Frito-Lay moved entirely to corn oil for its snack foods last year, but it is costing the company $30 million to $40 million a year extra in oil costs, said Rocco Papalia, senior vice president of research and development for the company. In its financial release for 2003, Frito-Lay said that without the oil switch, its operating profit would have grown by an additional 1 percent, or about $22 million.
The company chose corn oil because it has a positive health profile and is widely available, but it was a chore to make it work without changing the taste and texture of its products.
"It took us about 7,000 man-hours . . . and a few hundred sensory and taste tests to make sure the product was right," Papalia said. Production changes also had to be made on 200 manufacturing lines at 45 plants nationwide.
Frito-Lay's early adoption of corn oil also has made it more difficult for other companies that might want to do the same because its consumption of the oil pushed up the price.
Mark Ash, an agricultural economist with the Department of Agriculture's Economic Research Service, said the price of corn oil spiked last year to about 36 cents a pound -- or 20 percent more than the cost of soybean oil, which is the oil most commonly hydrogenated for food manufacturing.
Pepperidge Farm, meanwhile, started researching fat alternatives five years ago and will complete its transition to trans-fat-free sunflower oil, canola oil and un-hydrogenated soybean oil by the end of this year. The company had to change its dough mixing, sheeting and baking processes to create a Goldfish cracker that tasted the same, said Scott Gantwerker, vice president of research and development and quality assurance. The new oils are more expensive than hydrogenated soybean oil, he said, and harder to get in sufficient quantity. Ash said sunflower and canola oils typically cost 10 to 17 percent more than soybean oil.
"Hopefully supply and demand will take over and at some point the supply will increase and cost will go down," Gantwerker said.
Of course, what's a problem for some food processors is a business opportunity for others. Agricultural products giant Archer Daniels Midland Co. (ADM) has high hopes for its newly engineered oil. It mixes a fully hydrogenated, solid soybean oil -- which has a neutral effect on heart health -- with a liquid oil that has health benefits. In rearranging the enzymes on the fat molecules, ADM says, it is creating a product with a semi-solid texture that has good food-production properties but doesn't have the molecular structure that makes partially hydrogenated oils harmful.
ADM is meeting with commercial food manufacturers, said Mike Rath, general manager of specialty oils and fats. The company also is launching its own clinical trials to help establish the healthfulness of its new trans-fat-free oil.
But the product is not yet available in the quantities that food companies might need, and Rath said it is still more costly than most tropical and partially hydrogenated oils. Yet the price won't come down until ADM can ramp up production.
"We think over the long term . . . that we will have competitive prices," Rath said. "As you get more of the market to move in that direction, you get more efficient at it."
Another alternative still on the drawing board is genetically engineered soybean plants that would create oils with fatty acid profiles that are more favorable for health effects and cooking. Many experts have high hopes for such an alternative. But even if the right plant can be created, it would take years before enough fields were planted to produce the billions of pounds of oil the food industry requires.
And there's no guarantee that even this solution would solve the industry's problems in finding alternative fats, said Barry Swanson, a professor of food science and human nutrition at Washington State University.
"Just because they are genetically engineered soybeans, people may not be accepting of that," he said. "And as soon as the farmers switch crops, they've got different agricultural problems: different insects, different weeds, different climates. There are all kinds of problems they run into that nobody knows about."
