INDUSTRIAL PROCESSING OF COTTON SEED OIL

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INDUSTRIAL PROCESSING OF COTTON SEED OIL

ABSTRACT

During the recent past, world prices of agricultural products and their by-products have experienced substantial volatility. This was particularly noticeable for the price of cotton lint, but since 2007 the world has also witnessed a similar fluctuation in the prices of cotton by-products such as cotton oil, cotton cake, and substitutes for these products such as Asian palm oil. Given that lint prices and those of other products derived from seed cotton have a tendency to move in opposite directions, cotton producers in the C-4 countries (Benin, Burkina Faso, Mali, and Chad) are asking if the existing price mechanisms that set producer cotton prices in their countries are taking into account the true contribution of cotton by-products to the total value of the seed cotton sold by farmers. A parallel question raised by many actors concerns the differences in the prices offered to farmers from one country to the next in the C-4 region. Sometimes these differences cannot be explained by differences in production and transport costs, leading one to ask if the producer prices are really tied to price movements in world markets where all the C-4 countries are selling their cotton lint.

Given the interest of the C-4 countries in these questions, the West African Cotton Improvement Program (WACIP), financed by the United States Agency for International Development (USAID) undertook a study on the role of cotton by-products (referred to as “co-products” in some countries that believe their importance should be elevated) in the cotton sector in general and in the pricing mechanisms in particular.

• A comparative analysis of price mechanisms currently in use and related policies (e.g., subsidies, taxes, etc.);

• A comparative analysis of the organizational and institutional structure of the sectors (production, processing, and marketing) and the by-product subsectors;

• An analysis of the possibilities available to reduce the dependence of the cotton sector on the instability of cotton lint prices via changes in the way that by-products such as cotton seed, oil, and cake are incorporated in the pricing mechanisms that set producer seed cotton prices.

CHAPTER ONE

1.0. INTRODUCTION

Cottonseed oil is a cooking oil extracted from the seeds of cotton plants of various species, mainly Gossypium hirsutum and Gossypium herbaceum, that are grown for cotton fiber, animal feed, and oil. Cotton seed has a similar structure to other oilseeds such as sunflower seed, having an oil-bearing kernel surrounded by a hard outer hull; in processing, the oil is extracted from the kernel. Cottonseed oil is used for salad oil, mayonnaise, salad dressing, and similar products because of its flavor stability.

1.1. BACKGROUND STUDY

1.1.1. Composition

Its fatty acid profile generally consists of 70% unsaturated fatty acids (18% monounsaturated, and 52% polyunsaturated), 26% saturated fatty acids.[3] When it is fully hydrogenated, its profile is 94% saturated fat and 2% unsaturated fatty acids (1.5% monounsaturated, and 0.5% polyunsaturated). According to the cottonseed oil industry, cottonseed oil does not need to be hydrogenated as much as other polyunsaturated oils to achieve similar results. Gossypol is a toxic, yellow, polyphenolic compound produced by cotton and other members of the order Malvaceae, such as okra. This naturally occurring coloured compound is found in tiny glands in the seed, leaf, stem, tap root bark, and root of the cotton plant. The adaptive function of the compound facilitates natural insect resistance. The three key steps of refining, bleaching and deodorization in producing finished oil act to eliminate the gossypol level. Ferric chloride is often used to decolorize cotton seed oil.

This profile envisages the establishment of a plant for the production of cotton seed oil with a capacity of 4,128 tonnes per annum.

1.1.2. Physical properties

Once processed, cottonseed oil has a mild taste and appears generally clear with a light golden color, the amount of color depending on the amount of refining.[11] It has a relatively high smoke point as a frying medium. Density ranges from 0.917 g/cm3 to 0.933 g/cm3.[12] Like other long-chain fatty acid oils, cottonseed oil has a smoke point of about 450 °F (232 °C),[4] and is high in tocopherols, which also contribute its stability, giving products that contain it a long shelf life, hence manufacturers’ proclivity to use it in packaged goods.

1.1.3. Economic History

The by-product of cotton processing, cottonseed was considered virtually worthless before the late 19th century.[13] While cotton production expanded throughout the 17th, 18th, and mid 19th centuries, a largely worthless stock of cottonseed grew.[13] Although some of the seed was used for planting, fertilizer, and animal feed, the majority was left to rot or was illegally dumped into rivers.[14]

In the 1820s and 1830s Europe experienced fats and oils shortages due to rapid population expansion during the Industrial Revolution and the English blockade during the Napoleonic Wars.[14] The increased demand for fats and oils, coupled with a decreasing supply caused prices to rise sharply.[13] Consequently, many Europeans could not afford to buy the fats and oils they had used for cooking and for lighting.[13] Many United States entrepreneurs tried to take advantage of the increasing European demand for oils and America’s increasingly large supply of cottonseed by crushing the seed for oil.[14] But separating the seed hull from the seed meat proved difficult and most of these ventures failed within a few years.[14] This problem was resolved in 1857, when William Fee invented a huller, which effectively separated the tough hulls from the meats of cottonseed.[13] With this new invention, cottonseed oil began to be used for illumination purposes in lamps to supplement increasingly expensive whale oil and lard.[13] But by 1859, this use came to end as the petroleum industry emerged.[13]

Cottonseed oil then began to be used illegally to fortify animal fats and lards.[13] Initially, meat packers secretly added cottonseed oil to the pure fats, but this practice was uncovered in 1884.[13] Armour and Company, an American meatpacking and food processing company, sought to corner the lard market and realized that it had purchased more lard than the existing hog population could have produced.[13] A congressional investigation followed, and legislation was passed that required products fortified with cottonseed oil to be labeled as ‘‘lard compound.”[14] Similarly, cottonseed oil was often blended with olive oil. Once the practice was exposed, many countries put import tariffs on American olive oil and Italy banned the product completely in 1883.[14] Both of these regulatory schemes depressed cottonseed oil sales and exports, once again creating an oversupply of cottonseed oil, which decreased its value.[14]

It was cottonseeds depressed value that lead a newly formed Procter & Gamble to utilize its oil.[14] The Panic of 1837 caused the two brothers-in-law to merge their candlestick and soap manufacturing businesses in an effort to minimize costs and weather the bear market. Looking for a replacement for expensive animal fats in production, the brothers finally settled on cottonseed oil. Procter & Gamble cornered the cottonseed oil market to circumvent the meat packer’s monopoly on the price. But as electricity emerged, the demand for candles decreased. Procter and Gamble then found an edible use for cottonseed oil. Through patented technology, the brothers were able to hydrogenate cottonseed oil and develop a substance that closely resembled lard. In 1911, Procter & Gamble launched an aggressive marketing campaign to publicize its new product, Crisco, a vegetable shortening that could be used in place of lard. Crisco placed ads in major newspapers advertising that the product was “easier on digestion…a healthier alternative to cooking with animal fats. . . and more economical than butter.” The company also gave away free cookbooks, with every recipe calling for Crisco. By the 1920s the company developed cookbooks for specific ethnicities in their native tongues. Additionally, Crisco starting airing radio cooking programs. Similarly, in 1899 David Wesson, a food chemist, developed deodorized cottonseed oil, Wesson cooking oil. Wesson Oil also was marketed heavily and became quite popular too.

Over the next 30 years cottonseed oil became the pre-eminent oil in the United States. Crisco and Wesson oil became direct substitutes for lard and other more expensive oils in baking, frying, sautéing, and salad dressings. But by World War Two cottonseed oil shortages forced the utilization of another direct substitute, soybean oil. By 1944, soybean oil production outranked cottonseed oil production due to cottonseed shortages and soybean oil costs falling below that of cottonseed oil. By 1950, soybean oil replaced cottonseed oil in the use of shortenings like Crisco due to soybeans comparatively low price. Prices for cottonseed were also increased by the replacement of cotton acreage by corn and soybeans, a trend fueled in large part by the boom in demand for corn syrup and ethanol. Cottonseed oil and production continued to decline throughout the mid and late 20th century.

In the mid to late 2000s, the consumer trend of avoiding trans fats, and mandatory labeling of trans fats in some jurisdictions, sparked an increase in the consumption of cottonseed oil, with some health experts:220 and public health agencies recommending it as a healthy oil. Crisco and other producers have been able to reformulate cottonseed oil so it contains little to no trans fats. Still, some health experts claim that cottonseed oil’s high ratio of polyunsaturated fats to monounsaturated fats and processed nature make it unhealthy.

1.1.4. Use in food

Cottonseed oil has traditionally been used in foods such as potato chips and is a primary ingredient in Crisco, the shortening product.[22] But since it is significantly less expensive than olive oil or canola oil, cottonseed has started to be used in a much wider range of processed foods, including cereals, breads and snack foods.[23]

1.1.5. Use as insecticide

In an agricultural context, the toxicity of cottonseed oil may be considered beneficial: Oils, including vegetable oils, have been used for centuries to control insect and mite pests. This oil has been generally considered the most insecticidal of vegetable oils.

1.1.6. Concerns about fats and toxicity

The popular website of Andrew Weil, a doctor of integrative medicine, indicates that he “regard(s) it as unhealthy because it is too high in saturated fat and too low in monounsaturated fat.”[25] His site also states: “What’s more, cottonseed oil may contain natural toxins and probably has unacceptably high levels of pesticide residues (cotton is not classified as a food crop, and farmers use many agrichemicals when growing it)”[25] and this claim has been repeated by other websites.[26] However, the claim that cottonseed is not regulated as a food crop is not true. The Code of Federal Regulations (CFR) contains regulations for maximum pesticide residue allowed in cottonseed, as it does for all other food crops.[27] Furthermore, the natural toxin, gossypol, is eliminated in the refining process of commercially edible cottonseed oil, and the Food and Agriculture Organization of the United Nations has documented the lack of appreciable residues in cottonseed and cottonseed oil.

1.2. STATEMENT OF THE PROBLEM

The present study is an attempt to analyze the functioning of the power loom industry & assessing the problems suffered by the industry in Nigeria in general and Gombe oil processing Limited in particular. The study is expected to reveal the deficiencies if any, and enable to suggest appropriate measures for the problems of the industry, and thereby serve the interest of weavers, traders & consumers more effectively.

1.3. SCOPE OF THE STUDY

The present study is integrated and comprehensive study on powerloom industry of Malegaon projecting its detailed picture. This may help to enlighten the pathways to action and give broad indication for different policy options. The present study is an attempt to discover the factors that accounts for its vitality, strength and weakness

The present demand for the proposed product is estimated at 59,313 tonnes per annum. The demand is expected to reach at 184,350 tonnes by the year 2020.

1.4. OBJECTIVES

The study seeks to examine & focusing, considering the facts in a comprehensive manner the state of functioning & problems of Powerloom industry in the state of Maharashtra

emphasising Malegaon to the following context.

1) To study the nature, administration, status and scope of the Powerloom Industry of Maharashtra with special reference to Malegaon.

2) To analyse the Powerloom Industry of Malegaon in the context of Socio- Economic Development.

3) To suggest measures for modernisation in respect to technology upgradation, quality control and competitive marketing to face the challenges of the globalization.

4) To examine production pattern and the cost structure of Powerloom industry.

5) To analyse the problems & issues of Powerloom industry.

6) To provide concrete recommendations for overall development of Powerloom industry and to enhance its efficiency.

1.5. HYPOTHESES ANALYSIS

The first hypothesis that “The Powerloom sector has tremendous potential and strength to meet the future challenges as it has proven its performance and emergence of Powerloom sector has transformed an art into a modern industry” has been proved true by the analytical study of the statistical data about powerloom industry. The analytical study of the statistical data about decentralised powerloom sector shows that the industry’s growth is remarkable. The production trend of powerloom industry continues in the right direction. It produces around thirty thousand millions square meters annually and employing about 55 lakh workers. The Indian powerloom industry is not only self sufficient in the raw materials but also it is one of the suppliers of the raw material in the global textile market. More than 40% of the cloth that goes into exports originates from this sector. The modernization process by the government has widened the scope of the

powerloom industry to further their activity and profitability. Since 2002-03, 30657 Semi Automatic, 10303 Automatic and 26972 Shuttleless looms were installed under modernization scheme. The sector today not only fulfils the need of the domestic market but it exports to major countries across the world.

The study of the powerloom industry proved that the powerloom industry has tremendous potential and strength to meet the future challenges and the emergence of powerloom

sector has transformed an art into a modern industry.

1) The second hypothesis that “The terms of employment of powerloom workers need updation” has been proved true by the study of terms of employment of workers in

Malegaon. The above said hypothesis was tested with the help of Chi –Square Test. The relevant variables were selected and three formulated sub-hypotheses were tested.

The first formulated hypothesis “Workers’ job security is dependent on working conditions of the factory” has been found valid. The critical value of the Chi Square at 0.05 level of confidence for 9 degree of freedom was 16.919 which is less than calculated value of Chi Square i.e. 96.471 hence the null hypothesis was rejected.

The second formulated hypothesis “Workers’ Satisfaction with wages is dependent on satisfaction of job” has also been found valid. The critical value of the Chi Square at 0.05 level of confidence for 9 degree of freedom was 16.919 which is less than calculated value of Chi Square i.e. 109.083 hence the null hypothesis was rejected.

The third formulated hypothesis “Workers’ satisfaction with wages is dependent on Welfare Facilities” has been found valid. The critical value of the Chi Square at 0.05 level of confidence for 9 degree of freedom was 16.919 which is less than calculated value of Chi Square i.e. 116.685 hence the null hypothesis was rejected.

It is clear that the owners of powerloom units failed to provide basic amenities to the workers. The majority of the workers are not satisfied with the working conditions of the

factory. They are working with dust and fumes, no proper lighting and ventilation, ignorance of cleanliness, no care on hygienic conditions and no safety measures to avoid accidents.

Their jobs are unsecured and majority of the workers are not satisfied with their jobs in terms of welfare facilities and wages.

The study of terms of employment of workers proved that their terms and conditions need updation.

2) The third hypothesis “The Powerloom industry needs more Upgradation and Modernisation in the present scenario.” has been proved true by the study of technology level of powerlooms.

The above said hypothesis was tested with the help of Chi-Square Test. The relevant variables were selected and two formulated sub-hypotheses were tested.

The first formulated hypothesis “Acquisition of Powerlooms is dependent on total investment” has been found valid. The critical value of the Chi Square at 0.05 level of confidence for 4 degree of freedom was 9.488 which is less than calculated value of Chi Square i.e. 28.614 hence the null hypothesis was rejected.

The second formulated hypothesis “Total Investment is dependent on Type of Looms” has been found valid. The critical value of the Chi Square at 0.05 level of confidence for

2 degree of freedom was 5.99 which is less than calculated value of Chi Square i.e. 52.898 hence the null hypothesis was rejected.

The decentralised powerloom sector plays a vital role in meeting the clothing needs of the country. The powerloom industry has the intrinsic strength not only to withstand but also progress in post WTO regime. But, the industry has to modernise itself not only in machinery sector but also in adopting newer technology in manufacturing, adopting newer marketing strategy and diversification towards new products.

India has ranked first in the total number of powerlooms in the world. India has 0.50 lakh shuttleless powerlooms with ranking of 11. While India’s major competitor China has

second position in the world in terms of number of powerlooms. But China has about 3.39 lakh shuttleless powerlooms with 1st ranking. The growth rate of China’s textile economy is faster than India. In Malegaon there are about 68 shuttleless powerlooms out of 1.5 lakh powerlooms. With the advent of globalised free-trade regime the Indian

market is open for the other countries. The Indian powerloom industry has to face the competition from low cost and high quality textile products. So the pace of modernisation needs more speed.

It is clear that the powerloom industry need more upgradation and modernisation in the present scenario.

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