Introduction
In bottles on your kitchen shelves, in processed food products, cosmetics, soaps, and possibly even your car engine, vegetable oils and their related products are omnipresent in our daily lives. Considering just how widespread the applications of these oils are in the food industry, it is unsurprising that market reports indicate the edible oils and fats industry generated a revenue of USD 350.12 billion in 2022. In India alone, the edible oil industry was worth USD 3.54 billion in 2020; this number is projected to grow at a CAGR of 6.82% to reach USD 5.72 billion in 2027.
Shifts in the global edible oil industry have been influenced to a great degree by the market in India, given that the country is the world's largest importer and consumer of edible oils. The dynamics of the edible oil industry in India have been influenced by myriad factors, ranging from changing dietary preferences due to increased consumer awareness to rising incomes. Cooking oils like mustard, groundnut, and sesame, traditionally used in the country, are being replaced by soybean, sunflower, palm, and rice bran oils. While the edible oil industry in India relies on domestic producers for oilseed crops like soybean, mustard, sunflower, groundnut and sesame, the country still has to import large quantities of both oils and oil-bearing materials to satisfy national demand.
In a bid to keep up with the rapidly evolving edible oil market in India, the government has enacted various initiatives to increase the production and productivity of oilseeds and keep edible oil prices under control. The private sector, too, has a substantial role to play in making high-quality, nutritionally enriched edible oils accessible and affordable in the Indian market. Kumar Metal Industries has had the privilege of witnessing the evolution of this industry firsthand. From oilseed preparation, oil extraction and refining to value addition of byproducts, our experience as an EPC company delivering projects across the edible oil industry has provided us with a wealth of knowledge to establish plants which not only deliver value to our customers and their customers but are also friendly to the planet.
Oils and related products in demand
In recent years, we have witnessed the rise of edible oil industry installations concerning soyabean oil extraction and the further processing of soyabean oil. Demand has been notable in North American countries, including the USA, where soyabean is being processed to extract oil, its high protein content is being converted into soya protein concentrates and other products, and byproducts are being redirected as feedstock for biodiesel manufacturing. Alongside the substantial increase in soyabean projects, palm oil and its fractions have also claimed a significant share of the edible oil market.
Technological advancements and innovation
Considering the robust technologies underlying oils and fats processing, the fundamental processes in the edible oil industry have remained largely unchanged for decades. But given the planet's current state, including climate change and resource scarcity, technological advancements have been driven by motives of cost and energy efficiency. For instance, while both chemical and physical refining have been established industry processes for decades, in recent years, many players have shifted towards physical refining to reduce the amount of waste generated by the process.
One of the guiding philosophies of tech advancements in the edible oil industry has been to focus on reducing utility consumption. The primary approach to this issue has been to optimise systems to use lower steam and energy/electricity levels to function. When this isn't possible, the other approach has been to recover and reuse energy in the process. When consumption and waste generation are reduced, the fuel used to power plants in the edible oil industry also reduces. Another guiding philosophy has been to power oil extraction or refining plants with renewable energy. Finally, there is the trend of value addition - optimising byproducts from edible oil processing to serve as feedstock for biodiesel, oleochemical, specialty chemical, or other production processes, thereby deriving value from every product generated during oil extraction and refining.
At Kumar, we ourselves have dedicated teams working to address specific process development challenges. At our R&D centre, they innovate to improve equipment efficiency and performance, lower OPEX costs, and develop new product lines - all to help the edible oil industry in India and beyond effectively serve evolving consumer demands. We also have good technologies and projects in the value addition of byproducts. For instance, we deliver multi-feedstock biodiesel projects in which the plants are configured to utilise any edible oil industry by-products, including used cooking oil, low-value non-edible oils, and more. The biodiesels produced from these plants are of B100 grade and meet the highest Indian and European standards, including ISI.
At the end of the day, all innovations - including the ones incubated at our OM Innovation Centre - address the crucial question of improving process design and efficiency such that CAPEX and OPEX costs can be reduced while keeping the planet's health front and centre.
Changing consumer preferences
Another trend evident from our recent project experience is how consumers have transformed their edible oil choices. People have been increasingly conscious about their health, leading to more awareness about and preference for nutritionally rich ingredients. Consumers prefer oils that are all-natural and rich in antioxidants. As consumers prefer the preservation of nutrients naturally present in vegetable oils, leading players in the oils and fats processing industry have also refined their processing technologies to ensure that essential nutrients are not damaged or lost during oil extraction or refining.
The edible oil industry has been affected by consumer trends beyond just the edible oil market as well. Some of our recent work has been driven by demand for specialty chemicals manufactured from oils, fats, and their byproducts; we have developed systems to convert refining byproducts into high-value niche products. Additionally, as people adopt new preferences for liquid cleaners, creams, and other consumer products, demand for oleochemicals keeps increasing. We have not only been delivering large projects in this area, but we have also been innovating to improve efficiency. Oleochemical projects are usually CAPEX intensive, but we have instituted a robust supply chain mechanism to improve costs compared to international standards.
At present, we are executing an oleochemical project for a major palm oil player in Indonesia. The 200 TPD oleochemical fatty acid fractionation plant we are delivering is a highly customised design crafted for a specific feed industry application. Projects such as these have demonstrated that we can deliver on highly tailored requirements with our superlative engineering and manufacturing capabilities.
Regional patterns
In the past few years, we have also observed regional patterns in the edible oil industry. For decades now, Africa has represented a massive opportunity for new businesses. Now one of the largest growing areas in terms of industrialisation, the African continent has also shown promise for the edible oil industry. With demand for new vegetable oil projects substantially increasing in Africa post-Covid, Kumar has developed a robust regional presence and capabilities.
The edible oil industry in India, too, has been showcasing impressive growth - a trend driven not only by urbanisation, a growing population and rising incomes but also by government support to reduce India's import dependence in the edible oil market.
While we have delivered a couple of large projects in India in the past year, it is also worth mentioning some projects executed in the Middle East, the scale of which has been largely unmatched. Meanwhile, projects in Russia have marked a new geographical region for expansion. Finally, North America also presents a promising opportunity for the edible oil industry; we have executed oil extraction and refining plants in countries like Mexico.
Challenges affecting the edible oil industry
Price fluctuation is one of the main concerns of the edible oil industry in India and beyond. With edible oil's main input being an agricultural commodity, the effects of climate change have been felt indirectly by edible oil processors, EPC companies, and business owners. Fluctuations in crop pricing and availability have presented complex challenges and restrictions, especially for new investors and entrepreneurs in the edible oil industry. This complexity has meant that a large part of the demand for vegetable oil processing plants comes from existing players in the market.
The edible oil industry, like any other, is in constant flux. Experienced EPC companies like Kumar, who have hundreds of successful projects under their belt, are the ideal partners with whom to weather the storms of changing edible oil market dynamics. Having stood the test of time, Kumar has demonstrated that robust engineering and operational expertise across projects in all scales, types and geographies is indispensable for success in the edible oil industry.
