The Impending Severe Vegetable Oil Shortage

The vegetable oil supply in the United States is a house of cards. We import about 30% of the vegetable oil we use, over 5.2 million metric tonnes per year [1]. If that trade is disrupted by some economic or political mishap, we could lose nearly a third of the vegetable oil consumed in the U.S. And that’s not the worst news.

A strange connection has developed between vegetable oil production and livestock feed. Of all the vegetable oil produced in the U.S., 80.1% is from soybeans and 9.9% is from corn, for a total of 90% of domestic vegetable oil [2]. But both those crops provide low amounts of oil per acre, about 300 to 334 kg of oil per hectare of land. A hectare is 2.471 acres. A farmer (or a large agri-business) cannot pay the expenses of growing a crop of corn or soy with only the income from the oil. Soybeans are only about 18 to 20% oil. But when the soy is processed for oil, the press cake leftover is sold for livestock feed. This makes soy more valuable than if it were sold for oil alone, giving the farmer enough income to make a profit. And a similar situation exists with corn. The corn kernels contain an average of only 4.3% oil. But when the corn is processed, the oil is extracted and the remainder is used for livestock feed and/or other products. Corn oil alone is not worth enough to justify growing the crop.

What would happen if the livestock feed market collapses, so that the price of feed is too little to pay for the expense of growing corn and soy? Farmers and commercial agricultural companies would no longer be able to grow the current vast quantities of corn and soy (150 million acres combined total). [3] Then we would lose 90% of our domestic vegetable oil supply, which is just over 60% of our total vegetable oil including imports.

Other oils produced in the U.S. include: canola, cottonseed [4], sunflower, peanut, and safflower. But all of those oils combined only equal about 10% of the domestic total. And there would be no easy way to increase the production of those oils to make up the loss of corn and especially soybean oil. To plant any oilseed, you need seed for planting. And the current commercial system only produces a modest amount of each oilseed (other than corn and soy). Then you need the machinery to process the particular oilseed crop. Since we produce only small amounts of the above list of oils, we have limited machinery to accomplish that processing. Maybe the soybean processing plants could be adapted to other oilseeds. Maybe not. But we still could not ramp up the production of those other crops quickly enough.

So if the livestock feed market collapses, the U.S. will lose 90% of its domestic vegetable oil supply (60% of the total, including imports). Vegetable oil will disappear from supermarket shelves. When it is available, the price will be very high. Prices for all foods containing a significant amount of dietary fat will rise sharply. Some food companies might go out of business due to the low availability and high price of the vegetable oil they need for their foods. And most Americans will end up on a low-fat diet — not by choice.

The typical supermarket sells thousands of different food items. But the main ingredients in those foods are very few: wheat, rice, corn, potato, vegetable oil, sugar, legumes, nuts/seed, and not much else. Beef, pork, and poultry are all raised using livestock feed, which is made from corn and soy. Without corn and soy, there would be a sharp reduction in meat, poultry, vegetable oil, and any processed foods that require significant amounts of oil. Corn and soy are the dual lynchpin of the agricultural system. Without those lynchpins, the system could collapse.

– Thoreau

[1] USDA, Vegetable Oil and Oilseed Imports

[2] FAOSTAT, Crops Processed

[3] USDA, ERS, yearbooks for corn and soy.

[4] Cottonseed oil is the least healthy of all the above oils. And its production depends on the economic viability of the U.S. cotton market. If cheap imports reduce the value of the U.S. cotton crop, we might see a reduction in this source of oil as well.

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