OFI January 2016

POC PARTNER

January 2016 t Vol 32 No 1 www.oilsandfatsinternational.com

COCONUT OIL

In the eye of the storm

PALM OIL Breeding for sustainability Cover.indd 1

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Leading edge technologies for refining plants

Degumming • Acid Degumming (wet/dry) • Ultra-shear acid Degumming • Bio Degumming • Membrane Degumming

Neutralising Short/long mix Neutralising • Multimix Neutralising • Miscella Neutralising • Silica Purification

Detoxification

Bleaching

• Combiclean Process • Active carbon Purification

• Sparbleach Bleaching • Unibleach with prefiltration • Silica Purification

Deodorising

Winterising

• Qualistock Deodorising • Multistock Deodorising • Sublimax Ice Condensing

• Wintrend Winterising • Combifrac Winterising

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

CONTENTS FEATURES

NEWS & EVENTS 2

Do ‘sin’ taxes work?

2

CHINA

VOL. 32 NO. 1 JAN 2016

20

EDITORIAL: Editor: Serena Lim Tel: +44(0)1737 855066 E-mail: serenalim@quartzltd.com

Healthy competition in 6 a diversifying market

COCONUT OIL

Editorial Assistant: Rose Hales Tel: +44(0)1737 855157 E-mail: rosehales@quartzltd.com

23

SALES:

27

Sales Consultant: Anita Revis Tel: +44 (0)1737 855068 E-mail: anitarevis@quartzltd.com

EPA finalises volumes for RFS

PALM OIL

8

Biotech News

Syngenta rejects bid from ChemChina

Production Editor: Carol Baird E-mail: carolbaird@quartzltd.com

10

CORPORATE:

Transport & Logistics News

EQT Infrastructure to sell Koole Terminals

Managing Director: Steve Diprose Tel: +44 (0)1737 855164 E-mail: stevediprose@quartzltd.com SUBSCRIPTIONS: Elizabeth Barford Tel: +44 (0)1737 855028 E-mail: subscriptions@quartzltd.com Address: Subscriptions, Quartz House, 20 Clarendon Road, Redhill, Surrey, RH1 1QX, UK Annual Subscription: UK £145, Overseas £168.

Two years: UK £261, Overseas £302. Single copy £36 © 2016 Quartz Business Media ISSN 0267-8853 Website: www.oilsandfatsinternational.com

31 Breeding for sustainability

Oils & Fats International (USPS No: 020-747) is published eight times/year by Quartz Business Media Ltd and distributed in the USA by DSW, 75 Aberdeen Road, Emigsville PA 17318-0437. Periodicals postage paid at Emigsville, PA. POSTMASTER: Send address changes to Oils & Fats c/o PO Box 437, Emigsville, PA 17318-0437

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34 Alarm over rising imports Packed programme at OFI India 2016

Koole Terminals is a leading independent storage company in North-West Europe headquartered in the Netherlands.

The company operates eight tank storage terminals and an own fleet of twelve barges and three coasters. Koole Terminal has a total storage capacity of over 2.0 million cubic meters handling a wide range of liquid bulk products including edible oils and fats, mineral oil products, waxes, (oleo-) chemicals, biodiesel and other liquid products which are being stored and handled in Rotterdam, Zaandam, Amsterdam, Nijmegen, United Kingdom and Poland.

Koole Tankstorage Pernis (Rotterdam, NL). Capacity: 625,000 m3 of which 160,000 m3 is made out of stainless steel. Main products: vegetable oils & fats, oleo-chemicals, waxes, base oils, easy chemicals and biodiesel.

Koole Tankstorage Minerals (Rotterdam, NL). Capacity: 1,100.000 m3. Main products: mineral oils like, gas oil, fuel oil, gasoline, methanol, MTBE and ethanol.

Renewable Materials News

Sale of Cremer Oleo to IOI set for completion in first quarter

INDIA

37

A member of FOSFA

Oils & Fats International

Biofuels News

An archipelago problem

PRODUCTION:

@oilsandfatsint

Noble to sell stake in agriculture unit to COFCO for US$750M

In the eye of the storm

Chinese Sales Executive: Erik Heath Tel: +44 (0)1737 855108 E-mail: erikheath@quartzltd.com

Printed by Pensord Press, Gwent, Wales

News

TRANSPORT & LOGISTICS

Sales Manager: Mark Winthrop-Wallace Tel: +44 (0)1737 855 114 E-mail: markww@quartzltd.com

Published by Quartz Business Media Ltd Quartz House, 20 Clarendon Road Redhill, Surrey RH1 1QX, UK Tel: +44 (0)1737 855000 Fax: +44 (0)1737 855034 E-mail: oilsandfats@quartzltd.com

Comment

14

Diary of Events

16

International Market Review

40

Statistics

Koole Tankstorage Amsterdam (NL). Capacity: 118,731 m3.

Main products: molasses, vegetable oils & fats and oleochemicals. Koole Tankstorage Zaandam (NL). Capacity: 43,000 m3. Main products: vegetable oils & oleo-chemicals.

Koole Tankstorage Nijmegen (NL). Capacity: 79,000 m3.

Main products: vegetable oils & fats, oleo-chemicals, lecithin and castor oil. Koole Tankstorage Liverpool (UK). Capacity: 22.004 m3. Main products: phosphoric acid, vegetable oils & fats and molasses. Koole Tankstorage Avonmouth (UK).

Capacity: 24,553 m3. Main products: phosphoric acid, vegetable oils & fats and molasses. Koole Tankstorage Gdynia (PL). Capacity: 29,900 m3. Main products: vegetable oils & fats and mineral oil products.

If you need any further information please contact our Sales department: Mr. Robert Guijs: Phone. 31 (0) 75 6812 812, E-mail. r.guijs@koole.com. Mr. Rob Valkenburg: Phone.

31 (0) 10 472 45 49, E-mail. rvalkenburg@koole.com or visit www.koole.com

1 OFI – JANUARY 2016 www.oilsandfatsinternational.com

Contents.indd 1

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NEWS

COMMENT

Noble to sell stake in agriculture unit to COFCO for US$750M

Do ‘sin’ taxes work?

T S he idea of a ‘sin’ tax to tackle obesity recently came to the fore with a leaked report from Public Health England recommending that a sugar tax should be one of the ways the UK tackles this public health crisis.

Currently, there is still no conclusive evidence on whether sin taxes improve public health.

Mexico has been the biggest testing ground, having passed a one-peso-per-litre soda tax (about 10% of the pre-tax price) and an 8% tax on junk food in 2013.

More than 30% of Mexico’s population is obese and 14% have diabetes. The country’s 118M citizens drink nearly half a litre of soda a day, more than nearly anyone else in the world.

The tax took effect on 1 January 2014 and soda sales have fallen.

The Mexican National Institute of Public Health and the University of North Carolina found that sales of taxed drinks fell by 6% in 2014, with soda sales down by 12% in December 2014 compared with December 2013. The drop was greater among the poorest Mexicans, who were buying 17% less soda in December 2014 than a year before.

Did rates of obesity or diabetes fall? It is too soon to tell.

But the fact that the ban was introduced is a testament to those working against the tremendous lobbying power and money of the beverage industry.

Big beverage funding

Soda is on the verge of becoming the liquid cigarette, says Tina Rosenberg of the Guardian newspaper, with the industry worried about the demonisation of their product and seeking to break any link with diseases with a health-conscious image.

Coca-Cola has promoted thousands of sporting events in Mexico.

The New York Times also revealed last year that Coco-Cola has been supporting a new organisation called the Global Energy Balance Network, which advocates exercise – rather than what Americans eat or drink – to combat obesity. Health experts say this message is misleading as evidence points to exercise having only a minimal impact on weight compared with what people consume.

Other countries have put taxes on soda before Mexico. Finland and Hungary introduced sugar taxes in 2011. France introduced a tax on all beverages with added sugar or artificial sweeteners in 2012 and also voted for a new tax on energy drinks in 2013.

The danger of sin taxes is that consumers might buy similar products that are less heavily taxed or turn to cheaper brands, says a European Commission commissioned report ‘Food taxes and their impact on competitiveness in the agri-food sector’, released last July.

The report concludes that food taxes “in general achieve a reduction in the consumption of the taxed products” and that some products are reformulated to reduce sugar, salt and fat levels.

Studies do suggest that a tax of less than 20% has only a small effect.

If we turn to the tobacco industry as an example, about 80% of the world's smokers now live in low and middle income countries, partly due to a lack of adequate tobacco controls and aggressive marketing practices in developing countries. This suggests that “nanny state” controls do have an effect. Fewer young people also start to smoke due to high prices, difficulty in obtaining cigarettes and increases in perceived risk and disapproval rates, suggesting that taxes have had an effect and a shift in thinking has taken place.

While tobacco is one product and the food industry is far more complex, it seems that a combination of taxes and controls, combined with education to change our attitudes, would be the right steps to tackle the obesity problem. w

ingapore-listed Noble Group Ltd has agreed to sell its remaining 49% stake in its agricultural unit to the China National Cereals, Oils and Foodstuffs Corporation (COFCO) for US$750M. The Noble Agri sale would allow the group to fulfil the commitment it made in November to raise more than US$500M after reporting a sharp drop in thirdquarter earnings, the Wall Street Journal (WSJ) said.

The agricultural unit has been blamed for most of the US$208M in losses Noble reported from its associates and joint ventures in the nine months to the end of September 2015.

In November, it reported a 84% drop in its third-quarter net profit and announced the departure of its chief financial officer.

The group had also been dogged by allegations of accounting irregularities which it

has denied, the WSJ said.

The sale is subject to shareholder approval and Noble has confirmed that it will use the entire proceeds to pay down debt.

The group sold 51% of its agricultural unit to COFCO in 2014 for US$1.5bn, forming the Noble Agri joint venture (see OFI News, July 2014).

COFCO will now rename the unit, COFCO Agri.

The Chinese state-backed grain trader has been expanding in the last few years and is reportedly seeking a larger stake in Dutch grain trader Nidera.

Noble Agri trades and processes agriculture commodities which it originates from low-cost producing regions to high demand regions such as Asia and the Middle East. It owns and operates logistics and processing assets and its agricultural business carried 46M tonnes of product globally in 2013.

Kraft Heinz to slash jobs and close 7 manufacturing plants

N

ewly formed food giant Kraft Heinz Co is cutting 2,600 jobs, or nearly 6% of its workforce, by closing seven manufacturing plants.

The factory closures represent nearly one-fifth of the company’s 41 facilities in the USA and Canada and mark the first major impact for factory employees following HJ Heinz Co’s July acquisition of Kraft Foods Group Inc in July (see OFI News, June 2015). It follows the slashing of 2,500 mostly white-collar jobs in North America announced in August (see OFI News, September/October 2015).

A Kraft Heinz spokesman said the move was a “difficult but necessary decision” that would allow the company to invest hundreds of millions of dollars in modernising its plants with state-of-the-art production lines.

Production would be shifted to other plants in North America over the next 12-24 months.

Kraft Heinz produces global brands such as Philadelphia and Velveeta cheese, Heinz Ketchup and other sauces, Weight Watchers Smart meals and Planters nuts.

The union in March created the third largest food and beverage company in the USA and the world’s fifth largest food and drink group.

Brazilian investment firm 3G Capital Partners and billionaire investor Warren Buffet’s Berkshire Hathaway own 51% of the group and a consolidation of production facilities was widely expected, in line with the cost-cutting practices frequently employed by 3G. The Wall Street Journal said the packaged food industry was under pressure to streamline operations and boost sales as consumers eat less processed food in favour of fresher food.

“Other major US food makers including Campbell Soup Co, Kellogg Co and General Mills also have closed factories in recent years amid sluggish sales growth.”

2 OFI – JANUARY 2016 www.oilsandfatsinternational.com

Comment and News NEW.indd 1

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NEWS

Argentina floats currency to pave way for crop sales

L

eading soyabean exporter Argentina lifted four years of currency controls after grain exporters agreed to deliver US$6bn in hoarded crops to the country, Bloomberg reports.

The country let its currency float on 17 December, leading to the peso tumbling 29%.

Bloomberg said farmers had been storing crops, partly in protest over taxes and the difficult process of obtaining export permits.

Ricardo Echegaray, former head of Argentina’s tax agency, said earlier in the

month that farmers had about US$6bn worth of soyabeans, US$3.4bn worth of corn and US$2bn worth of wheat available for exports.

The country’s new president, Mauricio Macri, also announced the elimination of export taxes on crops, including corn and wheat. The soyabean tariff was cut by 5%, Bloomberg said.

Grain and oilseed exporter group CiaraCec said the policy change would unleash crops hoarded by farmers and lead to a large increase in shipments.

“The lifting of the currency control policy was the last measure needed to motivate crop sales for export,” Ciara-Cec spokesman Andres Alcaraz said. Combined with the reductions to export taxes and eliminated export permits, the move “confirms the battery of measures that will provoke huge sales”.

Argentina shipped about US$17.9bn worth of grains and oilseeds abroad in 2015, the lowest level since 2009, the Bloomberg report said.

Olenex to become Cargill buys salmon feed leader full joint venture argill announced that its US$1.5bn acquisition of EWOS, a global

A

rcher Daniels Midland (ADM) and Wilmar International announced on 10 December that Olenex, their partnership to market oils and fats in Europe, will become a full joint venture.

ADM will transfer two sites – a speciality oils and fats facility and a palm refining plant in Hamburg, Germany – to the new venture.

Wilmar will transfer its tropical oils processing plants in Brake, Germany and Rotterdam, the Netherlands.

“In addition to processing, the joint venture will also integrate raw materials sourcing, trading, and sales operations,” ADM said. Refined oils and fats from ADM’s other plants in the Czech Republic, Germany, the Netherlands, Poland and the UK will also be marketed by Olenex.

Olenex started in 2012 as a partnership between ADM and Wilmar to market oils and fats products in Europe.

The agreement is subject to regulatory approvals and is expected to close in in mid-2016.

C

leader in salmon feed, was completed on 8 October.

“The acquisition makes Cargill’s animal nutrition business a leading player in the growing salmon feed industry,” Cargill said.

EWOS produces more than 1.2M tonnes/year of salmon feed for the largest salmon producers in the world.

It operates in all four of the world’s major salmon farming regions: Norway, Chile, Canada and Scotland. It has also entered the feed market in Vietnam.

EWOS said that the global availability of fish meal and fish oil has been relatively constant at 5-7M tonnes of fish meal and one million tonnes of fish oil.

“The majority of this is derived from small pelagic fish like anchovy, sardines and capelin, while an increasing amount is derived from by-products and trimmings from seafood caught for direct human consumption.”

It said it had become more efficient in the use of marine ingredients in salmon feed, with its annual demand for these raw materials being stable for the past 10 years despite a large increase in annual feed production.

“While EWOS global feed sales have increased 66% since 2002 to more than one million tonnes/year, the total amount of fish meal and fish oil used has always been close to 400,000 tonnes/year.”

The company said it had succeeded in replacing the proteins from fishmeal with soya protein concentrate (SPC) and other proteins from agricultural origin Globally, Cargill’s animal nutrition business operates more than 275 facilities in 40 countries. With the acquisition, Cargill will have an additional seven feed manufacturing facilities; three in Norway, and one each in Chile, Canada, Scotland and Vietnam.

Cargill closes chocolate manufacturing plant

C

argill announced at the end of October that it will close its chocolate manufacturing plant in Lititz, Pennsylvania, USA in early 2016 and shift production to its three other plants in the same state, one in Milwaukee; and one in Ontario, Canada.

The Lititz makes chocolate, chocolate liquor and compound chocolate made from cocoa, vegetable fat and sweeteners.

The closure comes just over a year after Cargill completed its US$440M acquisition of ADM’s global chocolate business in August, which included six chocolate plants – three in North America and three in Europe.

Also in January, Cargill said it would centralise its North American Cocoa and Chocolate leadership and administration in Milwaukee and Minneapolis.

Cargill’s cocoa and chocolate business operates 27 plants in 11 countries, supplying the food industry with cocoa powders, chocolate, coatings, fillings,

cocoa liquors and cocoa butters. Its processing plants are located in Belgium, Brazil, Canada, Côte d’Ivoire, France, Germany, Ghana, Indonesia, the Netherlands, UK and the USA. It also has its own cocoa bean sourcing operations to buy and export cocoa beans from Brazil, Cameroon, Côte d’Ivoire and Indonesia.

According to philly.com, the Philadelphia region is a major centre for chocolate processing and manufacturing in the USA. In 2014, 97,688 tonnes of cocoa beans arrived as “break-bulk” cargo on pallets, and more than 50,000 tonnes were delivered in truck-size containers to the Philadelphia port.

Within 100 miles of the Delaware River are four large cocoa processors – Blommer Chocolate, Barry Callebaut; Cargill (formerly ADM), and Mars – which, in turn, sell to confectionery manufacturers Hershey, Mars, Kraft Foods, Tasty Baking, Asher’s Chocolates and Goldenberg’s Peanut Chews, all in the region.

IN BRIEF CANADA/USA: On 23 November, USA-based grain company Scoular Co completed its acquisition of Legumex Walker Inc’s special crops divison for C$94M (US$70.3M).

The value of the deal rises to C$174.6M (US$130.6M) with the addition of working capital.The acquisition includes 14 processing sites across Canada, the USA and China that process and handle various crops including edible beans, sunflowerseeds, flaxseed, canaryseed, pulses and lentils (see OFI News, November/ December 2015).

UK: Nidera UK has agreed to buy the grain trading divison of Criddle & Co, from food and agriculture company Edward Billington & Son Ltd, effective 1 December. Criddle & Co is an agricultural commodity trading company supplying grains, oilseeds and other ingredients to food and feed manufacturers and processors across the UK. TUNISIA: European farmer organisation Copa Cogeca has cricitised European Commission (EC) plans to increase duty-free import quotas for Tunisian olive oil to help the country’s economy recover from terror attacks in June, reports Olive Oil Times in October. The EC has proposed that Tunisia be offered an annual duty-free tariff quota of 35,000 tonnes for its exports to the EU until the end of 2017, on top of the existing 56,700 tonnes under the longstanding EU-Tunisia Association Agreement.

Copa Cogeca general secretary Pekka Pesonen said the deal would give Tunisia an unfair advantage and hit the European olive oil sector badly.

3 OFI – JANUARY 2016 www.oilsandfatsinternational.com

Comment and News NEW.indd 2

06/01/2016 11:05

NEWS

IN BRIEF WORLD: The United Nations Conference for Trade and Development (UNCTAD) adopted a new agreement on olive oil in October that reasserts the role of the International Olive Council (IOC) as a centre for information and dissemination and a forum for industry stakeholders, the IOC said.

The agreement will take effect on 1 January 2017 and remain in force until 31 December 2026. It is based on a text adopted in June by IOC members but includes changes that make certain points clearer.

The IOC said the text stressed the standardisation of national and international legislation on the physical, chemical and organoleptic characteristics of olive oils, olive pomace oil and table olives in a bid to “prevent obstacles to trade”.

The new agreement also aims to encourage consumer countries to join the IOC through a formula which calculates their share in the IOC budget by looking at production, exports and imports equally.

USA: On 13 November, the US Food and Drug Administration (FDA) finalised three more rules in its Food Safety Modernization Act (FSMA) that, for the first time, sets out safety rules for produce farms and makes importers accountable for checking that imported food meets US safety standards.

The three rules build on two preventive rules finalised in September (see OFI News, November/December 2015).

The Produce Safety rule sets standards for growing, harvesting, packing and holding produce.

The Foreign Supplier Verification Program rule requires food importers to verify that foreign suppliers are producing food in a way that meets US safety standards.

Importers must conduct checks such as audits of facilities, sampling and testing of food, or reviews of the supplier’s food safety records.

The Accredited Third-Party Certification rule is a programme to accredit third-party auditors to conduct audits and certify that food produced by foreign facilities meets FDA food safety requirements.

Dow and DuPont in mega merger U

S chemical giants Dow Chemical and DuPont announced a merger on 11 December in a deal valuing them at US$130bn.

The merged company, to be called DowDuPont, will eventually be split in three, focusing on agriculture, materials and speciality products.

The firms aimed to achieve the split within two years of the merger’s completion and hoped to save US$3bn through cost-cutting in that period, BBC said.

Analysts said the merger was needed for the subsequent spin-offs to qualify as tax-free transactions in the USA. Reuters said the merger would allow Dow and DuPont to rejig assets based on the diverging fortunes of their businesses.

The companies had been struggling with falling demand for farm chemicals due to slumping crop prices and a strong dollar, even as their plastics businesses thrived thanks to low natural gas prices, according to Reuters.

The 213-year-old DuPont makes products used in petrochemicals, pharmaceuticals, food and construction. Dow, which is 118 years old, manufactures plastics, chemicals, hydrocarbons and agrichemicals.

The proposed merger puts pressure on rivals such as BASF and Bayer AG to consolidate as falling crop prices curb sales, the Reuters report said.

“The biggest impact will certainly be in the agriculture market, where the seeds and crop chemical industries are to undergo rapid consolidation,” SunTrust Robinson Humphrey analyst James Sheehan said.

It could also prompt a renewed flurry of takeover bids for European rivals, with Syngenta AG the most likely target (see Biotech News, p8).

Analysts said the deal required regulatory approval and would face intense scrutiny, particularly over combining the agricultural businesses, which sell seeds and crop protection chemicals.

Solazyme to launch algae butter All IOI palm oil

U

S biotech company Solazyme is planning to launch an algae butter which it says can replace hard fats such as palm oil or partially hydrogenated oils in various applications including confectionery, bakery and spreads.

The algae butter was going through the US self-determined generally recognised as safe (GRAS) process and was likely to launch in “early 2016”, senior vice president Mark Brooks told FoodNavigator-USA. The algae butter mirrored fats such as shea stearin with a high proportion of around 70% stearic-oleic-stearic triglycerides.

Brooks said the algae butter was being tested by manufacturers of spreads, bakery and confectionery and could replace controversial palm oil and partially hydrogenated oils – which create trans fats – being phased out in the USA over the next three years.

Solazyme uses microalgal oil to make a range of products for the food, personal care, industrial and fuel sectors.

On 30 October, the company reported third quarter 2015 revenue of US$11.4M compared with US$17.6M for third quarter 2014.

Solazyme and Bunge also expanded their joint venture to include a focus on food, with Bunge taking the lead in the sales, marketing and application development for certain food oils and providing oil processing, global distribution and logistics.

Solazyme extended its joint development agreement with Unilever and expanded its relationship with BASF for the first commercial microalgae-derived surfactant. It would also terminate existing contracts for its Clinton and Galva manufacturing plants in the USA.

traceable to mill

S

peciality oils and fats producer IOI Loders Croklaan – part of Malaysia’s IOI Group – announced on 19 October that 100% of its directly-sourced palm oil worldwide is now traceable to the mill level.

Directly-sourced palm oil makes up 65% of the total volume IOI sources, while 84% of its indirectly-sourced palm oil is now traceable to mill level, making its total supply 94% traceable to the mill level.

Traceability to the mill was key to ensuring a transparent supply chain, said Ben Vreeburg, sustainability director at IOI Loders Croklaan. “At mill level, we can use our commercial leverage and drive change.”

The company also said 38% of all its sourced palm oil volumes was segregated Roundtable on Sustainable Palm Oil (SG RSPO) certified.

EC report says trans fats needs legal limits T he European Commission (EC) adopted a trans fat report on 3 December which said setting a legal limit for industrial trans fatt acids (TFA) would be the most effective measure in terms of public health and consumer protection.

The report, ‘Trans fatty acids in Europe: where do we stand?’, by the EC Joint Research Centre said that most of the food products analysed in the EU contained TFA levels below 2g/100g of fat.

“However, there are sub-

populations exceeding this recommended threshold. Indeed, specific population groups may be at risk of high TFA intake as long as products with high levels of TFA are sold on the European food market and they or their labelling are not regulated by EU legislation.”

The report looked at the effectiveness of different measures to protect consumer health such as mandatory labelling and voluntary industry agreements and concluded

that a legal limit for industrial TFA content would be the most effective. However, it said implementing such a move would need further investigation and a public consultation would be launched.

The report comes two months after major food giants, including Nestlé and Mars Inc, wrote an open letter to EU commissioners calling for legislation to limit the amount of TFA in processed food to 2g/100g to create a “level playing field” for manufacturers.

4 OFI – JANUARY 2016 www.oilsandfatsinternational.com

Comment and News NEW.indd 3

06/01/2016 11:05

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BIOFUELS NEWS

IN BRIEF BRAZIL: The country’s special committee on national development unanimously approved a senate bill on 11 November mandating a 7% biodiesel blend in diesel fuel, increasingly to 10% within three years, reports Biodiesel Magazine. The bill would also require a 20% biodiesel blend in pubic transport vehicles in cities with more than 500,000 people. The bill now needs to be considered by the Houses of Representatives.

SPAIN: On 4 December, the country approved a mandate for biofuels in transportation with a 8.5% blending target in gasoline and diesel by 2020, Bloomberg reports. A 4.3% mandatory blending level will begin this year.

The government also planned to set a target for inedible second generation biofuels by 2017, the report said.

UK: A partnership between British Airways (BA) and Solena Fuels, USA to build a US$500M facility in east London to convert municipal solid waste (MSW) into some 16M gallons/year of sustainable jet fuel has been shelved as a result of lack of financing and the current low petroleum price of around US$50/barrel, reports Green Air Communications. The plant was due to start production last year.

BA said it was still committed to pursuing the MSW-to-jet fuel pathway and was talking to other companies in the field.

FINLAND: On 3 December, Finnish pulp, paper and timber manufacturer UPM announced that the Finnish Market Court had ruled that its Lappeenranta biorefinery had not infringed on patent FI 100248 of Neste Oil. “UPM Biofuels’ business and deliveries of wood-based UPM BioVerno diesel will continue as usual,” it said.

Neste is the world’s largest producer of renewable diesel with plants in Finland, the Netherlands and Singapore.

URUGUAY: Alcoholes del Uruguay SA, a subsidiary of state-owned oil company Ancap, produced more than 130M litres of biofuel last year, its highest level ever, reports SeeNews.

EPA finalises volumes for RFS T

he US Environmental Protection Agency (EPA) announced its long-awaited Renewable Fuel Standard (RFS) volumes for 2014, 2015 and 2016 on 28 November.

It set a goal of 18.11bn gallons of renewable fuels overall for 2016, an increase from the 17.4bn gallons it proposed in May 2015 but far less than the 22.25bn gallons set out in its original 2007 Energy Independence and Security Act (see OFI Biofuel News, June 2015).

The volumes set out are for cellulosic biofuel, biomass-based diesel, advanced biofuel and total renewable fuel (see Table, above).

“The final 2016 standard for advanced biofuels is nearly one billion gallons, or 35% higher than the actual 2014 volumes, while the total renewable standard requires growth from 2014 to 2016 of over 1.8bn gallons of biofuel, or 11% higher than 2014 actual volumes,” the EPA said.

“Biodiesel standards grow steadily over the next several years, increasing every year to

FINAL RENEWABLE FUEL VOLUMES (BILLION GALLONS) Cellulosic biofuel

2014

2015

2016

2017

0.033

0.123

0.230

na

Biomass-based diesel

1.630

1.730

1.900

2.0

Advanced biofuel

2.670

2.880

3.610

na

16.280

16.930

18.110

na

Total renewable fuels

Units for all volumes are ethanol-equivalent, except for biomass-based diesel volumes, which are expressed as physical gallons

reach 2bn gallons by 2017.”

The EPA has been trying to balance the demands of ethanol producers, who support increasing statutory requirements, and the petroleum and refining industries, which have said that absorbing more biofuels into the fuel supply is not feasible.

It missed a series of deadlines to announce annual volume requirements for biofuels, leading to a lawsuit earlier in 2015 by the American Petroleum Institute and American Fuel and Petrochemical Manufacturers (AFPM).

In settling the suit, the EPA pledged to finalise overdue 2014

and 2015 rules and a 2016 rule by 30 November.

Renewable Fuels Association president Bob Dinneen said: “Today’s decision will severely cripple the programme’s ability to incentivise infrastructure investments that are crucial to break through the so-called blend wall and create a larger market for biofuels.”

AFPM president Chet Thompson declared in a statement that “Today’s rule is further proof that the RFS program is irreparably broken and that the only solution is for Congress to repeal it outright.”

EPA invites comments on jatropha oil emissions

T

he US Environmental Protection Agency (EPA) has invited comment on its greenhouse gas emissions (GHG) analysis on the production and transport of jatropha oil for biodiesel, renewable diesel, jet fuel, naphtha and liquefied petroleum gas.

It said it expected jatropha oil-based biodiesel or renewable diesel to qualify as biomassbased diesel or advanced biofuel under the US Renewable Fuel Standard, which requires a 50% reduction in GHG emissions aginst petroleum diesel.

The EPA looked at two main scenarios in its analysis, Biodiesel

Magazine said in October.

In one, it assumed jatropha production occuring on grassland in southern Mexico and northeastern Brazil not currently used for crop or pasture use. Most results were lower than GHG emissions from soyabean oil.

In a second scenario, the EPA looked at jatropha grown on land

that would have otherwise been used for agriculture. It conducted two analyses within this scenario – one where jatropha would displace mostly corn in Mexico, and one where jatropha was grown on cropland in Mexico and on agricultural land in Brazil.

The results were significantly lower GHG emissions against soyabean oil “mostly because jatropha sequesters more carbon than the cropland it displaces and the indirect emissions are relatively small because the displaced corn production is backfilled by higher yield producers such as US corn production”, the EPA said.

Argentine biodiesel production to fall nearly a third

A

rgentina’s biodiesel production was expected to fall 30% in 2015 to 1.8M tonnes from 2.58M tonnes in 2014 as a result of dwindling exports, Platts reported on 2 November.

Domestic consumption was set to rise 11%, not enough to offset an export fall of 55%, Argentine Biofuels and Hydrogen Association executive director Claudio Molina told Platts.

This would result in the industry working at about 40% of the 4.6M tonnes of installed capacity.

Exports began to decline in 2012 after the

European Commission launched a probe into alleged dumping of biodiesel by Argentina in the EU, prompting the imposition of anti-dumping duties which Argentina is contesting at the World Trade Organization.

On 11 November, the Energy Secretariat said it had cut biodiesel export taxes to a record low of 3.31% retroactive to 1 October, from 8.6% in September.

The secretariat also reduced the prices oil refiners must pay for biodiesel to meet a 10% blending requirement, Platts added.

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BIOFUELS NEWS

Abengoa in proceedings to avoid bankruptcy S

The Seville-based engineering and renewable energy firm had been struggling for a year with high debts but the situation became unsustainable in July. It first cut its 2015 targets and stepped up an asset sales plan on 31 July, only to announce a €650M rights issue of new shares to cut gross debt of some €8.9bn days later.

In late November, Abengoa confirmed that Gonvarri Corporacíon had backed away from a plan to inject around US$265.9M into the firm, prompting the start of its insolvency proceedings.

Abengoa runs the largest ethanol plant in Europe – a 480M litres/year plant in

EC launches ethanol benchmarks probe

T

he European Commission (EC) announced on 7 December that it had opened a formal anti-trust investigation into Spain’s Abengoa SA, Belgium’s Alcogroup SA and Sweden’s Lantmännen ek för for alleged manipulation of ethanol benchmarks.

“The EC has concerns that these companies may have colluded to manipulate ethanol benchmarks published by the price reporting agency Platts, for example by agreeing between them to submit or support bids with a view to influencing benchmarks upwards and thus driving up ethanol prices,” it said in a press release. Such practices harmed competition.

Big petroleum producers Royal Dutch Shell Plc, BP Plc and Statoil ASA, which were among the companies initially raided in May 2013, are not being investigated. Further inspections were carried out in October 2014 and March 2015.

The EC said there was no legal deadline for when the anti-trust investigation would end.

“The duration of an investigation depends on a number of factors, including the complexity of the case, the cooperation of the undertakings with the Commission and the exercise of the rights of defence,” it said.

“In a separate investigation, the EC is also assessing whether producers or traders of bioethanol have fixed prices or shared markets and customers.”

The EC said the prices published by price reporting agencies such as Platts served as benchmarks for trade in the physical markets and in the financial derivative markets.

In 2013, it proposed a regulation to enhance the governance, integrity and reliability of benchmarks used in financial instruments and contracts.

The regulation is at the final stage of adoption by the European Council and European Parliament.

Rotterdam, plus other plants in Brazil, Spain and France, and the USA. The company employs around 24,000 people worldwide.

In a statement to Ethanol Producer Magazine, Abengoa had said it intended to operate its ethanol plants in a normal course of business, with its York and Ravenna, Nebraska; and Hugoton, Kansas plants temporarily idled.

On 3 December, leading US farmer-owned cooperative CHS Inc filed a complaint at the US District Court in Nebraska, saying it had not been paid for some two million bushels of corn worth nearly US$5M which it had supplied to Abengoa’s three plants in Nebraska and Kansas between July and October 2015.

50 2015

pain’s Abengoa started insolvency proceedings on 23 November after a potential investor refused to inject fresh capital into the country’s largest renewable energy firm, plunging its share price by 54%, reports Reuters.

Abengoa has four months to reach an agreement with creditors to avoid insolvency and a potential bankruptcy under Spanish law.

Failure to reach a deal could lead to the country’s largest bankruptcy on record, Reuters said. The total exposure of Spanish and international banks to Abengoa was around US$21.4bn including financing for projects, a source said in the Reuters report.

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7 OFI – JANUARY 2016 www.oilsandfatsinternational.com 3381_FM_Tonsil_128x185_en.indd 1

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BIOTECH NEWS

Syngenta rejects bid from ChemChina

S

wiss-based seed and pesticide giant Syngenta AG rejected a US$42bn takeover offer by state-owned China National Chemical Corp in mid-November, just six months after turning down a US$47bn offer from Monsanto Co, Bloomberg reports.

Citing unidentified sources, Bloomberg said the world’s largest agrichemicals company was still in talks with ChemChina as well as other suitors, after turning down the offer on regulatory concerns.

ChemChina has a 5% share of the global crop chemicals through its ownership of Israeli

IN BRIEF USA: Mitsui & Co Inc, the US arm of Japanese commodities trader Mitsui & Co Ltd, said in October that it had bought a 50% stake in Bluegrass Farms of Ohio Inc, a grain handler and breeder of non-GM soyabeans, for US$15M in order to capitalise on growing demand for food made from non-GMO grains, including products like tofu and baby food, Reuters reported. Mitsui currently handles about 40% of products shipped from Bluegrass.

Bluegrass uses contract growers to produce soyabeans from seed it has developed. It buys, cleans and bags the foodgrade oilseeds for markets in the USA and Asia. It also handles non-GMO corn.

USA: The ‘Right to Know’ antiGMO campaign group singled out American food giant General Mills for criticism at the end of October, reports just-food.com.

In an open letter published in the Minneapolis Star Tribune, the group wrote that large food companies like General Mills “spend millions of dollars on anti-labelling initiatives that keep their customers in the dark”.

A General Mills spokesperson said the company supported a national approach to GMO labelling and opposed state-bystate legislation.

The US multinational manufactures and markets branded consumer goods including Cheerios cereal, Pillsbury refrigerated dough and Betty Crocker baking products.

It reported US retail net sales of US$10.5bn – 26% in ready meals, 22% in cereals, 20% in snacks, 19% in baking products and 13% in yoghurt and other products.

generic pesticides maker Adama. Syngenta’s 19% market share would catapult it to the industry leader position and would help it further its international expansion ambitions, Bloomberg said.

ChemChina had acquired several Western specialty chemicals businesses including Norwegian silicon business Elkem, French feed additives maker Adisseo, Australian plastics maker Qenos and most recently Italian tyremaker Pirelli.

“Future demand for pesticides globally will stay strong, particularly for a country

like China, which is trying to boost grains production,” Duan Yousheng, an analyst with China Pesticides Industry Association, said in the Bloomberg report.

“Syngenta has sales channels in over 120 countries and it is a world leader in research, and pesticide sales volume. Only (a) stateowned firm is able to make such an offer,” he added.

In May last year, number one global seed supplier Monsanto began a series of bids for Syngenta, (see OFI, Biotech News, June 2015) which it eventually abandoned in August.

Advanta Seeds expands in Brazil Syngenta suing

A

dvanta Seeds announced on 26 October that it is entering the soyabean market in Brazil with two varieties of soyabean seeds, marketed under the brand name Vereda.

The company already produces corn, sorghum, sunflower and canola seeds in Brazil.

CEO Claudio Torres said the company was aiming to invest BR200M (US$53M) in the coming years in Brazil as the country was one of its strategic growth areas.

It recently moved its Brazilian head office from Florianópolis to Campinas to be near its new focus area of the Cerrado, which its soyabean varieties were specifically developed for.

Advanta Seeds already has R&D stations in Minas Gerais in the Uberlandia region, and a new R&D satellite was established in Sorriso, Matto Grosso state.

Matto Grosso had a large production area of 9M ha of soyabean and 3.4M ha of corn, which was one of the reasons Advanta decided to set up a breeding station there, said Carmo Poloni, senior breeder, Advanta Seeds Brazil.

The company said India was another strategic expansion market and investment was being made with a new research laboratory in Hyderabad, with the main focus being disease resistance in vegetables and field crops in the country.

Advanta Seeds is a world leader in sorghum and has leading positions in many regions in corn, sunflower, canola, rice and vegetables. It is headquartered in Dubai.

grain traders

S

yngenta is suing several large grain traders claiming they should be responsible for losses incurred by US farmers when China rejected corn shipments containing its GM Viptera corn strain, which China had not approved, reports the Wall Street Journal (WSJ).

The suit was filed on 19 November and follows on from US farmers and grain companies suing Syngenta last year for lost income from China’s rejection of the corn shipments. In September, the judge handling the farmers’ lawsuit brought against Syngenta ruled that their case may advance.

If it is concluded that US farmers are due compensation, Syngenta’s lawsuit claims that the traders named in the suit – Cargill, ADM and two smaller traders – should be responsible for either part or all of the liability.

€1.2-2.8bn more in feed costs from EU ban A llowing individual EU members states to ban the use of GM food or feed in their territory would lead to increased feed costs of €1.2bn-2.8bn, according to three EU organisations representing the oilseed crushing and compound feed manufacturing sectors.

COCERAL, FEDIOL and FEFAC released their Economic Impact Assessment of the European Commission’s (EC) ‘opt out’ Proposal on 20 October.

The European Parliament rejected the proposal on 28 October but the EC has said it would not withdraw it. (See OFI, Biotech News, November/ December 2015).

The study looked at four EU member states – France, Germany, Hungary and Poland – potentially opting out from GM authorisation.

It concluded that substituting GM soya with non-GM soya would lead to an increase in feed costs of around 10% for the livestock sector (or €1.2bn for the four countries) or €2.8bn if all EU countries did so, making livestsock production uncompetitive. This was based on the average 2015 non-GM soyabean meal premium of €80/tonne, plus €30/tonne.

Soya meal represented 32% of the total protein and 44% of the total lysine used in the livestock sector in the four countries.

The study said while most grains and other feedstuffs used in EU feed were not GM, some 90% of soyabeans and meal were.

In 2012/13 to 2014/15, the EU used 28.5M tonnes of soyabean meal for feed on average (36.1M tonnes in soyabean equivalent) of

which around 97% was imported.

The four potential opt-out countries used 12M tonnes of soyabean equivalents.

Segregating non-GM soyabeans in shipping, storage and crush plants would be very costly, the study said.

And the EU oilseed crushing sector may not be able to recover the extra costs paid for non-GM soya through higher prices for non-GM soyabean oil as other oils, traditionally non-GM, were available at a lower cost.

COCERAL is the European association of cereals, rice, feedstuffs, olive oil, oils and fats and agro supply trade. FEDIOL is the EU vegetable oil and protein meal industry association. FEFAC is the European Compound Feed Manufacturers’ Federation.

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TRANSPORT & LOGISTICS NEWS

EQT Infrastructure to sell Koole Terminals P

rivate equity group EQT Infrastructure announced on 12 November that it is selling independent liquid bulk storage operator Koole Terminals to institutional investors advised by JP Morgan Asset Management – Global Real Assets.

EQT Infrastructure acquired Koole Tanktransport in February 2011 and NOVA Terminals in October 2011 to form Koole Terminals, which stores and handles a wide range of liquid bulk products including vegetable oils, mineral oil products, waxes, oleochemicals and other liquid products.

Headquartered in Zaandam, the Netherlands, Koole operates eight tank storage terminals in north-west Europe with some 2Mm3 of storage capacity. One is

IN BRIEF ALGERIA: The UAE’s Al Ghurair Resources group will build a US$40M grain silo with 165,000 tonnes of capacity in Algeria as part of a continuing strategy to secure food supplies, reports Bloomberg. Al Ghurair Foods supplies consumer goods, food services, bulk foods such as flour, pasta and eggs, animal feed, grain and vegetable oils in the Middle East and Asia.

It crushes and refines canola, soyabean and sunflower seeds at its plant in Jebel Ali Port, UAE, with a crushing capacity of 4,500 tonnes/day for soyabeans and 3,200 tonnes/day for rapeseed.

The refinery’s capacity is 96,000 tonnes/year, refining and packing canola, corn and sunflower oils for its own brands, retailers, wholesalers and private labels.

THE NETHERLANDS: Vopak Terminal Vlaardingen has put into service a new rail loading station which expands facilities for loading and unloading rail tank cars at its terminal in the Port of Rotterdam.

The company said it had modernised and expanded its rail facilities to meet increased rail transport over recent years, and growing demand for loading and unloading of rail tank cars.

The new rail loading station is connected with three rails and can load and unload 16-20 rail cars in eight hours, including handling time.

The terminal specialises in storing vegetable oils and fats, oleochemicals, biodiesel and base oil with 572,386m3 of storage capacity and 351 tanks.

located in Poland, two in the UK and five in the Netherlands – in Rotterdam, Zaandam, Amsterdam and Nijmegen. About 85% of its total storage capacity is located in Rotterdam.

Some locations also provide railway terminals for loading and unloading oils and fats.

Koole runs its own fleet of 12 barges and three coasters and offers a range of ancillary services including blending, mixing, heating, temperature and quality control.

EQT said that during its ownership, Koole’s storage capacity had more than tripled through organic capacity expansion and add-on acquisitions.

EQT Infrastructure is part of European private equity group EQT, whch has approximately €29bn in raised capital. EQT

Infrastructure is a €1.2bn fund investing in medium-sized infrastructure businesses in the Nordic region, parts of Continental Europe, and North America. Investment targets are regulated infrastructure, concession-based infrastructure, market-based infrastructure and infrastructure-related services.

JP Morgan Asset Management – Global Real Assets has more than US$87bn in assets under management. The Global Real Assets team is part of JP Morgan Asset Management’s Alternatives Investments business, which collectively manages over US$120bn in client assets across real assets, hedge funds, credit and private equity.

EQT said the sale was subject to positive advice from Koole’s works council.

EBRD to help expansion of Nibulon activities T he European Bank for Reconstruction and Development (EBRD) has organised US$130M of lending to Ukrainian grain and oilseeds trader and producer Nibulon to support its trading activity, including export sales.

The company owns and operates one of the largest networks of grain handling and logistics infrastructure in Ukraine.

Lending will consist of an A-loan of up to US$45M from the EBRD’s own account and a B-loan of up to US$90M, which will be syndicated to commercial banks.

Nibulon’s activities include production and export of agricultural commodities including wheat, barley, corn, rye and oilseeds; storage and transhipment terminals; and a fleet of 28 vessels.

It operates a transhipment terminal for grains and

oilseeds in Mykolayiv city, southern Ukraine, where it is headquartered.

Among developments last year, it announced plans to build a 200,000 tonnes/year US$15M high-capacity grain elevator to serve the regions of Chygyryn, Uman and Kaniv.

It also started dredging the Southern Bug waterway in the Mykolayiv region in October to increase the river’s depth.

Nibulon said about one million tonnes of grain – the same volume as carried by 50,000 trucks – would be transported from Voznesensk, Permovaisk and Kirovograd regions via the waterway.

It is also building an elevator complex at Buzke village along the waterway, its third in the Mykolayiv region and its second on the Southern Bug. The elevator is projected for completion in June this year.

G3 Canada to build new shipping terminal T he former Canadian Wheat Board (CWB) plans to build a new 50,000 tonne year-round shipping terminal in Hamilton to load wheat, soyabean and corn grown in Southern Ontario, reports the Globe and Mail.

G3 Canada Ltd said in October that the new port facility on the western edge of Lake Ontario would cost more than C$50M (US$37M) and was expected to be ready for the 2017 harvest.

Grain “production in Ontario has been growing at a pretty dramatic rate and we’ve been eyeing this [new terminal] as a key component in our eastern origination strategy,” said G3 CEO Karl Gerrand.

The terminal would compete with Richardson International and Parrish & Heimbecker, which had terminals at the port, and other well-established agriculture companies in the region, the Globe

and Mail report said.

Gerrand said G3’s terminal would load wheat, soya and corn onto Great Lakes ships and rail cars destined for its ports in Trois-Rivières and Quebec City and buyers overseas. The rail service would use the shortline Southern Ontario Railway to connect with the two major Canadian railways to Quebec so shipments would not halt when the St. Lawrence Seaway closes for the winter.

“We felt it was a real plus to be able to operate year-round,” Gerrand said.

The Globe and Mail said after the federal government ended the CWB’s monopoly on buying western Canadian wheat and barley in 2012, CWB began building and buying a network of elevators, port terminals and two grain ships as it transformed into a full-service grain handler to compete with the other agricultural

companies that began buying and selling western grains.

In April 2015, US-based Bunge Ltd and Saudi Agricultural and Livestock Investment Co. took control of CWB with an investment of $250M. In addition to seven grain elevators in Western Canada and four in Quebec, G3 has a port terminal in Thunder Bay, Ontario, and is in the early stages of designing and building a grain terminal at the Port of Vancouver.

Another four grain handling facilities are being built in Manitoba and Saskatchewan.

Gerrand said the Hamilton terminal completed the Southern Ontario grain pipeline and G3 would focus on expanding its reach in the Prairies with new inland terminals in Saskatchewan and Alberta that would feed the planned Vancouver terminal, which served Asian markets.

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

IN BRIEF THAILAND: Advanced Biochemical Thailand Co Ltd (ABT) – a subsidiary of international chemical group Solvay – has received certification from the Roundtable on Sustainable Biomaterials (RSB) for the production its bio-based building block for renewable chemicals and resins, the company announced on 1 December. The certificate covers the manufacture of bio-based epichlorohydrin (ECH) from vegetable glycerol. ABT said it was the first bio-based chemical operator in Asia to obtain RSB certification. It has been using Solvay’s proprietary technology in Thailand since February 2012.

USA: US biochemical company Renmatix Inc will develop its first commercial biorefinery this year, Bloomberg reports.

Duncan Cross, vice president of corporate development, said in the November report that the refinery would produce between 100,000 to 300,000 tonnes/year of sugars and would be commissioned by one of the company’s undisclosed partners.

Renmatix uses high-pressure steam to break wood chips and other biomass into sugars that can be made into materials such as bioplastics and biofuels.

Bloomberg said Renmatix had partnered with French energy giant Total SA and global chemical company BASF and was in talks with Coca-Cola Co to help make a bioplastic for its beverage bottles.

BELGIUM: Belgium’s KU Leuven and VIB have teamed up with Brazilian venture capital firm Performa Investimentos to set up a new company, GlobalYeast, to develop industrial yeast strains for bioethanol and the green chemicals industry.

KU Leuven is Belgium’s largest university and VIB is a life sciences research institute.

They have succeeded in making genetically engineered yeast strains capable of fermenting C5 sugars from concentrated and non-detoxified streams.

The new company has raised €6.25M from an investor consortium and will focus on the Brazilian market and large groups worldwide.

Sale of Cremer Oleo to IOI set for completion in first quarter

I

OI Oleochemical Industries’ €89.4M acquisition of Cremer Oleo’s entire oleochemicals manufacturing business in Germany is slated for completion in the first quarter of this year, subject to regulatory approvals.

The acquisition by the plantation and oleochemical giant, announced in September, will be made through IOI’s indirect wholly-owned subsidiary Alstersee 217 VV GmbH, to be renamed IOI Oleo GmbH. It will include Cremer Oleo’s only production facilities in Witten and Wittenberge and associated business activities in Hamburg, with a combined processing capacity of about 39,200 tonnes/year.

The Witten production plant offers a broad range of mostly branded oleochemical speciality products for the pharmaceutical, personal care, cosmetic, food and performance chemicals markets. The Wittenberge facility provides high performance capacities for esterification with multi-step short-path distillation, distillation and fractionation of fatty acids and production of medium-chain triglycerides.

IOI said in the Star Online that the acquisition was a timely opportunity for it to move further up the value chain to an established customer base of multinational and large European companies with production facilities in close proximity to key Western Europe and emerging Eastern Europe markets.

“The move will enable IOI Oleo to expand into a new product range to serve the higher margin but difficult to penetrate pharmaceutical, cosmetic, food and performance chemicals markets worldwide.

IOI also said it would establish new production sites in the centre of the EU, which would help mitigate the increased import tariff on Malaysian oleochemicals into the EU, following the withdrawal of the Generalised Scheme of Preferences in 2014.

Cremer Oleo said the remaining part of its business of sourcing oleochemical raw materials, processing, warehousing and supplying customers would not be affected.

IOI is Asia’s largest oleochemical manufacturer with 710,000 tonnes/year of capacity in Malaysia.

Bio-based polymers capacity to triple by 2020

G

lobal production capacity of bio-based polymers will triple from 5.7M tonnes in 2014 to nearly 17M tonnes in 2020, according to the European Bioplastics trade group (see Table, right).

The group projects a 10% growth rate from 2012 to 2013 and 11% from 2013 to 2014, with a decrease in 2015, in the third edition of its market study, ‘Bio-based Building Blocks and Polymers in the World – Capacities, Production and Applications: Status Quo and Trends Towards 2020’, published in November.

Global turnover for biobased polymers was some €11bn in 2014 compared to €10bn in 2013, with drop-in

polyethylene terephthalate (PET) and polyhydroxyalkanoate (PHA) showing the growth rates.

Europe was also losing a large share in total production to Asia, the report said.

Gevo Inc licenses isobutanol technology to Praj

G

evo Inc, USA announced on 9 November that it had entered into an agreement with India’s Praj Industries Ltd to license its isobutanol technology to processors of non-corn based sugars, including the majority of Praj’s global customer base of ethanol plant owners.

Praj will optimise Gevo’s technology for non-corn feedstocks including sugarcane, sugar beets, cassava, rice, sorghum, wheat and certain cellulosic sugars. It

will also provide the engineering, procurement and construction services for such projects.

The move builds on an earlier agreement in March 2015 for Praj to license up to 250M gallons of isobutanol capacity for sugarbased ethanol plants over the next 10 years and for it to optimise isobutanol production at Gevo’s plant in Luverne, Minnesota, USA (see OFI Renewable Materials News, June 2015).

Praj and Gevo will also work

together to commercialise Gevo’s technology for making renewable jet fuel from isobutanol in India.

Gevo’s technology uses synthetic biology and metabolic, chemistry and chemical engineering to focus primarily on producing isobutanol, as well as related products, from renewable feedstocks.

It operates a fermentation plant in Minnesota and a biorefinery in Texas to produce renewable jet fuel, octane and ingredients for plastics.

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DIARY OF EVEN TS

18-19 JANUARY 2016 Fuels of the Future 2016: 13th International Biofuel Conference VENUE: Berlin, Germany CONTACT: Bundesverband BioEnergie eV, German Bioenergy Association Tel: +49 228 8100 222 E-mail: info@bioenergie.de Website: www.fuels-of-the-future.com

9-10 FEBRUARY 2016 Oilseed Congres Europe MENA 2016 VENUE: Barcelona, Spain CONTACT: Oilseed Congress Europe, High Quest Group, USA. Tel: +1 207 2449544 E-mail: OCEINFO@highquestgroup.com Website: www.oilseedcongress.com

14-17 MARCH 2016 World Bio Markets 2016 VENUE: Movenpick Hotel City Centre & Passenger Terminal, Amsterdam, the Netherlands CONTACT: Green Power Conferences, UK. Tel:+44 207 099 0600 E-mail: info@greenpowerconferences.com Website: www.worldbiomarkets.com

13 APRIL 2016 5th Annual EU Biofuels Summit VENUE: Grand Hotel Kempinski, Geneva, Switzerland CONTACT: Baron Kootstra, Platts, UK Tel: +44 20 71763486 E-mail: baron.kootstra@platts.com Website: www.platts.com/events

20-21 APRIL 2016 6th Annual European Algae Biomass Summit VENUE: Berlin, Germany CONTACT: Dimitri Pavlyk, Active Communications International (ACI), UK Tel: +44 (0) 20 3141 0627 Email: dpavlyk@acieu.net Website: www.wplgroup.com/aci/event/ european-algae-biomass-conference-europe/

20-22 APRIL 2016 International Palm Oil Exhibition (INPALME) VENUE: Santika Dyandra Convention Centre North Sumatra Province, Indonesia Contact: Yanto Sutioso Tel: +62 853 19967833 E-mail: pibi@infopibi.com Website: www.palmoilexhibition.com

1-4 MAY 2016 107th AOCS Annual Meeting VENUE: Salt Lake City, Utah, USA CONTACT: AOCS Meetings Department, USA Tel: +1 217 6934821 E-mail: meetings@aocs.org Website: http://annualmeeting.aocs.org

Bursa Malaysia to host POC 2016 M

ark your calendar from the 7-9 March 2016 and be part of the global congregation of palm and edible oils industry professionals at the 27th Annual Palm and Lauric Oils Conference & Exhibition: Price Outlook 2016/2017 (POC2016) at the Shangri-La Hotel, Kuala Lumpur, Malaysia.

This event has upheld its core intention of providing valuable interaction opportunities for delegates to discuss trade possibilities, market trends and keeping abreast on the latest price forecasts that will impact their respective businesses.

Thought-provoking inputs from speakers and their comments are key takeaways that will continue to be discussed among delegates even after the event is over.

Join the event as a sponsor and maximise this platform and further elevate your corporate visibility and promote your respective products and services to delegates at POC2016.

For sponsorship enquiries and other

information, contact: POC2016 Secretariat Tel: +603 7727 8458 Fax: +603 7727 9458 E-mail: poc@ bursamalaysia.com Website: www. pocmalaysia.com Early bird offer (register & pay before or on 29 January 2016) RM2,600 (US$710) – Bursa member rate RM2,800 (US$760) – Non-member rate Normal rate (register & pay before or on 26 February 2016) RM3,000 (US$820) – Bursa member rate RM3,200 (US$870) – Non-member rate Walk-in rate (register & pay on 7 March 2016) RM3,800 (US$1,030)

29 MAY - 3 JUNE 2016

OFI India 2016

19th International Sunflower Conference VENUE: Balkan Congress Center, Edirne, Turkey CONTACT: International Sunflower Association Tel: +90 284 226 12 18 E-mail: info@isc2016.org Website: www.isc2016.org

13-14 April 2016 Hyderabad International Convention Centre

1-4 JUNE 2016 16th European Fat Processors and Renderers Association (EFPRA) Congress VENUE: Costa Navarina Resort, Messinia Greece CONTACT: KAFSIS Bio-Industries SA Tel: +30 210 89 60 100 E-mail: info@kafsis.com Website: www.efpramessinia2016.com

5-7 JUNE 2016 International Symposium on Lipid Oxidation and Antioxidants VENUE: University of Porto, Portugal CONTACT: Eurofedlipid, Germany. Tel: +49 69/79 17-533; Fax: +49 69/79 17-564 E-mail: info@eurofedlipid.org Website: http://www.eurofedlipid.org/ meetings/porto2016/index.php

18-21 SEPTEMBER 2016 14th Eurofedlipid Congress VENUE: International Convention Center (ICC) Ghent, Belgium CONTACT: Eurofedlipid, Germany. Tel: +49 69/79 17-533; Fax: +49 69/79 17-564 E-mail: info@eurofedlipid.org Website: www.eurofedlipid.org/meetings/ ghent2016/

Featuring a two-day exhibition, a free twoday Business Conference; a two-day Smart Short Course on oilseed and oil processing technology; and a free tour of the Council of Scientific and Industrial Research – Indian Institute of Chemical Technology (CSIR-IICT).

To register, go to:

www.ofievents.com/india/register Sales & Sponsorship

Mark Winthrop-Wallace, Sales Manager E-mail: markww@quartzltd.com Tel: +44 (0) 1737 855114 Anita Revis, Sales Consultant E-mail: anitarevis@quartzltd.com Tel: +44 (0) 1737 855068 Erik Heath, Chinese Sales Executive E-mail: erikheath@quartzltd.com Tel: +44 (0) 1737 855108 Nikunj Vishwakarma, India Sales Executive E-mail: nikunj@quartzltd.com Tel: +91 67351022; +93 73517070

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

14 OFI – JANUARY 2016 www.oilsandfatsinternational.com

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05/01/2016 09:36

BURSA1926-POC_A4_Mag.pdf

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05/01/2016 11:47

I NTE RN ATION AL M ARKET REVIEW

Will tighter palm help mop up excess soya?

Vegetable oil markets over the past year have reflected diverging supply fundamentals and 2016 seems to promise more of the same.

John Buckley writes FIGURE 1: VEGETABLE OIL PRICES (MONTHLY AVERAGES)

Niño impact reducing Malaysian and Indonesian rainfall, curbing or reversing production growth to which markets have become accustomed in recent years; and origin country plans, especially in Indonesia, to use a lot more palm oil in biodiesel.

The combination has been enough to get prices off the floor recently but more evidence of real stock decline may be needed to maintain an upward price trend.

Will production really suffer that much from El Niño? We may have to wait until halfway through 2016 – or beyond – to see what damage will really take place. And will biodiesel consumption really jump by 2M or 3M tonnes – or far more – cutting supply for traditional/largest outlets among food oil importers? Again, markets need to see proof that Indonesia has the biofuel distribution capacity and that its vehicles can cope with 20% palm blends targeted for 2016 – all in the context of chronically weak world energy markets.

Also, as 2015’s palm oil export performance has shown, traditional food oil demand isn’t guaranteed to hold up in the face of higher prices.

This is important for a market that depends on importers to dispose of almost three-quarters of its supply – many of them in less affluent developing countries.

Record stock build-up of soya oil

P

alm and soya oil prices have weakened amid record crops and stock build-ups, while sunflower and rapeseed oil prices have held up amid flat/lower crops and tightening availability. But that’s only part of the story, in terms of the US dollars in which most commodities are traded internationally. In reality, the enduring strength of the greenback – recently up to 12-year highs versus other currencies – has denied many oil/oilseed importing countries much of the benefit of the cheaper items while inflation increases in rapeseed and sunflower oil.

By distorting transmission of market signals back to producer prices, currency volatility has in some cases been to the producers’ advantage, improving real returns from weaker international prices. In Brazil, the devalued real has reportedly shored up producer incomes from soya crops at year-ago levels, even as these have shed as much as 20% of their global dollar value. Argentine soya and Malaysian/Indonesian palm oil producers are among others shielded to some extent by their weak currencies.

Currency volatility is expected by the big banks to continue playing a major role in crop price discovery during the year ahead. Dollar strength especially, is expected to persist as US interest rates start to rise. And despite some recent upward blips, further weakness is expected in the euro, and possibly in the Asian palm producers’ currencies too. Energy exporting countries’ currencies in the

Middle East, Asia and Latin America also seem likely to come under further strain amid some startlingly low predictions for crude oil prices – some envisaging these could halve again. It clouds assumptions about consumer – especially import-based – demand for fats, oils and other food commodities, estimates of which have been revised down recently.

On the fundamental side, the key question facing oil and fat markets towards the close of the year was the extent to which the ‘big four’ traded oils would maintain or shift their contrasting supply trends in 2016. (We count as ‘off-market’ the also significant contributors, cottonseed and groundnut oils, largely consumed in country of origin rather than exported).

Bullish forecasts yet to materialise The descent in palm oil prices in 2015 has, to a large extent, ignored a series of bullish forecasts throughout the year. As most of these failed to materialise, consumers might have been forgiven for hoping that this talk was only wishful thinking on the part of producers. Yet while origin pundits, with their vested interest, have been responsible for plenty of the bullish input, so have some normally detached observers, notably at 11th Indonesian Palm Oil conference in November.

The nub of the case for tighter palm oil continues to rest on twin supports: a delayed El

Some analysts also suggest soya oil will be able to fill some of the gaps created by any downturn in palm oil supplies. Certainly, there is huge slack in the soyabean market, faced with a record stock build-up to some 83M tonnes – equal to about 15M tonnes of soyabean oil. In a year in which world vegetable oil consumption is expected to grow by over 6M tonnes, palm is currently forecast to supply an extra 4.2M tonnes and soya oil 2.2M tonnes. If crushers could process another 10M or 20M tonnes of soyabeans, that could supply an extra 1.8M/3.7M tonnes of soya oil. However, even if that were possible, the meal from oil-oriented crush would have to find a home, probably resulting in stock build-up, downward pressure on meal prices and undermined crush margins for this meal-rich oilseed.

There also remains large origin stocks of palm oil to be disposed of – about 6M tonnes combined in the two leading producer countries. So while palm fundamentals do seem to have improved in terms of producer income, there remains a wide range of supply and demand possibilities and price scenarios for this year.

Top palm oil producers Indonesian industry body GAPKI recently warned of a possible 2/2.5M tonne hit to its export potential for 2016 (against 24/25M tonnes in 2015).

Plantation giant Sime Darby, meanwhile, expected 6% of its Malaysian and up to 10% of Indonesian output to be affected by El Niño droughts and smoke haze from Indonesia blocking sunlight, and pollination in both countries. USDA has just slashed its global output forecast for 2015/16 by 2.5M tonnes to 62.6M tonnes, reducing Indonesia’s by 2M to 33M tonnes and Malaysia’s by 0.5M to 20.5M tonnes.

Figures also show Malaysian November output fell 19% versus October, against a 7.5% drop in the same period in 2014, so an El Niño effect might v

16 OFI – JANUARY 2016 www.oilsandfatsinternational.com

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05/01/2016 09:38

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CHARTS: JOHN BUCKLEY

I NT E RN ATION AL M ARKET REVIEW

FIGURE 2: CBOT SOYABEAN FUTURES

v already be underway. Yet exports are falling fast too – down 12.4% on month in November, spread across a wide swathe of buyers, led by India. This may partly reflect the seasonal downturn as colder weather affects oil viscosity and handling. However a response to palm’s unusually small discount cannot be ruled out either.

Malaysian early December exports were even worse, dropping by over a third from October’s.

Apart from soya competition, palm traders remain uneasy about provision of trade finance for the second largest importer, China (although its edible oil demand rose 21% in November). There has also been talk of top buyer India raising its crude palm import tax – although steep declines that are forecast in its soya and palm oil crops after sub-par monsoon rains suggest it may need more rather than less oil imports.

For 2015 up until time of press, Malaysian exports were up by about 1%. Among key customers, less has gone to China, Pakistan and the USA but more to India, while Turkish imports rose five-fold, probably linked to feeding the influx of Syrian refugees.

Soya supply outlook The soya supply outlook has loosened further over the past month, resulting in Chicago futures in late November hitting a six-and-a-half year low.

Some partial bounces since have reflected ideas that demand may have been under-rated as well.

The key players, Chinese crushers – who analysts worried might chop back demand after the recent local stock-market falls – seem to have returned as hefty buyers and recent forecasts suggest the top importer will, after all, take in significantly more this season.

Importantly for the CBOT price, China has recently bought plenty from the USA, rather than switching wholesale to seasonally cheap South American soya. The USDA has meanwhile raised its forecast for Chinese soyabean crush to 80.3M tonnes (up almost 6M tonnes on the year). In November alone, China took in almost 7.4M tonnes from all sources – up by a third from October (when year-to-date imports were running almost 15% up).

So despite continuing qualms about faltering crush margins and over-stocking, it seems a case of ‘so far so good’.

That said, US sales are not guaranteed to hold up

if Latin American crops continue to shape up well.

While some weather interruptions there delayed sowing initially, the general picture has been favourable recently and there is plenty of time for things to catch up. Recent USDA forecasts suggest Brazil and Argentina combined will produce at least 157M tonnes – as much as in 2014 – while some local estimates are higher.

USDA took markets by surprise recently with upward revisions to its global soya crush and export trade estimates, enabling it to cut the world carryover stock estimate. But it didn’t quite override a larger than expected US crop estimate for 2015 – up 2.54M tonnes and now 1.5M tonnes above 2014’s record. Even with increases to crush and exports, US ending stocks are seen rising by 7.4M tonnes from the starting level.

As OFI went to press, soyabean oil is enjoying support on the US market from a new biofuel mandate for 2016 which traders expect to heavily favour this oil. US soyabean oil export forecasts have also risen, more than offsetting a recent cut in estimated US food use. Latin American biodiesel usage is being talked up and markets have been taking a more sanguine view of the recent election win by ‘business-friendly’ President Mauricio Macri in Argentina as well. This was initially expected to result in removal of the 30% soya export tax, opening the floodgates to huge stocks farmers hoarded as a hedge against inflation and local currency weakness. Now it seems the tax cuts will be phased in. Still, the huge stocks held in both Argentina and Brazil remain a long-term deterrent to price recovery in this sector (if probably not to US farmers sowing another big crop in 2016, based on present soya/maize price ratios).

The prospective competition is highlighted

by Brazilian export sales already nearing half the next crop versus just over a quarter at this time in 2014. Slow US farmer selling, disappointed with lower prices, has been pricesupportive. However, small forward futures premiums and the preponderance of fund/ speculative shorts in this market do not imply much confidence in a sustained soya price rally.

soya in October and November but suffered a reverse in December, as official body Statistics Canada astounded everyone by adding 3M tonnes to its 2015 crop estimate, now a far more comfortable 17.23M tonnes.

That was almost 2M tonnes more than the average trade guess and 800,000 tonnes over 2014’s crop. An increase was certainly needed to meet this season’s higher than expected demand without dragging end-season stocks down to risky low levels.

Canada’s crush has been running about 6% up and exports 12% up on the year versus earlier forecasts, that both would have to drop to accommodate a disappointing crop. Now, end-season Canadian and world stocks will be less tight than feared, especially as Canadian starting stocks were also revised up not long ago.

More supportive for prices, Ukraine’s winter sowings for 2016 have not all germinated after being sown late during a dry autumn – and about a third of what has sprouted is in poor shape.

Ukraine’s 2015 crop was already down almost 23% and the total CIS harvest (Russia, Ukraine, Belarus and Kazakhstan) about 1.2M tonnes lower than 2014’s. There will clearly be less Ukrainian rapeseed for EU crushers next season.

Australia, another key supplier to the EU, has also revised down its crop, to just under 3M tonnes, but may be able to meet EU demand as Canada deals with other global markets. It’s expected to be a heavy supplier to China which took about 365,000 tonnes more in January to October 2015 than the same period in 2014, nearly doubling its intake.

European winter rapeseed crops for 2016 have been favoured by mild, damp autumn weather, according to official crop forecaster Mars, which found fields in good condition in the big producers – Germany, France and UK, if not Poland, where dry weather delayed sowing, leaving late-established crops more exposed to cold snaps.

The German trade body UFOP meanwhile estimated its winter area up 4.3% while UK forecasts ranged from 7-15% down and French plantings minus 2%. EU yields, which fell almost 9% last year, could improve with better weather in 2016.

Sunflower consumption up

High demand for rapeseed/canola

After some upward revisions to CIS crops, 2015’s global sunflowerseed production seems to have turned out just 300,000 tonnes short of 2014’s 40M tonnes, a lot better than initial forecasts ranging closer to 38M tonnes.

With carryover stocks, that should enable crush to meet a third successive year of above-average sunflower oil consumption in excess of 14M tonnes.

Slightly larger CIS exports may also help fill in for a smaller EU crop (down 1.2M tonnes to a threeyear low of 7.75M tonnes). Russian and Ukrainian sunflowerseed crops might also expand this year on land vacated by failed winter wheat crops.

The EU sunflowerseed harvest area has contracted by about 10% in recent years while 2015’s yields fell by a similar amount after a hot, dry summer. More normal conditions could allow some recovery in 2016 but a clearer picture will not be available until the crop is sown in the spring. w

Rapeseed/canola has been sustained by its own relatively tighter market and the partial rally in

John Buckley is Oils & Fats International’s market correspondent

18 OFI – JANUARY 2016 www.oilsandfatsinternational.com

John Buckley.indd 2

05/01/2016 09:38

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19 OFI – JANUARY 2016 www.oilsandfatsinternational.com

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08/01/2016 12:16

C H IN A

Healthy competition in a diversifyin China’s market for branded oils is growing and diversifying as consumers become wealthier.

Mark Godfrey reports

A

s China’s economy slows down, there’s been increased competition among producers of staple oils like rapeseed and soya oil. But new players continue to pile into niches like coconut, olive, peanut and tea oil, using health and organictinged marketing ploys.

A morning melee around the oils section at the Walmart outlet on Heping Lu street in downtown Tianjin shows that China’s edible oils shelves have become a buyer’s market. Consumers are being courted by special offers from brands, like a five litre ¥72.90 (US$11.53) bottle of ‘Duo Li’ brand rapeseed oil which comes with a ‘free’ one litre bottle. Price conscious consumers lined up in midOctober at the store for five litre bottles of oils discounted due to a price war between leading brands.

The Walmart store on Heping Lu sold Jin Long Yu

China edible oil 2 pages.indd 1

05/01/2016 09:32

C H IN A

sifying market PHOTO: ACHY0701/DREAMSTIME.COM

(owned by Singapore-based Wilmar International) brand soyabean oil at CNY38.90 (US$6.15) per five litre bottle, the same price as that charged for the Hai Shi brand produced by Shanghai Liangyou Co. Hai Shi rapeseed oil (five litres), meanwhile, sold at CNY68.90 (US$10.90), while maize oil produced under the Duo Li brand by Shanghai Jiage Co sold at the same price, a 10% discount according to supermarket floor staff. Wilmar’s Arawan brand of peanut oil meanwhile sold at CNY105 (US$61.61) per five litre bottle. Data from the Tianjin municipal government shows that pricing for edible oils is at a low ebb in China. The average price per litre of blended oil in August was CNY12.11 (US$1.91), down 4.65% year-on-year according to data published by the market information centre of the Tianjin Commission of Commerce. The price of peanut oil fell 0.83% year-on-year while average soyabean oil prices were down 4.53% year-on-year according to the commission, which monitors commerce in Tianjin, one of China’s largest east coast cities and ports.

“The leading oil companies have cut prices... residents are paying more attention to high-end cooking oil to meet health needs,” according to Mr Zhang Liwei, an official analyst at the commission.

Worries over food safety and GM content have also steered higher-income consumers away from soya oil in particular, he says.

Basic versus specialist oils It is perhaps not surprising that cooking oil prices (which have long been a bellwether of government

China edible oil 2 pages.indd 2

food inflation monitoring) are down, given that weaker economic growth helped keep inflation subdued at 1.8% on average in 2015, much below the government’s declared ceiling of 3%.

Moderating GDP and credit growth was expected to limit price pressures in China for the rest of 2015.

However, inflation will rise to 2.3% this year based on improved commodity prices, according to Asian Development Bank (ADB) predictions.

China’s growth in consumption of edible oils is starting to slow in volume terms, with 1.6% annual growth predicted for the period 2013-2022 by the UN’s Food & Agriculture Organization (FAO), compared to 4.5% growth in the 2003-2012 period.

Brands have struggled to adapt to the changing trends in Chinese edible oils consumption, with market leader Wilmar International (commanding a 45% market share of branded and bottled edible oils, according to market researcher Euromonitor) forced into a price war over sales of more basic oils such as soya and peanut oils, with other leaders such as COFCO – National Cereals, Oils and Foodstuffs Corporation (16% market share) and Shandong Luhua (9.5% market share). This has happened as market players have also battled to capitalise on the demand for olive oils and the fatter margins that go with such premium products.

Prices for soya and rapeseed oil certainly look cheap next to another offering on the Walmart shelves: a five litre bottle of blended mustard seed and olive oil for CNY120 (US$18.99), sold under the Heng Da brand owned by the conglomerate of the same name based in Inner Mongolia. Closely associated with local government in Inner Mongolia, v

05/01/2016 09:32

C H IN A

PHOTO: ALENKADR/DOLLARPHOTOCLUB PRICE CONSCIOUS CONSUMERS ARE LINING UP TO PURCHASE FIVE LITRE BOTTLES OF VEGETABLE OIL, OFTEN WITH A ‘FREE’ ONE LITRE BOTTLE ON THE SIDE

Demand for GM-free oil Consumers have been drawn to peanut oil by worries over genetically modified content in other oils, particularly soyabean. This is according to a new entrant to the market: the ‘Veterans Peanut Oil’ brand launched this year by former People’s Liberation Army officer Chen Wei Qiang, in Linyi City of Shandong province, a peanut cultivation hotbed.

Chen says he has been motivated to set up his company, Ju Nan Xian Lao Bing Liang You Dian Co, due to rising demand among the public for a “safe and affordable oil that doesn’t have GM soyabeans in it”. He also points to the ability to distribute his oil through online commerce portals such as Taobao, Tmall and Yihaodian. Support also

Clever marketing Various government blueprints – such as the food processing five-year plan and a Chinese government food and nutritional development plan for 20142020 – stress that China wants to produce better quality local oilseeds crops rather than focusing on quantity. Production areas are declining in all categories, with Chinese soyabean cultivation in 2015 amounting to 6.1M ha, down 700,000ha on 2014, according to China’s State Administration of Grain in a bulletin of data issued in October 2015.

Peanut production at 4.7M ha is down from 4.6M ha in 2014; while rapeseed at 7.3M ha is down from 7.58M ha sown last year. Cottonseed production at 9.3M tonnes is down significantly from 15M tonnes in 2009, according to the grain administration.

High-quality edible oils are proving a sweet spot for firms in industrial categories where profits declined 8.2% year-on-year in the JanuarySeptember 2015 period, according to data from China’s finance ministry in late October.

State owned enterprises in industries such as petrochemicals, steel and coal – all areas suffering from over-capacity and low profitability – have sought out potentially lucrative niches as they continue to suffer from major losses. Some, like Heng Da, have set up trading operations importing products like olive oil while also launching edible oil brands.

Likewise, the Ye Xiang Fu brand of coconut oil produced by the Hainan Gan Cheng Science & Technology Development Co, sells for CNY60 (US$9.49) per one litre bottle. The coconut oil is marketed with attributes such as ‘fragrant’, ‘natural’ and ‘pure’.

New entrants to the market have stressed health and sustainability as marketing ploys. But while Hainan Gan Cheng describes the coconut oil as ‘organic’ in English and Mandarin on product packaging – the company has not secured official Chinese organic certification. The brand, which also markets the benefits of coconut oil for internal organs and skin, does have a ‘Green Food’ mark, a national scheme which indicates food producers are using reduced amounts of artificial inputs

like fertiliser and other chemicals. The ‘organic’ attribute is likewise claimed by sesame and hemp oil brand Yi Shu Tang, produced by Guangxi Ba Ma Yuxiang Shenghou Ti You Co, which sells on online stores such as Yihaodian.com for CNY59 (US$9.33) per 250ml bottle. ‘Organic’ is also the key marketing slogan (and emblazoned on the logo) for another new brand of ‘wild tea oil’ produced by the Xin Yu Yue Zhou Oil Co in the inland province of Jiangxi in eastern China: it sells at CNY119 (US$18.83) per two litre bottle in supermarkets and e-commerce sites.

Quality over quantity in future While much has been made of the recent slowdown in China’s macro-economic growth and the impact of the anti-corruption campaign on the catering sector, it is clear that the fundamentals remain in place for long-term growth in consumption of edible oils. Rising incomes and urbanisation are key factors: China is expected to narrowly edge ahead of the USA for the first time in the 2026 in nominal GDP terms (according to the International Monetary Fund).

Average annual wages in China were expected to be CNY59,885 (US$9,478) by the end of 2015, according to Trading Economics. This will rise to CNY63,519 (US$10,053) in 2020 and CNY79,960 (US$12,655) in 2030 and almost double to CNY112,651 (US$17,830) by 2050.

Putting the country’s current economic slow-down aside, as China gradually gets wealthier it’s likely that consumers will opt for lower volumes but also for higher-end oils. This should create plenty of competitive pressure between brands – and bargains for shoppers.

Mark Godfrey is a freelance journalist

PHOTO: ACHY0701/DREAMSTIME.COM

v Heng Da announced this year it was planning a CNY100bn (US$15.82bn) investment expansion into organic-minded agriculture, including a new line of six cooking oils.

But Heng Da is not the only firm seeking to cash in on rising demand for niche or higher end oils. Also on sale at Walmart outlets in Beijing and Tianjin: one litre bottles of olive oil sold at CNY59 (US$9.33) under the Nu Ma brand owned by Beijingbased Hua Yuan Sheng Ming Ke Mao Development Co which packages Spain-sourced olive oil imported from its supplier, Italy-based Santagata Luigi SA. Sales are strong, explains a spokesman for Nu Ma, which has promoted itself by becoming the official supplier to the local heats of beauty pageants like the Miss Universe contest, which are popular in China.

came from local government, which, Chen told Oils & Fats International, is keen to boost rural incomes through sales of high-value commodities like peanuts with value addition through crushing and processing locally. Indeed a five-year plan for the Chinese food processing industry published by China’s agriculture ministry in 2014 calls on local officials to “give full play to the advantages of the peanut producing regions…to develop a group of large-scale processing industries in peanut oil, cottonseed oil and sunflower oil…”

Groundnut oils such as from peanuts are one of the few areas of growth for domestic Chinese oils production, with contraction in local soyabean and rapeseed cultivation. Projections from the FAO in cooperation with the China Academy of Agricultural Sciences predict that increases in area and yields will remain flat with area for rapeseed falling 2% between 2013 and 2022 as cultivators turn to more profitable crops like maize. It projects that Chinese groundnut production will rise 11% in the same period with yields set to rise by four tonnes/hectare compared to only two tonnes/ hectare for rapeseed oil.

CUSTOMER DEMAND FOR OILS SUCH AS PEANUT IS RISING DUE TO A BELIEF IT IS GM-FREE, SAFER AND MORE AFFORDABLE THAN SOYABEAN OIL

22 OFI – JANUARY 2016 www.oilsandfatsinternational.com

China edible oil 2 pages.indd 3

05/01/2016 09:32

C OC ON U T OIL

PHOTO: MIKEPHOTOS/DREAMSTIME.COM

In the eye of the storm T

he Philippines, an island nation in the Pacific, thrives and suffers thanks to its tropical climate. The country is one of the world’s top producers of coconuts and coconut oil due to its hot, tropical environment; however, it is also prone to powerful storms. According to TIME magazine, the Philippines is the most storm-exposed country on earth and experiences an average of eight or nine typhoons (as they are known if they form over the northwestern Pacific) every year. Although coconuts grow easily in the Philippines, farmers are fighting government corruption, insect infestations and the constant barrage of typhoons to make a living from the ‘tree of life’.

Coconut oil production Situated just north of the equator the Philippines is one of the world’s largest producers of coconuts.

According to the Food and Agriculture Organization of the United Nations (FAO), in 2009 it produced 19.5M tonnes of coconuts, more than any other country in the world. By 2012, it had slipped to second place after Indonesia but was still producing nearly 16M tonnes/year of coconuts, and in January 2014 the FAO said the Philippines accounted for 26.6% of global production. Twenty-five percent of all agricultural land in the country is dedicated to coconut production.

Coconut oil (CNO) is one of the most lucrative commodities manufactured from coconuts and is exported in high quantities around the world.

As well as oil, the Philippines exports copra and desiccated coconut, coconut cream and protein, coconut water, whole mature nuts, coir and activated carbon from the coconut shells.

Globally, CNO is the most exported coconut commodity. Top 5 of Anything reported that in 2002 world exports reached 1.822M tonnes, against only 0.165 tonnes of copra. Used in food, cosmetics and energy products, the oil is a top earner for the country. According to The Manila Times, the Philippines exports over 70% of its CNO with 80% of the shipments going to Europe and the USA.

Industry associations

Super-Typhoon Haiyan struck the Philippines on 8 November 2013 and caused a huge loss of life and considerable damage, particularly to one of the country’s main income sources – coconuts. Rose Hales investigates how Haiyan, as well as other debilitating factors, are affecting the coconut oil industry and how it plans to recover

Two main associations support the coconut industry in the Philippines. The United Coconut Associations of the Philippines Inc (UCAP), is a non-profit private organisation which was established to unite all sectors of the coconut industry and work for their common good, serve as a centre of information about the coconut and related subjects and provide a forum for the coconut industry. The Philippine Coconut Authority (PCA) is the second, the sole government agency that is tasked to develop the coconut industry to its full potential in line with the new vision of a united, globally competitive and efficient coconut industry. The PCA oversees and promotes development in the industry for the v benefit of coconut farmers.

23 OFI – JANUARY 2016 www.oilsandfatsinternational.com

Philippine coconut industry Version 2.indd 1

11/12/2015 09:57

PHOTO: OLEGD/DREAMSTIME.COM

C OC ON U T OIL

IT WAS ESTIMATED THAT AROUND 33M COCONUT TREES WERE DAMAMGED OR DESTROYED BY TYPHOON HAIYAN IN THE PHILIPPINES, AFFECTING MORE THAN A MILLION FARMERS

v

Typhoon Haiyan On 8 November 2013 the Philippines was hit

by Typhoon Haiyan (known as Yolanda in the Philippines). Haiyan was one of the most powerful tropical storms ever recorded, and was graded a category five on the Saffir-Simpson scale, the highest possible category. Winds of 195mph were recorded, as well as 145mph winds sustained for at least 10 minutes. At least 6,300 people lost their lives in the Philippines alone, with a further 14M people affected and 600,000ha of farmland damaged.

As well as the initial devastation – the loss of lives, homes and habitat – Haiyan left a lasting impression on the country’s economy and industry.

In particular the storm severely damaged the previously thriving coconut industry, which an estimated 20M people (one in five Filipinos) rely on to make a living, according to Romulo Arancon, executive director of the Asian and Pacific Coconut Community.

The storm destroyed millions of coconut trees in the country. Eastern Visayas, the second largest coconut-producing region in the Philippines, was one of the areas most affected, the FAO reported in January 2014. Around 33M coconut trees were damaged or destroyed, impacting more than a million farmers. It was estimated that more than 128,000 households were severely affected by the typhoon. According to the FAO, the PCA estimated losses of US$396M. The coconut industry is such a huge part of the country’s economy that many people are indirectly associated and suffered after the typhoon hit; not just farmers, but also traders, logistics and transport workers.

Recovery plans The negative impact of the typhoon for coconut farmers is only made worse by the difficulties in replanting and the slow growth of the trees.

Although compared to many other trees coconut is comparatively fast growing, it still takes between six and eight years for a coconut palm to reach maturity and bear fruit. It can then take between 15 and 20 years for the tree to reach peak production.

The FAO has been working on developing alternative income sources for coconut farmers until coconut trees are productive again. The recovery plan is focusing on clearing felled trees through cash-for-work programmes and introducing new crops that could be planted alongside new coconut trees to give coconut farmers an income until their trees begin to fruit again. An estimated 44,000 of the worst affected farming households were provided with rice seed in early 2014, which was hoped would yield enough to feed 800,000 people for a year.

According to the FAO Philippines Newsletter 2015, Issue 3, the focus after Typhoon Haiyan was to build more resilient farming communities – this is being done by the FAO by providing water- and pest-resistant storage containers for seeds, as well as training to help farmers protect their seeds and reduce post-harvest losses. Household farming kits were distributed to coconut farmers, which included storage drums, vegetable seeds, heavyduty tarpaulin, drying nets, watering cans and organic fertiliser.

In addition, the FAO wants to encourage smallscale coconut farmers to intensify and diversify their livelihoods through inter-cropping and livestock integration, to build their capacities in risk assessment and climate resilience, and integrate soil conservation with trees in cropping areas to prepare communities for further disasters.

Although none of this can help the coconut industry directly following Typhoon Haiyan, it will ensure the survival of coconut farmers and their families to continue to produce coconuts when the newly planted trees begin to fruit.

The PCA also launched the Yolanda Recovery and Rehabilitation Program (YRRP) in the wake of the typhoon. The four major components of the relief effort are debris management, replanting, fertiliser and intercropping.

Industry recovering Since Typhoon Haiyan hit on 8 November 2013, over two years ago, is the CNO industry recovering in the Philippines?

In 2012, before Haiyan struck, the country

exported 1.101M tonnes of CNO, according to Index Mundi. And in 2013, CNO export figures reached 1.096M tonnes, The Manila Times said, which then fell strikingly to 795,297 tonnes in 2014, lower than the target of 850,000 tonnes.

Although according to InterAksyon, low production was also due to biological stress, experts said three consecutive years of good harvests before the typhoon had played a part.

However, as early as March 2015, the UCAP reported positivity on the country’s CNO industry.

Exports surged by 87.1% in January 2015, The Manila Times reported. In January 2015 79,250 tonnes of coconut oil was exported, compared to 42,360 tonnes recorded in the same period the previous year. Although this is a significant increase, starting as they did from the baseline, the figures are deceiving.

The industry set a lower export target of 804,000 tonnes for 2015 as some areas in Central Philippines will take a few more years to recover.

By June, UCAP said second quarter figures were up 31% year-on-year. The four-month tally reached 290,368 tonnes with hopes to reach the 804,000 tonnes target by the end of year.

In September last year, Cocommunity said exports of CNO was 473,769 tonnes, an increase of 19.6% from volumes in the same period of the previous year. However, it also reported that the increase in shipments was due to the Philippines importing raw material and crude coconut oil from other origins, which it then processed and exported.

Figures show that despite an initial dip following the super typhoon, the Philippine’s CNO industry was recovering in 2015. Unfortunately, the latest figures released in the final quarter of 2015 were not so positive. Exports of CNO from the Philippines dropped by almost a third in September, The Manila Times said. A lack of raw material as well as weak demand for traditional buyers were cited as the reasons for the drop. Monthly exports reached only 76,582 tonnes in September, a drop of 32.5% from 113,492 tonnes the previous September.

Regardless, Yvonne Agustin, executive director of UCAP told The Manila Times that she was confident the industry would still hit its export target of 804,000 for 2015 – figures were not available at time of press to confirm this.

Furthermore, a number of non-traditional coconut products are becoming increasingly popular around the world causing their export figures to surge in 2015, Cocommunity said.

In November last year, some non-traditional coconut products qualified in the Philippines’ top exports list by creating export revenues of at least US$100,000. In June 2015, the top five made earnings of over US$1M – these were virgin coconut oil, coconut water, glycerine, baled coir and coco milk powder.

Virgin coconut oil, also known as unrefined coconut oil, is extracted from fresh coconut meat instead of dried copra. It generated US$19.5M for the Philippines in June 2015 from shipments of 4,061 tonnes. According to Cocommunity this was an increase of 105.4% from June the previous year, which saw shipments of 1,977 tonnes in comparison. The USA was the biggest importer by far of virgin coconut oil, although other importers include Canada, Germany and Japan.

Sales of both refined and unrefined CNO are increasing in the west due to the perceived health and dietary benefits of the lauric oil.

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Misuse of the Yolanda relief fund In the wake of Typhoon Haiyan, the global community pledged contributions to the so-called ‘Yolanda relief fund’, money intended to support relief and recovery efforts in the Philippines.

The Philippine Star reported that violations and irregularities have surfaced in the way the PCA spent the P688.718M (US$14.76M) in the relief operations following the typhoon and in its anti-coconut scale insect project in 2014. A 2014 Commission on Audit (COA) report released last September said contracts were awarded to questionable suppliers using emergency procedures that did not ensure the best prices were sought. According to The Philippine Star, the COA report documented that farm machinery, seeds and fertilisers were bought with the money but a review of documents showed “documentary and procedural deficiencies” and the committee responsible for awarding the contracts “lacked sufficient awareness or knowledge in the procurement processes prescribed under RA 9184”. The Government Procurement Reform Act RA No. 9184 provides for the modernisation, standardisation and regulation of the procurement activities of the government and for other purposes. The act requires that the procurement of goods and services is “competitive and transparent”, state auditors told The Philippine Star.

In addition to problems with how the money was spent, in the same report The Philippine Star says only P17bn (US$364M) of the pledged P73bn (US$1.56bn) of foreign aid from the international community actually materialised following the storm’s destruction, according to the Department for Social Welfare and Development (DSWD).

The National Economic and Development Authority (Neda) 7 published its latest report in October last year documenting the success of the Yolanda rehabilitation projects – covering all areas from resettlement and infrastructure, to livelihood and social service. Its report is sobering for anyone hoping that the country is returning to normality.

A total of 2,766 projects were planned as part of the Yolanda rehabilitation programme, with a value of P11.99bn (US$254M), but only 997 have been completed, an inadequate 36%, at a cost of only P1.918bn (US$40.6M). Some of the remaining 64% are marked ‘on going’, whereas others are not started or implemented.

For coconut farmers the results have been marginally better, out of the 1,784 livelihood projects planned, 700 were completed – or nearly 40%.

Director of Neda 7, Efren Carreon said this was because these projects were easier and faster to implement.

Carreon did say that a majority of the ongoing projects were due to be finished by the end of 2015 and, if so, this would push the completion rate to 72%.

Purity Rules

An aging tree population Aside from the issues caused by typhoons, the Philippine coconut industry is struggling with both an aging demographic and, more worryingly, an ageing tree population.

Coconut palms take between six and eight years to become productive and reach peak production between 15 and 20 years. After 30 years of age the palm production begins to decrease. CNBC said that according to the FAO many of the trees in the region were between 50 and 60 years old.

Although the devastation caused by the storm has overshadowed the problems of an aging tree population – and many would have been destroyed – of the remaining trees, a large quantity are still too old to produce good amounts of coconuts.

Having highly productive trees is even more important after the typhoon crisis. Agustin, at the UCAP told Bloomberg in 2013 that some of the local palms were already 100 years old. The Asia-Pacific harvest is now around 40 nuts/tree/year, when there is a potential for a tree to produce 75-150 nuts/ year, the FAO says. It advises replanting after 60 years.

A representative for Asia and the Pacific at the UN told Bloomberg in November 2013 that world consumption of coconut products was growing at more than 10% a year, however production at that time was only increasing by 2%.

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Insect crisis Coconut palms, like all plants, are susceptible to insect infestations. Less than two years after Typhoon Haiyan, the Philippines announced the outbreak of Aspidiotus destructor or the coconut scale insect. According to The Wall Street 25 OFI – JANUARY 2016

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C OC ON U T OIL

‘A number of non-traditional coconut products are becoming increasingly popular...causing their export figures to surge in 2015’ Kilusang Magbubukid ng Pilipinas (KMP, Peasant Movement of the Philippines) and Coco Levy Funds Ibalik sa Amin (CLAIM) say the justice secretary Leila de Lima is ignorant about the levy and they are demanding the money be returned to its rightful owners. De Lima is seeking the coco levy funds to be transferred to the national treasury, which according to KMP secretary general Antonio Flores “is an insult to small coconut farmers and is in support of Aquino’s heinous scheme to plunder the funds”. KMP claims more than P75bn (US$1.6bn) has been trapped in the Bureau of Treasury (BTr) and the Aquino administration is using the earnings from the coconut farmers’ money, InterAksyon said.

In 2014, coconut farmers marched for two months from Davao (in the south) to Manila (in the north) to bring their case to government (the march became known as KM71); they were asking PHOTO: SCOT NELSON

v Journal it was first noticed in 2010 in Bantangas, south of Manila, but by 2014 it had risen to the level of infestation. Authorities believe that the insect entered the Philippines through an international port, most likely from Indonesia. Aspidiotus destructor attacks the underside of the leaf, thus preventing photosynthesis, causing the nuts to fall prematurely and lower productivity overall.

The Wall Street Journal reported that according to authorities in the country the coconut industry stood to lose as much as US$628M – two-thirds of its yearly earnings – if the infestation wasn’t brought under control. It was not made clear how many trees would have to be infected for such a loss to take place. The mortality rate from infestation is 65% with fruit yield dropping by 59% on average.

To deal with the crisis, the government said in early June 2014 that it had put aside US$17M for a six-month pruning and rehabilitation programme for infected trees. This included quarantining affected areas, burning their leaves and introducing insects that feed on the pests. It was estimated that the trees would recover within eight months.

According to Manila Standard Today the number of trees infested by August 2014 had climbed to 2.699M (out of about 325M trees across the country) in the Cavite, Batangas, Laguna, Quezon and Basilan regions of the Philippines.

However, by early 2015 Manila Standard Today reported that the outbreak had been contained. The containment was due in part to the PCA and other government agencies’ response to the emergency, and was also, somewhat ironically, thanks to Typhoon Glenda that struck the Philippines in July 2014. A report in InterAksyon said the typhoon appeared to help reduce the insect infestation. Although Francis Pangilinan, head of the presidential assistant for food security and agricultural modernisation, did not provide any statistics he did say that the storm reduced the emergency to a moderate or slight infestation. Manila Standard Today said data provided by the PCA showed that in February 2015 after Typhoon Glenda and the emergency protocols had been implemented, the infestation was reduced to only 1.611M coconut palms.

The levy causing fresh problems Unhelpfully, the industry is further hounded by economic issues affecting both the sale of coconut products and the support farmers are receiving.

This is in regards to the coconut levy and apparent misuse of the funds it has accumulated.

The coconut levy, a tax imposed on farmers, the proceeds of which are supposedly stored by the government to be utilised for the development of the industry and for the good of the contributors, has been plagued with problems since its inception more than 40 years ago and not much has changed.

The so-called Coco Levy Fund scam began in the 1970s and 1980s when the levy was initially imposed, a report in the Manila Bulletin explains.

Instead of being used to develop the industry, the then president Ferdinand Marcos used the money for personal gain, in particular to buy the United Coconut Planters Bank (UCPB) and a majority stake in San Miguel Corporation, the Manila Bulletin said. Coconut farmers are still contesting the taxation and the money’s use today. Various sources now estimate the fund’s assets to be in the region of P100-150bn (US$2.14-3.21bn).

InterAksyon reported on 17 September that

THE COCONUT SCALE INSECT ATTACKS THE UNDERSIDE OF THE PALM LEAVES, WHICH PREVENTS PHOTOSYNTHESIS

for a coco levy trust fund to be created, by law, which would be used to the advantage of coconut farmers. This initial group succeeded in meeting with President Benigno Aquino III in November 2014 to discuss their demands.

Since then things have moved forward, although not as much as many would have hoped. The Congress of the Philippines released a statement on 23 October last year that said that a trust fund for the exclusive benefit of coconut farmers and farm workers had been approved by the House of Representatives that day.

Officially it is known as HB 6135 or the proposed “Act Establishing the Coconut Farmers and Industry Trust Fund and Providing for its Management and Utilization”. HB 6135 seeks to consolidate all assets and benefits originating from the coconut levy, and create a trust fund for the exclusive benefit of coconut farmers and farm workers.

In addition it also provides for the creation of an ad-hoc committee that will prepare a five-year plan of programmes, activities and projects funded by the trust fund, known as the Coconut Farmers and Industry Development Plan.

According to the Congress of the Philippines’ statement, the House of Representatives urged the Senate to also pass the act.

Although the outlook appears positive, The Philippine Standard said that by late October 2015 the build-up to the next election had started, and farmers were concerned that officials who had previously promised assistance may desert the cause due to new priorities. Farmers were once against camped outside the Philippine Coconut Authority in October and planned to stay there until 1 December 2015 to ensure the government does not forget their promises.

What next?

The overriding problem facing coconut farmers that encompasses all of these challenges, from disaster relief, to insect infestation and aging trees is that Philippine law is now too old to be either relevant or helpful, according to Senator Chiz Escudero.

The last legislation relating to the coconut industry was issued in 1978, the Presidential Decree 1468 – Escudero said in a press release in October, Escudero feels passionately that government policy must be updated to be more attuned to the current situation. The legislation that created the PCA – Presidential Decree 232 – is over 40 years old and no longer responds to the industry’s needs.

Escudero is promoting Senate Bill No. 2116, which proposes the PCA be transformed into the Philippine Coconut Industry Development Authority (PHILCIDA), which would be tasked with offering marketing assistance as well as other services to help farmers become more productive and more profitable.

According to Escudero, the act also seeks to make the PCA/PHILCIDA profitable, sustainable and development-oriented; currently the PCA only receives 2% of the Department of Agriculture’s allocation as annual subsidy even though it covers 26% of total agricultural land and produces an annual average of 15.2bn coconuts.

If Escudero’s Senate Bill No. 2116 and the coconut farmers’ HB 6135 can be passed and implemented, the future of the coconut industry in w the Philippines is looking bright.

Rose Hales is OFI’s editorial assistant

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PHOTO: ALINA ISAKOVICH/DOLLARPHOTOCLUB.COM

exporting to other countries. An often quoted fact is that it is cheaper to import oranges from as far away as China, than for growers in Indonesia to sell them outside of their own island.

Palm oil is the country’s main trading commodity and, according to the Schuster Institute, 3.7M people are employed within the palm oil industry in Indonesia alone.

The Indonesia Central Statistics Bureau and Ministry of Agriculture says 31.6% of total dry land (18M ha) is allocated to palm oil crops in the country. Table 1 (following page) shows Indonesia’s palm oil production and exports taken from Indonesia Investments. In 2015, the country was forecast to produce 31.5M tonnes of palm oil and export 19.5M tonnes. India imports the largest amount of Indonesian palm oil, although the edible commodity is shipped across the world.

Indonesia relies heavily on the abundant vegetable oil but transportation is held back by complex challenges including high costs and outdated port infrastructure.

Current situation

An archipelago problem Indonesia’s logistics costs are out of control and are affecting its competitiveness for top-earning commodities such as palm oil. To lower its logistics spending and increase exports, the island nation needs to improve and update its infrastructure. Rose Hales reports on the situation in Indonesia and what steps are being taken to raise funds and modernise infrastructure

I

ndonesia is the world’s top producer of palm oil globally with a projected production of 31.5M tonnes in 2015. This production amount has increased nearly 50% since the 21.8M tonnes produced in 2010 but the country’s old and crumbling infrastructure system in struggling to keep up with the current volumes. In particular palm oil export relies on Indonesia’s many ports.

The country’s President Joko Widodo (Jokowi – as he is known) promised when he came to power in 2014 to invest in and update the country’s infrastructure, including its ports.

The archipelago country is the fourth most populous nation in the world with approximately 255M people, all inhabiting 6,000 of the country’s

17,000 islands. Sprawled across the equator in a vast area stretching more than 4,000 miles, Indonesia is one of the world’s most complex for transport and logistical arrangements.

Sitting where it does on the equator, Indonesia experiences an average daily temperature of between 26-30oC, which varies little, and high humidity. Such a climate has proved perfect for the cultivation of oil palms and Indonesia is now the world’s top producer and exporter of palm oil.

The country is the 15th largest in terms of land area but the seventh largest in terms of combined sea and land area, two facts that put into perspective the logistical difficulties an archipelago nation faces when transporting goods between islands and

Indonesia’s current infrastructure system is old and struggling to cope with increasing production and exports. There are two main ports, which handle the exportation of crude palm oil (CPO) – Port of Belawan in North Sumatra and Dumai Port in Riau.

According to Medan City Guide, the Port of Belawan is located on the estuary of the Deli and Belawan rivers and is Indonesia’s busiest port outside of Java. It was built in 1890 originally to move tobacco, however its cargoes were expanded in the early 20th century when oil palm plantations in north Sumatra begun exporting palm oil. The port was updated in the 1920s when new berthing facilities were constructed, and again in 1985 when it was restructured and a new container terminal was established. This new container terminal handles a fifth of all containerised exports from Indonesia, including palm oil. In 2006, the Medan City Guide said the 4.5M tonnes of exports included 499,500 tonnes of palm oil.

Dumai Port is also located on the island of Sumatra, on the north central shores. According to World Port Source, Dumai Port is the second largest after Port of Belawan and is located in the important international and regional trade centre and the oil-rich city of Dumai. In 2006, it handled 6.9M tonnes of cargo including 5.3M tonnes of foreign exports. The largest cargo category was palm oil at 5.5M tonnes.

Dedi Junaedi, director of international marketing at the Ministry of Agriculture, Indonesia, told OFI that other ports dealing with the export of crude palm oil (CPO) are Teluk Bayur, Panjang and Tayan.

Due to the ports being out-dated, inefficient and without a large enough capacity to support the country’s exports, logistics costs are much higher than they need to be – currently these account for 24% of the country’s spending, the World Bank reported last May. By reducing it to 16% it is estimated that business, government and households could save approximately US$70-80bn/ year, World Bank says.

The port system in Indonesia is run by four state-owned corporations, the Indonesia Port Corporations or PT Pelabuhan Indonesia (Pelindo).

They are responsible for governance, regulation, maintenance and operation of the ports and

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harbours in the country. There are four corporations numbered Pelindo 1 to Pelindo 4 from west to east.

Pelindo 1 covers Aceh, North Sumatra, Riau and Riau Islands. Perlindo 2 is responsible for ports in West Sumatra, Jambi, South Sumatra, Bengkulu, Lampung, Bangka Belitung, Banten, Jakarta, West Java and West Kalimantan. Pelindo 3 is responsible for Central Java, East Java, Bali, South Kalimantan, Central Kalimantan, West Nusa Tenggara and East Nusa Tenggara ports. And Perlindo 4 covers ports in South Sulawesi, Southeast Sulawesi, Central Sulawesi, North Sulawesi, East Kalimantan, Maluku and Irian Jaya.

Investing in infrastructure Many in the industry, including the Indonesia Palm Oil Producer Association (GAPKI) are saying that the country must improve its port infrastructure in order to remain competitive. Its main palm oil competitor, Malaysia, does not share Indonesia’s logistics problems. Even though Indonesia overtook Malaysia as the largest producer and exporter of palm oil in 2008, it is in danger of falling behind if it cannot keep its prices competitive. According to the World Bank, dwell time in some Indonesian ports is twice as long as it is in Malaysia and five times longer than in Singapore. In Priok port, for example, a container sits for six days between being unloaded and leaving the port gates, World Bank says.

When President Jokowi was inaugurated in October 2014, one of his main strategies was to invigorate the economy by improving maritime and transport infrastructure. He estimated that it would cost US$450bn to fix the country’s infrastructure.

This included ports, dams, airports, rail lines and road networks.

In November 2014, he unveiled ambitious plans for a US$6bn investment to specifically expand the country’s ports. According to Coordinating Minister for Maritime Affairs Indroyono Soesilo, the plans involve expanding five ports on the main islands (north Sumatra, Jakarta, east Java, south Sulawesi and Papua). Approximately Rp70tr (US$5.8bn) is needed to fund the projects, Bloomberg says, and Jokowi plans to raise this money by improving tax collection, attracting foreign investment and reducing fuel subsidies. On 1 January 2015, gasoline subsidies were scrapped with only a small discount being left on diesel. Last year this saved Indonesia US$18bn and was met with praise in the country.

For palm oil, in particular, there have been calls from producers across the country to solve inefficiency by building more ports. Currently there are only two major ports dealing with palm oil, but the Indonesian Vegetable Oil Refiners Association (GIMNI) says commodity shipments

PHOTO: FILIPBJORKMAN/DOLLARPHOTOCLUB.COM

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INDONESIA IS MADE UP OF 17,000 ISLANDS, WHICH MAKES IT A LOGISTICAL NIGHTMARE FOR TRANSPORTING GOODS

are increasing and new seaports need to be built to cope and to cut the costs resulting from the current inefficiencies. GIMNI says that modernisation is needed as well as the formation of three seaports specially equipped for palm oil exports in anticipation of increased export volumes. A spokesman for GIMNI, Sahat Sinaga, told the Jakarta Post in July 2013 that potentially new ports could be built in Mandailing Natal, North Sumatra; Pontianak, West Kalimantan; and Bitung, North Sulawesi. These locations are strategic due to the prevalence of palm oil plantations or proximity to important international markets such as Japan, Russia and the USA.

Funding modernisation One way in which Jokowi hopes to collect money to fund infrastructure modernisations is through the new CPO Fund. Launched in June last year, the Crude Palm Oil Supporting Fund (CPO Fund) began operating on 1 July and is designed to raise money from the export of CPO, which will be put back into the palm oil industry and fund the sustainability development programme.

In combination with the CPO Fund, the government also established the Plantation Fund Management Agency (CPO Fund Agency), which collects tax and manages the CPO Fund. The levies imposed on palm oil exports are US$30/tonne on processed palm oil and US$50/tonne on CPO, if prices fall below US$750/tonne. The agency officially began collecting on 16 July and Deal Street Asia reported that it could potentially generate around US$751.88M/year. For the remaining months of 2015, the agency had hoped to raise US$314M. According to Cocommunity, GAPKI supports the levy and acknowledges that the lack of suitable infrastructure is hindering the competitiveness of CPO products.

The CPO Fund is managed by six directors including Bayu Krisnamurthi as president director and Yuniar Yanuar as the finance director of the agency.

TABLE 1: INDONESIA’S PALM OIL PRODUCTION AND EXPORTS 2008

2009

2010

2011

2012

2013

2014

2015

Production (M tonnes)

19.2

19.4

21.8

23.5

26.5

27.0

31.0

31.5*

Export (M tonnes)

15.1

17.1

17.1

17.6

18.2

21.2

20.0

19.5*

Export (bn US$)

15.6

10.0

16.4

20.2

21.6

19.0

21.0

-

Sources: Food and Agriculture Organization of the United Nations, Indonesian Palm Oil Producers Association (GAPKI) and Indonesian Ministry of Agriculture •indicates forecast figures, not available at time of print

Foreign investment Indonesia’s 2016 budget has provisionally allocated Rp313.5tr (US$22.684bn) for infrastructure needs and, according to Finance Asia, the government hopes two-thirds of this will be financed by the private sector. According to the article, investment funds of US$93tr are available globally, but before Indonesia can even think about tapping into this source, it needs to get projects to a stage where they are investment ready, as the real challenge comes from putting together a formula that is attractive to investors.

In November last year, Shanghai Daily reported that foreign investment in Indonesia grew 18.1% to Rp92.5tr (US$6.8bn) at the third quarter compared to a year earlier. In November, Jokowi issued stimulus packages policies including regulations, tax incentives and other reforms to lure investment. He then designated ministers to deal with the foreign investors, Shanghai Daily said.

IIGF and the IIF In response to the need for assurance against political risks inherent in infrastructure investments, the Indonesian government along with the World Bank launched the Indonesia Infrastructure Guarantee Fund (IIGF) in May 2010. Such assurance was expected to increase the participation of private sector in developing infrastructure through Public-Private Partnership (PPP), the IIGF’s website says.

According to the World Bank, the IIGF is “an independent State Owned Enterprise 100% owned by the Government of Indonesia”. It is the single window for appraising, structuring, processing claim payment and providing government guarantees for infrastructure Public-Private Partnership (PPP) projects in Indonesia. The Indonesia Infrastructure Guarantee Fund Project (IGFP) was then designed to support the development of the IIGF. A similar but private infrastructure scheme was also set up in 2010 called the PT Indonesia Infrastructure Finance (IIF). The IIF became operational in 2012 and was established to focus on investing in commercially feasible infrastructure projects in Indonesia and to encourage private sector engagement in the country’s infrastructure development – according to its website.

Last October, Finance Asia reported that the group (30% owned by government entity with the remaining 70% taken by large shareholders) was hoping to launch its maiden international bond offering in order to build its asset base to US$1bn over the next couple of years. Progress was initially not as fast as expected, but it hopes this

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will speed up as it expands its asserts and increases disbursements.

Streamlining plans Last November, the country announced plans to streamline the way it implements its new infrastructure spending over the next five years, AFR reported. A powerful new central agency would prioritise the 1,600 proposed projects and give foreign investors greater confidence with clear financial commitment. Rainier Haryanto, the programme director of an existing committee to accelerate infrastructure spending told AFR that the committee had already streamlined the 1,600 projects down to 22 priority projects and had taken on an oversight role over six ministries involved in infrastructure delivery.

AFR said the government is being warned that other countries are making themselves more attractive to foreign investment, and Indonesia should stop wasting time trying to develop its own streamlining procedures.

Is infrastructure improving?

Sea toll road In early November last year, the government launched its sea toll road transportation programme at a cost of Rp27bn (US$1.9M). The programme connects Jakarta’s seaport of Tanjung Priok and Surabaya’s Tanjung Perak in East Java with major ports in Maluku and Papua. Jokowi put inter-island connectivity at the top of his development priorities under the sea toll road programme, The Straits Times said.

A freight service programme will run three regular inter-island freighters and six more have been ordered by state-owned shipping company Pelni to increase the frequency of the services. These are initially being subsidised by the government to

PHOTO: MPOB

Jokowi promised to use funds raised from levies and the removal of fuel subsidies to overhaul Indonesia’s infrastructure system, but this has not yet materialised. The Jakarta Post said last August that expenditure has been slow and bureaucracy is to blame. Foreign investors have been reluctant, according to the Jakarta Post, and the government has been criticised for inconsistencies in its policies, which are causing a lack of confidence.

In addition, Jokowi had optimistic predictions for the country’s growth in 2015.

Although things may not have gone to plan in 2015, as 2016 begins the country is still hopeful.

In August last year, the president laid out his plans for the 2016 budget, which focused on infrastructure spending in order to improve exports and boost growth, Jakarta Globe said. The growth target for 2016 is 5.5% (from 5.2% in 2015).

State spending was projected to be Rp2,121tr (US$154bn) – a 7% increase from the revised 2015 spending budget. Of this budget, Rp313.5tr (or 2.5%) has been earmarked for infrastructure projects including building 376km of roads, 110km of railways and 11 new airports, Jakarta Globe said.

This is an 8% increase from the amount allocated in the 2015 budget.

Economists have said that the 2016 budget

is “realistic” – although a slow performance on infrastructure spending in 2015 needed to be addressed quickly. The government had only spent 11% of its infrastructure budget in the first eight months of the year. By 21 September, Reuters reported that spending had begun to pick up and, in the first few weeks of the month, capital spending had been sped up, causing a surge in cement sales and imported capital goods and raw materials.

Businesses were sceptical, the Jakarta Globe reported in August, and were adamant that the government must stick to its infrastructure spending plans. Chairman of the Indonesian Employers Association (Apindo), Hariyadi Sukamdani, said the government must have other options to fund infrastructure improvements if tax collection doesn’t go as planned; he went so far as to say that the government should be prepared to take out debt or bonds to ensure plans for infrastructure development are not hampered.

Reuters said the government had only spent 14% of its Rp276tr (US$20bn) capital budget for the fullyear by the end of July 2015, which rose to 25% by August. On 21 September, President Widodo urged companies to not delay infrastructure projects any further as Jakarta is still far behind other big world cities. In early November, Reuters reported that government capital spending rose to US$3.76bn between July and September, double the amount spent between January and June, but 70% of the budget still remained unspent.

However, Singapore Business Review said at the end of November that Indonesia’s GDP growth finally stabilised in the third quarter and posted a gain of 4.73% year-on-year.

GIMNI SAYS THAT PORTS MUST BE MODERNISED AND THREE NEW SEAPORTS ARE NEEDED THAT ARE SPECIALLY EQUIPPED FOR PALM OIL IN ANTICIPATION OF INCREASED EXPORT VOLUMES

ensure consistent running regardless of load. It is then hoped that the regular freight service will attract the attention of shippers and traders who will begin using the service, ending the need for subsidies in the long term – a concept known as ‘trade follows the ship’. The subsidised cargo ships will carry staples such as rice, sugar and cooking oil.

Trade minister Thomas Lembong told Seatrade Maritime that the programme is expected to lower the price gap between the more developed western Indonesia and the struggling eastern regions by 30%.

The areas served by the subsidised cargo ships is only the first part of the plan, Transportation Minister Ignasius Jonan said, there will be more routes added at a later date.

Port Strategy reported in October that plans were also unveiled to build 188 ships between 2015 and 2017 to support the sea toll road.

New ports In terms of actual ports, plans began to emerge late last year for the development and upgrading of ports in the country.

According to the Jakarta Post in November, stateowned port operator Pelindo 2 plans to develop two new ports this year as well as upgrade Cirebon port in West Java. The two new ports would be located in Sorong, West Papua and in Kijing, West Kalimantan.

Corporate secretary Banu Astrini told the Jakarta Post that final plans were being developed. The ports, costing Rp3tr (US$219.1M) and Rp4.2tr (US$303M) respectively would be funded internally and from the proceeds of Pelindo 2’s global bond issuance, not from the state budget. The Kijing port will be able to accommodate 6.3M tonnes of CPO in a 5,000ha area, the Jakarta Post added.

Global consultant and engineering firm Aurecon announced last year that Pelindo 2 had commissioned it to develop a concept design for CPO loading and associated facilities in Teluk Bayur port, West Sumatra. It said 2014 data showed the port is handling up to 2.5M tonnes of CPO, a number that is expected to increase. The scope of work includes upgrading facilitates and developing a new jetty for CPO loading.

Jokowi and his government also has plans to update other ports to enable larger vessels to dock, reducing the country’s dependence on Singapore’s ports, the Jakarta Post reported in November. ASEAN cooperation director general for international trade cooperation Donna Gultom told the paper that a total of 24 ports have been earmarked by Jokowi for further development.

In August, the Port of Rotterdam Authority said it had signed a partnership agreement with Pelindo 1 for the development of a deep sea port in Kuala Tanjung. The Port of Rotterdam Authority and Pelindo 1 are carrying out a feasibility study, and depending on the outcome, will decide whether to enter into a joint venture with Pelindo 1 for the realisation of the port. Kuala Tanjung is one of the main projects in Jokowi’s national maritime strategy.

Jokowi has promised to ensure government spending on infrastructure is distributed much earlier this year in order to prevent the delays of w 2015.

Rose Hales is OFI’s editorial assistant

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Breeding for sustainability PHOTO: UNDERVERSE/DOLLARPHOTOCLUB.COM

cells or tissues under sterile conditions. Through the method of micropropagation, high-quality plants can be cloned to quickly grow genetically identical replicas.

Traditional forms of seed breeding are time consuming and it takes many years to produce improved planting materials. Genomics based technologies have sped up the process. A report in The Planter in December 2014 said such technologies are well-suited for oil palm and new, better planting materials are being produced quickly and more efficiently.

The MPOB formed a strategic collaboration with Orion Genomics, a small USA-based genomics company, and together they have made three significant breakthroughs, all of which promise to transform and develop the palm oil industry for the better.

Palm oil genome sequenced A major breakthrough came in July 2013 when scientists from the MPOB announced through a report published in Nature journal that they had successfully sequenced the genome of the oil palm.

According to a BBC report on the achievement, scientists used very advanced technology to decipher 1.8bn “letters” of DNA. Such a breakthrough creates the opportunity to better understand the role of each gene in the sequence and use such knowledge for marker assisted selection.

Through seed breeding and genome technology, scientists are forming a better understanding of the oil palm and are using their knowledge to make palm oil more productive and sustainable.

Rose Hales writes

M

reducing costs at the source.

Improving productivity Genome technology seeks to change the traits of plants to produce desired characteristics. In contrast to genetic modification, genomics alters the DNA of plants without introducing any foreign DNA. Seed breeders create hybrids that amplify positive characteristics while reducing negative ones. Different types of the same plant are bred and a superior hybrid with features from both is formed.

In addition, genome technology is used to sequence the genome of an organism. By decoding the DNA, scientists can pinpoint the specific genes that cause certain characteristics – some positive and some negative. Screening methods are developed to show whether a seed or plantlet carries a particular gene; this process allows breeders and growers to select only the most superior plants, which is called marker assisted selection.

Finally researchers use tissue culture, a range of techniques used for maintaining or growing plant

Simultaneous to the genome sequencing, the MPOB and Orion Genomics made a second announcement in the Nature journal, publicising the discovery of the oil palm shell gene.

The shell gene decides which of the three known shell forms the tree will produce: dura (thick), pisifera (shell-less) and tenera (thin). Tenera is a hybrid between dura and pisifera palms and contains two forms, or alleles, of shell genes, one shell gene is normal and the other is mutant. The consequence of this combination is 30% more oil/ land area than dura plants produce. Because it refers to the ideal shell-to-fruit ratio, scientists also refer to it as the ‘Goldilocks gene’.

Before the discovery, growers had to rely on selective breeding techniques in an attempt to v PHOTO: MPOB

ajor breakthroughs have recently been made in oil palm breeding and genome technology, which are set to boost productivity and improve sustainability.

With the world’s population set to grow by 2.3bn to reach 9.1bn people by 2050, the agricultural industry must produce 70% more food in 2050 than it produced in 2015. The palm oil industry, therefore, needs to revolutionise to produce a greater quantity of food and limit further deforestation of important ecological areas.

In her plenary lecture at PIPOC 2015, Datuk Dr Choo Yuen May – director general of the Malaysian Palm Oil Board (MPOB) – said that the palm oil industry needs to overcome the challenges of population growth, food demand, green technology demand, stagnant yields and steep competition from other crops such as soyabean.

The MPOB has two major strategies for increasing productivity and revolutionising the industry. These are to enhance productivity upstream and enhance value downstream – this means making the growing and collecting process more productive while

The shell gene

THE DURA (LEFT) AND TENERA (RIGHT) GENE VARIETIES

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The VIR gene Orion and the MPOB’s second important discovery was reported in June 2014 and concerned the identification of the gene that triggers colour change in oil palm fruit – the VIR gene.

The two most common types of oil palm are the virescens and the nigrescens varieties. The VIR gene is only found in the virescens palm and changes the colour of the fruit to bright orange when ripe. This is useful for palm fruit harvesters who can easily see the bright colour of the fruit from the ground and it gives a clear indication that the fruit is ripe. Ripe fruit contains the highest quantity and quality of oil.

The fruits of the nigrescens type do not contain the VIR gene and turn only from black to dark purple when they are ripe, according to The Malaysian Star, which reported on the discovery in 2014. This subtle change makes it extremely hard for growers to tell if the fruit is at the peak of ripeness.

Currently the virescens type is rarer than the

PHOTO: MPOB

v maximise plantings of tenera plants. According to the MPOB and Orion, due to uncontrollable external pollination up to 10% of plants could be the low-yielding dura shell form, and it could take up to six years for growers to identify the low-yield trees by which time it was too late to uproot them.

In addition to the discovery a simple molecular screen has been developed that can be used for both seeds and plantlets to scan for and reveal the undesired dura plants. These plants can be discovered early enough to remove them before they grow to maturity.

With less dura plants being grown, the efficiency of oil palm plantations has increased and the sustainability of the industry boosted as more high-yield tenera plants will reduce competition between plantations and rainforests. MPOB and Orion say that this will have a “significant impact on the Malaysian economy, because for every 1% increase in palm oil yields, Malaysia gains RM1bn (US$230M) in income”.

EXAMPLES OF A NORMAL (TOP) AND MANTLED PALM FRUIT

nigrescens variety, which is much more prevalent across Malaysia and Indonesia. The MPOB and Orion say that this new knowledge of the VIR gene will allow palm growers to choose virescens over the nigrescens, as the benefits of the former are now much greater. Growers will find it easier to judge the ripeness of the fruit if they choose the virescens variety.

In addition, the companies say that the shell gene and the VIR gene used in combination would enable seed breeders to develop new lines to further boost plant efficiency.

The mantle gene The final and, in many ways, the most significant discovery was made in September last year when Orion, MPOB and Cold Spring Harbor Laboratory announced they had found the epigenetic cause of mantling. This is a huge breakthrough that explains a previously unknown phenomenon that has caused millions of dollars of spoilage.

In the 1980s, most palms in plantations were produced by cloning the highest-yielding plants in culture dishes, Phys.org reported. However, often these fine hybrid clones grew into barren adults

TABLE 1: THE PRIORITY TRAITS IN OIL PALM No

Trait

Current

Benchmark

1

High oil yield

3.70 tonnes/ha/year 9.00 tonnes/ha/year

Kulim Group

2

Ganoderma tolerance

70%

Kulim, AAR, UP, FELDA, Sime Darby, IOI, Borneo Samudera and Genting Green

3

High bunch index

0.40

0.60

FELDA

4

Low height/ compactness

45-75cm/year

30cm/year

FELDA

5

Long stalk

10-15cm

25cm

FELDA and AAR

6

Low lipase

22-73% of FFA level

Half of the current level (no takers yet from the industry) of FFA

7

High oleic acid

22-40%

65%

(no takers yet from the industry)

8

Large kernel

5%

20%

FELDA

9

Vitamin E

660ppm

1,000-1,500ppm

FELDA

10

High carotene E.guineensis content 500ppm E.oleifera 1500ppm

E.guineensis 2000ppm E.oleifera 3000ppm

IJM, Sime Darby

90%

Source: The Planter, December 2014 (Mond Din et al. (2005))

Company

with misshaped and worthless fruits. The mutant form displayed by the plants was called ‘mantled’.

According to Dr Choo at the MPOB, the mantling has “severely curtailed the ability of oil palm growers to take advantage of the significantly increased yield that cloned palms can have over palms produced from seed.” Previously there has been no way for growers to identify the mantled phenotype until too late, as young plants do not show signs of mantling until mature. Many oil palm cultivators, especially smaller growers, were unwilling to take the risk that their entire plantations could conceivably transpire to be only mantled plants.

The MPOB and Orion’s study shows that mantled palms are genetically identical to their parents, however “the loss of DNA methylation in a specific region of an oil palm genome containing a transposable element called ‘Karma’ is responsible for the low-yielding mantled fruit”.

DNA methylation is necessary for cells to develop normally and is essential for a number of key processes. Low methylation of Karma (dubbed ‘bad Karma’ by the scientists) disrupts the gene’s normal splicing, causing the mantled phenotype. In the reverse situation, dense methylation of Karma (‘good Karma’) causes palm clones to thrive in production fields.

In revealing the discovery of the ‘bad Karma’ causing the mantled phenotype, Orion and the MPOB also say a simple, leaf-based test has been developed that can predict if the palm will be mantled. Crucially the test can provide a result before the palms are planted out and many years before physical signs of the phenotype would appear.

In future only the high-performing clones will reach maturity, optimising land resources. This allows growers to propagate high-yield clones, which the companies say have the potential to produce 2030% more oil/planted area than palms grown from seedlings. The team was not able to say what causes the ‘bad Karma’, but identifying its presence and producing a test to reveal it will still transform the industry.

The breakthrough was made possible owing to the MPOB’s vast collection of highly characterised clonal palms with a solid knowledge of palm oil and tissue culture, alongside Orion’s MethylScope technology, which can precisely map DNA methylation across entire genomes, the companies said.

Priority traits in oil palm Although improving oil yield is one of the main drivers of genome technology there are other desirable characteristics that seed breeders are working on making available.

Table 1 (left) shows the priority traits in oil palm that were identified and prioritised by the MPOB through brainstorming sessions in 2001 and 2003, a report, in The Planter revealed in December 2014.

According to the report, the 10 traits were then incorporated into a fast track breeding programme involving breeding activities and cloning via tissue culture. Seed breeders collaborated with the MPOB in pursuing the different traits. The companies responsible for pursuing each trait are also shown in Table 1.

The Planter says that besides high fresh fruit bunches (FFB) and oil yield, the traits that are most popular are those that simplify harvesting – these include short height, virescens (an indicator

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PHOTO: THUNGSARNPHOTO/DOLLARPHOTOCLUB.COM

of ripeness), low lipase (for the slow build-up of free fatty acid after harvesting) and non-abscissing (no loose fruits).

In order to improve breeding, the Malaysian industry needs to broaden the genetic base.

According to The Planter article, the Asian palm oil industry is built on just four palms, and the genetic base needs to be widened. The MPOB began collecting oil palm germplasm and, in December 2014, it had the largest oil palm germplasm collection in the world.

In the 2011 paper ‘Breeding for Sustainable Palm Oil’, Tristan Durand-Gasselin concludes that there are three traits, which, if changed, would improve sustainability. One of which is improving yield through bunch production and oil content.

The second is vertical growth, which has been largely reduced. A shorter statured palm facilitates harvesting and also prolongs the palm’s lifespan by five to seven years as its replanting age is usually determined by its height. Durand-Gasselin says that this would allow growers to replant when the time is right economically rather than by necessity. The final important trait is disease resistance. Scientists are seeking to find disease resistant palms for each of the major oil palm viruses.

Disease resistance Oil palm diseases can have major economic repercussions for palm oil-producing countries.

Durand-Gasselin records three diseases affecting the industry. These are: n Fusarium – can cause losses of up to 70% and mostly specific to Africa n Ganoderma – may cause up to 80% mortality, present in Southeast Asia and also in parts of Africa (sometimes in combination with Fusarium). Beginning to be seen in Latin America too n Bud rot, probably related to Phytophthora palmivora – can cause 100% mortality very quickly. Mostly seen in Latin America In terms of creating disease resistance, DurandGasselin explains the difference between total resistance (specific) and partial resistance (nonspecific). Total resistance is specific and can be bypassed easily by the pathogen, the report says. Partial resistance encourages and provides sustainable and non-specific resistance to a larger diversity of pathogens. Although such a method will not result in diseased plants disappearing completely from the field, it will be more efficient in limiting their number than total resistance does.

Results from Fusarium resistance have been reasonably successful and go back to the 1980s and 1990s. Research on Ganoderma resistant varieties is much more recent and no Ganoderma varieties have been released yet, although results are promising, Durand-Gasselin says.

Drought resistance In October 2015, the Borneo Post reported that Malaysia is developing a drought-resistant oil palm breed that could withstand several seasons of dry spell – including the effects of El Niño. Such a breed could be available within 10 years the report said.

According to the president of the International Society for Oil Palm Breeders (ISOPB), Dr Ahmad Kushairi, no efforts were made to breed a droughtresistant oil palm previously because the climate

THE DISCOVERY OF THE SHELL AND MANTLE GENE AND THE INVENTION OF SCREENING TESTS WILL ALLOW FOR LOW YIELDING PLANTS TO BE DISCARDED WHILE THEY ARE STILL IN THE NURSERY

did not necessitate such a development. Although initiatives for drought-resistant breeds are being developed in other parts of the world, Malaysia is only just beginning this process, Kushairi told the Borneo Post at the International Seminar on Gearing Oil Palm Breeding and Agronomy for Climate Change on 5 October last year. As the current extreme and unpredictable weather affects food crops, the need to address climate change in relation to palm oil productivity has emerged.

Malaysia needs to be prepared for the consequences of extreme weather.

A presentation published in September 2011

by Univanich Palm Oil PLC, entitled ‘Some Best Practices in Thailand’s Oil Palm Industry’, explained how palm oil breeding is making it

possible to grow oil palms in parts of Thailand up to 15o from the equator. Usually palm oil is only grown 10o either side of the equator. Thailand’s supply and demand is growing because oil palm breeding is improving drought tolerance. The Univanich Breeding Programme in Thailand had the objective to produce world-class tenera hybrids especially suited to dry growing conditions. In particular the company made selections based on high oil yields, drought tolerance and low height increments.

ISOPB The International Society for Oil Palm Breeders (ISOPB) is part of the MPOB but it represents oil palm breeds from countries across the world.

According to the ISOPB website it has a current membership of around 200, most of which are based in Indonesia or Malaysia.

The society’s aim is to advance the knowledge of oil palm breeding through international cooperation. In order to achieve this, its rules decree that it should hold symposiums, workshops and meetings locally and internationally; establish committees, commissions or working groups to deal with specific problems; arrange meetings of experts to exchange views, collaborate and distribute information; promote and assist in the international exchange of genetic material for breeding; publish a newsletter or journal to report on research activities; and where possible carry out these activities in consultation with the Food and Agriculture Organization of the United Nations and with other international, governmental or nongovernmental organisations.

The future When it succeeded in sequencing the oil palm genome, MPOB began a process that is already leading to increased understanding and improved productivity of the oil palm. The discovery of the mantled gene in particular has reopened the door to growing superior hybrid clones again, allowing for fast-growing, high-class oil palms to become the norm across the industry.

According to MPOB director general Dr Choo, oil palm is now 10 times more productive than soyabean and genomics will only continue to w improve its productivity in the future.

Rose Hales is OFI’s editorial assistant

TABLE 2: DEMAND FOR GERMINATED SEEDS FROM 2005-2013 IN MALAYSIA (SEEDS/REGION) Year

Penisula

Sabah & Sarawak

Total

2005

77,606,255

4,509,184

82,115,439

2006

58,744,419

8,251,130

66,995,549

2007

56,645,073

8,540,413

65,185,486

2008

74,620,293

13,622,642

88,242,935

2009

71,907,565

14,578,910

86,486,475

2010

64,008,546

12,565,259

76,573,805

2011

57,812,058

14,842,943

72,655,001

2012

56,634,583

18,639,958

75,274,541

2013

47,396,304

15,232,476

62,628,780

Source: MPOB

33 OFI – JANUARY 2016 www.oilsandfatsinternational.com

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Alarm over rising imports A

s the world’s largest edible oil importer, India urgently needs to address its stagnating oilseed production if it wants to avoid an ever increasing dependence on imports.

India’s demand for edible oils is some 21M tonnes/year and it meets this with domestic production of some 7M tonnes and imports of 14M tonnes, valued at over Rs65,000 crores (US$12bn).

With expected population and per capita income growth, its demand in 10 years is set to hit 30M tonnes.

“Oilseed production is more or less stagnating,” says Sushil Goenka, director of 3F Industries Ltd. “If nothing is done, imports will rise to 75-80% of our requirements.”

His view is echoed by Dinesh Shahra, manging director of Ruchi Soya Industries Ltd. “The import of edible oils has risen to alarming levels – 65% of our requirements – and we can’t afford to let this continue. No country should rely on such large imports for food.”

Large economy India itself is a US$2tr economy, according to Atul Chaturvedi, CEO, agri business, at Adani Wilmar.

“In purchasing power parity, it’s actually a US$5tr economy.”

Its GDP is growing at more than 7% but its agriculture sector is struggling at sub 2% growth and contributing less than 15% to GDP. “Collapsing farm incomes are leading to upheavals in the rural economy, compounded by the fact that 60% of the population depends on agriculture. Tragic farmer suicides are common.”

“Minimum support price-driven production has ensured India is self-sufficient in basic foods like wheat and rice, along with sugar. In all these commodities, except rice, we have a surplus but are not competitive in world markets due to high

PHOTO: EYEGELB/DOLLARPHOTOCLUB

IN DIA

India is projected to require some 30M tonnes of edible oils in 10 years’ time. Already the world’s largest vegetable oil importer, what can the country do to promote its domestic oilseed and processing sector? Serena Lim writes domestic values.

“Oilseeds and pulses are the biggest sufferers and the period between 1995 and 2015 should be considered the lost decades for these commodities.

There is practically no growth in oilseed and only marginal increase in pulses.”

India’s oil and oilseed turnover is US$25bn and import-export turnover is US$13bn, providing employment to over one million people, says Pravin Lunkad, president of the Solvent Extractors’ Association of India (SEA).

Oilseeds production has stagnated at around 2830M tonnes with productivity of 1,000-1,100kg/ha.

The rise of imports In the late 1990s, India opened up edible oil imports under open general license and its total consumption stood at around 10.5M tonnes, of which the imported component was about 4.5M tonnes. “With rising income levels and changing food habits coupled with competitively priced palm oils, demand skyrocketed and currently we are consuming almost 19-20M tonnes of oil.

“Out of this, the imports are almost 13.75M tonnes,” Lunkad says. “About 70% of our requirement is met by imports which are growing at almost one million tonnes/year valued at around US$12bn.”

According to Dorab Mistry, director of Godrej International, India’s edible oil imports have soared by almost 50% in the last five years (see Table 1, following page). Of these imports, palm oil tonnages have increased by 25% while soya oil has recorded

an increase of over 300%. “Soya oil imports will take market share from every other oil because soya is so attractively priced.”

Consumer trends in oil and meal Going forward, Atul Chaturvedi says loose oil sales will gradually cease to exist and packed and branded oils will keep increasing.

“More and more oils may get launched on the health platform. Groundnut and mustard oil will price itself out. Groundnut will become a dry fruit and mustard oil will be for connoisseurs and die hard Bengalis who can afford it. Rice bran oil may gain in popularity with health conscious consumers and blended oils may start getting marketed officially.”

Food safety issues will also become more and more important, with a more proactive regulatory regime in future.

“The Indian vegetable oil industry would be well advised to take food safety issues seriously or their very existence could be jeopardised.”

Along with growing edible oil imports, imports of corn and soya meal are also expected to rise.

“Poultry is the real sunrise sector in India with chicken and egg consumption growing with changing food habits,” says Chaturvedi.

“Youngsters prefer more animal proteins in their diets. We feel the poultry sector is growing at 10% and is poised to grow at 15% in the next decade.”

Even at a conservative 12% growth, this sector would require huge quantities in feed by 2025 of 33.67M tonnes of corn meal (the current consumption is 9.68M tonnes) and 13M tonnes

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IN DIA

Tackling the oilseed deficit In order to tackle India’s domestic woes, various solutions have been proposed including increasing its cultivated oilseed area, promoting oil palm cultivation, introducing minimum support prices for oilseed farmers and increasing import duties on edible oils to support the domestic industry.

Goenka says the problem with increasing cultivated area is that land is finite, with food, fibre, fuel, fodder and factories all competing for its use.

Oil palm cultivation also needs corporate backing to take off, he says.

Pravin Lunkad says oil palm plantations yield up to four tonnes/ha of oil compared to 400kg/ ha in high oil content oilseeds like groundnut and mustard.

Besides the state of Goa, the governments of India’s north-eastern states and Maharashtra have also been encouraging oil palm plantations and some plantations have been started up in Mizoram, Assam and Arunacha Pardeesh states.

“Yet this is a large scope to do a lot more by the state governments and the industry,” Lunkad says.

States which have the right agro-climatic conditions should provide land to the industry on long-term lease or sale, he adds.

Dorab Mistry believes that while oil palm cultivation must be encouraged and expanded, it can never be undertaken on such a big scale.

“The solution to India’s oilseed deficit lies in three factors – better planting material, the ability to lease land for contract farming and, above all, a switch from wheat to rapeseed in the granary belt of Punjab and Haryana.

“The switch must be enabled by making rapeseed

Supporting the domestic industry The oils and fats sector itself has been lobbying the government to increase the import duty on crude and refined oils to support its domestic industry.

Edible oil prices have fallen by about 20% in the past year, says Lunkad. “This has badly affected the local market price of oilseeds and farmers are reluctant to offer their oilseeds at the prevailing price and are discouraged from planting oilseeds.”

The SEA has urged the government to increase the import duty on crude edible oils from 7.5% to 25% and on refined vegetable oils from 15% to 45% to provide a 20% differential to support oilseed farmers and the domestic refining industry, which is languishing at 30% capacity utilisation.

The government raised the import duty in September by 5% on both crude and refined oils.

“This is too little to be of benefit to farmers and as there is no increased in the duty difference, large

Learn about the Indian oils and fats market Come to OFI India 13-14 April 2016 www.ofievents.com/india imports of refined vegetable oils will continue.”

Mistry says it is only a matter of time before import duties on crude and refined oils in India are revised upward or the Indian rupee is devalued to help the country become more competitive.

“India cannot compete when all its competitors have devalued their currencies by 20-40%.

“A lower rupee and a stronger economy can be achieved by lowering domestic interest rates and that is what India needs to do aggressively.”

The future scenario India’s consumption growth is pegged at 5%/ year and the country is expected to be consuming around 34M tonnes of edible oil by 2025.

“The import requirement of oils would balloon to 25M tonnes and domestic availability will only be 9M tonnes at the current rate of growth,” says Chaturvedi. The country’s vegetable oil imports bill may rise to USD$25bn.

“However part of this oil may come in the form of oilseed and not oil alone. Oilseed imports look a distinct possibility in the future.

“With soya and other oilseed crops going nowhere and India requiring both oil and meal, India is going the China way,” he says.

“Port-based crush plants could become a reality.

Canola imports on the west coast and sunflower and soyabeans down south is a distinct possibility.

“Corn import looks inevitable in the future for the livestock sector.

“Whether we like it or not, volatility will remain the order of the day in the next decade.

Be it exchange rate, be it commodity prices, be it employee expectation, be it employee attrition, be it consumer expectations, be it regulatory expectation or be it government expectation and responses. Only companies and organisations which are nimble footed and adaptable will survive and thrive,” Chaturvedi concludes. w

TABLE 1: MARKET SHARE OF INDIAN EDIBLE OIL IMPORTS (‘000 TONNES) 2015-16

2014-15

2013-14

2011-12

Soyabean oil

3,550

3,010

1,951

1,080

Palm oil

9,600

8,710

7,960

7,670

Sunflower oil

1,400

1,510

1,510

1,140

Lauric oils

300

250

220

200

Others

250

300

200

100

15,100

14,100

11,818

10,200

Total

TABLE: DORAB MISTRY/GLOBOIL 2015

of soya meal against a current consumption of 4M tonnes.

“This again is a scary scenario as domestic availability would not keep pace with this increase.”

cultivation remunerative and attractive – if necessary by import duties and even cash transfers.

To my mind, that is the easiest way to reduce India’s oilseed deficit.”

Goenka agrees that improving oilseed productivity is India’s best solution. “India’s yields are half of world averages or a third compared with the best in the world.”

Its soyabean yield, for example, is 47% of the world average and its cottonseed yield is 56% of the world average.

Along with good planting material, water and fertiliser management and good agronomic practices, the oilseed industry must also tackle the lack of communication between its players, research, farmers and the government, Goenka says. It should also feature model farms in selected areas around the country to showcase good practice to farmers.

Pravin Lunkad says an all out effort has to be made to increase productivity of oilseeds in the country. “It needs policy change by the states and the central governments; use of new releases and certified planting materials; a change in the mindset of the farmers to cooperatively grow oilseeds with the support of contract farming from the user industry.”

For some, GM crops also offer the chance to improve oilseed productivity.

“The debate on GM has been going on for more than two decades and the government may bite the bullet in the next decade,” says Atul Chaturvedi.

“India currently has more than 11M ha of land under GM, much more than China. The tragedy is that all this land is under cotton. In future, this may get extended to corn and oilseeds as well.”

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SH OW PREVIEW

Packed programme at OFI India PHOTO: SNEHIT/DOLLARPHOTOCLUB.COM

Full business and technical conference programmes will accompany the brand new OFI India exhibition, taking place on 13-14 April 2016 at the Hyderabad International Convention Centre

W

ith the new OFI India 2016 event drawing close, packed business and technical programmes promise to inform and enlighten those interested in learning about the world’s fastest growing oils and fats market.

OFI India 2016 will be held at the Hyderabad International Convention Centre on 13-14 April and will feature four events in one: t An international exhibition of suppliers, producers and processors (free to attend) t A business conference: ‘Fostering Market Growth and Facing Challenges in the Oils and Fats Industry’ (free to attend) t A Smart Short Course: ‘Oilseed and Oil Processing Technology Utilisation’ t Tour of CSIR-IICT (free to attend)

Learn from the experts Delegates at the two-day OFI India business conference, which is free to attend, will have the

Book a stand!

Exhibition & sponsorship Mark Winthrop-Wallace, Sales Manager E-mail: markww@quartzltd.com Tel: +44 (0) 1737 855 114 Anita Revis, Sales Consultant E-mail: anitarevis@quartzltd.com Tel: +44 (0) 1737 855 068

Nikunj Vishwakarma, India Sales Executive E-mail: nikunj@quartzltd.com Tel: +91 67351022; +93 73517070 Erik Heath, Chinese Sales Executive E-mail: erikheath@quartzltd.com Tel: +44 (0) 1737 855 108

Register to attend

THE CHARMINAR IN HYDERABAD IS ONE OF INDIA’S MOST FAMOUS LANDMARKS

chance to learn from leaders in their field.

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

A parallel two-day Smart Short Course offers delegates the chance to meet and learn from international experts to discuss their current problems and enhance their product innovation and plant operations (see following page for full programme).

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

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

As part of its support, the CSIR-IICT will open its doors with a tour of its cutting-edge R&D facilities on Tuesday 12 April, the eve of OFI India.

The focus of the CSIR’s Centre for Lipid Research includes oil processing, biolubricants, surfactants, castor oil-based products, speciality oleochemicals, bioactive compounds, nutraceuticals and structured lipids and biodiesel.

Reaching the Indian market India is the world’s largest edible oil importer and the second most populous nation in the world, with over 1.2bn people. It imports some 14M tonnes/ year of edible oil, against domestic production of 7-8M tonnes. With the country projected to need some 30M tonnes of edible oils in 10 year’s time and increases in population and lifestyle changes driving a rise in edible oil consumption, interest is strong in this growing market.

Exhibitors that have already booked or reserved stands at the OFI India exhibition include: Andreotti Impianti SPA; Buhler (India) Pvt Ltd; Buss ChemTech AG; ChemTech International; C.M. Bernardini Srl; Crown Iron Works Company; Desmet Ballestra India Pvt Ltd; DNR Process Solutions; Famsun Integrated Solution Provider; Ferro Oiltek Pvt Ltd; GEA Westfalia Separator India Private Ltd; HF Press + LipidTech, Harburg-Freudenberger Maschinenbau GmbH, Isotex Corporation Pvt Ltd; Kumar Metal Industries Pvt Ltd; Lipico Technologies Pte Ltd; Mectech Process Engineers Pvt Ltd; Muyang Co Ltd; Sharplex Filters (India) Pvt Ltd; United Engineering (Eastern) Corporation and v TMCI Padovan.

Supported by:

Free exhibition, business conference and CSIR-IICT tour www.ofievents.com/india/register

37 OFI – JANUARY 2016 www.oilsandfatsinternational.com

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Business Conference: Fostering Market Growth and Facing Challenges in the Oils and Fats Industry DAY 1: WEDNESDAY 13 APRIL 2016

DAY 2: THURSDAY 14 APRIL 2016

Module 1: Outlook on the Global Oils and Fats Scenario

Module 3: Geographic and Feedstock Factors Impacting the Indian Market

Welcome address Pravin Lunkad, President, Solvent Extractors’ Association of India Topic to be confirmed Dr Davish Jain, Chairman, Soybean Processors Association of India (SOPA); President and Group Managing Director, Prestige Group of Industries Price outlook and factors impacting on world supply and demand for oils and oilseeds James Fry, Chairman, LMC International, UK Mapping the market thought of the oil and oilseed market Nagaraj Meda, Managing Director, Transgraph Consultancy, India Module 2: Drivers and Challenges in the Indian and South Asian markets The challenges of Indian oilseed origination – addressing quality, supply, logistics and hedging issues Sumit Gupta, Business Manager, McDonald & Pelz Global Commodities Soyabean production in India and the benefits of sustainable practices Dr Suresh Motwani, Programme Head, Sustainable Soya, Solidaridad South and South-East Asia (SSEA) Drivers and challenges in the Indian and South Asian markets for edible oils and oilseeds Ali Muhammad Lakdawala, Assistant Manager, Procurement, Foods Division, ITC Limited, India

Meeting India’s current and future demand for palm oil – the global and domestic supply and demand scenario Sushil Goenka, Director, 3F Industries Ltd, India; Past President, SEA, India Topic to be confirmed D. N. Pathak, Executive Director, Soybean Processors Association of India (SOPA) Outlook on the global sunflowerseed and oil market Fabrice Turon, Head of Oilseeds and Oils Research, Fats & Associés, France Module 4: New Markets, New Applications and New Opportunities Rice bran oil processing and value added products Dr R B N Prasad, Chief Scientist & Head, Centre for Lipid Research, CSIRIndian Institute of Chemical Technology, Council of Scientific & Industrial Research, India Market overview and new applications for oleochemicals in Asia Gabriele Bacchini, Oleochemical Product Manager, Desmet Ballestra Oleo Presentations on jatropha, castor oil, coconut oil and biofuels

The OFI India Business Conference is free to attend. BOOK NOW! Go to: www.ofievents.com/ india/register

Smart Short Course: Oilseed & Oil Processing Technology Utilisation DAY 1: WEDNESDAY 13 APRIL 2016 Oilseed Processing 9.00: Oils and Fats Chemistry.

TBC, India 9.30: Oilseed Dehulling. Dirk Heinrich, Buhler Group, Switzerland 10.00: Making a Better Flake: The Art of Proper Conditioning.

Jonathon Bellenie, CPM Crown Europe, UK 10.30: Coffee Break 11.00: Energy Recovery Optimisation in Preparation Plants.

Farah Sköld, Solex Thermal Science Inc, Canada 11.30: Extraction Fundamentals: Optimising Oil Removal in Extractors. TBC, Andreotti Impianti, Italy 12.00: Crude Oil and Miscella Clarification for Production of High Quality Lecithin. Robert Zeldenrust, GEA Mechanical Equipment, Germany 12.30: Lunch 13.30: Full-Pressing of Canola and Sunflower Seed with the Two-step Pressing Process. Harald Boeck, HF Press+LipidTech, HF Group, Germany 14.00: Protein Concentrate Plant Design for Food and Aquafeed Applications. Jonathon Bellenie, CPM Crown Europe, UK

Centrifuges and Plants. Robert Zeldenrust, GEA Mechanical Equipment, Germany 9.30: Bleaching Basics and Practical Optimisation. Andri Camus, Clariant Adsorbents, Indonesia 10.00: Optimizing Deodorisation for Quality and Energy. Atul Joshi (TBC), Desmet Ballestra Group, India 10.30: Coffee Break 11.00: Comparison With Cold Refining Winterizing Using Centrifuges And Classical Filtration System In Sunflower Oil. (TBN), C.M. Bernardini, Italy 11.30: Fundamentals of Oils and Fats Processing – Deodoriser Design and Optimisation. Greg Waranica, CPM Crown Iron Works, USA Quality Control and Component Valorisation 12.00: Micronutrient Recovery and Concentration from Deodorizer Distillates, Ling Hua, Food & Life Science, Alfa Laval, Denmark

12.30: Lunch 13.30: Enzyme Solutions Improve Process Yield and Final Product Qualities. Hans Christian Holm, Novozymes, Denmark 14.00: Fat Modification Processes: Dry Fractionation, Chemical and Enzymatic Interesterification and Edible Oil Processing and Refining Hydrogenation. Marc Hendrix, Desmet Ballestra Group, Belgium 14.30: Advanced Technologies 14.30: Mechanism of Oxidation for Edible Oil Refineries - Case Studies. Anik Roy, MecTech Process and Oil Quality Management in Frying and Cooking Oils. Ignace Engineers, India Debruyne, ID&A, Belgium 15.00: Tea Break 15.30: Review of Degumming and 15.00: Tea Break 15.30: Hydrogenation as a Tool Refining Technologies. Ling Hua, for Making Hardstocks and in Food & Life Science, Alfa Laval, Oleochemistry. Michael Paul, BASF, Denmark Germany 16.00: Latest Developments in 16.00: Recycling Solutions Filtration of Edible Oils & Fats. for Spent Catalysts Generated Satish Khadke, Sharplex Filters, from the Oils and Fats and India Oleochemical Industries. Ben 16.30: End of Day One Ortlepp, Nickelhuette Aue, Germany

DAY 2: THURSDAY 14 APRIL 2016 Edible Oil Processing and Refining (cont.)

9.00: Process Automation and Remote Condition Monitoring for

16.30: End of programme Book the Smart Short Course: www.ofievents.com/india/ conference/smart-shortcourse-registration-page

38 OFI – JANUARY 2016 www.oilsandfatsinternational.com

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4 EVENTS IN 1 FEATURING: The international exhibition of suppliers, producers and processors (Free to attend)

OILS & FATS INTERNATIONAL

13 - 14 April 2016 Hyderabad International Convention Centre (HICC), India

Business Conference: Fostering Market Growth and Facing Challenges in the Oils and Fats Industry (Free to attend) Smart Short Course: Oilseed & Oil Processing Technology and Utilisation The CSIR-IICT One-Day Tour (Free to attend) THE MUST ATTEND, BUSINESS, TECHNICAL AND INTERNATIONAL EVENT FOR THE OILS AND FATS MARKET

WHY ATTEND? Network with local and international suppliers under one roof Meet with new contacts face-to-face including world leaders in their field Source the latest products and services on the market Discuss and debate the latest industry developments and innovations Learn from experts by attending the conference sessions Take a tour of the CSIR-IICT facilities

REGISTER NOW ONLINE AT WWW.OFIEVENTS.COM/INDIA SUPPORTED BY:

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ORGANISED BY:

06/01/2016 09:49

STATISTIC S

CRUDE PALM OIL PRICES ROTTERDAM (US$/TONNE)

STATISTICAL NEWS FROM MINTEC Palm oil Palm oil prices rose at the start of the final quarter of 2015, as severe dryness in Southeast Asia and smoke from illegal forest clearing fires in Indonesia raised concerns about damage to the crops. However, prices fell back in November due to record stocks in Malaysia at the end of October. Global production in 2015/16 is forecast at 65.1M tonnes, up 6% year-on-year. However, damage caused to crops by El Niño related dryness is expected to cause production growth in Indonesia and Malaysia to slow down in early 2016.

CRUDE COCONUT VS PALM KERNEL PRICES (US$/TONNE)

Palm kernel oil and coconut oil Low exports of coconut oil from the Philippines have caused the premium of coconut over palm oil to widen.

In September, exports fell by 33% year-on-year to 76.6M tonnes. Exports are expected to continue to fall, due to the stress caused to coconut trees by dry weather conditions throughout 2015. Global production of coconut oil is forecast to increase by 1% year-on-year at 3.4M tonnes, but ending stocks are expected to fall 29% year-on-year to 0.2M tonnes. Global production of palm kernel oil is forecast to reach 7.5M tonnes, up 5% year-on-year. However, growth is likely to be affected by damage caused to palms by dry weather in Southeast Asia.

SOYABEAN OIL PRICES ROTTERDAM (EU€/T) Soyabean oil Soyabean oil prices have risen since the start of Q4 2015, due to an increase in demand as a result of tight supplies of rapeseed oil and slowing production growth of palm oil. However, production is expected to exceed demand. Global production in 2015/16 is forecast to reach a record 51M tonnes, up 5% year-on-year, while consumption is expected to increase by 4% year-on-year to 50M tonnes. As a result, ending stocks are forecast to rise by 5% year-on-year to 3.7M tonnes.

PRICES OF SELECTED OILS (US$/TONNE) 2013

2014

Aug 15

Sep 15

Oct 15

Nov 15

Soyabean 1,052 897 732 705 735 707 Crude Palm 854 825 555 554 633 594 Palm Olein 803 762 537 545 593 575 Coconut 948 1,276 1,028 1,043 1,110 1,078 Rapeseed 1,080 906 764 765 801 772 Sunflower 1,108 905 814 819 855 858 Palm Kernel 904 1,120 751 797 874 807

Average price 964 INDEX 228

956 226

740 175

747 177

800 190

770 182

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

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

40 OFI – JANUARY 2016 www.oilsandfatsinternational.com

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Successfully Integrate Downstream with Technology from BUSS ChemTech Fatty Acid Derivatives: 

Non-ionic surfactants



FA chlorides



API‘s



Nitriles



Amines (prim., sec., tert., di-)

Reactions: 

Ethoxylation



Hydrogenation



Phosgenation



Cyanoethylation



Dehydrative amination



Amidation



Reductive Amination

If you are considering expanding your product portfolio, then take advantage of BUSS ChemTech‘s know-how and experience with oleochemical derivatives. We have provided designs and successfully started up dozens of plants. Products include surfactants, corrosion inhibitors, lubricant additives, fabric softeners and more.

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

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

www.buss-ct.com

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Flaking Mill OLFB. The best way to treat your oilseeds. The flaking mill opens a new dimension when processing soy, rapeseed, sunflower and corn, among others.

More than 500 tons of throughput per day, about 25 % less space requirements and a high-performance motor increase efficiency. The flake thickness is constant at all times during operation and can be set while running. This ensures a consistently high product quality and optimizes extraction yield. In addition, large swinging doors ensure good accessibility and facilitate maintenance. This is how to get the best out of oilseeds. More at www.buhlergroup.com /olfb

Innovations for a better world.

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