11/03/2005 - Finnish vegetable oil maker Suomen Rehu strengthens marketsynergies buying a majority stake in rapeseed and soy oil firm Mildola Oy,writes Lindsey Partos.

A subsidiary of Finnish food and agricultural group Lännen Tehtaat, SuomenRehu paid €3.9 million to increase its slice of Mildola Oy from 17.5 percent before the deal to 82.5 per cent.

A significant buyer of Finnish rapeseed, Mildola pulled in sales of €41million last year. The new mother group Lännen Tehtaat achieved a turnoverof €473.8 million in 2004, down from €492 million in 2003.

As Mildola’s single largest customer, the takeover deal should bringsignificant economies of scale for Suomen Rehu "as a buyer of rapeseedcake and soya bean meal, both by-products from Mildola’s foodmanufacturing process".

Lännen Tehtaat predicts the acquisition will boost the group’s annual netturnover by more than €20 million, although no "essential effect" isexpected for 2005 profit.

Rape seed, palm oil and soybean are all experiencing strong market growthas food makers continue to turn away from animal fats in favour ofvegetable alternatives.

By 2008 analysts Business Communications Company predict these keyvegetable edible oils will account for 69.9 per cent of the US marketalone.

Today, soybean and palm oil combined account for over half of all oilconsumed in the world.

After tight crops in 2003, soy oil has come in at 35 million tons for2004, offering some relief to prices, that in 2003, hit 15 year highs.Today, soy oil is selling for about $470 (€359) a ton.

The third largest vegetable oil crop, rape seed oil, reached 15 milliontons and is currently trading at about $666 (€509) a ton.

"Rape oil prices have been rising on the back of increasing demand fromfood and biodiesel industries, despite record global supplies," Josh Dadd,an economist at the UK Home Grown Cereals Authority (HGCA), recently toldFoodNavigator.com.

The fourth largest vegetable oil crop, sunflower seed oil, reflects asimilar picture to rape see oil, with prices becoming bullish on a tighterbalance sheet. For 2004, world production reached 10 million tons. Pricesare currently trading at around the $690 (€527) mark.