OFI March 2018 Feedstock Online Edition

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LAURIC OILS

Coconuts of the Caribbean

CANOLA

A key to greatness

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CONTENTS ONLINE EDITION March 2018 EDITORIAL: Editor: Serena Lim Tel: +44 (0)1737 855066 E-mail: serenalim@quartzltd.com Assistant Editor: Ilari Kauppila Tel: +44 (0)1737 855157 E-mail: ikauppila@quartzltd.com SALES: Sales Manager: Mark Winthrop-Wallace Tel: +44 (0)1737 855 114 E-mail: markww@quartzltd.com Sales Consultant: Anita Revis Tel: +44 (0)1737 855068 E-mail: anitarevis@quartzltd.com

FEATURES SUNFLOWER SEED

2

Ukraine: The sunflower state

SOYABEAN

7

PRODUCTION:

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EVENTS & STATISTICS 20

Diary of events

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Statistics

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SUNFLOW ER SEED

Ukraine:

The sunflower state

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Ukraine is a world leader in sunflower seed production, but its rapeseed and soyabean output is growing. Charlotte Niemiec writes

U

kraine is the world leader in the processing and production of sunflower oil. According to a report by the National University of Life and Environmental Sciences of Ukraine, titled ‘Market trends of oilseeds production in Ukraine’, the domestic oils and fats industry is one of the most advanced and promising segments of the food sector for its economy. In recent years, in line with growing global demand, there has been a corresponding and steady increase in the production of major oils and fats products.

The main growing regions for oilseeds are Dnipropetrovsk, Donetsk, Zaporizhia, Luhansk, Mykolaiv, Odesa and Kharkiv, where major production facilities are also located.

A report by the Ministry of Economic Development and Trade of Ukraine (MEDTU) notes that the country’s vegetable oil market comprises, in total, 1.7M tonnes/year. The biggest crop is sunflower oil, which makes up more than 90% of the total volume of oil-related products in Ukraine and represents at least 10% of total crop area. A large proportion of this is exported. MEDTU says Ukraine is the only state in the world where the population prefers unrefined sunflower oil, and not just because it is cheaper. There is also an increasing tendency towards bottled and refined sunflower oil production. However, a recent – and important – trend is the industry building and operating universal processing plants, which can process not just sunflower, but also soyabeans and rapeseed.

As a whole, the Ukrainian oil and fat industry is represented by companies of the Ukrainian Oil Industry Association (Ukroliyaprom) and large companies, including CJSC Cargill LLC,

Holding Grain trading company and Bunge.

Small manufacturers produce up to 30% of the total sunflower oil volume. All companies operate with large Ukrainian plants and there are around 17 large enterprises on the market at present.

Operating facilities are able to process up to 4.5M tonnes of oilseeds (mostly sunflower seed and rapeseed) and to produce 1.5M tonnes of sunflower oil, 380,000 tonnes of margarine and 105,000 tonnes of mayonnaise.

Domestic consumption of sunflower oil grew from 7.5kg per capita in 1998 to 12kg per capita in 2007. Domestic output of margarine and mayonnaise has also increased due to rising consumer demand and the growth of production volume in the confectionery and baking industries.

Almost 20% of total sunflower oil production is used for this purpose. The main products using oils and fats in Ukraine include mayonnaise, margarine, soap, confectionery fats and frying oil.

The passing of palm oil Historically, Ukrainian producers have struggled with high rates for the financing of crops. Obtaining loans is difficult for farmers because of a lack of mortgage loans and lending. Now, new legislation is geared towards creating a mortgage lending system to attract necessary financial resources to agriculture. Furthermore, prior to 1999, a lack of duty for the export of sunflower seeds negatively affected the local industry. That year, however, the government introduced a 23% export tax to protect the industry and tolling schemes made it possible to export seeds further on.

The oils and fats sector started to recover its position only after the banning of tolling operations.

A new law, adopted in July 2001, reduced the export tax down to 17% of customs duties and abolished duty-free exemptions, which had been previously granted to give and take contracts. After the cancellation of duty-free status, the new 17% export duty significantly curtailed the export of Ukrainian sunflower seeds.

Consumption of various vegetable oils in Ukraine has been constant over the years, although from 2010 the overall trend has slipped slightly downward. Two possible reasons for this are a slowly declining population and producers’ inability to supply the Crimean Peninsula and the conflict zone in the Donetsk and Lugansk regions.

The downward trend is seen most particularly with palm oil, which is used in the production of vegetable oils and fats, and indirectly in the confectionery and food processing industries.

Decreased consumption of these products by the domestic market, as well as a slash in exports to traditional markets in ex-USSR counties (especially the Russian Federation), resulted in a major fall in domestic consumption of palm oil and triggered a subsequent cut of its imports to Ukraine.

In 2014/15, Ukraine imported 136,000 tonnes of palm oil, 22% lower than the previous year. This drop was caused by a smaller market of processed products using palm oil, as well as decreased export volumes for products containing palm oil to other countries such as Moldova, Kazakhstan and Armenia. Imports of palm oil for 2015/16 were expected to remain on the same level and with a slight increase to 140,000 for 2016/17 due to expected gradual economic recovery pushing up demand for processed products. However, a draft law intends to introduce a complete ban on the use of palm oil in food production. If passed, it could change the distribution of vegetable oil consumption on the domestic market and result in a complete shutdown of palm oil imports for food purposes to the Ukraine, the GAIN report says.

Under this scenario, the industry could expect a slight decrease of total vegetable oil exports of 140,000 tonnes to compensate for the palm oil imports.

Soyabean and rapeseed oils have never been popular food products with Ukrainians, although sunflower oil is traditionally a staple food used in salads, as well as in baking and frying. Ukrainians are not used to consuming soyabean or rapeseed oils for household food preparation. Thus, these 

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SUNFLOW ER SEED

FIGURE 1: PROFITABILITY AND AREA PLANTED UNDER MAIN AGRICULTURAL CROPS IN UKRAINE

SOURCE: STATE STATISTICS SERVICE OF UKRAINE, 2015 (ECONOMIC RESULTS DATA WAS NOT AVAILABLE AT THIS DATE)

 oils are mostly destined for exports as value-added products, while soyabean and rapeseed meal is fed to animals. However, there is an observed increase in the consumption of soyabean and rapeseed in the last few years in the country, mainly coming from food processing and other industrial uses. This trend can be explained by the fact that these oils are now produced in Ukraine in larger quantities and have become available for domestic consumption at competitive prices.

Oilseed planted area increasing According to a United States Department of Agriculture (USDA) Global Agricultural Information Network (GAIN) report, the oilseed planted area in the Ukraine in 2016-17 is forecast to increase overall, due to the expansion of soyabean plantings (up 8%, reaching 2.3M ha) compared to 2.1M ha in 2015-16.

The report says soyabeans and sunflower seed are the two major oilseed crops in Ukraine in 2014 that maintained relatively strong profitability (see Figure 1, above). This trend is expected to continue into 2015. It should be noted that the increased profitability for all major crops in 2014 is largely attributed to significant devaluation of the national currency. Agricultural crop production is expected to be impacted by the following factors:  The national economy is still experiencing aftershocks of economic instability stemming back to the end of 2014  The local currency (hryvna) continues its devaluation – almost 70% value has been lost since the beginning of 2015 and over 300% since the beginning of 2013  Continued political instability in the country  Further increase of hryvna-denominated costs of agricultural inputs, including fuel, seed, fertiliser and pesticide chemicals – a significant share of which are traditionally imported  Intermediary financing for agricultural production is only available for the short-term (one to three months, at exorbitantly high interest rates) and long-term credit resources are prohibitive in terms of costs to producers These factors influence Ukraine’s farmers, who must reduce production costs for the 2016 harvest.

Producers are trying to adapt to this new business environment. As seed costs constitute over 30% of the input expenses for some crops, agricultural producers will be using lower cost seeds and give preference to domestically-produced seeds over imported ones.

Under these conditions, average crop yields are not expected to reach record high levels and are expected to demonstrate significantly lower performance under stressful weather conditions. However, the export-orientated nature of agricultural commodity production in Ukraine, especially in the oilseeds and grains sector, will allow local producers to benefit from the inflow of foreign currency as a result of sales to world markets.

According to industry insiders, total oilseed crush capacity in Ukraine at the beginning of 2016 reached 16.5M tonnes. That could be expanded up to 17M tonnes by the end of 2016 due to construction of new facilities, as well as the modernisation of existing ones, which could allow a larger threshold and variety of oilseeds to be crushed at higher speeds and improve output quality.

In addition, a few new transshipment facilities are planned to enter into operation in Ukraine in the near term, which would create even stronger stimulus for farmers to opt for the production of oilseeds as competition between importers and/ or crushers would translate into more competitive domestic prices. In terms of exports, rapeseed and soyabean oil exports from Ukraine are split between the EU and East and Southeast Asian countries, while sunflower seed oil exports are distributed evenly between Asian, European and Middle Eastern markets.

Optimum sunflower seed production The GAIN report notes that the production of sunflower seed in Ukraine in 2016/17 is forecast to reach 11M tonnes – just 1.5% lower than the 11.2M tonnes produced in the previous years.

Sunflower areas in Ukraine have remained relatively stable over the last five years, varying between slightly below 5M ha in 2013 to almost 5.3M ha in 2014. The report says it could be argued that the production area for this crop has reached its optimum level and is likely to remain stable, barring drastic changes in global demand for this crop from

domestic processors.

Ukraine’s Foreign Agricultural Service (FASKyiv) forecasts sunflower seed yields in 2016/17 will remain above the five-year average, but slightly below last year’s official country yield of 2.17 tonnes/ha, as producers are not increasing their costs for imported agricultural inputs and would rely on low-cost imported sunflower seeds, as they did last year. The forecasted yield is subject to further revisions depending on actual weather conditions during the growth period.

According to industry representatives, sunflower seed production volumes could be increased only through the use of more advanced hybrids and improved farming technologies, which might not be an option for farmers in times of economic instability, and subsequent cost-saving mechanisms in place for their businesses. At the same time, given the unstable economic situation, some producers will likely make decisions to expand production areas at the expense of grains, in addition to replacing expected winter-kill areas for other winter crops.

Almost all sunflower seed produced in Ukraine is crushed domestically, which has been the case over the last decade since the export duties for sunflower seed were introduced in 1999. A small share of sunflower seed is consumed raw as food and by the confectionery industry. Crush and consumption statistics for the last few seasons were revised by FAS-Kyiv to correspond with officially reported sunflower oil production and exports and to better reflect industry trends.

The sunflower seed crush for 2016/17 is forecast to reach 10.8M tonnes, comparable to the 11M tonnes estimated for 2015/16. The only factor that might significant lower the crush numbers for Ukraine is a significant decrease and/or total abolishment of the 10% export duty for sunflower seeds through suggested changes in legislation.

For 2016/17, local consumption of sunflower is expected to follow the usual trend, unless Ukraine changes its sunflower seed export tariffs.

In terms of trade, the combination of export tariffs and excess domestic crushing capacity makes Ukraine a marginal sunflower seed exporter. This is confirmed by decreased exports from 280,000 tonnes of sunflower seed in 2011/12 down to 45,000 tonnes in 2014-15. Based on this trend, sunflower seed exports are forecast to remain around 50,000 tonnes, both for 2016/17 and 2015/16. The dynamics could be reversed only in the case of significant lowering and/or abolishment of existing export duties.

Exports were slightly above 45,000 tonnes in 2014/15, which is approximately 35% less compared to exports in the previous year. The EU remained the largest export destination for sunflower seed, buying over 31,000 tonnes, or around 70% of total exports from Ukraine in 2014/15. Export volumes for September-December 2015 indicate that the EU bought 142,000 tonnes, retaining its status as the most popular destination for Ukrainian oilseeds.

Rapeseed crush growing A report by the State Statistic Service of Ukraine (SSSU) states that in 2016 farmers had planted around 655,000ha of winter rapeseed. Traditionally, over 90% of all rapeseed sown in Ukraine is the winter variety and these areas will form the  foundation of future harvest.

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Given that autumn weather conditions featured low levels of soil moisture while winter conditions failed to produce sufficient levels of snow cover in some regions, expected winterkill could reach 2030%, depending on spring weather conditions. FASKyiv forecasts 2016/17 production area to shrink to 640,000ha – over 6.5% below the area planted the previous year. However, it is possible that affected areas under this crop could be replaced with crops such as sunflower and soyabeans, which offer better profit margins for farmers.

The production of rapeseed, based on the expected production area and average yields, is forecast to reach slightly below 1.5M tonnes for 2016/17, which is around 15% lower compared to production volume the year before. Domestic rapeseed crush, while still insignificant – but growing – is the only force competing with exports.

Growth of the overall oilseed crush capacity in Ukraine drives production and subsequent exports of rapeseed oil and meal. The rapeseed crush in 2016/17 is forecast to reach 390,000 tonnes, up by almost 11% compared to the estimated 350,000 tonnes the previous year.

The domestic rapeseed price stabilised in 2014/15, after a major drop in the second half of 2013 and early 2014 induced by collapsing world oil prices. This crop is extensively used for biofuel production, especially on the EU market.

In July-December 2015, Ukraine exported almost 1.3M tonnes of rapeseed, 28% below the same period in 2014. This corresponds to the usual pattern when around 80% of sales occur in the first four to five months of the season, the GAIN report says. The EU remains the largest customer for Ukraine’s rapeseed, buying almost 1.3M tonnes in 2014/15. It is expected to remain the top buyer in the new season as in July-December 2015 exports to this designation exceeded 1M tonnes.

In July-December 2015, rapeseed exports were also shipped to other traditional buyers: Pakistan (almost 136,000 tonnes), UAE (more than 58,000 tonnes) and Bangladesh (almost 30,000 tonnes).

For 2016/17, rapeseed exports are forecast to reach only 1M tonnes – around 25% below the

estimate for 2015/16 – based on a combination of an expected decrease in production volume, together with a gradual increase of domestic crush.

Soyabean production hits record The soyabean planted area in Ukraine in 2016/17 is forecast to increase to 2.3M ha, about 7% higher compared to the 2.1M ha planted in 2015/16.

Production is projected to reach roughly 4.6M tonnes in 2016/17 under the assumption of expected yields at the average level for five previous years. This would result in a 17% increase compared to the 3.9M tonnes produced in 2015/16, when yields were lower than average due to unfavourable weather conditions.

A number of factors explain the favourable expansion. Farmers have seen good returns on soyabean production compared to sunflower seed.

There is a strong demand from exporters, as well as excess domestic crushing capacity that ensures sustainable farm-gate prices. Exports from Ukraine are generally low cost due to its geographic proximity to its major consumers – the EU, Egypt and Turkey. Favourable soil moisture and other climatic conditions, mainly in the north-central regions, have also helped production.

Soyabean profit margins for agricultural producers in Ukraine over the last six years have remained positive and, for the last three years, they have significantly surpassed that of rapeseed and grains. Soyabeans have become the second most profitable crop after sunflower and the same level of profitability might be expected for 2015. This makes the crop more attractive to local farmers, since production costs and technology are not the most expensive compared to other crops (for example, sunflower).

Domestic consumption in 2016/17 is forecast to reach 1.7M tonnes, a 6.7% increase compared to 2015/16 estimates. A significant share of the soyabeans produced in Ukraine – over 20% – will likely be used by the domestic crushing industry.

Part of this quantity ends up as soyabean oil and meal for exports and the rest is consumed

domestically as full-fat or regular soyabean meal.

Soyabean consumption for feed and waste for 2015/16 is expected to increase up to 730,000 tonnes, and to another 740,000 tonnes for 2016/17, under the assumption that the increased production areas under this crop will require more seeds that are produced domestically. Over half of all soyabeans produced in Ukraine are traditionally exported. In 2016/17, exports are forecast to reach 2.9M tonnes, a 26% increase compared to the 2.3M tonnes estimated for 2015/16.

Over 2014/15, as well as the first half of 2015/16, domestic farmers enjoyed relatively stable prices for soyabeans, with a few hikes associated solely with volatility of the national currency. Also, local prices were sometimes higher than export prices.

For 2014/15, total soyabean exports reached a new record of 2.4M tonnes, 92% higher compared to the previous year. Among the largest importers were Turkey, which purchased 920,000 tonnes, and the EU, which imported 527,000 tonnes.

For September-December 2015, soyabean exports were mainly designated both to the EU (170,000 tonnes) and Middle East (over 645,000 tonnes), where the major buyer was Turkey, which imported over 460,000 tonnes. These dynamics suggest that for 2015/16, the major markets for Ukrainian soyabeans will likely remain unchanged compared to the previous year.

Export volumes for 2015/16 are estimated to reach lower levels – 2.3M tonnes, which is a result of expected stable demand from crush while lower than expected yields kept volumes of production comparable to the previous year, despite the expanded production areas under this crop.

For 2016/17, exports are forecast to reach 2.9M tonnes based on an assumption of expanded areas of production and average growth of demand from crush. Soyabean imports were minimal and constituted mostly of planting seeds.  Charlotte Niemiec is a freelance journalist. Parts of this feature have been extracted from a United States Department of Agriculture (USDA) Global Agricultural Information Network (GAIN) report published 22 March 2016

SOURCE: INFORMATION AGENCY APK-INFORM

FIGURE 2: SUNFLOWER SEED AND OIL PRICES, UKRAINE, SEPTEMBER 2014 - FEBRUARY 2016

6 – March 2018  TO RECEIVE REGULAR COPIES OF THE MAGAZINE CLICK HERE Sunflower.indd 3

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SOYA B EANS

From one shore to another China is making a multibillion dollar investment in a railway to connect the east and west coasts of South America in order to secure cheap and easily transported soyabean imports.

But the project is muddled by politics and debates on potential routes. Ile Kauppila writes

S

outh America has become something of a breadbasket for the world’s edible oils industry, especially in the case of soyabeans. Despite its origins in Asia – where China is still the world’s fourth largest soyabean producer – five out of the top 10 soyabean cultivating countries are today found in South America. Brazil leads the pack, with a forecast production of 108M tonnes in 2017/18, according to the US Department of Agriculture (USDA). Behind it is Argentina with 86.8M tonnes in 2017, followed by Paraguay (10M tonnes), Bolivia (3.3M tonnes) and Uruguay (3.2M tonnes).

The huge amounts of soyabeans produced must also find a consumer. As domestic demand in South America could not possibly account for the entire production, the continent’s countries are among the world’s largest soyabean exporters as well.

Put together, South America’s exports amount to approximately US$24.4bn, representing about 48.9% of global soyabean exports, according to the Observatory of Economic Complexity.

It is not difficult to find a customer, either. China, despite its projected domestic production of 14.1M tonnes in 2017/18, is the sovereign leader in global soyabean imports. In 2016, it bought US$34bn worth of soyabeans, equalling 67% of total global exports.

Although Artem Hammerschmidt, a senior analyst at Oil World, projected in September 2017 that China’s soyabean imports would not grow in 2017/18 due to rallying domestic production, no reduction is expected either.

Over the hills and far away With South American soya producers keeping

their prime buyer, their greatest question becomes how they will get their product to China. South America’s transport infrastructure is heavily reliant on roads, which in many cases can be in less than stellar condition and even unpaved for long stretches.

Moving product by truck also causes a heavy strain on the already poor roads, exacerbating the issues and leading to congestion and kilometreslong truck lines at ports.

Additionally, road transport produces a lot of emissions, which in our increasingly climate conscious world is generally not good publicity for carriers and producers.

Transporting agricultural products to China also has an additional challenge posed by basic geography. Most of South America’s agricultural areas are either around the eastern coast or at least to the east of the Andes – one of the longest and highest mountain ranges in the world – while China lies across the Pacific to the west.

Oilseed producers have to choose the lesser of two evils and either attempt to transport their product over the mountains by road or ship it to the east coast. Scaling the mountains can quickly rack up costs, time and emissions, while taking the sea route means having to take the cargo either through the Panama canal or going around the continent at its southern tip.

The bioceanic corridor China is well aware of this problem and it is taking steps to ensure it gets the goods it needs. The Asian juggernaut has begun investing in various infrastructure projects, such as the Ferrogrão railroad in Brazil (see ‘Blazing the rail through Brazil,

OFI Nov/Dec 2017), to improve export logistics in South America and perhaps even increase its political influence in the area, due to the USA’s recently established ‘America First’ policies.

To make transporting soya to the western coast of South America feasible, China has now begun urging the region’s governments to establish the long-discussed bi-oceanic, or transoceanic, corridor. What this corridor would be in practice is a railroad stretching more than 3,500km from the coast of Brazil to the coast of Chile or Peru.

Such a project is by no means a new idea, and in some forms it has already become reality. In late 2016, the Ruta 150 road – the Argentine portion of the road connecting Porto Alegre in Brazil and Coquimbo in Chile – was completed, opening up a truck route across the continent. While this was already an improvement to the situation, it still suffers from the road transport problems mentioned above, namely long shipping times and high emissions.

Establishing a railway would, therefore, be the preferable answer, and China has already begun working towards such a goal. According to the USDA’s Global Agricultural Information Network (GAIN), in 2015 China and Brazil reached US$53.3bn worth of agreements investing in Brazilian agriculture and infrastructure, animal health, market access and climate change mitigation.

A key part of the agreements was jointly carrying out basic feasibility studies into a transoceanic railway connection, which would begin in Brazil and terminate in Peru.

The investigation was to be carried out in cooperation with China Railway Corp and China Railway Eryuan Group (CREEC) on the Chinese end and Empresa de Planejamento e Logística and u

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SOURCE: IDOM

SOYA B EANS

FIGURE 1: SUGGESTED ROUTE OF THE CBRC (KEY BOLIVIAN MUNICIPALITIES HIGHLIGHTED)

While Brazil is rumoured to be gearing up to give a thumbs-up to the CBRC, president Michel Temer is currently still holding back. His reluctance has sparked rumours that Temer – who is already embroiled in accusations of corruption despite having been in power barely over a year – is delaying the project due to the USA’s opposition.

China, on its part, does not really care which of the routes ends up being built as long as one of them does, but the country says it is waiting for Brazil and Peru to get through their own internal feasibility studies.

Benefits all around

u the Ministry of Transport and Communications in Brazil.

“The transoceanic railroad project is hoped to increase the facilitation of trade by reducing transportation cost and transit time. If the project were to be accomplished, Brazil may invest in developing a plan for railroad expansion to stimulate its economy,” USDA GAIN said at the time.

Granted, this report was made in 2015, but the project has not been forgotten in the meantime.

In October 2017, deputy director general at the Latin American and Caribbean Affairs Department at the Chinese Foreign Ministry Zhang Run invited the region’s countries to “get aboard China’s highspeed development train”.

“The Latin American and Caribbean region is like an extension of China’s Silk Road project and we’re ready to get more deeply involved,” Zhang said, referring to China’s Belt And Road Initiative, which seeks to improve connectivity and cooperation between Eurasian countries in order to boost trade and stimulate economic growth.

The key to this project is the establishment of a logistics route along the lines of the ancient Silk Road from China to Europe.

Overshadowed by politics The will to see the bi-oceanic corridor become reality is not restricted to the Asian side of the Pacific. Bolivia, in particular, is pushing for the project to go forward.

While not one of the key end point countries for the railway, Bolivia would like to see its geographic position in the centre of South America turn it into a major transport hub, not only for agricultural products, but also for the hydrocarbons and ore that find their way from the continent to China.

The bookends of the project, on the other hand, still have their feet on the brakes for the time being.

“The governments of Peru and Brazil are at best dragging their feet, saying ‘yes’ but looking to Wall Street for favours, unwilling to move,” Executive Intelligence Review (EIR) wrote in November 2017.

EIR also says Wall Street’s reluctance to fund

the project has delayed its implementation. And external funding is sorely needed. With an original estimate of US$10bn, the China Railway Corp now says that due to the difficult terrain in the Andes, the bill to build the corridor will rise to US$60bn.

“Given these figures and other projects that could be more urgent, it has been decided to continue studying [the railway project],” Peru’s vice president and transport minister Martin Vizcarra said in September 2016, giving a good example of the feet-dragging described by EIR. The corridor has also been pushed back by ongoing discussions about the route it would take.

CREEC, in the feasibility studies carried out with Brazil, recommends starting the tracks at the Port of Santos in Brazil, crossing the Andes at their lowest point in Saramiriza, Peru, and ending them at the one of Peru’s Pacific ports, such as Paita.

According to EIR, taking this route would avoid the trouble of crossing the Andes at their higher points.

However, Peru has stated flat out that it would not go for a route stretching as far north as Saramiriza, claiming that it would be too expensive and that cutting a track through the Amazon would cause unnecessary environmental damage. While it has not given official support to any plan yet, Peru could give a warmer response to a second planned route, called the Central Bi-oceanic Railway Corridor (CBRC).

The CBRC (see Figure 1 above) would also begin in Santos, but instead of heading north, it would push west through Bolivia and into southern Peru, finally terminating at the port of Ilo. Bolivia has for understandable reasons thrown its weight behind this suggestion and has carried out several feasibility studies. One of them, by Ghenova, states Bolivia has prioritised the project through an investment of US$7bn.

“This is one of the most ambitious infrastructure project in the history of Bolivia and will enable the development, exploitation and industrialisation of its natural resources. Additionally, it will tremendously improve the country’s essential communications,” Ghenova states in the study, which concluded in 2015.

The CBRC route would carry the additional benefit of being able to connect Argentina, Paraguay and Uruguay – all major soya producers – into its network by connecting to the Paraná-Paraguay waterway. This would be accomplished by running rails down from the Bolivian track of the railway to Paraguay.

Ruben Galleguillo, the minister for planning and industry in the Argentine state of La Rioja, has called for plans on a bi-oceanic corridor to become reality as soon as possible.

While the route Galleguillo proposes would run from Porto Alegre in Brazil to Coquimbo, Chile, Argentine producers would no doubt welcome the CBRC as well. Argentine olive oil producers say that having the corridor would boost the country’s olive oil exports to Asia by lowering costs and increasing product value.

“The bi-oceanic corridor is a very interesting project,” Frankie Gobbee, CEO and co-founder of the Argentina Olive Group, told the Olive Oil Times in November 2017. “Argentina would have a direct outlet to the Pacific, lowering the cost of exporting to Asian markets by up to 25%.”

Gobbee adds that being able to cut shipping times would also help deliver a fresher product to Asian consumers.

“What Argentina produces during the year, it also sells that same year. That gives greater security to international buyers because they always receive fresh oil from the current harvest,” he says.

So it is not only the soya producers who would benefit from establishing the corridor.

Manufacturers of other edible oils, not to mention miners and oil processors, could all reap the additional income brought on by faster shipping and the railway would also cut back on emissions from trucks.

With China’s clout behind the project, it is unlikely that the bi-oceanic corridor would not have the funds it needs to be built. Local political arm wrestling might, for the time being, be holding it back but EIR notes that neither China or Bolivia, nor many in Peru, are likely to take ‘no’ for an answer.

The question is less about whether the railway will be built and more about where and when.

Completion is – preliminarily – expected in 2023, but whether that date holds depends on when actual work finally starts. l Ile Kauppila is the assistant editor at OFI

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CA NOLA

Canola – a key to greatness C

The canola industry of South Africa is still trying to get air under its wings. But experts believe that with the right development decisions it may soon be soaring. Ile Kauppila writes

anola, as a strain of rapeseed plant, is a relative newcomer in the oilseed scene, at least when compared to some seeds that have been cultivated for thousands of years. It was developed in 1970s at the University of Manitoba in Canada through conventional plant breeding. Since then, canola has managed to build a healthy place in the oilseed market for itself, and it has become one of the most widely used oils in industrialised countries.

In the USA, for example, consumption has grown from 226,800 tonnes in the late 1980s to more than 2.25M tonnes in 2015, according to USDA statistics. In short, canola has in a short time become a real success story.

The largest producers of canola, based on USDA data from the 2014/2015 season, are the EU at 33% of the global total, Canada at 22% and China at 20%. However, these regions and countries have either a long history of rapeseed cultivation or the monetary means and workforce necessary to have reached such large-scale production in such a short time and, in a field dominated by giants, smaller players often go unnoticed. Even when they reach commendable growth of their own.

One such player in the canola business is South Africa. Canola was first commercially procured in the country only in the early 1990s as a means for wheat farmers to combat weed problems in their fields, Gerhard JH Scholtemeijer, chair of the Protein Research Foundation (PRF) in South Africa, tells Oils & Fats International. “However,” he adds, “as yields grow, more farmers are turning to canola as a cash crop in its own right.”

Humble beginnings The history of canola in South Africa began in the late 1980s, as shrinking profit margins from cereal crops – as a result of low prices and skyrocketing input costs – brought on a need to discover alternative cash crops that could be introduced in the Swartland and Southern Cape regions in the very southern tip of South Africa. Four crops were imported for this purpose, namely canola, linseed, safflower and sunflower, according to the PRF. The crops were tested in various locations for three years from 1990 to 1992, until it was discovered that canola exhibited the most potential. Thus, research emphasis shifted to canola u

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CA NOLA

SOUTH AFRICAN CANOLA PRODUCERS HAVE HAD TO STRUGGLE WITH POOR YIELDS BUT THE SITUATION HAS GOTTEN BETTER

u cultivars. European and Canadian varieties were tested initially, but further research revealed that the highest yields were obtained from Australian cultivars.

In 1992, 30 producers began to cultivate canola on a commercial scale. A planting area of 400ha yielded approximately a humble 500 tonnes of canola. Nonetheless, this marked the beginning of the South African commercial canola industry and its rapid growth.

Based on seed orders, RFP estimates that only a few years later in 1996 the planted area had increased to 15,000ha, with cultivation in the Southern Cape being promoted by the then newlyfounded Southern Oil Ltd and the establishment of an oil mill in the town of Swellendam, some 200km east from Cape Town. Production did not increase quite so rapidly in Swartland, but the construction of an oil press in Moorreesburg during the 1998/1999 season saw production increase as well.

Success and setbacks From here, the canola industry began to grow. The 17,000ha planted in 1998/1999 more than doubled to 44,000ha by the 2003/2004 season. Total yields increased similarly, going from 21,000 tonnes in 1998 to 40,770 tonnes in 2004.

Trouble, however, reared its head by 2005. In the 2004/2005 season, total yield fell to 32,000 tonnes despite a slightly increased planting area and, in the following seasons, both yields and planted areas began to shrink.

According to the PRF, the decrease in both acreage and production was caused by multiple factors, with low and fluctuating yields branded as the primary culprit. Indeed, data from the period shows yields ranging from a low of 0.72 tonnes/ ha in 2004/2005 to a high of 1.15 tonnes/ha in 2007/2008. Average yields range from 1 to 1.8 tonnes/ha, although yields as high as 2.5 tonnes/ha have been reported by some producers.

Producers also struggled with pests, such as slugs and isopods, which damaged fields so badly as to warrant complete re-planting. Additionally, South African farmers cultivate canola in crop rotation with other cereal and pasture crops. As such, it cannot be planted on the same land in Swartland more than once in every four-year cycle and, in

Southern Cape, more than twice in each 10-year cycle. Such restrictions cause additional pressure on yields.

Nonetheless, despite the difficulties, production has bounced back. By 2013, planted area increased to 72,000ha, with production reaching a new record of 112,000 tonnes. In 2014, when 95,000ha were planted, the yield unfortunately only grew to 123,000 tonnes, or 1.26 tonnes/ha. This, according to Scholtemeijer, negatively affected canola and, in 2016, hectares dropped to 68,000 with a yield of 105,460 tonnes, or 1.55 tonnes/year (see Figure 1 on the following page).

Current situation However, the industry does not seem discouraged by this latest setback. Scholtemeijer says that PRF has received the latest data from the Crop Estimates Committee of the South African Department of Agriculture, Forestry and Fisheries (DAFF), which indicates that farmers intend to plant 90,000ha in 2017.

“Although the area is less than the 95,000ha of 2014, we are optimistic that with the experience gained over the past few years, the crop should exceed previous records, provided we have at least a normal year ahead,” Scholtemeijer says.

Despite the severe drought conditions that impacted production levels in 2015, the DAFF notes that the gross value of canola production in South Africa has been on the increase during the past three years. The growth, the ministry says, is attributable to the improved volumes of production alongside “slightly improved” producer prices (see figure 2 on the following page).

Data shows that the canola industry has experienced fluctuations in the producer prices for the past 10 years, which the DAFF attributes to limited production and less supply in the market. In its latest profile on the South African canola market value chain from 2016, DAFF figures show that the closing price of 4,750 rands (appr. US$366)/ tonne in 2015 was up 79% from the 2,660 rands (US$205)/tonne in 2006, and just barely behind the record year of 2013, when the price reached 4,760 rands (US$367)/tonne.

The relatively low levels of local canola production have meant that South Africa has been a

net importer of canola for all of its history. Between 2006 and 2016, the country imported 130.65 tonnes of canola annually, while exporting 15.37 tonnes (see figure 3 on the following page).

Imports remained relatively low until 2015 when they skyrocketed, more than doubling from just below 200 tonnes in 2014 to more than 450 tonnes in 2015. However, taking into account the fluctuating record of South African canola imports, it would not be surprising to see this volume drop just as drastically in 2016, although the decreased production may indicate that the trend will continue.

South African canola exports head mainly to Africa and Europe, with Africa dominating the market except in 2010 when European exports spiked momentarily. South Africa is by far the largest African canola producer, while Europe rules global production, which explains the country’s “minimal” European exports, the DAFF states.

Within Africa, most exports go to countries within the Southern African Development Community (SADC), such as the Democratic Republic of the Congo, Malawi, Mozambique, Zambia and Zimbabwe. The market here is strengthened by both South Africa’s close proximity to the listed countries, the SADC Free Trade Agreement and the fact that South Africa is the only major producer of canola in the SADC. However, in general, the DAFF notes that trade of canola is “very low” in South Africa due to low production levels and lower utilisation level of canola.

More planting area The low levels of production at the moment, however, are not a reason for local producers to fret.

Quite the opposite, higher imports prove that there is demand for the product in the local market and therefore a lucrative opportunity for expansion.

Scholtemeijer – with the rest of the PRF, which has funded most of canola research in South Africa – believes in a better future as well. “We have set a target of 150,000ha with a yield of 1.67 tonnes/ha for the planting season of 2020,” he says. Should this target be reached, it would translate to 250,500 tonnes of produced canola, more than double that of 2016.

It is an ambitious goal, and one way the PRF believes it can be reached is by making use of areas that have not yet been used for canola cultivation.

“Canola has traditionally been planted in the Western Cape Province – which includes Swartland and Southern Cape – with its Mediterranean climate. Our research, however, has indicated that canola can be an economical proposition when planted in the summer rainfall area during winter under irrigation. In the Western Cape it is planted at virtual sea level, whilst in the summer rainfall area tests are being done at an altitude between 1,500m and 2,000m above,” Scholtemeijer explains.

Indeed, a 2013 study ‘Determining the area of arable land suited to canola production in the Western Cape’, commissioned by the PRF, found that approximately 782,000ha of arable land in the Western Cape would be suited for winter crop production. Hot and dry weather conditions proved limiting in some areas, but 743,500ha of land would nonetheless be suitable for canola production.

“An additional 200,000ha of irrigated land in the summer rainfall area could see yields of over four tonnes/ha,” adds Scholtemeijer.

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FIGURE 3: VOLUME OF CANOLA IMPORTS AND EXPORTS

FIGURE 4: CANOLA GROSS VALUE OF PRODUCTION (GVP, RAND)

SOURCE: DAFF

FIGURE 2: CANOLA PRODUCER PRICES (RAND/TON)

SOURCE: QUANTEC EASY DATA, DAFF

In addition to increasing the planted area, there are also other plans to advance canola production in South Africa. In its ‘Development plan for canola’, published in 2014, the PRF notes that the possibility of growing canola on dry land and on a large scale in the Eastern Cape and Free State regions was being investigated by various institutions for biodiesel production, and that canola could present “significant advantages” as a rotation crop due to its biofumigation characteristics.

In its plan, the PRF states that cultivar development, including the introduction of new cultivars and building and maintaining the germplasm bank, could bring great advantages to South African producers.

It also recommends the trialling of new cultivation practices, particularly related to the effects of planting dates, plant density and different planting techniques.

The PRF also notes that canola is rather susceptible to weed killers, plant diseases and insect pests. To combat these threats, the foundation suggests the inclusion of genetically modified (GM) seeds into the South African canola base.

According to the PRF, GM canola could contribute to making canola more competitive when compared to other crops. GM canola is being used increasingly in Australia and elsewhere, and PRF quotes the Canola Council of Canada as saying that while the protein fraction of canola is affected by genetic modification, the oil remains the same healthy product as the unmodified oil recommended by the Heart Foundation.

Local producers, however, could be less enthusiastic about GM canola. South Africa’s largest canola producer Southern Oil, for example, prides itself in its commitment to non-GM canola, and requires all of its seeds to be validated for being produced through traditional plant breeding.

In fact, the company claims that all locally-grown South African canola, whether by Southern Oil or other producers, is GM free. How hard they would fight the introduction of GM cultivars remains to be seen.

However, even if the increasing production was ultimately realised through increased planting area, the market is definitely ready for expansion.

Wandile Shilobo, head of economic and agribusiness research at Agbiz, wrote in November 2016 that the rise of the middle class in the early 2000s keeps driving demand for edible oils, particularly canola oil. This view is shared by the PRF’s Scholtemeijer.

“South Africa has a shortage of protein for animal nutrition, as well as a shortage of edible oil,” he says. “The production of soyabeans has increased dramatically over the last 10 years, but in spite of this, we do not foresee that in the medium term a surplus of either canola of soyabeans will be planted in South Africa that will cause overproduction of either edible oil or protein for animal nutrition.”

With overproduction being a distant dream, South Africa is well positioned to substantially grow its canola industry.

Canola’s health benefits, combined with its high percentage of oil and high-value oil cake, could make a positive contribution to South Africa’s growing domestic demand and possibly even lift the country to mingle with the big players of the global canola market. l Ile Kauppila is the assistant editor at OFI

FIGURE 1: AREA PLANTED TO CANOLA VS PRODUCTION

SOURCE: DAFF

Plans for the future

SOURCE: DAFF

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PHOTO: UNITED PLANTATIONS

of Appeal ruled that the claims were unverifiable.

Charrier said the Roundtable on Sustainable Palm Oil (RSPO) rules should be tightened so that RSPO members could not use use palm oil free claims, as this undermined the RSPO’s mission.

The industry should also positively leverage EU moves, such as likely proposals in 2018 to mitigate the process contaminants – 2,3-MCPD esters and glycidyl esters – found most often in refined palm oil; and the European Parliament’s resolution in April 2017 for the EU to introduce a single certification scheme for palm oil entering the EU market and to phase out the use of unsustainable vegetable oils in biofuel production by 2020.

“If and when these EU developments become effective, palm oil can be positioned as the best in class in terms of edible oil, as 100% deforestation free and with no or low 3-MCPDs and GEs.” Palm oil free labels would then become meaningless and the EU should ban all palm oil free claims, he said.

Crop apartheid THE MALAYSIAN PALM OIL INDUSTRY FACES A SHORTAGE OF LABOUR TO CUT AND HARVEST FRESH FRUIT BUNCHES

Tackling labour, yield and image issues With palm oil celebrating its 100th anniversary of production in Malaysia, the industry must tackle stagnant yields, labour shortages and a negative image as it maintains its position as the world’s top traded vegetable oil. Serena Lim reports from the PIPOC 2017 congress

P

alm oil free labels should be banned in Europe once health and sustainability rules are in effect, according to Olivier Charrier, global president of marketing and innovation for Nutella at Ferrero International.

Charrier was speaking at the International Palm Oil Congress and Exhibition (PIPOC) on 14-16 November 2017.

The Italian chocolate and confectionery producer uses around 160,000 tonnes/year of palm oil, accounting for around 0.3% of global palm oil consumption, the congress heard. Ferrero’s hazelnut Nutella spread accounts for a 20% share of the company’s business.

“We have been using palm oil for the last 50 years

and we will never give up palm oil as it is essential to our recipe,” Charrier said. Palm oil gave Nutella the right texture, was neutral in taste and did not become as rancid as other vegetable oils.

Among the seven Nutella ingredients, including sugar, cocoa and milk, palm oil led the way in terms of sustainability. All the palm oil used by Ferrero was segregated in terms of supply, Charrier said.

With various food scandals in the past decades, consumers did not trust the food industry any more, and palm oil had a very negative image in Europe, he added.

The number of palm oil free products had doubled in Italy alone from 34% two years ago to 64% currently, totalling some 738 products including biscuits, spreads and bakery goods.

“We are facing an extremely vicious cycle. Food manufactures and retailers advertise palm oil free products so consumers become more convinced that palm oil is bad. So more retailers make the claim.

“If you put all the palm oil free products together, the level of advertising spent on them is five times the amount that Coca-Cola spends on advertising.

“So far, we have failed to collectively address palm oil’s image in Europe.”

In the short term, the industry had to be bold against palm oil smear campaigns.

In June last year, Ferrero won a court case against Dutch retailer Delhaize over its claims that its palm oil free Choco spread was ‘healthier’ and more environmentally friendly when the Brussels Court

Carl Bek Nielsen, chairman of the RSPO board and chief executive director of Malaysia’s United Plantations, said the palm industry had to show tangible signs of taking sustainability seriously but called on the EU and NGOs to stop the ‘crop apartheid’ against palm oil.

He said palm oil was not the only oil to be used in biofuels in the EU but legislation was targeting palm biodiesel.

He called on the black sheep in the industry to stop their practices but said poor agricultural practices could be found in any country if you looked for it. “It is time to take the searchlight off palm oil,” he said.

Bek Nielsen pointed out that the world’s total land bank amounted to 13.4bn ha. Of this, 37% or 5bn ha was agricultural land. Of the 5bn ha of agricultural land, two-thirds went to pasture and one-third or 1.55bn ha was available for crops. Oil palms accounted for 19M ha or 0.96% of the crop land, yet contributed to a third of global edible oils production.

In 2016, 204M tonnes of oils and fats was produced, the world population was 7.3bn, there were 1.7bn middle class people, and each hectare of land needed to provide food for 4.5 people.

By 2050, there would be 9.8bn people, 5bn middle class, each hectare of land must provide for 6.5 people, and a conservative estimate of 350M tonnes of oils and fats needed to be produced.

Bek Nielsen said 50% of all global palm oil was produced by smallholders (those farming less than 100 acres) and the industry employed 4M smallholders worldwide, one million of them in Malaysia. “It is an important crop for farmers.”

He also said that many retailers were not delivering their part in the sustainability equation.

About 12M tonnes/year of RSPO certified palm oil was now produced, but only 6M tonnes purchased.

Stagnant yields and labour shortages Stagnating yields and labour shortages was a challenge brought by up several speakers at the PIPOC congress.

“Increasing yield is fundamental to our industry,” Bek Nielsen said.

Palm oil had the highest oil yield per hectare

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at some 4.15 tonnes/ha, with United Plantations achieving 5.86 tonnes/ha. This compared to yields of 1.2 tonnes/ha for rapeseed oil, 1 tonne/ha for sunflower oil, and 0.5 tonnes/ha for soyabean oil.

However, while the EU’s rapeseed oil yield had risen 45% and US soyabean oil yield had increased by just over 50% between 1990-2016, Malaysian palm oil yield had only risen 5% in that period, not taking into account the sharp yield decline in 2016 due to the drought effects of the El Niño weather pattern.

Dr Kushari, director general of the Malaysian Palm Oil Board (MPOB), said yields in some areas were actually decreasing because of labour shortages and emerging diseases.

“We are living on borrowed time,” Thayaparakanthan Ramachandran, head of plantation advisory and mechanisation at Sime Darby Plantations, said. “There is an urgent need to review current management practices to reduce physical efforts. No one wants to do a manual job.”

The minimum wage of around RM1,000 (US$243)/month may need to triple to attract foreign workers.

In oil palm harvesting, fresh fruit bunches (FFBs) need to be manually cut from trees, and the bunches collected by workers, either with wheelbarrows, mechanical buffalos or mini tractors.

Ramachandran said mechanisation, automation and changing work practices were the only options for the industry to move forward.

In Malaysia, the workforce ratio was 16% locals and 84% foreign workers, and 80% of labour costs went towards harvesting and collecting FFBs, which was carried out three times a month.

Before mechanisation could be introduced, the infrastructure had to be improved by levelling harvest paths and widening and levelling terraces.

A block harvesting system where workers are confined to one area was key, along with harvesting gangs where roles were specialised, such as the cutting and pruning.

Azman Ismail, head of the Techno Economics Research Unit at the MPOB, said most foreign workers came from Indonesia. “Plantations in Indonesia offer comparable wages to Malaysia and working environments and living conditions need to be improved to attract workers here.”

As of September 2017, 77% of the oil palm industry’s workforce came from overseas, with the number rising to 95% for harvesters and collectors.

The total workforce numbered 527,091 in 2016, not including independent smallholders, or more than one million if they were included. The total labour shortage at September 2017 was 40,063, mostly for harvesters and field workers.

The land-labour ratio, not taking into account the labour shortage, was one worker to 11.3ha, or 1:10.6ha including the shortage.

Global supplier Fadhil Hasan, board member of the Indonesian Palm Oil Association, said Malaysia and Indonesia accounted for around 85% of total world palm oil production, which had grown at around 4%/year in the past six years, up from 52.6M tonnes in 2011/12 to 64.25M tonnes in 2016/17.

Indonesia’s production was 36.5M tonnes in 2016/17 and projected to rise to 38.5M tonnes in 2017/18.

Its average annual palm oil production growth was trending down, from 10% between 2005-2010,

SOURCE: OIL WORLD/MPOB, CIMB, PIPOC 2017

PA LM OIL

FIGURE 1: ANALYSIS OF GLOBAL PRODUCTION OF 17 OILS AND FATS (2006-2016)

to 8% from 2010-15, and 3% from 2015-2020.

This was due to a moratorium on licenses to open new plantations and the productivity gap between smallholders and private plantations.

Production targets were 40M tonnes for 2020 and 46-47M tonnes for 2025 and there was an ambitious replanting target of 165,000ha/year.

Key factors to watch for in the future were the EU’s plan to end the use of palm oil based biodiesel in 2021, as the bloc currently used about 3.5Mm tonnes of palm oil for biofuels. The USA could also impose anti-dumping duties on palm biodiesel.

Ivy Ng, head of Malaysia research and regional head of agribusiness at CIMB Investment Bank, looked at edible oil trends between 1996-2006, when soyabean oil accounted for 23.5% of global oils and fats supply, and palm oil 24.8%. This had changed in 2006-2016 with palm accounting for 28.6% and soya 25.3% (see Figure 1, above).

In Malaysia, production growth had come from increases in planted area, rather than rises in yield.

Palm oil accounted for 52% of global vegetable oil exports in 2016, compared to 39% in 1996.

Malaysian palm oil production was estimated at 19.4M tonnes in 2017.

A potential negative impact for palm oil exports was India’s introduction of higher import duties in mid-August 2017. These rose from 7.5% to 15% for crude palm oil (CPO) and from 15% to 25% for refined palm oil.

“This is negative for CPO as the higher duties will make palm oil less competitive in India against other edible oils,” said Ng, who gave a CPO price forecast of RM2,800 (US$680)/tonne for 2017 and RM2,700 (US$656)/tonne for 2018.

Malaysian biodiesel U R Unnithan, president of the Malaysian Biodiesel Association (MBA), said current installed biodiesel capacity in Malaysia was 2.05M tonnes, based on the capacity of the MBA’s 17 members. Total CPO stocks consumed by Malaysia’s biodiesel mandate now exceeded well over 1.5M tonnes.

“The National Biofuel Policy was launched in 2005 too create a totally new demand for palm oil and the Biofuel Industry Act was enforced on 1 August 2008.”

Unnithan said biodiesel was linked to the diesel market, with a correlation between CPO and diesel prices. “When palm oil is cheaper than gas oil, palm methyl ester (PME) is competitive and there is huge opportunity to export.” When CPO prices rose above gas oil prices, then the export market collapsed, unless supported by local mandates.

PME consumption had increased every year with the wider rollout of Malaysia’s mandates.

Malaysia saw export growth between 2006-2009 when CPO prices had good parity with gas oil.

The export market collapsed in 2010-2012 when palm oil prices shot up, with the palm oil/gas oil price gap widening between 2013-2014.

In 2011, the mandate to incorporate 5% biodiesel in diesel fuel (B5) was rolled out, creating a secondary market which saw local consumption increasing. B7 was introduced in 2015, and B10 was approved by Malaysia’s cabinet in May 2016.

“Many countries have moved beyond B7 into B10,” Unnithan said.

Indonesia had B20, Argentina B10 and Colombia B10. Colombia produced 1M tonnes of CPO, 60% of which was used for biodiesel.

“Malaysia is well poised to move to B10,” he said.

Trials had shown that no engine modifications were required and some vehicle makers, such as Mercedes, had accepted the mandate, although others remained silent.

Unnithan said export prospects for palm biodiesel looked poor because of the lack of parity between palm and gas oil prices and the negative image of palm oil, with new sustainability criteria, particularly in the EU. The export duty structure for vegetable oils and biodiesel also created another major distortion in the PME market, with individual countries adjusting their export tax structures so that biodiesel became cheaper for exports.

“Biodiesel is going local and the local mandate is key for survival of this industry,” he concluded. l

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LA URIC OILS

Coconuts of the Carribean One disaster after another in the past 50 years has left the Carribean’s coconut industry less than a shadow of its former self.

Now, the region is trying to make a comeback into the business.

Ile Kauppila writes

C

oconuts have traditionally been an essential part of agriculture in the Caribbean islands. They are farmed for food and their husks can be used to produce fibres and other construction materials. However, in the 1950s and 60s, the major application for which the Caribbean coconut crop was used was the production of copra and subsequently coconut oil.

To produce copra, the coconut’s meat must be extracted from the shell and dried. The dried coconut flesh is then pressed or dissolved with solvents to extract the oil, producing as a byproduct a high protein, high fibre mash, which can be fed to ruminants.

In the Caribbean, this traditional method was used to process the coconuts farmed at large monoculture plantations.

The industry was, at the time, an important contributor to the economy, the Caribbean Agricultural Research and Development Institute (CARDI) says in its ‘Coconut Industry Development for the Caribbean: Towards a Shared Vision and Road Map’ workshop report. It improved foreign exchange earnings for the region, alongside rural employment and livelihoods, particularly by providing jobs for rural women.

Mangled markets But come the 1990s, the coconut industry in the Caribbean was all but decimated. The decline, which started in the 70s and continued through the 80s, was not caused by any single factor.

Instead, it was the end result of various different developments coming together throughout the region.

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One of the primary ones – according to CARDI – was the sudden availability of cheap vegetable oils, produced through modern high tech methods and processing systems. Coconut oil, the traditional cooking oil of the Caribbean, simply could not compete due to it still being laboriously produced by hand.

Jose Antonio Flaquer of the Dominican agri association Junta Agroempresarial Dominicana gives the example of the Dominican Republic in CARDI’s report.

“In the 1960s, the Dominican Republic coconut industry was heavily reliant on copra and coconut oil production,” Flaquer explains “No vegetable oils were imported and the country produced all its needs for oils from peanuts and copra in a 50-50 ratio. By the 1990s, imported vegetable oils accounted for 98% of the market.”

Another major impact was the poor publicity coconut oil received at the time. Coconut oil is comprised mostly (82.5%) of saturated fatty acids, which have been linked to increased levels of low density lipoprotein (LDL) cholesterol – or ‘bad’ cholesterol – in the blood.

Additionally, the high saturated fat content could contribute to weight gain and obesity with regular use.

While coconut oil also positively impacts the levels of ‘good’ high density lipoprotein (HDL) cholesterol, several health organisations around the world, including the US Food and Drug Administration (FDA) and the World Health Organization (WHO), have recommended avoiding its use in cooking.

Coconut oil’s tarnished reputation diminished global demand, which, together with decreased local use, spelled doom for the oil’s marketability (see Figure 1, page 20).

Disease and decay In addition to plummeting markets, a more natural adversary turned its gaze on Caribbean coconuts.

A plague of various diseases has swarmed over the islands several times over the past five decades, leaving behind devastated plantations filled with dead trees.

It was in the 1950s, says Wayne Myrie of the Jamaican Coconut Industry Board, when the lethal yellowing (LY) disease was first noticed in areas of limited economic importance in Jamaica. LY reached the island’s main plantation areas in the 1960s and over the following 30 years, it destroyed approximately 8M coconut palm trees, impacting the livelihoods of 8,000 farmers.

More recently, the red palm mite (RPM) was spotted for the first time in 2004 and has since spread across the islands. “In Trinidad and Tobago, yield losses in excess of 75% have been recorded and heavy losses have been seen in other Caribbean countries,” says Simon Eden-Green from UK consultancy ECG Consulting. Between 2005 and 2011, production of coconuts in Trinidad and Tobago declined from 4.6M nuts to 50,000 nuts.

Other diseases that have ravaged the region are the red ring (RR) disease, spread by the coconut palm weevil and the nematodes it carries, and bud rot, a fungal infection that necrotises and rots the palm’s leaves, causing them to slough off the tree.

To add insult to injury, the Caribbean’s coconut palms are also approaching the end of their lifespan.

According to CARDI, coconut palms hit their prime

THE DECLINE OF COCONUT OIL IN THE CARRIBEAN BEGAN IN THE 1970S AS CHEAPER VEGETATBLE OIL ALTERNATIVES BECAME AVAILABLE AND NEGATIVE PUBLICITY SURROUNDING SATURATED FATTY ACIDS, WHICH MAKE UP MORE THAN 80% OF COCONUT OIL (PHOTO: ADOBE STOCK)

productivity at around 20-30 years of age. In the Caribbean, however, large numbers of trees are more than 50 years old. As venerable seniors, the palms no longer produce enough coconuts to feed the industry and little replacement planting has taken place.

On top of the poor market situation, disease and aging trees, CARDI lists a limited gene pool of coconut varieties as a major challenge for the industry. The small genetic variety means it is difficult to breed more productive varieties that are resistant to the rampaging diseases. Poor field husbandry practices and lack of farming knowledge have also made it easier for disease to spread, and lack of business and marketing support means that whatever little is produced is not marketed efficiently.

Hope on the horizon But although the situation seems dark, not all is lost.

During the 2013 Caribbean Week of Agriculture, CARDI gathered experts and stakeholders in the Caribbean coconut industry together to devise a road map to reinvigorate the ailing plantations.

Together, they identified several avenues and methods for expanding the potential of coconuts.

Despite the diminishing production of, and demand for, coconut oil, the consumption of other coconut-derived products has soared. Within the last decade, applications in soaps, virgin coconut oil (VCO), health products and coconut water have caused demand to grow by 500%, according to World Atlas.

CARDI agrees, noting that health and wellness benefits associated with coconut products outside of coconut oil’s food use present strong new market opportunities for the Caribbean.

Within the greater global market, CARDI notes, are three promising segment. According to the association, Caribbean coconut farmers could attempt to get their foot in the door in products

that require large volumes of both green and dry coconuts (such as coconut water and milk), products for small but growing markets suitable for artisanal production (VCO, flavour enhancers) or high end products such as cosmeceuticals and nutraceuticals.

Coconut water, in particular, could prove a lucrative option. The water is marketed as a healthy and refreshing drink and the demand for it keeps growing, particularly in developed countries.

Market research firm Technavio estimates that, between 2016 and 2020, the global coconut water market will grow at a compound annual growth rate (CAGR) of 27%, while the International Trade Centre (ITC) estimates the market value to reach US$4bn by 2019. Demand is so massive that the Caribbean – and even Asia, which is responsible for 70% of global coconut output – could run out of coconuts.

Coconut oil is not out of the game, either.

Caribbean Agribusiness (AgriCarib) says that the high price of petroleum-based fuel some years back ignited a renewed interest in the use of coconut oil as a biofuel feedstock.

Although oil prices have since fallen, coconut oil is also receiving increased attention from the beauty and cosmetics industries. According to AgriCarib, coconut oil could relieve dry skin and improve skin smoothness by removing the outer layer of dead skin.

To be able to make use of these new market opportunities, the CARDI workshop drafted recommendations and a road map to kickstart Caribbean coconut production. Improving access to quality planting materials and widening the coconut gene pool were marked in the plan as some of the most important hurdles to clear. Included in this step is the establishment of a gene bank in at least one Caribbean country.

The meeting also called for a quality assurance system to be implemented in order to improve yields and product quality. Integrated pest u

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SOURCE: APCC

LA URIC OILS

FIGURE 1: DEVELOPMENT OF VEGETABLE OIL MARKET SHARES, 1960-2010

farmers, processors and producers.

In addition, says Robin, the project managers are also looking at the pest and disease situation and are working on providing clean planting materials.

Training has centred around IPM methods and CARDI is planning to carry out experiments all over the Caribbean. In LY-ravaged Jamaica’s case, the experiments will be carried out on select plots.

As the EU project’s end is drawing near – scheduled for 2018 – Robin says CARDI has applied for an extension and that the response has been positive so far.

He hopes that this means the Caribbean will have coconut activities going on for the next four or five years.

Valuable variety

u management (IPM) was also flagged as a crucial step in reinvigorating the industry and prevent it from being destroyed by disease yet again.

Additional steps in the plan are increasing R&D efforts for new niche products, seeking increased funding and improving industry clustering and capacity building.

Foreign funding Despite setting out a clear plan on what to do, the Caribbean producers are going to need outside funding to get production going again. Luckily, it is not only the Caribbean islands themselves who would like to see their plantations become productive once more.

According to data from the Observatory of Economic Complexity (OEC), Europe is the second largest importer of coconut oil at 35% of the global total, just barely behind Asia at 36%. And, as it turns out, Europe would like to keep its coconut supply steady.

In order to improve Caribbean coconut production, the European Union (EU) partnered in 2015 with CARDI and ITC to start the €3.5M (US$4.1M) ‘Coconut Industry Development for the Caribbean’ programme, financed under the 10th European Development Fund.

The programme has been implemented in the CARIFORUM countries, comprising Belize, Dominica, Dominican Republic, Guyana, Jamaica, St Lucia, St Vincent and the Grenadines, Suriname, and Trinidad and Tobago.

“The four-year programme,” says the EU, “has the goal of enhancing farming productivity, business capacity and the competitiveness of small scale farmers and enterprises along the coconut value chain. To do this, the project will undertake interventions to address four key areas that currently prevent the sector from achieving its full potential.”

These four areas include regional cooperation, productivity and sustainability, market information and risk management.

Among the measures the European bloc wants to take are increasing regional market integration by improving cooperation between stakeholders, improving soil fertility and pest and disease control, making access to market information and advisory services more available to small producers and improve smallholder capacity for risk planning, particularly on market and climate risks.

These areas correspond with those identified as needing improvement by the 2013 CARDI workshop.

Since its conception, the project – carried out on the ground by CARDI – has conducted workshops and provided training to small scale farmers.

Indeed, the project has reached the farmers instead of turning out to be just pretty words on paper, according to Gregory Robin, CARDI country representative for Jamaica.

In an August 2017 interview with the Jamaica Observer, Robin said that under the EU programme, CARDI and the Jamaican Coconut Industry board have established nurseries on the island and conducted training with regional

Despite the progress, much remains to be done to bring Caribbean coconut production up to a global standard. Improving the genetic variability of the Caribbean coconut stock and finding varieties that are resistant to the various diseases in the region is an ongoing project.

Without it, any new nurseries would risk crashing and burning like their predecessors in the 70s and 80s, not only because of disease but also because of poor production on a global scale.

“We are looking at moving germplasm from Africa, Brazil, Mexico, Southeast Asia – wherever we can find improved germplasm,” Compton Paul, the EU programme’s regional coordinator told Jamaica Gleaner.

“We have sent some people to Mexico. We are also sending people to Brazil to look at the varieties that are available there and how we can get those varieties into the Caribbean region.”

Bringing in new varieties is not without its issues.

While they might be resistant to the current diseases in Caribbean, they could bring with themselves new pests or disease from outside of the region, which could prove just as devastating. CARDI’s plan for more R&D to improve the varieties is therefore imperative.

The groundwork is nonetheless being laid out and, while it will still be years before the Caribbean can even begin to compete with Asia, the door to a better future is open.

Much depends on the countries’ ability to attract foreign investment to fuel their R&D efforts, but with the tremendous coconut demand and short supply, it would be a mistake to waste the Caribbean’s potential. l Ile Kauppila is the assistant editor at OFI

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OLIVE OIL

Mediterranean icon

Their main product, olive oil, is widely recognised as an icon of Mediterranean cuisine and as being healthy. Its consumption has therefore increased in non-producing countries all over the world, according to the September 2017 report ‘The EU olive and olive oil sector: Main features, challenges and prospects’ by the European Parliamentary Research Service.

The EU is the world’s main exporter of olives and olive oil, as well as being the main consumer market. Nevertheless, the sector is facing challenges that need to be addressed if it is to avoid disruptive effects on its future development.

European olive farms

EU olive producers already dominate the European and global olive oil and table olive markets and their slice of the pie is only poised to grow in the coming years

L

arge, intensive olive plantations and small traditional olive orchards together with ancient olive groves and even monumental olive trees – some of which are 2,500 or 3,000 years old – are emblematic of the Mediterranean basin’s landscape, cultural heritage and culinary traditions.

Grown in the area for thousands of years, olive groves have shaped the rural landscape of many EU regions. Beyond their productive value, they can also constitute a rural tourist attraction with the presence of ancient olive trees or outstanding olive plantation landscapes.

Olive tree plantations are found in nine EU member states – Croatia, Cyprus, France, Greece, Italy, Malta, Portugal, Slovenia and Spain (see Figure 2, page 8). In total, these countries have a planted area of slightly under 5M ha dedicated to olive plantations.

More than half of the planted area is in Spain, where most hectares are devoted to growing olives for oil production. Only in Greece do table olives account for more than 10% of olive groves.

Among producing countries, Greece, Italy Portugal and Spain account for the vast majority in terms of both hectares and farms with olive groves.

Spanish farms have the largest average plantation size, reaching 5.8ha/farm in 2013 according to Eurostat’s farm structure survey, followed by Portugal with 2.8ha. All other countries have average plantation sizes smaller than 2ha/farm.

“These averages obviously result from widely varying plantation sizes,” the EU report says.

“A closer look at the data shows that in Spain and Portugal, more than 40% of all olive-producing farms have more than 20ha of olive plantations, while those countries’ olive plantations are of an average size of 52ha and 67ha, respectively.

“In the rest of the producing countries, however, more than 90% of farms have fewer than 5 ha of olive plantations.”

The EU olive sector has on average smaller farms than other agricultural activities. The difference between overall average farm size and average olive plantation size in 2013 totalled 57ha in France, 18ha in Spain and about 10ha in Croatia, Italy and Portugal.

Many small-size traditional olive orchards cohabit with a few large and modern olive plantations that use irrigation, machinery such as shakers, new plant varieties or intensive production methods to produce more at lower cost.

A report by the European Commission on olive oil specialist farm income in the three main producing member states – Greece, Italy and Spain – reveals wide income discrepancies among these farms.

These are mostly linked to the size of their olive groves and the productivity levels that they can reach, labour being a major cost item.

As a result, many farms in lower income classes make less than €5,000 (US$5,920)/year/family work unit (and possibly carry out other gainful activities on the farm related to tourism, landscape or direct sales).

However, a few olive oil producers in higher income groups can produce more than €30,000 (US$35,500)/year/family work unit, with productivity in terms of quantity produced per farm and per work unit much higher than in smaller u

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u

SOURCE: INTERNATIONAL OLIVE COUNCIL

FIGURE 1: WORLD OLIVE OIL PRODUCTION TRENDS, 1990-2018 (‘000 TONNES)

SOURCE: EUROSTAT

OLIVE OIL

FIGURE 2: DISTRIBUTION OF OLIVE PLANTATIONS IN 2013

(US$71)/100kg in Portugal and Malta to more than €200 (US$236) in Greece in 2016.

Olive oil prices have also increased and vary a lot depending on the oil category, with extra virgin oil having the highest prices, ranging from more than €300 (US$355)/100l in Greece, Portugal and Spain, to more than €500 (US$592) in Italy in 2015. The minor producing countries of Croatia and Slovenia register up to double the price of the main producing countries.

The most recent world figures, published by the International Olive Council (IOC), indicate that the EU’s producing countries account for 70-75% of world olive oil production and more than one-third of table olives.

These countries are also the main consumers, exceeding half of world consumption of olive oil and one quarter for table olives, with Greece ranking first in per-capita consumption of olive oil and Spain for table olives.

Although olive oil production levels ensure EU self-sufficiency, this does not preclude trade with non-EU countries and a leading role for the EU on the international market.

On average, the EU exports 541,000 tonnes of olive oil annually, equaling two-thirds of total world exports, and imports 121,000 tonnes – or 15% of global imports. Meanwhile, the EU’s share of table olives stands at 44% for exports and 16% for imports.

Monitoring quality

u farms and considerably lower production costs per tonne.

The industry in numbers Olives and olive oil account for a major share of producing countries’ agricultural output. In Greece and Spain, olives represented more than 10% of agricultural output and more than 15% of crop output in 2016, as compared with cereals that represented 9% and 13% respectively. With slightly less significant shares, the output value of olives and olive oil is also important in Croatia, Cyprus, Italy and Portugal.

Average annual olive yield is 2,000-2,500 tonnes/ ha. This variation is the result of factors affecting harvested production, such as the alternation of good and poor harvests or climate conditions, in addition to different cultivation systems.

Italy and Spain have higher yields than the other producing countries. A trend analysis shows increased yields in Spain and Portugal and decreased yields in Italy and other producing countries (see Figure 3, page 19).

According to Eurostat data, EU olive production reached 10.9M tonnes and an output value of €2.255M (US$2.671M) in 2016. The quantity of produced olive oil in the 2016/17 marketing year – as per member states’ declarations to the European

Commission (EC) – adds up to more than 1.74M tonnes, of which 74% was produced in Spain and 22% divided almost equally between Greece and Italy.

“The value of olive oil production has reached almost €5bn (US$5.9bn) in recent years, about 80% of which was recorded in Spain and Italy,” says the EU parliament. “Lower production values were measured in 2013 in Greece and Spain and in both 2013 and 2014 in Italy.”

This level of production is lower than in the previous year, above all in Italy which registered a decrease of more than 60%, but appears in line with the cyclical production levels registered in the EU in recent years.

“However, the likelihood of maintaining or even increasing average production levels is strongly dependent on weather conditions as extreme events, such as continuing drought conditions and heat waves throughout southern Europe, are threatening the productive potential of the next harvest,” the report says.

In addition to the supply-demand balance, the quality of olives and olive oil, the organisation of the value chain, consumer preferences and production organisation affect selling prices.

According to Eurostat’s price statistics for olives and olive oil, selling prices for table olives have increased over the years, ranging from less than €60

All over the Mediterranean region, olive trees offer olives that vary in size, colour, oil content, taste and texture.

Depending on local habits, climate conditions and the final destination of the production, the olive harvest occurs at different stages of ripening and by means of more traditional picking methods or mechanical harvest.

These factors influence the quality of the product, be it olive oil or cured olives for table consumption.

Acidity is one of the parameters that determine the quality of olive oil, with a lower acidity level indicating higher quality “As olive oil is recognised as a quality product and an important element of a healthy diet, maintaining high quality standards is a key factor in increasing consumer confidence in both the EU and third countries.

“In this respect, EU quality labels showing protected designation of origin (PDO) and protected geographical indication (PGI) have already been registered for roughly 120 different types of olive oil, more than 40 of which are produced in Italy, about 30 each in Spain and Greece, and the remainder in France, Portugal, Slovenia and Croatia,” the EU parliament says.

Organic production is usually associated with high quality products. Although the share of organic over conventional farming is still low, olive groves represented more than one-third of all organic permanent crops in 2015.

They mostly produced olives for olive oil production. The number of hectares dedicated to organic olives has increased in recent years, especially in Spain and Italy.

One quality-guarantee system in olive production involves the adoption of integrated production protocols to maintain healthy production over time by managing resources in an economically,

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environmentally and socially sustainable way, taking into account experience and knowledge of the specific farming activity. In the olive sector, these systems are also implemented through producers’ cooperatives, whose members sign contracts that penalise non-compliance with certified agronomists’ instructions

FIGURE 3: AVERAGE ANNUAL OLIVE YIELDS IN THE EU (TONNES/HA)

SOURCE: EUROSTAT

OLIVE OIL

In June 2012, the EC presented an action plan for the EU olive oil sector with the objective of strengthening its competitiveness, taking advantage of olive oil’s widely recognised image as a quality product.

The action plan indicated six areas of action, which are now mostly covered by various instruments under the Common Agricultural Policy (CAP) 2014- 2020.

The six identified activity areas include quality and control, restructuring the sector, improving industry structure with the aim to reinforce producers’ organisations, promoting olive oil in nonEU markets, supporting the IOC and competing with producers located outside the EU. Olive producers are also eligible for direct payments from the EU, which are a form of income support granted to EU farmers on a per-hectare basis, independently of the production of a specific product.

Member states may also grant voluntary support linked to production in the olive oil sector that may be undergoing difficulties, but so far only Italy has opted for this voluntary scheme.

Member states can include thematic subprogrammes in rural development programmes to address the needs of areas of particular importance, or of sectors that have a strong impact on the development of rural areas, including olive oil.

The EU also provides olive farmers with a basis for protecting EU plant health from the introduction or spread of harmful organisms within EU territory. These measures were used following the 2013 outbreak of the Xylella fastidiosa in Puglia, Italy.

The emergency measures include action to combat the disease in demarcated areas by removing infected plants or containing the bacterium by other means when removal is impossible.

Furthermore, member states were requested to set up contingency action plans in the event of confirmed or suspected presence of the bacterium.

The EU has also been requested to implement a compensation programme to refund farmers for loss of revenue due to the eradication measures.

Challenges The primary challenge for the EU olive sector is the pace of farm structural development into a more efficient and modern production system. This is often linked to the idea of increasing farm size and introducing mechanisation in the production processes, such as in Spain and Portugal.

In general, production systems remain very traditional and cohabitation between large and modern and small, traditional productive units is typical.

“Transforming traditional olive orchards into more intensive olive plantations is not a one-size fits all solution. This is why the sustainability of olive production should not rely on production

FIGURE 4: AVERAGE OLIVE OIL PLANTATION SIZE VS AVERAGE FARM SIZE IN 2013

intensification in bigger farms only, but on innovative harvesting solutions, new cultivars or better pest management, in order to grow olive orchards that are more profitable and less exposed to market volatility,” says the EU report.

The olive oil market can fluctuate for several reasons, such as alternation of good and poor harvests or the time span before new plantations become fully productive. Other factors are less predictable and potentially more disruptive, such as extreme weather conditions or a plant disease outbreak. These elements create a highly volatile market, which means that producers are confronted with unstable prices and revenues.

Another area of concern relates to marketing standards and trade. To prevent loss of consumer trust in the image of olive oil as a high quality product, a continuous effort is needed at EU and national level to set and implement appropriate measures against food fraud. Olive oils are subject to regular monitoring and control to prevent fraud, especially in the category of extra virgin olive oils.

Prospects According to the EC’s latest medium-term agricultural outlook, the economic forecasts for

SOURCE: EUROSTAT

EU support policies

the olive sector up to 2026 point to considerably increased production in Spain by about 10%, and a less dynamic trend in Greece (+2%) and Italy (-1%).

In these three main producing countries, consumption trends should experience a certain stabilisation or minor decrease, largely offset by increased consumption in non-producing countries inside and outside the EU, following a trend established in the past few years.

In international trade, the outlook for 2026 is a considerable reinforcement of the EU’s leading role in exports, growing 45% over the period, and a possible increase in imports from non-EU Mediterranean countries.

“These predictions could be proved correct, especially if producers satisfy EU and world demand by offering the high quality expected from their products.

“In this respect, the EU is financing research and innovation work into new techniques to achieve more efficient and sustainable growing systems and better treatment of diseases and pests,” the parliament report says. l This article is based on a European Parliamentary Research Service report titled ‘The EU olive and olive oil sector: Main features, challenges and prospects’, authored by Rachele Rossi

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DIA RY OF EVENTS

18-19 APRIL 2018 Black Sea Grain: Moving Up the Value Chain VENUE: InterContinental Hotel, Kiev, Ukraine CONTACT: UkrAgroConsult, Ukraine Tel: +380 44 451 4634 E-mail: conference@ukragroconsult.org www.ukragroconsult.com/bsg/2018/en/ conference

24-25 APRIL 2018 Oils & Fats Conference VENUE: Hilton London Gatwick Airport, UK CONTACT: Trade Essential, UK Tel: +44 208 144 6702 E-mail: ap@tradeessential.com www.tradeessential.com/events/oils-and-fats

25-26 APRIL 2018 8 European Algae Industry Summit VENUE: Vienna, Austria CONTACT: Active Communications International, UK Tel: +44 203 141 0627 E-mail: dpavlyk@acieu.net www.wplgroup.com/aci/event/ european-algae-industry-summit

6-9 MAY 2018 109 AOCS Annual Meeting VENUE: Minneapolis Convention Center, USA CONTACT: AOCS Meetings Department, USA Tel: +1 217 6934821 E-mail: meetings@aocs.org www.annualmeeting.aocs.org th

9-11 MAY 2018 8 ICIS World Surfactants Conference VENUE: Hyatt Regency Jersey City, New Jersey USA CONTACT: ICIS, UK Tel: +44 20 8652 4659 E-mail: events.registration@icis.com www.icisevents.com/ehome/ worldsurfactants th

24-26 MAY 2018

th

27-29 APRIL 2018 Globoil International 2018 VENUE: JW Marriott Marquis, Dubai, UAE CONTACT: Teflas, India Tel: +91 022 622 31245 E-mail: events@teflas.com www.teflas.com

29 APRIL-3 MAY 2018 Trends in Margarine and Shortening Manufacture, Non-Trans Products 2018 VENUE: Texas A&M University, Bryan, USA CONTACT: Mohammed S Alam, Texas A&M University, USA Tel: +1 979 845 2740 E-mail: msalam@tamu.edu www.perdc.tamu.edu/event/trends-inmargarine-and-shortening-manufacture-nontrans-productsseminar-april-2018

5 MAY 2018 Fundamentals of Edible Oil Processing VENUE: Minneapolis Convention Center, USA CONTACT: ID&A Ignace Debruyne & Associates VOF, Belgium Tel: +32 51 311 274 E-mail: info@smartshortcourses.com www.annualmeeting.aocs.org/program/ short-courses-x2524

For full events list, go to: www.ofimagazine.com

Grain & Maritime Days in Odessa VENUE: Odessa, Ukraine CONTACT: APK-Inform Agency, Ukraine Tel: +38 048 703 7510 E-mail: conference@maritimedays.odessa.ua www.maritimedays.odessa.ua

3-8 JUNE 2018 2 International Symposium on Lipid Oxidation and Antioxidants VENUE: Karl-Franz University, Graz, Austria CONTACT: Euro Fed Lipid, Germany Tel: +49 69 79 17 533 E-mail: info@eurofedlipid.org www.eurofedlipid.org/meetings/graz2018 nd

19-20 JUNE 2018 IGC Grains Conference 2018 VENUE: Queen Elizabeth II Centre, London, UK CONTACT: International Grains Council, UK Tel: +44 20 7513 1122 E-mail: conf@igc.int www.igc.int/en/conference/confhome.aspx

20-23 JUNE 2018 EFPRA Congress 2018 VENUE: Fairmont Hotel, Barcelona, Spain CONTACT: EFPRA, Belgium Tel: +32 2 203 5141 E-mail: info@efpra.eu www.efpra.eu/congress-2018

27 JUNE 2018 2nd International Sunflower Oil & Meal Trade Conference VENUE: Marriott Hotel Riverside, Shangai, China CONTACT: APK-Inform, Ukraine Tel: +380 562 320795 E-mail: info@apk-inform.com www.sunoil-conference.com

4-6 SEPTEMBER 2018 AusCanola2018, 20th Australian Research Assembly on Brassicas VENUE: Perth, Australia CONTACT: Grain Industry Association of Western Australia Tel: +61 8 6262 2128 E-mail: RNash@giwa.org.au www.australianoilseeds.com/conferences_ workshops/ARAB/AusCanola_2018

15-16 SEPTEMBER 2018 20 Practical Short Course: Novel Technologies in Oilseed Processing, Edible Oil Refining and Oil Modification VENUE: Belfast, UK CONTACT: ID&A Ignace Debruyne & Associates VOF, Belgium Tel: +32 51 311 274 E-mail: RNash@giwa.org.au www.smartshortcourses.com th

16-19 SEPTEMBER 2018 16 Euro Fed Lipid Congress VENUE: Belfast Waterfront Congress Centre, Northern Ireland CONTACT: Euro Fed Lipid, Germany Tel: +49 69 79 17 533 E-mail: info@eurofedlipid.org www.eurofedlipid.org/meetings/belfast2018 th

3-4 OCTOBER 2018 Bulk Liquid Storage Conference 2018 VENUE: Cartagena, Spain CONTACT: Active Communications International, UK Tel: +48 61 646 7058 E-mail: mkielerska@acieu.net www.wplgroup.com/aci/event/europeanbulk-liquid-storage

7-10 OCTOBER 2018 Vegetable Oil Processing and Products of Vegetable Oil/Biodiesel VENUE: Rudder Tower, Texas A&M University CONTACT: Mohammed S Alam, Texas A&M University, USA Tel: +1 979 845 2740 E-mail: msalam@tamu.edu www.perdc.tamu.edu/event/vegtetableoil-processing-and-products-of-vegetable-oilbiodiesel

22-26 OCTOBER 2018 National Renderers Association 85th Annual Convention VENUE: Ritz-Carlton, Laguna Niguel, USA CONTACT: National Renderers Association, USA Tel: +1 703 683 0155 E-mail: co@martycovert.com http://www.nationalrenderers.org/

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STATISTICS

EU EXTRA VIRGIN OLIVE OIL PRICES, 2015-18 (€/KG)

STATISTICAL NEWS FROM MINTEC

SOYABEAN AND SOYA OIL PRICES, 2015-18 (US$/TONNE)

Olive oil Olive oil production for the 2017/18 season is expected to increase, up 9% y-o-y. With consumption forecast to remain stable at 2.6M tonnes – 5% below production – prices are likely not to see the peaks reached in 2017. Production continues to come from the main European growing regions of Greece, Italy, Portugal and Spain, with European production estimated up 3% y-o-y.

The 2016/17 crop suffered badly from disease and saw higher than average prices. As such, the increase in production is only a slight recovery from previous years. February prices from Greece, Italy and Spain have all increased when compared to the overall 2017 average price, up 16%, 30% and 5% respectively.

Soyabeans and soyabean oil Soyabean oil CBOT prices are down 3% from the start of the year. However, prices from Brazil have remained relatively unchanged overall. Global production is forecast up 4% y-o-y in 2017/18, with Brazil seeing a 3% increase in total production.

Despite Brazil seeing heavy rains in the main growing regions, the amount planted increased significantly and is likely to outweigh the loss from the abundant rainfall.

Sunflower oil Sunflower oil prices continue to fall, following a decline in prices for competitor oils, soyabean and rapeseed. Sunflower oil production for 2017/18 has been estimated 2% down y-o-y, following a decrease in production in Russia and Ukraine, down 1% and 12% respectively.

The decline was slightly offset by an increase in European production, up 5% in the same period.

EU SUNFLOWER OIL PRICE, 2015-18 (US$/TONNE)

PRICES OF SELECTED OILS (US$/TONNE) 2017

Oct 17

Soyabean

829.0

830.2

868.3

842.4

836.1

822.9

Crude Palm

690.0

704.0

718.8

680.5

690.5

691.8

Palm Olein Coconut Rapeseed Sunflower

Nov 17

Dec 17

Jan 18

Feb 18

661.0

669.5

680.0

644.5

660.3

672.6

1,537.0

1,381.0

1,536.3

1,448.1

1,393.3

1,245.0

855.0

880.0

894.5

862.7

841.1

821.9

800.0

804.5

800.7

785.6

805.0

799.5

1,250.0

1,296.0

1,401.1

1,282.4

1,250.0

1,142.9

Average price

946.0

938.0

986.0

935.0

925.0

885.0

Index

224.0

222.0

234.0

222.0

219.0

210.0

Palm Kernel

Mintec works in partnership with sales, purchasing and supply chain professionals to deliver valuable insight into worldwide commodity and raw materials markets using innovative technology and a knowledgeable team of specialists. We provide independent insight and trusted data to help the world’s most prestigious brands to make informed commercial decisions.

Tel: +44 (0) 1628 851313 E-mail: sales@mintecglobal.com Website: www.mintecglobal.com

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