Cotton producers' income from cottonseed could very well depend on a decision made by a person wearing a chef's hat in an Applebee's restaurant.
That's essentially who the National Cottonseed Products Association has targeted in an advertising campaign to promote the health and taste benefits of cottonseed oil. The campaign is being funded jointly by Cotton Incorporated and the NCPA.
Oilseeds industries are facing tough competition these days, with oil prices at low levels and a health-conscious society prompting many of them to undergo breeding and genetic engineering efforts to improve the composition of their oils.
What the public doesn't know is that cottonseed oil already has many of the health and taste attributes all the other oils are striving for. The challenge for NCPA is to find out who needs this information. That led to the joint project with Cotton Incorporated in 1997, which found that the casual dining segment might be very receptive to cottonseed oil.
Your neighborhood Applebee's and Chili'ís are good examples of the segment. Typically, these restaurants may use canola oil or soy oil, both of which have staked claims on healthiness.
“The canola industry has done a good job of promoting canola oil as being healthy,” said David Kinard, director of research and education for NCPA, in Memphis, which represents U.S. cottonseed oil mills. “But what people don't realize is what is bought on the grocery shelf is different from what restaurants use to fry.”
Kinard explained that the canola or soy oil sold at retail stores is typically used only once and is thrown away. But restaurants need frying oil that will last through several cookings and under those circumstances, canola and soy oil can break down, or revert. When that happens, the oils take on the flavor of the source. “Soy oil may taste like beans. Canola will taste fishy. Corn oil may be musty.”
To extend an oil's fry life for the restaurant, it has to be hydrogenated, a process which creates trans-fatty acids. Those trans-fatty acids are becoming a huge negative in health terms.
On the other hand, when cottonseed oil with its longer frying life finally does revert, “it has a nutty, buttery flavor that blends well with food flavors and won't overpower the food flavor.”
Since restaurant chefs are interested in health and taste, but have to make a profit as well, the NCPA believes the casual dining segment would be a good target for its promotion efforts. “Cooking oil is too expensive to use once and throw it away,” Kinard said.
With Cotton Incorporated's expertise, the NCPA is targeting the segment with an advertising blitz, now beginning its second year.
“We've seen some pretty impressive results from the first year,” Kinard said. “We've also gotten some positive feedback from the suppliers, the oil mills and refiners that sell into that market.”
Whatever the NCPA does to promote cottonseed oil will ultimately benefit cotton producers. For example, through cooperative arrangements and gin memberships, cotton growers essentially own about 40 percent of the crushing industry, so they ultimately receive the benefits of improved returns from cottonseed.
And generally, the crush provides a floor for seed value, according to Kinard. “That value has historically been higher than what a straight feeding value would be. If you didn't have crushing, then the low dollar market for cottonseed would be feeding beef cattle. They're not going to pay any premium for the feed value of the protein, fiber and fat that's in that seed.”
On the other hand, dairy cattle operations are willing to pay a higher cost for cottonseed. “They want the cottonseed to get a little more fat in the diet and to improve their butterfat tests and the hull provides some fiber. It's a good package that works better for dairy cows than for beef cows.
“To get the seed they need for dairy cattle, traders bid up at a price just above the oil mill price. That has really put a lot of pressure on the crushers to meet that demand. It's provided two very strong markets for the ginner who is selling seed. But without the crusher to provide that floor, the price could drop down very low.”
There is at least one historical example of this. In 1994, with bidding for cottonseed in Georgia and the Carolinas largely limited to dairies, cottonseed prices in those states were as much as $33 per ton below the Beltwide average of $101. But the revival of the cotton industry in the Southeast and the rebuilding of the crusher (oil mill) base drove cottonseed prices up by as much as 20 percent over the next two years.
“If you're going to improve the value of seed overall, a strong oil market is what you need,” Kinard said.
Typically about half of the 6 million tons of cottonseed produced each year is used for dairy feeding.
At one time, there was a strong cottonseed oil market overseas, according to Kinard. “But a lot of that has dried up because there are so many competing oils in the world, including palm, canola and soybean oil.”
Most of those foreign countries are looking for cheaper oil, and cottonseed oil has usually commanded somewhat of a premium over soy in the commodity market, Kinard says.
Over the years, increased competition has left cottonseed oil with a handful of customers in the snack food industry, many of which fry potato chips in cottonseed oil. “It's nice to have a few big name customers,” Kinard says, “but it also makes us very vulnerable.”
Another component of cottonseed, the meal, is mostly used for feeding dairy cattle and another growing market, catfish. The hulls are also used for feeding, while the linters can go into paper products.
A cotton plant will produce about 1.55 pounds of seed per every 1 pound of lint. The ginning of a bale of cotton will produce around 740 pounds of cottonseed. At 5 cents per pound. That's about $37 per bale, or around $100 a ton.
Kinard noted that the amount of cottonseed produced per bale has been declining in terms of weight and quality over the last few years. In the 1980s, cottonseed production never declined below 780 pounds per bale of lint produced.
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