OFI November December 2021 by Quartz Business Media

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OILS & FATS INTERNATIONAL

NOV/DEC 2021 ▪ VOL 37 NO 8

OILSEEDS The cotton challenge

PALM OIL

Digital transformation

Cover Nov.Dec.indd 1

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www.desmetballestra.com

Science behind Technolog y

CONTENTS

OILS & FATS INTERNATIONAL

IN THIS ISSUE – NOV/DEC 2021 Oilseeds

FEATURES

NEWS & EVENTS

Digital transformation

What benefits does a digital supply chain platform offer to the palm oil industry and how can it work?

Testing & Standards

Oils & Fats International reports on testing news and developments globally

The cotton challenge The cotton and cottonseed oil sector is taking steps to tackle the sustainability challenges it faces

Comment

Transport & Shipping

A complex set of rules

The safe transport of oils and fats is governed by regulations and includes the proper cleaning of tanks

Global round-up of news

Photo: Adobe Stock

Palm Oil Certification & Standards

2 News

USA

Room for growth Photo: Adobe Stock

While India has a goal to blend 5% biodiesel in road fuel use by 2030, domestic production remains marginal, with a lack of feedstock supply

Malaysia to lift foreign labour ban at plantations

Biofuel News

Biodiesel

Why we eat (too much)

Shell to build new SAF, renewable diesel facility

Renewable News

Cargill to buy Arkema’s epoxides business

Transport News

Shake-up in oil market The soyabean and edible oil sector in the USA is expected to experience major disruption due to the growth of the country’s renewable diesel market

Kinder Morgan to create storage hub with Neste

Biotech News

Court ratifies Mexico’s GM corn and glyphosate ban

Diary of Events

International events listing

Statistics

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Contents Nov.Dec Version 2.indd 1

World statistical data

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EDITOR'S COMMENT

OILS & FATS INTERNATIONAL

VOL 37 NO 8 NOVEMBER/ DECEMBER 2021

EDITORIAL: Editor: Serena Lim serenalim@quartzltd.com +44 (0)1737 855066 Assistant Editor: Gill Langham gilllangham@quartzltd.com +44 (0)1737 855157

Why we eat (too much) With the growing obesity epidemic around the world, and new studies shifting the burden of blame onto sugar and not fat, a new book takes a fascinating look at the science of weight regulation and the puzzle of obesity. Why We Eat (Too Much) is written by bariatric surgeon Dr Andrew Jenkinson and one of its key messages is that our weight is not determined by simply counting the calories we eat the traditional view of energy in (food) minus energy out (exercise) = energy stored (fat).

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The book explains that our bodies regulate our water content perfectly by using the thirst signal to take water in, and urine to excrete it. In the same way, our body regulates our energy by using appetite to signal us to eat, and our metabolism to use energy up. Jenkinson writes that we all have a weight set point – the level of energy that our brain calculates is necessary for our survival. And our bodies will always try to reach and maintain this weight set point. But while our hydration system is 100% accurate in setting and maintaining the water we need, our energy system is not. Some of us, and those who suffer from obesity, have a weight set point that is too high, due to genetics and environmental signals, Jenkinson says. Repeated dieting tricks our brain into preparing for famine, eating more and regaining lost weight. The weight set point edges upwards with the next diet, signalling possible famine again. This is why obesity sufferers who go on repeated diets say they can lose weight but always regain it because in the struggle of wills, the conscious will invariably lose against the subconscious brain signalling us to eat. Increased stress also influences our weight set point as our body, like that of an injured animal’s, will not want to let go of our energy stores if it feels under threat. The book also looks at how our increased consumption of refined grains (including grain-fed animals), vegetable oils (as opposed to natural saturated fats due to debated research linking high fat diets to heart disease), and processed food (which contain vegetable oils high in omega 6) has led to excessive omega 6 fatty acids in our bodies and a much higher omega 6 to omega 3 ratio compared to pre-industrial times. A high amount of omega 6 in cell membranes is associated with pro-inflammatory effects and modern diseases such as heart disease, metabolic syndrome, diabetes, arthritis and Alzheimer’s, according to Jenkinson. High omega 6 in western foods also mimicks the autumn food that triggers pre-winter weight gain in many animals. So excess omega-6, high insulin levels from eating too much carbohydrates (prompting our bodies to store blood sugar in fat cells and increase our weight set point), and high stress cortisol levels – when combined with low calorie dieting – are ‘famine’ signals which can cause intractable obesity. The book then explains how we can eliminate these ‘famine’ signals and reset our weight at a healthier level. In essence, this means eating and cooking fresh food, not relying on processed foods high in sugar, refined carbohydrates and vegetable oils, and cutting down on stress, which includes sleeping and exercising. It’s all sensible advice, whether you agree with all the science in the book, and something which would make us all healthier and happier. Serena Lim serenalim@quartzltd.com www.ofimagazine.com

25/10/2021 14:55:17

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NEWS IN BRIEF WORLD: US alternative meat start-up Impossible Foods announced on 23 September that it is launching its plant-based pork in Hong Kong, Singapore and the USA. Impossible Pork would be available first in the USA, and then in Hong Kong at more than 100 restaurants followed by a November launch in Singapore. Soya protein and coconut and sunflower oils are among the ingredients of the new plant-based pork. The main ingredient responsible for mimicking the taste and texture of Impossible Foods’ meat substitutes is soya leghaemoglobin, a source of heme, a key protein responsible for meat’s colour and savoury flavour.

Malaysia to lift foreign labour ban at plantations The Malaysian government’s decision to lift the foreign labour ban on oil palm plantations has the potential to ease pressure on the sector, The Edge reported on 6 October. However, there was still some way to go before the industry would see any meaningful impact from the move, according to the report. The city of Putrajaya’s special grant to bring in 32,000 foreign workers for the plantation sector was the only exemption given to any sector with regards to foreign labour, with other industries such as manufacturing having to wait until at least 31 December. While the government’s green light for foreign labour would help to restore productivity and allow for better cost efficiency, plantation companies needed at least one to two months to recruit foreign workers, according to Ivy Ng Lee Fang, head of Malaysia Research and regional head of Agribusiness Research at CGS-CIMB Securities Sdn Bhd.

“Bear in mind that the recruitment process must follow environmental, social and governance criteria, followed by a quarantine period,” Ng told The Edge. Kenanga Research analyst Adrian Kok noted on 20 September that since the implementation of the foreign labour freeze last March, the situation in plantations had deteriorated to a labour shortage of about 75,000 harvesters, from 40,000 previously, and a yield loss of 20%, The Edge reported. “We estimate an additional worker shortage of an average of 2,000 with each passing month. Efforts to recruit locals are ongoing, but the attrition rate is high, with about 60% leaving within a year,” Kok was reported as saying. Sime Darby Plantation told The Edge that its Malaysian operations had seen a decline in fresh fruit bunch (FFB) production in the last two years partly as a result of the labour shortage, falling 3% in full-year 2020 compared with 2019.

Swiss food and drink giant Nestlé is expanding its plantbased portfolio with two new additions – egg and shrimp alternatives, the company announced on 7 October. Launched as Garden Gourmet vEGGie, the plant-based egg product is vegan, contains soya protein and omega-3 fatty acids and can be scrambled, used as an ingredient in pancakes and used in baking in the same way as real eggs, according to the company. The Garden Gourmet vEGGie’s ingredients also include

Photo: Nestlé

Nestlé launching plant-based egg and shrimp

Nestlé's plant-based egg contains soya protein and omega-3 fatty acids

rapeseed oil, natural flavouring and carrot concentrate (car-

rots, sugar, sunflower oil and citrus juice concentrate).

Nestlé’s plant-based seafood Vrimp offering is also vegan and is made from seaweed, peas and konjac root. The two new products would be introduced as a testand-learn range in a limited number of stores in Switzerland and Germany. The Vrimp’s debut follows the launch of Garden Gourmet Vuna, now available in Switzerland, Germany, Italy and the Netherlands. Vuna contains water, pea protein, wheat protein, rapeseed oil, salt and natural flavourings.

Chinese crush plants shut due to energy consumption curbs A number of soyabean crushing plants in China were ordered to shut down due to government curbs on energy consumption to meet stringent emission targets, AgriCensus reported on 23 September. The Chinese provinces of Jiangsu and Tianjin were particularly hit as provincial governments curbed electricity supplies. Beijing introduced the curbs to meet the central government’s energy saving plan – formally called “Dual Control System of Total Energy Consumption and 4 OFI – NOVEMBER/DECEMBER 2021

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Energy Intensity” – to reach President Xi Jinping’s goal of carbon neutrality by 2060, the report said. As part of the plan, each provincial government was required to set an energy intensity target and build lists of high energy consumption and energy-intensive industries. Some provinces had been warned that they were falling behind their targets and were urged to increase efforts to meet their environmental goals this year – leading some to enforce shutdowns at critical

manufacturing sites, AgriCensus wrote. Dozens of factories in industrial centres, such as Jiangsu, Tianjin and Zhejiang, had been ordered to cut or halt their operations, including some major soyabean crushing plants, according to industry sources and local media. Local media reports said crushing plants operated by LDC, Beijing Grain Group and Jiusan had issued urgent notices on 22 September to halt operations due to power rationing, AgriCensus said. www.ofimagazine.com

25/10/2021 14:40:48

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NEWS

Canadian drought to impact canola imports Canada’s smallest canola harvest in 13 years due to severe drought is leading importers to either pay more or look for other suppliers, Reuters reported on 4 October. The lack of Canadian canola is also forcing some importers to turn to alternative vegetable oils, such as palm and soyabean. In the first seven weeks of the new crop year starting 1 August, Canada exported 388,000 tonnes of canola – a 71% drop from the previous year, according to the Canadian Grain Commission. Up to the crop year ending 31 July 2022,

Canadian canola exports are likely to fall 38% to 6.5M tonnes, while crushing volumes are forecast to drop to 7.5M tonnes from last year’s record 10.4M tonnes, according to Agriculture and Agri-Food Canada. Canadian crushing companies, including Bunge and Archer Daniels Midland (ADM), processed 661,968 tonnes of canola in August – the lowest monthly volume in more than two years, the report said. Australia and Ukraine, which had bigger harvests this year, were likely to benefit

from Canada’s small crop, according to Stephen Nicholson, senior analyst of grains and oilseeds for investment bank Rabobank. Typically those countries exported far less than Canada’s volumes, he said. “It’s not like there’s this big reservoir of canola out there looking for a home,” Nicholson was quoted as saying. “The importers are the ones that are going to be left out in the cold.” Canada’s biggest export markets are usually China, Japan, Mexico and the United Arab Emirates, according to Reuters.

Dairy fat can be beneficial to heart health, study says

IN BRIEF CHINA/EUROPE: Speciality oils and fats supplier Bunge Loders Croklaan (BLC) said on 5 September that it had launched a certified organic oleic-palmitic-oleic (OPO) ingredient, for infant milk formula in China and Europe. OPO is a uniquely structured lipid naturally present in breast milk. BLC said demand for organic infant milk formula was growing and its Betapol Organic ingredient mimicked the lipid structure of human breast milk.

Photo: Adobe Stock

A new study claims that dairy fat can be beneficial to heart health, Shape magazine wrote on 6 October. In the study, a research team analysed the blood samples of 4,150 people with a median age of about 60 years in Sweden, a country with high dairy consumption, the report said. This was followed up 17 years later by seeing how many of the participants had experienced heart attacks, strokes, hypertension, and other heart health issues. After adjusting the findings for factors such as age, activity levels and diet, the team found that those who had higher levels of dairy fat in their blood had a lower risk of heart

A new study has found that people with higher levels of dairy fat in their blood had a lower risk of heart disease

disease compared to those who had lower levels of dairy fat, Shape reported. The study was then followed up with 18 similar studies

Big boost in Indian vegetable oil imports

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involving nearly 43,000 people in Denmark, the UK, and the USA, and the results were comparable, Shape said. However, the researchers

were careful not to draw too many conclusions about their results, which were published in PLOS Medicine. “The findings from our study using fatty acid biomarkers suggest that a higher intake of dairy fat was associated with lower cardiovascular disease risk in diverse populations including Sweden… though more trials are needed to understand if and how dairy foods protect cardiovascular health,” the researchers wrote. The American Heart Association currently recommends that people eat two to three servings of fat-free or low-fat dairy products per day, such as fat-free milk, fat-free or low-fat yogurt, and low-fat cheeses.

India’s total vegetable oil imports in September increased by 72% compared to the previous year to a record 1.8M tonnes, including more than 400,000 tonnes of refined palm oil, Reuters reported on 1 October. Palm oil imports also reached a record 1.4M tonnes in September, double the rate compared to September 2020, due to increased sales ahead of key festivals and buyers taking advantage of lower duties effective until 30 September, the report said. The Indian government lowered the import duty for palm oil (CPO) and refined palm oil (RBD) on 30 June in a bid to control record price rises. It also cut the import tax on soyabean and sunflower oils on 20 August by 8.25%. Edible oil consumption in India traditionally rises in the December quarter due to the start of the wedding season along with festivals such as

Dhanteras and Diwali, according to Reuters. Top palm oil producer Indonesia had supplied a large percentage of India’s palm oil imports in September as it was offering refined palm oil at a discount to rival producer Malaysia, a Mumbai-based dealer with a global trading firm was quoted as saying. • On 9 August, the Indian government announced a US$1.48bn National Mission on Edible Oil-Oil Palm to boost domestic production and reduce the country’s dependence on imports, The Times of India wrote. Prime Minister Narendra Modi said the mission would ensure that farmers could get support – from quality seeds to technology – to promote the cultivation of oil palm and oilseeds. India imports about 60% of its annual edible oil demand of about 25M tonnes, the report said. www.ofimagazine.com

25/10/2021 14:40:52

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NEWS WORLD: Global agribusiness giant Louis Dreyfus Company Holdings (LDC) announced on 10 September that it had completed the sale of an indirect 45% equity stake in the company to Abu Dhabi-based holding company ADQ for an undisclosed sum. The deal, announced last November, marks the first time in the private company’s 170 year history that it will operate with ownership outside the family, according to World Grain. LDC is active in over 100 countries and its business covers grains and oilseeds, coffee, cotton, juice, rice, sugar and freight. ADQ’s portfolio covers multiple sectors, including food and agriculture.

Most EU soya from low deforestation risk areas

ARGENTINA: The oilseed crushing rate in Argentina could drop to 56% by the end of the 2021/22 season, one of the lowest rates in a decade and down from 62% in 2020/21, AgriCensus reported on 8 October from a new study by oilseed crushing and exporters chamber Ciara-CEC. The Ciara-CEC report also noted that in the last 10 years, domestic soyabean production fell 9% to 44M tonnes while Brazil's production had risen from 75M tonnes to 144M tonnes, and US soya production had increased by 28M tonnes, from 91M tonnes to 119M tonnes.

More than 80% of soyabeans processed in the EU was sourced from low deforestation risk areas, according to a new report by the EU seed crushers and oil processors’ federation (FEDIOL) published on 6 October. FEDIOL assessed the geographical sourcing of soyabeans among its member companies in 2020. Soya associated with a low risk of deforestation – even if not all supplies had been verified or certified – covered those of Argentine origin outside the Gran Chaco area; Brazilian soyabeans under the Amazon moratorium or under valid sustainability/no deforestation certification; Canada; EU; Ukraine; and the USA. The assessment concluded that 87% of the soyabeans processed in the EU in 2020 was sourced from regions with a low risk of deforesta-

tion, a 20% points’ increase compared to 2016. FEDIOL also assessed the volumes of soyabeans bought and sold as meal or oil in the EU compliant with the soya sourcing guidelines (SSG) set by the EU Feed Manufacturers’ Federation (FEFAC). It found that 43% of the soya processed last year was compliant FEFAC SSGs. This was a 79% increase compared to 2016. The amount of FEFAC SSG compliant soya product that FEDIOL companies were able to sell as verified or certified in 2020 reached 14%, a 3% increase compared to the previous year. However, there was still a 30% points gap between what FEDIOL companies bought and processed and what they sold as verified or certified, due to customers’ limited uptake of soya meeting sustainability criteria, the association said.

High fat diet may increase hair thinning

Photo: Adobe Stock

IN BRIEF

Obesity may lead to depletion of hair follicle stems, a study has shown

A research team at Tokyo Medical and Dental University has discovered a molecular mechanism to explain why obesity can lead to hair loss, Science Daily reported on 21

September. The researchers used mouse model experiments to examine how a high-fat diet (HFD) or genetically-induced obesity could affect hair thinning and loss,

the report said. Published in Nature, the results showed that obesity could lead to depletion of hair follicle stem cells (HFSCs), which blocked hair follicle regeneration and ultimately resulted in hair loss. The team compared the gene expression in HFSCs between HFD-fed mice and standard diet-fed mice and traced the reaction. “High-fat diet (HFD) feeding accelerates hair thinning by depleting HFSCs that replenish mature cells that grow hair, especially in old mice,” said study lead author Hironobu Morinaga. HFD-fed obese mice also showed faster hair loss and smaller hair follicles along with depletion of HFSCs.

African, Asian firms trail in certified palm oil purchases A new report by the World Wide Fund for Nature (WWF) has indicated that African and Asian companies were the least likely to buy sustainable palm oil. The 2021 edition of the WWF’s Palm Oil Buyers Scorecard assessed the progress made on sustainability metrics made by 227 major retailers, manufacturers and hospitality companies in Australia, Singapore, Indonesia, Malaysia, the USA, Canada and Europe. 8 OFI – NOVEMBER/DECEMBER 2021

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“While some companies have made commendable efforts to eliminate deforestation, land conversion and human rights abuse from their palm oil supply chains, palm oil buyers should do much more to deliver impact at scale and at pace,” the report said. Top performers included retailer Coop Switzerland, chocolatier Ferrero, furniture retailer IKEA, British department store John Lewis and confectionery giant Mars. More than a third (85) of the 227 com-

panies WWF approached failed to provide any information on their palm oil usage. The report said half of respondents were still not sourcing 100% Roundtable on Sustainable Palm Oil (RSPO) certified sustainable palm oil (CSPO). African and Asian respondents had the lowest uptake of RSPO-certified palm oil volumes, with only 23% of their reported volumes being certified. This compared to a global RSPO CSPO average uptake of 67%.

www.ofimagazine.com

25/10/2021 14:40:56

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BIOFUEL NEWS UAE: Biofuel producer BioD Technology (BioD) has commissioned a 30,000 tonnes/ year biodiesel refinery in Dubai’s Jebel-Ali Free Zone, Yahoo Finance reported on 7 September. BioD used residues such as used cooking oil, animal tallow, palm oil mill effluent, and acid oils as feedstocks, the report said. The company’s biodiesel capacity was around 60,000 tonnes/year, its website said. SWEDEN: Forestry specialist SCA has partnered with Nordic energy firm St1 to produce and sell liquid biofuels, the companies announced on 20 September. The two firms would be equal shareholders of the joint venture, which would have a 50% share in the St1 Gothenburg biorefinery. SCA would supply tall oil and invest some US$68.65M in the venture. With an expected capacity of 200,000 tonnes, the new refinery was due to become operational in second quarter 2023 and would produce HVO diesel and bio-jet fuel. As well as tall oil, it could also utilise a wide range of other feedstocks, the two firms said. St1 would also become a 50% owner of the SCA Östrand biorefinery, in developmental stage to produce 300,000 tonnes of biofuels based on black liquor (a by-product from kraft pulp production) and solid biomass (such as sawdust or bark).

Shell to build new SAF, renewable diesel facility Royal Dutch Shell (Shell) is set to build a new biofuels facility in Rotterdam, the company announced on 16 September. The 820,000 tonnes/year plant will be built at the Shell Energy and Chemicals Park Rotterdam, in the Netherlands, formerly known as the Pernis refinery. Upon completion, the facility would be among the biggest in Europe to produce sustainable aviation fuel (SAF) and renewable diesel made from waste, the company said. “Today’s announcement is a key part of the transformation of one of our major refineries into an energy and chemicals park,” Shell’s downstream director Huibert Vigeveno said. The Rotterdam biofuels facility was due to become operational in 2024 and would produce low-carbon fuels such as renewable diesel from waste in the form of used cooking oil (UCO),

waste animal fat and other industrial and agricultural residual products, the company said. A range of certified sustainable vegetable oils, such as rapeseed, would supplement the waste feedstocks until even more sustainable advanced feedstocks were widely available, Shell said, adding that the facility would not use virgin palm oil as feedstock. SAF could make up more than half of the 820,000 tonnes/year capacity, with the rest being renewable diesel, with the mix adjusted to meet customer demand. As part of its Powering Progress strategy, Shell said it was transforming its 14 refineries into five energy and chemicals parks and aiming to reduce the production of traditional fuels by 55% by 2030, and provide more low-carbon fuels such as biofuels for road transport and aviation, and hydrogen.

Pyrocell starts pyrolysis oil production Joint venture company Pyrocell has started the production of pyrolysis oil for biofuels at its plant in Sweden, the firm said on 23 September. Founded in 2018, Pyrocell is jointly owned by wood product firm Setra Group and Swedish petroleum company Preem, and produces biooil from a forestry by-product. Pyrocell’s plant (pictured right) at Setra Kastet sawmill in Gävle on Sweden’s Baltic coast converts sawdust, a by-product from Setra’s industrial process, into non-fossil pyrolysis oil. The pyrolysis oil is then further processed to make renewable diesel and petrol at Preem’s refinery in Lysekil. The plant would produce around 25,000 tonnes/year of non-fossil pyrolysis oil, the company said. Pyrolysis is a process which involves the rapid heating of a substance to a high temperature to vaporise the solid material and condense it

Photo: Setra Group

IN BRIEF

into a liquid. This process turns forestry waste products, such as branches, roots and sawdust, into oil, which can then be refined into renewable petrol and diesel.

Argentina to appeal US ruling on biodiesel import duties The Argentine government has said it will appeal against the US Court of International Trade’s upholding of duties on its biodiesel exports to the country, Reuters reported on 22 September. Argentina’s move follows the US court’s decision on 21 September to reject a motion for judgment from the Argentine government and LDC Argentina, who were challenging steep US levies imposed since 10 OFI – NOVEMBER/DECEMBER 2021

Biofuel news Nov.Dec.indd 2

early 2018 which effectively shut off Argentine access to the US market, Reuters wrote. “The Argentine government will work jointly with the private sector of our country to reverse this decision,” the foreign ministry said in a statement, adding that it had a 60-day window to appeal the ruling. The duty rates on Argentine biodiesel imports followed an investigation that found US biodiesel producers were being

harmed by unfair trade practices, said a 21 September Biodiesel magazine report. In May 2020, the US Department of Commerce decided that there were no “changed circumstances” in Argentina’s subsidies to its biodiesel producers that would warrant changes in US duty rates. The USA was a key market for Argentine exports of biodiesel before the duties were sharply raised, according to Reuters. www.ofimagazine.com

25/10/2021 08:46:51

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RENEWABLE NEWS

Cargill to buy Arkema’s epoxides business Global agribusiness giant Cargill announced on 27 September that it had agreed to buy Arkema’s epoxides business, which includes an epoxidised vegetable oils facility in Blooming Prairie, Minnesota, USA. The acquisition would allow Cargill to meet the growing demand for bio-based solutions for plastics, automotive and other industries, the company said. “Industrial customers are increasingly searching for solutions made without petrochemicals, especially in consumer applications where potential concerns around

Global agribusiness giant ADM has partnered with South Korean chemical firm LG Chem to explore lactic acid production in the USA, World Grain reported on 15 September. The companies signed a memorandum of understanding (MoU) to launch a joint venture early next year that would build, own and operate a US-based facility to produce high-purity corn-based lactic acid on a commercial scale. The venture would allow LG Chem to enter the bioplastics market by delivering a stable supply of raw materials, LG Chem vice chairman and CEO Hak Cheol Shin said. The lactic acid from the joint venture would be used to produce polylactic acid (PLA), a biodegradable plastic that could be used in a range of

Photo: Adobe Stock

USA: Leading renewable diesel producer Neste said on 7 September that it will buy US independent renewable waste and residue fat and oil trader Agri Trading, subject to regulatory approval. Neste refines waste, residues and raw materials, including waste oils and fats, into renewable fuels and feedstock for plastics and other materials. Minnesota-based Agri Trading handles and trades animal fat waste, used cooking oil, technical corn oil and other vegetable oils throughout the lower 48 US states, Canada, Mexico and Europe.

ADM and LG Chem plan to build a US plant to produce corn-based lactic acid, which can be used to make polylactic acid (PLA), a biodegradable plastic

products – from food packaging to clothing to upholstery – and sold for use in a range of food and pharmaceutical applications, according to the World Grain report. LG Chem and ADM had

worked together previously, signing an agreement in 2019 to make bio-based acrylic acid for use in the manufacture of superabsorbent polymers used in nappies and other hygiene products, World Grain wrote.

Biodegradable plastics deal to make PBAT South Korean chemical company LG Chem announced on 12 September that it is partnering with petrochemical firm TK Chemical to produce biodegradable plastics. The two companies signed a memorandum of understanding on 10 September to produce poly butylene adipate-co-terephthalate (PBAT) by constructing a PBAT production line, due to become operational by the second half of next year. The partners said they would also pursue a number of plans including the production of agricultural vinyl and disposable envelope materials and the construction of a marine biodegradable mass production system. The agreement followed an earlier announce-

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Renewable news Nov.Dec.indd 2

oils. The specialty oils, or epoxides, are key components for Cargill’s existing portfolio of bio-based plasticisers and polyols. “With this acquisition, Cargill will gain full control of its production process, transforming its commodity soyabean oil into epoxides, and ultimately, creating the bio-based plasticisers and polyols used to make a range of everyday products, such as shower curtain liners, tiles, carpets and furniture,” the company said. Arkema is a speciality chemicals and advanced materials firm based in France.

ADM and LG Chem in lactic acid project

IN BRIEF

THAILAND: Biopolymer producer Braskem announced on 9 September that it is partnering with petrochemical company SCG Chemicals on an ethylene study for bio-based polyethylene (PE) in Thailand. The study would consider a joint investment in a new bioethanol dehydration plant in Thailand to produce bioethylene and biopolyethylene. If approved, the plant would be located in Map Ta Phut, Rayong, and would combine Braskem’s technology and knowledge of biopolymers with SCG Chemicals’ experience of the Asian market and expertise in PE production, according to the company.

toxicity and sustainability continue to grow,” said Kurtis Miller, managing director of Cargill’s bio-industrial business. “Adding this capability will allow us to innovate across the polyol value chain, transforming our vegetable oil into highly functional compounds that bring benefits like flexibility, durability and heat stability to a wide range of industrial products.” The Blooming Prairie plant’s epoxide manufacturing process combines soyabean and other vegetable oils with hydrogen peroxide, resulting in the oxidation of the

ment by LG Chem in August that it would start construction of a 50,000 tonnes/year PBAT plant within the year and begin full-scale mass production from 2024. Seoul-based LG Chem is active in the petrochemicals, advanced materials and life sciences sectors and also has a subsidiary specialising in batteries, according to its website. A subsidiary of the Samla Midas (SM) Group, TK Chemical is a Korean company specialising in chemical fibres and manufactures polyester (PET), PET-Chip and spandex. Since 2019, TK Chemical has also operated a circulating system that collects and recycles plastic (PET) bottles. www.ofimagazine.com

25/10/2021 08:49:26

TRANSPORT NEWS THE NETHERLANDS: Leading marine service supplier Maersk Supply Service and Dutch non-profit engineering environmental organisation The Ocean Cleanup have announced positive results from a joint hydrotreated vegetable oil (HVO) trial. The trial involved blending biofuel into the marine gas oil on the Maersk Tender, the statement said. For the trial, the partners purchased 90M tonnes of HVO biofuel, with a mixing rate of 15% HVO and 85% low sulphur marine gas oil (MGO), Maersk Supply Service said. The HVO was able to cover two separate sixweek trips, according to the statement, and saved 38.95M tonnes of CO₂. “For now, it is very much a test, as biofuel is still an expensive alternative to standard marine gas oil. Still, it has given us valuable insight into how this can reduce our emissions further,” Maersk Supply Service managing director for Canada Chris Tibbo said. The results from the trial could pave the way for similar upgrades to be carried out on more Maersk Supply Service’s T-Class vessels. Maersk Supply Service, part of the Danish shipping company Maersk, has set a target to reduce the carbon intensity of its fleet by 50% by 2030 and to be carbon neutral by 2050.

Kinder Morgan to create storage hub with Neste Leading renewable diesel producer Neste announced on 13 September that it would create a US domestic raw material storage and logistics hub with North America energy infrastructure company Kinder Morgan. The companies would create the hub to support increased production of renewable diesel, sustainable aviation fuel (SAF) and renewable feedstock for polymers and chemicals. Upon completion, Kinder Morgan’s Harvey facility in Louisiana would become the primary hub where Neste would store a range of raw materials including the used cooking oil (UCO) it collected from more than 40,000 restaurants across the USA, Neste said. The Finnish firm refines waste, residues and raw materials into renewable fuels and sustain-

able feedstock for plastics and other materials. In the project’s initial stages, Kinder Morgan would modify existing tanks and piping for the segregated storage of a range of raw material across 30 tanks, Neste said. The project – expected to become operational in first quarter 2023 with the possibility of expansion – would also include a new boiler for heating tanks and railcars and infrastructure improvements for rail, truck and marine movements. Kinder Morgan owns an interest in, or operates, around 133,000km of pipelines which transport natural gas, refined petroleum products, crude oil, condensate, CO2 and other products. Its 144 terminals store and handle various commodities including gasoline, diesel fuel, chemicals, ethanol, metals and petroleum coke.

Canadian Pacific Railway acquires KCS Canadian Pacific Railway (CP) has agreed to acquire Kansas City Southern (KCS) for US$31bn after lengthy negotiations between three of North America’s largest rail companies, World Grain reported on 15 September. The merger would create the first US-Mexico-Canada rail network, the report said. Following the transaction, the combined rail company would expand to 32,186km and would lead to improved efficiency and supply chain integration for grain companies and others, according to a World Grain report on 25 March. To progress with its deal with CP, KCS first had to terminate its proposed merger

Photo: Adobe Stock

IN BRIEF

Canadian Pacific’s merger with Kansas City Southern will create the first US-Mexico-Canada rail network

with Canadian National (CN), which would have significant financial implications, World Grain wrote. KCS would have to pay CN$1.4bn (US$1.1bn), which

included a termination fee of US$700M and a US$700M refund of the fee CN had paid for KCS to terminate its deal in May with CP, according to the report.

Higher dry bulk freight rates due to Chinese port congestion Port congestion in China and higher fuel costs have led to an increase in freight rates for dry bulk commodities, AgriCensus reported on 22 September. Congestion at Chinese ports remained a key factor affecting global freight markets with large port stocks creating bottlenecks and vessel queues. In addition, the after-effects of Typhoon Chanthu that hit the Chinese coast on 13 September were 14 OFI – NOVEMBER/DECEMBER 2021

Transport news Nov.Dec with ad.indd 2

still affecting logistics at local ports with congestion across all four vessel sectors – Capesize, Panamax, Supramax and Handymax, the report said. Recent outbreaks of COVID-19, with increased quarantine measures, had also caused further delays. Meanwhile, freight costs had been affected by rising fuel prices, according to AgriCensus. Cargoes crossing the Atlantic from the Americas to Europe rose on 22

September compared to the previous week with Panamax routes from Brazil and the US Gulf to the Netherlands assessed at US$22.37/tonne and US$32.10/tonne respectively, AgriCensus said. In the Black Sea region, Panamax freight rates for cargoes heading to China increased to US$65.18/tonne while vessels crossing the Mediterranean to North Africa came in at $35.00/tonne. www.ofimagazine.com

25/10/2021 14:44:11

TRANSPORT NEWS

Qube Holdings to buy Newcastle terminal Australian logistics and infrastructure company Qube Holdings has agreed to acquire Newcastle Agri Terminal (NAT) from existing shareholders CBH, Viterra Australia, Riverina and CTC Terminals. The agreement, which was due to be finalised on 30 September, would involve Qube paying A$90M (US$65.4M) for NAT, Qube said on 8 September. “The acquisition of NAT will further strengthen Qube Agri export bulk service, offering growers and traders the ability to

now ship from Newcastle,” Qube Holdings managing director Paul Digney said. Qube offers port, bulk, logistics and property services. It said the NAT grain export facility, based in Newcastle, New South Wales (NSW), featured some 60,000 tonnes of silo storage, rail receival infrastructure, road discharge facilities and capacity to load up to 2,000 tonnes/hour. The NAT terminal was positioned to capture export grain from the large north-

ern NSW region, one of the most productive grain producing regions in the world, Qube said. According to its website, NAT offers grain storage and export solutions for grains, oilseeds and legumes through the Port of Newcastle. Services offered by the terminal include loading bulk export shipments, packing grain into containers, delivering grain to domestic customers, handling imported grain, and fumigation and blending of grain.

Argentina forms new agency to dredge Paraná river The Argentine government has formed a new agency to manage dredging operations on the Paraná River, World Grain quoted from a Reuters report on 26 August. “The strengthening of policies on the management of inland waterways is a priority objective of the national executive,” the government said in a decree. However, farmers and the private sector were sceptical about the decree due to fears that government intervention would make shipping grain less efficient and more

costly, according to the report, “This decree looks like the government does not only want to set up conditions for the tender and the dredging tariff,” Gustavo Idigoras, head of the CIARA-CEC export companies’ chamber, told Reuters. “It looks like an excess of bureaucracy that might mean additional costs for export operations on the river.” Under the current system, cargo ships paid tolls directly to the private dredging company in charge of keeping the river

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open, the report said. The Paraná River, which carries about 80% of Argentina’s grain exports, has recently seen its water level drop significantly due to one of the worst droughts in decades. The river’s water levels in Argentina and Brazil had reached their lowest point in many years, holding back grain exports, Reuters wrote. Argentina was the world’s top exporter of soyabean meal and the third largest exporter of corn, according to the report.

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25/10/2021 14:44:11

BIOTECH NEWS USA: Leading US seed company Beck’s Hybrids has purchased Bayer’s soyabean seed production and processing plant in Beaman, Iowa, which could process and treat 1M units/year of soyabeans, World Grain reported on 24 August. Beck’s is the third largest corn and soyabean seed brand in the USA, according to the report. USA: US food technology firm Benson Hill announced on 17 September that it was acquiring a soyabean crushing facility in Seymour, Indiana, to further strengthen its position in the supply of proprietary, non-genetically modified (GM) identity preserved and sustainable soya protein and oil ingredients for the human food and animal feed markets. “This targeted investment can ultimately provide the production capacity to deliver on our integrated business model for commercialisation and scaling of our … soyabean products, including Ultra-High Protein (UHP) soyabean ingredients.” Benson Hill’s CropOS platform combines data science and machine learning with biology and genetics to accelerate breeding, according to the company website. The acquisition, subject to customary closing conditions, was expected to close by the end of September.

Court ratifies Mexico's GM corn and glyphosate ban The Supreme Court of Mexico has unanimously denied four appeals against the ban on genetically modified (GM) corn and the herbicide glyphosate, according to local press reports. Challenges presented by seed manufacturers including Bayer-Monsanto, Syngenta, PHI and Dow were all rejected by the court, AgriCensus wrote on 15 October. The four companies had called for a suspension of a precautionary measure that prevented the use of GM corn in the country and had mounted numerous legal challenges over several years appealing the decision. A presidential decree, which was published in the Official Gazette of the Federation on 31 December 2020, had banned the use of

glyphosate, along with imports of GM corn, from January 2024, AgriCensus wrote. Abel Rodriguez Montejo, an analyst with local consultancy firm Grupo Consultor de Mercados Agricolas (GCMA), told AgriCensus that the ban would have a negative impact on farmers’ profitability as glyphosate helped them to reduce costs. “Once this product is banned, farmers will have less profitability and corn production could be negatively impacted as glyphosate does not have a substitute product,” he said, adding that the GMO ban would be difficult to manage. Mexico is largely self-sufficient in white corn but depends on imports of mostly GM yellow corn from the USA for livestock feed, according to AgriCensus.

African Union developing GM guidelines The African Union (AU) is developing guidelines for genetically modified (GM) crops to encourage increased adoption in the region, Bio Market Insights reported on 7 September. Currently, only seven countries in Africa – Eswatini, Ethiopia, Kenya, Malawi, Nigeria, South Africa and Sudan – have approved the commercial production of GM crops, according to the report. While many opposed the development of novel crop strains, the push for a shift in perception was gaining momentum, boosted by the recent success of projects in places such as Nigeria. In the AU’s draft report on

Photo: Adobe Stock

IN BRIEF

The African Union hopes to encourage increased GM crop production

GM crop sumption” GMquality products. Calyxt sayscommercialisation, seedless hemp offered improved yieldsofand Peace Mutuwa from the group’s agriculture and rural development unit said new regulations would be used to protect consumers and countries from “unwitting con-

It was hoped that under the new guidelines, seed regulations could be homogenised to help countries achieve food security and improve crop yields, Bio Market Insights wrote.

Corteva to take longer to penetrate Brazil's GM soya market US crop protection and seed producer Corteva expects to take up to three times longer to break into Brazil’s genetically modified (GM) soya seed market than it did in the USA, Reuters reported the company as saying on 8 October. In a statement on 24 August, Corteva announced the launch of its GM Conkesta E3 soyabean in Brazil. Corteva’s rival – German chemical firm Bayer – has had a virtual monopoly in the country, with a vast network of sales staff and longstanding relationships with farm16 OFI – NOVEMBER/DECEMBER 2021

Biotech news Nov.Dec.indd 2

ers, seed developers and manufacturers in Brazil, according to the report. Corteva, meanwhile, was just establishing its presence in the country. Brazil’s adoption of GMO crops helped it become the world's biggest seller of soyabeans used for livestock feed but weeds and pests had become resistant to the chemicals those crops could withstand, Reuters wrote. For this reason, Bayer and Corteva were both seeking to convert Brazilian growers to their next-generation GM seed varieties that could tolerate newer

herbicides, Reuters wrote. “The adoption of the Enlist system in Brazil will take a little longer than in the United States,” Corteva said in an e-mailed statement to Reuters, due to limited seed quantity in Brazil. The company captured 35% of the US soya-planted area within three years of launching Enlist, Reuters said. However, in Brazil, Corteva estimated it would take five to 10 years to reach that level. Corteva is also launching a more expensive soybean seed in Brazil called Conkesta. www.ofimagazine.com

25/10/2021 08:57:52

DIARY OF EVENTS 8-10 November 2021

24-28 January 2022

13-15 June 2022

AOCS Australasian Section Meeting Newcastle, Australia www.aocs.org/attend-meetings/ industry-events

Fuels of the Future 2022 (Online) www.fuels-of-the-future.com/en

2022 International Fuel Ethanol (FEW) Workshop & Expo Minneapolis, USA www.fuelethanolworkshop.com/ema/ DisplayPage.aspx?pageId=Home

9-10 November 2021 5th International Symposium ‘Dietary Fat and Health’ Frankfurt, Germany https://veranstaltungen.gdch.de/tms/ frontend/index.cfm?l=9072 9-11 November 2021 Argus Biofuels Europe and Asia Markets – Virtual Conference (Online) https://www.argusmedia.com/en/ conferences-events-listing/biofuels-live 11 November 2021 The China International Oils and Oilseeds Conference (CIOC) Guangzhou Shangri-La Hotel, China http://www.dce.com.cn/CIOC/ 16-18 November 2021 25th Advanced Oil Processing Short Course (Online) www.smartshortcourses.com/ oilprocess25/index.html 16-18 November 2021 RT2021 (Online) https://rspo.org/news-and-events/ announcements/save-the-date-forrt2021

4-5 February 2022 2022 Canadian Lipids and Proteins Conference (Online) www.aocs.org/attend-meetings/ canadian-lipids-and-proteins-conference 15-16 March 2022 13th Biofuels International Conference & Expo Brussels, Belgium https://biofuels-news.com/conference/ biofuels/biofuels_index_2022.php 22-25 March 2022 Australian Industrial Hemp Conference Tasmania, Australia https:// australianindustrialhempconference.com 27-28 April 2022 10th European Algae Industry Summit Reykjavik Iceland www.wplgroup.com/aci/event/europeanalgae-industry-summit/ 1-4 May 2022 AOCS Annual Meeting & Expo Atlanta, Georgia, USA https://annualmeeting.aocs.org 10-12 May 2022

20-23 June 2022 20th International Sunflower Conference Novi Sad, Serbia www.isasunflower.org/news-events/ news/article/20th-internationalsunflower-conference-novi-sad-serbia1%EF%BB%BF 23 August-3 September 2022 World Congress on Oleo Science (Online) https://jocs.jp/en/conference-meeting 12-16 September 2022 oils+fats Munich 2022 Messe Munich, Germany www.oils-and-fats.com/index.html 20-21 September 2022 Palmex Malaysia 2022 Kuala Lumpur, Malaysia http://asiapalmoil.com 23-28 October 2022 North American Renderers Association Annual Convention Ritz Carlton Laguna Niguel Dana Point California, USA https://nara.org/about-us/events

Asia Grains&Oils in Qazaqstan Nur-Sultan, Kazakhstan www.apk-inform.com/en/news/1522549

FENAGRA 2022 – Brazilian Rendering Congress Campinas, São Paulo Brazil www.fenagra.com.br

Palmex Indonesia 2022 Medan, Indonesia http://palmoilexpo.com

1-2 December 2021

18-19 May 2022

24-27 September 2023

Oleofuels 2022 Marseille France www.wplgroup.com/aci/event/oleofuels

16 International Rapeseed Congress Sydney, Australia www.irc2023sydney.com

1-4 June 2022

North American Renderers Association Annual Convention Ritz Carlton, Naples Florida, USA https://nara.org/about-us/events

17-18 November 2021

World Bio Market Meetup (Online) https://biomarketinsights.com/world-biomarket-meetup-december-1st-2nd-2021 1-2 December 2021 Virtual Indonesian Palm Oil Conference 2021 (IPOC) 2021 (Online) https://gapki.id/news/19870/virtual-ipoc2021-indonesian-palm-oil-conference-12-december-2021 17-20 January 2022 National Biodiesel Conference & Expo Las Vegas, USA www.biodieselconference.org www.ofimagazine.com

Diary Nov.indd 1

EFPRA Congress 2022 Algarve, Portugal https://efpra2020algarve.com/frequentlyasked-questions/

25-27 October 2022

24-27 October 2023

For a full events list, visit: www.ofimagazine.com Information subject to change OFI – NOVEMBER/DECEMBER 2021

25/10/2021 08:59:43

PALM OIL CERTIFICATION & STANDARDS

A palm oil digital supply chain would allow transactions to be captured digitally and stored on a private blockchain consortium owned by stakeholders (Source: DIBIZ)

Digital transformation The palm oil industry faces compliance, financial and reputational risks if it does not engage in sustainable palm oil production and trading, according to Unnikrishnan Unnithan, CEO of the DIBIZ digital platform. “Demand for sustainable palm oil is expanding and this has become a massive challenge in the industry as plantations do not generally have a digital workﬂow to track their fresh fruit bunches (FFB),” Unnithan told the virtual Palm Oil Outlook (POC) conference earlier this year. Malaysia and Indonesia account for over 80% of world’s palm oil supply. According to Unnithan, 18.9M ha of land was planted to oil palm in 2017, producing 75M tonnes of palm oil and

Figure 1: Global CSPO production and planted area 18 OFI – NOVEMBER/DECEMBER 2021

DIBIZ.indd 2

Source: DIBIZ, Virtual POC, March 2021

With demand for sustainable palm oil growing as a result of government, NGO and consumer pressure, what benefits does a digital supply chain platform offer and how can it work? Unnikrishnan Unnithan

7.7M tonnes of palm kernel oil (PKO). In 2019, the area planted under the Roundtable on Sustainable Palm Oil (RSPO), Indonesian Sustainable Palm Oil (ISPO) and Malaysian Sustainable Palm Oil (MSPO) schemes was 14.9M ha. In that year, 14.8M tonnes of RSPOcertified palm oil and 3.37M tonnes of RSPO-certified PKO was produced (see also Figure 1, below). “Producing and trading sustainable palm oil is no more an option. It is mandatory for businesses to survive in 2021 and beyond,” Unnithan said. This was due to increasing regulatory, NGO and consumer pressure. The EU’s Farm to Fork strategy would also add more pressure on Malaysian and Indonesian producers to adopt sustainability. Meanwhile, many large multinational corporations were demanding sustainable certified products.

Bringing in smallholders

Unnithan said any sustainability initiative would not be meaningful without bringing in the more than 3M small-scale oil palm farmers who were limited by funds and inadequate information and knowledge about growing and selling palm oil. “Some 40% of the world’s palm oil is produced by smallholders cut off from the sustainable supply chain.” u Unnithan said current challenges in www.ofimagazine.com

25/10/2021 09:02:43

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PALM OIL CERTIFICATION & STANDARDS

Source: DIBIZ, Virtual POC, March 2021

Figure 3: Scope for digital supply chain from oil palm harvester to plantation office

Figure 4: Scope for digital supply chain from plantation office to oil mill/trader

Source: DIBIZ, Virtual POC, March 2021

Figure 2: Current manual paperwork process from harvesting to oil mill/trader

u Unnithan said the current manual process of tracing product involved tedious bookkeeping and too much paperwork to conform to regulations (see Figure 2, left). However, with a digital platform such as DIBIZ, the trade documentation of each and every stakeholder could be captured and required delivery slips autogenerated. This entire ecosystem would be connected by a blockchain network with immutable records, building trust and transparency. With DIBIZ, smallholders could download a free mobile app available in Basa Malaysia, Bahasa Indonesia, Tamil, Mandarin Chinese or English. They could choose which certification system to sign up to (RSPO, MSPO or ISPO), with daily prices displayed, cutting out the middle men who could exploit them. Farmers could keep up-to-date records, access daily prices and new farming and agricultural practices could be disseminated to them. And through digital wallets and tokens, farmers could be rewarded for every sustainable step they took, giving them access to low-cost funds for supplies such as fertiliser and seeds. “For the first time, the cost barrier that existed in bringing smallholders on board can now be incentivised because it actually means more money in the pocket of the smallholder.” There were also benefits for oil mills, downstream companies such as refiners and oleochemical/biofuel operators, distributors/retailers and logistics companies as the app gave them much better inventory management, collaboration with partners with an inbuilt and secure messaging system, efficient and low cost supply chain management across geographies, and the ability to make sustainability claims with solid data. “The app can get exact coordinates of every single supplier in the palm oil supply chain, helping companies find out if they can easily conform to NDPE (no deforestation, no peat and no exploitation) policies. You can see end-to-end real time traceability. And it provides the opportunity for open trading of all certified sustainable palm oil (CSPO). DIBIZ is not the only palm oil app available to operators in the sector. However, Unnithan believes a digital transformation of the palm oil supply chain is a must to survive, bringing benefits to all stakeholders in the supply chain. ● Unnikrishnan Unnithan is the co-founder and CEO of the DIBIZ digital platform. This article is based on a presentation he made at the Virtual POC conference on 23-24 March 2021

implementing extended supply chain monitoring included: • The high cost of developing and maintaining siloed systems. • The high cost of human capital to monitor compliance and manage supply chain partners. • Lack of collaboration between 20 OFI – NOVEMBER/DECEMBER 2021

DIBIZ.indd 3

producers, trading partners and smallholders due to lack of digital platforms/tools • Difficulty in exchanging data due to different ERP and accounting systems • Concerns about security, data privacy • Lack of trust in exchanging trade information

www.ofimagazine.com

25/10/2021 09:02:53

TESTING & STANDARDS

Global round-up of news Oils & Fats International reports on instrumentation news and developments

App to safeguard against red palm oil dye in Ghana

IN BRIEF CHINA: A simple lab technique called headspace gas chromatography-ion mobility spectrometry (HS-GC-IMS) can help detect adulteration of sesame oil, Securing Industry reported on 18 October. The method was able to distinguish between genuine samples of sesame oils bought from food vendors in Wuhan, and counterfeits created by mixing sesame oil essence with other lower cost oils. The researchers from China found that the main volatile compounds of counterfeit sesame oils were pyrazines and identified a series of compounds that could be used as markers for adulterated sesame oils.

A Ghanaian association has launched an app to safeguard against a potentially carcinogenic red palm oil dye, Modern Ghana reported on 22 July. Although banned as a food pigment by the International Agency for Research on Cancer due to its carcinogenicity, the red

palm oil dye Sudan IV is used in Ghana, according to the report. The Artisanal Palm Oil Millers and Outgrowers Association of Ghana developed the app to enable customers to order palm oil and have it delivered directly to their homes, association president Paul Amaning said. A QR code would also verify the palm oil’s source and prevent consumption of any oil containing Sudan IV. Derived from the fruit of the African oil palm tree, red palm oil (pictured) has a red/ orangey colour and is used extensively for cooking in Africa due to its distinctive taste and colour, according to Eat Well Abi. It is still mostly produced at artisanal levels, with the palm fruits being steamed to release the oil, then pressed to extract it. The resulting red palm oil is not bleached or refined, according to the website.

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25/10/2021 10:37 25/10/2021 14:57:14

BIODIESEL

Room for growth While India has a goal to blend 5% biodiesel in road fuel use by 2030, domestic production remains marginal, with a lack of feedstock supply hampering market development Ankit Chandra While India has a target to blend 5% biodiesel for on-road fuel use by 2030, its actual blend rate falls below 0.1% and remains marginal, according to a United States Department of Agriculture (USDA) Global Agriculture Information Network (GAIN) report in June. Factors behind this low figure include COVID-19 lockdowns leading to plant closures as well as limiting consumer fuel usage; a contracted diesel pool; and high vegetable oil feedstock prices. Biodiesel use remains negligible due to limited feedstock availability, a lack of an integrated and dedicated supply chain, and import restrictions. A decade-long effort to develop jatropha as a feedstock has been discontinued but the Indian government is working on developing a consistent used cooking oil (UCO) supply chain.

National B5 target

India’s 2018 National Biofuels Policy sets out a blending rate of 5% biodiesel with conventional diesel (B5) by 2030. In 2021, the national average blend rate was estimated at 0.09%. The country’s total greenhouse gas (GHG) emissions are the third largest in the world, although per capita emissions are well below the global average. In 2020/21, India’s CO2 emissions fell by 2.6bn tonnes, 7% below 2019 levels due to the COVID-19 pandemic and national lockdowns. While this led to sharp reductions in emissions, these 22 OFI – NOVEMBER/DECEMBER 2021

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will rebound as lockdowns ease and the economy recovers. The Indian transportation sector is critical to achieving greenhouse gas (GHG) reductions. Transportation consumes nearly 70% of the country’s total diesel supply, 66% of which is used by passenger and commercial vehicles. Currently, diesel meets an estimated 46% of transportation fuel demand, followed by gasoline at 24%. Gasoline and on-road diesel consumption combined are forecast to rise over the next five years from the current estimate of 98bn litres in 2018 to 126bn litres by 2023.

Limited domestic production

India has a very limited number of domestic suppliers producing biodiesel and most of their production capacities are under-utilised, with few viable feedstock sources and limited government support mechanisms (such as subsidised feedstocks, tax credits or loan guarantees). The country has more than six biodiesel plants, each with production capacity ranging from 11-225M litres/year. Total installed annual production capacity is 1bn litres. However, operating capacity remains at 500-550M litres as the majority of plants remain closed due to COVID-19 lockdowns. High feedstock prices (imported palm oil, palm stearin and domesticallyavailable animal tallow) have also reduced operating margins.

This year, India is expected to produce close to 180M litres of biodiesel, 10% below 2020 levels. Biodiesel producers use non-edible industrial oil (palm stearin), UCO, animal fat, tallow and other oils (sludge, acidic and tree-borne oils) as their primary feedstocks, utilising 35% of total installed capacity. With increasing prices of imported palm oil and domesticallyavailable animal tallow, most functioning producers utilised palm acid oil in 2020. Production capacity has not changed over time and, except for UCO, there are no official regulations on the supply of feedstocks for biodiesel production. In terms of domestic feedstock supply, this remains in a nascent stage. Past field trials have used jatropha and other inedible oilseeds grown on nonarable lands. However, these failed to reach necessary yields to make cultivation economically feasible. Domestically-sourced UCO has been identified as a feedstock with a large, untapped potential. According to the Indian Oil Corporation Limited (IOCL), India has the potential to generate 2.2bn litres/year of UCO. However, the lack of sufficient infrastructure for UCO collection poses a significant challenge. On 4 May, the Ministry of Petroleum and Natural Gas (MoPNG) announced a scheme for procuring UCO-based biodiesel from the IOCL Tikrikalan terminal. u Many biodiesel-producing countries

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BIODIESEL 2012 13.0 126.0 0.0 0.0 125.0 14.0

2013 14.0 132.0 0.3 3.9 128.0 15.0

2014 15.0 138.0 1.7 41.5 102.0 11.0

2015 11.0 152.0 0.8 33.1 118.0 13.0

2016 13.0 158.0 2.7 41.7 119.0 13.0

2017 13.0 170.0 7.1 7.6 165.0 18.0

2018 18.0 185.0 25.2 23.1 180.0 25.0

2019 25.0 230.0 7.0 54.0 185.0 23.0

2020 23.0 200.0 1.0 68.0 140.0 16.0

2021f 16.0 180.0 1.0 50.0 140.0 7.0

5 460.0 27.4%

6 465.0 28.4%

6 480.0 28.8%

6 500.0 30.4%

6 550.0 28.7%

6 600.0 28.3%

6 650.0 28.5%

6 670 34.3%

6* 580.0 34.5%

6* 520.0 34.6%

Feedstock use for fuel (‘000 tonnes) 58 65 Non-edible industrial 42 48 Used cooking oil (UCO) 6 7 Animal fats/tallow 106 120 Total

70 49 7 126

75 50 6 131

85 55 5 145

90 55 6 151

100 55 6 161

110 60 8 178

140 65 10 215

145 50 9 204

90 55 9 154

Calendar year Beginning stocks Production Imports Exports Consumption Ending stocks

2011 15.0 111.0 0.0 0.0 113.0 13.0

Production capacity (million litres) Number of biorefineries Nameplate capacity Capacity use (%)

5 450.0 24.7%

Market penetration (million litres) 31.0 Biodiesel, on-road use 42.0 49.0 32.0 41.0 48.0 72.0 83.0 100.0 50.0 50.0 45,520.0 49,343.0 49,354.0 49,605.0 52,179.0 Diesel, on road use 55,179 56,715.0 59,220.0 60,145.0 44,400.0 52,927.0 0.07% Blend rate (%) 0.08% 0.10% 0.06% 0.08% 0.09% 0.13% 0.14% 0.17% 0.11% 0.09% 75,866.0 82,238.0 82,256.0 82,674.0 87,064.0 91,965.0 94,524.0 98,700.0 100,241.0 74,000.0 75,000.0 Diesel, total use f=forecast, * indicates theoretical estimate

Figure 1: India biodiesel production from multiple feedstocks (million litres) u largely rely on manufacturing units run by large petroleum companies or vegetable oil refineries. In India, the space is dominated by entrepreneurs operating micro, small and medium enterprises who are typically fuel traders, with relatively better access to the domestic fuels market. However, since biodiesel is a volumedriven industry, most traders opt for capital expenditure savings by establishing low cost biodiesel manufacturing units that largely process low free fatty acid (FFA) feedstocks (less than 5%) such as palm stearin and palm oil, which are subject to global vegetable oil price volatility. Since feedstock cost is integral to biodiesel production, manufacturing units must be modernised to give them the flexibility to process all types of feedstocks, including UCO. A supply chain infrastructure must also be built for UCO. India does not produce renewable diesel or sustainable aviation fuel (SAF).

Consumption

India’s annual biodiesel consumption grew by 6% between 2011-2019. However, due to the COVID-19 pandemic and ensuing lockdowns, demand dropped by almost 24% in 2020 and is expected to remain flat at 140M litres in 2021. Oil marketing companies (OMCs) were estimated to have procured 5M litres of biodiesel in 2020, almost 95% below volumes procured in 2019 due to decreased travel and transportation amid 24 OFI – NOVEMBER/DECEMBER 2021

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the COVID pandemic. As of May 2021, OMCs had issued 30 letters of intent (LOIs) to biodiesel suppliers and had offered periodic incremental price guarantees for five years, with guaranteed offtakes of 10 years extended to prospective biodiesel suppliers. Of the 30 LOIs, 23 were issued by IOCL amounting to a total capacity of 229.5M litres (557.57 tonnes/day). According to sources, OMCs are working on procurement pricing models that reflect market factors such as vegetable oil feedstock price volatility, diesel retail prices and other macroeconomic indicators. The current procurement price for biodiesel is US$0.89 (INR65)/litre. The estimated biodiesel quantity procured for blending with diesel for onroad use remains at around 50% of total use. Blended diesel buyers are limited to certain OMC retail outlets, Indian railways, certain state road transport corporations, road transport fleet companies and port authorities. Retail biodiesel prices are benchmarked with the retail diesel price in India, with the current integrated goods and services tax (GST) rate at 12%. Remaining biodiesel demand comes from smaller buyers procuring biodiesel for small and medium scale enterprises in applications including agriculture (operating irrigation pumps and tractors), brick kilns, mobile communication towers and back-up power generators.

Source: USDA Foreign Agricultural Service, Trade Data Monitor, industry sources

Stocks, production, imports, exports, consumption (million litres)

Trade

India’s biodiesel imports remain negligible due to import restrictions. The government only allows biodiesel exports from its Special Economic Zones and export oriented units. This year, biodiesel exports are expected to decline by 26% to total 50M litres. Nearly all exports go to Europe (primarily the Netherlands, Spain and Belgium), taking advantage of EU incentives provided to waste-based biofuel exporters.

Conclusion

There is tremendous growth potential for India’s biodiesel market, bearing in mind that many countries operate a minimum B5 blend rate and several – including Brazil, Argentina, Malaysia and Indonesia – run at B10 or higher. However, If the country wishes to achieve B5 by 2030, it will have to increase its production capacity to more than 3.45bn litres, assuming a projected diesel pool size for on-road use of 69bn litres for the same year. The country must have in place a viable strategy that builds a financially sustainable domestic industry which has sufficient feedstock, coupled with market access for imports. ● This article is based on a United States Department of Agriculture (USDA) Global Agriculture Information Network (GAIN) report published on 17 June 2021 prepared by Ankit Chandra

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25/10/2021 14:47:22

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OFI – NOVEMBER/DECEMBER 2021 25 26/09/2018 12:20

The cotton challenge The cottonseed oil sector – along with the wider cotton industry – is taking steps to tackle the sustainability challenges it faces Gill Langham Cottonseed oil production is expected to increase – at least in the short-term – mainly due to increasing global demand from the food sector, according to industry analysts. A by-product of cotton processing, cottonseed oil is extracted from the seeds or kernels of cotton plants and is used for salad oil and dressing, mayonnaise, and is also suitable for cooking and frying. Cottonseed oil has a mild, nut-like taste and is clear with a light golden colour, which makes it a versatile product. Global cottonseed oil production has been stable at around 5M tonnes during the last decade, according to Statista, dipping to 4.25M tonnes in 2015/16, and reaching 4.86M tonnes in 2020/21. Production peaked in 2018 and is likely to continue its growth in the immediate term, according to the Global Cottonseed Oil Market Insights 2007-2019 and Forecast 2020-2025 report, available from Research and Markets. Consumption is also expected to 26 OFI – NOVEMBER/DECEMBER 2021

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continue on an upward trend over the next few years, the report says, to reach 6.3M tonnes by the end of 2025. However, any potential growth in the sector would be limited for a number of reasons, according to Stephen Nicholson, vice president, RaboResearch Food & Agribusiness, Grains & Oilseeds. “In the short to medium term, the demand for vegetable oil is expected to grow due to demand from the biofuels sector, particularly renewable diesel. However, I don’t believe cottonseed oil will be a beneficiary,” he says. Price is a major factor, according to Nicholson, with cottonseed oil the highest priced vegetable oil in the USA second only to peanut oil. “Since the mid-1990s, the production and demand for cottonseed oil has decreased due to price,” he says. “Demand for cottonseed and a small supplier base make cottonseed oil sometimes difficult to procure.” Cottonseed production has been steady to down over the last 10 to 15 years, according to Nicholson, with the same pattern for crushing and exports. More cottonseed is going into dairy feed channels, Nicholson says, which is one of the main reasons cottonseed oil production is down. “Cottonseed oil has a place in food applications and that is not going to go away overnight, but if prices persist at these high levels, manufacturers will look for alternatives to cut cost.”

Photo: Adobe Stock

OILSEEDS

Market leaders

The top global producers of cottonseed oil in 2021 are India and China with 1.39M tonnes and 1.36M tonnes respectively, according to United States of Agriculture (USDA) figures. Other notable producers include Brazil (680,000 tonnes), Pakistan (318,000 tonnes), the USA (220,000 tonnes), Uzbekistan (204,000 tonnes) and Turkey (196,000 tonnes). Smaller producers include Australia, the EU-27, Mali, Myanmar and Turkmenistan. From 2007 to 2018, the most notable rate of growth in terms of cottonseed oil production, among the main producing countries, was attained by Australia, according to the Global Cottonseed Oil Market Insights report. In 2018, approximately 168,000 tonnes of cottonseed oil were exported worldwide, the report says, a 17% increase on the previous year although exports continued to decline slightly. Of the main exporting countries, Australia experienced the highest growth rate of exports over the 11-year period with a more modest pace of growth for other global leaders. Global cottonseed oil imports reached 141,000 tonnes in 2018, a 14% increase on the previous year, according to the report. However, imports continued to indicate a relatively ﬂat trend overall. Major importers of cottonseed oil in 2018 included Mexico (16,353 tonnes), www.ofimagazine.com

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OILSEEDS Malaysia (14,348 tonnes), Australia (13,963 tonnes), Saudi Arabia (12,915 tonnes) and Tajikistan (11,277 tonnes), the report says. During the period, the highest rate of growth in terms of imports was attained by Saudi Arabia (+85.1%/year), according to the Global Cottonseed Oil Market Insights report.

Photo: Adobe Stock

Challenges in cotton

Cotton is the most widely used natural fibre globally, with more than 250M people across the world depending on cotton cultivation and processing for their livelihoods, according to the Sustainable Trade Initiative (IDH). However, the cotton sector faces a number of sustainability challenges, the IDH says. According to the IDH, around 99% of the world’s cotton farmers across 70 countries are smallholders, who produce 75% of the 25M tonnes/year of global cotton production. Although cotton covers only 3% of the world’s cultivated land (see Figure 2, p28), it accounts for 24% of global insecticide use and is also a water intensive crop. Other sustainability issues include the crop’s impact on soil quality and biodiversity as well as profitability, working conditions, gender, health & safety, and child labour, according to the IDH.

importers of cotton, claims that cotton is a water-intensive fibre are primarily based on misleading water consumption data. “The cotton plant is actually drought tolerant and can grow in a variety of climate conditions,” Cotton Incorporated’s vice president and chief sustainability officer Dr Jesse Daystar says. Most of the water used to cultivate cotton is naturally-occurring rainfall, according to Cotton Incorporated’s sustainability website Cotton Today, with 64% of all cotton grown in the USA fully reliant on rainfall. According to the International Cotton

Advisory Committee (ICAC), the global area under rain-fed cotton is 16.9M ha, which is equivalent to 55.7% of the total cotton acreage, and the global average irrigation water usage is 1,214 litres to produce 1kg lint + 2kg seeds. In the USA, the cotton industry has a goal to improve water efficiency by 18% by 2025, the Cotton Today report says, and has also launched the US Cotton Trust Protocol to help the industry measure its progress. “Compared to 20 years ago, we produce much more cotton per acre, with virtually no increase (or even a small decrease) u

Taking action

A number of organisations have launched schemes to tackle the sustainability challenges faced by the sector. The IDH Cotton programme, for example, aimed to improve the livelihoods of 3.5M smallholder and medium cotton farmers by 2020, across India, Pakistan, China, Turkey, Mozambique and Tajikistan. IDH’s Climate-Smart Agriculture Programme in Jana, Maharashtra, India, for example, addressed smallholder vulnerability to climate change through public/private action. In Ambar block in Jana, the IDH partnered with the Watershed Organisation Trust (WOTR) to create access to water in 30 villages, impacting 6,300 farmers. As a result of the programme, approximately 900 more farmers took up a second crop due to increased water accessibility and 4,496ha of land were protected from soil erosion (against a target of 3,000ha), the IDH says.

Water & pesticide use

According to research and marketing company Cotton Incorporated, which is funded by US growers of cotton and www.ofimagazine.com

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OILSEEDS

Source: Milling & Baking News, Food Business News, Rabobank 2021

Figure 2: Share of cotton in world agriculture land u in water usage. Technology and better yielding cotton plants have been the key to improving our water use efficiency,” Dr Daystar adds. Cotton growers are also implementing practices like conservation tillage and other regenerative agriculture techniques to improve surface water quality and reduce runoff, she says. Today, many cotton growers use an integrated pest management approach rather than applying large amounts of pesticides to crops, according to Cotton Incorporated’s Cotton Today website. In this way, growers select the right pesticide for the right pests on the right crop, only when and where necessary, and at the lowest possible rates. In the USA, for example, cotton farmers make 50% fewer insecticide applications than the previous generation, according to the website.

Child and forced labour

Action is being taken by both governments and industry associations to tackle the issues of child and forced labour in the cotton sector. In January, for example, the USA 28 OFI – NOVEMBER/DECEMBER 2021

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Source: Cotton Incorporated

Figure 1: Weekly cottonseed oil prices – Mississippi PSBY (2011-2021)

announced a ban on imports of all cotton products – along with tomato products – from western China’s Xinjiang region due to allegations that they were made with forced labour from detained Uighur Muslims, according to a Reuters report on 13 January. The US Customs and Border Protection agency, which is part of the Department of Homeland Security (DHS), estimates that the USA imported about US$9bn of cotton products from China in 2020, according to the report. The region-wide import ban followed a move to block cotton imports from China’s largest producer, the military-linked Xinjiang Production and Construction Corps (XPCC), the report says. Both bans would have a big impact on cotton production in Xinjiang, which produces as much as 20% of the world’s supply of the commodity, Reuters writes. China denies the allegations and says the camps are vocational training centres needed to fight extremism. In Uzbekistan, almost 2M people are recruited every year for the annual cotton harvest, according to the International Labour Organisation (ILO), which worked

with the government and clothing producers in the country during the 2020 cotton harvest to end forced labour. The partnership promotes structural change, global commitments, reform of recruitment practices and third-party monitoring. Compiled for the World Bank, the ILO’s report ‘2020 third-party monitoring of child labour and forced labour during the cotton harvest in Uzbekistan’, published on 29 January, shows that the systematic and systemic use of child labour and forced labour in the country had been eradicated, although some local vestiges remained. More than 96% of workers in the 2020 cotton harvest worked freely and the systematic recruitment of students, teachers, doctors and nurses had completely stopped, according to the report. In 2020, the share of cotton pickers that experienced coercion was 33% lower than in the previous year, the ILO says, with some provinces and districts having very few or no forced labour cases. However, there had still been cases at the local level of people being threatened with loss of privileges or rights if they declined an invitation to pick cotton, it says. Although the majority of pickers participated in the harvest voluntarily, about 4% were subject to direct or perceived forms of coercion. The Uzbek government has significantly increased wages since 2017, according to the ILO, and has introduced a differentiated pay scale so that pickers are paid more per kilogramme of cotton towards the end of the harvest, when conditions are less favourable and there is less cotton to pick. This has led to a significant drop in the prevalence of forced labour, the ILO says. This was followed by the creation of a new co-ordination body – the National Commission for Combating Trafficking in Persons and Forced Labour in 2019. “ILO believes that responsible sourcing of Uzbek cotton, cottonseed oil, textiles and garments should be facilitated and encouraged,” Jonas Astrup, chief technical advisor for the ILO Third-Party Monitoring Project (TPM), says.

Looking ahead

If cottonseed oil’s current high price continues, food manufacturers could look for alternatives in a bid to cut costs. Meanwhile, the cotton industry is taking steps to tackle the sustainability issues that it faces. ● Gill Langham is the assistant editor of OFI

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OILS & FATS INTERNATIONAL

TRANSPORT & SHIPPING

A complex set of r The safe transport of oils and fats is governed by the regulations of both international and national organisations, as well as industry bodies, and include the proper cleaning of tanks Keith Nuthall

30 OFI – NOVEMBER/DECEMBER 2021

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The transport of edible oils and fats by sea is not just big business – it has become increasingly regulated under international convention and controlled by industry standards, with a view to improving efficiencies and reducing the risk of pollution and contamination. According to US-based Research & Markets’ September report, the global market for fats and oils is projected to generate revenues of US$236.7bn in this year, growing at a compound annual growth rate (CAGR) of 3.8% by 2026 to reach US$285.2bn that year. In its 2020 trade bulletin, the United Nations Conference on Trade & Development (UNCTAD) estimates that the value of internationally traded oils and fats was around US$100bn in 2019. The successful bulk transport of oils and fats can therefore yield major revenues. However, getting it right, within the law and according to good industrial practice is not easy. And this work is becoming more demanding. For instance, under an International Maritime Organisation (IMO) 2020 regulation regulating its MARPOL International Convention for the Prevention of Pollution from Ships, sulphur in ships’ fuel oil has been capped

at a maximum of 0.5%. Any changes to MARPOL must be followed closely by the oils and fats shipping sector, given that since 2007, the industry has been brought under IMO regulation. Most oils and fats can be carried by IMO classified types 1 and 2 double hull tankers and type 3 single hull tankers, (with the exception of palm oil, which can only be carried on single hull vessels if special measures are made to protect this cargo), according to a note from marine insurer Maritime Mutual. A spokesperson for the London-based IMO told OFI: “Global vegetable oil production amounted to around 209.14M tonnes in 2020/21 and much of that is transported by ship, including in bulk. The safe transport of such oils is paramount for IMO. IMO has adopted a comprehensive body of regulations from construction to training of seafarers to address the safe transport of all goods by sea.” She also highlighted 2019 updates (in force since 1 January 2021) to its International Code for the Construction and Equipment of Ships carrying Dangerous Chemicals in Bulk (IBC), which included revised chapters 17 (a summary of minimum safety requirements, such as for venting vapours from tanks); 18 www.ofimagazine.com

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TRANSPORT & SHIPPING The transport of oils and fats by sea has become increasingly regulated to improve eﬃciencies and reduce the risk of pollution and contamination

Photo: Koole Terminals

f rules (a list of products to which the code does not apply – although vegetable oils generally are covered); 19 (the index of products carried in bulk); and 21 (criteria for assigning carriage requirements for products subject to the IBC Code, such as technical rules limiting water contamination and temperature controls). Code changes affecting the construction and equipment of ships carrying dangerous chemicals in bulk were also adopted.

Discharge of residues

Maritime Mutual also warned that oils and fats shippers need to follow IMO MARPOL rules on carrying vegetable oils by sea regarding the operational discharge of residues into the sea. This has recently been amended by IMO Resolution MEPC.315(74), covering north western and western European seas, including the Baltic and Norwegian Seas. Here, shippers must pre-wash vegetable and palm oil cargo tanks after discharging cargo at ports and discharging tank washings onshore. Elsewhere, shippers can continue discharging these washings into the sea, as per MARPOL Annex II, which limits volumes, and insists discharges are made underwater, with ships moving at a minimum speed of seven www.ofimagazine.com

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knots, at least 12 nautical miles from land, and in water depths exceeding 25 metres. Another set of international rules that edible oils shippers need to follow is the Recommended International Code of Practice for the Storage and Transport of Edible Fats and Oils in Bulk, developed by Codex Alimentarius, the global food regulator. This includes rules on tank construction, insisting that tanks are made from inert materials such as stainless steel. It also gives guidance on the need to install temperature sensors and control devices to prevent overheating of oils and fats in tanks and associated lines. These check minimum and maximum loading and discharge temperatures, which vary according to the cargo type. Codex rules are generally written into national regulations, notably because they can be cited in disputes at the World Trade Organisation (WTO) regarding food trading rules. The Codex committee on fats and oils continues to refine the organisation’s code of practice for the storage and transport of edible oils and fats in bulk. In its planned October meeting, for instance, Peru is pressing for a rule that tankers cannot carry edible oils and fats unless operators certify that they have not carried leaded liquids in their three previous deliveries.

Tank container standards

Meanwhile, industry standards usually insist that tankers are built to, and operated, under International Organization for Standardization (ISO) standards, which were recently updated in 2019. The key document here is ISO 1496-3:2019 on ‘Freight containers – specification and testing – Part 3: Tank containers for liquids, gases and pressurised dry bulk’. It sets out the basic specifications and testing requirements for ISO series 1 tank containers loading and unloading liquids by gravity or pressure discharge, moved by road, rail and sea, including interchange between these modes. These international regulations and guidance are welded into industry contract models so that shippers follow

good practice and comply with the rules, keeping them updated.

Industry contracts

FOSFA International (the Federation of Oils, Seeds and Fats Associations) is a key player here, with its ‘Carriage of Oils and Fats’ protocols and contract documents. This includes qualifications of shippers, heating instructions, banned previous cargoes (that could contaminate oils and fats), and a certificate of compliance, cleanliness and suitability of a ship’s tank, among other controls and guidance. FOSFA advises its members of changes to its rules generally via circulars, which cover other issues such as allowable tank coatings, pressure testing, reporting responsibilities, and more. Internationial oils and fats association (AOCS) stresses that 85% of the world’s oils and fats trade use FOSFA contracts, with the standard forms boosting understanding and clarity in communications between parties. “This allows the parties to discuss and agree on the important features such as quality, quantity, price, and shipment/delivery dates,” said a note from AOCS (once the American Oil Chemists’ Society). National regulators may also impose additional safety requirements. A good example is the USA, which insists that companies that move large volumes of oils and fats over water must develop a ‘facility response plan’ and follow a ‘spill prevention, control and countermeasure’ regulation, in case there is an accident that causes a major leak. This includes contingencies for dealing with “a worstcase discharge of animal fats and vegetable oils”. The rules are administered by the US Environmental Protection Agency (EPA), which stressed in a report: “Scientific research and experience with actual spills have shown that spills of animal fats and vegetable oils kill or injure wildlife and produce other undesirable effects. Wildlife that becomes coated with animal fats or vegetable oils could die of hypothermia, dehydration and diarrhoea, or starvation.” In addition, regional laws are of relevance, such as those passed by the u European Union (EU). These allow the OFI – NOVEMBER/DECEMBER 2021

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Photo: Adobe Stock

TRANSPORT & SHIPPING

Industry regulations cover the bulk transport of oils and fats in tank containers

u bulk transport of oils and fats into the EU, under the EU general food law, regulation 178/2002, and regulation (EC)852/2004 on the hygiene of foodstuffs, both of which are currently under review. A key consideration, and a regulation that is constantly assessed by the European Food Safety Authority (EFSA), is the requirement that previous cargos in bulk tanks before an oils and fats shipment are included on a positive list. If these items are not listed, the next use of a tank shipped to and from the EU cannot be for edible oils and fats. Recent changes to this legislation include 2019 guidance from EFSA that calcium lignosulfonate was insufficiently safe to consumers to be an authorised previous cargo, but that methyl acetate, and ethyl tert-butyl ether (ETBE) were safe enough for inclusion on this list (a decision made in 2017). FEDIOL, the EU vegetable oil and protein meal industry association, aids the industry by publishing a code of minimum requirements and recommendations for bulk transport in road tankers/ISO containers of edible oils and fats for direct food use. This includes guidance on heating, offand onloading, pumps, HACCP-systems and more. FEDIOL has been active in delivering more detailed guidance, for instance on crushing and processing oilseed-based feed for animals, including their handling in tanks, with specific advice depending on the type of seeds. Of course, these major industry bodies are not the only organisations offering practical guidance on how best to 32 OFI – NOVEMBER/DECEMBER 2021

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transport edible oils and fats in bulk. The transport information service from the German Insurance Association, for instance, provides specialist information from German marine underwriters on handling 190 specific products, with the aim of reducing accidents and losses, and hence claims on insurance policies. These products include a wide range of oils and fats, such as butter, cottonseed oil, hempseed oil, soya oil, olive oil and more. Regarding rapeseed oil, for example, the service advises that the oil does not need heating, as its solidification point is relatively low. But if it solidifies in tanks, rapeseed oil cannot be liquefied again even by forced heating. Near heating coils, the oil melts, scorches, discolours and becomes rancid. In addition, the international TIC Council, which represents the Testing, Inspection and Certification (TIC) industry, releases detailed guidance through its agricultural and vegetable oils committee. It has released a 2020 version of its directory of expertise expected to be understood by an agricultural superintendent for oils and fats transports, including how best to make calculations about liquid density and volumes, heating, shore tank gauging, sampling, contamination and more.

Cargo tank cleanliness

One major consideration for any shipper of oils and fats is ensuring that tanks are properly cleaned before they receive a mass cargo of edible liquids, to avoid tainting by contaminants. Maritime Mutual stresses that shippers

follow two interrelated set of standards on cargo tank cleanliness standards and tank cleaning procedures. The FOSFA Code of Practice for Superintendents (CPS) manual lays down the tank inspection process and tank fitness and cleanliness requirements which must be followed by such officials, as mandated by FOSFA contracts. These rules are within the FOSFA CPS Part 1, Oils and Fats, Section 5.2, Ships Tank – Fitness and Cleanliness. This incudes advice such as the following: “Check visually so far as accessible to ensure that no internal fittings of copper or copper alloy, which are not allowed. Report on condition of tank coating. Report on residues, loose scale, hardened product adhesion to cross-members, etc. Where chemical cleaning has taken place, it is essential to check for residual chemicals. Report on any unusual foreign odour and identify if possible.” Regional advisors also offer guidance, such as the European Federation of Tank Cleaning Organisations (EFTCO), which has released multi-lingual versions of its codes which are designed to ensure postpumping cleaning is at the highest level, recognising “tank cleaning is an essential part of the supply chain”. The group regularly updates its guidance, issuing in 2019 an EFTCO Cleaning Document (ECD), enabling shippers to detail every single tank cleaning. A blog for maritime recruitment service MySeaTime outlines the difficulties in ensuring tanks are sufficiently clean before and after shipping oils and fats. It stresses that using good cleaning software is helpful in securing product-specific advice, for instance, after offloading vegetable oils, with methods varying according to the product category. Keeping empty tanks moist ahead of cleaning helps, as does using higher water temperatures and increased spray force. Utilising IMO-authorised cleaning chemicals at appropriate densities can also be useful: “While high pressure and higher temperatures will do most of the job, cleaning to wall wash standard would still most likely require the use of chemical re-circulation in the tanks,” said the blog. Ultimately, transporting oils and fats in bulk is a specialist business that rewards expertise. The Port of Rotterdam, in the Netherlands, is a good example. The port has specialised storage and handling facilities for edible oils and fats with a capacity of 1.2M m3, and has expanded and improved in recent years to allow larger tankers to load and unload, including ship-to-ship transfers. ● Keith Nuthall is the editor and director of International News Services Ltd, UK

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USA The soyabean and edible oil sector in the USA is expected to experience major disruption due to the growth of the country’s renewable diesel market Keith Nuthall An anticipated surge in supply and demand for renewable diesel is likely to cause major disruption to the American vegetable oil market and industry, notably soya. With the US government and certain states regarding renewable diesel as a swift way to further reduce carbon emissions and meet Paris agreement climate change targets, the prospects for major additional purchases of soyabeans within the US domestic market are very real. A note from the EU Energy Information Administration (EIA) released in July projected that because of planned producing and refining capacity projects, US production of renewable diesel would rise from 0.6bn gallons/year or 38,000 barrels/day (b/d) in 2020 to 5.1bn gallons/ year (330,000 b/d) by the end of 2024. Prices are already rising and will probably increase further, causing a major headache for food industry buyers of soyabeans who have already been struggling with inflationary pressures that they have been passing on to customers. The latest data from the US Department of Agriculture (USDA) notes how American soya producer revenues have boomed to US$46bn in 2020, up from US$30bn in 2019. But without additional production coming online, or the diversion of US soya exports to the domestic market, these prices may grow further. Soyabean production was up in 2020, but nowhere near the increase in renewable diesel demand – 4.1bn bushels, up from 3.5bn bushels in 2019. Soyabean oil production expanded more slowly (25.6bn pounds in 2020, compared to 24.9bn in 2019). A key driver of this change is political – the current federal and many state administrations in the USA are committed to fighting climate change. This has sparked the federal Renewable Fuel Standard (RFS) and the California LowCarbon Fuel Standard (LCFS), with similar rules in Oregon and Washington state, for instance, which favour the use of renewable diesel. While it uses the same soya feedstock as biodiesel, the manufacturing process is completely 34 OFI – NOVEMBER/DECEMBER 2021

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Shake-up in oil m diﬀerent, and it is popular because it can be easily substituted for fossil fuels without changing combustion systems.

Soya supply crunch

This is creating the risk of a real supply crunch. Currently in 2021/21, around 50% of the soyabeans grown in the USA are crushed domestically to make oil and meal, with the remainder exported as whole beans for crushing elsewhere. In terms of product, 20% of crushed beans become oil and the remainder meal, the vast majority used to feed livestock, especially poultry and pigs within the USA. Soyabean oil is currently used domestically to make edible products, for baking and other food ingredients, plus some industrial applications, such as paint, as well as the burgeoning renewable diesel (and biodiesel) feedstock. Around a third of domestic US soya oil supplies is used to make renewable diesel or biodiesel. But that proportion is expected to grow and that may disrupt the market and the industry. American production could increase through farmers switching to soya from diﬀerent crops or diverting exports to the domestic market, which would be ready to consume beans through major new renewable diesel plants. An example would be Marathon Petroleum’s reﬁnery in Martinez, California, which may produce

730M gal/y (48,000 b/d) in 2023; and Phillips 66’s Rodeo Renewed project in San Francisco, which could make 800M gal/y (52,000 b/d) of renewable fuels by 2024. That would require additional crushing capacity in the USA and companies are investing in this area. A major announcement came in August, when Archer Daniels Midland (ADM) announced it would work with Marathon to set up a crushing plant in North Dakota to handle 150,000 bushels/day of soyabeans by 2023. In September, oil major Chevron and commodities trader Bunge announced plans to invest US$600M to double the capacity of two Bunge crushing facilities, which together currently crush 7,000 tonnes/day of soyabeans. Commenting on the changes, Thomas Hammer, president of the US National Oilseed Processors Association (NOPA) said: “We have never seen anything like it. We’re in uncharted waters. The markets are going to have to deal with this. I don’t know how this will all shake out. It’s the biggest change in 20 years.”

Climate change threat

Technical advancements could also boost yields, but researchers have stressed that the US soyabean sector will have to ﬁrst contend with climate change, as with other oilseed crops such as this summer’s drought-reduced canola harvest www.oﬁmagazine.com

25/10/2021 14:52:25

USA A growth in healthy eating trends strengthend by the COVID-19 pandemic is expected to beneﬁt sales of olive oil and canola oil in the USA

keep its citizens happy through reliable food supplies.

Photo: Adobe Stock

A switch to canola?

il market in Canada. Climate change could reduce US soyabean yields by 27.9% by the end of this century, claims a 2020 paper in Climatic Change journal. Clever new agricultural techniques could claw back these losses, but they would have to avoid chemical inputs to be sustainable. If increased US soya crushing production and/or export diversion occurs, US processors will have a lot more meal to sell, domestically and overseas, which could reduce prices. Whether major food manufactures, such as Nestlé and Mars, would be prepared to see their American soya oil supplies fall, is another question – especially as both companies have made public commitments to source sustainably, without promoting deforestation – a potential problem in Latin America and Asia, for instance. These key food buyers may start looking for new suppliers or nail their own longterm contracts. In addition, importers of US soyabeans may be nervous about export diversion. China currently imports signiﬁcant amounts of US soyabeans for its own processing, including feed for its important pigmeat sector. While the USDA predicts 2021/22 US soyabean exports will be 2.075bn bushels, (down 9% from 202221), any reduction in supply of this key input could have important consequences for a Chinese government that needs to www.oﬁmagazine.com

USA.indd 3

Another possible switch for US-based food processors would be an increase in canola supplies from Canada. However, the meal by-product is less nutritious than soya meal and generally targeted at dairy and beef cattle because ruminant digestion can deal with the lower quality feed – chickens and pigs fare less well. In any case, Canadian growers will want to avoid a repeat of this year’s drought-hit harvest. The USDA in August estimated that Canadian canola production would fall to 16M tonnes, down 4.2M tonnes from earlier estimates. One reason that the USA looks like a good long-term bet for canola producers is its increasing food oil purchases, with consumers regarding canola as a healthier vegetable oil option. Research released in January by USbased Allied Market Research says canola oil will increase sales by more than any other American segment – with a 2021-27 CAGR of 6.3% (with olive oils also growing fast) “owing to their health beneﬁts”, which will “usher a plethora of opportunities for players in the near future”. “Numerous applications of vegetable oil, the growing popularity of fast food, and changes in consumer lifestyle towards more convenient foods in the food service and food processing industries augment the growth…” the report noted.

Healthy eating trend

Another market researcher, Euromonitor International, has stressed that the COVID-19 pandemic has strengthened healthy eating trends that will energise these American edible oil market shifts. “Organic olive oil has seen a particularly strong spike in demand, with fortiﬁed/ functional vegetable and seed oil also seeing signiﬁcant growth in 2020,” noted Euromonitor in a December 2020 report. One reason is because COVID-19 has highlighted the health risks of being overweight, notably from poor diets and “this is likely to increasingly inform consumer purchasing decisions when it comes to edible oils. Olive oil is likely

to be the key beneficiary…,” predicted Euromonitor. And with the American Obesity Association predicting that by 2025, 50% of Americans will be obese (50 pounds over the medium average weight and 60% by 2030), there will be plenty of consumers reminded of the need to buy healthy oils when they look in the mirror. With the USA population now exceeding 330M, that will deliver a lot of demand. Looking at canola oil, which has the rosiest prospects in the USA, US Canola Association communication director Angela Dansby said sales were being boosted by an appreciation that “canola oil is among the healthiest edible oils in the world”. With cardiovascular disease remaining the leading cause of death for US adults, American consumers are increasingly aware that food choices impact health, she said. So, the fact that the American Heart Association recommends canola oil “as a heart-smart ingredient” can only boost sales, notably through its low saturated fat and high omega-3 fat content. US canola oil consumption more than quadrupled from 2003 to 2019 – from 4.5 to 17.2 pounds (lbs) per person. This will probably attract more American farmers into this market, given that domestic supply only delivers 31% of demand at present, with Canadian exports a key supplier. Output growth is expected, said Dansby, in areas such as the Pacific Northwest and the Great Plains where this broadleaf crop rotates well with wheat or small grain crops. Canola’s sustainability profile is also boosted by the fact that canola flowers produce high amounts of nectar, good for honey production. That said, as with soyabean oil, there may be growing demand for canola oil to be used as a renewable diesel feedstock as well. Dansby noted that canola-based biofuels can reduce greenhouse gas emissions by over 50% compared to conventional fuels: “What’s good for the heart is good for the engine; low saturated fat canola oil makes renewable fuel with excellent cold flow properties.” Canola may end up being caught in the fuel-food market tussle as well. ● Keith Nuthall is the editor and director of International News Services Ltd, UK OFI – NOVEMBER/DECEMBER 2021

25/10/2021 14:52:26

STATISTICS STATISTICAL NEWS EU sunflower oil market

The Mintec Benchmark Price (MBP) for EU sunflower oil rose 14% to €1,244/tonnes on 11 October. Prices recovered by 29% from 18 June, when the market hit €960/ tonne, the lowest value in 2021. As prices had fallen significantly up until June, EU sunflower products had become more attractive, spurring demand for the product. The trend is now more in line with the 2020 bullish run and the oil remains cheaper compared to soyabean and rapeseed oils, which has added to its competitiveness. Additionally, increased global sunflower oil consumption due to a recovery from the COVID-19 pandemic, particularly from India, has added to upward pressure on sunflower oil prices. However, an increase in expected production in the 2021/22 marketing year still poses a downside risk for the sunflowerseed and oil market, with record-level sowings in both Ukraine and Russia during the 2021 planting period.

EU sunflower oil price, fob NW Eur (€/tonne)

Palm oil

The Mintec Benchmark Price (MBP) for EU palm oil increased by 15% month-on-month to €1,123/tonne on 11 October. The price increased on the back of a significant recovery in Indian palm oil imports, with 1.4M tonnes imported in September, a record month. Imports climbed due to a reduction in the effective import tax rate from 30.25% to 24.75% on 11 September. This was amid increased demand for edible oils ahead of key festivals such as Diwali and Dussehra and the wedding season during fourth quarter 2021. The upward trend in prices is likely to continue going forward due to a bullish wider global vegetable oil complex, as well as delays in soyabean harvesting in India, which has increased the country’s reliance on imported palm oil. Additionally, palm oil remains the cheapest vegetable oil in the complex, thus maintaining its competitiveness globally.

Vegetable oil prices (€/tonne)

Biofuel market

EU biodiesel price, DR07 0 biodiesel whs DE (€/tonne)

Prices of selected oils (US$/tonne) Apr 21

May 21

Jun 21

Jul 21

Soyabean

1,369.2

1,427.1

1,352.6

Crude palm

1,000.1

1,128.9

1,021.8

Palm olein

Aug 21

Sept 21

1,414.5

1,389.9

1,364.6

1,053.0

1,118.4

1,173.1

921.6

1,046.6

943.9

990.1

1,069.2

1,144.9

Coconut

1,554.0

1,633.9

1,580.5

1,522.5

1,456.6

1,485.2

Rapeseed

1,339.1

1,386.6

1,302.0

1,367.3

1,425.2

1,505.1

Sunflower

1,589.4

1,595.0

1,314.5

1,213.0

1,297.7

1,313.6

Palm kernel

1,430.4

1,464.1

1,355.0

1,236.1

1,299.1

1,370.5

Average

1,315.0

1,383.0

1,267.0

1,257.0

1,294.0

1,337.0

312.0

328.0

300.0

298.0

307.0

317.0

Index

36 OFI – NOVEMBER/DECEMBER 2021

Stats Nov.Dec.indd 1

The EU biodiesel price increased by 22% month-on-month to €2,475/MT on 6 October. The price surged due to increases in the crude petroleum oil market, which has a positive correlation with biofuel prices, as well as an increase in the vegetable oils which act as feedstocks. Brent crude prices on the EU Intercontinental Exchange (ICE) increased by 13.74% month-on-month to US$82.92/ barrel on 11 October, while the Mintec Category Index for EU vegetable oils increased by 2.38% to €1,041/tonne on 22 September. Increasing global commitments to more sustainable energy usage has added to demand for biofuels. The market is likely to push higher over the coming months, driven primarily by the COVID-19 recovery in demand affecting both crude oil and vegetable oil markets. Mintec provides independent insight and data to help companies make informed commercial decisions. Tel: +44 (0)1628 851313 E-mail: sales@mintecglobal.com Website: www.mintecglobal.com

www.ofimagazine.com

25/10/2021 09:22:03

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OFI November December 2021

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