity of uses is such that there are opportunities to sell a range of specifications provided these meet food safety and other requirements. India is the dominant supplier due to its ability to provide good quality material which is cleaned and in some cases hulled. East African origins according to buyers have lost market share in recent years due to the buyers loss of confidence in the reliability of suppliers especially in terms of contract fidelity. This is particularly true of Ethiopia but perhaps a little less so for Uganda where
buyers lack of knowledge of the country is mixed with negative perceptions. However the willingness of buyers to engage with new origins when faced with challenging supply issues has been shown by the entry of Nigeria and to a lesser extent Burkina Faso and Mali to the European market in recent years. Sesame Seed Oil The EU market for sesame seed oil is dominated by supplies from Mexico and China. The market is centred on North Western Europe similar to the seed market. It is showing growth in recent years despite soaring values. Sesame seed oil in Europe is used both in the food industry (dressings, salad oils, cooking oil for the ethnic food market) and in pharmaceuticals. Buyers specifications tend to be high making it a difficult market to break into unless first class processing facilities are available. Table 6: Imports Sesame Seed Oil 2011 Importer Share 2011 vs. Tonnes Million Euro Tonnes Million Euro Tonnes Million Euro By Volume 2007 EU-27 5,918 12.14 5,120 15.11 6,609 19.88 12% UK 2,896 5.25 2,401 6.31 2,765 7.95 42% -5% Germany 1,459 3.16 1,198 4.10 1,896 6.67 29% 30% France 1,007 2.43 1,247 4.21 1,690 5.58 26% 68% Netherlands 2,278 3.65 1,035 3.72 1,402 4.23 21% -38% 2011 Exporter Share 2011 vs. Tonnes Million Euro Tonnes Million Euro Tonnes Million Euro By Volume 2007 Mexico 2,107 3.79 2,030 5.86 3,051 8.10 46% 45% China 1,713 2.82 1,001 2.53 917 2.64 14% -46% Source UNComtrade Groundnuts (Peanuts) The EU is the largest importer of groundnut products in the World. The bulk of imported groundnuts are used in foodstuffs (snacks, peanut butter, confectionary, sauces etc.). Only a small proportion is crushed for use as oil. Groundnuts are imported in three formats kernels (shelled nuts), in shell groundnuts and groundnut oil (45,000 tonnes 2011). The European market has led the World in food safety requirements with aflatoxin contamination, pesticide residues and phytosanitary issues all coming to the fore in recent years. These requirements have discouraged some exporters including the USA which has left the market open to be dominated by Argentina with 66% of kernels exports. In recent years some African suppliers such as Senegal, The Gambia and Mozambique have regained footholds in the EU market for kernels. Food safety and especially aflatoxin is the key issue in accessing the European market. Table 7: EU Groundnut imports by type of product Value Million Euro % In shell, Redskin and Pale skin Kernels Kernels 605 73% Oil 105 13% In shell 105 13% Meal 11 1% Total Value 826 Source UNComtrade European snack food manufacturers who sell groundnuts simply roasted and salted prefer a larger peanut (40/50 kernels per ounce or larger) but there are a wide range of uses and a place for a many varieties as imports from India, Brazil and China demonstrate.
The overall trend in the groundnut complex has been positive for exporters in recent years. The European market has been growing and is expected to continue its growth. The imports from developing countries (12%) have grown at twice the rate of the overall imports since 2011. There has been a decline in the import of in shell groundnuts in favour of kernels which is expected to continue. The market is dominated by the Netherlands which is the dominant trader, processor and distributor of groundnuts with more than half of all groundnuts passing through the Netherlands mainly Rotterdam port. Other important destinations are Germany and the UK both of whom show positive growth but even these imports are often negotiated through Dutch companies. Table 8: EU Groundnut Imports 2007-2011 2011 Share 2011 vs. Importers Tonnes Million Euro Tonnes Million Euro Tonnes Million Euro By Volume 2007 EU-27 478,999 376.12 464,043 430.18 508,245 605.34 6% Netherlands 242,917 189.57 213,216 233.61 281,358 323.23 55% 16% UK 87,963 73.36 86,210 66.57 91,656 114.36 18% 4% Germany 76,518 66.97 78,718 92.45 90,176 111.94 18% 18% Exporters Argentina 284,549 220 282,254 260 334,604 390 66% 18% China 89,903 73 72,876 64 64,439 87 13% -28% South Africa 2,435 2 3,447 4 7,236 9 1% 197% Senegal 1,711 1 18 0 4,463 5 1% 161% Gambia 1,240 1 1,314 1 4,430 4 1% 257% Mozambique - 0 180 0.15 408 0.42 0.1% na DC Total 430,501 334 421,954 382 480,748 572 95% 12% DC % 90% 89% 91% 89% 95% 94% Source UNComtrade In the past two seasons crop problems in India, China (2012) and Argentina (2013) have demonstrated the impact of poor weather (drought during growing/rains during harvest) on groundnuts. This has caused prices to be volatile with the price surging upwards during the poor harvest season and falling back during the good harvests. In 2012/13 we saw a sharp fall in prices as a result of a very good USA crop (Oct-Dec) but then surge upwards again as the Argentine crop (May/July) was disrupted and ultimately damaged by wet weather. The impact is seen in the 60% increase in value of imports (2007-2011) at a time when volumes grew by 6%. This is creating opportunity for new suppliers in the European market. During the same period of crop and harvest volatility the developing markets in China, India and Indonesia continued to increase their consumption of groundnuts. Notably China commenced some large volume imports from the USA. If this continues the World supply/demand balance for groundnuts is likely to turn into a deficit balance position. This may have a major influence on the groundnut supply position in Africa which at 6.5m tonnes per annum produces about 25% of the Worlds groundnuts which are almost all consumed where they are grown.
Table 9: EU Groundnut Oil imports 2011 Share 2011 vs. Importers Tonnes Million Euro Tonnes Million Euro Tonnes Million Euro By Volume 2007 EU-27 95,420 92 75,716 72 76,383 105-20% France 35,790 35 24,874 26 21,586 28 28% -40% Italy 38,678 39 36,903 33 37,177 52 49% -4% Suppliers - 0-0 Senegal 55,732 56 10,090 10 41,531 58 54% -25% Brazil 8,556 8 30,273 27 12,602 18 16% 47% Gambia 1,996 2 5,642 6 7,148 9 9% 258% DC Totals 95,098 91 75,605 71 76,370 105 100% -20% DC % 100% 99% 100% 100% 100% 100% Source: UNComtrade EU groundnut oil imports have been falling due to constrained supply. http://www.cbi.eu/promisingeumarketsforgroundnutoil. Sunflower Seeds The EU is a major producer and crusher of sunflower seed which is primarily used for vegetable oil production. Following years of growth in consumption The EU sunflower crop is grown in the southern countries France, Spain, Bulgaria, Hungary and Rumania and is susceptible to drought which determines import needs and export trade (mainly to other European countries) in any given year. There is a minor trend toward increased acreage for sunflower seed which has seen production tend toward the upper end of the range 6.5 8 million tonnes. Sunflower seed is crushed in the producing countries and in Italy, Belgium and the Netherlands. Crushing has been falling in recent years due to competition from rapeseed and uncompetitive pricing of sunflower products. Crushing for oil is in the region of 7m tonnes per annum. There is also an increasing usage of sunflower in food products but this remains a small proportion of overall consumption at 0.3 million tonnes (3.75%). The EU is however remains a significant importer of sunflower oil (2011 0.62 million tonnes) and seed (2011 0.4 million tonnes). Imports are primarily from Eastern Europe with Ukraine being the major supplier (40% seed, 71% crude oil, and 36% refined oil). Other important suppliers are Argentina (seed 6% oil 14%, Moldova (seed 19%, oil 7%) and USA (seed 12%). Export opportunities for sunflower seed to the EU are good for exporters of high volumes of crushing seed or high quality oils. Price competitiveness may be difficult however unless new suppliers are in a position to compete with mechanised efficient farmers, offer a viable volume and have efficient logistics to compete with supplies from Eastern Europe. Competition with high volume mechanised farming methods in Eastern Europe, Argentina or North America may prove challenging for exporters from East Africa. Potential exporters in Uganda or Ethiopia may be better to investigate niche markets for food usage perhaps offering sunflower seed which have unique quality, high value or certification. Non-oil or confectionary grade sunflower seed may present better opportunities. Figure 3: EU Sunflower Complex Imports 2007/08-2011/12 000 tonnes Source FAOStat
Linseed / Flax seed The EU is the largest Linseed consumer in the World buts produces less than 7% of the World crop and less than 30% of its own needs. Linseed is primarily used in Europe for industrial purposes as oil after crushing in products such as varnishes and paints. It is also used as animal feed both for cattle and as an ingredient in birdfeed mixes. Use for human consumption as vegetable oil is limited due to characteristics of the oil but direct use of the seed for human consumption is increasing driven by the Health and Wellness trend on foot of nutritional properties such as the high omega 3 content. This has led to the inclusion of linseed in seed mixes, bread and margarine. Table 10: EU Linseed Market Snapshot Million tonnes 2011/12 Trend World Production 2.14 Steady EU Production 0.16 Steady EU Imports 0.45 Recovering following GMO scare. 2012 0.54 million. Developing Country Share 22% D.C. Share change +231% Following Canadian GMO problem EU turned to developing countries of Eastern Europe Uganda/Ethiopia share 0 EU usage Crushing 0.45 Moderate growth Animal Feed 0,12 Steady Direct Human 0.04 Fast growth Total usage 0.61 Sources: Onidol 2010 EU Linseed Study, Oil World Following the finding of genetically modified material in linseed shipments from Canada in 2009 imports to Europe fell sharply from 0.695 million tonnes to 0.412 million tonnes (-40%). Canada s market share dropped from 81% in 2007 to 32% in 2011. This is a good example of how a small number of cases can destroy large markets when food safety requirements are not conformed to. The EU has found new supplies in Eastern Europe and demand has recovered to 76% of pre-2009 levels. Competition for export is from major producers such as Russia/Kazakhstan (production 0.72 million tonnes), Canada (production 0.49m tonnes) and USA (0.15m tonnes) who produce at low cost due to mechanised methods and suitable growing conditions. However the growing trend toward direct human consumption of linseed may provide an opportunity for suppliers from Ethiopia (production 150,000 tonnes) where linseed is mainly used as a vegetable oil. For example a cold pressed organic linseed oil might have some attraction for health food actors. in the European chain certified gmo free may open market opportunities for certified linseed in cases where conventional entry may be militated against by costs of production and transportation. There are also possibilities in the high end birdfeed market where linseed is included in mixes for finches and canaries but quality requirements in this sector are high and should not be underestimated. Niger Seed Niger seed is a very low volume oilseed in global terms. Production is in the range of 350,000 tonnes annually and is located mainly in Ethiopia (about 190,000 tonnes) and India (150,000 tonnes with smaller production in Myanmar and Nepal. In both major origins the bulk of production is used for oil extraction for domestic use and the balance is exported for sale primarily to the United States for use in the bird food industry. Niger seed is highly valued as bird food in the USA and there have been initiatives to commence production so far without large scale success. The USA is the dominant importer with imports in
the region of 40,000 tonnes in 2012 drawn from suppliers in Ethiopia, India and Myanmar. Indian exports of Niger have been falling in recent years (2009: 6000 tonnes 2010: 13000 tonnes but recovered in 2012 to a total of 28000 tonnes. (Source: India Oilseed Processors and Exporters Association). 76% of Indian exports were to the USA in 2012 and 18% were to the EU. The USA practice of using Niger seed in bird food has spread to Europe in recent years with imports showing a sharp increase. There is a difference in the requirement between the EU and the USA. The USA requires sterilisation of seed prior to export which facility is available in Addis Ababa. The EU does not require sterilisation but does require all the usual phytosanitary procedures and testing. Table 11: EU Market Niger Seed 1. EU Imports from 2008 2009 2011 2012 Ethiopia Tonnes 1509 1164 1872 3620 Value Million 1.60 0.70 1.07 3.18 % change -19% +61% +93% Source: UNComtrade, trade sources 2. EU Imports from 2008 2009 2011 2012 India Tonnes 2176 1996 3820 3422 % change -5% +91% -10% Source: Indian Oilseeds Processors and Exporters Association www.iospea.in 3. Estimated total 2008 2009 2011 2012 Imports EU Tonnes 3607 3160 5692 7042 % change -12% +80% +24% Source: calculated 4. EU Importers From India From Total Share 2011/12 Tonnes Ethiopia U.K. 1575 2107 3682 52% Belgium 784 353 1137 16% Netherlands 304 243 547 8% Spain 313 19 332 5% Germany 188 308 496 7% Source: UNComtrade, Indian Oilseeds Processors & Exporters Association www.iospea.in, Trade sources. Continued growth in the EU market could provide opportunities for the development of export trade for an existing producer such as Ethiopia or new producers in Uganda as Niger seed can be sold at high prices for export and replaced with lower priced domestic oils such as soya or sunflower without a negative food security impact. Safflower Seed World production is estimated at 650,000 tonnes annually which is produced in North and Latin America, India and China as well as a range of other countries. Safflower is used for the production of vegetable oil which is similar to sunflower oil in characteristics, as a substitute for linseed oil in paints and as an ingredient in pharmaceuticals. There may be opportunities to market in Europe for the manufacture of oleic oils. This would mean competing on price with the major exporters USA (oil), Russia (seeds) Australia and India (seeds) where extensive mechanised agriculture is practised similar to sunflower seed production in those countries.
Table 12 : Average imports to EU 2007-2011 in Tonnes Country Safflower Seed Safflower Oil Netherlands 3-5,000 10 15,000 Germany 1000 10 15,000 UK 1000-2000 1000 France 750 1000 750 In 2012 the EU imported 6132 tonnes of Safflower Seed which according to trade sources was largely used in birdfeed. It may be interesting to consider this option for small exporters who may also be involved in the export of Niger Seed This survey was compiled for CBI by James Fitzpatrick and Rene De Baaij Published: 26-07-2013 Disclaimer CBI market information tools: http://www.cbi.eu/disclaimer