CEH Report

Table of Contents

Abstract

China, Malaysia, the United States, the European Union, Indonesia, India, Brazil and Argentina are notable fats and oils–producing countries, and China, the European Union and India are notable high-demand areas that must supplement regional production through imports. The following graph shows world production and consumption by country/region:

Global fats and oils consumption will grow at an average annual rate of 4%, mainly as a result of growth in China and India. Growing economies, large populations and improving incomes will increase per capita demand for oils and fats in these countries. Also, demand for biofuels (mainly from rapeseed and palm oils) will increase demand in Europe. In the United States, fats and oils consumption will grow only slightly, at 1–2% per year.

In the United States, product substitution will continue within the fats and oils industry. Soybean oil has shown and will continue to show growth. Tallow and grease will show only slight growth as a result of increased substitution with healthier vegetable oils. Tall oil will decrease slightly as a result of a decline in the pulp and paper industry. Corn oil is expected to increase as a result of increased ethanol production and more feed uses. Butter and lard consumption will also increase because of an expected increase in pork production.

The United States remains the world’s largest producer and consumer (slightly ahead of China) of the world’s most voluminous oil—soybean oil. U.S. soybean oil now faces severe export competition from low-cost production in other countries, notably Argentina and Brazil and Western European countries, which have increased production of this commodity oil in recent years.

As a whole, EU countries are among the world’s largest consumers of fats and oils and must import over 32% of their annual demand. In 2004, EU consumption totaled almost 20 million metric tons, of which 72% was accounted for by Germany, Italy, Spain, the United Kingdom and France. The CIS and Eastern European countries must also augment domestic production with imports.

Japan imports the majority of its vegetable oils either as raw materials (such as vegetable seeds) or as final products. However, most animal fats and marine oils are produced from domestic sources. Crude tall oil is no longer supplied from the domestic pulp industry and must be imported.