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Cargill, BASF join race for plant-based omega-3 oils

  • Article by: MIKE HUGHLETT
  • Star Tribune
  • November 2, 2011 - 9:48 PM

Cargill Inc. is partnering with German chemical giant BASF in the race to develop a plant-based source of omega-3 oils, a potentially lucrative market as demand for the healthy ingredient soars.

Cargill and BASF unveiled a joint development agreement Wednesday in which the companies will work to produce genetically modified canola with the same omega-3 benefits as fish oil. BASF will sink $208 million into the venture; Cargill, a private company, didn't disclose its commitment.

BASF brings its genetic engineering capabilities to the project, while Cargill brings its sizable presence in the processing and distribution of canola oil and myriad other foods. The companies expect to have a commercial product by 2020.

Omega-3 fatty acids are beneficial for the heart, and may have other positive physiological attributes, including bolstering brain health. Fish oil is the traditional source for omega-3s in dietary supplements and food, and most of it comes from sardines, particularly from Peruvian fisheries.

But "basically supply is capped because there are strict rules on the amount of fish that can be harvested," said Christopher Shanahan, a consultant at market researcher Frost & Sullivan. "Supply growth is not keeping up with demand growth."

According to GOED, an organization of omega-3 suppliers, demand for omega-3 dietary supplements alone -- already a $1 billion a year market -- is growing at 12 percent annually. Beyond that market, there's increasing demand from foodmakers who want to bolster everything from bread to orange juice with omega-3s.

Enter Minnetonka-based Cargill and other global agribusiness giants. Certain plants, including canola and flaxseed, are natural sources of omega-3s. Over the past two years, Cargill has brought to market a canola oil and shortening bolstered with omega-3s from a flaxseed-based technology.

However, those products and all plant-based omega-3 food goods now on the market -- while imparting health benefits -- don't have the chemical structure to deliver the same broad health punch as fish oil.

The quest for Cargill and BASF: find a "disruptive" technology to turn plants into the biochemical equivalent of fish oil, Shanahan said. They have plenty of competition.

Monsanto and Solae, a biotechnology firm in turn owned by DuPont Co. and Bunge Ltd., have been jointly working since 2007 to develop omega-3-rich soybeans. Dow Chemical paired up with Martek Biosciences to do the same with canola in 2008.

Earlier this year, an Australian corporate-government venture launched a canola-based omega-3 project. And the burgeoning algae industry is eyeing the omega-3 market, including Green Plains Renewable Energy, which produces algae for biofuel and omega-3 ingredients in Iowa.

The prize is potentially big: Plant-based omega-3s are expected to be less costly than fish sources of the fatty acids. Plus, plant-derived omega-3s have a longer supermarket shelf life than those that come from fish.

Thus, efforts by agriculture and bioscience companies are likely to eventually produce omega-3 ingredients that will dominate the food and beverage industry, Shanahan said. "This is a race, so whoever gets to market first will have a competitive edge."

Mike Hughlett • 612-673-7003

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