Oils & Fats International October/November 2014 by Oils & Fats International

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T HE B USI NE SS MAG AZ IN E FOR TH E OILS AN D FATS IN D UST RY

VOL. 30

NO. 8 OCT/NOV 2014

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CONTENTS FEATURES CHINA EDITORIAL: Editor: Serena Lim Tel: +44(0)1737 855066; Fax: +44 (0)1737 855034 E-mail: serenalim@quartzltd.com

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Glycerine market explodes COVER: SAFFLOWERSEED OIL IS GATHERING INTEREST IN THE FOOD, BIOFUEL AND OLEOCHEMICAL INDUSTRIES P28

Eliminating trans fats

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23 24

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News

Sime Darby offers $1.7bn for NBPOL 6

SHOW REVIEW

Soyabean glut creates uncertainty

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No foreign cap

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Contents.indd 1

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NEWS

COMMENT

No foreign cap

oreign oil palm plantation players will have breathed a sigh of relief after Indonesia dropped a controversial 30% foreign ownership cap in its plantations bill passed on 30 September. The original bill would have retroactively limited foreign ownership of plantations to no more than 30%, down from the current maximum of 95%, potentially hurting Malaysian players such as Sime Darby Bhd, Kuala Lumpur Kepong Bhd and IOI Corp Bhd, and Singapore-listed Golden AgriResources and Wilmar International. The new law (see story, below) will still allow the central government to limit direct foreign investment in Indonesia’s plantation sector through government regulations, based on the type of crop, the size of the producing company and certain geographical conditions. However, analysts believe this is unlikely to happen as incoming President Joko Widodo, who is due to assume office on 20 October, is known to be pro-business, pro-agriculture and against foreign ownership limits in plantations. Although the bill’s aim was to maximise land usage and open up the sector to smallholders, and could be attributable to electioneering before the July presidential elections, the underlying factor driving moves to limit foreign ownership is deeply rooted in ‘commodity nationalism’. Indonesia is home to the world’s largest gold mine and exports the most power-station coal, palm oil and tin, according to Bloomberg. Outgoing President Susilo Bambang Yudhoyono has introduced a series of nationalistic rules for commodities – including palm, cocoa and mining – in an effort to boost domestic processing industries and the value of its exports. In 2012, foreign mining companies were made to divest at least 51% of their shares to Indonesian buyers after 10 years of operation. In January, Indonesia banned the export of metal ores to encourage the construction of smelters, which led to mine closures, thousands of lost jobs and a global surge in nickel prices. Parliamentarians have also drafted two bills that aim to limit foreign ownership in banking and insurance. One cannot blame a country like Indonesia for trying to push investment in value-added manufacturing and services and create a more even distribution of wealth. However, critics including the World Bank say such policies often backfire, driving away investors, which could cost Indonesia more than US$6.5bn in lost taxes and royalties over the next three years, crippling efforts to build roads, schools, hospitals and other infrastructure. Resource nationalism is making commodity prices more volatile and threatens global security, think-tank Chatham House said in a report in 2012. “When countries and governments think they may be running out of cheap resources, they try to keep more for themselves.” China, Ukraine and Argentina responded to the surge in food prices in 2008, for example, with taxes or controls on grain exports. Such moves can trigger similar actions in other countries, threatening trade wars, driving up prices and creating a crisis of confidence that spreads from one resource to another. The think-tank argues that new institutions are needed to collaborate in managing resources and reducing volatility, such as a “Resources 30” group of economies, which could set rules on export restrictions and the activities of state-owned resource companies. Until then, growing “resource nationalism” will continue to raise serious concerns about the predictability of the business environment and long-term economic growth. Serena Lim

Sime Darby offers $1.7bn for NBPOL S

ime Darby Plantation Sdn Bhd offered to buy Papua New Guineabased New Britain Palm Oil (NBPOL) for some US$1.74bn or £7.15/share on 9 October. The move comes after the plantation and agri-business arm of Malaysia’s Sime Darby group aborted plans to buy Kulim (Malaysia) Bhd’s 49% stake in NBPOL after its 60-day exclusivity period with Kulim expired on 28 September. Kulim’s stake was up for sale after it failed to raise its shareholding from 48.97% to 68.97% in July 2013. Sime Darby president and chief executive Tan Sri Mohd Bakke Salleh said the acquisition would be a significant milestone for one of the world’s largest producers of sustainable palm and palm kernel oil, as it was acquiring a low-risk, well-managed ongoing business that would add value to the group. The two companies’ combined land bank would be nearly one million hectares, up from Sime Darby’s current holdings of 864,141ha spread across Malaysia, Indonesia and Liberia. NBPOL’s two refineries in Papua New Guinea and the UK would boost Sime Darby’s total refining capacity by 300,000 tonnes to 4.05M tonnes. Sime Darby’s bid amounts to an 85% premium over NBPOL’s last closing share price of £3.87/share on 8 October. “We don’t mind paying a premium price considering its [NBPOL’s] potential high fresh fruit bunch yields and high oil extraction rate,” Salleh said. “The premium paid for NPBOL’s assets reflects competition for developed oil palm projects, as the hurdle rate for developing a new oil palm plantation is increasing due to issues like land acquisition,” Barclays said in a Reuters report. Nearly two-thirds or 79,800ha of NBPOL’s existing landbank of 135,000ha, mostly located in Papua New Guinea, is already planted with oil palm. Sime Darby Plantation is one of the world’s largest plantation companies, producing some five percent of global crude palm oil output. NBPOL said in a statement that an independent board committee intended to recommend Sime Darby’s bid to shareholders in the absence of a higher offer. The acquisition is expected to be completed by the end of the year, subject to Sime Darby obtaining a minimum of 51% of NBPOL shares, and regulatory conditions.

Foreign ownership cap dropped

ndonesia’s House of Representatives passed a new plantation bill on 30 September, which sets stricter rules on foreign ownership in the plantation sector so as to maximise land usage and open up the sector to smallholders. A controversial 30% foreign ownership cap was dropped. Instead, any specific limit will be decided separately through government regulation (Peraturan Pemerintah or PP), which will not need further parliamentary approval. Plantation business groups, as well as the Agriculture Ministry, had previously voiced criticism of the bill, expressing concern that it would hurt the business climate for plantation firms and growers. The new law requires plantation companies to allocate 20% of their concessions to people who live in nearby areas and to help them with their own plantations, which is already a long-standing practice by foreign companies. The new law also regulates the scope of plantation areas and land concessions according to a number of variables, such as the type of crop grown, the company’s factory capacity, the area’s population density and certain geographical conditions. The central government will also have the right to turn over stateowned forests and abandoned plots of land to plantation owners. But the law also requires plantation owners to conduct discussions with indigenous residents over plots of lands to be acquired. Companies will have five years to comply with the new law.

2 OFI – OCTOBER/NOVEMBER 2014 www.oilsandfatsinternational.com

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NEWS

China extends GM inspection vigilence to US sorghum C hinese authorities are stepping up checks on US cargoes of sorghum, traders told Reuters in August, potentially curbing shipments from the world’s largest exporter of the corn-substitute. Four traders with direct knowledge of the matter said the country’s quarantine office in July asked local authorities to tighten checks of sorghum and barley, looking for impurities such as pesticide residues and heavy metals. The move comes after China has already rejected more than one million tonnes of US corn due to the presence of Syngenta’s genetically modified (GM) corn strain MIR 162

that has not yet been approved by Beijing. Chinese feed mills have increasingly been turning to US sorghum as a cheap substitute for domestic corn, which has seen inflated prices as Beijing supports the country’s rural population. “There are worries in the market, which should reduce imports of sorghum in later months,” said Zhang Yan, an analyst at Shanghai JC Intelligence Co Ltd. JCI cut its forecast for sorghum imports to 1.6M tonnes for the 2014/15 marketing year, down from 3.9M tonnes predicted earlier.

China is the world’s largest importer of US sorghum, with its feed mills buying almost all their sorghum from the country. “Shipments already booked or on the way to China may have no problem, but bookings after the notice may face trouble,” said another industry source, adding that some of the major buyers had already been informed of strict checks. Sorghum is traditionally used to make alcohol in China but use in animal feed surged last year as the industry sought to diversify ingredient supplies and replace expensive domestic corn.

IN BRIEF

Palm kernel and coconut oil shipments forecast to climb

hipments of palm kernel oil (PKO) and coconut oil are expected to climb in 201415, Bloomberg reported Oil World as saying in September. The increase comes as the industry rebounds from a year-earlier slide stemming, in part, from damaged coconut trees in the Philippines following Typhoon Haiyan. Exports of both oils may climb to 5.4M tonnes from 5.1M tonnes in 2013-14. Philippines coconut oil production is predicted to climb to 1.34M tonnes, after slumping to 1.22M tonnes in 2013-14 from 1.62M tonnes a year earlier. The

slide left coconut oil prices at a US$225/tonne premium to PKO as of 3 September, Oil World said. “Supply disruptions, primarily in coconut oil, and high price volatility have interrupted the strong growth of global demand for lauric oils in recent years,” Oil World wrote. “We expect world exports of coconut oil to recover from the multi-year low. “The price premium of coconut oil over palm oil and PKO is likely to stay above average in the foreseeable future, but will probably soon ease from the current unusually high levels,” Oil World added. Typhoon Haiyan, which hit the Philippines in November 2013, caused damage to residential, commercial and agricultural properties valued at US$6.5bn to US$14.5bn, according to estimates by catastrophe modelling firm AIR Worldwide. The typhoon damaged 33M coconut trees in the Philippines’ Eastern Visayas region alone, and new trees take six to eight years after planting to reach full production potential, according to the United Nations Food & Agriculture Organization. Production of PKO will rise to 6.73M tonnes in the year through September 2015 from 6.47M tonnes, with output in Indonesia climbing to 3.42M tonnes from 3.22M tonnes, Oil World forecast.

‘Gutter oil’ contamination prompts product recalls

n 14 September, Hong Kong ordered a massive recall and ban on 25 lard and lard-containing products imported from Taiwanese food oil manufacturer Chang Guann Co, which admitted its products had been contaminated with ‘gutter oil’. Hong Kong also banned all food made with the products. ‘Gutter’ oil is illegal cooking oil that has been recycled from waste oil or discarded animal parts. Chang Guann admitted on 5 September that lard it had purchased from an unlicensed factory in Taiwan had been used as a base oil in the manufacturing of edible lard oil. “We only began purchasing lard from the Pingtung factory on 25 February this year. As of last month, a total of 243 tonnes of lard had been bought from the factory, 216 tonnes of which have been used as a base oil in the manufacturing of 780 tonnes of edible lard oil,” the company said in a press release. “We are also a victim in this case. Although not all of our fragrant lard oil products contain the alleged

gutter oil, we ordered the recall of all products with an expiration date before 1 March next year.” According to Taiwan’s Food and Drug Administration (FDA), hundreds of mooncakes, along with pineapple cakes, bread, instant noodles, steamed buns and dumplings had been removed from shelves in the country since the case surfaced. More than 1,000 restaurants, bakeries and food plants had also used the tainted oil. FDA Southern Center deputy director Liu Fang-ming said if Chang Guann bought the suspect lard without knowing what it really was, the company’s owners might only be subject to a fine. “However, if the firm was aware of the lard’s real contents and still used it to manufacture cooking oil, its owners could face a maximum prison term of seven years,” he said. Some experts believe that about a tenth of China’s cooking oil is gutter oil, with the first documented case reported in mainland China in 2000 and, in Taiwan, in 1985.

INDIA: Emami Biotech Ltd, the edible oil and biodiesel arm of Emami Group, has entered into an agreement with Kolkatabased Rasoi Group to buy the Rasoi brand of vanaspati (hydrogenated fat) and edible oil for Rs13 crore (US$2.1M), the company said in September. The acquisition will be an addition to Emami’s existing portfolio of edible oil brands, such as Emami Healthy & Tasty and Himani Best Choice. Emami Biotech also plans to build its third refinery with a capacity of 2,000 tonnes/ day in Gujarat to cater to India’s northern and western markets, which is expected to become operational in around 18-24 months. WORLD: Procter & Gamble (P&G) has declared a commitment to no deforestation in its palm oil supply chain. These commitments include establishing traceability of palm oil (PO) and palm kernel oil (PKO) to supplier mills by the end of 2015, ensuring no deforestation in the palm supply chain to plantations by 2020 and working with suppliers (including smallholders), industry peers, NGOs, academic experts and other stakeholders to promote consistent industry standards and practices for sustainable PO sourcing. P&G’s PO already receives Roundtable on Sustainable Palm Oil (RSPO) certification. Colgate-Palmolive has also recently released its own PO sourcing policy, commiting to sustainably sourced PO with zero deforestation and full traceability of PO back to the plantation by 2015.

3 OFI – OCTOBER/NOVEMBER 2014 www.oilsandfatsinternational.com

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NEWS

Chinese imports of soyabeans to plunge ahead of US harvest

IN BRIEF SWITZERLAND: Bühler has launched a new horizontal sunflower impact dehuller, the ‘DGBB’, which the company said facilitates optimal extraction results when processing sunflowerseeds, with efficient dehulling and minimised broken seeds. The product flow has achieved high throughput rates of up to 180 tonnes/day and this can now be controlled through an inspection window in the feeder, which helps ensure the product is evenly spread over the entire machine width. Different moisture content values or sunflowerseed varieties can be processed and the DGBB provides a consistent dehulling degree with reduced fines and dust, leading to a reduced risk of oil impregnation. All components are easy to clean, are accessible and easy to exchange in a very short time, the company said, which leads to operational advantage and reduces maintenance costs.

hinese imports of US soyabeans could plunge by as much as a quarter in the crop year that began in September, after processing margins in the country fell to their lowest in two years, industry sources told Reuters. The potential drop in shipments to the world’s biggest buyer of soyabeans comes as the USA is gearing up to harvest a record soyabean crop, piling more pressure on benchmark prices that have hit their lowest in four years. Any hopes that demand for the products produced by China’s soyabean processors would pick up in the next few months have been dashed by slow growth. This has left processors struggling with the socalled negative margins they have suffered since February, meaning they cannot cover the costs of producing edible oil or animal-feed ingredient soyameal. “The first half of the (calendar) year was the worst on record for the industry”, said a Singapore-based

senior official at an international trading company, which owns soyabean processing facilities in China. “With the way things are, we don’t expect prices and demand to recover any time soon,” he added. Record soyabean imports in the 2013/14 crop year, coupled with slowing demand from the livestock sector, have resulted in a glut of soyabeans in China, dragging processing margins into negative territory. China’s crackdown on commodity financing trade has compounded the woes of an industry saddled with huge losses, prompting some imports to default on cargoes. Those challenges did not filter through to January to July total soyabean import volumes, which climbed about a fifth from the year before to 41.68M tonnes, as a raft of cargoes booked in advance arrived in China. But they are expected to hit soyabean shipments from October to December, historically the period when imports pick up, the Reuters report said.

California approves stricter olive oil labels and grades

he state of California, USA has approved stricter standards on the labelling and grading of olive oil, Olive Oil Times reports. The rules came into effect on 26 September for California producers that produce at least 5,000 gallons/year, which applies to an estimated 100 growers and around a dozen mills. The new standards include more precise methods for testing adulteration, known as PPP and DAGs, and the banning of misleading marketing terms for refined oils such as ‘light’ and ‘pure’. The benchmark for free fatty acidity (FFA) has been set at 0.5%, below the international standard of 0.8%. The proposal suggested

ISRAEL: Lipid supplements manufacturer Enzymotec Ltd has added a new phospholipidbased item to its range. ‘Omega PC’ is an extract from wild, cold water fish and comprises omega-3 fatty acids bound to both phospholipids and triacylglycerols. Dr Ariel Katz, president and CEO of Enzymotec, said: “We believe that this new advanced fish oil product should help drive growth in the omega-3 fish oil market, which [has become] stagnant due to commoditisation and lack of innovation.”

that, when olive oil is used as an ingredient in prepared food, the label must specify the grade used. However, that type of regulation was found to be beyond the scope of the standards as well as beyond the authority of the California Marketing Act. Extra virgin olive oil is defined as “olive oil that has a free acidity, expressed as free oleic acid, of not more

than 0.5g/100g, a median of defects equal to 0, and the other characteristics which correspond to the limits fixed for this grade in these standards. Extra virgin olive oil is fit for consumption without further processing.” Californian producers, who supply approximately two percent of American olive oil needs, have been vocal proponents of the new regulations, seeking to differentiate their products from imported olive oils, which they say are often substandard. Additionally, while the new rules only affect olive oil produced in California, industry observers say the ultimate aim is to have stricter standards apply to imports as well.

India’s vegetable oil imports hit record highs and forecast to rise even further

ndia’s vegetable oil imports touched 13.33 lakh (1.3M) tonnes in August this year – the highest for the last two decades – on record shipments of soyabean oil, industry body the Solvent Extractors’ Association (SEA) said in September. Imports are expected to rise further in coming months and put pressure on domestic edible oil prices, the SEA warned, adding that vegetable oil imports were getting cheaper following measures taken by Indonesia and Malaysia to clear their huge stock. To curb cheap imports and

protect local oilseeds farmers, the SEA demanded the government to hike the import duty on crude and refined edible oils from existing levels. The country’s previous highest import was 11.6 lakh (1.16M) tonnes in January 2013. “Import of vegetable oils during August is up by 76% at 13.33 lakh (1.3M) tonnes, compared to 7.57 lakh (757,000) tonnes in August 2013. This is the highest in any single month since import allowed under open general licence (OGL) in 1994 by India,” the SEA said. Of total vegetable oil imports,

palm oil shipments stood at 805,131 tonnes, soyabean oil at 350,373 tonnes, sunflower oil at 140,349 tonnes, while non-edible oil comprised 12,135 tonnes during August this year. India’s vegetable oil imports are likely to increase and put pressure on domestic edible oil prices, which currently are at an historic low since 2008, it said. Palm oil imports by India, the world’s biggest buyer, could increase due to expected lower global prices after Malaysia cut its export tax on CPO for two months, effective from September.

In reply, Indonesia set its export tax on CPO to zero in October, down from the nine percent rate in September. Indonesia sets its monthly export tax according to a formula based on average prices in Jakarta, Rotterdam and Kuala Lumpur. Emphasising the need to protect domestic farmers, the SEA said: “There is an urgent need to support farmers by increasing import duty on crude vegetable oils from 2.5% to 10% and refined oils from 10% to 25%, which is the only viable option.”

4 OFI – OCTOBER/NOVEMBER 2014 www.oilsandfatsinternational.com

Comment and News.indd 3

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BIOFUELS NEWS

INDONESIA: Starting in 2016, the country’s PT Garuda airline will blend avtur, a type of aviation fuel, with palm oilbased biofuel to help reduce its carbon emissions, Biofuels International reports. The airline will use approximately 1.8bn litres/year of avtur to operate its aircraft. As a result, from 2016, Garuda’s jet fuel consumption is expected to reach two billion litres/year. UK: British Airways is planning to fuel its planes with biofuel derived from municipal waste such as paper, food and garden clippings, Biofuels International reports. The first of these projects is GreenSky London, currently under construction, which will be able to process some 50,0000 tonnes/year of waste and convert it to approximately 60,000 tonnes/ year of jet fuel.

US industry board urges end to ‘unfair’ EU trade duties T

he US National Biodiesel Board (NBB) has filed comments with the European Commission (EC) challenging what it says are unfair trade duties that have blocked US biodiesel from being exported to Europe since July 2009. The NBB urged the EC to allow duties on US biodiesel to expire this year as scheduled, citing overwhelming evidence that global trade for biodiesel had changed dramatically since the duties were imposed and that continuing the duties was protectionist and unnecessary. European biodiesel producers were able to sell biodiesel in both Europe and the USA without duties and, at the very least, US producers should be able to take part in the European market without having to pay punitive duties, the NBB said, pointing out that: ! US imports of biodiesel from the EU had grown in

USA: A California-based biofuel company building a waste to jet fuel plant east of Reno has been awarded a US$70M grant from the US Department of Defense to help speed delivery of its high-tech process that converts household waste into jet fuel. The plant is expected to produce more than 10M gallons/year of advanced biofuels while diverting over 200,000 tonnes of waste from landfills by 2016. ZAMBIA: Mahtani Group has partnered with UK-based Sunbird Group to develop a US$150M bioethanol plant in Luapula province, Biofuels International reports. The plant will use cassava as its feedstock, which is widely grown in the province. Production was expected to start up in November this year. PORTUGAL/GREECE: Portugalbased biodiesel technology provider IncBio announced in September it had signed a contract with SPA Renewables SA to supply a 2.4M gallons/ year biodiesel plant in Corinth, Greece. The plant will use IncBio’s ultrasonic reactors to produce EN14214 biodiesel from used cooking oil collected locally. IncBio said it expected the plant to be complete by the end of February 2015.

recent years while EU imports of US biodiesel had been virtually eliminated. ! The US biodiesel tax incentive, the main reason behind the EU’s trade duties, was currently not in effect and hadn’t been for three of the past five years. ! Because it is structured as a blender’s incentive, the US biodiesel tax incentive is available to European producers when it is in effect, as well to US producers. European imports to the USA can also qualify for the Renewable Fuel Standard (RFS), the policy that requires specific volumes of renewable fuels to be blended in the USA. The original duties imposed by the EC in 2009 are due to expire this year but the EC is conducting an “expiry review” expected to last 12-15 months over whether to reinstate them.

Neste shelves microbial oil process PHOTO: NESTE OIL

IN BRIEF

este Oil announced on 7 October that it was moving away from its R&D efforts on microbial oil to other areas such as using forestry and agricultural waste and residues as feedstocks for renewable diesel. Two years of research at its pilot plant in Porvoo (pictured left) had generated a lot of knowledge but Neste’s senior vice president of technology Lars Peter Lindfors said the process was not yet economically competitive. “Lignocellulose material is not a financially competitive indutrial feedstock for producing renewable diesel using the microbial oil process at the moment.”

Summit Group to build ethanol plant in Brazil

owa, USA-based Summit Group, a leader in production agriculture, renewable energy and international agribusiness development, will construct a corn ethanol production facility in Brazil, Ethanol Producer Magazine reported in September. The US$140M plant will be built near leading agricultural state Lucas do Rio Verde in Mato Grosso, the country’s largest producer of corn and soyabeans. When operational, the plant will produce 50M gallons/year of ethanol.

Biofuel production down, biodiesel up, forecasts IEA

n International Energy Agency (IEA) report said that global biofuels production increased by almost seven percent last year, reaching more than 115bn litres (30.38bn gallons). This is three billion litres higher than predicted in the IEA’s report of the same time in 2013. When adjusted for energy content, biofuel output accounted for 3.5% of global oil demand for road transport in 2013, up from 3.4% in 2012 and 2% in 2007. Production is expected to reach 139bn litres in 2020. According to the report, the forecast has been revised down since last year’s outlook, with 2018 production forecast to be two billion litres in 2020. The biodiesel forecast has been increased slightly, with 2020 production expected at 33bn litres. Advanced biofuel capacity is expected to reach four billion litres by 2020, with developments expected to be limited primarily to the European Union (EU) and USA. However, the report said that policy support for

increased biofuel production was waning in the key markets of Brazil, the EU and the USA. It was, however, expanding in new non-OECD markets, such as Southeast Asia. “In the USA, the design shortcomings of previous biofuel mandates have become manifest, leading to policy review that have introduced uncertainty in the market”, the authors stated. “In Brazil, the ethanol industry’s economic situation is worsening, partly due to inflationtargeted gasoline price regulations that undermine ethanol economics. In the EU, ongoing controversy about the sustainability of biofuels has led to a proposed cap on conventional biofuel use that is leaving the industry in limbo until a final decision on the proposal is taken. At the same time, policy support is burgeoning in non-OECD countries, notably oil-importing economies in Southeast Asia and Africa that subsidise fuel consumption, where rising domestic biofuel production promises a valuable option to lowering fuel import bills.”

6 OFI – OCTOBER/NOVEMBER 2014 www.oilsandfatsinternational.com

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BIOFUELS NEWS

EC carries out anti-trust raids on ethanol companies

fficials from the European Commission (EC)’s competition watchdog raided the headquarters of several ethanol companies on 7 October based on allegations the companies were manipulating industry benchmarks, the EC confirmed. The EC said it had it on good authority that ethanol companies from two different member states may be colluding to provide faulty price information to a price-reporting agency, which then offered up the faulty information as a benchmark for the marketplace to trade on. “Such behaviour, if established, may amount

to violations of European anti-trust rules that prohibit cartels and restrictive business practices and abuses of a dominant market position,” the EC said in a statement. The prices published by price reporting agencies served as a benchmark for trade in the physical and financial derivatives markets for several commodity products in Europe and globally, the EC said. And even small distortions could have a significant impact on prices, potentially harming consumers. The companies raided include Lantmannen

Agroetanol in Sweden and Agroetanol in Belgium. The EC cautioned that it was only in the preliminary stages of its investigation and that the inspections did not amount to a guilty charge for the companies. The raids follow similar allegations against BP PLC, Statoil ASA, Royal Dutch Shell PLC, and others related to price manipulation in the biofuels industry, according to Law360. The EU and the Norwegian Competition Authority are investigating whether these companies passed off coordinated numbers to a price-regulating agency.

Commercial production at 2G ethanol plant in Brazil

n Brazil, GranBio has initiated production at the first commercial-scale plant for second-generation (2G) ethanol in the southern hemisphere, Biofuels Digest reports. The Bioflex 1 unit in São Miguel dos Campos, Alagoas, has an initial production capacity of 82M litres/year of ethanol and uses Proesa pre-treatment technology from Italian company BetaRenewables, enzymes from Novozymes in Denmark and yeast from DSM in Holland.

GranBio invested US$190M to build the plant and US$75M on the steam and electricity cogeneration system. Construction was completed in 20 months and was managed by GranEnergia, a company also controlled by GranInvestimentos SA. The report said the 2G ethanol made it possible to increase Brazilian production capacity by 50%/acre using agricultural waste such as straw and bagasse, without expanding the area of

sugarcane fields. Gran Bio developed a system to harvest, store and process 400,000 tonnes/year of straw for Bioflex 1, which makes it one of the world’s largest and most competitive. According to a 14 October Bloomberg report, GranBio is also close to announcing a partner for a second cellulosic ethanol facility, which will be comparable in size to the Bioflex unit. The company also plans a second biochemical plant.

Demand set to double in China

hina’s biodiesel demand will double by 2017 from 2013 levels to as much as 2.5M tonnes/year or more, according to a new report from ResearchinChina. The report said that in 2013, China’s total capacity of biodiesel exceeded 3.7M tonnes/year, but output attained 1-1.2M tonnes/ year, indicating that capacity utilisation was not high.

7 OFI – OCTOBER/NOVEMBER 2014

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BIOTECH NEWS

IN BRIEF USA: On 18 September, the Department of Agriculture (USDA) reached a decision to deregulate Dow’s 2,4-D resistant Enlist Duo soyabeans. The American Soybean Association (ASA) approved the move and called on the Environmental Protection Agency (EPA) to quickly finalise the label for a new low-volatility Enlist Duo herbicide that could be used with these soyabeans to control resistant and difficult-to-manage weeds. WORLD: A team of international researchers has sequenced the genome of the Nevada dampwood termite to understand how the more than 4,000 species of bacteria that thrive in their guts work together, AGWeb reports. Specifically, the researchers hope to identify enzymes that could lead to novel ways to produce cellulosic biofuels. GERMANY: Farming company KTG Agrar AG plans to expand soyabean cultivation in expectation of major European demand for crops free of genetically modified (GM) organisms. KTG said it planned to harvest around 20,000 tonnes this year and more than 25,000 tonnes next year of GMfree soyabeans. The company will process the beans in its oil mill.

Grain elevators may refuse unapproved GM seeds, US rules

n August, in response to a lawsuit filed by Syngenta against Bunge – which refused to accept Syngenta’s Agrisure Viptera variety of corn – the US court of federal appeals ruled that “A biotech developer cannot use a century-old warehouse law to force a grain elevator company to accept its genetically engineered corn”. The ruling will likely preclude other biotech seed companies from using a similar litigation tactic with elevators that reject crops due to their transgenic traits, experts have said. The controversy dates back to 2011, when the Bunge elevator company refused to accept the Agrisure Viptera corn variety produced by Syngenta seeds. Bunge told growers it couldn’t accept the variety because it hadn’t cleared regulatory hurdles in all major export destinations. The trait hadn’t been approved by officials in China – and has since been rejected by the Chinese

authorities. Syngenta now faces three billion-dollar class actions in three states. In response, Syngenta filed a lawsuit accusing Bunge of violating the US Warehouse Act of 1916, which requires elevators to treat depositors fairly. Farmers who grew Viptera corn had to ship their crops to other elevators and find other sources of corn to fulfil their contracts with Bunge, which hurt Syngenta’s reputation and market share, the biotech company claimed. The 8th US Circuit Court of Appeals threw out Syngenta’s lawsuit, ruling that the company lacked a “cause of action” to bring against Bunge in court. Farmers directly affected by Bunge’s refusal may still sue the elevator company, but the Eighth Circuit’s ruling would prevent similar lawsuits by Monsanto, Dow, DuPont or another biotech seed firm, said Drew Kershen, an agricultural biotechnology law professor at the University of Oklahoma.

China considers inspection change

hinese regulators are considering whether or not to change the inspection requirements for shipments of US corn by-products, according to four people with direct knowledge of the subject, Bloomberg reported in September. Imports of dried distillers grains (DDGs) currently require government certification that proves they do not contain MIR 162, a GM corn variety. In a meeting with industry officials in Beijing, regulators were reported to have discussed widening the inspection regime to third parties. The four people said Chinese officials had discussed using a polymerase chain reaction method for inspections, which involves replicating a small sample of genetic material to test for the presence of specific genes. However, shipments would still be subject to further inspection in China. As OFI went to press, no final agreement had been made and no meetings were scheduled.

Scientists successfully sequence rapeseed genome

cientists have successfully sequenced the complex rapeseed genome, which will accelerate ongoing research efforts to improve the crop for animal and human nutrition. A Reuters report said Germany’s Bayer – the world’s largest supplier of genetically modified (GM) rapeseed seeds – was primarily responsible for the mapping out of the entire genetic code of the oil plant. Academic researchers in Australia and China, as well as Dutch biotechnology firm Keygene NV, contributed to the project, Bayer said. Coordinator Boulos Chalhoub of the French National Institute

for Agricultural Research (INRA) said: “We have discovered the mechanism by which the levels of glucosinolates, which make the crop less nutritious for livestock, can be reduced.” He added: “Our breakthrough will also help scientists in their efforts to make oilseed rape more resistant to disease, improve yield and its takeup of nitrogen from the soil, thereby improving its environmental profile.” Oilseed rape has one of the most complex genomes among flowering plants. “The gene number is four times that of the human genome,” said Chalhoub. He said that after five years of research, the consortium had detected 1,600 genes that are implicated in oil-based synthesis, findings which will support researchers aiming to develop rapeseed variants rich in omega-3 fatty acids for human and animal feed needs. Rapeseed is used for food oil and is a common feedstock for biofuel in Europe. Bayer made €250M (US$370M) in sales from GM rapeseed and from pesticides for rapeseed farmers last year, around 15% of the global market.

Europe causing GM crop approval delays, group says

uropaBio – Europe’s largest and most influential biotech industry group, whose members include giants such as Monsanto, Bayer and other biotech companies – has accused the European Commission (EC) of failing to comply with existing legal timelines to formally adopt import authorisations of genetically modified (GM) crops. The group said this had caused delays of up to eight months and added significantly to the already existing delays between the EU and exporting nations. The group said it would continue to insist and request that the procedures set out in EU law for approving GM products be followed, and that legally prescribed timelines were met. Not doing so would send a message to the agriculturerelated industries of Europe and beyond, as well as to other innovative sectors, that Europe could not guarantee a predictable regulatory system and sound trade environment, it said. The nine GM applications in question were four biotech soyabean varieties, one oilseed rape and one cotton. They have all received positive safety assessments from the European Food Safety Authority and gone through two rounds of voting by the EU under ‘cosmitology’ rules.

8 OFI – OCTOBER/NOVEMBER 2014 www.oilsandfatsinternational.com

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TRANSPORT & LOGISTICS NEWS

IN BRIEF ARGENTINA: On 15 August, Noble Group Ltd announced that the company’s whollyowned subsidiary, Noble Argentina SA, had agreed to acquire a 22.75% shareholding interest in Sitio 0 de Quequén (Sitio 0), a company incorporated in Argentina. Upon completion, Sitio 0 will become an indirect associated company of Noble. The consideration for the acquisition was approximately US$17M, excluding an additional payment of up to US$3M. USA: In mid-August, Pacific Northwest Grain Companies and the International Longshore and Warehouse Union reported that they had reached a tentative labour agreement in a two-year standoff affecting grain export facilities at ports in Portland, Seattle and Vancouver, reports Oregon Public Broadcasting News (see OFI, Transport News, August/ September 2014). No specifics were provided on the terms of the deal, which would pave the way for United Grain Corp to start moving grain from the Port of Vancouver. Since July, the company has only been able to make a few shipments from the port because of the dispute over work rules and pay. Other companies included in the agreement are Columbia Grain at the Port of Portland and Louis-Dreyfus Commodities, which operates grain terminals in Portland and Seattle.

ADM gains second US export terminal in Pacific Northwest

rchers Daniels Midland (ADM) has acquired an ownership stake in a second export terminal in the US Pacific Northwest, a vital gateway for US agricultural shipments to Asia, according to a Reuters report. ADM announced the move on 30 September and said it had gained the ownership stake in the Columbia Grain export terminal in Portland, Oregon, by expanding its Kalama Export Company joint venture with Japanese grain trader Marubeni Corp, previously the terminal’s sole owner. “There’s a lot of competition in the Pacific Northwest and having the option to export from two elevators rather than just one can make the logistics of exporting grain much easier,” Terry Reilly, a grains analyst from Futures International, said in the Reuters report. “And, if you increase competition, it increases flow and brings in more competitive prices.” Some 30% of US grain and oilseed exports are

handled by export facilities in the Pacific Northwest, offering shippers the shortest route to Asia and top soyabean importer China, and top grain importer Japan. Kalama Export Company currently runs a bulk grain terminal in Kalama, Washington, about 64km upriver from the Columbia Grain terminal. ADM and Marubeni each owned 45% of the Kalama terminal, with Mitsubishi holding the remaining 10%. An ADM spokeswoman said that under the new expanded joint venture, ADM would own 32.2% of the two elevators, Marubeni 60.6% and Mitsubishi 7.2%. The joint venture would be renamed Pacificor LLC but the 50/50 ADM and Marubeni governance structure would remain unchanged. ADM did not disclose the value of the transaction but said the company expected to record a gain in the quarter ending 30 September. That preliminary value could be adjusted in the company’s fourth quarter results, the Reuters report said.

ADM’s SA export terminal operational

n August, the first loaded vessel departed Archer Daniels Midland (ADM)’s new export terminal in Bacarena, in the northern Brazilian state of Pará. The terminal is a significant addition to ADM’s expanding logistical network in Brazil and offers an efficient pathway for the export of grain from the increasingly productive western and northern regions of the country. ADM received approval to begin operations at the terminal at the end of July. ADM acquired the terminal in 2012. It currently has the capacity to handle approximately 1.5M tonnes/year of grain, but ADM intends to expand the terminal’s capacity to six million tonnes by 2016. “The Bacarena terminal builds on our existing network, which uses inland waterways, rail and truck transportation to move crops and products throughout Brazil,” Valmor Schaffer, president of ADM South America, said. “We are excited by the opportunities presented by Brazil’s expanding agricultural production and look forward to continuing to be a part of the country’s success.”

US grain glut taxes storage facilities, transport sector

stockpile of US Midwest grain will likely increase in the coming months and tax farmers already desperate to house or haul corn, soyabeans and other products ahead of an expected record harvest, a US Department of Agriculture (USDA) official said in September, Reuters reports. Grain stocks this harvest season are expected

to exceed permanent storage facilities by around 694M bushels, or about 3.5% of expected harvest totals, said Arthur Neal, who analyses market and transportation issues in the agricultural sector. That overstock could fill roughly 174,000 jumbo hopper rail cars with South Dakota, India, Missouri and Illinois most impacted. “Because 2013 grain is reportedly still in storage and waiting to be moved before the 2014 harvest, it is critical to move as much of the 2013 grain crop as quickly and efficiently as possible,” Neal told a hearing of the Senate Commerce Committee. The glut is causing snarls along train lines and driving other transportation costs higher. Barge rates along the Mississippi and Illinois rivers, for instance, are roughly 50% higher than the five-year average. Neal was testifying at a hearing about congested rail lines, which have been burdened in recent months by a bump in agriculture production, coal deliveries and oil train shipments.

FRA proposes rule to amend US brake safety

he US Federal Railroad Administration (FRA) has opened a comment period on a proposed rule that aims to amend brake system safety standards for certain freight and other nonpassenger trains, Ethanol Producer Magazine reported on 19 September. According to the new rule, trains carrying ethanol would be among those impacted. A statement published by the FRA notes the proposal will help prevent the unintended movement of trains. “Safety is our top priority”, said US transportation secretary Anthony Foxx. “[This] action is only the latest in more than two dozen steps we have taken in the last year to further safeguard communities along train routes that carry crude oil and other flammable liquids.” According to the notice, the FRA is proposing to amend the existing regulations to include additional securement requirements for unattended equipment, primarily for trains transporting certain substances. This includes poisonous by inhalable hazardous materials, some flammable gases, flammable or combustible liquids – including crude oil and ethanol – and some explosive hazardous materials.

10 OFI – OCTOBER/NOVEMBER 2014 www.oilsandfatsinternational.com

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

Superabsorbent polymers closer for BASF, Cargill and Novozymes

IN BRIEF USA: Virdia Inc announced on 2 September that it would build a US$60M biochemical facility to turn sugarcane bagasse into industrial sugars and biofuels at the Raceland Raw Sugar Corp mill in Raceland, Louisiana. The plant is expected to be completed by the end of 2016. California-based Virdia is a recent acquisition of Stora Enso Oyj, a US$16bn/year global forestry products company headquartered in Finland.

BRAZIL: In June, speciality chemicals producer Lubrizol Corp, USA, announced it had broken ground on a major US$20M surfactant plant expansion in Belford Roxo, Rio de Janeiro. The company said the expansion would allow it to produce a larger portfolio of surfactant products at the facility, including “a significant number of naturally-derived ingredients” to meet the growing demand for household cleaning and personal care products in the Brazilian market. WORLD: In June, speciality chemicals company Elevance Renewable Sciences, USA, added a second solvent and degreasing product to its portfolio, following its joint introduction of Steposol MET-10U surfactant with the Stepan Company earlier this year. Elevance Clean 1200 is described as “a proprietary ester blend derived from a biobased renewable feedstock” aimed at removing industrial residues such as automotive lubricants, metalworking fluids and hardened cooking greases. The product will be produced at Elevance’s biorefinery in Gresik, Indonesia, a 180,000 tonnes/ year joint venture with Wilmar International Limited, but new capacity is being constructed at Natchez, USA, which is expected to come on-stream in 2015.

ASF, Cargill and Novozymes announced on 15 September that they had progressed another step in producing acrylic acid from renewable raw materials with the successful conversion of 3-hydroxypropionic acid (3-HP) to glacial acrylic acid. They will scale up the process to produce biobased acrylic acid, which BASF will initially use to manufacture superabsorbent polymers that can soak up large amounts of liquid, used primarily for diapers and other hygiene products. “Cargill came together with BASF and Novozymes in August 2012 to do what had not been done ever before,” said Jack Staloch, vice president of R&D at Cargill. “It’s a great example of what can be accomplished when industry leaders with unique expertise in biotechnology and chemistry come together to create new innovations.” Currently, acrylic acid is produced by the oxidation of propylene derived mainly from the refining of crude

petroleum oil. In July 2013, the partners successfully demonstrated the production of 3-hydroxypropionic acid (3-HP), one possible precursor to acrylic acid, at pilot scale. “Now we are working full force on the set-up of a small integrated pilot plant until the end of this year,” said Teressa Szelest, senior vice president of BASF’s global hygiene business. The pilot plant for 3-HP will be operated by Cargill and supported by Novozymes. The companies said superabsorbent polymers and other products derived from bio-based acrylic acid would meet consumer and industry demand for consumer goods based on renewable raw materials and sustainable supply chains. BASF is the world’s largest producer of acrylic acid, a high-volume chemical that feeds into a broad range of products, including superabsorbent polymers.

Braskem in renewable tyre project

myris, Braskem and Michelin announced on 9 September that Braskem was joining a partnership already launched in 2011 between Michelin and Amyris to develop renewable isoprene for the production of tyre and other rubber applications. Braskem, Michelin and Amyris will work together to develop a technology to utilise plant sugars, such as those found in sugarcane or cellulosic feedstocks, to produce the renewable isoprene. Brazil’s Braskem is the largest petrochemical company in the Americas and a global leader in the production of biopolymers, manufacturing green polyethylene from sugarcane-based ethanol. Renewable products company Amyris will share its rights to commercialise the isoprene technology developed under this collaboration with Braskem. Global tyre company Michelin will maintain certain preferential, but not exclusive, access to the renewable isoprene to be produced by this technology. Amyris uses its industrial bioscience technology platform to convert plant sugars into a variety of hydrocarbon molecules, flexible building blocks that can be used in a wide range of products including cosmetics, polymers, lubricants, renewable diesel and jet fuel.

Funding for commercialising PEF

EUROPE: Global renewables company Myriant Corp, USA announced on 2 September that speciality chemicals distributor Azelis Group will distribute its bio-succinic acid throughout Europe. Myriant currently produces bio-succinic acid from renewable feedstocks at its 13,600 tonnes/year plant in Louisiana, USA.

utch biotech company Avantium announced on 5 June that it had secured new investment of US$50M, which would be used towards the commercialisation of its 100% bio-based plastic, polyethylene furanoate (PEF). The funding comes from a consortium consisting of Swire Pacific, the Coca-Cola Company, Danone, Alpla and existing shareholders. Proceeds will be used to complete the industrial validation of PEF and finalise the engineering and design of its first commercial-scale plant. Avantium CEO Tom van Aken said: “Our proprietary YXY technology to make PEF has been proven at pilot plant scale and we

are now moving to commercial deployment.” Avantium uses its YXY catalytic process to turn plantderived carbohydrates into furan dicarboxylic acid (FDCA) ad methyl levulinate, with the former then polymerised with ethylene glycol to give PEF. PEF can replace fossil fuel-derived polyethylene terephlalate (PET) in applications ranging from drinks bottles to industrial fibres. According to Lipid Technology, Avantium has been working with Danone and Coca Cola on developing PEF bottles since 2012 and, last year, Alpla signed an agreement to jointly develop PEF bottles for the personal and home care markets.

Genomatica says nylon is focus

alifornia-based Genomatica announced in August that major nylon intermediates – including hexamethylenediamine (HMD), caprolactam (CPL) and adipic acid (ADA) – are the focus of its third set of bio-based processes under development. Genomatica is developing complete process technologies for the bio-based production of these intermediates, which it will then license to major firms in the nylon value chain. “These three chemicals, with a total market of over US$18bn/year, are used primarily in the production of nylon 6 and nylon 6,6, also referred to as the polyamides PA 6 and PA 6,6,” the company said in a press release. Development of commercial processes for nylon intermediates is expected to take several years and follow a sequence of technical, partnership, scale-up and commercialisation milestones. Genomatica is also inviting leaders in the nylon value chain to join it as development partners. Genomatica’s nylon intermediates programme follows the commercialisation of its process for producing butanediol (BDO), which has been licensed by BASF and by Novamont. In December 2013, BASF announced its first commercial production of BDO using Genomatica’s process (see OFI March 2014, Renewable News).

12 OFI – OCTOBER/NOVEMBER 2014 www.oilsandfatsinternational.com

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DIARY OF EVEN TS

3-6 NOVEMBER 2014 World Ethanol and Biofuels VENUE: Intercontinental Hotel, Budapest, Hungary CONTACT: Informa Agra Customer Services, UK Tel: +44 (0)20 3377 3658 E-mail: registrations@agra-net.com Website: www.worldethanolandbiofuel.com

5-7 NOVEMBER 2014 OFI Asia 2014 VENUE: Kuala Lumpur Convention Center, Malaysia CONTACT: Mark Winthrop-Wallace, International Sales Manager, OFI, UK Tel: +44 (0)1737 855114 E-mail: markww@quartzltd.com Website: www.ofievents.com/asia

6 NOVEMBER 2014 FOSFA Annual Dinner

26-28 NOVEMBER 2014 10th Indonesian Palm Oil Conference and 2015 Price Outlook (IPOC 2014) VENUE: The Trans Luxury Hotel, Bandung, Indonesia CONTACT: IPOC Secretariat, Indonesia Tel: +6221 57943852 Fax: +6221 57943853 E-mail: info@gapkiconference.org Website: www.gapkiconference.org

4 DECEMBER 2014 FOSFA Oils and Fats Dinner VENUE: London, UK CONTACT: FOSFA, UK. Tel: +44 (0)20 72835511 E-mail: contact@fosfa.org Website: www.fosfa.org

9-10 FEBRUARY 2015 Oilseed Congress Europe/MENA

VENUE: London, UK CONTACT: FOSFA, UK. Tel: +44 (0)20 72835511 E-mail: contact@fosfa.org Website: www.fosfa.org

14-16 NOVEMBER 2014 69th Annual Convention & International Conference on Sustainable Technologies and Futuristic Trends: Oilseeds – Oils Processing and Surfactants & Expo 2014 VENUE: Hotel Radisson Blue, Agra, India CONTACT: Prof R K Trivedi, president, OTAI Central Zone, India Tel: +91 841 502 4771 E-mail: otai2014@otaicentralzone.org Website: www.otaicentralzone.org

17-20 NOVEMBER 2014 12th Annual Roundtable Meeting on Sustainable Palm Oil (RT12) VENUE: Shangri-La Hotel, Kuala Lumpur, Malaysia CONTACT: RSPO Secretariat, Malaysia Tel: +603 7727 8458 Fax: +603 7727 9458 E-mail: GA@rspo.org Website: www.rt12.rspo.org

19-20 NOVEMBER 2014 Lignofuels 2014 VENUE: Madrid, Spain CONTACT: Dimitri Pavly, Active Communications International (ACI) Europe, UK Tel: +44 (0)20 3141 0627 E-mail: dpavlyk@acieu.net Website: www.wplgroup.com/aci/conferences/ eu-eef6.asp

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

VENUE: Hotel Arts Barcelona, Barcelona, Spain CONTACT: Mark Phillips, The Oilseed Congress Team, USA. Tel: +1 978 8878800 x 121 E-mail: conferences@soyatech.com Website: www.oilseedcongress.com

2-4 MARCH 2015 POC 2015 – Palm & Lauric Oils Price Outlook Conference & Exhibition VENUE: Shangri-La Hotel, Kuala Lumpur, Malaysia CONTACT: POC2015 Secretariat Tel: +603 7727 8458 E-mail: poc@bursamalaysia.com Website: www.pocmalaysia.com

10-12 MARCH 2015 World Bio Markets VENUE: The Rai, Amsterdam, the Netherlands Tel: +44 (0)207 099 0600 E-mail: info@greenpowerconferences.com Website: www.greenpowerconferences.com

15-17 MARCH 2015 81st Annual National Institute of Oilseed Products (NIOP) Convention VENUE: JW Marriott Camelback Inn, Scottsdale, Arizona, USA CONTACT: NIOP, USA. Tel: +1 202 591 2461 E-mail: niop@kellencompany.com Website: www.niop.org

17-20 MARCH 2015 International Conference on Coconut Oil (ICCO) VENUE: Bangkok International Trade & Exhibition Centre, Bangkok, Thailand CONTACT: AgriAsia, Thailand

Tel: +66 (0)2 670 0900 E-mail: agriasia@vnuexhibitionsap.com Website: www.agri-asia.com/internationalconference-of-coconut-oil.aspx

20-22 APRIL 2015 International Biomass Conference & Expo VENUE: Minneapolis Convention Center, Minneapolis, Minnesota, USA CONTACT: BBI International, USA. Tel: +1 866 746 8385 E-mail: service@bbiinternational.com Website: www.biomassconference.com

23-25 APRIL 2015 International Palm Oil Exhibition (INPALME) VENUE: Medan International Convention Centre (MICC), Indonesia CONTACT: PT International Network, Indonesia. Tel: +62 21 36827651 E-mail: pibi@infopibi.com Website: www.palmoilexhibition.com

3-6 MAY 2015 106th AOCS Annual Meeting & Expo VENUE: Rosen Shingle Creek, Orlando, Florida, USA CONTACT: AOCS Meetings Department, USA. Tel: +1 217 6934821 E-mail: meetings@aocs.org Website: www.aocs.org/meetings

3-6 JUNE 2015 European Fat Processors and Renderers Association (EFPRA) Congress 2015 VENUE: Krakow, Poland CONTACT: Polish Renderers Industry Employers Association, Poland Tel: +48 22 629 73 32 E-mail: biuro@zppu.eu Website: http://efpracracow2015.com

4-6 JUNE 2015 9th China (Guangzhou) International Edible Oil & Olive Oil Exhibition 2015 VENUE: China Import and Export Fair Pazhou Complex, Guangzhou, China CONTACT: Ms Kimy Xie, Guangzhous Yifan Exhibition Service Co Ltd, China. Tel: +86 20 6108 9050 E-mail: kimy.xie@foxmail.com Website: www.chinaexhibition.com

2-4 SEPTEMBER 2015 2nd High Oleic Oils Congress VENUE: Paris, France CONTACT: Fat & Associés, France. Tel: +33 567339 206 Fax: +33 567 339203 Website: www.higholeicmarket.com/hoc-2015

13 OFI – OCTOBER/NOVEMBER 2014 www.oilsandfatsinternational.com

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I NT E RN ATION AL M ARKET REVIEW

upplies of oil-bearing crops are growing even faster than the last review anticipated, backed by record crops of soyabeans and palm oil. While global demand for major oils is seen expanding by 4.5% or 7.6M tonnes in the new season that started 1 October, excess supply will build stocks of oilseeds and oils to record levels, a prospect that is cutting oil values to their lowest in over five years. There is not much on the horizon to spoil the picture of cheap bounty for consumers as this issue goes to press – maybe some reductions in winter rapeseed sowings in Europe and/or some possible weather issues developing for early South American soyabean planters – against which stands a bulky global oilseed stock/use ratio of almost 21%. About half the increase in this season’s oil supply is down to increased palm oil production. Malaysian/Indonesian palm oil crops increased faster than expected in the summer, when what seems to have been an empty threat of dry weather from the El Niño system loomed. Malaysian output is currently running about 944,000 tonnes up on the year, although it seems to have peaked earlier than usual, in August rather than in October, as it did last year. Although demand has increased for palm, exports have continued to under-perform in the last quarter and Malaysian shipments are running six percent lower on the year. Although India has taken more, big drops have been seen in imports by China and Pakistan. At the same time, an earlier forecast boom in Malaysia and Indonesia’s biodiesel output seems to have been significantly overstated or, at best, prematurely talked up. The result has been rising rather than the expected falling stocks in the producing countries. The prognosis for biodiesel has been clouded further by the collapse of Brent crude oil prices to their lowest level in four years, initially in response to the US shale oil/gas boom and, latterly, amid renewed global demand jitters sparked by a wobbling Chinese economy; political tensions in the Middle East, Ukraine and Russia; and even the fear that the Ebola outbreak in West Africa might turn into a wider pandemic. Although the United States Department of Agriculture (USDA)’s palm data is compounded up from national marketing years to fit its October/ September totals, it shows the direction in which this is likely to lead supply and makes for sober reading. It forecasts 2014/15 carryover for palm will reach a new record of 8.8M tonnes – about double the average for the previous decade. Malaysia and Indonesia have responded to the glut by cutting export duties to zero as 2014 draws into its final months and there is industry pressure to extend that waiver into 2015. However, the inescapable challenge for the big suppliers marketing to the customers – heavily weighted towards price-conscious developing countries –

Soyabean surplus weighs on global edible oil prices CHARTS: JOHN BUCKLEY

A glut of soyabeans in the USA and an increase in palm oil production in Malaysia and Indonesia is driving world edible oil prices to their lowest in five years. John Buckley writes

FIGURE 1: CHICAGO SOYABEAN FUTURES

FIGURE 2: VEGETABLE OIL PRICES MONTHLY AVERAGES

is the fact that palm oil is no longer offering its customary steep discounts versus rivals such as soya, sunflower and rapeseed oil.

Soyabean glut grabs headlines Although consumers around the world use more palm than any other oil, the growing soyabean glut has grabbed even more headlines in the pricemaking process. Since the last outlook, the forecast for this season’s world soyabean production has jumped from 300M tonnes to 311M tonnes, and could well go higher still once all the US crop now being harvested has been counted. The most recent official figure for this is about 107M tonnes – 15.5M tonnes more than last year. But, based on the stellar yields being seen in October, some analysts are looking for something closer to 110M tonnes. There is a potential offset from expected revisions to the USDA’s estimates of US planted and harvested area, but that will not materially alter the picture of excess supply. Even with one million tonnes more domestic crush and perhaps one million tonnes to two million tonnes more exports, the USA will see pipelines starved by last season’s record 94.7M tonnes of disposals (+10M on 2013/14, filled to overflowing), resulting in a five-fold increase in ending stocks to their

highest level in eight years, or so the USDA thinks. It has taken just a few months for that developing scenario to knock soyabean values down by 37% from their 2014 peaks to their lowest since mid2009 – and the decline may not be over yet. Last issue, we wondered if soyabeans would drop under US$10/bushel. With that barrier already broken, some analysts think they could now go to US$8/ bushel or less. Prior to the boom years that began with the crop shortages of 2008/09, CBOT bean futures regularly had long spells in the US$5.506/bushel area (see Figure 1, above). Production costs – land, labour, agro-chemicals, etc – have obviously moved up considerably since then which, in theory, should have some ‘price-underpinning’ effect. The trouble is, as any long-term market observer knows, commodity prices tend to move as much on sentiment/emotion as on such economic fundamentals (and, arguably, soyabeans, like grain and sugar, went far too high during the recent commodity boom, helping to inflate production costs, especially for land). The near/medium-term fundamentals could pile on the gloom for soyabean farmers hoping for a rerun of higher prices. Due to the worse returns from key competitor crop maize, Latin American farmers are expected to plant another record crop over the coming weeks and months. If the weather behaves

14 OFI – OCTOBER/NOVEMBER 2014 www.oilsandfatsinternational.com

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there, that could add another seven million tonnes to 10M tonnes of extra soyabeans to world supplies in second half 2014/15 (Feb/Aug). Even if these crops fall short of forecasts, the Latin American region – the source of 70% of the world’s soya oil exports – is carrying in more stock this year than last. It would take something verging on a weather catastrophe to cut production enough to change the outlook for global soyabean surplus. And that does not even begin to take account of the extra acres many analysts think the USA will plant next spring in place of maize. It begs the question, where will all the soya go? World production is seen 26M tonnes higher but crush only 12M tonnes up, the bulk of that increase in China, Brazil, the USA and Argentina, in that order. World soya oil demand is, meanwhile, seen just 1.3M tonnes higher, whereas the extra beans, if crushed would equate to something closer to five million tonnes of soyabean oil. Even allowing for food, direct feed and seed etc, the current global balance suggests a large cushion of soyabeans to cope with any unforeseen weather emergencies. Soya oil prices in Chicago have responded by dropping to almost 25% from their 2014 highs, causing the soya/palm premium to collapse to the mid-US$50s/tonne recently, compared with the 2013 average of almost five times that level. No wonder, then, that palm exporters have been unable to capitalise on their lowest prices for five years.

FIGURE 3: WORLD OILSEED CARRYOVER STOCKS

FIGURE 4: WORLD VEGETABLE OIL CONSUMPTION

Rapeseed & sunflower prices slashed Other mainstream ‘soft’ oils like rapeseed and sunflower oil have also seen their prices slashed as they followed palm and soya oil prices down (Figure 2, previous page) although sunflower has been performing something of an about-turn in recent weeks amid confirmation of the lower production expected in the former Soviet Union. The USDA’s combined figure for Russia, Ukraine, Moldova and Kazakhstan crops has now gone down to 20.55M tonnes from last year’s 23.23M tonnes. A drop had been expected in the last review due to lower Russian plantings but yields seem to have under performed too, dropping by an average 10% across the region. Although Western Europe’s crop is seen close to last year’s at 8.6M tonnes (8.9M tonnes), global sunflowerseed output is expected to drop by about six percent (although it would still be the second largest ever). That has been reflected in the crude sunflower oil price ex-tank Europe, which had dropped as low as €800/tonne in August but has recently returned to around €865/tonne (although that is still a bigger drop from the summer of 2013 than seen for rapeseed and soyabean oils). The USDA assumes sunflower oil production will be maintained at a fairly high level of 15.4M tonnes by working into this season’s larger starting stocks to supplement the smaller crop. It also expects global sunflower oil consumption to rise by almost half a million tonnes – which some observers might think a little optimistic as its premium over its principal rivals starts to inflate again. Rapeseed output, on the other hand, has also turned out a bit smaller than expected this year, thanks largely to downward revisions for Canada, recently estimated at around 14.5M tonnes versus last year’s record of almost 18M tonnes, after a year of often difficult weather. Last year’s crop was in considerable surplus,

however, leaving the 2014/15 market with a stock four times that of the year before (about 2.4M tonnes) to supplement supply. That should be enough to meet anticipated Canadian crush and export demand of about 15.4M tonnes without causing undue end-season supply tightness – especially if, as some analysts think, the crop is actually underrated by about 400-500,000 tonnes. Meanwhile, the European Union (EU) rapeseed crop has gone from strength to strength, beating last year’s bumper 21.1M tonnes by a further 2.4M tonnes. Given current (3.3%) estimated growth in domestic EU demand, that should translate into lower imports. Elsewhere on the rapeseed map, the former Soviet countries are expected to come close to last year’s ample 4.4M tonne crop, while Australia is expected to see a drop from 3.76M tonnes to 2.45M tonnes due to weather-reduced yields. Overall, the world should have enough rapeseed to meet demand for oil products in 2014/15 without making too large a dent in this season’s larger carry-in stocks. In dollar terms, consumers within the Eurozone paid relatively more for rapeseed and other oils because the euro was weak versus the US$ and other major currencies. However, if the soyabean glut is as big as some think it will be, dollar prices for oils across the board will continue to drop, bringing further benefit to EU consumers, even in euro terms.

Future influencing factors ! Where will the final US soyabean crop figure end

up? The top end of forecasts could mean further price cuts. ! South American planting and growing weather – possibly the most important near/mediumterm factor – a re-run of the droughts seen two seasons back could spoil farmers’ plans to expand the crop. ! Europe may sow less rapeseed this autumn for harvest in 2015 due to falling prices and bans on neonicotinoid pesticides widely used to protect this crop. ! Will Russia and Ukraine continue to grow enough rapeseed to supplement EU and other users’ crush? ! Top producer Canada had a smaller canola crop this year after weather challenges that might put some farmers off planting it (next spring) but it has carryover stocks to work down. ! Large sunflower harvests in Europe and the CIS countries seem to be finding ready outlets for the oil, not only in Europe but globally, as lower prices than usual combine with its perceived ‘premium quality/healthy’ image (although suppliers of the other three major oils frequently claim similar attributes for their own products). ! Can palm oil capture more trade as its price sinks? That may be a challenge if prices of other oils continue to follow suit? ! Top importer India reportedly needs more edible oils from overseas in the wake of domestic " oilseed crop shortfalls. John Buckley is Oils & Fats International’s market correspondent

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GLYCERINE IS USED IN THE MANUFACTURE OF SOAPS, COSMETICS AND BEAUTY CARE PRODUCTS, PHARMACEUTICAL AND TOBACCO PRODUCTS, AS WELL AS MANY TECHNICAL APPLICATIONS

Glycerine market explodes The Chinese glycerine market is set to expand to almost one million tonnes in 2014, fuelled by exports to China of good quality crude glycerine from global sources, chiefly South America and Indonesia. Jonathan Heming, CEO of HBI, writes

uch has been written about the effect that biodiesel production has had on glycerine prices, but there has been limited mention of the influence that China has had in absorbing much of the additional glycerine produced by the biodiesel industry during the last decade. Exports of large volumes of good quality crude glycerine are rapidly expanding the size of the Chinese market. A detailed picture of the state of imports can be seen in Table 2 (below), based on data from Chinese customs. The table shows crude glycerine volumes converted to 100% concentration

TABLE 1: ESTIMATED CHINESE DOMESTIC PRODUCTION, IMPORTS AND CONSUMPTION OF GLYCERINE IN â&#x20AC;&#x2DC;000 TONNES, 2005-2014 Domestic production Imports of crude Approx. consumption of crude glycerine & refined glycerine of refined glycerine* 2005 60 40 100 2006 70 100 170 2007 180 186 366 2008 125 246 371 2009 115 350 465 2010 205 368 573 2011 202 438 640 2012 162 489 651 2013 184 566 750 2014 199 719 918 *Exports of glycerine from China are negligible and this estimation takes no account of stock movements, which are not available in China. Sources: HBI China, Chinese Customs Office

TABLE 2: IMPORTS INTO CHINA OF CRUDE AND REFINED GLYCERINE 2009 2010 2011 Crude glycerine 237,600 243,200 316,000 Refined glycerine 112,000 125,000 122,000 Total 349,600 368,200 438,000 Source: Chinese customs data

2012 357,600 131,000 488,600

with estimates for 2014 constructed by a linear extrapolation of the imports for the January to July period until the end of the year. By this measure, 2014 imports of glycerine into China look likely to increase by about 30% compared to 2013. On the other hand, domestic production of glycerine in China is not increasing on the same scale. Several papers have been published debating the viability of biodiesel production in China, including a Global Agricultural Information Network (GAIN) report issued in October, which provides an informative assessment of agricultural markets for the US federal government. The report notes that the consumption of diesel in China in 2012 was 200bn litres. With a growth of six percent/year expected, this would imply a present market size of diesel of about 200M tonnes/year. Should the Chinese government go ahead with a B5 mandate, which was published as a standard in 2010, it would open a mind-boggling 10M tonnes/ year market, with one million additional tonnes of glycerine generated.

B5 standard provides guidance only However, such calculations are based only on speculation. The B5 standard was intended as guidance for automobile constructors and nothing indicates that the government intends to enforce it as a mandate. Moreover, as was discussed at the CBI Oleochem Outlook 2014 conference, held 2-3 July !

2013 467,969 98,562 566,531

Jan-July 2014 344,236 75,350 419,586

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Est 2014 590,119 129,171 719,290

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" 2014 in Qingdao, China, Chinese administrative support in terms of biofuels is strictly limited to non-food feedstocks. Biodiesel producers will struggle to utilise the existing supply chains of used cooking oil (UCO) unless biodiesel is offered at a premium above existing applications (and European doublecounted producers). There are just five small biodiesel operations running in China and HBI estimates that no more than 100,000 tonnes of domestically-produced biodiesel will be available in 2014. In addition, large volumes of biodiesel are being shipped from Indonesia to China.

Reserve stocks may play role Dorab Mistry, director of Godrej International and a respected vegetable oil price forecaster, points out that the Chinese Reserve has been holding several million tonnes of rapeseed oil. This determination to hold enormous reserves of edible oil shows that biodiesel has no role to play in the minds of the planners of China’s economy. Paradoxically, if the Reserve holds onto its stock for too long, the quality will deteriorate and biodiesel may become the only possible application for the oil reserves. Domestic production of fatty acid, fatty alcohol and methyl ester sulphonate is similarly capped by the structural disadvantage that China has no abundant raw material available for oleochemical

TABLE 3: HBI PRODUCTION ESTIMATES FOR CHINESE GLYCERINE Type of feedstock Production of glycerine from fatty acids Production of glycerine from fatty alcohols Production of glycerine from soaps Production of glycerine from biodiesel (UCO-based) Production of glycerine from methyl ester sulphonate (MES) Total Source: HBI

production that could compete with the price of crude palm oil (CPO). HBI’s estimates for domestic production of glycerine for 2014 are shown in Table 3 (above). The 2014 consumption in China of glycerine at 918,000 tonnes is remarkable in the sense that all the glycerine used is refined glycerine. Around 40% of the world’s refined glycerine is now consumed in China, suggesting that Chinese end-users of refined glycerine have widened the geographical reach of their marketing. For instance, one can now find Chinese triacetin producers offering product to a first-class European tobacco producer, which is one of the most difficult accounts to crack. Likewise, epoxy resin made from epichlorohydrin (ECH) manufactured from glycerine is finding its way into Europe in increasing volumes. ECH is more than ever a key downstream application for glycerine and market conditions

TABLE 4: REFINED GLYCERINE SPOT PRICES IN CHINA 2007-2014 Import price of 99.5% pharma grade refined glycerine in US$/tonne CIF CMP* in drums 2007 QII 725 QIII 1,050 QIV 1,820 2008 QI 1,600 QII 1,400 QIII 750 QIV 400 2009 QI 650 QII 600 QIII 500 QIV 500 2010 QI 650 QII 560 QIII 500 QIV 1,000 2011 QI 900 QII 700 QIII 700 QIV 675 2012 QI 635 QII 700 QIII 800 QIV 825 2013 QI 860 QII 900 QIII 930 QIV 900 2014 QI 850 QII 800 QIII 670 Source: HBI

Tonnes 145,000 29,000 10,000 10,000 5,000 199,000

*Chinese main ports

Price of 95% tech. grade refined glycerine in RMB/ tonne in bulk delivered** 6,750 8,750 11,750 14,750 7,800 5,800 3,300 4,700 4,300 4,100 4,000 4,500 3,900 3,800 5,400 5,750 5,000 4,500 4,500 4,500 4,500 4,500 4,600 4,900 5,300 5,400 5,300 4,800 4,500 4,000 **Includes 17% VAT

finally look more enticing. Cheap refined glycerine now coincides with better ECH prices. Epoxy resin, the main application for ECH, is in demand again. Demand should pick up in earnest over the next few months and producers of ECH derived from glycerine have announced that they soon expect to reach 50% of capacity utilisation, which is over 200,000 tonnes/year. These levels of production have never before materialised.

Glycerine prices decrease Meanwhile, prices for all grades of glycerine have been decreasing for a year. As can be seen in Table 1 (previous page), the downward trend of this price cycle has not stretched on for so long since 2007, which explains why many Chinese trading houses are tempted to speculate that prices could soon rebound. However, everything is currently pointing towards further price devaluation. Nevertheless, it is important to point out that Chinese trading houses have the capacity, simply based on speculation, to take out very large volumes of glycerine from the market. As can be expected in a market where margins are very thin and prices fast decreasing, there have been many unfortunate episodes of defaults by Chinese customers. HBI China has had a remarkable performance during this cycle and has limited customer defaults to a handful of cases. In addition, a Herculean performance to convince customers to accept 95% of discrepancies on documents was successful. By HBI’s reckoning, such discrepancies occur in about 30% of letters of credits and are now the usual source of contract defaults. The best quality vegetable 80% minimum crude glycerine price has decreased from US$450/ tonne CIF Chinese main ports in October 2013 to US$240/tonne CIF Chinese main ports in October 2014. Refined glycerine prices have decreased in parallel. The best quality Malaysian refined glycerine is sold below US$650/tonne CIF Chinese main ports in drums today, with many sellers happy to agree deals at lower values before prices decrease further. HBI pegs the average price level of purchases of pharma quality refined glycerine by the Chinese in September 2014 at around US$670/tonne CIF Chinese main ports in drums. As vegetable oil prices are set to remain relatively cheap in the medium term, discretionary blending of biodiesel globally will result in ongoing price erosion in all glycerine markets including China. Nevertheless, with very difficult trading conditions in China, defaults will continue to be a major risk. ! Jonathan Heming is the CEO of HBI, an international brokerage company that moves over 300,000 tonnes/year of glycerine

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Eliminating trans fat Food manufacturers must look at alternatives to partially hydrogenated oils (PHOs) as the USA’s Food and Drug Administration (FDA) moves to ban them. Charlotte Niemiec looks at what could be used in their place

and, crucially, no timeline, the FDA is nevertheless expected to remove GRAS status for trans fats, which would have the effect of virtually eliminating them from the US food supply. Food manufacturers, therefore, will soon have to consider alternatives. One website, www.tfx.org.uk (TFX) campaigns against the use of trans fats in food and offers some suggestions for alternatives for the food industry.

Natural products Instead of using chemically modified fats and oils, food manufacturers could revert to natural fats such as butter or lard (see OFI, April/May, ‘Bringing butter back’, p22) which contains small amounts of natural trans fats but also small amounts of the healthful lauric acid, conjugated linoleic acid (CLA) and vaccenic acid, according to TFX. The drawback for food manufacturers is that butter is expensive and may not be as effective as PHOs. Butter fat is another alternative that is cheaper than butter. It is mostly derived from ‘surplus’ butter by removing the water and protein. As a semi-hard fat, it substitutes directly for hydrogenated oil and has good keeping properties; its fatty acid composition is roughly half saturates and half monounsaturates. Companies using it in their products, according to TFX, including Tesco in its ownbrand dark chocolate and Nestlé in its Kit-Kat bars. Animal fats, claims TFX, are also an excellent alternative, as the human body has proved its ability to process them with no ill effects. The website notes: “The harder animal fats, such as beef fat and venison fat, have a high proportion of longer chain saturates such as stearic acid, which is cholesterol neutral, and only traces of myristic acid. As for palmitic acid – a saturated fat that raises cholesterol, found in all animal fats – [the] body readily converts surplus carbohydrate in the diet into palmitic acid for energy storage. Cutting our dietary intake of palmitic acid will,

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s the US government prepares to remove generally regarded as safe (GRAS) status for foods containing trans fat, food manufacturers that use edible oils and fats must also prepare for the change. The main culprit for trans fat is partially hydrogenated oil (PHO), found in crackers, cookies, cakes, frozen pizzas, snack foods such as popcorn, fast food, vegetable shortenings, margarines and coffee creamers. Using PHOs in food has many advantages for food manufacturers. The process of partial hydrogenation stabilises vegetable oil, increases product shelf-life and decreases refrigeration requirements. Many baked foods require semi-solid fats to suspend solids at room temperature and PHOs have the right consistency to replace animal fats such as butter or lard at a lower cost. They are also relatively inexpensive when compared to tropical oils such as palm oil or coconut oil. However, on the basis of scientific evidence, the finger of blame is being pointed at trans fats as the cause of a rise in coronary heart disease and other adverse health effects. According to data from the World Health Organization (WHO): “Consumption of industrially-produced partially hydrogenated vegetable oils has been associated with an increased risk of cardiovascular disease, infertility, endometriosis, gallstones, Alzheimer’s disease, diabetes and some cancers.” Many countries around the world have taken steps to address the level of trans fats found in their food. Iceland has implemented a total ban on trans fats, while Denmark and Sweden have effectively banned them by implementing a total two percent trans fat limit over total fat found in products. Switzerland followed Denmark’s lead and implemented the same ban in 2008. In 2011, Argentina launched a campaign that also aims to bring the maximum level of trans fats over total fats to two percent by 2014. In 2007, the Food Standards Agency (FSA) of the UK issued a news release stating that voluntary measures within the country to reduce trans fats in food had already resulted in safe levels of consumer intake. However, according to the Food and Drug Administration (FDA) of the USA, the average American still consumes 5.8g/day of trans fat and labelling of trans fat is not as iron tight as other countries; trans fat levels of less than 0.5g/ serving can be listed as being trans fat free on the food label, but servings of 0.5g can quickly add up to significant levels without the consumer’s knowledge. While there has been no official announcement

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therefore, do little to lower levels of palmitic acid in our bodies as long as we eat a carboyhydraterich diet.” However, animal fats also contain cholesterol, which is the main cause of heart disease that the FDA is attempting to curb with its ban on trans fats. But, says TFX, “dietary cholesterol only correlates weakly w i t h

blood s e r u m cholesterol which, in turn, does not directly relate to cholesterol in tissues or cholesterol laid down in a plaque on the inner surface of arteries, which is what is really dangerous to health. The creation of artificial cholesterol plaque is also stimulated by oxidisation, often caused by free radicals – and saturated fats provide some protection against free radicals.” Other advantages of using animal fats include additional health benefits, such as the levels of tocopherols (natural antioxidants better known as Vitamin E) and other fat-soluble vitamins and mineral nutrients. Animal fats tend also to be chemically stable and can, therefore, be used for frying and cooking without significant deterioration. However, the obvious drawback of using animal fats is that they cannot be used in vegetarian products, which vastly limits their use and does not make them a viable alternative for many food manufacturers.

Tropical and other oils – or none? There has been considerable media focus recently on the health benefits of coconut oil, another alternative to trans fats. Various news outlets are claiming that coconut oil has been vilified due to its high level of saturated fat, but that this is not necessarily fair. TFX claims that coconut oil is a good source of the medium-chain saturated fatty acid lauric acid – a protective substance found in mother’s milk that boosts the immune system – and that coconut oil is loaded with antioxidants, protects against heart disease and cancer and is active against pathogenic viruses, bacteria and fungi. However, health

bodies such as the WHO, FDA and American Heart Association (AHA) have warned against excessive consumption of coconut oil because of its high level of saturated fat. Even palm oil, which also contains a high level of saturated fat, may have been unfairly stigmatised, TFX argues. The website cites a submission by the Malaysian Palm Oil Council (MPOC) to the WHO, which argued that “the saturated fatty acid palmitic acid, found in palm oil, behaves similarly to or better than unsaturated vegetable oils in terms of cholesterol levels.” Indeed, palm oil appears to have been the PHO alternative of choice thus far for manufacturers. Nevertheless, from an environmental perspective, there are concerns that the use of palm oil in food products will contribute to a rise in deforestation in palm oil-producing regions, such as Indonesia and Malaysia, in order to clear land on which to produce the crop. The obvious solution is simply to use vegetable oils such as rapeseed, corn, olive or soya. However, there are drawbacks to using these. TFX explains: “Some liquid vegetable oils ... contain up to five percent trans fat as a result of trans isomerisation of alpha linolenic acid (ALA) during prolonged high temperature refining, deodorising and other processing ... While the use of liquid oils is a good idea in a domestic culinary context, the food industry often needs long shelf-lives and, thus, the chemical stability that hydrogenation confers to unsaturated vegetable oils. Hydrogenation is normally applied mainly in order to stabilise certain fatty acids within vegetable oils (mainly ALA), which are prone to rancidity. But, in the case of frozen food, this should not be a significant factor, since the food is conserved by low temperature. There is little obvious reason for using hydrogenated oil rather than liquid oil in frozen food products unless very long storage times are anticipated.” What about removing fats completely? Various companies, such as FiberGel Technologies, are focusing on this. FiberGel offers Z-Trim – a ‘zero calorie’ gel made from corn bran fibre and a few additives. The company claims that Z-Trim can replace fat in processed foods volume for volume, up to 50% of the original fat quantity, without any difference in taste or mouth feel. While it cannot replace all the hydrogenated fat in a product, it could make a worthwhile contribution to the reduction of trans fats, while also reducing total fat and thus the calorific content of products.

Mixing, manipulating and moulding Another option is to use fully hydrogenated oil rather than partially hydrogenated oil, but mix it with unhydrogenated oil. This was flagged up as an alternative by Robert M Reeves, president of the Institute of Shortening and Edible Oils (ISEO) in 2003 to the Washington Post: “One trans fat alternative involves blending fully hydrogenated oil with unhydrogenated oil, neither of which contains trans fats, resulting in a final product that contains no trans fats but that may be identified as ‘partially hydrogenated’ in the ingredient statement.” This would, as TFX notes, result in the mechanical and fluid properties that ! PHOs provide.

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Interesterification offers another alternative, as noted by the American Soybean Association (ASA): “Instead of partially hydrogenating soya oil, food companies may be able to meet some of their specific needs by using a process called interesterification, which rearranges the oil’s fat molecules without adding hydrogen molecules, producing a product with few trans fatty acids. These alternative ways to process soya oil may slightly increase the cost of the finished product, but soya oil is relatively inexpensive and produces a healthy product that’s low in saturated fat.” One company offering such products to the market is the Danish enzyme company Novozymes, which produces Lipozyme TL IM, an enzyme to make trans fatty acid-free bakery shortenings and margarine via enzymatic esterification and interesterification. By using the enzyme, the company says, oil processors can control the conversion and no trans fatty acids are produced. Perhaps the most exciting and forward-thinking approach is the production of advanced oilseeds through biotechnology. As TFX asks, if the oil from traditional oilseeds does not have the qualities the food industry needs, why not change the plants and the seeds they produce, instead of changing the oil? This can even be done by using selective breeding rather than genetic modification. According to TFX: “In the case of soya oil, widely used in the USA, the principal unstable ‘fatty acid’ is alpha linolenic acid (ALA). This has prompted soya breeders to produce seed with a very low linolenic acid content. Leading the field is the State

“If the oil from traditional oilseeds does not have the qualities the food industry needs, why not change the plants and the seeds they produce, instead of changing the oil?”

University of Iowa, which has produced soya with one percent linolenic acid content, as compared to seven percent in normal soya. At this low level, there is no longer any need for hydrogenation.” Biotechnology company Dow Agrosciences is also focusing on advanced oilseeds and has developed a novel line of canola named Nexera. This has been developed to produce an oil – ‘Natreon’ – which, according to the company, satisfies the need of the food industry for stability and shelf life, without the need for hydrogenation, and which contains a fatty acid profile that is beneficial to human health. The company says of the product: “Like traditional canola oil, Natreon contains about seven percent saturated fat, the lowest of any vegetable oil. The unsaturated fat profile of Natreon also is desirable with more than 70% monounsaturated fat and a higher omega-3 polyunsaturated fat content than most of the PHOs it can replace. In addition to health benefits, monounsaturated fat gives Natreon canola oil natural stability, making it ideal for high-heat applications, such as frying, and for products that require extended shelflife, such as baked goods and snack foods. Natreon canola oil has a neutral flavour and preserves the good, clean taste of foods. It also gives fried foods a light, crisp texture, which still is number one with many consumers.” This plethora of options is encouraging for the food industry; while one alternative may not work, another just might. ! Charlotte Niemiec is OFI’s assistant editor

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TR ANS POR T, LOGISTIC S, STORAGE

Major changes to previous cargoes There are major changes to the lists. These include the addition of several products requested by the industry since the publication of the 1996 list and subsequently added to trade lists such as the FOSFA Acceptable List. Not all the latest products have been added as several were not considered by EFSA for reasons discussed later. Examples of the new products are: ammonium nitrate solution, calcium nitrate solution and isobutanol. Mixtures of fatty acids, fatty alcohols and fatty esters have also been added, but have been restricted to those sourced from edible types of fats and oils. Care must be taken when shipping these derivatives from nonedible oils such as jatropha oil, as this becomes more common. EFSA has also noted the problem that arose when used cooking oil (UCO) from public collection sites was incorporated into animal feed and they have added the restriction to these derivatives of “not contaminated with compounds of toxicological concern”. There are also some products that remain on the list, but which have been modified from the previous list. EFSA wished to restrict the types of animal, marine and vegetable oils to those that are currently shipped within the trade. In other words, they did not want to allow any new types of oils to be carried as previous cargoes without those oils being subjected to hazard analysis. To ensure this was the case, EFSA made use of the work carried out by the Joint Food and Agriculture Organization (FAO)/World Health Organization (WHO) Expert Committee on Food Additives (JEFCA) for the International Maritime Organisation (IMO) and restricted them to those that are allowed by IMO to be carried in bulk by sea. These are listed in the IMO publication MEPC.2/ Circ and are the names of the oils that must be listed in ships’ documents for inspection by local port state control. The new list clears up the frequently asked question of whether fatty acid methyl esters (FAME) were included in the 2004 list. It now states “any ester produced by the combination of the listed fatty acids with any of the listed fatty alcohols as well as methanol and ethanol”, meaning that all

PHOTO: SHOTSSTUDIO/FOTOLIA.COM

n May 2014, the European Commission (EC) published revised legislation replacing the 1996 derogation given to the oils and fats trade from the full dedication required for transporting foodstuffs. Although the previous cargo list had been updated in 2004, new legislation was required as the original dedication directive had been withdrawn. Fortunately, the new rules are essentially the same as the previous ones except for the List of Acceptable Previous Cargoes. The new list is the result of work carried out by the European Food Standards Agency (EFSA) and is based on thorough consideration of the hazards that would occur from contamination of an edible oil by a previous cargo. The risk analyses were based on criteria used by the Scientific Committee on Food for the original list and also on criteria devised and accepted by the Codex Alimentarius Commission in 2009. EFSA also introduced the concept of minor components remaining in the materials from the manufacturing process, thus making their investigations more realistic. All the EFSA opinions and the EU legislation are freely available on the internet.

Previous cargo rules change Changes to the previous cargo list published in May 2014 by the European Commission (EC) generally favour the edible oils and fats industry. John Hancock of FOSFA writes commercial FAMEs and fatty acid ethyl esters (FAEEs) are allowed. Nevertheless, shippers must remember that the toxicological status of a previous cargo is determined by that of the most toxic component, however minor the component may be. The types of molasses have also been restricted to those produced from sugarcane, sugar beet, citrus and sorghum but, as this includes almost all the commercial molasses shipped in bulk, this should not be a problem. One modification that should help in the position of tankers for EU destinations is the removal of the restriction for aqueous solutions such as potassium and sodium hydroxide, which are now accepted as previous cargoes in their own right, rather than being transparent cargoes. EFSA accepted that modern cleaning regimes and practice made this previous restriction unnecessary. There have also been some products that have been removed from the old list, for example, calcium lignosulphonate. The reason for this is that the terms include products with a wide range of specifications and thus full risk analyses were not possible. It is likely that products with fixed specification ranges will be accepted by EFSA in future.

FOSFA and NIOP differences There are still some differences between the FOSFA and National Institute of Oilseed Products (NIOP) lists and the new EU list. The major omission is ethyl tertiary butyl ester (ETBE), which is a “big mover” in shipping terms. This material is a replacement for methyl tert-butyl ester (MTBE) in motor fuel and is favoured for its superior environmental footprint.

It is recognised that this product has a lower hazard profile with respect to previous cargoes but, unfortunately, it has not been evaluated by EFSA. The changes in the EU are a result of the adoption by Codex Alimentarius of a set of criteria that were used to develop its own list of acceptable previous cargoes. During the development process within the Codex Committee on Fats and Oils, members were asked for their opinion on all the substances on the Draft List, which was based on the FOSFA and NIOP trade lists. In order to answer this request, the EC asked EFSA to look at the Codex criteria and lists. Since ETBA was not on the FOSFA list at the time that the draft Codex list was drawn up, it was not included in the EFSA work. However, following discussions with the EC, it is probable that a note describing the procedure for adding a substance to the EU list will be posted on their website in the near future. This will require the production of a data dossier, including toxicological data, giving the complete information to enable EFSA to formulate an opinion. FOSFA is willing to work with any manufacturer or shipper to follow this procedure. In summary, previous cargo lists are important because they reduce the risk to consumers from any contamination from previous cargoes carried in chemical tankers. The new EU list of acceptable previous cargoes has some important changes from the 2004 list, most of which are favourable to the industry. The products have been subjected to a consistent set of criteria to produce reliable hazard profiles. The expert opinions have been freely published and it is likely that they will form the basis of a fully harmonised list in the not-too! distant future. John Hancock is FOSFA’s technical manager

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FLEXITANKS ARE HUGE, FOLDAWAY PLASTIC BAGS FOR THE EASY TRANSPORTATION OF EDIBLE OILS INSIDE SHIPPING CONTAINERS

Flexitanks: a bag for life le it n s o er fin nci l n environ ent l v nt es i isin shippin vol es n llowin or etter s nit tion o oils n ts owever etter st n r s re re ire to prevent costl le es re n in he n lie en ll e ine the ch llen es ollowin the ont iner wners ssoci tion on erence hel in r on l

lexitanks are a developing innovation for moving oils and fats around the world, and they were the key focus for delegates gathered at the Container Owners Association (COA) conference in Hamburg, Germany, in July. These huge, impenetrable and foldaway plastic bags, that fit inside shipping containers, are particularly useful for transporting oils and fats as they allow for better sanitation and easier transportation. The COA’s flexitank manager and keynote speaker, Chris Thornton, explained that usage of flexitanks for all kinds of products and commodities had increased significantly over the last decade. In 2002 there were only 40,000 shipments/year but, in 2014, it was expected that some 500,000 consignments would use flexitanks. Damien McClean, founder and CEO of Irelandbased global firm SIA Flexitanks, views flexitanks as being ideally suited for the transport of oils and fats. Indeed, back in 1999, McClean designed, developed and introduced the first multiply disposable

polyethylene flexitank, which is ideal for such liquid and viscous cargoes. “Before flexitanks came along, you would use a variety of drums or a time container. If you send a time container from Turkey to China, for example, and it cost you US$3,000 to send it there, it is going to cost you the same to bring it back empty,” he says. “The benefit of the flexitank is that it uses a standard shipping container and, when you strip the flexitank, the shipping container can then be used to carry TVs or washing machines, for example. So really it is a one-way cost system.”

Helping the world and the wallet Flexitanks offer both financial and environmental benefits to businesses. Many industries have realised that substantial savings can be made through the reduced weight of flexitanks, as they do not utilise traditional glass and plastic bottles and are therefore capable of carrying higher volumes of liquid than bottles.

McClean explains: “The density of oil at 0.9 [specific gravity] in general is really suited to flexitanks because you can get 24,000 litres in there, whereas if you load drums you are only going to get 17 or 18 tonnes [or about 18 thousand tonnes] in there. That is why oils are practically suited towards shipment with flexitanks.” For instance, Olive Oil Market, an olive oil wholesaler based in Greece, offers three shipping methods: drums, heavy-duty plastic barrels with a capacity of 58 gallons (220 litres); totes, which are plastic containers inside steel cages with a capacity of 275 gallons (1,014 litres); and flexitanks, with a capacity of 5,812 gallons (22,000 litres). Besides the considerably increased capacity, flexitanks offer two main advantages over the more conventional methods, drums and totes: their optimisation of loading – 20% higher than a drum or a tote; and their compatibility with olive oil, particularly, in that the materials used do not damage the oil’s quality and properties. Nevertheless, McClean says the single biggest product being shipped by flexitanks today is palm oil, mostly from Malaysia and Indonesia. “Palm oil is the biggest, then wine, fruit juices, and natural and synthetic latex, which comes out of Vietnam, Indonesia, Malaysia and southern Thailand.” According to statistics from 2013 presented by the COA at this year’s conference, Asia – with 50% of cargo volumes – was the biggest regional market for flexitanks, whereas Europe was at 15%, North America eight percent, South America seven percent and the rest of world at 20%. Edible oils and base oils each used 20% of the flexitank market division in 2013. “You do have rapeseed oil movement”, says McClean. “And, if you go down into the Mediterranean, you can ship a lot of different types from pomace grade right up to extra virgin olive oil. And, even in North Africa, from Morocco, Tunisia, you can ship a lot of vegetable or olive oil. Even Ukraine – that is another country that utilises flexitanks for transport of its vast amounts of sunflower oil.”

Better specs needed to stop leakage At the Hamburg conference, a new specification for the manufacturing process and testing of flexitanks was introduced to delegates. Known as PAS 1008, developed by the British Standards Institution (BSI) it will enable flexitank manufacturers to certify the quality of their products. “There are numerous standards throughout the container shipping industry but, until now, there has never been a standard to aid the manufacture or testing of flexitanks, which is important,” explains Thornton. “A damaged flexitank, for instance, can result in large cost implications due to leaking cargo. In view of that, the flexitank industry recognised the need for better-defined criteria for this growing sector of the bulk liquid packaging industry.” The Federation of Oils, Seeds & Fats Associations (FOFSA) participated in the development of the standard. “The main problem in the use of flexitanks is that they are produced with a wide range of qualities and prices. The lower quality bags are prone to leak and, if the tank is at a high level in a container carrier, the damage to the containers on the lower levels can be significant,” said a FOFSA note.

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The standard includes minimum requirements for the material properties of the flexitank film and, where fitted, the outer sleeve; the leak tightness of the loading/discharging valve(s); and the system’s resistance to an impact. Under the standard, flexitanks are tested using rail impact tests – a system where a train wagon carrying a flexitank is driven into another wagon and the flexitank is then tested for leaks or other damage. Alongside the launch of the PAS 1008, Thornton says a key development for the industry was the international specification for flexitank operations, which has been developed by the COA. “Poor quality manufacturing or a lack of testing can make flexitanks more susceptible to damage, resulting in lost or damaged stock as well as the resulting clean-up,” he explains. “In addition to concerns regarding leakage, some shipping lines have been reluctant to carry flexitanks. The pressure placed on the sidewall panels by incorrectly specified or loaded flexitanks can result in the freight container bulging beyond accepted ISO tolerances and can lead to permanent deformation.” To counteract this, the COA drew up a recommended Code of Practice in 2009 to help improve standards in the manufacturing and operation of flexitanks. An expert steering group provided technical expertise through reviewing the drafts and resolving comments submitted during public consultation. Since then, the COA has updated its Code of Practice twice. The latest version, released in September 2011, stipulates specific and detailed

rules for the standardisation of flexitanks’ quality. For example, the code states that “the flexitank shall be marked with the following information (which must be visible when the right-hand door of the container is opened): a. Unique flexitank number; b. Manufacturer’s name and/or recognised logo.” It also sets rules for insuring the flexitanks and states that “there should be insurance cover for not less than US$5M per single incident”. The code requires flexitank operators to create emergency plans and flexitank manufacturers and/ or operators to prepare manuals for fitting, loading and discharge of the tanks. As of June 2014, there are 49 companies from around the world who produce flexitanks that have been certified as compliant with the COA’s code of practice.

Keeping oil warm for easy discharge One of the big challenges flexitank manufacturers face is the problem of reheating certain products when they arrive at their destination. “For example, palm oil taking a ticket into Europe for the winter can take two days to heat up after travel, whereas, if you could heat it up in two hours, that would really be a game changer and there is a lot of effort going into that,” says McClean. His company has specially designed steam heating pads to fit under certain flexitank models, which are capable of evenly reheating the cargo before unloading. “This heater pad is made to allow liquids that have a low melting point and can

solidify when subjected to low temperatures, to be discharged using either steam or hot water as a heat source,” he explains. Sun FlexiTanks, a company based in India, has also produced a heating pad that can safely transport oils in cold temperatures. The heating pad is disposable and is made of two rubber tubes, which stream hot water throughout the pad. They are then placed beneath the flexitanks during transport and engaged when the tank arrives at its destination. Shamrock, another flexitank company based in Cyprus, produces a similar disposable heating pad that can heat up a container of liquid – for example palm oil or olive oil – in about four to six hours. The reason heating pads are necessary, according to Shamrock, is that “at low temperatures, a highviscous product would become sticky and not at all easy to discharge”. Additionally, “alongside EU certifications, our flexitanks are also certified for the transport of halal and kosher products. This gives us great flexibility,” adds McClean. Furthermore, the development of a dependable refrigerated flexitank is an innovation that will give much impetus to flexitank usage, says McClean. His company has already utilised refrigerated flexitanks to ship milk from Australia. “Basically, you can load a flexitank in any country that’s got a port. You can load countless numbers of non-hazardous products into a flexitank. The market is so vast, it’s mindboggling.” Breandáin O’Shea and Kylie Kendall are freelance ! journalists.

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Vegetable oils on the beach It would appear that this may simply be the tip of the iceberg, however, with concern growing about substances such as vegetable oils and waxes washing up on beaches on Baltic and North Sea coasts over the past year or two. While these might not be considered “classic” pollution incidents – and it is still not clear whether they are the result of legal or illegal discharges – they impair the recreational and tourism values of beaches and coastlines and society bears the expense of the clean-up, which can often run into hundreds of thousands of euros. A group of European countries accordingly made a joint submission to the first session of the IMO’s new Sub-Committee on Pollution Prevention and Response (PPR), proposing that additional controls be put in place to reduce the quantities of high viscosity and persistent floating substances discharged to the environment. One of the areas earmarked for further consideration is pre-wash requirements, with the suggestion made that all products defined as ‘persistent floaters’ should be required to perform some form of pre-wash. It has further been suggested that the definition of ‘high viscosity’ in MARPOL Annex II should be changed from ‘50mPa at discharge temperature’ to ‘50 mPa at 20ºC’. The most far-reaching effect of this would be to curtail the current practice of heating certain vegetable oils to take them out of the high viscosity range and thus avoid carrying out a pre-wash. In fact most, if not all, vegetable oils and animal fats would be captured

PHOTO: KOOLE TANK STORAGE

eaders based in the United Kingdom may recall some rather distressing reports in the early part of last year of seabirds washed up on the south coast coated in a sticky substance they had apparently picked up in slicks in the English Channel. It was initially believed that the substance in question was palm oil, but it was later identified as polyisobutylene (PIB), a product shipped in large volumes and used in a wide variety of products, including cosmetics, grouting materials and additives for lubricating oil. While the source of the slicks was never identified, it was widely assumed to be a ship discharging residues, and pressure from environmental groups led the International Maritime Organization (IMO) to agree to an amendment to the carriage requirements for this product. Polyisobutylene has been carried for many years as ship type 2 and pollution category Y, meaning that residues can be discharged into the sea providing certain conditions are met, such as the distance from shore, depth of water and speed the ship is travelling. It was ascertained that it was a form of the product with high molecular weight that had caused the problems and so it was agreed that, henceforth, there should be two entries for polyisobutylene, one with a molecular weight equal to or lower than 224 with the current carriage requirements and one with a molecular weight higher than 224, which should be pollution category X. This will mean that, following discharge of the higher molecular weight variety, the tanks will have to be pre-washed before the vessels leave port, with the wash water being pumped ashore.

Toughening discharge rules As concern grows over substances such as vegetable oils and waxes washing up on coastlines, European countries are calling for tighter o ific tion to r les on the h n lin o ships resi es net tro e o the ntern tion l rcel n ers ssoci tion writes under one or both of these measures. Since there are also more than 100 other products in the International Code for the Construction and Equipment of Ships Carrying Dangerous Chemicals in Bulk (IBC Code) defined as ‘persistent floaters’, to follow this route would require a serious commitment on the part of IMO member states and terminals in their ports to provide reception facilities to deal with the vast increase in residues being delivered ashore. Another suggestion concerns the definition of ‘en route’ in MARPOL Annex II in relation to the discharge of residues. The current definition: ‘underway at sea on a course or courses, including deviation from the shortest direct route, which ... will cause any discharge to be spread over as great an area of the sea as is reasonable and practicable’ is understood by most member states to include a ship going out to sea to tank clean before returning to the same port to backload. There have been suggestions, however, that this practice should be outlawed, with ‘en route’ being redefined to make it clear that it involves going to a different port. This would mean that where a vessel was discharging and back loading at the same port it would either have to deliver its entire tank washing residues ashore or proceed to another port

before returning to backload. Since unloading and backloading at the same port is a fundamental feature of the worldwide parcel tanker trade, this could have a profound effect on the industry.

Tightened regulations look likely No formal proposals have yet been made in respect of any of the above ideas, and IMO procedures mean that a formal proposal would have to be made to the Marine Environment Protection Committee (MEPC) before discussions can begin in earnest in the Evaluation of Safety and Pollution Hazards (ESPH) Group. Given the current programme of meetings of the MEPC, it is unlikely that the issue will be formally considered before the PPR SubCommittee in spring 2016. It nevertheless seems clear that, sooner or later, we are going to see yet another review of MARPOL Annex II and tightening of the regulations concerning the handling of residues of a wide variety of products. ! Janet Strode is general manager at the International Parcel Tankers Association. This article originally appeared in the March 2014 FOSFA newsletter. For more information, visit www.fosfa.org

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he global oils and fats market looks set to be “flooded with soyabeans”, with an extra 35-37M tonnes of production expected in the 2014/15 season, bringing the crop to some 311M tonnes, Thomas Mielke, editor-in-chief of Oil World told the Globoil conference in Mumbai, India on 27-28 September. The glut would result in a surplus in soya meal supply, with crushers and traders needing to find a market for the meal, leading to a fall in prices. The extra soyabeans may not help meet growing world demand for edible oils, as it was unclear at what pace soya would be crushed to release the oil if meals prices were low, “so you could see insufficient supply in several markets”, Mielke added. Other oilseed production for 2014/15 was expected to fall by 4.1M tonnes (against an increase of 13.2M tonnes in 2013/14) and crushing was also expected to fall one million tonnes (against an increase of 9.4M tonnes in 2013/14). Mielke said the growth in the oils and fats market would be below normal at 4-5M tonnes for 2014/15, less than half the increase of the 10.7M tonnes seen in 2013/14. Against that, total consumption of oils and fats grew 8M tonnes in the last 12 months to some 200M tonnes. “We do not expect this to continue because we will not have enough oil supply.” Mielke said the glut of soyabean production was also a big uncertainty for India. Various speakers forecast that the soyabean crop would grow by 1012% to reach 10.5M-12.5M tonnes in India, creating the same uncertainty over the timing of crushings.

Soyabean glut creates uncertainty Plentiful supplies of soyabeans on the global and Indian market will create uncertainties over the timing of crushing this season and subsequent availability of soyabean oil, the Globoil conference heard in India recently. Serena Lim writes India’s high dependence on imports Dinesh Shahra, managing director of Ruchi Soya Industries, said India was forecast to consume 20M tonnes of edible oils next season, of which 7M tonnes would be met with domestic production. India would need to import 13M tonnes of edible oils to meet the shortfall in demand, comprising 9M tonnes of palm oil, 2M tonnes of soyabean oil and 2M tonnes of sunflowerseed and canola oil. Vijay Data, president of the Solvent Extractors Association of India (SEA), said India urgently needed to address its high dependence on imported edible oils, with the SEA putting an action plan to the government to increase productivity of oilseeds, introduce GM crops and increase planting of oil palm as a plantation crop. Edible oil prices were at an historic low since 2008 and there was also an urgent need to protect the country’s farmers from cheap imports, particularly from Indonesia and Malaysia. He urged the government to increase the import tax on crude

edible oil from 5% to 10%, and from 10% to 25% on refined oils. Angshu Mallick, chief operating officer of India’s Adani Wilmar, said India’s edible oil market was huge and unorganised. Of the 18M tonnes of edible oils consumed every year, 50% was in the “unorganised” sector. Only 31% of urban households used branded oils, compared with 9% of rural markets. “It is a cluttered market. Currently, there are more than 2,000 brands reported monthly by Nielsen India in the cooking oil category.” Mallick said India’s growing middle class population meant an increasing potential consumer base. “In 1985, the share of middle-income class in the total population was 1%. In 2010, it was 13% and is projected to rise to 20% in 2015 and 37% in 2025, rising at a CAGR rate of 8.5% from 2010 to 2025. “This offers huge market potential. The market value is estimated to increase by 122% in the next four years from some 470M INR to 1,100M INR in 2018, growing at an annual rate of 25%.” !

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Supercharged safflower trition ll he lth s owersee oil is therin interest ro the oo io el n oleoche ic l in stries e to its hi h level o oleic ci s n ilit to row in ost re ions o the worl h rlotte ie iec writes

s a crop that shows some potential as a biofuel feedstock, safflower remains a surprisingly neglected crop in comparison to the oil giants of palm, soyabean and rapeseed. World production is around 600,000 tonnes/year, with the majority grown in India (41%, on around 300,000ha). Saffloweroilcontainsmanyhealthyproperties, but it does not nearly approach the popularity of sunflower oil, to which it is nutritionally similar. The safflower plant grows up to 150cm tall with globular flower heads that have yellow, orange or red flowers. It resembles a thistle and each branch has one to five flower

heads containing 15 to 20 seeds/head. It is an ancient crop, with evidence of its use dating back to the 12th century – dyes made from safflower were identified in the tomb of Tutankhamen. Its colourings have been used for making red and yellow dyes, which were known as carthamine in the 19th century. According to safflowerseedoil.org, the plant has enjoyed a rich history in both the east and the west and could be described as “one item that bridges the commercialisation of agriculture

from ancient times to modern day.” Safflower seeds produce both monounsaturated oil and polyunsaturated oil, the former commonly used as a cooking oil and the latter as a cold oil, for example, mixed into salad dressings. Both contain Vitamin E, Vitamin K and omega-3 fatty acids. Recently, agricultural biotechnology company Arcadia Bioscience Inc launched its Sonova Ultra GLA safflower oil. The oil has 55% gamma linoleic acid (GLA) at twice the concentration produced in any other oilseed, the company says. To put that into perspective, evening primrose oil contains approximately 10% GLA and borage oil contains around 20%. GLA is an omega-6 fatty acid that is claimed to provide dietary support in weight management and, in combination with the omega-6 fatty acids EPA and DHA, can support heart and eye health and reduce inflammation, asthma, diabetic neuropathy and rheumatoid arthritis. Aside from its edible oil uses, safflower seeds, which are rich in methionine, are useful as an ingredient in formulated poultry feed.

India the key producer Regardless of its relatively small world production, safflower is grown in around 60 countries, including India – which produces almost half the world total – followed by the USA, where California state leads. According to a January 2011 Business Line article, while India is ranked number one in safflower production, it has some of the poorest productivity levels, with low yields of an average 630kg/ha compared to the global average of 893kg/ha. Other producing countries include the USA (17%), Argentina (13%) and Kazakhstan (12%). China leads in productivity, reaching an average yield of 2,519kg/ha, followed by the USA at 1,639kg/ha, Argentina, 897kg/ha and Kazakhstan, 750kg/ha. The article further notes that safflower occupies seventh place in the area dedicated to oilseeds in India, and 99% of it is grown in the southern plateau region (see Table 1, pg 30). The states of Maharashtra and Karnataka contribute 55% and 31%, respectively, but Gujarat has the highest productivity (1,000kg/ha), followed by Karnataka (795kg/ha), Maharashtra (565kg/ha) and Andhra Pradesh (462kg/ha).

Headed for the highway

RESEMBLING SUNFLOWERSEED AND OIL, SAFFLOWER IS BEING EYED AS A WINTER ROTATION CROP FOR BIOFUEL. (PHOTO: ANDREY SHUPILO/DREAMSTIME.COM)

In 2010, the US Army turned its attention towards safflower in Utah, where it grew wild on 20 acres of government land, according to a Salt Lake Tribune article. Noting the potential, officials decided to cultivate the land and harvest the crop, capable of producing 50 gallons/acre of biofuel. While 20 acres was initially selected to trial the scheme, the crop is expected to be planted on the entire 200 acre property. Utah State University (USU) – a key player in the scheme – is pursuing a “FreeWays to Fuel” programme that aims to plant oilseed crops such

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as safflower, canola and flaxseed along the often unused roadsides in the USA. USU researchers suggested that the nation could produce around one billion gallons/year of biodiesel by harvesting along highways. Safflower has also been selected as an ideal winter crop for Texas. One study, conducted at the Department of Agriculture and Applied Economics, Texas Tech University, Texas, USA, concluded that winter safflower would be a profitable feedstock for biodiesel production in that state. The study noted: “With a positive net economic value (NEV) of 99,886 BTU/gallon and net energy ratio (NER) of significantly greater than one, the safflowerderived biodiesel system yields more useful energy out than is required during production, processing and transport.”

region and, although not a major crop, safflower is already cultivated in Afghanistan. Safflower has a long tap root and is highly drought-resistant. If more safflower is planted than is needed to supply the first biodiesel plant, the oil could be sold to consumers – safflower oil is one of the healthiest vegetable oils for human consumption (Afghanistan currently imports most of its vegetable oil). Safflower oil’s cold weather properties approach those of petroleum diesel. For subsequent biodiesel plants, crops such as camelina and pennycress should be considered; these crops are not, however, currently grown in Afghanistan.” Cost savings to the US military were estimated at US$3.7bn in the first year and US$3.8bn in subsequent years, with the cost of an estimated US$90M to build the plant itself.

On-location biofuel in Afghanistan?

Australia leading safflower research

Interest in safflower has been growing throughout the world. In a June 2010 paper titled “Producing and using biodiesel in Afghanistan”, authors Wayne Arden and John Fox suggest the US military grows the crop in Afghanistan and builds biodiesel refineries to produce biofuel for use in their vehicles. Arden and Fox explain that, as importing fuel into the country is an expensive business, producing biodiesel ‘on location’ would make solid financial sense, provide the country with an additional crop and source of income, and perhaps even lessen its production and trade of opium. This out-of-the-box thinking demonstrates the versatility of safflower, which is “best suited as Afghanistan’s first biodiesel crop. It is native to the

A group of researchers and scientists at Australia’s Commonwealth Scientific & Industrial Research Organisation (CSIRO), the country’s national science agency, are working towards the commercialisation of industrial chemicals derived from safflower. The researchers are attempting to ‘supercharge’ safflower to produce increased amounts of fatty acids. Deputy chief of CSIRO Plant Industry, Dr Allen Green, spoke to Glen Paul about the possibilities and why the team chose safflower as its platform. “It was a consultation with the growers themselves. The Grains Research & Development Corporation (GRDC) surveyed and worked out

what would be best as an additional crop for farmers in Australia, and safflower works very well in the northern parts ... Also, because it has a very small production for food, we think we’ll be able to segregate it quite easily for the food and industrial types in production and handling.” He explained that the team were using CSIRO’s gene silencing technology (RNAi technology) to switch off the conversion of a desirable fatty acid, oleic acid, which is very valuable for industrial products, and switch off its conversion to the polyunsaturates, which are good for food, but not good for industrial products. Dr Green explained that safflower could have a significant impact on lessening our dependence on fossil fuel petrochemicals as a biomaterial. Using safflower has the additional advantage of producing greater energy than that put into producing the crop. Green notes that “we will need to grow and produce more product per unit area of all our crops in the future, as demand for food and industrial products goes up, so the challenge is to get more productive and get more value out of our cropping systems.” Oleic acid is an important oleochemical platform that can be used in a range of industrial applications, such as high-stability lubricants, dielectric fluids (electrical insulators) in power transformers, and as raw materials for bio-based polymers (plastics). “It’s interesting that the high oleic oil that we produce could be suitable for food, but in our food oils we need to have a balance of fatty acids for nutrition, so high oleic oils have been developed overseas but they’ve generally been up to 80%, so !

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" that you still get the nutritional fatty acids in those oils. It’s completely different for industrial uses – you want as high a purity as possible, so really to push this up to 93%, potentially to 95% of one particular compound is a very big advantage for industrial use. We wouldn’t think that that oil would be used in food production, although it would be perfectly safe for human consumption.” He added: “It’s still a number of years before we get this to market. Obviously, we’ve made this breakthrough and we now have to develop varieties and commercialise those, so it’s probably five or six years down the track before farmers can get involved. But we’re interested in this particular product because we thought it had potential for about 100,000ha of additional production for Australian farmers, so it’s a sizeable new crop benefit, and that’s why the GRDC was interested as well. And they see that, in the long-term, these industrial products will also have premium prices, compared to traditional crops, so there’s an opportunity for added value for the growers.” In January this year, the Office of the Gene Technology Regulator (OGTR) approved the team’s application to establish field plots of experimental safflower lines. If the outcomes are positive, the group would work toward making commercial varieties available by 2018. “It’ll be a GM crop, even though it doesn’t have any new transgenes, it has only its own DNA replaced.” Finally, Green notes, the GRDC is looking into safflower improvement in anticipation that the crop will be bigger in the future. ! Charlotte Niemiec is OFI’s assistant editor

“Safflower oil is one item that bridges the commercialisation of agriculture from ancient times to modern day”

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OILSEED S

OIL PRODUCED FROM SAFFLOWERSEEDS IS FLAVOURLESS AND COLOURLESS AND NUTRITIONALLY SIMILAR TO SUNFLOWER OIL

TABLE 1: SHARE OF SAFFLOWER TO TOTAL OILSEEDS AREA AND PRODUCTION IN INDIA Year Total oilseeds* Total oilseeds* Safflower % total Safflower % total – Area Production Area Production 1990-93 25.1 19.1 2.7 1.5 1995-98 26.2 22.8 2.6 1.4 Source: Kalpana Sastry et al, 2001 * 3-year average

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The route forward There are three main routes forward for biofuels, given the slow development of second-generation commercial production: an incremental route, a transitional route and a leapfrog route. This feature is extracted from a paper published by the NextSTEPS Research Consortium of the Institute of Transportation Studies

iofuels present great promise but also great challenges, according to a paper published by the NextSTEPS Research Consortium (NextSTEPS) of the Institute of Transportation Studies at UC Davis, titled ‘Three Routes Forward for Biofuels: Incremental, Transitional and Leapfrog’. Enthusiasm was high in 2006 when President George W Bush promoted biofuels in his State of the Union speech to enhance energy independence and reduce greenhouse gases (GHG). Achieving those goals seemed straightforward: boost corn ethanol, then transition to non-food (cellulosic or algal) materials. This plan received strong support from the agricultural industry, energy security advocates and farm belt communities. Some environmentalists expressed concerns but, overall, optimism was high. Scepticism slowly spread in the following years. Corn ethanol production was energy-intensive, consumed large amounts of land, likely raised food prices and indirectly increased GHG emissions by diverting land to corn production. With increasing quantities of US corn production being diverted to ethanol production, reaching 40% in 2009, the debate over the magnitude of these impacts among stakeholder groups and researchers soon spilled over into the mass media and Congress. Scepticism was even stronger in Europe, aggravated by increasing use of fuels made from vegetable oils, especially involving palm oil linked to deforestation of rainforests in Southeast Asia. When the US Congress codified the Bush goals into law in 2007 in the Renewable Fuel Standard (RFS), it established a mandate of 15bn gallons of corn ethanol by 2015. This was accompanied by a delayed but rapidly expanding target for cellulosic fuels, reaching 16bn gallons/year by 2022, plus

an additional one billion gallons for biodiesel from algae, waste oils and oilseed crops. Corn ethanol was expected to create the conditions for cellulosic (and algal) biofuels to leapfrog forward – providing even greater energy and GHG benefits. However, the jump from demonstration to commercial stage has so far proven difficult for cellulosic (and algal) biofuel companies. In 2013, the production of starch and oil crop-based fuels topped 14bn gallons. Fewer than one million gallons of cellulosic biofuels were produced in 2013, while the mandated level had been set at one billion gallons. To date, even smaller volumes of algae-based fuels have been produced. Given the slow development of commercial-scale cellulosic and algal biofuels, the NextSTEPS paper examines the future of biofuels by characterising three distinct routes forward.

The options The first is the incremental route, in which “progress happens at existing biorefineries by improving the existing production system”. There has been considerable innovation at existing biorefineries that produce corn ethanol and biodiesel. Most notable are new technology processes to extract corn oil from the ethanol co-product stream for sale as biodiesel and animal feed – now integrated into about 80% of US corn ethanol plants. Additionally, some biorefineries are switching their plant’s process fuel to lower-carbon sources (for example, from natural gas to landfill gas), while others are lowering the energy use of their plant by switching from dry to wet distiller grains co-production. Still others are improving the starch-to-ethanol yield through the use of corn strains that are

PHOTO: SKYPIXEL/DREAMSTIME.COM

genetically optimised for ethanol production. The feedstock mix for biodiesel production has shifted toward corn oil and waste greases, which have lower rated carbon intensities. The second route is the transitional route, in which “firms gain experience with cellulosic feedstocks while using existing infrastructure and supply chain logistics to the largest extent possible”. A number of other biofuel technologies are emerging that facilitate a transition to large-scale cellulosic production. “Bolt-on” systems refer to equipment added onto existing biorefineries that allow for the processing of cellulosic material alongside corn or sugarcane sugar streams; boltons are either physically bolted on to the existing system or added as adjoining facilities that share some infrastructure with the existing system. Currently, three types of feedstocks are being tested in bolt-ons: ! Corn kernel fibre (a physical bolt-on that shares most corn ethanol plant facilities ! Bagasse (already processed at sugarcane ethanol plants to produce electricity, but requires some additional process vessels for ethanol conversion ! Corn stover (like bagasse, except not as yet collected and brought to a central location). Bolt-ons are transitional in that they generate additional demand to help establish larger markets for the enzymes needed to break down cellulosic material, while also giving fuel producers experience using the enzymes as well as the cellulosic material, including the logistics of collecting and preparing the feedstock for conversion. Some efforts also are helping increase the general knowledge base for handling and converting cellulosic biomass. In addition, biochemical firms have also begun converting cellulosics to industrial chemicals, thus helping to establish enzyme markets. Finally, other companies are also boosting the knowledge base about cellulose material, turning it into intermediates use for heat and electricity. The third and final route is the leapfrog route, in which “cellulosic and algae investments to produce ethanol or drop-in gasoline or diesel replacement

32 OFI – OCTOBER/NOVEMBER 2014 www.oilsandfatsinternational.com

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fuels are made at new, stand-alone biorefineries”. Currently, about 50 firms are pursuing commercial-scale cellulosic and algae plants in the USA. These associated facilities are at various stages of development, including at least six with partially or fully completed commercial-scale plants. However, output from the completed plants typically remains far below plant capacities due to financial and technical problems. As the next biorefineries come online this year (for example, POET and Abengoa), as well as others in Europe, the industry will have a better picture of the current viability of commercial-scale cellulosic and algae biofuel.

Purity Rules

Financial considerations These biofuel routes lay the foundation for an in-depth analysis of the tradeoffs between different investment and policy strategies – in terms of carbon emissions reductions and level of investment risk. Relative to the transitional or leapfrog route, incremental improvements typically have lower financial risk, shorter payback periods, lower capital requirements and higher probabilities of successful implementation. Therefore, as US biofuel policies have become increasingly stringent, these improvements appear to be the “lowest hanging fruit” for producers. However, the incremental route is likely limited in its GHG reduction potential, both by the thermodynamic potential of existing biorefineries and the fact that expanded use of conventional biofuel feedstocks includes the risk of higher emissions from land use change. On the opposite end of the risk spectrum is the leapfrog route. Leapfrog technologies are expected to have low carbon intensities compared to corn ethanol, due to the high yields of dedicated energy crops, as long as they are grown on land not under pressure for other use. Leapfrog technologies also can unlock important resources – such as organic fractions of municipal waste – that have no land use risk and few alternative uses. However, leapfrog technologies may remain costly and challenging to move to maturity – with costs dropping slowly from the first plant to the ‘nth’ plant – and may be seen to waste public money if relatively few new technology advancements and benefits are achieved on a year-by-year basis. Since 2009, funding from venture capitalists, federal programmes and oil companies has averaged US$1.8bn/year. The NextSTEPS model suggests that, in a world with low-to-moderate gasoline prices, leapfrog technologies might never reach cost parity with petroleum fuels. Leapfrog technologies could also have additional environmental costs, such as those related to land competition. Between the incremental and leapfrog routes lie transitional technologies, typically “bolt-on” units. The NextSTEPS research says that bolt-ons could increase ethanol yield/acre of corn by five percent for corn fibre and up to 30% for stover. Therefore, the transitional route is limited in its maximum potential GHG benefit, as corn acreage in the USA is not expected to greatly expand in the future and would cause greater land-use impacts if it did. Ensuring that agricultural residue is sustainably harvested (enough left in place to meet production needs) also limits supply. If every corn ethanol plant in the USA added fibre and stover bolt-ons, this route will offer approximately 3.5bn additional gallons of cellulosic biofuel. However, its much bigger benefit could lie in aiding a transition to large-scale cellulosic biofuel production. The NextSTEPS paper estimates that the incremental route has the potential to result in biorefineries with lifecycle GHG emissions about 30% lower than existing conventional plants, or transitional and leapfrog biorefineries with 20% and 80% lower emissions than gasoline, respectively. The study suggests that a strongly implemented incremental route could improve the GHG ratings performance of a far larger biofuel production volume in the next 10 to 15 years than the transitional or leapfrog routes. This leads to greater potential GHG benefits in early years, but gains flatten out as, eventually, nearly all incremental biofuels are fully improved. In contrast, with steady growth, potential aggregate GHG reductions associated with an aggressive leapfrog route could surpass the incremental route by 2025 and eventually be much larger.

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Incremental developments Incremental developments made to existing biorefineries aim to incrementally lower energy use and cost, and potentially emissions as well. Examples include improvements made to feedstock harvest and transportation, feedstock loading, conversion efficiency and distribution at corn ethanol 33 OFI www.oilsandfatsinternational.com

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BIOFU ELS

" or soya biodiesel plants. According to the Air Resources Board (ARB)’s website, the industry has seen a large-scale movement towards more efficient and lower carbon-intensive plants in the USA and Brazil. In total, the biorefineries that have applied for new or modified pathways in California’s Low Carbon Fuel Standard (LCFS) programme produce approximately 5.5bn gallons/year of fuel, not all of which ends up in California. While reductions in carbon emissions need to be independently vetted – and displacement effects analysed – the advantages of this route are that (1) the existing fuel supply is large (over 14.5bn gallons in 2013) and, therefore, the potential carbon reductions are also large and (2) these improvements often add value to a producer beyond carbon reductions.

firms, such as Midori Renewables, Vertimass LLC, ICM, Edeniq, Gevo, BP, Inbicon and DuPont, develop and license bolt-on technology to existing biorefineries. Others are developing conversion technologies that might lower costs in the future. Ensyn and Talko Industries are building a fast pyrolysis plant in Alberta, Canada, which will be used to power Talko’s sawmill. Ensyn has another project with an oil company in which they are blending small amounts of pyrolysis oil from cellulose in crude oil prior to refining into petroleum products, thereby lowering the carbon intensity of the petroleum production.

Conclusions

Leapfrog developments The leapfrog category includes cellulosic and algaebased biofuels produced at stand-alone plants. Because these technologies are not proven at scale, there is a chance the fuels will continue to be much more expensive than conventional routes or that they will fail to live up to the promised environmental performance. Additionally, the approach entails a large risk of failed investment, as clearly demonstrated by multitudes of start-ups in the past decade (the paper counts at least 22 bankrupt firms and dozens of firms that have pivoted out of cellulosic biofuels). The US federal government is the largest single supporter of the leapfrog route and invests through: small-business loans, biorefinery grants, Advanced Research Projects Agency-Energy (ARPA-E) grants, US Department of Agriculture (USDA) feedstock improvement grants, and the Department of Defense advanced biofuel programme. Private equity funds are also active funders of the leapfrog approach and tend to focus on small, start-up leapfrog firms. A third source of funding for the leapfrog approach is from large, capital-intensive corporations like oil companies or chemical manufacturers. Firms such as Shell, British Petroleum and DuPont have the advantage of deep pockets to disperse the risk of failed investments and global operations to utilise low-cost feedstocks and labour markets. They also tend to be technically sophisticated with a strong understanding about liquid fuel conversion processes and complex, global supply chains. However, for the corporate leapfrog funders, biofuels offer a much lower profit margin than the products that fall in their core expertise (for example, gasoline) and several have scaled back biofuel investment in the last three years. The NextSTEPS paper identified 66 firms worldwide that have built, are building or plan to build cellulosic or algae biorefineries. Of these, 53 were based in the USA. Other leapfrog firms have stayed alive simply through continuous fundraising or through switching to higher value, non-energy bioproducts. Of the various conversion technologies, biochemical conversion using enzymatic hydrolysis and fermentation is the preferred technology of the greatest number of firms.

Transitional technologies Technologies that utilise small quantities of cellulosic material are potentially a bridge to

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the leapfrog route. These technologies give producers much-needed expertise with handling and converting cellulosics, and potentially help establish market connections for cellulosic feedstocks. Three examples of products from transitional technologies are: ethanol from bolt-on plants (including additions within, or adjacent to, existing plants), industrial chemicals and pyrolysis used in petroleum refining. Bolt-ons are typically smaller scale and have a lower investment risk than stand-alone cellulosic and algal biorefineries. These plants benefit from shared supply-chains, distribution networks and capital costs, with shared or adjacent conventional biorefineries. Currently, three types of bolt-on facilities are under development: corn fibre, sugarcane bagasse and corn stover. Bolt-ons using corn fibre have the smallest investment risk because the additional equipment is small compared to the conventional plant. Edeniq and ICM claim their corn fibre conversion technologies increase yield by three to five percent above conventional corn ethanol. Bolt-on facilities that use bagasse are also being developed. They require larger processing units, fewer shared facilities and higher investment risk than corn fibre conversion, but benefit from the fact that bagasse is already collected and stored at sugarcane plants. Thus, unlike for corn stover, a new collection process is not needed. Bagasse bolton units are expected to increase yield by as much as 25%. For bolt-on plants, the largest investment risk is corn stover. The POET-DSM plant in Emmetsburg, Iowa, which opened this summer, has a separate corn stover biorefinery adjacent to the existing corn ethanol plant. The plant is considered a bolt-on because it shares entry roads and grid connections as well as ethanol processing. The NextSTEPS paper estimates that stover processing can increase yields at corn ethanol plants by 30%. Several other firms could reasonably be placed as working within transitional technologies. Some

If all three routes were pursued in an aggressive fashion, the study estimates a modest decline in transportation GHG emissions by 2030 relative to today’s level. (This calculation relies on controversial carbon intensity values and accounting used in today’s policies). Several other biofuel GHG reduction strategies are also being pursued around the world, such as bolt-on facilities in Brazil utilising sugarcane bagasse and various renewable and biodiesel facilities utilising non-food crops (for example, jatropha) and algae. In the near-term, the study sees incremental improvements at existing corn ethanol and soya biodiesel plants or similar facilities using other feedstocks offering the greatest carbon reduction potential. However, if the goal is to achieve large GHG reductions from biofuels (for example, greater than 20%), then leapfrog technologies appear very likely to be needed. Cultivating them at the scale required under conditions that do not erode their low-carbon status, especially given other demands on biomass, is a pressing challenge for the future. An incremental technologies strategy is especially attractive, given the slow development and commercialisation of leapfrog technology and the unpredictable current and future policy landscape. Precisely how far process improvements can go in terms of lowering carbon intensity at a relatively low cost is uncertain, and remains an empirical question. The transitional technologies are attractive because of their potential to facilitate learning and development for future cellulosic biofuel production at a far lower investment and risk level than fullscale leapfrog investments. But, ultimately, leapfrog technologies should be attractive to any policy maker serious about deep GHG reductions in the transportation sector. However, the paper concludes, if a long-term goal is to expand the share of biofuels in aviation, marine transport and heavy duty vehicles, then drop-in biofuel pathways will be needed. The transitional innovations and most of the current leapfrog innovations do not involve the use of drop-ins. From an energy planning perspective, the NextSTEPS paper recommends greater specific policy focus be placed on developing drop-in biofuels. ! This feature is extracted from the NextSTEPS Research Consortium of the Institute of Transportation Studies at UC Davis’ report titled ‘Three Routes Forward for Biofuels: Incremental, Transitional and Leapfrog’ and has been used with kind permission.

34 OFI – OCTOBER/NOVEMBER 2014 www.oilsandfatsinternational.com

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I NSPE CT ION , TESTIN G & C ER TIFIC ATION

Inspection and testing round-up IFFO opens certification for non-members PHOTO: IFFO

Oils & Fats International reports on some of the latest news and developments surrounding inspection testin n certific tion around the world

SGS expands globally

GS has made a series of expansions across the globe. SGS Indonesia announced in July the opening of a new agricultural laboratory, located in Banarmasin, South Kalimantan, Indonesia. It is an analyst member of the Federation of Oils, Seeds and Fats Association (FOSFA). After the success of a similar lab in Medan, North Sumatra, SGS has expanded its existing line of services for the palm oil business to serve an increased demand for testing. Indonesia, the world’s largest producer of palm oil, has seen demand for the product for both food and non-food use increase rapidly over the last 20 years. The new laboratory in Banjarmasin is located 15 minutes from Syamsuddin Noor airport and seven hours from Tarjun. The company said the facility’s convenient location woud drastically reduce turnaround times and would help preserve the quality of samples, due to shortened shipping times. As international trade in seed grows, so does the requirement for timely and effective seed testing and analysis services. To meet increased demand in one of the world’s major markets, SGS has launched a new seed testing laboratory in China. The new facility provides extensive laboratory testing and research services, delivering analysis and evaluation of seed quality, optimisation and improvement. The company provides a series of genetically modified (GM) tests based on DNA and polyamerase chain reaction (PCR), and can identify the presence of GM organisms in concentrations as low as 0.01%. For non-transgenic seeds, it provides testing for the detection of specific GM organisms to avoid transgenic security issues. It conducts standard label testing, which is mandatory testing of items according to the four seed labelling regulations of China’s seed law, including seed germination testing, analysis of clarity, variety identification, purity testing and moisture testing, among others. The company also performs TZ testing, a three-step test for viability. This service examines preconditioning, preparation and staining, and evaluation. In Argentina, SGS’s contract research services have developed a new field trial facility in Junin city, the country’s main crop region. A new team, equipped with the latest technologies, will conduct efficiency trials, good laboratory practice (GLP) studies and GM regulated trials.

he International Fishmeal and Fish Oil Organisation (IFFO) has decided to allow nonmembers of the organisation to apply for certification under its Global Standard for Responsible Supply (RS), in order to continue the standard’s growth as recognised best practice for fish oil and meal production, Lipid Technology reported in June. In addition, it will add a second certification body to its programme to give more choice and availability, and a number of new clauses relating to factory management have also been proposed. These can be viewed on the organisation’s website at www.iffo.net. Andrew Jackson, chairman of IFFO RS Board, said: “The IFFO RS standard has got off to an excellent start, but the board felt that the time had come to widen the ambition of the standard to address the whole global marine ingredients industry. The decision to allow nonIFFO members to apply for the standard gives the factories processing the over 40% of global production not coming from IFFO members the opportunity to demonstrate their responsible practices.” Elaborating, he said: “These practices will now include not only responsible raw material procurement and safe processing, but also some entry-level requirements in the areas of factory effluent and emissions, as well as employee terms and conditions. These changes should reassure the marine ingredients value chain that products certified to our standard are being responsibly produced and are increasingly available for their use.”

EU lifts restrictions on Ukrainian sunflower oil

MBP Group receives RSB certification

he European Union (EU) endorsed measures in July to lift import restrictions on sunflower oil from Ukraine that have been in place since 2008. A specific certification scheme was applied following the discovery that a number of consignments of sunflower oil from Ukraine were contaminated with mineral paraffin. Since tests carried out at EU borders have revealed no further contamination, the systematic testing regime has been gradually relaxed. In 2009, the 100% testing of imports was replaced with random sampling, while systematic testing of exports before they left Ukraine was maintained. The Standing Committee of EU Member States experts agreed to measures lifting the testing regime, which will apply 20 days following publication at the EU Official Journal.

y-product collection company MBP Group has achieved the Roundtable on Sustainable Biomaterials (RSB) sustainability certification for its waste material collection, trading and distribution activities, the company announced in August. David Magnussen, CEO, said: “MBP Group was built on a sustainable background, adding as much value as possible to industrial by-products. Sustainability was – and still remains – a key ingredient of our business activities and its success. We are pleased to see that our company was certified according to the RSB scheme; this constitutes an important recognition of our continuous efforts for the sustainable management and trade of industrial waste and by-products.” The company provides services to a wide range of industries and specialises in finding optimal markets for bio-derived fats and oil, as well as solids and powders.

36 OFI – OCTOBER/NOVEMBER 2014 www.oilsandfatsinternational.com

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I NSPE CTION , TESTIN G & C ER TIFIC ATION

! Edible

oil adulteration up to 64% in India

n July, the Consumer Guidance Society of India (CGSI), a city-based NGO, claimed at a press conference on loose edible oil adulteration that almost 64% of the loose edible oil in India was being mixed with palm oil, DNAIndia reports. Sesame seed oil, coconut oil, groundnut oil, mustard oil, sunflower oil, cottonseed oil and soyabean oil was found to be affected. Dr Sitaram Dixit, chairman of CGSI and Dr M S Kamath, secretary, CGSI said their team had collected as many as 269 samples that had been sent for testing. Of the collected samples, almost 64% tested positive for adulteration with inexpensive palm olein. Kamath said: “Luckily, there were no dangerous substances found in the samples, but the majority of the oil samples contained cheap palm olein. We want the state government to withdraw the government resolution that it passed in 2013 to allow the sale of loose oil.” He added that CGSI had raised the issue with the Food and Drug Association. A report from the Deccan Chronicle further reported that packets of Sun Gold refined oil, Best Heart refined sunflower oil and Everyday Gold refined sunflower oil were found to be deficient in volume, and that the Legal Metrology department had booked seven cases against retailers of edible oil in Hyderabad. “After getting information from the public that traders of Sarda Oil Mills and BRS Refineries were engaging in short-filling of edible oils sachets and tins, we conducted a raid on the edible oil units. During our inspection, we found that volumes were less by 15ml in one litre sachets, and 134ml in 15kg tins and 5kg tins. “Seven cases were booked for violation of the Legal Metrology Act 2009 and Packaged Commodity Rules 2011. Goods worth Rs 20,51,860 (US$33,681) were seized,” the news outlet reported S Gopal Reddy, ADGP and controller of Legal Metrology, as saying.

Inspectorate Agri expands across Canada

nspectorate Agri, a core part of the Bureau Veritas Commodities Division, announced in a 16 June press release that it had acquired an ISO/ IEC 17025:2005 accredited grain analytical laboratory in Saskatoon, Saskatchewan, Canada, which specialises in grain inspection and testing, including grain grading, mycotoxin analysis (vomitoxin, ochratoxin, aflatoxin and zearalenone), protein and moisture estimation, falling number analysis and insect infestation detection. The company has also opened two new labs in Canada, one in Weyburn, Saskatchewan and one in North Vancouver, British Colombia, the press release said. Both facilities have similar capacities to the Saskatoon facility for testing and grain inspection. Services include on-site grading and inspection vessel loading and inspection, quality and quantity certification for vessels, and rail car sampling and inspection.

Coconut insecticide endangers certification

roducers of virgin coconut oil (VCO) in the Philippines have expressed concern that the insecticide used to kill the coconut scale insect (CSI) (aspidiotus rigidus) is likely to affect their certification as suppliers of organic produce, Business World reported in July. The family of insecticides called neocotinoids is injected via the trunk of the coconut tree and could cause the chemicals to seep into coconut products such as VCO, they said. According to a statement sent out by the United Coconut Association of the Philippines (UCAP), “organic certification” requires no chemicals, no chemical pesticides and no inorganic fertilisers”. Without certification, importing countries cannot sell these products as “organic” or “natural”. The Philippine Coconut Authority (PCA) has said that it is “endorsing both chemical and

organic protocols” in combating the insect, and said that chemical treatments have “scientific basis”. “We are not insisting on relying only on the use of chemicals. PCA is promoting both chemical and organic solutions. Studies and experiment(s) show that the use of both chemical and organic pesticides complement each other, with the chemical pesticide having a 30-day active effect on eradicating the CSI and the organic pesticide being able to flush out the remaining CSI on surfaces of fronds.” According to the PCA, an organic solution is also available for spraying on the infested trees, saying that “the product is 100% organic-based and biodegradable as it is made from edible plant sources”. This had been effective in trees in the Calabarzon region, where the CSI infestation was most serious, the report said.

Palm oil benchmark Certified coconut oil Palm Oil Innovation Group (POIG) launched in Philippines NGO-backed has set up a new benchmark for palm oil with a view to taking responsible palm oil sourcing to a new level, Community reported in July. The group, established by NGOs including Greenpeace and the WWF – as well palm oil producers – has published a set of indicators that allow independent verification that palm producers are meeting the strict guidelines set out by the POIG charter. The charter builds on the Roundtable for Sustainable Palm Oil (RSPO)’s certification standard, with additional requirements that ensure all palm oil operations are free from deforestation, the destruction of peatlands, and human and labour rights abuses. POIG added that the new benchmark standard was good news for the growing list of palm oil consumer companies, including Nestlé, Ferrero, Unilever, L’Oreal, Safeway, DelHaize, Procter & Gamble, General Mills, Kellogg and Mars, which have made ‘No Deforestation’ commitments and are demanding responsibly produced palm oil.

programme to develop a certified coconut oil supply chain to enhance sustainability and improve the livelihoods of 2,500 coconut growers in the Philippines has been launched, the Indian Coconut Journal reported in May. The programme is the result of a partnership between industry giants the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, BASF and Cargill. The partnership is co-financed by the German Federal Ministry for Economic Cooperation and Development (BMZ) through its programme ‘develoPPP.de’. The programme focuses on smallholder coconut growers in the southern Philippine island of Mindanao and aims to raise farmers’ income by improving productivity and coconut oil quality. It will also introduce the Sustainable Agricultural Network (SAN) standards as a basis for Rainforest Alliance Certification for coconut production. Farmers will be provided with newly designed coconut dryers to improve the quality of copra (coconut meat) and coconut oil.

Alex Stewart to offer inspection in Uruguay

lex Stewart International Corporation, which provides inspection for foodstuffs and agricultural commodities, among others, announced in January it was now able to provide full inspection services for metals, minerals and soft agricultural commodities from Uruguay, South America. Coverage would include all ports of loading, discharge, refineries, warehouses and points of logistical importance for quantity and quality certification, and for the import and export of commodities in Uruguay. In addition, Uruguayan inspection operators would support and complement the company’s inspections infrastructure throughout South America, in " particular Argentina and Brazil.

38 OFI – OCTOBER/NOVEMBER 2014 www.oilsandfatsinternational.com

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STATISTIC S

SUNFLOWER OIL VS RAPESEED OIL PRICES (US$/TONNE)

STATISTICAL NEWS FROM MINTEC Sunflower and rapeseed oils Prices for both sunflower and rapeseed oils continued to fall year-on-year (YOY), reaching a four-year low in September due to the good availability of sunflower oil and rapeseed oil, as well as other vegetable oils. Global rapeseed oil production is forecast at a record 26.2M tonnes, up one percent YOY. Global sunflower oil production is forecast at 15.4M tonnes, down one percent on the 2013/14 record production.

GROUNDNUT OIL PRICES AND PRODUCTION (‘000 TONNES)

Groundnut oil Groundnut oil prices followed a similar trend to 2013, falling sharply in the first quarter of the year and rising steadily in Q2. Global groundnut oil production in 2014/15 is forecast at a record 5.7M tonnes, an increase of two percent YOY. Groundnut production is expected to rise in India and China, providing weather conditions remain favourable. However, US groundnut production is expected to fall by seven percent from last season’s crop, which resulted in a steady increase in prices between May and August.

Biodiesel and diesel EU biodiesel prices have fallen since the start of 2014 as a record European rapeseed harvest and high US stocks of soyabeans lowered the cost of biofuel feedstocks. The European harvest of rapeseed was estimated in August to reach 22.7M tonnes in 2014/15, up 1.3M tonnes from the previous month’s forecast and up seven percent YOY. Soyabean production in the USA is also expected to reach a record 103.8M tonnes, up 16% YOY. As a result, ending stocks of soyabeans in the USA are forecast to increase significantly, to 11.8M tonnes in 2014/15, up from 3.8M tonnes in 2013/14.

BIODIESEL PRICE (US$/TONNE)

PRICES OF SELECTED OILS (US$/TONNE) 2012

2013

May 14

Jun 14

July 14

Aug 14

Soyabean Crude Palm Palm Olein Coconut Rapeseed Sunflower Palm Kernel

1,230 1,014 997 1,122 1,240 1,256 1,119

1,052 854 803 948 1,080 1,108 904

968 888 816 1,410 948 945 1,256

931 858 789 1,378 919 931 1,224

889 828 762 1,237 875 899 1,098

850 746 697 1,173 853 837 943

Average price INDEX

1,140 270

964 228

1,033 245

1,004 238

941 223

871 206

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40 OFI – OCTOBER/NOVEMBER 2014 www.oilsandfatsinternational.com

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applications, our innovative solutions support you at every stage of the process chain. What’s more, we’re committed to reliable operations, energy savings and cost reduction while ensuring superior product quality. Whatever your requirements, talk to us – Lurgi technologies have the answer.

The seed of efficiency: the new sunflower impact dehuller. In order to achieve optimal extraction results with sunflower seeds, you need efficient dehulling technologies. The new B端hler sunflower impact dehuller allows the dehulling degree to be adjusted to specific needs and so ensures efficient dehulling with optimal hull opening, top product quality, and maximum yield with minimum oil loss. As a component of the integrated B端hler sunflower seed processing system, we can offer you complete customized solutions with unrivaled process efficiency from cleaning to flaking. More at +41 71 955 11 11 or www.buhlergroup.com/dgbb.

Sunflower seed dehuller DGBB. High throughput capacity. Up to 180 metric tons per day. Integrated inspection window. For checking the constant product flow inside the feeder. Flexible application. Adjustment of the dehulling degree according to specific needs at four set-points depending on the processed sunflower seeds. Proven dehulling technology. Specially designed impact plate reduces seed damage and fine dust. Low operating costs. Low-wear design of the rotor, beater plates, impact plate, magnets, and seals.

Innovations for a better world.