Improving traceability is one of the key challenges for the food industry – integral to improving the sustainability of products and the lives of workers across the globe. What is the edible oils industry doing to increase traceability and transparency in the supply chain?
Gary Lewis, Current President of The National Edible Oil Distributor’s Association’s (NEODA) and Chief Commercial Officer at KTC Edibles explains.
Edible oils – current traceability levels
Efforts to improve traceability and sustainability in the oils market have typically focused on forest risk commodities – palm oil and soya. This is because of the real, measurable association unsustainable production has with deforestation, displacement of indigenous communities and threatening endangered species.
Today, the most traceable edible oil is palm oil – as over the last 15 years, huge efforts have been made to develop more traceable, sustainable supply chains. The development of certification schemes such as RSPO has transformed the palm oil market.
Although there is some way to go, more than 71 percent of the UK’s palm oil is now certified sustainable. At KTC, we’ve now switched to 100 percent certified sustainable segregated palm oil – and we expect other companies to follow our lead in the coming years. The progress has been fantastic. It’s a blueprint for change that we now need to look to apply to other edible oil commodities, like soya.
Soya is roughly where palm was a decade ago – with limited transparency in the supply chain, and poor consumer understanding of the issues. Although there are certifications in place, none are as developed or trusted as those associated with palm.
The good news is that things are changing, thanks to initiatives such as The UK Soy Manifesto, a 2021 industry commitment to ensure soy that enters the UK market is sustainable. It generated good engagement, with signatories making up nearly 60 percent of the market – although there are concerns about whether the certification schemes are robust enough to drive meaningful change.
Outside of the forest risk commodities, traceability has been less of a priority. Rapeseed and sunflower are not associated with the destruction of rainforest – so there has been less pressure to provide transparency. This is now changing.
Changing demands – traceability beyond sustainability
Traditionally, demand for traceability in edible oils has been driven by one of two factors – sustainability, and method of production (e.g. Non-GM and organic).
Now, we’re seeing an increase in brands demanding traceability on social, ethical and political grounds. For instance, with the war in Ukraine, we’ve had customers trying to eliminate all Russian products from their supply chain.
Unfortunately, increasing traceability within the sunflower oil supply chain depends on the crushers – many of whom utilize seed from multiple countries. Providing finished product segregated by country of origin isn’t something they’ve had to think about until now.
So far, crushers have proved reluctant to address the issue – and their focus over the past two years has been firmly on security of supply. As the Ukraine crisis drags on, and supply continues to remain tight, it seems unlikely that this will improve soon.
Changes in focus – from traceability to security in supply
Supply chain challenges, the war in Ukraine and global price rises have led to a change in focus when it comes to sustainability.
Pre-pandemic, the trend was clear – with a clear increase in demand from customers for traceable, sustainable commodities.
However, the last few years have moved the priorities back to supply. Customers have been more concerned with getting raw materials, and have been prepared to compromise on their commitments in order to meet price points and get products to market.
Soya – traceability up but sustainability down?
Thanks to supply chain developments, new technology and looming legislation driving change, traceability in edible oils such as soya is improving all the time. Unfortunately, changes in the global market look set to significantly constrain supply. Demand for sustainable soya already outstrips supply, and there’s a real chance that we may have better traceability… but no supply of sustainable product.
Buying from EU sources is one way of assuring higher sustainability/non-GM – but there simply isn’t enough being produced.
Currently, the growth in soya production is coming from South American countries, such as Brazil and Argentina – but there is little incentive to produce sustainably, thanks to huge demand from Asian countries like China and India.
At the same time, the world’s soya millers often purchase from multiple different countries, making it impossible to trace the origin.
Another big issue lies with the growth of the biofuel market, especially in the US. Increasing biofuel mandates (the US requires motor fuels to contain ten percent biofuel), and the emergence of biofuel applications such as SAF (Sustainable Aviation Fuel) are taking up an ever-increasing proportion of US soybean production. All the projections are for this to increase in the coming years.
As a result, exports from the world’s leading producer may fall, and users will need to source from elsewhere. The shortfall is likely to be filled by countries such as Brazil and Argentina, where production is contributing to the destruction of rainforest, and the displacement of indigenous peoples.
Solutions to drive sustainability
There is some positive news – there are more sustainable options available than ever before, and traceability in edible oils is improving all the time.
As things stabilize over the coming years, we expect a renewed focus on traceability to force the market into change, especially when it comes to soya. In the EU, we’re already seeing growers increase planting of non-GM crops in response to growing demand.
Long term, expectations on major food producers to evidence their carbon footprints and Scope 3 (supply chain) emissions will put increasing pressure on the entire supply chain – including crushers, mills and growers to provide a level of traceability that simply doesn’t exist yet in most commodities.
In the meantime, food businesses looking for traceability and sustainable solutions will inevitably have to pay a premium – as demand outstrips supply. Balancing the value of this against the cost of solutions in the current environment looks likely to be a real challenge!
Gary Lewis is President of NEODA and Chief Commercial Officer at KTC Edibles. Founded in 1972, KTC Edibles employs more than 275 people across two UK sites in Wednesbury and Liverpool. The company supplies more than 250m litres of cooking oils to customers of all sizes across the UK food industry each year.
The National Edible Oil Distributor’s (NEODA) key objective is to promote the interests of its members and raise standards across the entire edible oil packing and distributive trade. NEODA’s members include edible oil and fats refiners, processors, distributors and waste oil collectors (who also sell fresh oil). It also covers manufacturers and suppliers of non-oil products (including batter mix, sausages, packaging, potato preservatives) and other industry bodies.