Calgene Chemical has agreed to market industrial rapeseed oilfrom Canada's largest oilseed processor.

The Skokie, Ill., subsidiary of Calgene Inc. (NASDAQ:CGNE) ofDavis, Calif., struck the agreement with CanAmera Foods. Halfof CanAmera is owned by the Saskatchewan Wheat Pool andManitoba Pool Elevators, and the other half by Central Soya Co.Inc., which had a previous oilseed processing agreement withCalgene, said Andrew Baum, oils division president.

Both partners hope the agreement will presage futureprocessing of bioengineered oils from Calgene's oilsmanufacturing and marketing subsidiary, Baum said. He calledthe agreement "another link in the chain" of an integratedindustrial plant oils business.

Calgene Chemical will exclusively distribute high erucic acidrapeseed (HEAR) oil, which has applications in plastics,cosmetics, lubricants and coatings. The product will bedelivered for non-food uses in tank trucks and drums. CalgeneChemical will also market CanAmera's canola oil in tank trucksand drums to industrial users.

Although financial details were not disclosed, Baum said thatthe distribution "will improve the profitability of CalgeneChemical. The impact will not be insignificant." The subsidiarywill buy the oil outright, then re-sell it. Its trading price hasranged from 20 cents to 80 cents in the past decade.

Historically, canola oil has been imported to the U.S. fromCanada and Eastern Europe, but supplies from Eastern Europehave become unreliable, Baum said.

To provide reliable and reasonably priced engineered rapeseedoils, Calgene Chemical anticipates making the product in severalareas at once, he said. This approach will account for variablesthat drive commodity markets, such as government policy,weather, plant diseases, relative economic conditions anddifferences in demand. Canada grows from 6 million to 9million acres of canola annually. CanAmera is the largestprocessor of rapeseed in North America and the world's largestintegrated producer of HEAR oil.

HEAR oil is gaining popularity as an ingredient inbiodegradable lubricants. Mobil Oil Corp. is developinglubricants based on vegetable oils, which Calgene Chemicalagreed in September 1992 to manufacture exclusively forMobil in the U.S. Last May, Calgene began its first field trials ofrapeseed plants producing laurate, a detergent raw material.

Meanwhile, Calgene Chemical is producing Eurcical TD-13 as alubricant to use in textile mills, and Erucical EG-20 for use inautomatic transmission fluid.

"We see this as the beginning of a broader relationship," saidLarry Horn, CanAmera's senior vice president. His companybrings contracting and production capabilities to Calgene's workin engineering and breeding rapeseed for new applications,which Calgene will market.

-- Nancy Garcia Associcate Editor

(c) 1997 American Health Consultants. All rights reserved.

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