Globe to invest Tk 450cr to produce sunflower oil

Globe Pharmaceutical Group is set to enter the edible oil market with sunflower oil with the view to catering to the increasingly health-conscious middle-class segment.

Sunflower oil, with its high content of essential vitamin E and low content of harmful saturated fats, is said to be a healthier option than soybean and palm oils.

“This is a growing market as a section of people are shifting to sunflower oil on health grounds,” said Shaker Shamim, chief finance officer of Globe Pharmaceutical Group of Companies.

The company, which has presence in beverage, biscuit and dairy markets, will invest Tk 450 crore to establish a seed crushing and solvent extraction complex to extract sunflower, soybean and canola oils.

Globe is the third firm after City Group and Meghna Group of Industries to set up a plant to extract oil and oilcakes from seeds

It will help develop the backward linkage capacity of the import-dependent edible oil and feed industries of the country, industry insiders said.

The move is expected to further cut Bangladesh's import dependence on oilcakes to make feed for livestock and reduce the import of crude and finished edible oil.

Oilcake is the solid residue that is left after the oil-bearing seeds have been pressed free of their oil. It is used as cattle feed or fertiliser.

The demand for edible oil has been on the rise for increased population and rising income levels, health consciousness and the increasing use of oil as an ingredient in various feeds.

Bangladesh, which has a population of 16 crore, consumed 23.10 lakh tonnes of oil in 2015-16, with the figure expected to rise to 25.20 lakh tonnes this year, according to the US Department of Agriculture.

Due to insufficient local production, over 90 percent of the domestic requirement for edible oil is met through imports that cost Tk 10,408 crore in 2015-16, according to data from Bangladesh Bank.

Palm oil, which is brought in from Malaysia and Indonesia, and soybean oil, which is imported from Argentina and Brazil, dominate the consumption basket in Bangladesh.

The market for sunflower, canola and rice bran oil still remains low.

In recent years, a number of local firms started producing rice bran oil, while some firms have also started marketing imported sunflower, canola and olive oils to cater mainly to the high-income groups.

In its plant, Globe will be able to process 1,200 tonnes of sunflower seeds daily, according to Shamim.

“We will cater to both the domestic and export markets for edible oil, particularly sunflower.”

At present, the cheapest price at which sunflower oil is sold is about Tk 200 a litre, which many cannot afford to buy.

“Our survey shows that offering the oil at reduced prices will encourage more consumers and the demand will grow.”

Globe, which is targeting to hit the market in September, will sell its sunflower oil at Tk 150 a litre, he said.

At present, the market for sunflower and other higher priced edible oils stands at between Tk 40 and Tk 50 crore a month, according to Shamim.

The company, which exports beverages and products to 23 countries, has already completed the groundwork to export its sunflower oil.

The oilcakes from sunflower and other oilseeds will be sold to the local feed industry, he said.

Bangladesh's feed industry consumes 16 lakh tonnes (1.6 million tonnes) of oilcakes a year to meet the growing demand from poultry, livestock and aquaculture farms.

The demand for oilcake is met through locally crushed soybeans and imported soybean meals.

Bangladesh's soybean meal production in 2015-16 stood at 8.60 lakh tonnes, according to the USDA.