The vegetable oil production industry in Ukraine is a powerful agro industrial complex uniting seed producers with those of oil-and-fat output. This industry is mainly oriented at the production of sunflower oil and related products.
Sunflower makes up more than 90% in the total volume of oleaginous product manufacture in Ukraine and no less than 10% of total crop area. Annual croppage is regularly growing. It reached a record high of 5.4 mn tons in 2006. Ukraine ranks second in the world after Russia and supplies 15-17% of the world’s sunflower production.
Sunflower seeds have long been used as a form of in-kind payment between agricultural companies in the country. Naturally, area under it is gradually expanded.
Sunflower is a profitable endeavor with profitability up to 89%. It depends less on weather conditions than many other crops, though a rainy summer decreases the oil content in seeds. However, the yield per hectare of sunflower in Ukraine, which used to equal the crops in other European states in the end of 1980s, now drops annually by approximately 7%. There are two reasons for the phenomena: violation of agricultural norms and land exhaustion.
Unique natural and climatic conditions in Ukraine make it possible to grow sunflower practically everywhere except for Volyn, Lvov, and Rivne regions. At the same time, steppe lands are most favorable for this, notably Autonomous Republic of Crimea, Kherson, Odessa, Zaporozhye, Nikolayev, Lugansk, Donetsk, Dnepropetrovsk, and Kirovograd regions. Sunflowers demand a certain number of sunny days per year for the enzymatic process to form oil in seeds. Conversely, starch grows in sunflower seeds in a rainy summer. The Odeskiy-122, -123, -128, -249, -504 hybrids are the most important for growing in Ukraine. The Kharkov type of seed produces 52-55% oil, the Odessa and Zaporozhye kinds – 50-52%.
Enterprises in the oil and fat industry in Ukraine can be divided into three categories. Enterprises producing vegetable oil comprise the first category: oil and fat and oil extraction integrated works. Small producers of vegetable oil in companies, where this kind of activity is not primary, is the second category. These processing companies are more dependent on the situation on the local market, because their vegetable output is in small lots for the needs of rural inhabitants.
Ukraine is almost the only state in the world where the population prefers unrefined sunflower oil, and not only because it is cheaper. At the same time, there is an increasing tendency toward bottled and refined sunflower oil production.
Agricultural companies use their oil mills to process seeds with the aim of getting cash for current payments. Small manufacturers produce up to 30% of the total sunflower oil volume. The third category includes producers of oil&fat output - margarine plants and integrated soap mills.
Primary processing products such as vegetable oil and ground oil cake, deeper processed products such as mayonnaise, margarine, soap, confectionery fats, and drying oil, drupaceous nuclei after the processing of fruit kernels, sunflower flour, and protein acids are all obtained as a result of oleaginous seed processing.
The Ukrainian oil and fat industry is represented by companies of the Ukroliyaprom (Ukrainian Oil Industry) association and large companies including CJSC Cargill, LLC Holding Grain trading company, and Bunge.
All companies operate with large Ukrainian plants, and 17 large enterprises operate on the market at present. Operating facilities are able to process up to 4.5 mn tons of oleaginous seeds (as a rule, sunflower and rape) and to produce 1.5 mn tons of sunflower oil, 380 ths. tons of margarine, and 105 ths. tons of mayonnaise.
Consumption of domestically made sunflower oil in Ukraine grew over the last years from 7.5 kg in 1998 to 12 kg per capita in 2007, which is connected with the increased purchasing power of individuals. Meanwhile, the recommended consumption norm amounts to 13 kg per capita. Domestic output of margarine and mayonnaise also increased under the influence of rising consumption demand and the growth of production volume in the confectionery and baking industry. Almost 20% of the gross sunflower oil production is used for this at present.
The vegetable oil market constitutes 1.7 mn tons per year. A large portion of the sunflower oil produced is exported.
It should be also noted that sunflower occupies only 6.6% in the world consumption pattern out of 17 oleaginous varieties, with rape oil at 9.9%, palm oil – 22.4%, and soybean oil – up to 26%.
Ukraine possesses favorable climate conditions for soybean cultivation. Thanks to the high quality of the grain and vegetative mass, soybean is among the major protein and oleaginous sources in the world. It is used in cattle breeding, the food industry, engineering, and medicine. UNESCO named soybean a strategic food plant due to its high nutritive value and protein content. Its importance from the point of view of agricultural practices is among its definite advantages, because it improves soil structure and enriches it with nitrogen, being nitrogen detent. After growing of soybean accretion of grain yield reaches 4 centner/ha. According to information of Institute of plant growing named after Yuriev, growing of soybean in the world increased 8.9 times over the last 60 years. Approximately 0.9 mn tons of soybean is grown in the countries of the former Soviet Union.
Soybean oil is produced from soybean grain by extrusion. Freshly extruded it resembles sunflower oil with taste and aroma, but would grow rank soon. After refining the oil gains good taste features, becomes transparent, has long shelf life and is used equal to sunflower and olive oil. It is a wonderful dietetic foodstuff containing unsaturated linoleic and linolenic fatty acids, salines of calcium, sodium, magnesium, phosphorus, and vitamins E and C. Soybean oil is used for frying, baking, and as salad dressing. Nowadays soybean is used in Ukraine mainly in food industry.
Rape is the second most important oleaginous variety in Ukraine, though its importance is relatively small. Cultivation in Ukraine has grown since 1997, though general production is still low. Nowadays it is mainly used for output of margarine and mayonnaise, because Ukrainian consumers traditionally prefer sunflower oil. A significant portion of rapeseed is pressed at oil mills that process sunflower, in particular, during relatively idle periods.
Corn oil is produced by dry processing of corn flour germs and its amount is quite low (merely 18-20%). Germs are washed away from starch substances in production of starch and molasses. Oil is extruded almost totally from such germs (40-50%). Oil in the first case is with better taste and more stable while storing. It is also possible to get oil by cold and hot extrusion. Oil of cold extrusion is of golden-yellow color and hot-extruded oil is darker.
Oil consists of triglycerides of oleic (up to 45%), linoleic (up to 48%), and saturated (up to 11%) acids. The following acids relate to saturated ones: palmic, stearic, arachin, capronic, caprylic, and capric acids, and hypoxic acid is considered unsaturated acid. The oil contains vitamin E and phitostearines. Iodine number is 111-113. Chemical constituents: 49-57% of fat oil, 13-18% of proteins, approximately 5% of phytin and other substances including tocopherol are contained in corn germs.
Grape-kernel oil has high biological activity and contains active antioxidants. Due to this it is mainly used in cosmetics, because it combines with free radicals in cells and thus slows down process of cell ageing.
Apricot oil contains triglycerides, natural wax, stearines, and liposoluble vitamins. This oil replenishes loss of skin grease while washing up and due to bad weather impact. It has antioxidant activity.
Sea-buckthorn oil contains a unique complex of vitamins, microelements, organic acids, and other biologically active substances. It fortifies body with vitamins, and has antiphlogistic, antioxidant, antiseptic, and recharging effect. It is used as anti-radiation, antipyretic, anaplerosis, and tissue regenerating agent.
Linseed oil is the first by its biological value. 46% of F vitamin is contained in linseeds. Linseed oil nourishes brains, improves cell exchange, liquidates constipation, improves skin, and reduces level of cholesterol. It is specifically useful for people experiencing acute shortage of F vitamin. The oil is easily oxidized; therefore it should be thoroughly protected from contact with air and light. It facilitates epithelization of wounds, operates antiphlogistically, normalizes metabolism in cells, and possesses a unique capacity to moisturize skin naturally.
Cedar oil (oil from cedar nut kernels) contains microelements and vitamins. It acts as a nutrient and antioxidant. It actively transports and easily frees useful substances while doing neogenesis (regenerating injured tissues).
Wheat germ oil is very useful healing oil. It contains vitamins A, D, E (in large amount), and K, as well as 85-90% of unsaturated fatty acids.
Peanut (arachis) oil contains 27% of proteins and 16% of carbohydrates. Exclusively cold worm pressed oil is of high quality, though it is practically not sold.
Cotton oil contains 40-50% of linoleic acid and none of linolenic acid.
Hempseed oil contains 46% of linoleic and 28% of linolenic acids.
Approximately 140 producers operate on the market of mayonnaise. Production volumes of mayo in Ukraine amounted to 115 ths. tons in 2003 and 170 ths. tons in 2007. Export of mayonnaise made 2.5 ths. tons in 2003 and 5.0 ths. in 2007. Mostly mayonnaise is exported to Russia and Moldova. Annual import constitutes almost 4 ths. tons.
Approximately 30 operators work on the market of margarine. Production of margarine made 235.9 ths. tons in 2003 and about 300 ths. tons in 2007. Annual export of margarine constitutes about 2 ths. tons and import – 30-40 ths. tons. Producers face no problems with raw stock (except for seasonal variations of prices). Oil and hydrogenated fat (salicylic sodium) are local raw stock ingredients, while tropical oils, emulsifying agents, and stabilizers are imported.
Granting loans and regulation of export and import by increase/decrease of customs duty for export/import of sunflower seeds and sunflower oil nowadays are main instruments of oil and fat industry state regulating.
Financing of future crops is quite problematic for many producers of sunflower seeds. Rates in Ukraine are extremely high (from 14% to 20% in US dollars). Obtaining of loans is difficult for farmers due to the lack of mortgage loans and lending under land pledge. At present, legislation for creating a mortgage lending system and market mechanisms of land movement is being drafted. It would attract necessary financial resources to agriculture.
A lack of duty for the export of sunflower seeds negatively affects the local oil and fat industry. Seeds were exported. Plants were idle and sunflower oil was imported. The government introduced a 23% export tax in October 1999 to protect the industry. Meanwhile, tolling schemes made it possible to export seeds further on. Only after the banning of tolling operations did the oil and fat sector of Ukraine start to recover its position. A new law was adopted in July 2001 according to which the export tax was reduced down to 17% of customs duties on FOB basis. This law also abolished duty-free exemptions, which had been previously granted to give-and take contracts. After the cancellation of duty-free status, the new 17% export duty significantly curtailed the export of Ukrainian sunflower seeds. Export duties are not applied to sunflower oil and oilcake.
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