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Contents September.indd 1

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NEWS

COMMENT

The road to 10 million

T

he Roundtable on Sustainable Soy (RTRS) held its 10th annual meeting in Belgium in May with the ambitious goal of seeing 10M tonnes of responsible soya on the market by 2017 a recurring theme (see report, p??).

Production of RTRS soya has risen from a modest 420,000 tonnes in 2011 to 1.4M tonnes in 2014.

Ten million tonnes is an ambitious goal but it is still a fraction of the total amount of soya produced globally every year. To put 10M into perspective, in just 50 years, global soya production has grown from 27M tonnes to a forecast 318.9M tonnes for 2015/16 and 514M tonnes in 2050.

The amount of land devoted to growing soyabeans has risen from under 30M ha in 1970 to over 100M ha in 2012 and a projected 141M ha in 2050 and, with the rise, has come concerns over deforestation, land rights and labour conditions.

Almost three-quarters of all soya produced globally is used for feed as rising populations and incomes has led to demand for meat, dairy and eggs skyrocketing over the past few decades.

So what progress has been made in sustainable soya production and use since the RTRS was formed in 2006?

The WWF published its first Soy Report Card last year and found that while many retailers were moving to responsible sourcing of soya, companies behind the scenes in feed, meat and egg production were failing to act. Of the surveyed 88 companies from Denmark, France, the Netherlands, Sweden and the UK (who account for a third of soya use in Europe and 5% of global use), only 31 were members of the RTRS and only a few were on track to use 100% responsible soya by this year. Just 42% of companies in the report card had started buying responsible soya, amounting to roughly 850,000 tonnes.

The WWF singled out the RTRS and ProTerra certification schemes as being the most robust.

The ProTerra certification scheme is for Identity Preserved, nonGMO product, with 95% of volumes covered by soyabeans from Brazil. Certified volumes have actually fallen, according to data on the company’s website, with 2.8M tonnes produced last year; 2.9M tonnes in 2013; 3.5M tonnes in 2012; 4M tonnes in 2011; 3.9M tonnes in 2010; 4.1M tonnes in 2009; and 4.2M tonnes in 2008 and 4.6M tonnes in 2007.

The RTRS has its certification scheme and trading platform – RTRS certified soya can be sold or bought as physical material or as credits.

According to the RTRS website, certified production has risen from 420,706 tonnes in 2011 to 1.2m tonnes in 2013, with purchases of credits totaling 140,100 tonnes in 2011 and 0.7M tonnes in 2013.

Last year, 1.4M tonnes were produced and 1.29M credits were bought, along with 56,000 tonnes of physical material, giving total sales of 1.35M tonnes. The forecast for this year is for production of 1.8M of certified tonnes and sales of 1.8M tonnes of credits and 100,000 tonnes of physical product.

As with palm oil, the key to increasing supply of sustainable products is for sales to match production.

The low level of certified sustainable palm oil (CSPO) uptake has been a long-standing challenge for the Roundtable on Sustainable Palm Oil (RSPO). Last August, the RSPO reported that total sales of CSPO (both physical and in certificates) for January-June 2014 was a record 2.48M tonnes, against 1.67M tonnes for the same period in 2013. While this was a 48.8% increase, it still only represented a 47% uptake of the total CSPO supply of 5.28M tonnes.

Bringing buyers on board is the key to encouraging farmers to grow sustainable crops and it is time that those further down the supply chain played their part by buying certified soya and palm products. w

Mitsubishi buys 20% in grain trader Olam

M

itsubishi Corp agreed to buy a 20% stake in commodity grain trader Olam International at the end of August, Bloomberg reported. The purchase will take place through two deals worth S$1.53bn (US$1.09bn).

Olam said in a statement that it would issue 332.7M new shares worth S$915M to the Japanese trading giant. Mitsubishi paid S$2.75/share, which is 29% more than Olam’s 2014 trading average.

Bloomberg said Mitsubishi’s investment was a sign of confidence in Olam, which was still recovering from an attack from US short-seller Muddy Water and questions about its finances and operations. Mitsubishi would own the second-biggest share in the company after Singapore state investor Temesek, which rescued Olam in March 2014 following a financial inquiry.

Oilseed and Grain said that in addition to the stake purchase, the two companies had agreed to establish a joint venture in Japan

that would combine Olam’s raw material origination platforms with Mitsubishi’s downstream capabilities.

Olam has operations in cocoa, edible nuts, dairy production, vegetable ingredients and other commodity services. Mitsubishi’s living essential resources division handles a range of materials including grains, oils and fats and dairy products. t Japanese trader, Marubeni Corporation, increased its investment in US-based oilseed and grain agribusiness Gavilon, The Wall Street Journal reported in July. Marubeni hoped to turn around Gavilon’s disappointing performance since it bought the company two years ago.

Gavilon was expected to contribute US$160-208M/year in profit, but instead contributed only US$58M in its first year, and a US$250M loss in the second year, The Wall Street Journal said.

Disappointing US harvests were said to have hit Gavilon’s earnings.

Viterra acquires Felda’s oilseed plant in Canada T

he agricultural segment of Glencore PLM, Viterra, has agreed to buy Felda Global Ventures’ (Felda) oilseed processing plant at Bécancour, Quebec for C$190M (US$143M) according to a Reuters report in August.

Felda, the world’s largest producer of crude palm oil, said in June that it was seeking a buyer for its crushing and refining businesses in the USA and Canada. Bloomberg said it wanted to shift its focus to increase its core palm oil plantation business.

The plant in Quebec can crush 1.05M tonnes/year of canola and soyabeans, and produces vegetable oil for food and industrial markets, and meal for livestock feed.

The acquisition would triple Viterra’s capacity, putting the company among the three biggest processors in Canada alongside Bunge and Cargill, Deal Street Asia reported. The acquisition would add to Viterra’s other canola crushing plant already operating in Manitoba, Western Canada. Deal Street Asia said it was expected that the deal would close this year.

The Canadian arm of Felda’s business, which crushes soyabeans and canola, recorded a pretax loss of 81.8M ringgit (US$21.9M) in its 2014 annual report after being hit by falling crush margins, Cocommunity reported in July.

Felda has operations in more than 10 countries across Asia, Europe and North America. Bloomberg said in May that Felda announced a 98% decline in its first quarter net income due to lower palm oil prices.

Group president and chief executive officer of Felda, Datuk Mohd Emir Mavani Abdullah, said: “By divesting this unit we are streamlining our downstream focus, and strengthening the group’s competitive position”.

The Star Online said that gross proceeds from the sale were expected to be used to partially repay borrowings and for working capital.

2 OFI – SEPTEMBER/OCTOBER 2015 www.oilsandfatsinternational.com

Comment and News.indd 1

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NEWS

COFCO seeks larger Nidera stake

C

hinese state-owned food giant COFCO wants to increase its 51% stake in Dutch grain trader Nidera, a Reuters report said in July, a move which would speed up its transformation into a global agricultural trader.

Two sources told Reuters that discussions were underway for the stake to increase by at least another 15%. Such a move would

project COFCO into the select ‘ABCD’ group of companies dominating the industry.

COFCO’s recent expansion included investments of US$2.8bn into joint ventures with Noble Group and Nidera.

An earnout clause that allowed COFCO to increase its stake in Nidera after three years could be brought forward, sources told

Reuters. It was also reported that COFCO wanted to increase its stake in Noble Group. Reuters said that the company wanted to integrate Noble and Nigera, and set up headquarters for the new company outside of Asia.

COFCO said in April that it planned to become a publicly listed global powerhouse, the Financial Times reported.

Evergrande to Olive oil price rise caused spin off grain by poor harvests in Europe and oil arms Thelastconsumer price of olive oil has increased significantly due to season’s poor olive harvest in Europe, Olive Oil Times reported

C

hinese property developer Evergrande Real Estate Group has said it plans to spin off its three non-core businesses – the production of grain and oil, spring water and dairy items, according to a Reuters report.

In March, China Daily reported that the three businesses would be listed in Hong Kong in about three years. Although Reuters said in August that the chief executive of the firm, Xia Haijun, did not provide a timeline for the sales.

Evergrande Real Estate Group is China’s second-largest property developer by sales, and it only diversified into the grain and cooking oil sector in August 2014, and into the dairy business in October of the same year, China Daily reported.

Reports by China Daily in August this year also revealed that the company would continue to invest in the three noncore businesses over the next three years leading up to their sales. It planned to invest ¥2bn (US$314M) this year, ¥1.5bn (US$235M) in 2016 and ¥1bn (US$157M) in 2017.

Haijun reported the company’s first-half core profit in August, Reuters said, including a 57% surge in sales.

in August.

Even though Greece and Tunisia experienced an increase in yield of 127% and 300% respectively, this was not enough to make up for disastrous harvests in top producing countries Italy and Spain, who together are responsible for 70% of global output.

In Spain extreme heat and drought were blamed, Olive Oil Times said, whereas Italy suffered fruit fly infestations as well as the deadly Xylella fastidiosa bacterium, which caused hundreds of trees to be destroyed.

According to Bloomberg, the price of olive oil had increased by 10% in early August, surpassing the rate of inflation. Oil World reported that Spanish extra virgin olive oil was selling at US$4,272/tonne, the highest price since April 2006.

Furthermore, Olive Oil Times reported that the International Olive Council predicted this year’s total output to be 2.3M tonnes, the lowest level since 2000.

Kraft Heinz cuts 2,500 jobs F ood giant union Kraft Heinz, which was formed in July this year, announced in August that it plans to cut 2,500 jobs in North America in a bid to save at least US$1.5bn from the company’s annual budget, The Wall Street Journal reported.

A spokesman for the company told The Wall Street Journal that the new management team was restructuring the company to simplify its operation and leverage its much larger scale. By eliminating duplication it said it hoped decisions could be made

faster, accountability would be increased and growth would therefore be accelerated.

The 2,500 jobs being cut represented more than 5% of the company’s entire workforce, and included 700 employees in its headquarters in Northfield near Chicago, according to the report.

It was expected that Brazilian investment firm 3G, which took over Heinz in 2013, would focus aggressively on costs, the report continued, as it eliminated many jobs at Heinz back in 2013.

Cargill completes ADM European chocolate acquisition

C

argill announced that it completed its acquisition of Archer Daniels Midland’s European chocolate business on 3 August after the European Commission (EC) granted conditional clearance on 17 July.

The US$440M deal between the two companies was announced in September 2014, but in February the EC said it was investigating the deal, which had shown potential competition concerns. Although clearance was granted by the EC, it asked Cargill to offload part of the assets as a condition.

Two chocolate, compound and liquor production sites in the USA, one in Canada, and two chocolate and compound production sites in Europe – one in the UK and one in Belgium – were transferred to Cargill.

Cargill divested the industrial chocolate production facility in Mannheim, Germany to satisfy the EC. The German facility was also transferred but would be kept as a separate entity with its own interim management until an agreement with a prospective buyer was made, Cargill said.

IN BRIEF NIGERIA: Unilever plans to raise its stake in its Nigerian unit from 50.1% to 75%, Reuters reported in June. The €192.6M offer would be to minority shareholders, and would not de-list the subsidiary. The subsidiary has been operating in Nigeria, Africa’s biggest economy, for nearly a century and Unilever sees the country as a long-term investment, Reuters said.

WORLD: Mondelez International announced in June that it is on track to meet its goal of sourcing 100% traceable palm oil by the end of the year, after reaching 70% traceability in 2014, Food Navigator reported.

ZAMBIA: Shareholders approved Cargill’s offer of US$25.7M to acquire Zambeef Products’ soyabean crushing and edible oil arm, Lipid Technology reported in June.

The subsidiary, Zamanita, is a leader in the Zambian edible oil market.

EUROPE: French oilseed processor and vegetable oil producer The Avril Group announced on 3 August that it had agreed the acquisition of The Kerfoot Group, a UKbased oil packaging and distribution specialist. The acquisition would allow Avril to increase its presence in the UK though its subsidiary Saipol.

Saipol produces and sells vegetable oil in France used for food, animal feed and biodiesel.

There was also potential to grow the company’s prospects in the table oils market.

ASIA: Leading Thai energy group, PTT, sold its entire investment in Indonesian crude palm oil producer PT Mitra Aneka Rezeki (PT MAR) to PT Prasada Jaya Mulia (PJM) and Harvey Bay Overseas Ltd (HBO) for US$35M, Deal Street Asia reported on 10 June. The entire deal was completed on 9 June.

PTT announced last December that it would sell its 95% stake in the Indonesian business, as it moved to divest non-core operations, Reuters said. The stake was purchased in February 2008 for US$14.7M, as the company sought to expand into sources of green energy.

3 OFI – SEPTEMBER/OCTOBER 2015 www.oilsandfatsinternational.com

Comment and News.indd 2

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NEWS

IN BRIEF WORLD: Olenex, the joint venture between ADM and Wilmar, announced its commitment to eliminating deforestation from its palm oil supply chain on 28 July through a new policy. Olenex said it would only source palm oil or derivatives from suppliers committed to protecting High Carbon Stock (HCS) forests or High Conservation Value (HCV) areas and peatlands, and which were committed to protecting human rights and supporting local communities.

The policy applied to Olenex’s entire supply chain, from direct suppliers back to the mill source, and their supply base.

AUSTRALIA: Family-owned agribusiness Craig Mostyn Group (CMG) agreed to sell its food service division to new player Style Limited for AU$3M (US$2.08M) in August, ABC Rural reported. CMG produces, among other things, protein meal, tallow and cooking oils in Western Australia, Victoria and Tasmania.

According to David Lock, chief executive officer of CMG, the company’s strategy was to obtain supply chain integration, but as it did not achieve that with its food service division, it was happy to offload it.

ABC Rural said Style had had its eye on CMG’s food service division for some time as it believed the acquisition would complement Norwest Seafoods, which it acquired in June.

UK: Melted ice cream could become a thing of the past, as scientists from the universities of Dundee and Edinburgh announced in August that they had developed a recipe for a more robust frozen dessert that will last longer before melting, according to a Telegraph report.

The recipe was based on a naturally occurring protein that bound air, fat and water together. The protein, known as Bs1A occurred naturally in the friendly bacteria of some foods and worked by attaching to fat droplets and air bubbles, which made them more stable, the report said.

The Telegraph added that the new products could have lower levels of saturated fats and fewer calories.

Cargill announces $51M loss

O

n 6 August Cargill announced its first loss in 14 years. A net loss of US$51M for the period from March until May 2015 was reported, compared with earnings of US$376M in the same period a year ago.

“While several Cargill businesses generated very strong earnings in fiscal 2015, we lagged results from the prior year and did not meet our own expectations,” said David MacLennan, Cargill’s president and chief executive officer. “The economic environment remains sluggish in many emerging markets where we have invested significantly over the past several years. Even so, we aim for growth and profitability through these cycles. We are moving forward with good progress on changes begun last year to optimise the business portfolio, reduce costs and increase operational effectiveness.”

Oilseed and Grain Trade said the loss was due to the Venezuelan currency decline – which fell almost 90% in value on the black market in the past year due to falling oil prices and exchange rate controls – as well as a technological problem – a portion of the company’s SAP technology system had to be written off as it did not meet its requirements.

Cargill said additional factors in South America limited trading profits. In Argentina farmers held their crops; in Brazil the company saw slower farmer selling due to low global prices of corn and soyabeans; and Cargill’s evacuation and the subsequent armed occupation of its sunflowerseed processing plant in Donetsk, Ukraine decreased earning in the region for 11 months from July 2014.

Call for stronger palm oil standards

A

group of international food companies with combined assets of more than US$5tr signed a letter on 1 June seeking stronger social and environmental regulations to qualify for certification from the Roundtable on Sustainable Palm Oil (RSPO), Food Business News reported.

The companies include global purchasers of palm oil such as ColgatePalmolive, Kao Corp, PepsiCo, Procter & Gamble and Johnson & Johnson.

The letter called for deforestation and peatland clearance to be prohibited in order for certification to be given, and for additional environmental and human rights protections to be included.

The RSPO said it acknowledged the importance of the issues raised, but that the standard was agreed upon through a consensus process. On 5 May, the RSPO said it was working on voluntary guidelines that would enhance the existing requirements on issues including deforestation and human rights. Food Business News said the first draft was made available to the RSPO board of governors in June.

ADM shifts focus away from ethanol

A

rcher Daniels Midland (ADM), the world’s largest corn processor, is shifting its focus away from ethanol production, as a result of the cooling biofuel boom, forcing it to look for alternative uses for its corn byproducts, Reuters reported.

Reuters said the shift “could be one of the most transformative moves ever made” by the 113-year-old corn giant.

ADM posted a record quarterly profit in 2008 after edible oil prices reached an all time high, but just two quarters later prices plummeted, resulting in the company’s worst performance in five years. Ethanol was forecast to remain flat for at least the next decade due to government biofuel blending targets having been reached, and efficient, modern vehicles consuming less fuel.

Avon’s revised palm oil promise

P

ersonal care and cosmetics giant, Avon, said in July that it has revised its 2011 Palm Oil Promise to increase its support for responsibly sourced palm oil.

The 2015 guidelines would hold Avon’s suppliers accountable to a set of sourcing principles. Growers must meet the guidelines outlined below: t Deforestation-free. t Traceable to a point where they can demonstrate the palm oil meets the sourcing principles. t Protect peatlands and have a no burning policy. t Use best management practices for plantations on existing peat soils. t Comply with all relevant local, national, and international laws. t Track and report on the carbon footprint of their production. t Protect workers and indigenous communities. t Compliancy with existing RSPO Principles and Criteria, or equivalent standard.

CORRECTION: In ‘The trans fatty acid conundrum’ feature which appeared on p25,26 in the July/August issue of OFI, there was an error in the diagrams depicting the geometric structure of trans and cis isomers. The correct diagrams appear below.

Trans (Elaidic acid)

Cis (Oleic acid)

These fatty acids are geometric isomers (structurally identical except for the arrangement of the double bond)

Saturated (Stearic acid)

Not isomeric with the previous two

SOURCE: WIKIPEDIA

4 OFI – SEPTEMBER/OCTOBER 2015 www.oilsandfatsinternational.com

Comment and News.indd 3

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BIOFUELS NEWS

OECD and FAO predict biofuel use will continue to increase

IN BRIEF SPAIN: The government will set an increased national blend target for biofuel at 8.5% by 2020, the Ministry of Industry, Energy and Tourism said in July.

EUROPE: In August, The Brussels Times reported that the use of biofuels for European transport increased by 6.1% in 2014, after a decrease in use in 2013. The observations were made by EurObserv’er, the renewable energy observer.

The increase was mostly due to biodiesel (+7.8%); ethanol consumption remained stable (+0.1%).

USA: Renewable fuel producers Pacific Ethanol and Aventine Renewable Energy Holdings completed a merger in July, they announced. Pacific Ethanol said it was now the sixth largest producer of ethanol in the USA, more than doubling its production capacity to 515M gallons/year, and expanding its geographical footprint.

n agricultural outlook published in July by the Food and Agricultural Organization of the United Nations and the Organization for Economic Co-operation and Development has predicted ethanol and biodiesel use will continue to grow over the next decade, although at a slower rate, Ethanol Producer Magazine reported.

The OECD-FAO Agricultural Outlook 2015-2024 report said that biofuel production would depend on the policies of high-producing countries. Blend mandates in Brazil were recently increased to 27% and a tax policy was introduced favouring the domestic hydrous ethanol industry. The report predicted that Brazil would also produce two-thirds of the world’s additional ethanol supply over the next 10 years. The percentage of sugarcane used to produce

ethanol was predicted to expand, Ethanol Producer Magazine’s report said, from 20% to 25% by 2024.

Sixty percent of the additional sugarcane produced will come from Brazil.

Ethanol production in the USA is predicted to arise mostly from cellulosic ethanol.

Ethanol Producer Magazine said the report predicted continuing low petroleum prices over the next decade, which would remove some of the incentive to produce first-generation biofuels. It would also mean that the production of biofuel would be greatly dependent on the policies that mandate its use. Ethanol was predicted to be the commodity most influenced by varying petroleum prices, with the drop in petroleum prices in 2014 putting download pressure on ethanol prices.

will export First tender for Indian biofuels Raízen 2G ethanol to EU

I

EU: The Agricultural and Fisheries Council has officially adopted the new rules that address indirect land use change impacts from biofuels.

The directive was accepted by the European Parliament in April and placed a 7% cap on first-generation biofuels that could count towards renewable energy directive (RED) targets.

It also allowed biofuels from second-generation feedstocks to be double -ounted and required greenhouse gas emission savings to be reported.

WORLD: Global delivery company UPS announced on 29 July that it had agreed to purchase up to 46M gallons of renewable fuels over the next three years from Neste, Renewable Energy Group and Solazyme. UPS said the deal would make it one of the largest users of renewable diesel in the world.

THAILAND: A new B7 mandate came into effect in the first week of August, which saw the demand for palm oil increase by 8,000 tonnes/month (84,000 tonnes/year) as a result, Biofuels Digest reported. It was hoped that blends would reach 10%, and eventually 20%.

A

ndia’s state-run fuel retailers launched the country’s first tender for biodiesel in August, seeking to procure 850M litres from local manufacturers by March 2016, reports The Economic Times.

The Indian Oil Corporation would procure about 40% of the total quantity while the balance would be shared between Bharat Petroleum and Hindustan Petroleum, the report said.

The biodiesel would have to be delivered at multiple locations across the country from August through to March 2016.

The Economic Times said the tender would help retailers discover the price of biodiesel and ready themselves for blending when it became mandatory. Uncertainty on the availability of biodiesel had slowed progress towards mandatory blending.

The National Policy on Biofuels had proposed 20% blending for both biodiesel and ethanol by 2017, the report said.

In August the government announced an E10 blending mandate from October’s start of the 2015/16 cane crops, Biofueld Digest reported. The excess duty on ethanol that will be used to supply the domestic biofuels blend mandate will also be waived.

B

razilian sugar and ethanol producer Raízen said in July that it has secured deals to export cellulosic ethanol to Europe at a 26% premium over conventional prices.

The second-generation ethanol is selling at a premium of US$0.35/ gallon over traditional ethanol.

The company said this was due to environmental concerns from customers abroad.

Lagosur supplies Latin America

Tariffs cause EU industry to stagnate U U

SA based company Lagosur has announced what it claims is the first business focusing on exporting biofuels to Latin nless import tariffs are relaxed, According to Agrimoney biofuel the European biofuels industry use is capped because of a low 5% America. Lagosur said it had a two-part strategy, the first part will stagnate next year, Agrimoney blending rate. Consumers would of which delivers biodiesel to the said, referring to a report from the remain resistant to higher blend southern continent, with customers US Department of Agriculture’s rates without price incentives. in Peru, Bolivia and Chile. It is bureau in The Hague.

Legislation was implemented In particular the report noted to force fuel suppliers to increase also launching initiatives to bring state-of-the-art biofuel generating that the EU had “effectively blending, the target was for 20% technology to the continent. separated itself from the biofuel in road fuel by 2020. But international market” by introducing additional legislation allowing anti-dumping legislation, which second-generation fuels to count made importing biofuels too costly. double towards blending targets EU biofuels were not competitive meant that suppliers only needed internationally, so the EU only to change feedstocks to meet he sugarcane industry in Brazil produced fuel to meet demand the targets, and did not need to is in serious trouble, with domestically, the report said. increase blend rates. plant closures, redundancies and requests for judicial recovery, a Folha de S.Paulo report said in July. he Initiatives for Next Generation Aviation Fuels (INAF) – a consortium One of the reasons for the crisis of 46 organisations including Boeing, Japan Airlines, Japan’s was the low profits that ethanol government and the University of Tokyo – has laid out a five-year ‘roadmap’ is offering the industry, especially to develop sustainable aviation biofuels by the 2020 Tokyo Olympics as a compared to labour rates which way to reduce aviation’s environmental footprint, it said in July. rose at 10% over the last year.

Brazil’s sugarcane industry in crisis

T

Japan’s roadmap to aviation biofuel

T

6 OFI – SEPTEMBER/OCTOBER 2015 www.oilsandfatsinternational.com

Biofuel News Sepember.indd 1

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BIOFUELS NEWS

Indonesia hoping for WTO biofuel settlement he World Trade Organisation (WTO) has agreed to Indonesia’s second request for a panel to be set up to settle a dispute regarding the EU’s anti-dumping measures on its biodiesel, The Jakarta Post said in September.

Indonesia submitted its first request last June and it was rejected in July, according to a disputes roundup by the International Centre for Trade and Sustainable Development (ICTSD).

According to the WTO, Indonesia’s complaint challenged “certain provisions of November 2009 on anti-dumping measures on imports from non-EU member countries concerning the determination of normal value in anti-dumping investigations; and anti-dumping duties on

Historic cellulosic ethanol for China D

uPont and Jilin Province New Tianlong Industry Co (NTL) announced a licensing agreement on 16 July to develop a cellulosic ethanol technology plant, the largest in China, to be located in Siping city, Jilin province.

NTL will produce renewable biofuel from corn byproducts using DuPont’s enzyme technology.

NTL was working to secure the compulsory consent of the government in July.

NTL said it would combine its own ethanol production expertise with DuPont’s world-class enzymes to produce cellulosic renewable fuel for China’s rapidly growing liquid biofuel market, which was projected to exceed 1.7bn gallons/year by 2020.

The new plant was particularly important news in light of China’s recent goals for renewable energy, cutting reliance on foreign oil and offering increased opportunities for the country’s large rural population.

imports of biodiesel originating in inter alia Indonesia, imposed in May 2013 (provisional duties) and November 2013 (definitive duties).” Questions were raised over the “cost adjustment” methodology, ICTSD said. Jakarta was concerned about how the probe was conducted and said that the measures were not consistent with the EU’s obligations under the Anti-Dumping Agreement.

The tax imposed ranged from €76.94 to €178.85/tonne The Jakarta Post said. The measure was in response to a finding by the European Biodiesel Board (EBB), which found that imports of biodiesel from Indonesia increased from 157,915 tonnes in 2008 to

1.09M tonnes in 2011. The EBB said this was because the price of the Indonesian fuel was below the European market’s fair value.

Mahmud Syaltout, an international trade law and policy expert, told The Jakarta Post that the dispute settlement body’s decision would be final, meaning Indonesia must prepare complete and verified documents to support their arguments in order to win. The report said the government was optimistic that the panel would settle the issue.

Argentina already disputed the anti-dumping duties in a consultation request filed in December 2013; the report is expected by the end of the year.

49 2014

T

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Using steel waste gas to make biofuel

G

lobal Steel manufacturer ArcelorMittal said in July that it has signed a letter of intent with LanzaTech, the carbon recycling company, and Primetals Technologies, a technology and service provider in the steel industry, to construct a biofuel production facility.

The €87M plant would be Europe’s first commercial-scale production facility creating bioethanol from waste gases produced during the steelmaking process, and would be located at ArcelorMittal’s steel plant in Ghent, Belgium.

Around 50% of the carbon used in steelmaking leaves the process as carbon monoxide. Usually this is combusted and CO2 is emitted. LanzaTech’s technology would recycle the waste gases, fermenting them with a proprietary microbe to produce bioethanol.

The first stage of the construction would commence later this year with an initial capacity of 16,000 tonnes/year of ethanol being produced by mid-2017.

FM_Tonsil_128x185_en.indd 7 OFI – SEPTEMBER/OCTOBER 2015 1 www.oilsandfatsinternational.com

Biofuel News Sepember.indd 2

TONSIL® bleaching earths: the standard for efficient and sustainable purification and refinement.

05.12.14 16:41

10/09/2015 14:29

BIOTECH NEWS

US House Committee bans GM labelling

T

he US House Agriculture Committee approved a measure banning mandatory labelling of genetically modified organisms (GMOs) in food on 14 August, Reuters reported, which has been heralded a victory for food companies and other opponents of GM food labelling. The measure will also ban local efforts to regulate GM crops.

Those opposed to the labelling believed that the current system was confusing for consumers, farmers and manufactures, and without mandatory labelling food packaging would be more accurate and consistent across the 50 states. They also argued that GMOs are

well regulated, safe and nutritious.

For those fighting for mandatory labelling of GMOs, the Safe and Accurate Food Labelling Act was objectionable because it would overturn state labelling laws on GMOs, and it would prevent state and local governments from regulating GMO crops, Reuters said.

Labelling supporters said that consumers had a right to know if their food contained GMOs. They argued that there was a lack of scientific consensus on GM safety; for example the herbicide glyphosate – used widely on GM crops – had been detected in food, when earlier in the year a World Health

Organisation research unit said glyphosate “probably” caused cancer in humans.

Having been approved by the House Agriculture Committee, the bill was passed to the House of Representatives who approved the measure by voice vote before the August break.

The bill will next be passed to the Senate for approval. Groups were increasing their efforts to ensure the bill did not become law, Reuters said. Scott Faber, executive director of Just Label It, told Reuters that the battle was far from over and that “the real fight will be in the Senate”.

Scottish ban CSIRO agrees to license on GM crops high oleic safflowerseed

S

cotland said in August that it will ban the growing of genetically modified (GM) crops in the country, according to a report in New Scientist. Recent EU regulations allow individual member states to prohibit the growing of GM crops even if European safety authorities have granted them clearance.

New Scientist said that the Scottish government was concerned that premium exports such as whisky could be adulterated by GM material.

“Allowing GM crops to be grown in Scotland could damage our clean and green brand and our £14-billion food and drink sector,” a government spokeswoman said.

The government submitted a request for Scotland to be excluded from European consents for GM crop cultivation, including an approved corn variety and six other crops awaiting authorisation.

European biotechnology trade association EuropaBio said it regretted the decision. “Any Scottish farmer who may have been interested in using the technology has now officially lost his or her freedom to choose,” representative Beat Späth told New Scientist.

Ian Sands of the Scottish National Farmers Union said the ban might be due to the Scottish administration wanting to make its policies distinct from those of the UK parliament.

Scottish farmers would still be allowed to feed imported GM fodder to their livestock.

Soyatech Newsroom said Greece and Latvia were the only other EU members who had so far asked for GM crop cultivation bans.

A

ustralia’s national science agency CSIRO said on 13 July that it had agreed to license a super-high oleic acid safflowerseed (SOH safflower) to Australian start-up firm GO Resources.

SOH safflower is a key outcome of the Crop Biofactories Initiative – a partnership between the Grains Research and Development Corporation (GRDC) and CSIRO. The safflower is genetically engineered to contain 94% oleic acid which CSIRO said was the highest source found in any commercial crop. GRDC representative Ron Osmond said Go Resources would take the technology through to the next phases of development and commercialisation.

Oleic acid is a mono-unsaturated fatty acid found in moderate amounts in most plant oils. Due to its stability, it is particularly useful for high temperature industrial applications. CSIRO said SOH safflower’s high percentage of oleic acid made it suitable for several high-value applications. Go Resources said the oil could be used in lubricants, solvents, cosmetics, plastic additives, resins and polymers, biofuels, coasting, paints and inks. It also estimated that the value of the worldwide industrial oils and oleochemical market was in excess of US$30bn/year.

Go Resources said it was seeking support from additional investors to take the technology to market. It expects commercial production in Australia to begin in 2018.

Non-GM rapeseed launch for China

C

ibus and Rotam announced in August that they will cooperate in the development of a herbicidetolerant rapeseed in China.

USA-based Cibus, which specialises in non-transgenic (non-GM) trait development, uses patented technology to naturally modify the cell functions of the rapeseed. Global agrochemical company Rotam will be responsible for choosing the rapeseed breeding partners and establishing a relevant business model.

Cibus and Rotam said they hoped their sulfonylurea herbicide tolerant rapeseed would help meet growing demand in China for high quality, non-transgenic rapeseed oil.

Cibus president and CEO Peter Beetham said the product should help Chinese farmers by reducing the amount of chemicals needed to control weeds, cutting costs, increasing crop yield and providing benefits for the environment.

This, in turn, would strengthen the Chinese rapeseed industry.

IN BRIEF USA: Cargill said in April that it had purchased Colorado-based OPX Biotechnologies’ proprietary fermentation-based processes and systems. The EDGE technology modifies microbes to synthesise biochemicals through fermentation. However, it was reported by Biofuels Digest that Cargill had effectively acquired the entire company in an asset purchase. The purchasing sum was not disclosed.

FRANCE: DEINOVE announced on 8 July that it has reached the third and penultimate milestone of its DEINOL project, which triggers additional funding of up to €1.2M from its supporter Bpifrance. DEINOVE develops processes for producing biofuels using Deinococcus bacteria, and the DEINOL programme aims to develop a second-generation bioethanol production process using non-food biomass and the Deinococcus bacteria.

USA: The USDA opened a public comment period on a Monsanto genetically engineered corn variety with increased ear biomass, Ethanol Producer reported on 6 August. Public comment was invited on a preliminary plant pest risk assessment and draft environmental assessment, which were due by 20 August.

WORLD: Monsanto has dropped its bid to purchase Syngenta.

Monsanto said in a statement in August that it still believed a merger would be highly beneficial for both companies, but it would no longer pursue the current proposal and instead would “continue to focus on its growth opportunities built on its existing core business”.

8 OFI – SEPTEMBER/OCTOBER 2015 www.oilsandfatsinternational.com

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TRANSPORT & LOGISTICS NEWS

New EU MRV regulations for shipping

A

new EU regulation designed to monitor and ultimately reduce greenhouse gas (GHG) emissions from the shipping sector entered into force in July.

Currently, emissions from the global shipping industry amount to about 1M tonnes/year of CO2, which is equal to 3% of the world’s total GHG emissions. In the EU, this accounts to 4% of total emissions.

According to the European Commission (EC), without action, the emissions from the shipping sector could more than double by 2050 due to anticipated growth in the world economy and the connected demand for transportation.

The EC said it was taking a global approach to reducing emissions from international shipping. In June 2013, it set out three steps for reducing maritime GHG emissions, the first of which was monitoring, reporting and verifying (MRV) CO2 emissions from large ships using EU ports. The EU MRV Regulation, which entered into force on 1 July, relates to this first step.

IN BRIEF NETHERLANDS: In July, Koole Terminals began operating the storage terminal it acquired from BP in Pernis. Koole said it was handling the truck loading facility, the K1 jetty for seagoing vessels, as well as the storage capacity of 200,000m2. Edible oils and fats, biodiesel and oleochemicals would pass through the facility.

WORLD: Neste is installing smart software, called the Marorka system, in its tankers, which reduces emissions and saves on fuel costs, Hellenic Shipping News reported in July.

The technology would also be offered to its partners to ensure it is sustainable.

The Marorka system monitors speed, fuel consumption and locations. Ship operation efficiency would be monitored extremely accurately, unlike the approximate data that had been collected manually in the past.

Tanker shortage predicted

N

ew IMO regulations for the carriage of biofuels come into force on 1 January 2016 but many tanker owners are not aware of the changes, which could result in a shortage of eligible product tankers, Splash24/7 reported in July.

Oil in water monitoring company Rivertrace Engineering, UK, said most existing vessels did not have oil discharge monitoring equipment calibrated to handle biofuels. Without the correct equipment, vessels would not be allowed to carry biofuels, or blends of biofuels and oil products.

Managing director of Rivertrace Engineering Mike Coomber told Splash 24/7: “They are sleep-walking into a situation in which the employment opportunities for their ships will become seriously jeopardised… Time is running out for many operators.”

Pre-2005 units cannot be retrofitted, but the process was straightforward on upgradable units. “All that is likely to be required is the replacement of the measuring cell and installation of a new circuit board,” Coomber said.

Only five international companies were capable of upgrading the systems and only a limited number of people could fit new ones, the Splash24/7 report said.

G3 Canada opens grain terminal

N

ewly formed Canadian agribusiness G3 Global Grain Group announced the opening of a new multi-million dollar grain terminal at Colonsay, Canada in August.

The terminal has three 8,500 tonne steel bins. General manager Ross Affleck said the facility would be able to handle over 400,000 tonnes/year of grain.

Saskatoon Media Group reported that the facility took 18 months to build. It was one of four being built

by G3 Canada in Saskatchewan and Manitoba.

One terminal had already opened near Portage and G3 was scheduled to open another in Moose Jaw in 2016.

Are expectations for expanded Suez Canal too high?

T

he expanded Suez Canal, which opened on 6 August, has been heralded as an economic opportunity that the Suez Canal Authority claims will become “the route of choice for ship owners the world over”, The Wall Street Journal reported.

The authority said it expected annual revenue to increase from US$5.3bn to US$13.2bn by 2023 although The Wall Street Journal said shipping experts had expressed doubt that the expansion would even come close to this figure. The canal was not hitting capacity before the expansion and the number of ships passing through has fallen in recent years. Experts said that it was not clear how the government had arrived at its predictions.

Neil Davidson, a senior analyst

at Drewry, said that trade between Asia and Europe, rather than the size or depth of the canal, would determine traffic volumes.

A shipping consultant with Dyanamar B.V in the Netherlands said the expansion of the Suez Canal was a defensive measure

against the new Panama Canal which is due to open next year and is significantly larger. Although it was also said that the Suez could still remain attractive for South China to US trade routes if its tolls did not rise significantly, according to The Wall Street Journal report.

PHOTO: EUGENESERGEEV/DOLLARPHOTOCLUB

USA: Two years after Botlek Tank Terminal (BTT) loaded the first train from its rail loading and discharge facility, it announced in July that it had reached the milestone of handling 500,000 tonnes of liquid bulk products including biodiesel, soyabean, palm and other vegetable oils.

In the future the facility could be expanded to handle other products such as aviation fuels, gasoline and diesel, the company said. BTT has a total storage capacity of 200,000m2 – 130,000m2 of which is suitable for storing clean fuels and 70,000m2 for biodiesel and vegetable oils.

The EC said the MRV Regulation was expected to cut CO2 emissions from the covered journeys by 2%.

From January 2018, ships weighing above 5,000 tonnes of any flag on voyages to, from and between EU ports will have to monitor their CO2 emissions, distance travelled and cargo carried. This data must then be verified and reported annually. In addition, ships must carry a document of compliance (DOC), which would be subject to inspection.

According to a 2degrees report in May, the green lobby group Transport and Environment criticised the regulation saying it did not go far enough.

“Though the new laws will improve transparency and provide greater incentive for fuel efficiency, this is where our cheering stops,” Sotiris Raptis, T&E’s clean shipping officer said. “Given that the sector’s rapid growth is set to outstrip efficiency gains, only CO2 targets under the EU’s 2030 plan and Energy Union can deliver actual emissions cuts.”

THE SUEZ CANAL REOPENED ON 6 AUGUST

10 OFI – SEPTEMBER/OCTOBER 2015 www.oilsandfatsinternational.com

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R E N E WA B L E M AT E R I A L S N E W S

IN BRIEF UK: Johnson Matthey Process Technologies and Rennovia Inc announced in July that their start-up of a mini-plant in Stockton, UK to produce glucaric acid from glucose was successful.

Collaboration between the two companies began in March 2014 to develop and commercialise bio-based glucaric acid and adipic acid (see OFI Renewable Materials News, June 2015). The miniplant used “jointly developed technology for the catalytic aerobic oxidation of glucose to glucaric acid,” Johnson Matthey said.

FRANCE: The country’s first plant producing isobutene from renewable resources will be built and operated by the newly formed IBN-One, a joint venture between Cristal Union and Global Bioenergies, the companies said in May. Cristal Union is a European beet processor and Global Bioenergies is developing a process to convert renewable resources into hydrocarbons through fermentation.

IBN-One has a nonexclusive license to use Global Bioenergies’ isobutene process.

IBN-One chairman and CEO Bernard Chaud said the 50,000 tonnes/year plant could be operational by 2018.

Cargill and Genomatica to collaborate on chemicals

A

gribusiness giant Cargill and US biotech company Genomatica announced a deal on 20 July to accelerate the production of renewable chemicals for industrial applications.

“Our collaboration will give chemical producers, distributors and users access to a reliable, cost-effective source of carbohydrate feedstocks, colocation support services and production partnerships based on GENO process technologies,”

Cargill said in a press release.

Genomatica develops biobased processes to produce intermediate and basic chemicals and has commercialised its process to produce 1,4-Butanediol (BDO), which has been licensed by BASF and Novamont.

As part of the deal, Cargill has made an equity investment in Genomatica and secured rights to make additional investments.

The companies said chemical producers would benefit from

New LDC glycerine refinery Solazyme algae oil deals

L

ouis Dreyfus Commodities (LDC) is adding a glycerine refinery to its soyabean crushing and biodiesel plant in Claypool, Indiana, USA, Biofuels Digest reported in August.

The new refinery has a 80M pounds/year capacity and would be the second-largest producer of USP-grade Kosher refined glycerine in the USA. Construction was expected to be completed by the end of the year.

The plant is located 100 miles southeast of Chicago on the Norfolk Southern Rail Road and the facility will be able to load glycerine into trucks as well as tanker railcars.

LDC had leased specialised, lined tank cars to ship the glycerine, Biofuels Digest said. According to Tommy Malone, LDC’s head of North America, “The refinery in Claypool is being built with the best technology available.”

O

ne of Latin America’s largest cosmetics companies, Natura Cosméticos, and renewable oils and ingredients company Solazyme announced on 9 June that Natura would buy Solzayme’s AlgaPur microalgae oil to incorporate in its product lines.

The companies said they had been working together for two years on several projects, including a year of testing and product validation phases.

Solazyme said its AlgaPur was made using a fermentation process to convert sugarcane into highperformance oils.

Solzayme also announced on 28 July that BASF was launching the first commercial surfactant derived from AlgaPur for use in home and personal care applications. Commercialised by BASF under the trade name Dehyton AO45, algal betaine is an alternative to amidopropyl betaine used in products such as shampoos, liquid soaps, hand dishwashing liquids and other applications.

Mid-cut fatty alcohol prices fall for third month

A

the collaboration as they could get started faster by having a reliable source for renewable feedstocks; and save time and money by locating next to a Cargill site. Chemical users considering backwards-integration could do so faster and more cost-effectively or enter into a long-term purchase agreement, without having to become a producer. Chemical distributors could secure longterm supplies of products to meet customer demand.

verage spot prices of mid-cut C12-14 fatty alcohols were US$1,277.50/tonne FOB southeast Asia in June, falling for a third consecutive month due to softening feedstock costs in the second half of March and slower procurement activity, reports ICIS. Prices for C16-18 blended fatty alcohol averaged US$1,400/tonne FOB southeast Asia in June, reflecting a gradual downtrend from January as a result of higher supply arising from a shift in production focus from the underperforming mid-cuts to the relatively stable C16-18 fatty alcohols market.

In the US market, abundant supply was a dominating factor in third quarter fatty alcohol contract negotiations, keeping firm downward pressure on mid-cut detergent-range alcohols, as well as on the heavy C16-18 chain, ICIS said.

Supply of Asian fatty alcohols was outstripping demand following numerous capacity increases between 2013-2015. Plant operating rates were said to be at 50-60% since the second half of 2014 on the back of weak margins.

In 2014, KLK Oleo started up an additional

nameplate capacity of 100,000 tonnes/year through a new plant in Malaysia, while Wilmar in Indonesia started its new fatty alcohols plant of 140,000 tonnes/year.

Ho Tung Group in Jiangsu, China, also started up its 80,000 tonnes/year fatty alcohol plants in 2014. However, as of May 2015, the plant was understood to have stopped operations owing to weak margins.

ICIS said a few had delayed initial start-up schedules from 2014 to 2015 amid weak market conditions. Ecogreen in Batam, Indonesia, delayed the start-up of an additional 180,000 tonnes/year, at its 150,000 tonnes/ year plant in Batam; as did Saudi Kayan (Sabic) in Saudi Arabia, which started up a new 83,000 tonnes/year in the first half of 2015.

Buyers were expected to buy on a needs basis, given ample supply, poorer downstream conditions in the key Chinese market and volatility in crude palm kernel oil prices.

Adding pressure was India’s 20% duty against fatty alcohols imports from southeast Asia, introduced on 28 August 2014 and valid for 200 days. A court hearing was scheduled

ASIA ANNUAL FATTY ALCOHOLS CAPACITY Company Location Capacity (tonnes) Ecogreen Indonesia 390,000* Kao Chemicals

350,000

KLK Oleo

Malaysia, Philippines Malaysia

Musim Mas

Indonesia

200,000

Wilmar

Indonesia

140,000

Zhejiang Jiahua Energy

China

135,000

VVF

India

120,000

Teck Guan

China

100,000

Thai Fatty Alcohols P&G

Thailand

100,000

Malaysia

100,000

200,000

* Includes new capacity expected to start up by end of 2015 in August 2015 to hear Galaxy Surfactant’s objection to the duty. Galaxy is a major Indian surfactant producers importing fatty alcohols.

12 OFI – SEPTEMBER/OCTOBER 2015 www.oilsandfatsinternational.com

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DIARY OF EVEN TS

22-25 SEPTEMBER 2015 FEDEPALMA 18th International Oil Palm Conference VENUE: Cartagena de Indias Convention Center, Cartagena, Colombia CONTACT: FEDEPALMA, Colombia Website: http://web.fedepalma.org/ xviii-conferencia/en/the-conference

27-30 SEPTEMBER 2015 13th Euro Fed Lipid Congress

VENUE: Florence, Italy CONTACT: Euro Fed Lipid, Germany Tel: +49 69 79 17533 E-mail: info@eurofedlipid.org Website: www.eurofedlipid.org/meetings/ florence2015/index.php

28-30 SEPTEMBER 2015 Globoil 2015

VENUE: Renaissance Mumbai Convention Centre, Mumbai, India CONTACT: Tefla’s, India Tel: +91 22-26304816/17 E-mail: events@teflas.com Website: http://www.globoilindia.com

30 SEPT – 2 OCTOBER 2015 10th Oilseed & Grain Trade Summit

VENUE: Hyatt Regency, Minneapolis, USA CONTACT: HighQuest Group, USA Tel: +1 810 6608683 E-mail: ogts-info@highquestgroup.com Website: www.oilseedandgrain.com

6-8 OCTOBER 2015 PIPOC 2015

VENUE: Kuala Lumpur, Malaysia CONTACT: Malaysian Palm Oil Board E-mail: pipoc2015@mpob.gov.my Website: www.mpob.gov.my

14-15 OCTOBER 2015 International Sunflower Oil Symposium VENUE: Shanghai, China CONTACT: APK-Inform, Ukraine Tel: +380 562 320795 E-mail: globoil@apk-inform.com Website: http://www.apk-inform.com/en/ conferences/china/program

19-23 OCTOBER 2015 82nd National Renderers Association (NRA) Annual Convention

VENUE: Ritz Carlton, Laguna Niguel, California, USA CONTACT: Marty Covert, NRA Convention Coordinator, USA. Tel: +1 703.754.8740 E-mail: co@martycovert.com Website: www.nationalrenderers.org/events/ convention

For a full listing of oils and fats industry events, go to: www.ofimagazine.com

More than 8,000 expected at PIPOC 2015

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he three-day MPOB International Palm Oil Congress and Exhibition (PIPOC 2015) from 6-8 October 2015 at the Kuala Lumpur Convention Centre, Malaysia is expected to draw more than 8,000 participants and trade visitors comprising mainly industry experts, researchers, policymakers, millers, traders and export personnel.

Organised by the Malaysian Palm Oil Board (MPOB), the event features the theme, ‘Oil Palm: Powering the World, Sustaining the Future’.

The event will showcase five concurrent conferences: the Agriculture, Biotechnology & Sustainability Conference; Chemistry, Processing Technology & Bio-Energy

22-23 OCTOBER 2015 10th ICIS World Oleochemicals Conference VENUE: Radisson Blu, Dubrovnik, Croatia CONTACT: ICIS, UK. Tel: +44 20 8652 3887 E-mail: events.registration@icis.com Website: www.icisconference.com/ worldoleochemicals

31 OCT – 4 NOVEMBER 2015 World Congress on Oils + Fats and 31st ISF Lectureship Series

VENUE: Rosario, Argentina CONTACT: Jeffry Newman, International Society for Fat Research Secretariat, USA Tel: +1 217 359 2344 Fax: +1 217 351 8091 E-mail: jnewman@isfnet.org Website: www.isfnet.org

3-5 NOVEMBER 2015 7th Palmex Indonesia 2015

VENUE: Santika Premiere Dyandra Hotel & Convention, Medan, Indonesia CONTACT: PT Fireworks Indonesia Tel: +62 21 4290-0030 E-mail: info@asiafireworks.com Website: www.palmoilexpo.com

5 NOVEMBER 2015 FOSFA Annual Dinner

VENUE: Divani Apollon Palace and Thalasso, Athens, Greece CONTACT: Gemma Hale, FOSFA, UK. Tel: +44 20 72835511 E-mail: contact@fosfa.org Website: www.fosfa.org

5-6 NOVEMBER 2015 14th International Fat and Oil Industry 2015 VENUE: Hotel Bristol, Odessa, Ukraine CONTACT: APK-Inform Agency, Ukraine Tel: +380 562 320795, +380 562 321595 E-mail: market@apk-inform.com Website: www.apk-inform.com/en/ conferences/oil_2015/about

Conference; Oleo & Specialty Chemicals Conference; Global Economics & Marketing Conference as well as Food, Health & Nutrition Conference. In addition, there will also be an evening forum on current issues, an exhibition with over 315 booths displaying new industry advances, technical tours as well as a golf tournament.

“PIPOC is a highly anticipated global conference that takes place every two years, and focuses on current and relevant issues within the palm oil industry,” says the MPOB. “The previous event, held in 2013, drew a crowd of over 7,000 from 50 countries.”

http://pipoc.mpob.gov.my

16-19 NOVEMBER 2015 13th Annual Roundtable Conference on Sustainable Palm Oil (RT13) VENUE: Shangri La Hotel, Kuala Lumpur, Malaysia CONTACT: RSPO Secretariat. Tel: +603 7727 8458 (Malaysia); +62 21 57940222 (Indonesia); E-mail: RT@rspo.org Website: www.rt13.rspo.org

20-21 NOVEMBER 2015 PORAM Annual Forum and Dinner

VENUE: One World Hotel, Selangor, Malaysia CONTACT: PORAM Secretariat, Malaysia Tel: +603 7492 0006 E-mail: poram@poram.org.my Website: www.poram.org.my

25-27 NOVEMBER 2015 11th Indonesian Palm Oil Conference and 2016 Price Outlook VENUE: Bali Nusa Dua Convention Centre, Indonesia CONTACT: IPOC Secretariat, Indonesia Tel: +6221-57943852; Fax: +6221-57943853 E-mail: info@gapkiconference.org Website: www.gapkiconference.org

3-5 DECEMBER 2015 7th biennial Journées Internationales d’Etude sur les Lipides (JIEL) conference

VENUE: Marrakech, Morocco CONTACT: Société Marocaine pour l’Etude des Lipides (SMEL). Tel: +212 0522 994982 E-mail: jiels2015@gmail.com

15-16 DECEMBER 2015 Malaysia-Egypt Palm Oil Trade Fair & Seminar (POTS) 2015

VENUE: Cairo, Egypt CONTACT: Zainuddin Hassan, Nur Adibah, Malaysian Palm Oil Council Tel: +603 7806 4097; Fax: +603 7806 2272 E-mail: zainuddin@mpocegypt.com or nuradibah@mpoc.org.my Website: www.mpoc.org.my

14 OFI – SEPTEMBER/OCTOBER 2015 www.oilsandfatsinternational.com

Diary.indd 1

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sa Meet u tober c O 8 6 mpur u L a l a Ku ia Malays . 269 o Booth N

03/09/2015 10:09

I NTE RN ATION AL M ARKET REVIEW

Crop upsets shifting market shares Divergent supply outlooks and their impacts on relative costs are strengthening trade and consumption prospects for soya and palm at the expense of rapeseed and sunflower oils.

With oil prices generally still under pressure from the overall surplus, margins are suffering in some soft-seed crushing centres. John Buckley writes

T

he rapeseed supply situation has deteriorated much faster than expected over the summer months as lower plantings, droughts in Canada and Europe, and less than ideal weather in the CIS countries and Australia have clipped global crop estimates on an almost weekly basis.

In Europe, and France especially, searing heat and lack of rain has played havoc in some areas, helping to reduce the EU rapeseed total to a recent range of 20.7 to 21.1M tonnes compared with last year’s 24.4M tonnes – its lowest since 2012’s 19.6M tonnes. It signals a major decline in EU rapeseed crush (a 6.5% drop if it can source imports close to last year’s 2.3M tonnes) and a forecast 4.7% fall in Europe’s rapeseed oil consumption. EU carryover stocks of rapeseed will also fall to their lowest for some years by next autumn – 57% under last year’s.

Canada’s canola crop – in a reverse of last year’s too-wet pattern – has been plagued by dry weather, leading to some alarmingly low estimates before rains recently returned. So far, these have helped forecasts edge up from the Canadian Wheat Board’s low 12.5M tonnes (and some private ones as low as 10/11M tonnes) to around 13.3M tonnes (versus last year’s 15.56M tonnes and 2013’s near 18M tonnes). Canada’s crush is currently seen falling by over 6%, to about 6.9M tonnes, assuming it limits exports to about 7.4M tonnes and draws down its own stocks to a third of recent levels, to their lowest in many years. Some private estimates are less pessimistic, however, viewing a crop that could yet nudge or exceed 14M tonnes. However, even though it might help relieve, it would not negate the overall outlook for a tight market ahead.

Within the CIS countries, lower plantings and yields are expected to clip Russia’s rapeseed crop to around 1.2M tonnes (1.46M tonnes last year) and Ukraine’s from 2.2M to 1.7M tonnes – maybe less.

Ukraine is expected to export about 25% less whole rapeseed (at some 1.5M tonnes) while Russian shipments will likely fall too, along with carryout stocks in both countries. Australia’s output is meanwhile seen dipping to 3.3M tonnes, not far off last year’s level but well under 2013’s 3.8M tonnes, again reducing export supplies for customers including Europe.

The world’s second largest rapeseed oil consumer, China, also has a smaller crop (down 500,000

FIGURE 1: STOCKS OF RAPE & SUNFLOWERSEED WILL GET TIGHT NEXT SEASON

FIGURE 2: OIL MARKET SHARES

tonnes) but will try to keep oil consumption up around the 7.7M tonne level by crushing more of its reserve stocks – these will be seen falling by about 30% by the end of 2015/16 season. Despite some doubts about the strength of its domestic crop, India is also expected to maintain rapeseed oil consumption near last year’s level. Overall, the relatively diluted demand response to the smaller global rapeseed crop is expected to halve carryover stocks to a 12-year low of around 3.4M tonnes, leaving this market highly exposed to any further crop upsets in 2016.

After a burst of strength in May/June, when crop pointers clearly began to go wrong, the rapeseed oil price reaction has been fairly restrained so far.

Average monthly prices for EU material ex-mill hit a one-year peak of about €770/tonne in early July, resulting in an €80 premium over soya oil but have since slipped back to the low €680s (when soya fell to the €660s). In dollar terms, rapeseed oil averaged a 2015 peak of US$820 in June, falling to US$786 in July.

Failure of rapeseed product prices to fully match the rise in oilseed costs – and difficulty obtaining enough old crop supply ahead of an uncertain harvest outlook – has been hurting Canadian crushers who were using only two-thirds of their capacity as OFI went to press amid, reportedly, their weakest margins in years.

Given its prominence in the European mix of oils (40% of total vegetable oil consumption and 20% of food oil use) rapeseed clearly needs to ‘buy’ more acreage ahead of the winter planting season in Europe. Concerns have meanwhile been expressed in Ukraine, a major supplier to Europe, that dry weather will again reduce its winter sowings.

Ukraine total area fell to just 680,000ha this year from 880,000ha in 2013 and 1M ha in 2013.

Sunflowerseed output falling Rapeseed’s shortfalls coincide with a setback for global sunflowerseed output, seen falling to a threeyear low of 39.4M tonnes after smaller crops in Europe, Argentina and, to a lesser extent, Ukraine.

Although the Russian crop is seen higher this year, overall CIS output will be about 2.8M tonnes under 2013’s peak 22.7M tonnes. Europe’s sunflower crop is also seen about 1M tonnes down on the average of the past two seasons. Yet more sunflower oil is needed to meet demand that has grown by over 10% in the last three years, 48% in the last decade and almost doubled since the turn of the millennium.

By drawing down stocks in Europe, Russia, Ukraine and Argentina, sunflower crush, oil production and consumption can be kept up more or less around last year’s level. However, as in the rapeseed market, that will leave low stocks very exposed to the vagaries of weather/farmers’ sowing intentions next year.

Crude sunflower oil prices responded to crop shortfall signals by advancing to a peak of about US$925/tonne in early July. Although dragged down to around US$830 recently by weaker soya and palm oil markets, the price of refined, bleached and deodorised oil in Rotterdam was still commanding an approximate 20% premium over soya as OFI went to press. Whatever base price for vegetable oils is dictated by the two most internationally traded items – palm and soya – sunflower’s dwindling stock scenario looks likely to maintain these larger premiums for some time v

16 OFI – SEPTEMBER/OCTOBER 2015 www.oilsandfatsinternational.com

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17 OFI – SEPTEMBER/OCTOBER 2015 www.oilsandfatsinternational.com 12.08.15 15:51 03/09/2015 10:15

CHARTS: JOHN BUCKLEY

I NT E RN ATION AL M ARKET REVIEW

FIGURE 3: CHINA IS PIVOTAL TO THE GROWTH OF GLOBAL SOYABEAN IMPORTS

recent high, 6.6% of 2013/14 when demand was still responding to the descent in prices from their 2010/11 peaks.

Continuing dismal period for palm oil

FIGURE 4: VEGETABLE OIL PRICES – MONTHLY AVERAGES

v ahead – assuming global demand stays up at the predicted stable level.

A quite different scenario is still building for market leaders palm and soya oil, most pointers at present suggesting abundant supplies overtaking demand. The extent of the soyabean surplus remains in debate during late August as traders continue to contest US harvest acreage figures as well as likely yield outcomes after a slightly delayed, excessively wet start in over half the soya belt, followed by a rather too-dry period (that now seems to be ending with some decent rains). The general condition of the crop points to something in the region of 106M tonnes – give or take a million or so. Down a bit on last year’s record 108M tonnes but plus larger carry-in stocks (double last year’s at some 11.6M tonnes), this actually gives a bigger total US supply for 2015/16.

Soyabean surplus relying on China The USDA recently upgraded its Latin American 2014/15 soyabean crop forecasts to account for higher local estimates. And while it sees Argentina cutting back by about 3.8M tonnes next season, it has the next Brazilian crop rising by a further 2.5M tonnes to a new record 97M tonnes (some Brazilian sources even see the crop nudging 100M tonnes as farmers shift from less profitable maize). Overall, world soya output in 2015/16 may be similar to the past season’s, which was about 80M tonnes higher than four years earlier. Over that same period, soyabean crush has grown by only 43M tonnes, boosting surplus stocks from 54M tonnes in 2011/12 to 81M tonnes this season and projected

at 87M tonnes for 2015/16.

The soya market’s dependence on China to provide new outlets for all these extra soyabeans has been a big talking point all summer (see Figure 3, above). Since 2011/12, China’s imports have rocketed from 59M to 77M tonnes – an average 10% per annum growth rate. In the coming season, the USDA expects imports of 79M tonnes – up just 2.6%.

Even that figure is questioned by some observers as the largest consumer’s economic growth begins to stall, although it’s a reasonable working premise for now.

The main problem for US soya producers is that China has been switching more of its demand to the record Latin American supplies, made ever cheaper by the collapse of the Brazilian and Argentine currencies versus the US dollar. Despite China actually buying more soyabeans than ever recently, US sales of its coming huge crop have recently been running at their lowest level for some years.

That’s weighed heavily on the Chicago soyabean futures complex, where nearby prices have recently collapsed under US$9/bushel from their recent peak of over US$10.50/bushel. Some observers think values could drop below US$8.50/bushel if the US crop comes in anywhere near the USDA estimate and China continues to spread its custom further south.

US soya oil futures prices have meanwhile dropped about 16% off their June highs but refined SBO prices in Europe are down by a lesser 9% from their recent peaks due to the weakness of the Euro versus the dollar. Overall, world soya oil consumption is expected to grow by about 5.3%, slightly better than last year’s 4.4% but below the

It has been a dismal period for palm oil producers with the value on the Malaysian futures benchmark sinking weekly and accruing a more than 20% loss from the early June peaks. The bearish factors remain broadly unchanged from those discussed in my last review – exports lagging behind seasonally rising Asian production and resulting in origin stock build-up (Malaysia’s inventory was recently at its highest since November last year). Latest official data from the Malaysian Palm Oil Board had exports slightly lower in July despite the weakening Malay ringgit (hitting a 17-year low versus the US dollar) and Malaysia’s supposed advantage offered by rival Indonesia’s new, higher export duties. In the event, better Chinese and US demand was offset by a drop in off-take from India and Pakistan. Unofficial earlyAugust data promised a better export performance with demand rising from China, India and Pakistan but the consensus later in the month was that this was probably only a blip. The year-to-date export performance has continued to show a 1.5% overall decline with sales improving to India and some moderate-sized buyers like Philippines and Vietnam – but less going to China, Europe and most other medium/large markets. Malaysian production is meanwhile up by about 1.2% in Jan/July and forecast by the USDA to increase 6% in the season ahead (by about 1.2M tonnes).

A recent report from Indonesia’s Oil Palm Estate Fund meanwhile suggested its overall exports had not been much affected by the new tax system, although lower-levied processed palm oil’s share had leapt at the expense of higher-taxed crude oil sales.

Still dependent on exports to dispose of 70% of its production (expected to rise from 33M to 35M tonnes this year), Indonesia’s government has suggested leeway to expand domestic use by 5M tonnes with its subsidised biodiesel programme (part-financed by the export levy) and other industrial outlets like biolubricants and biodegradable plastics.

Malaysia has also reiterated its plan to use up to 300,000 tonnes more in industrial outlets and to reinstate a replanting programme to put the brakes on expanding production. But until they see firm evidence of these plans working, the markets are likely to focus more on the competition for export markets between the two main suppliers.

USDA’s current forecast remains for a global palm oil production increase in 2015/16 season (starting 1 October) of about 3.7M tonnes or some 6%. Going into 2016, it is possible El Niño will reduce yields but, again, the markets need to see hard evidence of this happening and plantation expansions in Indonesia may offset some of any yield loss. Although origin biodiesel plans may make some headway, overall, palm oil looks likely to remain in good supply for traditional food users for the time being. Along with huge soya oil supplies, palm oil will restrain base prices across the edible oil sector. However, oilseed meal markets, while also down from their early summer peaks, have fallen relatively less than oils which may offer some w support to meal-rich oilseed crush margins.

John Buckley is Oils & Fats International’s market correspondent

18 OFI – SEPTEMBER/OCTOBER 2015 www.oilsandfatsinternational.com

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SPEC IALITY FATS

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Shea potential

trees are generally uncultivated, although they are protected and managed extensively. Traditionally, work in the shea industry is undertaken by women; the Global Shea Alliance (GSA) estimates that 16M rural African women work in the industry in order to support their families. The trees thrive exclusively in the warm and dry climate of subSaharan Africa; this special climate is what makes shea butter such a prized commodity, as it is not cultivated elsewhere, or even planted in man-made groves within the region.

International demand

Rare, naturally grown, traditionally harvested, and with reportedly remarkable moisturising and healing properties, demand for shea butter is growing steadily.

Rose Hales looks at what makes shea so special

I

t’s probable that most people, if asked, would recognise shea butter as an ingredient that is used extensively in high-quality body butters and moisturisers. Although shea’s qualities make it a value commodity for such applications, its uses extend far beyond this, into the food and pharmaceutical industry.

Millennia old Shea butter has been known, produced and used in West Africa for millennia, but is a relatively new export, the demand of which is growing exponentially – with an even greater potential. Shea butter is produced from the fruit of the Vitellaria paradoxa, or the African shea tree, which grows exclusively in the arid Sahel of sub-Saharan Africa.

Nigeria is the world’s biggest shea producer, followed by Mali and Ghana. Other countries in western and central Africa that make a substantial living from shea include Burkina Faso, Niger, and South Sudan. Figure 2 (page 24) shows the location of the ‘shea belt’.

Shea grows naturally in the region and the

The GSA estimates that demand for shea has increased globally by 1,200% in the last 10 years, which has resulted in the appearance of various alliances and cooperatives which seek to protect the producers and yield the highest possible quality product. The GSA itself was founded in 2011 and its main aims are to empower women working in the industry, encourage fair trade, learn and teach better methods of production and encourage producers. It currently has 380 members from 25 countries including large global companies such as The Body Shop, Nestlé and The Hershey Company.

The main importers of shea are the EU, Japan and the USA, and it is used in food production, as well as pharmaceuticals and as a skin treatment.

Major confectionery companies Hershey’s and Nestlé are both members of the GSA and both buy shea for use in their products. An article in Confectionery News in May reported that Hershey’s annual consumption of shea butter is around 2,200 tonnes, cocoa butter equivalents (CBE) – of which shea is one – represent 2% of its annual ingredient spend. The same report also says that Nestlé buys approximately 8,000 tonnes/year of shea, which is used in a number of products including confectionery.

Major cosmetic companies purchasing shea include The Body Shop and L’Occitane Inc. When asked, The Body Shop would not comment on the amount of shea it buys in comparison to other butters. However, according to a sponsored feature on the Guardian website, L’Occitane’s use of shea generates over US$360M in total sales revenue across six countries (including the USA).

CBE or healing moisturiser?

Although shea is traditionally used for cooking and continues to be used in West Africa for this purpose, the majority of exports function as CBEs. Shea butter has the same fatty acid and triclyceride profile as cocoa butter, giving it exceptionally similar physical properties. Furthermore, it has a slightly higher melting point, making it a useful addition to chocolate for a smooth texture. As shea has a lower value than cocoa butter, it is used to replace the more expensive fat. The maximum amount of CBE permitted in chocolate is 5% in Europe; in the USA no CBEs are allowed. Shea butter as a CBE makes up between 90-95% of all shea exports.

The remaining 5-10% is used in personal care products in the luxury cosmetics industry. The butter is sold unrefined for moisturising and for adding to soaps, lotions and skin treatments. Research into the subject has brought up various articles that cite scientific evidence for the moisturising and healing properties of shea – although verification or authoritative backing has been far more difficult

20 OFI – SEPTEMBER/OCTOBER 2015 www.oilsandfatsinternational.com

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SPE CI AL I TY FATS

to find. The American Shea Butter Institute (an organisation which promotes shea) talks about the bioactive fraction and the moisturising fraction; according to the institute, the bioactive fraction accounts for 10% or less of butter and includes nutrients such as vitamins A, E and F, cinnamates, phytosterol and other phytonutrients. A product with a high ‘bioactive fraction’ is considered to be best; around 6% is considered to be high and signifies a quality shea butter. According to Dr Samuel Hunter of the American Shea Butter Institute, interviewed in an article in the New America Media, a bioactive fraction of 6% distinguishes it as an oil that is absorbed easily into the skin, rather than merely coating. Furthermore the butter naturally melts at body temperature, increasing its absorption properties.

The United Nations Development Program published a shea butter scoping paper in 2006 that said the apparent ‘healing properties’ are due to the presence of several fatty acids and plant sterols, in particular oleic, stearic, palmitic and linolenic acids. These fatty acids are nonsaponfiable (do not convert to soap when introduced to an alkali); the ‘nonsaponfiable fraction’ of shea is said to be high in comparison to other butters and is the reason shea is thought to aid healing. Although many articles and papers purport this information, sources and research backing the claims are mostly missing or incomplete.

In West Africa, shea has been used for many years in the absence of more modern medicines to treat sunburn, reduce stretch marks and on new-born babies.

Oils & Fats International spoke to the GSA to find out if the association backs the health benefit claims. The GSA said “shea butter is recognised as having important therapeutic properties, particularly for the skin (UV protection, moisturising, regenerative and anti-wrinkle properties).”

Squeeze it …

The industry’s potential Many studies focus on the gap between the amount of shea butter produced and the potential of the industry. The GSA estimates that there is the potential to produce 2.5M tonnes of kernels per year – an estimate of average kernel production from existing shea trees in Africa. Although butter production varies based on extraction methods and the quality of the kernel, on average a single tonne of kernels will produce half a tonne of shea butter. According to figures provided by the GSA, currently around 650,000 tonnes of kernels are collected each year; 400,000 tonnes are consumed domestically and 250,000 tonnes are exported. Which means that there is potentially almost 2M tonnes of kernels currently not being utilised. A study titled, Land Suitability Modelling of Shea Distribution Across Sub-Saharan Africa, uses Geographic Information Systems (GIS) to explore the details of shea potential. The study estimates an area of 3.41M km2 as being suitable for shea trees, which spans across 23 countries and includes 18.4M women collectors; this allows for a conservative estimate of 1.84bn trees and a potential collected crop of 2.44M tonnes of kernels, further allowing for more than 800,000 tonnes of shea butter.

If approximately 2.5M tonnes of kernels are potentially available every year, why is it that the actual collection quantity is significantly lower?

Shea trees are not very reliable and are a long-term investment in terms of planting new specimens. Trees take from between 10 and 15 years to bear fruit.

According to a report by Jean-Marc Boffa submitted to the GSA, Opportunities and Challenges in the Improvement of Shea Resource and its Management: “Shea trees are slow-growing and long-lived. Nut production increases with tree age.

It becomes significant between 20 and 30 years of age, increases until age 100 to 200 and would slowly decline afterwards.” The report also notes that social customs (belief that it might cause bad luck) as well the fact that shea is “selfsown and abundant”, means that people “do not spontaneously invest time or resources planting the tree.” Lack of new trees being planted and the tree population gradually aging means that the potential for shea v

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RR-02-001

THE STONES OF THE SHEA FRUIT ARE CRACKED OPEN TO ACCESS THE FAT INSIDE

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SPEC IALITY FATS

v

will begin to shrink. The GSA is in agreement with this statement, saying one of the main challenges is “the declining and ageing of tree populations”.

There is also research to suggest that cultivating what is seen as a wild plant does not seem worthwhile in the eyes of farmers in Africa.

Boffa reports that many more would consider actively cultivating shea “if improved varieties were available”, an improved tree with greater economic benefits would be worth cultivating. Thus “improvement programmes would need to succeed in radically transforming the tree and people’s perceptions from what is currently considered a ‘wild’ tree into the equivalent of an improved, highly productive ‘exotic’ tree.”

In order for the shea industry to reach its full potential, the women on the front line in Africa need to be supported. This is where the GSA comes in; one of its chief aims is to empower women. The alliance undertakes training in villages as well as broadcasting informative radio advertisements on best practice. According to the GSA, “these trainings benefit women collectors through improving the value of their shea nuts for sale and increasing their access to international markets.”

Improving butter quality and making access to international buyers easier are steps that will benefit the entire market.

Additionally, the production of shea kernels into shea butter is not efficient. Shea butter is produced predominantly using a traditional process described in Figure 1 (below). The process is estimated to have an efficiency of around 20-28%. The GSA says the other main challenge within the industry is FIGURE 1: PRODUCTION OF SHEA BUTTER

Separating/cracking

The fruit’s pulp is removed. The nut is then dried and separated from its outer shell. Elderly women and young girls traditional take responsibility for this, breaking the shells using small rocks.

Crushing

The nuts are crushed using a pestle and mortar.

Roasting

Roasting of the crushed nuts takes place in huge pots over open wood fires. This gives the butter its slightly smoky smell.

The contents of the pots are stirred constantly.

Grinding

Once roasted, the mixture is ground until it is a smooth paste.

Separating the oils

The paste is kneaded and water is gradually added. The butter oils float to the top and are removed. These are then heated again, melted slowly in big pots to remove any remaining water.

Shaping

Once all the water has evaporated, the butter is placed in a cool place to harden before it is shaped into balls.

RR-02-001

Source: Wikipedia

“a lack of facilities and capacity among women’s groups at the base of the shea supply chain”. In response to this challenge, the association launched a sustainability programme in 2014.

The programme seeks to, among other things, improve the quality of processors and ensure healthy tree populations.

How is the industry changing?

Certification is becoming increasingly important to shea butter’s wealthy consumers; organic and fair trade are the two most popular trends and are affecting the way shea is being traded and labelled, as well as how it is made and who produces and sells it. The EU has required since January 2005 that all agricultural products are traceable from source. In addition Fairtrade International (FLO) is developing specific new guidelines for the shea butter industry.

Could demand match supply?

Finally, when considering the possibilities of producing a greater supply, one must determine if demand is sure to grow respectively. Primarily it is extremely unlikely that the demand for shea butter will decline – ‘natural’ skincare products are on the rise and popularity will only grow as consumers become increasingly health conscious and aware.

Realistically, the lack of scientific evidence behind claims of healing and moisturising properties is not likely to affect the market.

Use of shea as a CBE is also unlikely to decline.

The USA currently does not allow any CBE in products labelled ‘chocolate’ but this could change.

The GSA is working with partners in the USA to submit a petition pushing for CBE to be allowed in chocolate. US confectionery giant Hershey’s already uses CBE by labelling its products as ‘chocolate candy’ instead of ‘chocolate’, a strategy that more companies may choose to adopt.

Joseph Funt, managing director of the GSA told Confectionery News in May: “We expect continued strong interest in shea-based CBEs” due to the technical advantages and competitive price points of the butter. Demand has remained stable over the last two years, the GSA told Confectionery News,

TREE AID: Harnessing the shea tree

I

n Samoa village, Ghana, most things are in short supply but local women have drive and ambition by the bucketful. This year, TREE AID will start to harness the locally-grown shea tree to help villagers improve their own lives.

Shea trees already provide vital resources.

Community leader Salah Sakoaru told TREE AID: “Our welfare is tied to our trees. We make and sell shea butter for money to send children to school and buy medicines and foods when we have no crops.”

But hand-processing leaves little time for anything else. The women would like machinery, which can speed up production ten-fold. Then, they would have time to invest in other ventures

22 OFI – SEPTEMBER/OCTOBER 2015

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FIGURE 2: THE AFRICAN SHEA BELT THE SHEA BELT IS LOCATED IN SUB-SAHARAN AFRICA AND EXTENDS ACROSS 23 COUNTRIES, IT COVERS APPROXIMATELY 3,000 MILES, SPANNING FROM THE FOOTHILLS OF THE EASTERN ETHIOPIAN HIGHLANDS ACROSS TO SENEGAL IN THE WEST

with some new growth being seen in South America.

The GSA’s newest member is Swiss confectioner Barry Callebeut, which manufactures cocoa and chocolate products. The confectioner’s support for the shea industry represents a clear shift in attitude towards the African butter – and reveals where future demand is most likely to stem from.

In the minutes from the GSA’s March 2015 general meeting, it was said that the alliance is currently supporting national organisations in India to revise the country’s policy to allow shea as a CBE in chocolate. Some manufacturers in Asia are turning to palm butter as a CBE but, due to the subsequent loss of both texture and taste, they may switch to shea if the product becomes more available.

As the price of cocoa continues to rise due to difficult conditions including high winds damaging crops, with various sources including the Guardian predicting that “cocoa prices are expected to double by 2020” – shea will be under increased demand. EU chocolate manufacturers who do not currently use shea as a CBE may choose to in order to reduce the price of their products. This, in turn, is likely to cause the cost of shea to rise, or at the w very least produce higher demand.

Rose Hales is OFI’s editorial assistant like honey production and tamarind processing, diversifying their income. TREE AID offers training to improve shea butter yields – showing villagers how to make saleable products, run small businesses and invest for the future.

It’s an approach that TREE AID has replicated across the drylands of Africa, tailoring projects to fit local needs. As chief executive John Moffett explains, “Projects like this are cost-effective, environmentally sustainable and can be a culturally appropriate way to improve the wellbeing of the world’s poorest people, giving them back both their dignity and the power to shape their own futures.” www.treeaid.org.uk/GiftsThatGrow OFI would like to thank TREE AID for supplying this issue’s cover image

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SUSTAIN ABILITY

Making soya sustainable Deforestation is the obvious sustainability issue with soya but it is not the only difficulty that the world’s fastest expanding crop is facing. Luckily, Martin Banks reports, an unlikely ally for responsible soya production has emerged

V

egetable oil companies are rightfully concerned about the reputation of key feedstocks such as soya for good environmental and social sustainability.

Bad news stories about poor pay, pollution and virgin land clearances can knock consumer demand for products, which is not good for business.

However, the 10th annual Round Table on Responsible Soy (RTRS) conference, ‘Responsible Soy – The Road to Ten Million’, staged on 19-20 May in Brussels, heard that help making the sector more sustainable has come from perhaps an unlikely source – McDonald’s.

The American fast food giant, a huge consumer of oils and fat, is intent on having 100% sustainable certified soya in its chicken meat supply chain by 2020.

Keith Kenny, head of sustainability and CSR at McDonald’s Europe, outlined the company’s policy on soya and sustainable sourcing.

Seizing on the ambitious RTRS goal of seeing 10M tonnes of responsible soya on the market by 2017, he declared that over the last 10 years sustainable soya issues had given him “10 million headaches”, adding, “it has certainly been the item that has taken up the most time and resources of our sustainability teams.” McDonald’s, he said, is committed to sourcing all its food and packaging “sustainably” and eliminating deforestation from all the multi-national’s global supply chains, including its purchases of oils and fats.

Work has focused on six priority products that have the greatest environmental impact: beef, chicken, wood fibre, fish, coffee and palm oil.

“Beef and chicken are clearly where our work on soya is an important piece of the overall sustainability requirement,” he said. Some 250,000 tonnes of McDonald’s beef products come from about 450,000 farms in Europe, while 100,000 tonnes of chicken is sourced from nearly 3,000 farms. As such, both offer “different challenges” when considering sustainable soya as feed, he said.

Kenny cautioned: “It is clear that if we want to continue to serve menu items such as the Big Mac and Chicken McNuggets to our customers long into the future, we have to have sustainable sources of supply.”

The company’s approach to sustainable soya

is “multi-faceted” and he said it has worked for many years to “support the work” of the Amazon soya moratorium for Brazil, which seeks to halt the trade in soya grown on newly deforested land. It began as a two-year programme in 2006 and was extended until 2016.

Kenny said the Brazilian soya moratorium working group – the GTS – had been “hugely successful” since its inception nearly 10 years ago, adding: “They have done a truly outstanding job on the issues they have focused on and have been so successful that virtually everyone, including major non-governmental organisations (NGOs), is in agreement that soya is no longer a driver of deforestation in the Amazon biome.”

He added: “However, we know the moratorium is due to come to an end this time next year to be replaced by something else – yet to be fully defined as this is still a work in progress.

“For us, the moratorium has been so effective because it assures us, as customers of Brazilian soya, that we are not and will not be contributing to the deforestation of the Amazon biome. We feel that for any replacement process to be considered successful, this outcome must be maintained and we are hopeful that this will happen.”

Deforestation is not the only issue When it comes to sourcing soya sustainably, he argues there are “many other issues” other than deforestation that should be considered.

That is why last year, McDonald’s committed to a number of initiatives in its poultry supply chains, including 100% sustainably certified soya by 2020.

“Because of that commitment, last year our European chicken suppliers bought somewhere in the region of 22,000 RTRS certificates covering approximately 20% of the soya they used. They

MCDONALD’S EUROPE IS INTENT ON HAVING 100% SUSTAINABLE CERTIFIED SOYA IN ITS CHICKEN MEAT SUPPLY CHAIN BY 2020

will buy even more certified soya this year as we gradually progress towards 100% in 2020,” he explained.

Founded as global multi-stakeholder platform in 2006, the RTRS aims to cut the negative impacts of soya cultivation through the development, implementation and verification of a global standard for responsible soya.

RTRS has implemented an international sustainability and carbon certification scheme for production. In 2014, a total of 1.3M tonnes of responsible soya was purchased by a number of companies from different countries and sectors, an all-time record.

This will be all the more important, Kenny estimates, as per capita meat consumption in

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Soya is, in fact, the fastest expanding crop in the world and its production has grown explosively over the years.

Total production reached 270M tonnes in 2013 and is expected to rise further.

However, soya production is sometimes tainted by practices such as deforestation, the destruction of ecosystems, violation of land rights and unfair working conditions.

Hastening the market momentum Accelerating momentum towards getting those 10M tonnes of responsible soya onto the market by 2017 was a recurring theme of the conference and, on this, the RTRS’s executive director Agustín Mascotena said, “providing 10M tonnes of responsibly cultivated soya can prove to be the tipping point that will establish responsible soya right in the centre of the international market.

If producers, buyers and other stakeholders join forces in a common push, we can accelerate the market momentum for responsible soya.”

Countering deforestation caused by uncontrolled soya cultivation was another hot topic of discussion and the conference was presented with initiatives to map and protect high conservation value areas that are threatened by illegal land expansion.

On this, the RTRS has launched an online mapping system that allows it to identify such zones, indicating that these are regions where soya cannot be produced. The project has been rolled out for Paraguay and Brazil and will be pursued for Argentina. Its ‘Guides for Responsible Expansion of Soya’ help pre-assess the risk for the ecosystems in various areas, thus avoiding any negative impact of the expansion of cultivation.

Deforestation is a subject of much controversy, of course, and participants at the conference were lobbied by campaigners who claimed that the RTRS had actually been “strongly criticised” by farmers movements and NGOs from soyaproducing countries in Latin America, as well as environmental groups in Europe.

PHOTOS: ANATOLII, KENISHIROTIE/DOLLARPHOTOCLUB.COM

developing countries will increase from 28kg today to 42kg by 2050 – a 50% growth, adding a further 150M tonnes of meat production. The majority of this increase, about 100M tonnes, will probably be poultry, Kenny said. This will require an additional 200M tonnes of oilseeds for feed, using (with additional cereal production) 100M hectares more agricultural land by 2050 – roughly the surface of France and Spain combined.

RTRS and other schemes, he believes, therefore have a “crucial role” to play in helping provide companies like his with the ability to help meet its sustainable sourcing and zero deforestation commitments and enabling them to provide sustainably produced food to customers “long into the future”.

Addressing the ecological and social challenges, Argentina-born Daniela Montalto, senior forest campaigner at Greenpeace International, said that while the moratorium had seen “incredible progress” in tackling deforestation it would be necessary to extend it way beyond 2016.

While setting targets and standards are all very well and good, Andrew Voysey of the Cambridge Institute for Sustainability Leadership told the conference that access to capital was “the key” in making such objectives a reality.

He said: “Keeping the momentum going for responsible soya is very laudable and we have thrown out the challenge for one third of international banks to mobilise behind this goal.”

‘When it comes to sourcing soya sustainably ... there are many other issues other than deforestation that should be considered’ Turning commitment into action The challenge has already been taken up by two global companies: food and consumer goods manufacturer Unilever and Dutch retailer Royal Ahold, who launched a call for action to support responsible soya chains on behalf of the Consumer Goods Forum (CGF), a platform of manufacturers and retailers that strive for positive change in the sector. The two firms named RTRS as one of the most credible ways to obtain certified responsible soya and to achieve zero net deforestation.

“As soya is a hidden ingredient, its traceability is difficult or even impossible to achieve”, said Hugo Byrnes, vice president, product integrity, of Royal Ahold, a member of the Retailers’ Soy Group.

“Therefore, transformation can only be achieved when manufacturers and retailers all specify sustainable soya. Only then can we achieve the critical mass necessary to let certified soya enter Europe in particular and be used as feed.”

Sheila Redzepi, Unilever’s vice president for global advocacy and sustainability strategy, stressed the need to safeguard forests. “We’re making progress but to achieve our deforestation and sustainable agriculture commitments at scale, we need to go beyond what we can achieve in our own operations,” she said.

Several NGOs at the conference, such as the World Wildlife Fund, Greenpeace and NGOs from Latin America, stressed the importance of RTRS as a key instrument to monitor the agricultural frontier. But more needs to be done, they said.

The meeting showed that there is broad support from all participants for zero deforestation and an increased market share for responsible soya, said RTRS president Olaf Brugman.

Looking to the future, he said: “Now we must turn this commitment into action. Only if we act together can we push forward the supply and demand of responsible soya on the market and eliminate deforestation from the soya chain.” w Martin Banks is a freelance journalist

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SUSTAIN ABILITY

Commitment across the supply chain

Concern for sustainability is growing and industry players are required to work together to find solutions. Albrecht Baetge reports on Archer Daniels Midland’s recent initiatives in this area

S

ustainability is a growing concern among consumers across the globe. The worldwide demand for oils and fats is forecast to reach 202M tonnes by 2015, which represents a 6M tonnes increase compared to 2014.

With 58M and 44M tonnes respectively, palm and soyabean oils currently represent half of the world’s total oils and fats production. As customer demand for traceability in the food value chain grows, major industry players are increasingly challenged to develop strategies towards more sustainable production.

Commitment across the supply chain As a leading global agricultural processor, ADM has a vital role to play in feeding future generations. ADM believes that sustainable agriculture must be an industry-wide effort, and works closely with industry peers, trade associations, growers, governments, non-governmental organisations (NGOs) and other industry bodies to achieve industry standards that will encourage sustainable practices at every stage of the supply chain. As part of this effort, ADM supports organisations and certification platforms that encourage sustainable agricultural practices, such as the RSPO (Roundtable on Sustainable Palm Oil) and ISCC (International Sustainability & Carbon Certification).

Sustainable oilseeds programme Because ADM occupies a prominent position in the oilseeds value chain, it has developed several initiatives to encourage sustainable practices throughout its operations. For example, ADM has launched a sustainable oilseeds programme, which enabled it to provide rapeseed and sunflowerseed in Europe that meets the ISCC PLUS requirements, which is ISCC’s certification platform for the food and feed industries. With these accreditations, it is able to meet the increasing demand for certifiedsustainable oilseeds in Europe.

Innovative partnership Through ADM’s sustainable oilseeds programme, the group also works on innovative partnerships that support a sustainable oilseeds supply chain.

Recently, ADM signed a Joint Business Development Plan (JBDP) to continue to grow its relationship as an oils and fats supplier to Unilever in Europe, Africa and North America. Among other business objectives, the JBDP will help advance existing cooperation around sustainability initiatives with the company, such as the ADM/Unilever Soybean

Sustainability Program in the USA, through which ADM sources and processes sustainable soyabeans and supplies Unilever with oil for Hellmann’s mayonnaise. Another example is ADM and Unilever’s partnership with LEAF (Linking Environment and Farming) in the UK, which promotes sustainable agricultural practices at the farm level to produce sustainable rapeseed oil for Unilever’s Flora spreads, as well as for Hellmann’s UK. The JDBP will also strengthen ADM’s existing European sustainability initiatives, particularly in Central and Eastern Europe, enhancing the company’s supply chain to provide Unilever with ISCC PLUS-certified oils and fats products.

Sustainable agriculture ADM’s efforts in sustainability also focus on sustainable agriculture by ensuring fertility protection and biodiversity at origin. For example, in South America ADM created the “Doing It Right” programme in 2009 in partnership with Alianca da Terra, a Brazilian not-for-profit organisation, with the goal of maximising existing cropland yields while minimising the extension on precarious ecological areas. Among other benefits, this programme provides technical farming training and yearly assessments to ensure that soya growers respect social and environmental standards including fair labour conditions. To build upon this programme, this year, ADM launched its Responsible Soybean Standard, which will enable customers in Europe and other regions to source protein meal made from sustainably grown soyabeans, therefore meeting the growing demand for sustainable feedstuffs.

ADM is also committed to energy efficiency, particularly during the transportation and processing of oilseeds. By 2020, the group aims to decrease its energy per unit of production by 15%.

Since 2010, ADM’s oilseeds operations in Europe have already reduced overall energy usage per tonne by 11.5% and the company is confident that it can meet or even exceed this objective.

Palm oil sourcing ADM is particularly attentive to the sourcing of palm oil, which is a key ingredient in many consumer products. As stated in ‘Our Commitment to NoDeforestation’, ADM will only source palm oil, palm kernel oil and their derivatives from suppliers that are committed to the protection of High Carbon Stock (HCS) forests or High Conservation Value (HCV) areas and peatlands, and which have adopted mechanisms that protect human rights and support local communities. The group is also working with The Forest Trust to map its palm oil supply chain and develop appropriate action plans to create a more sustainable, traceable supply chain. ADM’s commitment to a deforestation-free supply chain is also shared by Olenex, its joint-venture with Wilmar International, which has recently announced a new policy that will eliminate deforestation from its palm oil supply chain as well.

By participating in sustainability certification programmes and partnering with diverse industry players, ADM has built on its capabilities to create stronger supply chain integrity and develop more sustainable and innovative solutions to meet its customers’ needs.

w Albrecht Baetge is ADM’s sustainability manager, Europe

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T R ANSP OR T, LOGISTIC S & STORAGE

A work in progress

MANY OF BRAZIL’S ROADS ARE DANGEROUS AND CAN BE IMPASSABLE IN DIFFICULT WEATHER CONDITIONS

River, road and rail problems in Argentina and Brazil make the transport of oilseeds exceptionally problematic, causing delays for purchasers worldwide. A report from HighQuest partners assesses the situation

A

rgentina, Brazil and the USA are completely different markets in terms of interior infrastructure and the relative distance from the major soyabean growing regions to the primary soyabean export ports. While soyabeans in the USA, on average, have to travel the longest distance to reach the export facilities in New Orleans Louisiana (NOLA) and the Pacific North West (PNW), the advanced river and rail infrastructure allows for soyabeans to reach the export markets in a timely manner and modern infrastructure at the ports allows for quick loading and limited delays. This is an advantage because rail lines and barges allow US exporters to load a greater quantity of soyabeans at a given time, reducing per unit transportation costs, despite the longer distances.

There are two major interior soyabean transit routes to reach the export market in the USA: the Western Corn Belt to the PNW by rail, and the Mississippi River to NOLA by barge. Over the last two years, the PNW route has experienced a 15% decrease in train speeds, which has led to slower turn times for shuttle trains and capacity reduction

for grains moving to the PNW. As a result, turn times on shuttle trains have declined from three times a month to two times a month, which means that fewer soyabeans are available for export out of the region. The primary reasons for the decrease in train speeds include track improvement work, increased traffic and tight rail car capacity due to increased petroleum, intermodal, coal and automobile volumes.

The Mississippi River route is controlled by the barge freight market. The route from Davenport, Iowa to NOLA is a very safe route, but there are several problems. It can take as many as 22 days for a barge leaving from Davenport to reach NOLA due to the fact that barges have to wait at various locks along the river and be switched onto longer tows with bigger tow boats in St Louis. Furthermore, during the winter months, certain segments of the river system can freeze (particularly the upper Mississippi and the Illinois River). This means that farmers in these regions have to ship their grains to the export market either prior to the DecemberJanuary period, or they have to store them until the river thaws. During months when the rivers are frozen, export terminals in NOLA rely on grain from the Ohio, lower Illinois, Arkansas and lower Mississippi rivers, as well as rail to barge transfers in St Louis.

Brazil’s poor infrastructure Brazil is an entirely different matter. Soyabean and corn production has grown substantially over the past five years (especially in the centre-west state in Mato Grosso), yet storage and transportation infrastructure have not grown with it.

Currently 61% of the soyabeans moved in Brazil

are transported via truck over long distances on mainly unpaved roads. There are multiple challenges that Brazilian farmers face when trucking soyabeans from Sorriso, Mato Grosso (MT) and Londrina, Paraná (PR) to the ports of Santos and Paranaguá.

Poor road infrastructure leads to slow transportation speeds for trucks to reach the ports and increased spillage of soyabeans en route – up to 3% of the crop, according to Dr Peter Goldsmith at the University of Illinois. The major highways in Brazil are toll roads, causing multiple delays en route at toll stations. Long waiting lines to reach the ports – estimated to be as long as 30 miles (50km) at peak season – cause trucks to wait for at least four to five days just to unload their trucks.

Furthermore, the lack of rail and waterway infrastructure to reach ports in the south and, potentially, alternative ports in the north, leads to major congestion on the roads around the port, increasing delays and waiting times.

This situation has been exacerbated by a new law in Brazil limiting the amount of time truckers may drive per day. Truckers’ driving hours are limited to eight hours/day, which may be extended to a maximum of 10 hours/day, but extra hours make the driver eligible for overtime compensation.

Additionally, truckers must take at least a half-hour break every four hours and a one-hour lunch break.

Delays at port Port infrastructure is another major challenge for Brazilian soyabean exporters using the ports of Paranaguá and Santos. Waiting times are not limited just to trucks entering the ports, but also v

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FIGURES: HIGH QUEST

FIGURE 1: FINANCIAL RAMIFICATIONS OF DEMURRAGE (TONNES)

FIGURE 2: DEMURRAGE COSTS

FIGURE 3: VESSEL WAIT TIMES IN ARGENTINA AND BRAZIL (DAYS)

v include vessels entering the ports. Brazil is working to improve ocean vessel waiting times and expand the volumes of cargo passing through its ports, but it still has a long way to go.

Two of the major problems for Brazilian ports is their lack of draft and the narrow channels that ships have to pass through to reach the port. The draft restrictions in Paranaguá and Santos limit the amount of volume that can leave the port, as these two ports cannot handle Capesize or Post-Panamaxsized vessels, while the narrow channels limit the number of vessels that can enter and exit the port at a given time.

Both ports have announced concessions to the private sector for expanding the drafts and channels of each port, but the concessions have not yet been auctioned and it is likely to take time and considerable investment before the necessary improvements are made.

Another significant factor that leads to ocean

vessel delays in port is that the berths in Paranaguá and Santos do not have protective structures to shield grains from rain and there is limited covered storage at the ports as well. Therefore, when it rains, vessels docked at the berths cannot load until the rain stops and trucks have limited access to unloading grain, which leads to extended loading times.

An example of these delays occurred in 2013 when the Port of Paranaguá recorded 51 days of halted grain loading during the first six months of the year, leading to ocean vessel waiting times that reached as high as 65 days during the peak season.

HighQuest received survey responses from four countries (China, Taiwan, Thailand and Vietnam), with 28 buyer responses, who identified Brazil as the least predictable origin in terms of shipment delays due to long vessel waiting times at the ports during the peak season, although both Thailand and Vietnam reported that they experience lengthy

shipment delays regardless of origin.

Many of the respondents (especially in China and Taiwan) said that predictability of delivery matters to them because of the impact that shipment delays have on their businesses. Impacts that buyers listed included: t High demurrage costs, which get passed on to the buyer either through direct payment or in the initial price of the soyabeans. t Potential foreign currency and interest rate risk. t The inability to match soyabean purchases with sales of the end product, which can lead to risk management issues. t Customer complaints focused on the timeliness of soyabean meal and oil delivery. t If the shipment arrives too late in China, the buyer may be forced to purchase soyabeans at higher spot prices from domestic buyers or even from another origin. t Potential slowdowns in capacity utilisation. t Potential forced changes in buying patterns, which could lead to international buyers increasing their purchases prior to the peak season in an effort to avoid costly delays during the peak season – in this case, buyers have to build additional storage to support additional soyabean purchases and face additional inventory and working capital costs.

Two classic examples of the impact of late arrivals occurred in 2013 in China and Thailand. In China, Sunrise Group – a large soyabean trading company based in Shandong Province – was forced to cancel three million tonnes in soyabean purchases from Brazil. Sunrise has limited soyabean processing capacity and the majority of its revenue comes from trading imported soyabeans in the domestic market. Sunrise had to substitute its three million tonnes of Brazilian purchases with purchases from soyabean traders in the domestic market, as well as some from the USA, in order to fill its customer orders, which led to a decrease in the availability of soyabeans in the domestic market and higher local prices for soyabeans, as the expected three million tonnes never materialised.

The result was a net loss of six million tonnes of soyabeans for crushers in China and considerable reputational risk damage for Sunrise, as the delayed shipment meant that the only way Sunrise could fill its customer orders was by buying soyabeans in the domestic market, thus limiting availability in China and raising prices for the entire market. Sunrise lost considerable sums of revenue from the delays and was not able to fill its orders in a timely manner and, as a result, the company announced in 2014 that it was in danger of exiting the market.

In Thailand, Inteqc Feed reported that it had to purchase 5,000 tonnes of soyabeans in the domestic market at significantly higher prices than its initial payment for imported soyabeans, due to late arrivals. The numbers were staggering: Inteqc paid US$600/tonne (or US$3M) to cover the late arrivals at a price of 1,000 Thai baht(US$30)/tonne higher than it had paid for the initial soyabeans, which went directly to the business’s bottom line.

Solving Brazil’s problems There are significant opportunities to reduce transit times to the ports, as the Brazilian government has begun to auction off several highways and railway

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concessions to the private sector.

The ports of Paranaguá and Santos have also established electronic waiting for dump pits at each port. These dump pits have already made a substantial impact on waiting times for trucks to enter these ports. Upon loading soyabeans in Sorriso or Londrina, truckers use an electronic device to programme their dump date and time and request a dump date be assigned for the planned arrival at the port. Within a few hours of registering, the trucker can check to see what dump date and time has been assigned to the load.

The ports set up this system as a result of the enormous traffic waiting to dump soyabeans in 2012 and 2013. This system allows Santos and Paranaguá to receive each day only the amount of soyabeans and corn they can handle on a daily basis and to programme the arrival of trucks accordingly. As a result, Santos and Paranaguá organise the arrival of trucks loaded with grains in four shifts: 12am-6am; 6am-12pm; 12pm-6pm; and 6pm-12am. A truck driver’s slot will lie within these periods and the ports allow for five hours of leeway. Furthermore, the port of Paranaguá states that the wait is not to exceed 12 hours for a driver registered within their online system; the one caveat is that trucks must be registered within the port’s online system in order to be eligible.

This electronic system is expected to reduce waiting times for truckers registered within the system substantially, and reports out of Brazil say that lines are currently 30% shorter than they were in 2013.

One of the concessions granted to the private sector is likely to have a significant impact on transit times in the future, specifically the granting of a stretch of the BR-163 to Odebrecht. What would really improve the situation in Santos and Paranaguá would be if the northern section of the BR-163 was auctioned to the private sector.

Currently, the vast majority of the northern route is unpaved and, in the rainy season, it can be impassable. If this section of the highway was built up and improved, it would give soyabean and corn farmers the option to truck their products to the southern or northern ports (depending upon their location) and would reduce congestion in Paranaguá and Santos considerably.

Despite the exciting possibilities this highway could offer, construction on both the northern and southern routes has been held up by the extensive bureaucracy in the federal and state governments and it is unlikely that the full benefits of this highway will be recognised in the near term.

privately owned and have large amounts of storage, as they are usually accompanied by a processing facility due to the differential export tax. As a result, Argentine farmers do not have to wait in long lines to dump their soyabeans and vessel waiting times are relatively low (approximately 30% of what Brazil experiences).

The majority of export capacity in Argentina is on the Paraná River and the river only has a draft of around 35ft. This means that Panamax vessels can only load approximately 44,000 tonnes of soyabeans in Rosario and then exporters have to top off their vessels in either Bahia Blanca or Rio Grande do Sul, which adds several days to transit times.

During the summer months, especially during drought conditions, the draft of the river can recede due to a lack of rainfall, which leads to vessels either holding less cargo or the potential for the river to be

closed for extended periods.

Due to the continuing recent economic crisis and the fact that dollars on the black market have been trading at two times the official exchange rate, Argentine farmers have been holding their soyabeans on farm and either waiting for better prices or for the exchange rate spread to narrow.

The Argentine government devalued the peso in January 2014 and farmers have been holding onto their soyabeans to use as a unit of savings, preferable to the weak peso. However, the country is expected to export more soya, despite increased w stockpiling of the crop, due to good harvests.

This HighQuest report was prepared for the United States Soyabean Export Council (USSEC) and the Soy Transportation Coalition (STC) in September 2014 and is reprinted with permission

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Argentina in better position In Argentina, HighQuest used Rufino, Santa Fe as the proxy for soyabean shipments from origin to destination. Rufino is located in the major soyabean producing region of Santa Fe province and is located 156 miles (261km) from the major soyabean export port of Rosario. Given Argentine trucking rules (no more than eight hours/day on the road), this means that a truck carrying soyabeans from Rufino to Rosario would have to average approximately 19.6mph to reach Rosario in a day, which is very likely to happen. As a result, interior transportation in Argentina is shorter than in any of the major origins.

Argentina does not have the same problems as Brazil, as the vast majority of soyabean ports are

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Chewing the fat The EU rendering industry shifted significantly in 2014, with a law law change allowing processed animal proteins to be used in fish feed and the Russian embargo on Western food hitting EU exports of pork.

Rose Hales writes

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he rendering industry maintains close ties with the meat production industry and changing fashions and tastes, as well as disease and health scares, drastically affect its available feedstocks and the quantity of final materials produced.

In 2014, beef production (as well as dairy production) declined dramatically in the European Union (EU). Beef in particular is in competition with cheaper pork and poultry, during a difficult and stretched time for many European countries.

Although pork consumption is not expected to increase in the EU, export figures are up, despite the Russian embargo on western food products.

Pork is gaining in popularity in third countries, especially in Southeast Asia where it is supported by a favourable exchange rate; this is driving up export figures and stabilising production. In its Short Term Outlook report, the European Commission projected a 7% increase in pigmeat exports from the EU in 2014, increasing by a further 8% in 2015.

The poultry market is predicted to see a rise in consumption in the EU as well as abroad due to its advantageous position as a meat with a healthy image. The poultry industry also has lower investments and is a more integrated sector as a whole. In addition, it is expected that the import of high quality cuts will rise.

EFPRA in 2014

ON 1 JUNE 2013 THE LAW IN THE EU WAS CHANGED TO ALLOW PROCESSED ANIMAL PROTEINS (PAP) TO BE USED IN FISH FEED. UNSUPRISINGLY, THE AMOUNT OF PAP GOING TO THE AQUACULTURE INDUSTRY INCREASED SIGNIFICANTLY IN 2014

The European Fat Processors and Renderers Association (EFPRA) represents 35 members in 26 European countries, employing 14,000 people.

Between them, the members produced over 17M tonnes of raw material in 2014, a figure that remains stable from 2013. The raw material was processed into 2.7M tonnes of animal fat, an increase of 200,000 tonnes from 2013, and 3.9M tonnes of animal proteins, which decreased by 200,000 tonnes from 2013. Category 3 (Cat 3) materials accounted for 12M tonnes in 2014, an increase of 1M tonnes from 2013. EFPRA represents 93% of Cat 1 production (animal by-products – ABPs – which are considered high-risk including diseased animals with the possibility of contamination); 69% of Cat 2 (ABPs which are considered high-risk, including fallen livestock and manure); and 74% of Cat 3 (meat which is fit for human consumption but is undesirable, also egg shells, hides and skins).

A full explanation of the three categories can be found on the next page.

In the EU there are

four countries that are producing significantly greater quantities of rendered materials. Germany processed the greatest amount of raw materials in 2014 – 3M tonnes were produced, a slight increase from 2.8M tonnes in 2013. This was followed by France at 2.8M tonnes in 2014, then Spain at 2.2M tonnes, and the UK at 1.8M tonnes. In 2013, the UK produced more raw materials then Spain.

There has been a slight increase in some areas of the ABP processing sector, with a decrease in others. In particular, statistics show that there has been an increase in member states with separate Cat 2 processing facilities. Overall, Cat 2 material was processed in 11 of the 26 member states, the same number as in 2013.

BSE risk negligible Ever since the outbreak of bovine spongiform encephalopathy (BSE) in the 1980s, the industry is constantly reviewing the risk status of BSE. According to EFPRA secretary Dirk Dobbelaere, the risk status of BSE in the EU is now classed as negligible.

Due to the BSE risk status being extremely low, the European Commission will be considerably reducing the list of specified risk materials (SRMs) in a number of member states. The list of SRMs will then be limited to the skull, brain and spinal cord of cattle over 12 months old.

According to Dobbelaere, a letter was sent on 9 June from EFPRA to Dr Bernard Van Goethem at the Directorate-General for Health and Consumers (DG SANCO). In it, EFPRA expressed its concern over the effect that the reduction of the SRM list will have, in particular, on Cat 1 processing facilities in the EU. The letter states: “We [EFPRA] estimate that the quantity of raw material currently processed in Cat 1 plants will considerably go down and this will obviously have a severe economic impact on Cat 1 processing plants.” Each country is obligated to maintain an ABP collection and disposal system, which should reflect both the actual amounts of ABP accruing in the state, but also reflect the need v for extended capacity in the event of a crisis.

PHOTO: GEIRSOLEVAAG/DOLLARPHOTOCLUB

32 OFI – SEPTEMBER/OCTOBER 2015 www.oilsandfatsinternational.com

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v

EU animal by-product classification

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he BSE crisis in the 1990s highlighted how animal by-products (ABPs) not intended for human consumption were playing a key role in the spread of certain infectious diseases. It became clear that these products had to be kept out of the food chain.

Regulation No 1774/2002, which sets out measures across the whole ABP processing system from collection, transportation, handling, processing and disposal, was introduced in 2002. In particular, the regulation enforced a high level of health and safety and prohibited intra-species recycling.

The regulation included a detailed classification system for all ABP into three categories: Category 1 material comprises the following animal by-products: t all body parts, including hides and skins, of animals suspected of being infected by a transmissible spongiform encephalopathy (TSE) or in which the presence of a TSE has been confirmed; animals killed in the context of TSE eradication measures; pet animals; zoo animals and circus animals; experimental animals; wild animals suspected of being infected with a communicable disease; t specified risk material as tissues likely to carry an infectious agent; t products derived from animals that have absorbed prohibited substances or substances containing products dangerous for the environment; t all animal material collected when treating waste water from category 1 processing plants and other premises in which specified risk material is removed; t catering waste from means of transport operating internationally; t mixtures of category 1 with category 2 and/or category 3 material.

Category 2 material comprises the following animal by-products: t manure and digestive tract content; t all animal materials other than those belonging to category 1 collected when treating waste water from slaughterhouses; t products of animal origin containing residues of veterinary drugs and contaminants in concentrations exceeding the Community limits;

t products of animal origin, other than category 1 material, that are imported from third countries and fail to comply with the Community veterinary requirements; t animals other than category 1 that have not been slaughtered for human consumption; t mixtures of category 2 and category 3 material.

Category 3 material comprises the following animal by-products: t parts of slaughtered animals which are fit for human consumption but are not intended for human consumption for commercial reasons; t parts of slaughtered animals which are rejected as unfit for human consumption but are not affected by any sign of a communicable disease; t hides and skins, hooves and horns, pig bristles and feathers originating from animals that are slaughtered in a slaughterhouse and were declared fit for human consumption after undergoing an ante mortem inspection; t blood obtained from animals declared fit for human consumption after undergoing an ante mortem inspection, other than ruminants slaughtered in a slaughterhouse; t animal by-products derived from the production of products intended for human consumption, including degreased bones and greaves; t former foodstuffs of animal origin, other than catering waste, which are no longer intended for human consumption for commercial reasons or due to problems of manufacturing or packaging defects; t raw milk originating from animals that do not show any signs of a communicable disease; t fish or other sea animals, except sea mammals, caught in the open sea for the purpose of fishmeal production, and fresh by-products from fish from plants manufacturing fish products for human consumption; t shells of eggs originating from animals that do not show any signs of a communicable disease; t blood, hides and skins, hooves, feathers, wool, horns, hair and fur originating from healthy animals; t catering waste other than category 1.

Comparing the amount of SRM that will be processed under the new legislation with the precautionary extended capacity, EFPRA says Cat 1 plants will be working at an estimated 50% capacity, driving up the cost of collection, processing and disposal. The extra capacities, which serve the public in the case of an emergency, should be paid for by public bodies, EFPRA says in the letter.

This will protect the sustainability and economic viability of the ABP processing industry, where reserve capacities are maintained, but the costs are not shouldered by those providing them.

EFPRA received a reply on 11 August stating that: “My service will contact other Commission Services, including those responsible for State Aid, and carry out an in-depth analysis of the situation for discussion with member states at one of the next PAFF standing committees.” The committees ensure that EU decisions and regulations are both practical and effective.

Biodiesel Biodiesel in the EU is produced primarily from Cat 1 and Cat 3 material, and a small amount of Cat 2. In 2014, biodiesel was produced from 320,000 tonnes of Cat 3 material (up from approximately 265,000 tonnes in 2013), and 400,000 tonnes of Cat 1 and Cat 2 material (an increase from 370,000 tonnes in 2013).

According to Dobbelaere, new EU legislation in the form of the Renewable Energy Directive (RED 2009/28/CE) – which states that waste-based biofuels can be double-counted when calculating the shares of renewable energy in transport – may well change the low input from Cat 2 materials.

THE RUSSIAN EMBARGO HAS CAUSED A HUGE DROP IN RUSSIAN IMPORTS

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However, it is also possible that an increasing amount of Cat 3 material may be used to produce biofuels due mainly to the Russian embargo (see box, right). The embargo has caused a significant quantity of high-quality animal fats to stay in the EU, which are being channelled into biodiesel production to prevent wastage.

PAP (processed animal proteins) Overall in the EU, 2.5M tonnes of PAP is produced.

Although the majority remains multispecies, PAP produced from poultry has increased in the last year. More interesting is how the destination of the PAP has changed over the last year, mainly due to law changes and shifting demand.

Although pet food is by far the largest sector using PAP – in 2014, 1.6M tonnes of PAP was used in pet food – this is in decline. Of this figure, 60% or 950,000 tonnes came from multi-species, significantly less than two years ago when 1.6M tonnes of multi-species fat was used in pet food.

Poultry meal use in pet food increased in 2014 by 180,000 tonnes compared to 2012.

In comparison to figures from 2013, a larger amount of PAP went into fertiliser in 2014 – generally fertiliser is produced using multispecies PAP. A total of 825,000 tonnes of rendered materials was used to make fertiliser in 2014, around 65% was multispecies PAP, and around 20% was meat and bonemeal (MBM).

Unsurprisingly, due to the law change on 1 June 2013 allowing animal proteins to be used in fish feed, this sector has also seen a significant increase.

Indeed, demand for animal proteins from the fish feed industry has nearly quadrupled from 24,800

tonnes in 2012 to 98,600 tonnes in 2014, although the EU is still reluctant to use animal proteins in fish feed.

due in particular to a decrease in mink being bred for fur.

Food and feed grade fats is a completely different story. In the major markets, terrestrial animal feed is holding stable from 2013, with oleochemistry 24% up. The medium-sized markets are showing a similarly positive outlook, with an unsurprising increase in biodiesel (16%) and an increase of 4% in the pet food sector. Finally in the small markets, an increase of 40% was seen in 2014 in the food industry, fish feed also grew 17%, fur feed remained stable with only the milk replacer w market falling 6%.

Conclusions In conclusion, Dobbelaere said that the volume of animal by-products being processed in the EU increased slightly in 2014, by 1%. Overall there was a decrease in the production of Cat 1 and Cat 2 materials, with an increase in the processing of Cat 3 and food quality materials.

It was suggested that the losses in Cat 1 and Cat 2 condemned material is too high and that better valorisation of slaughter by-products is needed.

Dobbelaere proposed that cleaning of intestines could be introduced.

In biodiesel production, the use of Cat 1 materials has now stabilised and an increasing amount of Cat 3 materials are finding their way into biodiesel production – the Russian embargo is affecting the destination of Cat 3 material more than anything else, with a decrease in export demand creating an overabundance of quality material.

Furthermore, only 2% of the animal fat used in the oleochemical industry is from Cat 1 and 2.

In the case of food and feed grade proteins, there has been a decrease of 3% in the market.

The big markets making use of food and feed grade rendered materials are fertiliser – which has grown by 13% – and pet food – which declined by 4%. For the smaller markets, a 21% increase in intake for the fish feed market (due to a change in the law) has possibly triggered a demand elsewhere. Demand in food (blood products and greaves) has fallen 7.5%, and fur feed has also declined dramatically by 30%,

This feature is based on a paper presented at the EFPRA Congress in Krakow on 4-6 June 2015 by Dirk Dobbelaere, Secretary General of EFPRA, ‘Overview on the EU animal by-products processing industry in 2014’

The Russian embargo I

PHOTO: IVAN NAKONECHNYY/DOLLARPHOTOCLUB

IMPORTS

n early 2014, conflict broke out in Ukraine stemming from disagreements between pro-EU and pro-Russian groups. Ukraine’s then president, Viktor Yanukovych, was ousted after signing a treaty with Russia instead of with the EU, and was replaced by an interim government. Russia refused to accept the temporary government and staged an invasion of Crimea, annexing the district on 18 March.

In reaction to Russia’s involvement in the crisis, a group of western countries, including the EU and the USA, introduced a ban on trading. Russia responded by introducing its own embargos on food. In August 2014 the first wave of embargoes were announced which included all meat, followed by a further list in October 2014 – including pork, chicken and beef fats, lard and offal. Russia has not admitted that this is a response to sanctions imposed by other countries, instead citing the desire for self-sufficiency and high quality products. The dairy and meat industries have been hit hard.

Sales of pork meat, in particular, into Russia are decreasing; 2013-2014 saw a huge drop in imports. As a result, European pig producers are suffering (Germany and Poland in particular are taking a hit; before the embargo, 40% of German-produced pork was exported to Russia), alongside producers of dairy (which also fell under the Russian embargo in 2014). It is expected that it will be many years until the EU sees any return to previous export levels to Russia.

Russia’s food embargo was due to expire in August 2015. However, as soon as the USA and EU announced their own extensions in June, Russia announced it would be extending its embargoes for a further six months.

OF PORK MEAT, CREATING AN OVERABUNDANCE OF CATEGORY 3 MATERIAL, WHICH IS BEING USED TO MAKE BIODIESEL

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Plant and technology round-up Oils & Fats International reports on some of the latest projects, plant and technology news and developments around the world

Largest Cargill refinery in North America opens C

IN BRIEF USA: ANDRITZ has received an order from Kore Infrastructure for a paddle dryer for its biosolids recovery plant under construction in Rialto, California.

The plant will utilise biosolids from wastewater facilities in Los Angeles that would have gone to landfill, which will then be converted into biodiesel and biochar.

The separation dryer will reduce the volume of the biosolids by up to 80% and will preserve its energy content for further recovery.

According to ANDRITZ, start-up at the plant is scheduled for the second quarter of 2016.

COLOMBIA: Portuguese engineering company, IncBio, announced in July that it had secured an agreement to design and build a 75,000M tonnes/year biodiesel plant for Biocosta Green Energy in Santa Marta, Colombia.

IncBio specialises in fully automated, industrial, ultrasonic biodiesel plants. The Colombia plant will produce biodiesel from local and sustainably sourced crude palm oil, blended with palm acid oil and palm fatty acid distillate up to a total of 25% FFA. Pre-treatment and acid esterification with IncBio’s solid catalyst technology would be used, as well as transesterification, dry wash using ion-exchange resin and biodiesel distillation, the company says.

IncBio expects that plant will open by May 2016.

USA: Speciality vegetable fat producer, AKK, announced in July the groundbreaking of a new innovation centre in Edison, New Jersey. The centre will house contemporary technology and processing capabilities for its bakery, confectionery and dairy customers.

President of AKK USA Terry Thomas says that because the company offers valueadding vegetable fats without trans fats, it hopes to partner with manufacturers looking for an alternative to partially hydrogenated oils – which the FDA said in June were no longer ‘generally recognised as safe’ and must be removed from all products in the next three years.

argill announced the opening of a new state-of-the-art canola refinery in Clavet, Saskatchewan, Canada in July, which it says completes its Canadian canola industry footprint.

“This new refinery means everything from the canola seeds grown to speciality consumer oils we refine are being produced here in Canada,” Scott Portnoy, corporate vice president and platform leader for Cargill Food Ingredients & Systems says, “further highlighting Cargill’s commitment to Canada’s canola industry.”

According to Cargill, the oil refinery in Clavet is capable of refining 1bn pounds/year of canola oil, making it the largest Cargill refinery in North America. One hundred people were employed during construction and 30 permanent positions will be created to run the facility.

In August, Cargill also announced the completion of a new US$10M, 45,7002 foot seed innovation centre in Ft. Collins, Colorado, USA. The centre will be the home of Cargill’s canola hybrid development and will be where the company selects the next generation of VICTORY seed hybrids, which are crushed and refined to become Clear Valley high oleic canola oils.

CARGILL’S NEW FACILITY IN CLAVET, SASKATCHEWAN, CANADA HAS THE CAPACITY TO REFINE 1BN POUNDS/YEAR OF CANOLA OIL

HyGear offers on-site hydrogen generation

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ndustrial Dutch gas supplier HyGear says its Hy.GEN system allows customers to produce their own hydrogen from natural gas, an alternative to purchasing hydrogen from external sources, saving both money and energy.

Bought hydrogen is mostly supplied compressed by tube trailers, and may be transported over long distances.

As well as being an alternative to purchasing hydrogen, HyGear says its Hy.GEN system is also superior to electrolysis. Electrolysis splits water into hydrogen and oxygen using electricity, but is energy intensive and expensive. The HyGear process uses steam reforming in which natural gas and steam are reformed into hydrogen and an off-gas steam. The system has been optimised so that the process reuses waste gases and waste heat – offgases are an input for the burner, providing heat for the reforming reaction, then any residue heat is used to generate steam. HyGear says the process is very energy efficient and is therefore much more cost effective than electrolysis, with utility expenses and operational costs around 20-25% of the cost of electrolysis.

HyGear says the Hy.GEN is small and containersized and can be installed easily at a customer’s site. The company also has partnerships with gas companies around the world for local back-up and peak demand supply.

Golden Agri Resources building $150M plants

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he world’s second largest plantation company, Golden Agri Resources (GAR), will be investing up to US$150M to build two biodiesel facilities in Indonesia, the Jakarta Post reported in August.

GAR hopes that the facilities will benefit from an anticipated increase in the country’s biodiesel blending mandate from 10 to 15%, the Jakarta Post said.

Richard Fung, head of investor relations, told reporters that the company would like to be directly involved in efforts to boost sustainable energy.

The expansion would be carried out by a subsidiary of GAR. Both biodiesel plants will have a 300,000 tonnes/year capacity and are located in Marunda in North Jakarta and Tarjun in South Kalimantan.

The construction of the first plant is expected to be completed in the first half of 2016 and the second one in the later half of 2016, Fung told the Jakarta Post.

It was also reported that the biofuel produced is expected to be fully absorbed by the Indonesian government’s biodiesel programme, althought GAR will have to go through a tender process with state oil and gas firm Pertamina.

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€20M for French ethanol demo plant Raízen and Iogen’s biofuel plant opens T B he EU-Commission awarded €20M for the financing of a second-generation ethanol demonstration plant in France, Taurus Energy, the yeast provider for the plant, announced in May. The project is being referred to as 2G BIOPIC. As well as Swedish yeast and C5 fermentation technology provider Taurus Energy, the award financing is also shared with French production companies CIMV (group leader) and Rolkem and US enzyme maker Dyadic. The application for assistance in financing the plant was submitted by CIMV in late 2014 to the EU’s Horizon 2020 programme. Taurus Energy says the

project will run for three years and cost an estimated €35M. The demo plant will use a new, patented technology to separate lignin, cellulose and hemicellulose without damaging any of the ingredients. The new method is environmentally clean and will result in a higher yield of ethanol compared to other current methods.

The plant will utilise CIMV’s patented method of separating the lignin and then the enzyme and fermentation steps will convert the hemicellulose and cellulose into ethanol.

CIMV plans to use the lignin to produce various speciality chemicals.

razilian president Dilma Rousseff officially opened sugarcane ethanol producer Raízen’s expanded biofuels plant in São Paulo, Brazil on 22 July, Biofuels Digest reports. The plant is also the first large-scale commercial implementation of Iogen Energy’s cellulosic ethanol technology, which converts biomass into advanced, cellulosic biofuel.

Construction of the US$105M plant was completed on time in December 2014.

Raízen has announced previously that if the Costa Pinto plant in São Paulo is successful, it intends to deploy the Iogen Energy technology in seven more of its sugar cane mills. Raízen’s executive vice president Pedro Mizutani says: “We plan to be producing up to 1bn litres of cellulosic biofuel from bagasse and cane straw by 2024.”

According to Biofuels Digest, President Rouseff says that producing the second generation biofuel will be realising a dream for Brazil, and represents the country’s commitment to ethanol production.

Brian Foody, CEO of Iogen Energy, says, “Large scale commercialisation in Brazil will open the door for global development of our technology.”

BDI commissioned for Argent Energy plant

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PHOTO: ARGENT ENERGY

ustrian-based BDI-BioEnergy International announced on 14 August that it has received its second order from existing British customer Argent Energy to construct and install multifeedstock technology at the energy company’s biodiesel plant in Motherwell, Scotland.

Biodiesel Magazine says that the projected cost to install BDI-BioEnergy’s biodiesel process at the plant is more than US$34M. According to BDI, the technology enables some of the most difficult waste materials to be used to produce biodiesel.

In January BDI received its first commission from Argent Energy, to build an esterification plant that can convert materials with a very high free fatty acid content into ARGENT ENERGY’S MOTHERWELL PLANT biodiesel.

Golden Peanut and Tree Nuts facility expanded

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olden Peanut and Tree Nuts, a subsidiary of Archer Daniels Midland Company, announced on 3 August that it plans to significantly expand the capacity of its peanut oil processing facility in Dawson, Georgia, USA. The company says that consumers are looking for cleaner labels and peanut oil is non-GM, trans fat free and is even allergen-exempt when it is highly refined.

The USA is currently a net importer of peanut oil, Golden Peanut and Tree Nuts says, and as domestic demand increases, Golden Peanut hopes that it can meet customer demand with domestic production.

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New Britain Oils chooses Loadtec hybrid system A

specially designed, hybrid tanker access system designed for New Britain Oils (NBO) in Liverpool, UK has become Loadtec’s best selling tanker access system globally.

Loadtec says it was provided a very clear brief to design a tanker access system that met two important objectives.

Firstly, to ensure absolute safety while working on tanker tops and that the tanker would not need to be moved to locate the loading arm in any one of the six manholes.

Secondly, to safeguard food safety integrity so the tanker bays would be inside a sealed building, and it was imperative that the doors could be closed to assist hygiene.

Loadtec says that as the system was required for a state-of-the-art industryleading refining plant, great care was taken to ensure that any design would be utilised for long-term efficiency and reliability. The

Loadtec solution had to combine that ethos with foolproof safety and assurance that any operator could step into the task and not jeopardise themselves or the integrity of the plant. It had to be designed so that one man could operate all three bays effectively, thus giving a payback.

Loadtec engineers designed a hybrid system that allowed safe access to any tanker without risk of falls from a permanent walkway. In addition, the system featured a very long-range loading arm with fingertip control.

Loadtec says the system has now been operating reliably for four years.

NBO WANTED A COVER TO PREVENT DEBRIS FROM ENTERING THE OPEN MANHOLE

GEA presents new algae separators at Achema

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quipment and process technology provider GEA presented a new generation of algae separators at Achema 2015 in Frankfurt in June.

The new generation includes the algaeprime and algaepro series.

GEA says the prime series, with a capacity of 100-23,000 litres/hour, is ideal for research and development as well as for start-up companies. In particular it offers flexibility, high capacities, easy and simple operation and maximum scale-up safety.

In comparison, the pro series is best for full, industrial-scale algae processing, GEA says. Its capacity range is between 20,000 and 80,000 l/h and it can be completely customised to suit process and demand. GEA says the direct drive feature provides maximum energy efficiency, with profitability and cost management being the clear focus during the pro series’ design.

New versatile Polaron SSHE from Gerstenberg

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erstenberg Services’ has a new Polaron Scraped Surface Heat Exchanger (SSHE), which it says is the most versatile in the industry.

The SSHE uses heat transmission obtained by direct cooling with natural or artificial refrigerants such as CO2 or NH3 to produce quality margarine.

Gerstenberg Services’ say that the natural CO2 refrigerant will set a new standard in terms of production and will help customers to achieve new recipes. Furthermore, the SSHE is described as being particularly energy efficient with an effective cooling system.

All wearing parts are easily accessible as the SSHE is designed to ensure fast and reliable CIP cycles. Wearing parts of the water shaft seals are also easily exchanged, guaranteeing a secure and quick service.

Increase Profits by Converting Your Basic Oleochemicals into High-value Derivatives Take advantage of Buss ChemTech‘s know-how and experience to convert your basic oleochemicals into higher value derivatives such as surfactants, corrosion inhibitors, lubricants and fabric softeners.

Buss ChemTech revolutionized oil & fat hydrogenation technology with the introduction of the Buss Loop® Reactor in the 1950‘s. We have been improving product quality, production efficiencies and the bottom line of our clients ever since.

From engineering and key equipment packages to turnkey plants, Buss ChemTech can provide the scope of supply that fits your needs.

Buss ChemTech AG Hohenrainstrasse 12A 4133 Pratteln 1 Switzerland Tel: +41 61 825 6462 info@buss-ct.com www.buss-ct.com

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SH OW PREVIEW

OFI India 2016 in Hyderabad O

FI India 2016 builds on the OFI events portfolio in one of the world’s fastest growing oils and fats markets. To be held at the Hyderabad International Convention Centre on 13-14 April, the event will feature four events in one: t An international exhibition of suppliers, producers and processors (free to attend) t A business conference: ‘Fostering Market Growth and Facing Challenges in the Oils and Fats Industry’ (free to attend) t A Smart Short Course: ‘Critical Issues in Crushing, Refining, Processing, Product Formulation and Packaging’ t The CSIR-IICT one-day tour (free to attend)

The Indian oils and fats market

THE CHARMINAR IS ONE OF INDIA’S MOST FAMOUS LANDMARKS AND IS A GLOBAL ICON OF HYDERABAD

A brand new OFI event will take place on 13-14 April 2016 in India, the world’s largest edible oil importer. OFI India will attract players across the oils and fats supply chain from India, Asia and globally

India is the world’s largest edible oil importer and the second most populous nation in the world, with over 1.2bn people. It imports some 11M tonnes/ year of edible oil, against domestic production of 7-8M tonnes.

The country consumes around 19M tonnes/year of edible oil and per capita consumption stands at around 14-15kg, compared with a global average of 22.8kg.

India produces around 37M tonnes of oilseeds including soyabeans, rapeseed, mustard seed, peanuts, sunflowerseed, cottonseed and copra. It also produces other oilseeds such as castor, sesame, safflower and niger.

Increases in the population and lifestyle changes are driving the increase in edible oil consumption. A growing health and wellness trend means wealthier consumers are becoming increasingly aware of the quality and health value of the oils and fats they consume.

Palm oil remains the most widely consumed oil in India due to its blending versatility with other oils and competitive price. Palm oil’s food use consumption in India is expected to rise to 9.2M tonnes in 2014/15, against 3.2M tonnes for soyabean oil and 2.6M tonne for rapeseed oil.

With its widespread area and population, regional preferences exist for edible oil within India.

Coconut, peanut and sunflower oils are popular in south India; peanut and cottonseed oil in Gujarat and Maharashtra; rapeseed oil in the northeast and northwest; soyabean oil in central India; and rice bran oil in eastern India.

Vegetable oil imports enter India via eight important ports – Mumbai and Kandla in the western region; Mangalore and Cochin in the southwest; Chennai, Kakinada and Vizag in the southeast; and Calcutta in the eastern region. These ports service a vast hinterland.

Learn from the experts Delegates at the two-day OFI India business conference, which is free to attend, will have the v chance to learn from experts in their field.

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Four modules will cover global and regional issues impacting the oils and fats industry; drivers and challenges in the Indian and South Asian markets; geographical and feedstock issues impacting Indian markets; and applications and opportunities for oils and fats players.

Confirmed speakers include: t James Fry, Chairman, LMC International, UK t Nagaraj Meda, Managing Director, Transgraph Consultancy, India t Nagaraj Meda, Managing Director, Transgraph Consultancy, India t Ali Muhammad Lakdawala, Assistant Manager, Procurement, Foods Division, ITC Limited, India t Fabrice Turon, Head of Oilseeds and Oils Research, Fats & Associés, France t Dr R B N Prasad, Chief Scientist & Head, Centre for Lipid Research, CSIR-Indian Institute of Chemical Technology, Council of Scientific & Industrial Research, India.

Improve plant and product innovation A parallel two-day Smart Short Course offers delegates the chance to meet and learn from international experts in the field to discuss their current problems and enhance their product innovation and plant operations.

Smart Short Courses has held its programmes for marketing, technical and plant personnel at the leading oils and fats events all over the world.

Industry support including tour OFI India 2016 has the the backing of the Federation of Oils, Seeds and Fats Associations Ltd (FOSFA) and the main oils and fats associations in India including the Solvent Extractors’ Association of India (SEA); the Oil Technologists’ Association of India (OTAI); and the CSIR-Indian Institute of Chemical Technology (CSIR-IICT).

As part of its support, the CSIR-IICT will open its doors with a tour of its cutting-edge R&D facilities on Tuesday 12 April, the eve of OFI India. The focus of the CSIR’s Centre for Lipid Research includes oil processing, biolubricants, surfactants, castor oilbased products, speciality oleochemicals, bioactive compounds, nutraceuticals and structured lipids and biodiesel.

Book now!

Sales & sponsorship

Mark Winthrop-Wallace, Sales Manager E-mail: markww@quartzltd.com Tel: +44 (0) 1737 855 114 Anita Revis Sales Consultant E-mail: anitarevis@quartzltd.com Tel: +44 (0) 1737 855 068 Erik Heath Chinese Sales Executive E-mail: erikheath@quartzltd.com Tel: +44 (0) 1737 855 108 Nikunj Vishwakarma India Sales Executive E-mail: nikunj@quartzltd.com Tel: 09167 351 022

The Charminar is not the only mosque worth seeing in the city, immediately southwest of the famous minarets is the Makkah Masjid, which is said to be one of the most beautiful mosques in Hyderabad and is remarkable because of its size and splendour.

Hyderabad also contains popular Buddhist and Hindu temples and statues. An 18-metre high monolithic statue of the Buddha towers over the Hussain Sagar – one of Hyderabad’s many lakes – from its base on the Rock of Gibraltar. Adjacent to the lake are three public parks, Sanjeevaiah Park, Lumbini Park and the NTR Gardens.

Hyderabad’s royal history has produced many remarkable palaces across the city. The most famous are the Falaknuma Palace, the Chowmahalla Palace, the Asman Garh Palace and the Taramati Baradari. Each has strikingly different design and architecture representing different styles and techniques of their times. Finally, the Golconda Fort located 11km from the main cosmos of the city, is one of the most magnificent fortress complexes in India, and one of the strongest.

Business conference

To present a paper, contact: Serena Lim E-mail: serenalim@quartzltd.com To register, go to: www.ofievents.com/india/register

Smart Short Course

To register, contact: Ignace Debruyne, E-mail: info@smartshortcourses.com or Sefa Koseoglu, E-mail: sefa.koseoglu@membraneworld.com

CSIR-IICT Tour

To register, go to: www.ofievents.com/india/register

www.ofievents.com/india In addition to its architecture, the city is famous for its cuisine, which is specific to the region. The famous Hyderabadi biryani is a fragrant rice-based dish usually prepared with goat or chicken, eggs, onions and peanuts. It is traditionally served with gravy and yoghurt chutney.

Reaching the Indian market Attached to the Novotel Hyderabad for complete convenience, the Hyderabad International Convention Centre is India’s first purpose-built and state-of-the-art convention and exhibition facility.

Exhibitors that have already booked or reserved stands include Andreotti Impianti, Beijing Gaochang Machinery, Bühler, Clariant, CM Bernadini, Crown Iron Works, Desmet Ballestra, DNR Process Solutions, Fat & Associés, Felda Johnor Bulkers, GEA Westfalia Separator, Infinity, Lipico Technologies, Manorama Group, Myande Group, Oiltek, Scikoon Industries, Sharplex Filters, w and Vendeep.

Hyderabad – the City of Pearls The bustling city of Hyderabad is the capital of the southern Indian state of Telangana. It is the fourth most populous city in India with a population of 6.8M people and is made up of two parts separated by the Musi River. On the southern side of the river is the ‘old city’ – the historic settlement established

by Muhammad Quli Qutb Shah in 1591, and on the northern banks lies the urbanised ‘new city’. The two parts of Hyderabad are connected by many bridges.

Hyderabad was known historically as a centre for trade in pearls and diamonds and is still known as the City of Pearls today. There are bazaars all around the city, many of which have been open for centuries.

One of the most famous, the Laad Bazaar, lies at the feet of the Charminar – a monument and mosque which is one of India’s most recognised landmarks.

Its name roughly translates to ‘four towers’, after its four iconic minarets, and it is often used to represent the city.

THE HYDERABAD INTERNATIONAL CONVENTION CENTRE IS INDIA’S FIRST PURPOSE-BUILT CONVENTION FACILITY

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42 OFI – SEPTEMBER/OCTOBER 2015 www.oilsandfatsinternational.com

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EEN GR NOT IS UGH O EN

Chuta

The edible Jatropha was established as an affiliation of the oldest agronomic University in Hohenheim. We are a seed developer with outstanding scientific credentials and were amongst the earliest pioneers of Jatropha breeding and research which made us a leader in this field. Our high yielding Jatropha cultivars give preferred feedstock for biodiesel and biokerosene production.

Our product Our newest commercial line is the Chuta. This product is an edible kernel with favourite characteristics. The name Chuta was inspired by the designation from the Totonaca culture in Veracruz, Mexico where this plant is used for human consumption since ancient times.

Chuta has an excellent protein score. The seed kernels contain much over 80% of unsaturated fatty acids and are ideal to be used in snacks and energy bars. The inheritance of the edible feature of the seeds is fully secured. The composition of the oil is almost indistinguishable from other premium oils like olive. Average seed yields of 2.5 tons/ha over a 30-year lifecycle and an oil content > 35% have increased the crop’s value and utility fundamentally and make it a “best bet“ for Ag-Investors. The cultivation of Chuta can be scaled up rapidly so that it will develop into a staple food crop in only a few years. Chuta is an ideal investment for agricultural growers who are already experienced in oilseed production. Existing farm equipment and oilseed processing facilities can be used with no modification.

Our offer ➜ elite seeds from our developed special varieties ➜ partnership in commercializing this new crop ➜ direct entrepreneurial participation

WE PROVIDE MORE THAN PURE EDIBLE OIL. Always the best selected filter for safety, purity and enjoyment.

INDUSTRIAL FILTRATION

Please ask for our current Investor Report with comprehensive information and much more details about the salient features of this promising crop.

www.JatroSolutions.com JatroSolutions GmbH Echterdinger Str. 30 70599 Stuttgart, Germany Tel. +49 711 459 997 60 office@jatrosolutions.com

In the production of edible oils, filtration is a decisive process, which effects the quality and the nature aroma of the finished product. As a market leader, MAHLE provides ecologically and economically convincing solutions that will continue to meet the increasing requirements worldwide. High-quality and versatile filters, such as vertical and horizontal pressure leaf filters, backwash filters, or cartridge and bag filters with FDA-approved filter materials, achieve high performance and an economical service life for all methods of oil production. When safety and purity reach the highest level, then it makes far more than just pure edible oil.

We drive your success. Worldwide.

With performance, precision, and passion. www.mahle.com

43 OFI – SEPTEMBER/OCTOBER 2015

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PHOTO: PALSGAARD A/S

M ARGARIN ES

TRANS FAT ALTERNATIVES PRODUCE A SOFTER PRODUCT AND A SLOWER CRYSTALLISATION SPEED

A trans I fat-free strategy

Crystallisers can be used to fill the production performance gap left by slowly crystallising, trans fatty acid-free margarines.

Anders Molbak Jensen writes n the early 1990s, a landmark Harvard Medical School paper concluded that trans fatty acids present a significant health risk, with higher risks of cardiovascular disease already registered at daily intake levels of just 5-6g.

The impact of the study was powerful and, at least in Europe, instantaneous. Since 2004 in Denmark, for example, oils and fats used in food products have been permitted a maximum of 2% non-animal trans fat content.

The USA, on the other hand, has been somewhat slower to react, although it introduced mandatory labelling for trans fats in 2006. Most recently however, in June 2015, the Food and Drug Administration (FDA) finalised a determination that trans fats are not generally recognised as safe, and set a three-year time limit for their removal from all processed foods.

The effects of trans fatty acid reduction t Higher melting point. t Slow crystallisation of fat types. t Easier to overwork the fat product. t Post crystallisation. t Changed structure over time. t Storage more sensitive to temperature.

Life without trans fats Without trans fats, which is commonly derived from partly hydrogenated fats, it is much more difficult to consistently produce high-quality margarine. In fact, every part of the production process becomes more sensitive to a variety of factors that were comfortably handled by partially hydrogenated oils in the past.

One such factor is the higher melting point of other fat types. For optimum flavour release, it is best to use fats that melt at approximately mouth temperature – around 350C. In the old world, trans

fats fitted the bill perfectly. In the new one, the only economically feasible, readily available fat type is palm oil, fractions of palm oil, or interestified fat types – but all lack comparable functionality.

The melting point of a fat also affects the ability of manufacturers to work with the fat during the production process. In a trans fat-free world, you get a mixture of high melting point fractions and liquid oil, giving a higher melting point and a tendency toward softer products. Perhaps the most important phenomenon, however, is the slower crystallisation speed of trans fat alternatives.

Slower crystallisation, lower capacity Generally, manufacturers simply cannot produce as much margarine from the same production lines as before. Process parameters require adjustment to handle slower crystallisation and, most often, investments in new tube chillers are demanded or, for example, combining two machines where only one was needed before. Whichever route is chosen, final product quality just won’t be the same.

Lower production capacity is one effect of slower crystallisation. Another is that crystallisation continues to develop for longer than the usual 24 or so hours during pre-storage, changing its structure over an extended period of time and resulting in a more brittle product. Storage, therefore, and storage temperature variations, have a much greater effect. In pre-storage, an attempt might be made to reduce brittleness and ensure consistency v

44 OFI – SEPTEMBER/OCTOBER 2015 www.oilsandfatsinternational.com

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210C for v by varying temperatures from, for example, the first five days then reducing to 16 0C thereafter.

For some, new pre-storage facilities that can enable the required temperature control may be required.

FIGURES: PALSGAARD A/S

M ARGARIN ES

FIGURE 1: THE EFFECT OF CRYSTALLISER DOSES ON PRODUCTION CAPACITY

Crystallisers and emulsifiers Manufacturers now need to come up with trans fatfree recipes that give margarine’s batch-by-batch quality the best possible chance of success. Our research and experience indicates that crystallisers can do much to ease the production process. To discover how they can help, we examined how various process parameters affect the speed and nature of crystallisation for puff pastry margarine.

When chilling begins in the margarine production process, the first crystals appear, creating a ‘seat’ for more to build upon, finally arriving at a much firmer mass that must be broken down somewhat, restoring plasticity.

To tackle this problem, Palsgaard used one of its pilot plants to start the seating earlier in the process, allowing more time in the machine to reduce post-crystallisation. A longer time in the equipment, however, means a greater effect from the pin machine and the following tube chillers, resulting in a quite different product.

The company’s trials compared hydrogenated, interesterified fat and unhydrogenated fat in puff pastry margarine. Hydrogenated fat performed best, crystallising quickly. Unhydrogenated fats such as palm oil performed worst as they were far slower to crystallise. In fact, both before and after the pin machine, the latter was hopelessly overworked, and would be impossible to pack or, for that matter, to eat. The interesterified fat medium crystallised well but was too easy to overwork.

FIGURE 2: THE EFFECT OF DIFFERENT PROCESS PARAMETERS ON PUFF PASTRY EXPANSION

The solution of choice A key aim is to determine a crystalliser which has a melting point that makes it easy to use in production. This can be achieved with steric acid, combined with behenic acids.

Tribehenic and monobehenics have the most extreme melting points for crystallisers. Other triglyceride compositions, on the other hand, with behenic acids can produce a lower melting point, making them easier to handle in production.

Any of these acids can easily be purchased, but constructing such triglycerides is no walk in the park. Locating the behenic acids in the right place on the chain requires more than a little expertise.

Using Tribehenate Mp, with its 820C melting point, greatly speeds up crystallisation compared with a reference of 40% palm oil, 40% palm stearin and 20% liquid soya oil without crystalliser.

The Mp crystalliser Palsgaard tested almost matches Tribehenate Mp’s speed, but with a lower melting point of 610C. Both solutions far outstrip the performance of the reference. The tests also revealed that using crystallisers forms more beta prime crystals, which have a better absorbing effect than other crystal types.

Moving on, Palsgaard tested a similar puff pastry margarine recipe as in previous trials, this time adding 1.7g of crystalliser.

The trials showed a surprising result. While 1.7% crystalliser is not a large portion of the recipe, its effect was strong, quickly getting the seating in place upon which to build further crystals.

Next, the effect of crystallisers on production

capacity was examined (see Figure 1, above). Two capacity levels, with and without crystallisers, were tested. The study demonstrated that the more crystallisers were added, the higher the bar pressure could be maintained, allowing maintained or increased capacity. Without adding crystallisers, capacity needs to be reduced, allowing the blend to remain in the tube chillers for longer. So while adding crystallisers will increase recipe costs, there is a worthwhile trade-off in better utilisation of production equipment.

Palsgaard also decided to look more closely at the effect of different crystalliser dosages on production capacity, moving from zero to 0.5%, 1%, 1.5% and 2%. It also simultaneously tested the effect of two different rotation speeds – 400 and 800rpm.

A baking test was then carried out on the final product, experimenting with tube rotation speeds at the same time. The effect on 10 puff pastries of increasing crystalliser dosages from zero to 2%, switching between three different rotation speeds was measured (see Figure 2, above).

Most production machinery has a fixed rotation speed so this is not a parameter many can work with. Yet rotation speed strongly affects expansion results, performing best at around 10-11 times expansion from dough thickness to final baked puff pastry. Introducing crystallisers smooths out

the effects of rotation speeds, enabling a good expansion result not only with different process parameters but also on different machines.

Are crystallisers always necessary?

But are crystallisers the only feasible solution to slower crystallisation and are they always necessary?

It is possible to create recipes that perform just as well as, or at least comparably to the performance of a trans fat-containing formulation. Cake margarines, for example, that use fast-crystallising fat types such as palm oil or coconut oil fat have nothing to be gained by adding crystallisers.

But with cheaper fat types, small amounts of crystallisers can make a significant difference.

Manufacturers will need to take a look at their equipment line-up as well. Up-to-date machinery may not need crystallisers at all. But it is likely that older machinery will not be able to maintain current capacity and product quality on the new, trans fatfree playing field – at least, not without applying crystalliser dosages as high as 2%. However, even after an upgrade to more modern equipment, 0.51% crystalliser content may still add benefits. w Anders Mølbak Jensen is the product and application manager, Lipid & Fine Foods, at Palsgaard A/S

46 OFI – SEPTEMBER/OCTOBER 2015 www.oilsandfatsinternational.com

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STATISTIC S

USED COOKING OIL PRICES (EU€/TONNE)

STATISTICAL NEWS FROM MINTEC Used cooking oil European Union (EU) prices for used cooking oil have risen since the start of the year, driven by an increase in prices for vegetable oils during the first half of 2015.

In the EU, rapeseed is the most common stock for biofuel and prices for rapeseed rose. This was driven

by EU production forecast falling 13% year-on-year to 21.1M tonnes. As a result, ending stocks are expected to fall 57% year-on-year to 940,000 tonnes.

Palm oil Palm oil prices reached a six-year low in August due to high carry-over stocks and record production. Global production in 2015/16 is forecast at 65.2M tonnes, up 6% year-on-year. Consumption is forecast at 63.6M tonnes, also up 6% year-on-year. As a result, ending stocks are expected to increase 3% year-on-year to 9.1M tonnes. Prices fell sharply in July and August due to concerns about the Chinese economy.

PALM OIL PRICES (US$/TONNE)

Palm kernel oil Prices for palm kernel oil have been on a downward trend since the start of the year due to global production forecast for 2015/16 rising by 4% yearon-year to 7.5M tonnes. This is largely due to rising production in Indonesia, the world’s largest producer, up 4% year-on-year at 4M tonnes. China, the world’s second largest importer, is expected to import 650,000 tonnes of palm kernel oil in 2015/16, up 13% year-onyear. However, the decision by China’s central bank to devalue the Yuan in August led to uncertainty about the impact on trade, causing further pricefalls.

PALM KERNEL OIL (US$/TONNE)

PRICES OF SELECTED OILS (US$/TONNE) 2013

2014

May 15

June 15 July 15

Aug 15

Soyabean 1,052 897 777 781 749 738 Crude Palm 854 825 665 672 644 565 Palm Olein 803 762 625 637 607 544 Coconut 948 1,276 1,120 1,117 1,082 1,042 Rapeseed 1,080 906 762 802 788 767 Sunflower 1,108 905 908 915 832 815 Palm Kernel 904 1,120 951 917 875 765 Average price 964 INDEX 228

956 226

830 197

834 198

797 189

748 177

Mintec is the principal independent source of global information for commodities and raw materials. We specialise in helping supply chain professionals minimise risk. We provide services that range from detailed market reporting and consultancy projects to packages of sophisticated tools for analysing and interpreting market information. Mintec supports leading suppliers, processors, retailers, service providers and major end-users across a wide range of industrial and consumer goods sectors with statistical information and expert market analysis.

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

48 OFI – SEPTEMBER/OCTOBER 2015 www.oilsandfatsinternational.com

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