KFC buying canola
A SWITCH to high-oleic canola oil (Hocan) by one of the nation’s biggest fast food players is fuelling massive growth in demand that could shift the make-up of the national canola crop.
KFC Australia this year transitioned from Malaysian-sourced palm oil to Australian-produced Hocan in all of its 600-plus stores.
KFC Australia chief supply chain officer Michael Clark told a field day south of Forbes last week the transition meant the company needed to increase the amount of Hocan planted across Australia to meet future demand.
“This is a massive change for us. We’re moving from palm oil – which we can buy any time of the day, any time of the year – to a crop that is a speciality crop,” he said.
KFC Australia refused to disclose how much Hocan it would purchase each year, but a spokeswoman said it would be “one of the major users of high-oleic canola oil in 2012-13”.
Mr Clark said the transition to Hocan, which will be sourced entirely from Australian farmers, took four years of development. The company has reached agreements with Cargill, Integro Foods and MSM Milling to supply the oil.
“For us, it’s about price and availability. The thing that keeps me up at night is not having enough oil, because if we don’t have enough oil we can’t open the store – we can’t cook any chicken,” he said.
Despite growth since Hocan varieties were first developed in the late ’90s, it is still a relatively small part of the overall canola picture in Australia. Mr Clark said KFC Australia was not interested in “riding the commodity markets” and wanted to source Hocan locally.
“We need to set things up for the long term. For us it makes a lot of sense to buy local – wherever we can, we do,” he said.
“It’s much easier coming down here and talking to (Australian farmers) about high-oleic canola than talking to an Indonesian farmer about their palm oil.
“Key for us is we want you guys to grow this thing, this is why we’re here – we want to grow the supply of high-oleic canola.
“We’re a stable, long-term customer, we’re in it for the long-term and we want to make sure we’re a priority.
“When push comes to shove, I want to be the person who buys the last tonne of high-oleic canola in Australia.”
AWB grain marketer Josh Gordon tipped other fast food companies would follow KFC Australia’s lead in moving to Hocan, which is low in saturated fats.
Mr Gordon said consumers were demanding healthier fast food, which he said Hocan delivered.
“Obviously the market is demanding it and so (KFC Australia has gone) down that path, and they’re real leaders in that direction. Their competition is looking very closely at what they’re doing and I wouldn’t be surprised if we saw other restaurants in that market place quickly come to follow KFC’s lead,” he said.
Mr Gordon said demand for Hocan was not about to subside any time soon.
“Demand is only increasing. We’re not in a situation where we’re going to see demand for high-oleic canola fall away or even stop still,” he said.
Mr Gordon said growing Hocan was attractive to farmers for two reasons; the premium Cargill paid for growers who participated in their closed-loop supply chain, and the fact growers know where their product is sold.
While traditionally Hocan varieties have failed to yield as much as conventional varieties, plant breeding development has increased yields considerably.
“Growers do like to know that they’re growing a product that’s going to be used in Australia, for Australians, and is really in demand,” Mr Gordon said.
Cargill Australia managing director Philippa Purser said the Hocan supply chain was a growing success story.
“Consumers are asking for healthier oils and that comes through to the (Yum Restaurants) team and KFC back to us and we can send those signals back to the growers to make sure you grow what the market is asking for,” she said.