Oils & Fats International January 2015 by Oils & Fats International

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January 2015 Vol 31 No 1 www.oilsandfatsinternational.com

TRANSPORT

New regulations fuel concern

PAKISTAN

A mountain of oilseeds

INDIA

Attracting fresh investment Cover.indd 1

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Leading edge technologies for refining plants

Degumming

Neutralising

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

• Multimix Neutralising • Miscella Neutralising • Silica Purification

Short/long mix Neutralising

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

Science behind Technology

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

CONTENTS FEATURES CHINA VOL. 31

NO. 1 JANUARY 2015

Opting for quality

LAURIC OILS

EDITORIAL: Editor: Serena Lim Tel: +44(0)1737 855066; Fax: +44 (0)1737 855034 E-mail: serenalim@quartzltd.com Assistant Editor: Charlotte Niemiec Tel: +44 (0)1737 855157; Fax: +44 (0)1737 855034 E-mail: charlotteniemiec@quartzltd.com

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Attracting fresh investment

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OFI India 2015 in Hyderabad

Indonesia: intensifying production

Pakistan: a mountain of oilseeds

PROCESSING & TECHNOLOGY

Website: www.oilsandfatsinternational.com

Plant and technology round-up

Biotech News

EU law to allow national ban of GM crops Transport & Logistics News

Stena increases freight costs following new ECA regulations

ASIA

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Biofuels News

Continuation of EU biofuel strategy threatened, says UFOP

SHOW PREVIEW

News

Cofco IPO plans to include Noble Group and Nidera

Family fortunes New regulations fuel concern

Comment

Words or action?

TRANSPORT, SHIPPING, LOGISTICS

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Going nuts for coconut

NEWS & EVENTS

Renewable Materials News

LanzaTech, IOC-DBT recycles CO2 into omega-3 fatty acids 14

Diary of Events

International Market Review

Statistics

A member of FOSFA 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 173180437. Periodicals postage paid at Emigsville, PA. POSTMASTER: Send address changes to Oils & Fats c/o PO Box 437, Emigsville, PA 17318-0437 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 Printed by Pensord Press, Gwent, Wales

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Pictured on the front page is Koole Tankstorage Pernis (Rotterdam) BV. This terminal is part of Koole Terminals, which owns and operates the following: Koole Tankstorage Pernis (Rotterdam): cap. approx. 700,00m3, of which 130,000m3 is constructed of stainless steel. The main products handled at this terminal include vegetable oils and fats, oleochemicals, waxes, base oils, easy chemicals and biodiesel. Koole Mineral Oil Terminal Rotterdam: cap. approx. 1M m3. Products handled include mineral oils, gas oil, fuel oil, gasoline, methanol, MTBE and ethanol. Koole Amsterdam: cap. approx. 125,000m3. Products handled include molasses, vegetable oils and fats and oleochemicals.

Koole Zaandam: cap. approx. 45,000m3. Products handled include vegetable oils and oleochemicals. Koole Tankstorage Nijmegen: cap. approx. 85,000 m3. Products stored include vegetable oils and fats, oleochemicals, lecithin and castor oil. Koole Tankstorage UK: These terminals are based in Liverpool and Avonmonth and have a joint capacity of approx. 50,000m3. Products handled include phosphoric acid, vegetable oils and fats and molasses. Koole Gdynia (Poland): cap. approx. 35,000m3. Products handled include vegetable oils and fats and mineral oil products. For more information, please contact: Robert Guijs Tel: +31 (0) 75 6812 812 E-mail: r.guijs@koole.com Rob Valkenburg Tel: +31 (0) 10 472 45 49 E-mail: rvalkenburg@koole.com

1 OFI – JANUARY 2015 www.oilsandfatsinternational.com

Contents.indd 1

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NEWS

COMMENT

Words or action?

ith sustainability becoming an increasingly important goal for many companies these days, it is worth reporting the signing of a landmark UN agreement on food security and sustainability last October. The Principles for Responsible Investment in Agriculture and Food Systems were approved by the UN Committee on World Food Security and, although they are voluntary, the UN says it is the first time that governments, the private sector, NGOs, development banks, research institutions and academia have been able to agree on what constitutes responsible investment in agriculture and food systems. The agreement states that responsible investment in agriculture and food systems entails increasing sustainable production and productivity of food, reducing food loss and waste, improving income and reducing poverty, and enhancing market efficiencies and fairness – particularly taking into account the interests of smallholders. This statement is the framework that everyone can use when developing national policies, corporate social responsibility programmes, individual agreements or contracts. One striking feature of the new agreement is a clause that links responsible investment in agriculture to “taking measures … to reduce and/or remove greenhouse gas emissions”, the first international agreement where no one has objected to explicit language on reducing emissions. Another feature is the extension of tenure rights to land, fisheries and forests to include “existing and potential water uses”, as water is an increasingly contentious issue in global agricultural development. Not everyone, however, is happy with the agreement. Oxfam, which took part in the two-year consultation process, says the new principles are too weak and vague and that governments refused to apply the principle of Free, Prior and Informed Consent for all affected communities. “That omission is frankly deplorable. It should be clear that all investors have clear legal obligations to protect human rights and to avoid environmental damage and land-grabs.” The world clearly needs to raise food production, with the UN Food and Agriculture Organization estimating that an average net investment of US$83bn/year will be needed to raise agricultural production by 60% and feed the global population of more than nine billion by 2050. And it is important that production is increased in a way that doesn’t trample on land, water, resource and indigenous rights. But, as with any sustainability scheme, the proof will be in how many governments and companies put them into practice. Otherwise, the principles will remain admirable words but will not amount to concrete action. w

Cofco IPO plans to include Noble Group and Nidera

hina’s massive state-run grain trading company, Cofco, is planning an initial public offering (IPO) that could take up to three years to complete, Global AgInvesting reported in October. The IPO will include the trading and agricultural assets of Noble Group and Nidera, which were acquired earlier this year. In recent years, Chinese state-run companies have been focusing on investing in overseas agricultural and agribusiness targets as China’s food demand and imports have been growing faster than expected. With the goal of linking grain production in South America and the Black Sea region with markets in Asia, Cofco bought a 51% stake in Nidera in February, followed by the purchase of a 51% stake in Noble Agri Ltd for a combined price of US$3bn. Cofco has made other

agricultural acquisitions over the past few years. The company’s wine division bought Chile’s Biscottes and France’s Chateau Viaud in 2010 and 2011 and, earlier in 2014, formed partnerships in pork production with private equity giant KKR & Co, and in dairy with France’s Danone SA. The Noble and Nidera deals were the largest in China’s food industry and closed Cofco’s seven-year campaign of overseas expansion. Cofco has stated that its combined revenues after the deals now total US$63.3bn, after a full-year revenue total for 2012 of US$34bn. If calculated on an annual basis, this places Cofco as bigger than industry giant Bunge Ltd, but still ranking behind Cargill and Archer Daniels Midland (ADM), the report said.

New body to regulate MSPO standard

new Malaysian palm oil certification council should be in operation by the first quarter of next year to supervise the recently launched Malaysian Sustainable Palm Oil (MSPO) standard, Douglas Uggah Embas, Minister of Plantation Industries and Commodities, said at the official launch of the OFIC 2014 Congress and OFI Asia 2014 exhibition on 6 November last year. The standard was agreed in September 2013 and will be applicable to independent smallholders, plantations, organised smallholders and palm oil mills. It includes seven principles covering management commitment and responsibility; transparency, compliance to legal requirements; best practices; and development of new planting, with a certification process to ensure compliance. “The inclusion of smallholders in the MSPO standard is especially significant because smallholders comprise up to 40% of the total area planted to oil palm in Malaysia,” the minister said in a statement. As of October, three mills, three plantations and two smallholders had successfully complied with MSPO requirements. “The challenge now is to work towards widespread national implementation and international recognition and acceptance of this set of auditable standards,” the minister said.

Chinese agribusiness group looking at €100M investment in Bulgaria

major Chinese agribusiness company intends to invest €100M in the construction of an industrial park for processing agricultural produce in Bulgaria, InvestBulgaria Agency (IBA) announced in November. Tianjin State Farms Agribusiness Group plans to attract another five Chinese companies to the project. In 2011, the group rented some 2,000ha of land in northwestern Bulgaria to grow maize, alfalfa and sunflower for export to

China. The Asian giant was at the forefront of agricultural investments in overseas farmland as it struggled to feed its growing population due to a shortage of suitable land and water resources at home, IBA said. “Investment in production in Bulgaria will allow Chinese companies free access to the European market, thus significantly saving duties, taxes and operating costs,” IBA deputy executive director Kostadin Djatev said in a statement.

In addition to providing Chinese companies with access to the EU market, Bulgaria could serve as a bridge to the markets of Turkey, Russia, Ukraine and countries in the Middle East, Djatev said. Tianjin State Farms Agribusiness Group is active in the production and distribution of milk, dairy products and fruit juices. It also engages in wine production, fish farming, turf farming and property development.

2 OFI – JANUARY 2015 www.oilsandfatsinternational.com

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NEWS

EU rejects UK’s ‘traffic light’ system, files infringement T he European Union (EU) has rejected the United Kingdom (UK)’s controversial ‘traffic light’ nutritional labelling scheme, citing a paradoxical example where Diet Coke is labelled more favourably than extra virgin olive oil, the Olive Oil Times reported in October last year. The European Commission (EC) has filed an infringement procedure against the UK government, which has two months to respond to the allegations. The charges allege an infringement on the EU’s core principles of the free movement of goods; in other words, the government is unlawfully interfering with consumer’s choices. The ‘traffic light’ nutritional information system was enacted by the UK government in

an effort to fight obesity and help people make healthier and more informed food choices. The voluntary system – which is widely supported by Britain’s largest supermarket chains – uses red, amber and green colour codes to label the calories, sugar, fat, saturated fat and sodium content of a product. Green signals a low amount of a given nutrient; amber a medium amount and red, high. A ‘red light’ is indicated when fat content of a given product exceeds 17.5g/100g. That well-meaning but simplistic guideline creates a logical paradox when it comes to ‘superfoods’ like olive oil, said Italy’s National Confederation of Farmers (Coldiretti). “The goal of the traffic lights was to decrease the consumption of fat, salt and sugar – not based on the amount actually consumed, but

on the generic presence of a certain type of substance,” said a spokesman. “This ends up excluding foods such as extra virgin olive oil while promoting carbonated beverages without sugar, misleading consumers with respect to the real nutritional value.” Because the system simply looks at numbers, the result is sugar-free drinks such as Diet Coke receiving a ‘green light’, despite the presence of controversial artificial sweeteners and having no health benefits. Coldiretti said that the Italian export market would be harmed by the system, which also frowned upon cheese and prosciutto. Upon the passage of the system in 2013, London said that it complied with EU Regulation No. 1169/2011, which concerns the provision of food information to consumers.

Bright Food acquires majority stake in Salov Group

hanghai, China-based Bright Food Group has acquired a majority stake in Italy’s Salov Group, which produces the Sagra and Filippo Berio brands, the Olive Oil Times reported in October last year. Shanghai Yimin No 1 Food Factory, a subsidiary of Bright Food, finalised the deal with Salov’s owner, the Fontana family, on 1 October, according to a statement released on its website. Bright Food is China’s secondlargest food conglomerate. The Fontana family will retain minority ownership. Filippo Berio is the top-selling brand in both the USA and the UK, while Sagra holds a large market share in the group’s

home country. The Salov group sells its products in over 60 countries with sales reaching €330M (US$417M)/year. According to a statement

released by Bright Food, the move is a business response to changing habits among China’s growing middle class as they look towards healthier foods. While the group will retain olive oil production in Italy, the Chinese firm says it will support the continued international expansion of Salov’s brands. The move is another step towards Bright Food’s goal of increased international presence, the report said. In recent years, it has acquired majority stakes in Australian food company Manassen and UK-based Weetabix, and it is in the final stages of its planned acquisition of Israel’s Tnuva cooperative.

Rise of chocolate consumption in BRIC, MINT markets

he emerging Brazil, Russia, India and China (BRIC) and Mexico, Indonesia, Nigeria and Turkey (MINT) markets consume less chocolate than developed nations, but levels are rising, ConfectioneryNews reports. The news agency mapped Euromonitor International’s 2014 per capita chocolate consumption data for these emerging markets and found that chocolate consumption has grown or remained stable in every BRIC or MINT market since 2012. These countries buck the trend of some developed markets such as the USA, where chocolate consumption has declined. Russia is the only emerging market to feature in the top 20 consuming nations and has the

highest chocolate consumption among the BRIC and MINT nations by some distance. However, Turkey and India have been earmarked as markets to watch for the future. Major chocolate and cocoa players such as Barry Callebaut and Ferrero have built factories in Turkey to seize on the growing market, the ConfectioneryNews report said. Meanwhile, the risk that West Africa’s Ebola outbreak will spread and disrupt cocoa supplies may boost demand for beans from Ecuador and Colombia, according to industry groups in the Andean nations, Bloomberg reports. “There’ll be a chance to promote our cocoa in Europe and elsewhere amid this very unfortunate Ebola situation,”

the head of Colombia’s National Cocoa Growers’ Federation, Eduard Baquero, said in October. “Some people may give preference to cocoa from the Americas as a preventative measure.” Global cocoa prices have risen 7.9% this year, partly on speculation that an outbreak of the deadly virus in Sierra Leone, Liberia and Guinea could spread to nearby Ivory Coast and Ghana. Together, the two countries account for roughly 60% of world cocoa production. Ecuador’s cocoa production is on track to reach a record 240,000 tonnes this year, rising as high as 260,000 tonnes in 2015. Colombia will produce 51,000 tonnes this year.

IN BRIEF SPAIN: The cooperative known as Dcoop has reached an agreement with Cargill to purchase the latter’s 50% share in Mercaoleo, the Olive Oil Times reported late last year. Mercaoleo is an olive oil business established as a joint venture between the two entities in 2007. Dcoop is the world’s largest olive and olive oil producer with over 100 olive oil mills, which produced 293,000 tonnes of olive oil in 2013, around 10% of the world’s total output. Dcoop will now control Mercaoleo’s bottling plant in Antequerra, Malaga, which has a capacity of 100M litres/year. EU: Euronext announced last October that it would launch a full rapeseed derivatives solution from 14 November 2014 to allow the industry to trade individual futures and options contracts for rapeseed grain, meal and oil – making it the first exchange in the world to offer the combination of hedging instruments for rapeseed. The three contract combination covers the entire supply chain, offering a solution to the increased volatility of rapeseed oil and meal pricing, and allowing users to manage their entire crushing margin from grain to oil to meal, Euronext said. Rapeseed oil and meal contracts were based on non-GMO references, thus complying with specifications requested by industry participants, Euronext said.

3 OFI – JANUARY 2015 www.oilsandfatsinternational.com

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NEWS

IN BRIEF PNG: Tzen Plantation Ltd (TPL), a Malaysian-owned palm oil company in Papua New Guinea, said it was aiming to increase its total planted area from 6,300ha now to 20,000ha by 2016, The Star reported in October last year. The company’s new US$23M palm oil mill has the capacity to process 25 tonnes/hour of fresh fruit bunches (FFBs). MALAYSIA: The Malaysian Palm Oil Council (MPOC) said it expected crude palm oil prices to increase to between RM2,100 (US$633)/tonne and RM2,500 (US$754)/tonne in 2014, lifted by factors such as biofuel demand and petroleum price level, The Borneo Post reported in October. AFRICA: Equatorial Palm Oil PLC announced in November that, while there had been no instances of the Ebola virus at its operations in Liberia, it had nearly halved its planting target of 2,500ha by the end of the year, due to restrictions on movements in the country. SWEDEN: AAK announced in November the need for a price increase across the markets it serves. Costs associated with transporting and converting raw materials have increased substantially as have input costs associated with labour, healthcare, storage and handling, regulatory and food safety, packaging and waste management. The result is the need for an increase of 3.5% to seven percent for all noncontracted truck load business as of 1 January 2015. For less than truck load business, the percent changes may vary. AFRICA: The Democratic Republic of Congo will lease out 640,000km2 of farmland – an area larger than France and equal to one quarter of the area of the country – in an attempt to attract capital and improve food production. The 25-year leases are designed to avoid possible unrest and conflict with investors who could be accused of land grabbing, although the leases may later be extended.

Bunge sourcing ‘bolt-on’ deals

unge Ltd is looking for ‘bolt-on’ deals in grain milling and oil processing to expand its food and ingredients business, Bloomberg reported in October. The company is looking for wheat, corn and rice mills in the Americas and oil-refining, blending and packaging plants that process soyabeans, canola and other crops in Asia, Soren Schroder, the CEO of White Plains, New York-based Bunge, told Bloomberg. “Milling is more of an Americas phenomenon,” Schroder said. “Demand for vegetable oils and fats in Asia is growing very rapidly.” The company is looking for assets over the next year to complement its network of businesses that

buy crops and crush oilseeds, Schroder said. While declining to provide an exact price range, he said the acquisitions may be bigger than US$300M, but not multibillion-dollar deals. Bunge is the latest agribusiness company to show an interest in deals in food and ingredients, the report said. In October, Archer Daniels Midland (ADM), the world’s largest corn processor, closed its deal to buy Wild Flavors GmbH for around US$3bn and announced an agreement to purchase Specialty Commodities Inc for US$170M. Ingredion Inc announced an agreement to buy Penford Corp for US$339M on 15 October.

Castor oil to be developed in Brazil

razil’s Agricultural Research Corporation (Embrapa) and Evogene have signed a joint research agreement for the advancement of castor cultivation in Brazil. The cooperation will primarily focus on technologies for controlling castor-specific diseases as well as practices for castor cultivation in rotation with soyabeans. The global market for castor oil has tightened over the past few years with industrial demand – in Brazil and internationally – exceeding availability and production. Currently, castor is cultivated on approximately 100,000ha in Brazil, an area that could substantially increase with the introduction of advanced varieties and modern cultivation practices.

Investors sought for Ukraine groups

krLandFarming, the Ukraine agriculture giant in which Cargill bought a stake in January, is seeking further investors to put together a fund for buying on-thecheap groups brought low by the country’s crisis. UkrLandFarming said it was “in discussions with potential investors” over the sale of a stake in the group, which – with a landbank of 654,000ha, is more than twice the size of Luxembourg – claims to be Ukraine’s biggest farming group. A deal with the investors, which the farm operator said

were showing “strong interest’ in a deal, would promote the company’s progress on paths to broaden its shareholder base ahead of a stockmarket flotation. It would also back an aim of “potentially taking advantage of distressed acquisition opportunities in the Ukrainian market at the moment.” Ukraine’s woes – stemming from tensions in the east with proRussian separatists, besides the loss of Crimea, but also evident in a tumbling hryvnia – have hurt companies in a number of sectors.

Unilever, IOI sign partnership deal

onsumer goods giant Unilever, and oils and fats supplier IOI Loders Croklaan, signed a global partnership agreement last October designed to drive efficiencies and increase the capacity and quality of speciality oils and fats, and commodity oils. At the heart of the partnership is the shared responsibility of accelerating sustainable market tranformation for palm oil, the companies said. Unilever had pledged that all the palm oil used by its European food business will come from sustainable sources by the end

of 2014, and that it will only use traceable and sustainable palm oil worldwide by 2020. IOI also announced in November that it had introduced a new sustainable palm oil policy, which supercedes its existing policy to ensure: no deforestation through the conservation of High Carbon Stock forests and the protection of peat areas; building a traceable and transparent supply chain; respecting the rights of employees, indigenous peoples and local communities; and increased focus on driving beneficial economic change.

CORRECTION OFI would like to correct several errors contained in the feature, ‘Glycerine market explodes’, which was published in its October/November 2014 issue, p16 and 18. 1. Exports to China of good quality crude glycerine are coming chiefly from South America and Indonesia, not Argentina and Indonesia. 2. Should the Chinese government go ahead with a B5 mandate, it would open a mind-boggling 10M tonnes/ year market, with one million additional tonnes of glycerine generated, not required. 3. Large volumes of biodiesel are being shipped from Indonesia to China, not China to Indonesia. 4. Prices for all grades of glycerine have been decreasing for a year and the downward trend of this price cycle has not stretched on for so long since 2007, which explains why many Chinese trading houses are tempted to speculate that prices could soon rebound, not increase. 5. Please note that the correct spelling of HBI CEO Jonathan Heming’s surname is Heming. 6. Please also note that as well as glycerine’s use in the manufacture of soaps, cosmetics, beauty care, pharmaceutical and tobacco products, it also has many technical applications. OFI would like to apologise for these mistakes, which occurred during editing.

4 OFI – JANUARY 2015 www.oilsandfatsinternational.com

Comment and News.indd 3

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BIOFUELS NEWS

IN BRIEF ITALY: In October, Biochemtex and Beta Renewables announced an agreement with Energochemica SE for the construction of a 16.5M gallons/ year cellulosic ethanol plant, Biofuels Digest reports. The plant will be constructed in Strážske, Slovak Republic. The project was expected to commence immediately and the start-up of the plant was anticipated for the first half of 2017. The plant will use enzymes from Novozymes and yeast from Leaf Technologies. CHINA: Boeing and Commercial Aircraft Corp of China (COMAC) opened a demonstration facility in October that will turn used cooking oil (UCO) into sustainable aviation biofuel. The two companies estimate that 500M gallons/year of biofuel could be made in China from UCO. The facility will clean contaminants from waste oils and convert it into jet fuel at a rate of 160 gallons/day. ARGENTINA: Biodiesel exports increased 44% during the first nine months of 2014 compared to the same period last year, Biofuels Digest reports. As a result, production figures are also starting to recover, with production rising 22% during the period over 2013. Despite anti-dumping duties placed on exports in the European Union (EU), the EU will soon become the main destination for Argentine biodiesel once again. ITALY: Energy company Eni’s CEO told the Senate industrial committee that the company plans to restructure itself away from oil refining – an industry that has suffered losses of €6bn since 2009 – and instead focus on biodiesel and other alternative fuels. By doing so, it would avoid laying off staff and keep its manufacturing facilities operational, but refine biodiesel instead of fossil diesel. MALAYSIA: Felda Global Ventures Holdings Bhd (FGV) has followed on from its first shipment of 6,000 tonnes of palm biodiesel to China with a second 6,000 tonnes shipment to Dongguan Port, Guangdong, the New Straits Times reported on 28 October.

Continuation of EU biofuel strategy threatened, says UFOP

ndustry body the Union zur Förderung und Oel- und Proteinpflanzen (UFOP) said last October that it feared the EU decarbonisation strategy in the transport sector would be phased out if there was no update to the initial targets for the reduction of greenhouse gas (GHG) emissions in the sector, which are binding for all member states. In view of the European Council’s decision not to update these targets, UFOP believes the continuation of the EU biofuel strategy – the most important element of GHG reduction to date – is under threat. The association said the decision cast doubt on the prospects for the biofuel industry after 2020. EU heads of state and government have challenged the European Commission (EC) to further develop instruments and measures for a technologically neutral concept to promote emissions reduction and energy efficiency in the transport sector from 2020. UFOP expressed concern that this measure did not recognise the existing success of biofuels. The association said it was worried there would be a shift in priorities in R&D, without contributing any tangible relief for climate protection in the period from 2020 to 2030. For business groups in the EU and in nonmember states, these requirements impact on the generation of raw materials, as well as on transport

and processing. For this purpose, the EC has since authorised 17 certification systems. UFOP said it feared that, under the current status of the Council’s decision, this sustainability certification was close to being eradicated. There was a much greater need for a strategic focus based on the biofuels already on the market, which included expanding the share of renewable energies from diverse biomass sources in a way that was both gradual and open to technology. However, according to UFOP, this concrete resolution is lacking. They claim the policy is based on too-high expectations of technical advancements, whereas policy should be gauged on the basis of past experience rather than future promise. Additionally, the authorisation granted by the member states to include the transport sector in the emissions trading scheme was likely to lead to fragmentation in the EU approach to decarbonisation, UFOP said. In contrast, the current promotion of biofuels provided a concrete and effective contribution to diversification based on renewable resources and the reduction of fossil fuels. The decision was, however, a warning to the industry to further explore the issue of technological developments and new investments for the development of new biomass resources.

Italy mandates fuel from inedible crops Optimism in

n October, Italy became the first member of the European Union (EU) to mandate the use of renewable fuel made from inedible crops, Bloomberg reports. The law requires that gasoline and diesel contain at least 1.2% advanced biofuel, starting in January 2018. By the turn of the decade, that will increase to 1.6% and, by 2022, a minimum of two percent biofuel must be blended. First-generation biofuels, made from edible plants such as corn, have been blamed for driving up food prices. The European Council in June proposed capping the amount such fuel can contribute toward its 2020 target of 10% renewable energy in transportation at seven percent. It also proposed that member states set targets for advanced biofuels, made from crop waste and non-food crops such as switchgrass, at 0.5% of total transport energy use. The move should spark investors’ interest and may inspire the council and European Parliament to adopt an EU-wide mandate for advanced biofuels by 2020 and beyond, Sebastian Soederberg, vice president for biomass conversion at Novozymes A/S, said. Bagsvaerd, Denmark-based Novozymes develops enzymes for making advanced biofuels. Nil Torvalds, a member of the European Parliament, added that the decision could pave the way for other countries to follow suit.

Global ethanol production on the rise

he Energy Information Administration (EIA) said last October it expected global ethanol production to average 927,000 barrels/day in 2014 and 933,000 barrels/day in 2015, Bloomberg reports. The EIA noted that biodiesel production averaged 89,000 barrels/day in 2013 and was

forecast to average 81,000 barrels/day in 2014 and 84,000 barrels/day in 2015. Furthermore, carbon emissions were forecast to rise by 1.1% in 2014, after rising 2.5% in 2013 compared with the previous year. The agency forecast a slight decline in emissions by 0.4% in 2015.

Indonesia over blend mandate

ndonesia’s Energy and Mineral Resources Ministry’s renewable energy directorate general said he was optimistic the country could maintain its policy of blending biodiesel with diesel fuel, despite the programme’s realisation remaining below target, The Jakarta Post reported in November. Figures from the renewable energy office show that only 1.2M kilolitres (kl) of biodiesel was blended during the first nine months of 2014, far below the government’s initial target of blending four million kl by the end of the year. “The mandatory 10% blending is ongoing, though not as quickly as we’d expected, mostly because of a lack of supporting infrastructure such as facilities to carry the product, as well as blending and storage facilities,” said renewable energy director general Rida Mulyana. The 10% blend mandate was introduced by the government in September 2013, a policy aimed at reducing oil and diesel imports.

6 OFI – JANUARY 2015 www.oilsandfatsinternational.com

Biofuel News.indd 1

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BIOFUELS NEWS

Abengoa begins 2G EU-Russia sanctions hinder trade of Russian individuals and entities identified Council of the European Union (EU) has ethanol production Therecently enacted regulations that require the by the Council as being responsible for the misappropriation of Ukrainian state funds member states of the EU to impose sanctions or responsible for human rights violations in Russian individuals and companies in at plant in Kansas against Ukraine. response to Russia’s military action in Ukraine,

urope’s largest ethanol producer, Abengoa SA, began operations at its first commercial-scale cellulosic ethanol plant last October, Bloomberg reports. The facility in Hugoton, Kansas, can make as much as 25M gallons/year of cellulosic ethanol derived from crop waste and will reach full production in the first quarter of 2015, the Seville, Spain-based company said in a statement in mid-October. Other biofuel makers have struggled to produce second-generation (2G) biofuels in high volumes and at competitive prices, including Gevo Inc and Kior Inc. Abengoa is one of the first companies to deliver 2G cellulosic fuel on a commercial scale, a sign that it may become a more important part of the US energy supply. “Costs are coming down and the Abengoa plant is one of the ways to help that, through commercialisation,” US energy secretary Ernest Moniz said in a telephone interview with Bloomberg. “We will see the next generation of biofuels – cellulosic biofuels – playing a much bigger role.” The plant cost around US$500M. It was developed over a decade and was supported by a US$97M grant and a US$132M loan guarantee from the Energy Department. It was completed in August and began initial production at the end of September. The decision to finance Abengoa’s biofuel effort was comparable to the agency’s early backing for utility-scale solar power, Moniz said. “We’re trying to support the first movers for getting out there into the market and driving costs down,” he said. The plant also has a co-generation system that produces about 22 megawatts of electricity from biomass. It uses about half of that capacity and the balance is made available to the local grid. “It’s solving multiple problems at the same time,” Abengoa’s chief executive officer, Manuel Sanchez Ortega said, adding that it was “huge progress”. Kior, backed by Vinod Khosla and Bill Gates, halted production at its commercial-scale cellulosic fuel plant in Mississippi in January 2014 to make improvements to its manufacturing process. Gevo halted production of isobutanol at its Minnesota plant in 2012 because of contamination issues, but resumed production in June 2013. Isobutanol is a compound that can be blended with gasoline or converted into hydrocarbon fuels and chemicals.

Biodiesel Magazine reported in October last year. These new sanctions may have adverse consequences for European biofuels companies that wish to transact business in Russia. Given the risk to European biofuels companies of violating these new EU sanctions, biofuel companies should ensure that none of the technology or equipment they sell to a buyer in Russia can be put to military use, the report said. They should also ensure that the Russian purchaser does not appear on EU lists

In regulations issued in July and September 2014, the Council forbade any member state of the EU to allow any of its citizens or corporations from, among other sanctions, selling, manufacturing, supplying, maintaining, servicing, transporting or exporting, directly or indirectly, any goods or technology to any person or entity in Russia if they could be used in the Russian military or intended for use in Russia’s deep water oil exploration, Arctic oil exploration or shale oil projects.

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BIOTECH NEWS

EU law to allow national ban of GM crops

n December, Members of the European Parliament (MEPs) and EU member states agreed on a new law that would allow national governments to ban genetically modified (GM) crops, even if they have been approved by the European Food Safety Authority (EFSA), European Voice reports. The change in the law was proposed by the European Commission (EC) in 2010 after some member states put national bans in place that were deemed to violate EU single market rules. Under the proposal, member states could ban crops that had been approved at EU level, but only under certain circumstances. The issue had been stalled for years and there had been no

qualified majority for or against GM crops. A breakthrough was finally reached in June under the Greek presidency of the Council of Members. The anti-GM countries were concerned that the EC’s proposal, which did not allow bans on environmental or health grounds, could be easily challenged in either EU courts or at the World Trade Organization (WTO), the report said. The anti-GM countries had formed a blocking minority against new GM authorisations in the EU for years. The quid-proquo implicit in the legislation is that those countries would stop blocking new authorisations if they were allowed to ban the crops. However, if those bans were

later struck down by courts, the anti-GM countries would have been outmanoeuvred. In October, MEPs called for member states to be able to impose more legally-sound bans on the basis of a range of environmental grounds. They also called for no time limits on the bans and for national risk-managers to be able to give a second opinion to EFSA on the safety of crops. MEPs opposed the Council compromise reached in June, which would have required companies to essentially ask the permission of GM crop companies before they banned their crops. That provision was removed from the deal reached on

PHOTO: MJLP4337/DOLLARPHOTOCLUB

DuPont harvests GM corn in China, despite hurdles

uPont Pioneer, one of the world’s largest seed companies, will not give up on efforts to cultivate genetically modified (GM) crops in Chinese fields despite regulatory hurdles, even as rivals pull back, Reuters reported in November. The Iowa-based agricultural seed and chemical unit of DuPont late last year harvested

its first test crops of GM corn in China in six years, after lengthy efforts to win government approval for the new trials. The company was pressing ahead while Monsanto had retreated from efforts to grow GM crops in China, amid mounting frustrations within the US seed industry about Beijing’s slow regulatory processes.

Industry leaders have said they are focusing on winning Chinese clearance for imports of new GM crops, rather than for cultivation approval. China has not approved commercial cultivation for any type of biotech corn. Approval to sell GM corn seed to Chinese farmers would mark a big victory for a US seed maker because China is the world’s fastestgrowing corn market. But Chinese consumers had become increasingly concerned over GM seeds in the past two years and Beijing had all but stopped issuing approvals for imports of new GM crops. Another hurdle was China’s desire to promote its own domestic biotech innovations, industry members were reported to have said.

3 December, European Voice said. MEPs were also successful in adding some limited environmental grounds to be used in justifying national bans. However, they were unsuccessful in their attempt to have authorisations be given a second approval by national authorities. That was considered unacceptable in Germany, the report said, as the country was fearful of a re-nationalisation of agricultural policy. The agreement still needs to be formally approved by the entire Parliament and Council. This was expected by the end of 2014 and one spokesman said he expected the new regime to be in place by Spring 2015.

Monsanto and Dow sue against GM ban in Hawaii

enetically modified (GM) seed companies Monsanto and Dow Chemical Co have sued Maui County, Honolulu, Hawaii, to stop a new law banning the cultivation of GM crops, Soyatech reported in November. The lawsuit asks a judge to immediately prevent the law from taking effect and seeks to invalidate the new law, which voters narrowly adopted during a November election after an intense campaign featuring US$8M in spending by the seed companies against the initiative. Both companies research and develop new varieties of corn in the country. Conducting the work in a US state also helps the seed companies protect their intellectual property.

More than 50 lawsuits against Syngenta over unapproved corn variety

grochemicals giant Syngenta is facing a growing number of lawsuits challenging its release of the genetically modified (GM) MIR 162 corn seed that China had not approved for import, with losses to farmers estimated to be at least US$1bn, The Associated Press reported last November. More than 50 lawsuits have been filed in 11 major corngrowing states, including Illinois, Iowa, Missouri and Nebraska, with hundreds more being prepared. The lawsuits seek to compensate

farmers for the alleged lost market, the report said. The legal dispute centres around Syngenta’s sale of a hybrid corn seed called Agrisure Viptera, which was genetically altered to contain a protein that kills corn-eating pests such as earworms and cutworms. The US Department of Agriculture (USDA) approved it in 2010 and Syngenta first sold it to farmers in 2011. It has been industry practice for biotech seed developers to wait until major trade partners

have approved new products before selling it widely, Rick Paul, a lawyer representing the farmers, said. But, in this case, China – which refuses to buy GM crops it has not tested – had not approved Viptera. China had rejected more than 130M bushels of corn, as of late October, the lawsuits said. Damages have been estimated to exceed US$1bn, according to the National Grain and Feed Association. Meanwhile, Syngenta and Dow AgroSciences have tightened

up launches of new GM seeds, Reuters reported in November, telling farmers where they can grow new corn and soya varieties and how they can use them. Bayer CropScience told Reuters it had decided to keep a new soyabean variety on hold until it received Chinese approval. China is a key market for the US$12bn US agricultural seeds business and for global grain traders and accounted for nearly 60% of US soya exports and 12% of corn exports two years ago.

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TRANSPORT & LOGISTICS NEWS

IN BRIEF DENMARK: Following the introduction of Emission Control Areas (ECAs) in the North and Baltic Seas, the country is pushing for stricter nitrogen oxide (NOx) emission control areas (NECAs) covering the same areas, Hellenic Shipping News reported in October. Michael Schilling, deputy director of the Danish Environment Protection Agency, said that NOx emissions from international shipping in Danish waters exceeded the total from land-based sources. USA: A bumper harvest of grain last year forced farmers in Missouri to store corn and soyabeans in unused buildings, giant plastic bags and in piles on the ground, Soyatech reported in November. Last year’s corn harvest was expected to yield 14.5bn bushels, a four percent increase over 2013 volumes and the highest production on record. The soyabean harvest was projected at 3.93bn bushels, 17% better than in 2013.

Stena increases freight costs following new ECA regulations

wedish ferry operator Stena Lines has become the latest company to warn of an economic shift following the introduction of stricter rules on sulphur emissions, including charging higher freight costs as a result of new regulations (see ‘New regulations fuel concern, p28). In a September statement, Stena said the new sulphur emissions directive, which came into force on 1 January this year, would have a “significant economic impact on Stena Lines’ business”. The company said it would look to use alternatives to traditional bunker fuel from 2015, including using methanol and LNG, or converting its ferries with the introduction of scrubbing units. It added that it had already reduced its fleet by two vessels and it was now being “forced” to increase freight prices as a direct result of increased fuel costs. “From an economic perspective, this is one of the largest negative political decisions since tax-free was discontinued”, Stena CEO Carl-Johan Hagman said. “We have a positive attitude to environmental improvement rules as long as they are the same for everyone and are implemented at a rate that we and our customers can handle – but this isn’t the case with the new sulphur rules. Ultimately, the increasing fuel costs affect the North European export and import industry negatively because a significant share of transports are done by sea,” he added. For Stena, the changes mean increased fuel costs

of SEK1M (US$139,661)/day, or around SEK450M (US$61.7M)/year as a result of the more expensive low sulphur fuel. “On the freight side, we therefore have to increase prices by around 15%.” Hagman said: “We want to be able to deliver the same quality and service and continue our efforts to offer environmentally friendly transports. This means that we must charge our freight customers more to compensate for the increased costs.” Stena said that, since 2005, it had worked to reduce its environmental impact, which had reduced vessel energy consumption by 2.5%/year. In parallel with the change to low sulphur fuels, Stena was running a number of projects to look at alternative fuels and different techniques for emission purification, it said. “In early 2015, we will be starting a trial with methanol as a fuel in one of our ferries. At the same time, we are investigating scrubber technologies and are also looking at LNG as a fuel. Naturally, converting and rebuilding our ferries will take time and cost a lot of money,” Hagman said. Other shipping companies have also said their businesses would be affected by the changes. Switzerland-based Mediterranean Shipping Company said it would levy per-container surcharges of up to US$165 to offset expected higher bunker fuel prices when the stricter emissions regulations took effect in January.

Egypt’s port capacity set to quadruple to 10M tonnes

he Egyptian Government has begun taking steps to convert the country into a global logistics centre for the handling and storage of grain and food commodities, according to Prime Minister Ibrahim Mehleb, Daily News reports. Damietta Port has been identified as the first site in which logistics operations will begin. “This is a large national project that is no less important than the Suez Canal project,” Mehleb

said. He pointed out that the total area for the proposed project was 3.35M m2, of which 0.56M m2 fell within the boundaries of Damietta Port. The remaining 2.79M m2 comprised a portion of the untapped industrial area northeast of the port. The Ministry of Supply said the project included the addition of two sea piers of 650-700m in length and 17m deep to receive large ships carrying up to 150,000 tonnes of grain. A

river pier 1,200m long and 5-6m deep would also be added with all relevant equipment. The project provided for the construction of modern silos and domes for storage in three storage areas with a capacity of 7.5M tonnes. Egypt’s port capacity would quadruple from 2.5M tonnes to 10M tonnes. The second of five industrial zones would manufacture soya and provide for food commodity manufacturing and oil extraction.

Constanta port, Romania emerges as Europe’s biggest grain transport hub

onstanta, whose natural harbour on the Black Sea has welcomed ships since at least the sixth century BC, is emerging as Europe’s biggest grain transport hub in the US$4.2bn global wheat trade, Bloomberg reported in October last year. Buoyed by booming wheat and corn exports from Romania and its neighbours to the Middle East, grain volume passing through the port by August had reached 9.5M tonnes, up 30% on 2013 levels of 7.3M tonnes. Volume was set to

top 2013’s record 15.3M tonnes by the end of 2014, according to port spokeswoman Monica Velicu. Cargill Inc, the largest closely held US company, and freight handler Transport Trade Services SA, more than doubled grain capacity at their Canopus Star Terminal in Constanta in August. Shippers sent a record 533 Panamaxes and other dry bulk carriers to Constanta’s deep-water berths in 2013, a 21% increase from the previous year, port figures show. Rising crop yields in

Romania, Bulgaria and Hungary, along with new silos and terminals to handle the growing grain flow to Egypt, have vaulted the port ahead of Rouen, France as Europe’s grain hub. As grain output has grown, “Constanta port was the main facility to benefit. It’s the only large port with sufficient capacity to serve the region,” said James Hyslop, director for Romania at the European Bank for Reconstruction & Development. The Romanian port exported

8.7M tonnes of grain in 2013, up from 5.39M tonnes in 2012. Rouen, France’s busiest grain hub, exported 7.35M tonnes in 2013, compared with 6.45M tonnes the prior year, port figures show. In August and September last year, 138 dry bulk ships berthed at the port. More than half were Handysizes and around a quarter were Panamax ships. Constanta’s berths, with depths as deep as 13m, can easily handle Panamaxsized vessels.

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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 THE NETHERLANDS: Corbion Purac, which provides lactic acid, lactic acid derivatives and lactides, and functional blends containing enzymes, emulsifiers, minerals and vitamins, is entering the biotechnology arena by becoming a polylactic acid (PLA) producer. The company intends to bring new biodegradable solutions to the plastics industry and increase global PLA production capacity by a further 75,000 tonnes/year by investing approximately €60M in a plant in Thailand. MALAYSIA: Since receiving Roundtable on Sustainable Palm Oil (RSPO) supply chain certification in 2013, Emery Oleochemicals has commercialised RSPO Segregation (SG) fatty alcohol solutions. The company’s Home and Personal Wellness business unit will offer SG-certified speciality oleo derivatives through its Emercol series, which includes applications ranging from co-emulsifiers to emollients, viscosity controllers to stabilisers and dispersants. WORLD: Procter & Gamble (P&G)’s Tide Coldwater laundry detergent will switch from corn-based to cellulosic ethanol derived from agricultural waste, the company said in October last year. Ethanol is a key ingredient of Tide, serving to enhance and stabilise the detergent formula.

LanzaTech, IOC-DBT recycles CO2 into omega-3 fatty acids

n Illinois, USA, LanzaTech and a research team from the IOC-DBT Center for Advanced Bio-Energy Research (an entity co-funded by India’s Department of Biotechnology and Indian Oil Corporation Limited) have announced the development of a new process to recycle carbon dioxide (CO2) emissions into omega-3 rich fatty acids. Recycling the CO2 gases – the sole carbon source – for continuous gas fermentation, LanzaTech’s microbes produce acetate that is then consumed as energy and carbon by a proprietary algae developed by the team at IOC-DBT. These algae are rich in omega-3 fatty acids and can be utilised as an omega-3 rich fish meal substitute, or the algal oil can be extracted and

purified as an independent omega-3 lipid product. “LanzaTech and the team from IOC-DBT have demonstrated the tremendous potential of carbon recycling”, LanzaTech CEO, Dr Jennifer Holmgren, said. “A platform that can produce sustainable food and fuels economically and at scale turns the issue of food versus fuels on its head,” she added. Dr DK Tuli, executive director of IOC-DBT said: “A continuous pilot plant facility shall be set up at IOC (R&D) next year, which shall integrate both the processes resulting in the creation of a disruptive technology. This project can be a game changer for production of omega-3 fatty acids and oil from algae using an economically viable method.”

BBMC industry to attract US$1bn

he bio-based materials and chemicals (BBMC) industry is poised to attract nearly US$1bn in investment this year (2014-15), notably by later-stage funding rounds, according to a report by Lux Research, Biomass Magazine reported in October last year. The estimated US$974M investment represents a 28% increase from 2013, suggesting companies that have endured economic disruption have gained maturity and regained investors’ confidence. “Over the last two years, funding for bio-based materials and chemicals has shifted decisively toward later-stage rounds, reflecting the growing maturity of the industry and the shift from R&D to production,” said Meraldo Antonio, Lux Research associate and the lead author of the report, titled ‘Dynamics of Venture Capital Funding in the Bio-based Chemicals Industry’. “Participation of corporate investors has also increased”, he added, “suggesting that large multi-nationals in many industries see bio-based materials as strategically important.” Lux Research analysts found that North American companies dominated the industry. Driven by technology entrepreneurship and a favourable investment environment, North American companies cornered 87% or US$2.2bn of the total venture capital funding for the BBMC sector over the past three years.

Reverdia gets 99% renewable label from USDA

everdia, a joint venture (JV) between Royal DSM and Roquette Frères, has received the United States Department of Agriculture (USDA) Certified Bio-based Product Label for its ‘Biosuccinium’ bio-succinic acid. The label verifies that the product’s amount of renewable bio-based ingredients – 99%, in this case – meets or exceeds levels set by the USDA. Bio-based products are finished or intermediate materials composed in whole, or in significant part, of agricultural, forestry or marine ingredients.

US$2.5M grant to Genomatica halves time to produce microorganisms bioplastic supplier development programme. In this be naturally produced by a chosen a technology Nature Works programme too, Genomatica microbe. leader in the chemical Genomatica, industry, announced in October the latest results from the use of its proprietary, integrated biotechnology platform that converts alternative feedstocks to major chemicals. The company leveraged its platform to create microorganisms that achieved a ‘titer’ (concentration of product) of over 50g/litre for one of its programmes in less than half the time required by an earlier programme. This level is a relevant milestone on the path towards a commercial process and highlights the platform’s ability to rapidly engineer microorganisms to produce chemicals that may not

Genomatica’s first commercial process, Geno BDO, was developed using its platform and was notable for three reasons: the company reached commercialscale production in just five years; the process directly converts feedstocks to a chemical that is not naturally produced; and the thousands of tonnes of 1,4-butanediol (BDO) produced to date continues to lead the industry in production of a high-volume intermediate chemical from renewable feedstocks. The BDO programme required 27 months to reach over 50g/titer. The latest example was achieved as part of Genomatica’s butadiene

was using its platform to design a microorganism and process to make a chemical that was not naturally produced; and, in this case, just 10 months was required to reach 50g/litre. Genomatica believes this improved performance represents the high leverage that can be achieved from its integrated biotechnology platform. Genomatica’s biotechnology platform and over 500 patents and applications enable it to develop processes for additional major chemicals. The next is for butadiene, with Versalis and Braskem as partners, and over US$100M in industry support.

n Minnesota, USA, the US Department of Energy’s Bioenergy Technologies Office has announced a grant of up to US$2.5M to NatureWorks, one of the world’s leading suppliers of bioplastics, in support of an ongoing programme that aims to sequester and use methane as a feedstock for the company’s Ingeo biopolymers and intermediates. The grant supports an ongoing multi-year joint development programme between NatureWorks and Calysta, with the specific goal of transforming, via a fermentation process, renewable biomethane into lactic acid, the building block for Ingeo.

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DIARY OF EVEN TS

Bursa Malaysia to host POC2015

ark your calendar from 2-4 March 2015 and register to be part of the global congregation of the palm and edible oils industry professionals, at the 26th Annual Palm & Lauric Oils Conference & Exhibition: Price Outlook 2015/16 (POC2015). This event will be held at the Shangri-La Hotel, Kuala Lumpur. POC has upheld its tradition of providing valuable interaction opportunities for delegates to discuss trade possibilities, market trends and to keep abreast of the latest price forecasts that will impact their respective businesses. Thought-provoking inputs from the speakers and their comments are key takeaways that will continue to be discussed amongst the delegates on-site and even post event. Join POC as a sponsor to maximise this platform and further elevate your corporate visibility and promote your products and services to delegates at POC2015.

19-20 JANUARY 2015

For sponsorship enquiries and other information, contact: POC2015 Secretariat Tel: +603 77278458 Fax: +603 77279458 E-mail: poc@bursamalaysia.com Website: www.pocmalaysia.com Early bird offer (register and pay before or on 31 January 2015): RM 2,600 (US$840) – Bursa member rate RM 2,800 (US$910) – Non-member rate Normal rate (register and pay before or on 14 February 2015): RM 3,000 (US$970) – Bursa member rate RM 3,200 (US$1,040) – Non-member rate Walk-in rate (register and pay on 2 March 2015): RM 3,800 (US$1,230)

15-17 MARCH 2015

Fuels of the Future: 12th International Conference on Biofuels

81st Annual National Institute of Oilseed Products (NIOP) Convention

VENUE: Berlin, Germany CONTACT: Bundesverband BioEnergie e.V, Germany. Tel: +49 228 8100 222 Fax: +49 228 8100 258 E-mail: info@bioenergie.de Website: www.fuels-of-the-future.com

VENUE: JW Marriott Camelback Inn, Scottsdale, Arizona, USA CONTACT: NIOP, USA. Tel: +1 202 5912461. E-mail: niop@kellencompany.com Website: http://niop.org

9-10 FEBRUARY 2015

17-20 MARCH 2015

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

18-20 FEBRUARY 2015 20th Annual Ethanol Conference (NEC): Going Global VENUE: Gaylord Texan Resort and Convention Center, Grapevine, Texas, USA CONTACT: Executive Events, USA. Tel: +1 866 497 1232 or +1 303 586 4751 E-mail: necregistration@ethanolrfa.com Website: www.nationalethanolconference.com

2-3 MARCH 2015 World Bio Markets VENUE: Hotel Okura, Amsterdam, The Netherlands CONTACT: Green Power Conferences, UK. Tel: +44 (0)207 099 0600 E-mail: info@greenpowerconferences.com Website: www.worldbiomarkets.com For a full listing of oils and fats industry events, go to: www.ofimagazine.com

International Conference on Coconut Oil (ICCO) VENUE: Bangkok International Trade & Exhibition Centre, Bangkok, Thailand CONTACT: AgriAsia, Thailand. Tel: +66 (0)2 670 0900 E-mail: agriasia@vnuexhibitionsap.com Website: www.agri-asia.com/internationalconference-of-coconut-oil.aspx

3-7 MAY 2015 106th AOCS Annual Meeting & Expo VENUE: Rosen Shingle Creek, Orlando, Florida, USA CONTACT: AOCS Meetings Department, USA. Tel: +1 217 6934821; E-mail: meetings@aocs. org; Website: http://annualmeeting.aocs.org

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

4-6 JUNE 2015 The 9th China (Guangzhou) International Edible Oil and Olive Oil Exhibition 2015 VENUE: China Import and Export Fair Pazhou Complex, Guangzhou, China CONTACT: Ms Kimy Xie, China. Tel: +86 20 6108 9059; Fax: +86 20 6108 9459 E-mail: kimy.xie@foxmail.com Website: www.chinaexhibition.com

10-11 JUNE 2015 Oleofuels 2015 VENUE: Frankfurt, Germany CONTACT: Cheryl Williams, ACI, UK. Tel: +44 (0) 203 141 0623; E-mail: cwilliams@acieu.net Website: www.wplgroup.com/aci/conferences/ eu-eaf8.asp

5-9 JULY 2015 14th International Rapeseed Conference VENUE: The Convention Centre at TCU Place, Saskatoon, Saskatchewan, Canada CONTACT: Nicola Adams, IRC 2015 Event Manager, Canada. Tel: +1 306 668 2650 E-mail: nicola.adams@agwest.sk.ca Website: www.event-wizard.com/ira2015

21-22 April 2015 OFI India 2015

21-22 APRIL 2015 OFI India 2015 VENUE: Hyderabad International Convention Centre (HICC), Hyderabad, India CONTACT: Mark Winthrop-Wallace, International Sales Manager. Tel: +44 (0)1737 855114 E-mail: markww@quartzltd.com Website: www.ofievents.com/india

23-25 APRIL 2015

Hyderabad International Convention Centre, Hyderabad, India

www.ofievents.com/india For sales and sponsorship, contact: Mark Winthrop-Wallace, Sales Manager Tel: +44 1737 855114 E-mail: markww@quartzltd.com Anita Revis, Sales Consultant Tel: +44 1737 855068 E-mail: anitarevis@quartzltd.com

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

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

14 OFI – JANUARY 2015 www.oilsandfatsinternational.com

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I NTE RN ATION AL M ARKET REVIEW

A low start to the year? FIGURE 1: VEGETABLE OIL PRICES MONTHLY AVERAGES

he long descent in vegetable oil prices, which first got underway back in early 2011, seemed to be coming to a halt over the last quarter of 2014. Most major items even managed to work off the autumn’s multi-year lows – despite some further increments to 2014 crop estimates (mainly US soyabeans and Canadian and EU rapeseed). The move was also fairly resilient to the collapsing market for crude mineral oil with its negative implications for consumption growth of vegetable oils in the biodiesel sector – although palm especially now seems to be suffering from this input. It is not unusual for oilseed and/or vegetable oil prices to stage a fourth quarter rally as the peak oilseed harvest periods pass in the northern hemisphere and Asian palm oil – with its now 35% share of global vegetable oil consumption – enters its wintering period of lower production (see Figure 1, right). Markets coming 30-40% off peak levels, even over a four-year period, might be expected to pay less attention to such seasonal trends, especially when the relative costs of the competing market leaders – palm, soya, rape and sunflower oils – have become unusually close. However, the Q4 rally had plenty of support this year from the soya complex which, even in December, was still trying to complete its transition from 2013/14’s extremely tight finish to a supposedly glutted season in 2014/15 (see Figure 2, right). Apart from a slightly later than usual US harvest, the key factor in this delayed refilling of the US pipeline has been record early season export demand for US soyabeans – especially from top customer China. Demand for US meal exports has also been unusually strong, pushing up meal prices and crush margins, fuelling fierce competition between US processors and exporters for early season bean supplies. Although the USA has got off to a flying start with soyabean exports for the past few seasons (much of that due to China’s ever expanding demand), 2014 saw an added boost from Latin American supply concerns (see Figure 3, p18). These focused partly on dry weather holding up seeding, especially in Brazil, and partly on Argentina hanging on to more of its old soyabean crop than usual, as a hedge against rampant domestic inflation. With both the major Latin American producers committing less of their 2015 crops than usual to the export market, buyers turned to the USA for near supplies and, in case the weather did not improve in Brazil – for forward ‘insurance’ cover (some of which purchases might be exposed to cancellation later). As OFI went to press, US exporters found themselves – just three months into the season – already having committed 85% of the full marketing

CHARTS: JOHN BUCKLEY

The US soyabean glut continues into 2015, a year that expects to see no dramatic increase in palm oil production in Indonesia and a decrease of rapeseed production in the European Union. John Buckley writes

FIGURE 2: GLOBAL SOYABEAN STOCKS

year soyabean export forecast (now raised to 47.9M tonnes). The US meal export forecast has also gone up to a record 11.9M tonnes, while oil exports are seen jumping 18% to over 1.3M tonnes. US domestic meal demand may also get a boost if market rumours are right that China may relax its restrictions on imports of US dried distillers’ grains. Since China virtually blocked intake of this feed ingredient from the USA, on the grounds that it might contain unauthorised genetically modified (GM) maize, it has been piling up within the States and competing for outlets with soya meal. As OFI went to press, the heavy demand for products was expected to drive US November crush to a new record high. These demand factors have helped sustain soyabean complex values amid a further uprating of the 2014 US crop from 106.9M tonnes to 107.7M tonnes (see Figure 4, p18). The factors have also offset, to some extent, better rainfall arriving in Brazil and Argentina although, having gone in later than normal, much of the Brazilian crop may arrive a few weeks late as well. Most of the forecasts for Latin American soya production have stayed fairly close to the United States Department of Agriculture (USDA)’s view, which is for a joint increase of about 7-8M tonnes for Brazil and Argentina. Brazil’s government (CONAB) forecast is even higher than the USDA’s. The markets still want to see a normal growing season progress further before assuming this crop will arrive as planned on the market. But, assuming

no major weather upsets, the current prognosis is for world soyabean output to expand by a hefty 27.5M tonnes – up almost 10% on 2014. As noted in OFI’s October/November issue, soyabean supply is growing more than twice as fast as demand (consumption seen at around 12M tonne levels now). If this entire increase was crushed, that would produce well over 5M tonnes more soyabean oil, rather than the 2.3M tonnes extra that the USDA currently predicts. Other points to note include: t The USDA sees world soya oil consumption expanding by three percent in 2014/15, including a five percent jump in Chinese demand which, at 14.36M tonnes, is expected to account for over 31% of global usage of this oil versus 18% going to the USA and about 14% used in Brazil and Argentina combined. t South America is now the source of half the world’s soyabean supply and 66% of soya oil exports t Despite the recent focus on China’s slowing economy, it is expected to crush a record 74.5M tonnes of soyabeans and consume 57.4M tonnes of soya meal – almost 30% of world off-take. t As demand also rises in Europe, South America, the USA and some importing countries, world consumption of soya meal is expected to pass 195M tonnes – 10M tonnes more than 2013 – to account for most of the growth in oil meal consumption. But it is not enough to clear the surplus. v

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I NT E RN ATION AL M ARKET REVIEW

Palm prices and exports slumping Palm oil prices recently slumped to their lowest level since late September 2014 under pressure from rival soya oil’s unusually small premium, disappointing export demand and the impact of collapsing energy markets on palm’s biodiesel expansion plans. Despite lifting export taxes, Malaysian November exports fell by six percent and some analysts were predicting seasonally flat Asian demand for December too, due to the usual cold weather/clouding and solidifying issues that occur at this time of year. Although Malaysian November production was down by about 7.5%, end-November stocks still rose by over five percent to a 21-month high of almost 2.3M tonnes. As of December 2014, output was still running 4.3% higher than at the same time in 2013 (about 754,000 tonnes more), while exports were down 5.2% (about 870,000). However, some traders were talking of a steeper 10-20% drop in December output. Indonesian November production was also expected to drop by about three percent and probably more in December. The Indonesian palm body GAPKI, meanwhile, said it expected output to rise only 4.8% or 1.5M tonnes in 2015 to 32.5M tonnes, and for exports to increase just 1.4% or 300,000 tonnes to 21.6M tonnes. Prior to the latest slump in energy markets, origins had been talking up their hopes of new biodiesel demand rescuing them from surplus and sending palm prices on a higher course. With Brent crude oil at five-year lows – down nearly 30% since early October 2014 and almost 40% by December, it does not seem the best time for producers to be taking a tougher line enforcing biodiesel mandates (very laxly applied in Indonesia) or encouraging greater levels of discretionary blending.

FIGURE 3: US SOYABEAN EXPORTS

CHARTS: JOHN BUCKLEY

v Global soya crush has been lagging behind supply for three seasons now and, on the basis of the latest USDA crush number, world carryover stocks of soyabeans will expand from about 67M tonnes to a new record of almost 90M tonnes, including the US inventory rocketing from a measly 2.5M tonnes to over 12M tonnes. It is many years since the USA has had this sort of stock buffer to play with and the global market has never been so glutted. Have the markets fully adjusted yet to this scenario? Or, as Latin American crops get harvested and another large US harvest is sown next spring, will soya come under further intense pressure to lower its prices? A couple of caveats must be mentioned. One is the possibility that the USDA’s crop counting agencies – the Farm Service Agency (FSA) and National Agricultural Statistics Service (NASS) – may adjust down the final US acreage over the December/January period, trimming some off the US crop estimates above, while final average yield could go up or down. Markets also have to respect the US Budget Office, which estimates that 2015’s sowings will drop 3.2M acres to 81M acres. This is higher than the USDA’s long-term ‘baseline’ projection made earlier in 2014 (77.8M acres), but nowhere near reported market thinking, said to average around 88M acres. On the USDA’s last estimate, the USA sowed 84.2M acres in 2014 and harvested 83.4M. Still, whichever way these figures ultimately jump, the biggest fundamental facing the soya market in the months ahead is likely to be a large surplus.

FIGURE 4: CHICAGO SOYABEAN FUTURES

Indonesia was estimated to use 1.8M kilolitres (kl) of palm diesel in 2014 – 45% under its 3.3M kl target. It plans to raise the blend to 20% in 2016, requiring over eight million tonnes of palm oil. Earlier, it boosted the blend from 7.5% to 10% and told power plants to use 20% from January onward. Indonesia is, by far, the largest consumer of palm oil – seen using 11.2M tonnes this season, or over 18% of the world total. Oil World estimated global palm use in biodiesel at 9.3M tonnes, representing 16% of consumption. Palm may not yet have experienced the full weight of competition from cheap, record supplies of soyabean oil as the lion’s share of this season’s soya crop increase is yet to be marketed (by the USA as well as the later-harvesting Latin Americans). Palm has earned its dominance of the world vegetable oil trade over many years by steeply discounting its price to attract the majority of developing country custom. In 2013, the discount against soya oil averaged US$245/tonne. Recently, this has been nearer US$50/tonne.

Rapeseed to rise, but not for EU Some further adjustments have been made to 2014 rapeseed crop estimates since OFI’s last market report, led by Canadian officials raising estimates from 14.1M tonnes (which markets always thought was too low) to a higher-than-expected 15.56M tonnes. In 2013, Canada produced a record crop of just under 18M tonnes. Canadian crush was earlier forecast by the USDA at 7.38M tonnes, about 4.3% up on the year. COPA members, accounting for the bulk of crush, had already processed about six percent more in the season by December, but capacity use has recently dropped back from over 80% to around 73% (versus 2013’s near 78%), after fire damage to a large Louis Dreyfus plant in Saskatchewan. With exports seen around 8.3M tonnes, 2014/15 ending stocks –

earlier expected to halve – could now be close to the ample starting level of 2.36M. Against the decline in Canadian output, European Union (EU) crop estimates have risen another 500,000 tonnes to a new record 24M tonnes, almost three million tonnes more than 2013 and signalling that import needs will drop by around one million tonnes for the current season. Commonwealth of Independent States (CIS) suppliers have also produced a big crop for the second year running. First pointers to 2015 are less encouraging for the EU. The widely-followed analyst, Strategie Grains, sees planted area dropping by about 200,000ha due to lower margins versus cereal crops, especially when rape was being sown. It also believes yields will return closer to trend from 2013’s above average result, reducing the harvest by about 10% on-year at 21.6M tonnes. Another forecaster, Lanworth, was more optimistic, suggesting that, with reasonable weather, the crop could again exceed 23M tonnes. Area sown in Ukraine – a key EU supplier – is also expected to fall by up to 10%. Strategie forecasts 2015 EU sunflowerseed production at 8.5M tonnes versus 2014’s 8.9M tonnes, assuming slightly lower yields. However, these early forecasts tend to be quite speculative, as crop conditions, weather and relative pricing can alter by the spring, when sunflowerseed is sown. If Russian and Ukrainian winter cereal crops suffer big losses, as some analysts fear, that could free up more land for crops such as sunflower or maize. Despite slightly smaller global harvests of rapeseed and sunflowerseed in 2014, global oilseed crush is likely to be kept at relatively high levels by drawing down relatively larger carry-in stocks of both oilseeds. That should keep up supplies of both w oils near last season’s high levels. John Buckley is Oils & Fats International’s market correspondent

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C H IN A

Opting for quality

CHINA’S SOYABEAN OIL CONSUMPTION ROSE FROM 11.1M TONNES IN 2010-11 TO 14.1M TONNES IN 2014-15

China is experiencing a growth in packaged oils demand as wealthier, more health-conscious consumers are choosing quality products. Dairy consumption is also set to soar on the back of rising incomes. Gao Fu Mao writes from Beijing

ising incomes and a continued tightening of food safety enforcement is boosting demand in China for commercial packaged oils, with consumers moving away from the bulk oils that have dominated past markets. Overall, while year-on-year (YOY) growth in global oils and fats production has averaged three percent in each of the past two years, vegetable oil sales in China will rise an average 16%/year in the period 2014-2018, according to projections by Euromonitor – a 79% jump in overall value of sales in China in that period. Imports of oils and fats have been growing at almost eight percent/year, according to the China National Grain and Oils Information Center (CNGOIC), growing from 10.6M tonnes in 20082009 to 12.2M tonnes in 2012-2013, while overall consumption grew from 30.7M tonnes to 35.9M tonnes in that same time period. China’s consumption of edible oils has grown considerably: soyabean oil consumption rose from 11.1M tonnes (2010-2011) to 14.1M tonnes in 2014-2015, according to data from China’s National Bureau of Statistics. Palm oil consumption, at 6.6M tonnes in 2014-15 compares to 5.7M tonnes in 20102011, while rapeseed oil consumption has soared from 5.9M tonnes in 2010-2011 to 7.4M tonnes in the marketing season 2014-2015 (October 2014 to September 2015), according to projections by the US Department of Agriculture (USDA). Peanut oil consumption, at 2.7M tonnes, will have risen from 2.4M tonnes in 2010-2011, while sunflower oil consumption will rise from 0.36M tonnes to 0.95M tonnes in the same time frame. Rapeseed oil accounts for 20% of overall oil retail sales in value terms, Euromonitor figures show, with soyabean oil comprising 18%; peanut oil, 14%; and corn oil, 10%. Sunflower and sesame oils account

for seven percent and one percent of vegetable oil sales, respectively, and mixed oils comprise 26%. Consumption of edible oils rose 14%/year in value terms between 2008 and 2013 to US$8bn. Packaged oil sales have risen on the back of a clampdown on sales of bulk or loose cooking oil in China after a slew of scandals over the recycling of so-called ‘gutter’ cooking oil. Given China’s consumption growth, it is not surprising that there have been 569 new cooking oil launches in the country between 2008 and the end of 2012, according to research consultancy Mintel. While the majority of new products launched were blends, 37 new launches were of sesame oil, making it the most popular single category for unblended new launches. Meanwhile, there were 31 launches of peanut oils, 30 launches each of and rape and soyabean oils and 13 launches of sunflower oil in the period. In terms of labelling, 21% of new launches used the term ‘non-GMO’, while nine percent carried the term ‘low cholesterol’ and 11% ‘no preservatives’.

Young buyers more health-conscious Retailers report a distinct difference in buying habits between age groups, with older consumers guided by price. “Our young consumers are much wealthier nowadays and they are willing to spend extra on a basic food product like cooking oil if that product has unique health and nutrition benefits, whereas older customers go for a cheaper but wellknown local product,” explains Wu Guodong, floor manager at the massive WalMart outlet in DaWang Lu, a downtown district of Beijing. Olive oil sales are growing, explains Wu, who also claims that strong regional distinctions in oil choices remain: sales of soya oils are highest in WalMart stores in the largest cities such as Beijing and Shanghai, while sprawling

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southwesterly regions such as Sichuan consume higher rates of peanut and rapeseed oil, in part due to local production of these crops. An established pecking order has emerged in retail (business to consumer) vegetable oils sales, with Wilmar International leading the way on a 44.6% market share, with Cofco well back on 15.1% and, in third place, Shandong Luhua on 9.2% with next-placed Shanghai Liangyou on 3.5%. Broken down by brands, the leaders are Arawana (Wilmar) and Fortune (Cofco). Liangyou is among the firms that have been most aggressive with new product launches: its ‘Haishi’ brand in 2013 launched a new ‘imported Italian olive’ oil blend (blended with rapeseed, soyabean oil, corn oil and sunflower, as well as peanut and sesame oil), which retails for Chinese Yuan Renminbi (CNY)99 (US$16.15)/five litre pack in outlets of WalMart in Beijing. It is already the country’s fifth strongest edible oil brand. Chinese olive oil sales will rise 175% in the period 2008-2013. But olive oil sales accounted for only US$186M of US$15.8bn in 2013 overall retail oil sales. That said, Chinese players are also after established brands as both solid investments and suppliers of quality produce: hence the purchase in October last year by Shanghai Bright Foods of Italybased olive oil player Salov, which produces Filippo Berio, the top selling olive oil brand in both the UK and USA. Branded margarine spreads are also becoming more common on Chinese supermarket shelves. Since June, outlets of Carrefour in Beijing have stocked packs (140g × 10 sachets) of Canola Harvest (‘Kannuo La’) brand rapeseed oil margarine imported from Canada. The ‘non-hydrogenated, trans fat-free, imported’ margarine is, according to the Mandarin-language packaging also ‘zero cholesterol’. Canola Harvest is a Canadian brand owned by Richardson International. Chinese suppliers have also risen to the challenge: among them Hanchang, which retails a vegetable oil-based ‘butter’ for CNY1 (US$0.16)/ per 10g sachet.

Shifting to wheat and corn In terms of domestic oilseeds production, China has been shifting from soya and rapeseed to wheat and corn, thanks to higher government-set procurement prices for grains. China’s habit of keeping large stockpiles of key commodities like soyabeans can

have the effect of softening prices at key periods of the year, explains an official at the Harbin branch of the CNGOIC, a research body attached to the State Grain Administration. Likewise, government policies on pricing manipulate soya and corn demand through state procurement prices and tariffs, as well as release of stockpiles, says an official. The State Council blueprint China Food & Nutritional Development Plan 2014-2020 stresses new technology and new sustainable cultivation of soya. There are signs that the government is moving away from minimum procurement prices to direct subsidies for farmers, “suggesting the focus will continue to be on quality rather than quantity of local soya output,” says the CNGOIC official. China’s own soyabean crop is down: 12M tonnes projected by the USDA for 2014/15 represents a drop of 200,000 tonnes on 2013/2014. Obstacles to increasing yields will remain in place for some time: low technology and poor quality seeds. There are clear signs, however, that China is moving away from self-sufficiency, while seeking to improve the quality of its domestic oilseeds crop. As for diversifying oil supplies, the price advantage of palm oil in China remains considerable. In January 2013 (the last date for which there are complete records) China’s wholesale price for palm was CNY6,279 (US$1,025)/tonne while the equivalent price for rapeseed stood at CNY10,594 (US$1,729)/tonne and soya at CNY8,766 (US$1,431)/tonne.

China’s growing appetite for dairy Meanwhile, dairy consumption has soared, with China’s annual dairy revenues now worth US$476/ year (half the size of US dairy sales) and revenues from the industry are set to double by 2017, according to Australian bank Macquarie. It is projecting China’s total dairy consumption will post a 13% annual increase up to 2020, with 20% average annual growth at the ‘premium’ end – in products such as infant powder and cheeses. Firms targeting China’s growing appetite for butters and spreads include Australian creamery giant Devondale, which exports from Australia thick blocks of butter (227g) that sell on the popular online food retailer Yihaodian (controlled by WalMart) for CNY112 (US$18.28)/four-pack. Specially packed for the Chinese market, the butter packs were launched in February last year.

RISING INCO MES AND URBANIS ATION

Also in special packaging for the Chinese consumer, New Zealand’s Anchor sells 30 sachets of 10g of spreadable butter for CNY27 (US$4.40). Similarly packaged for the Chinese market, Anchor’s 227g blocks of butter (salted) sell for CNY32.90 (US$5.37). Chinese suppliers are also tapping this market. Perhaps one of the most intriguing domestic products to hit the shelves last year was from Muxiang Yuan Nai Co, a Xilanhote city firm in Inner Mongolia which, in December 2013, launched ‘Grassland Butter Cream’, which sells for CNY33 (US$5.38)/300g jar under the ‘Tianmei Hua Ru’ brand, with instructions on how to use the butter oil as a spread or “to make bread cakes for nutrition and health.” Suki sells its new unsalted butter for CNY14 (US$2.20)/200g block in supermarkets where the company’s ‘light spread’ margarine-type butter, launched in 2013, sells for CNY34.90 (US$5.69)/500g pack. Growth in dairy consumption is being driven by much of the same factors behind growth in vegetable-based oils and fats consumption: rising incomes and urbanisation are powering sales of convenience foods, which depend heavily on inputs like palm oil and fats. A look at the longterm trends suggest that, while both GDP growth (set to flatten at four percent in 2030, according to projections by Citibank’s China research team) and population growth will slow, per capita income will climb at a rapid rate. Average incomes will rise from US$6,291 in 2012 to US$10,791 in 2017 and US$32,682 in 2030, according to predictions by the Economist Intelligence Unit. It predicts median household income will rise from US$7,401 in 2012 to US$9,811 and then US$39,917 in 2030. Most impressively, the number of households earning US$50,000-plus/year will soar from 2.76M in 2012 to 9.81M in 2017 and 169.5M in 2030. Between 2013 and 2018, average incomes in the huge central provinces of Sichuan and Henan are set to rise from CNY60,000 (US$9,799)/year to CNY90,000 (US$14,698)/year. These will still look low next to CNY130,000 (US$21,230) average annual incomes in Shanghai. But, in the mean time, the population of southwestern Chengdu – supposedly a provincial city – will have risen from four million in 2000 to 11.2M in 2020, with a similar growth in the central w city of Zhengzhou. Gao Fu Mao is a freelance journalist

L ATIAU/DOL OTO: AKULAM IS CONTRIBUTING TO A GROWTH IN DAIRY CONSUMPTION (PH

) OCLUB ARPHOT

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LAU RIC OILS

Production of coconut oil is on the rise in the lauric oil powerhouses of Southeast Asia, as its purported health benefits have attracted global interest. Charlotte Niemiec looks at the numerous uses of coconut and its oil and the worldwide market

oconut oil has enjoyed a sudden surge in media interest of late, as news outlets tout its various health benefits. But are we to believe the hype? Despite its high level of saturated fat – around 90% – the popularity of the lauric oil is on the rise. Scientific evidence suggests coconut oil can offer a variety of health benefits, as it contains medium-chain triglycerides (MCTs), which may have therapeutic effects on brain disorders such as epilepsy and Alzheimer’s. The oil may also be effective at killing harmful pathogens in the body and help prevent infections; it may reduce appetite leading to weight loss; it could reduce seizures, improve blood cholesterol levels and lower the risk of heart disease; and it functions well in cosmetics, protecting hair against damage, moisturising skin and has shown a reasonable effectiveness as a natural sunscreen. Health authorities have historically warned the public to avoid consuming large amounts of coconut oil due to its high level of saturated fat, but recent reports suggest saturated fat is not as bad for human health as we have believed. As previously reported in Oils & Fats International (see January 2014, Comment, p2), a two-year study by the independent Swedish Council on Health Technology Assessment found that a low-carbohydrate, high fat diet was the most effective weapon against obesity and diabetes. Since this study was reported, many others have come out of the woodwork, all suggesting that saturated fat is not the culprit for increased risk of cardiovascular disease, but trans fat, found in hydrogenated vegetable oil, is now the enemy to be avoided. There appears to be little scientific evidence to suggest that consuming large amounts of coconut oil contributes negatively to health; the opposite would appear to be true. A 14 February 2011 Huffington Post article explains that scientists researching Pacific Island populations that received 30-60% of their calories from fully saturated coconut discovered these populations were exceptionally healthy. The article notes: “Back in the 1930s, Dr Weston Price found South Pacific Islanders whose diets were high in coconut to be healthy and trim, despite high dietary fat, and heart disease was virtually nonexistent. Similarly in 1981, researchers studying two Polynesian communities for whom coconut was the primary caloric energy source found them to have excellent cardiovascular health and fitness.” Furthermore, in the 1940s, the article says, farmers who tried to use inexpensive coconut oil to fatten their livestock were surprised to find it didn’t work. Instead, coconut oil made the animals lean, active and hungry. The theory that saturated fat contributes to heart disease does not, then, quite add up. The

natural saturated fats found in coconut oil do not seem to be detrimental to health. Another Huffington Post article, dated 22 April 2014, enlightens us further, explaining that the coconut oil most popularly enjoyed today is not the same coconut oil that was enjoyed in the 1980s. Back then, it was highly processed and full of trans fats. The newspaper spoke to Tom Brenna, a professor of nutritional sciences at Cornell University’s College of Human Ecology, who clarified: “The older refined/bleached/deodorised (RBD) coconut oil caused rapid and very unhealthy looking rises in cholesterol … There is no evidence that this is the case for virgin coconut oil, which is available today but was not in the 1970s and 1980s, when people were using RBD coconut oil.” According to the United States Department of Agriculture (USDA), one tablespoon of coconut oil contains 117 calories, 13.6g of fat (11.8% saturated, 0.8% monounsaturated and 0.2% polyunsaturated), 0g of protein, 0g of fibre and 0g of sugar. It provides little to no minerals or vitamins. Despite this quirky nutritional profile, coconut oil has never been more popular than it is today.

tobacco products. It is used in the manufacture of alkyd resins, which are an important component of surface coatings. In the paper and printing industries, it is used as a plasticiser, humectant (a substance used to keep things moist), lubricant and used with other ingredients in producing greaseproof paper. Alkyd resins are also an important component of many printing inks. It can be used as a general lubricant, due to its non-toxic character, in both food and in machinery where product purity is essential, and in plastics. In textiles, it is used as a conditioning agent to soften yarn and fabric. It lubricates many kinds of fibres in spinning, twist setting, knitting and weaving operations. Coconut oil is a fundamental chemical component of polyethers for urethane foams; it is widely employed in manufacturing electrolytes for electrolytic condensers, which are used for radio and neon lights, and in processes for electro disposition and treatment of metals. Finally, it is used to make nitroglycerine, which is the usual explosive in dynamite.

Industrial and other uses

Following the increase in popularity, the production and price of coconut oil is also on the rise. A September 2014 Oil World report explains that shipments of lauric oils, which include palm kernel oil (PKO) and coconut oil, were expected to climb in the 2014/15 period, as the industry rebounds from a year-earlier slide. Exports of both oils were estimated to climb from

But coconut oil’s uses are not just limited to food. The Indian Coconut Journal explains in its August 2014 issue that coconut oil is widely applied in many industries. It helps keep tobacco moist and soft to prevent breaking and crumbling during processing, ensuring freshness in packaged cigarettes and other

Southeast Asia production

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Going nuts for coconut 5.1M tonnes in 2013/14 to 5.4M tonnes in 2014, with Philippine coconut oil production predicted to climb to 1.34M tonnes, after slumping to 1.22M tonnes in 2013/14. Southeast Asia is a powerhouse for coconut production and the world’s top three coconut producers are Indonesia, the Philippines and India (see Table 1, below). Indonesian coconuts are scattered over 5,000km from west to east countrywide and are the source of

income for approximately seven million households. The three major producing islands are Sumatra, with 31.8% of total plantation area, followed by Java (22.7%) and Sulawesi (20.8%). Coconut plantation area in 2014 was estimated to be around 3.79M ha. Low productivity hampers production in this country, but there was nevertheless a slight increase in plantation area of 0.28%, or 11,000ha in the period 2012/14 under a new planting programme supported by the Ministry of Agriculture.

The area under coconut in the Philippines – one of the world’s major producers – was 3.55M ha in 2013, accounting for 26% of total agricultural land. There are an estimated 338M bearing coconut trees in the country and production reaches 15,344bn nuts/year on average, with an average productivity of 43 nuts/year. However, when Typhoon Haiyan ripped through the country in November 2013, it damaged 33M coconut trees in the Eastern Visayas region – the major coconut growing region. The deadliest Philippine typhoon on record, it killed at least 6,300 people in the country and, in the Visayas region, affected more than 11M people – many of whom were left homeless – according to UN official figures. The typhoon caused damage to residential, commercial and agricultural properties to the tune of up to US$14.5bn. Therefore, these estimated production figures are likely to be much lower and the country will take some time to recover from its loss. In Malaysia, coconut is grown in Johor, Sarawak, Sabah, Punk and Schingor states. Even though the area under coconut decreased from 106,312ha in 2011 to 98,533ha in 2013, nut production increased from 468.8M nuts in 2011 to 539M nuts in 2013. This was attributed to an increase in planting area with high yielding varieties, as well as increased involvement of the private sector in both upstream and downstream activities and strong support from the government in terms of financial and technical advisory services to the coconut industry. Nevertheless, the area under coconut in Malaysia is only 1.8%, or 98,533ha, against a total agricultural area of 5,274,757ha, and just 0.3% of people are involved in the coconut industry. Thailand depends heavily on coconuts for subsistence. It is one of the most important cash crops for 332,033 small farmers. Out of the total area of the country (321M ha), the area under coconut is around 213,000ha. The southern region of Thailand is the major coconut producing area, covering 114,000ha, while the central region – which includes the peninsular area – occupies 96,000ha. Each year, 60% of total coconut production is used for domestic consumption, 35% for coconut milk manufacturing and just five percent for oil v

TABLE 1: AREAS UNDER COCONUT IN ASIA PACIFIC (‘000 HA) Country 1998 1999 2000 Indonesia 3,706 3,679 3,684 The Philippines 3,116 3,116 3,119 India 1,861 1,755 1,768 Sri Lanka 442 442 442 Thailand 376 372 325 Papua New Guinea 260 260 260 Vietnam 187 173 173 Malaysia 230 226 226 Vanuatu 96 96 96 Samoa 92 92 96 Fiji 54 54 54 Solomon Islands 59 59 59 Kiribati 26 26 25 FS Micronesia 17 17 17 Marshall Islands 0 0 0 Palau 14 14 14 APCC Total 10,536 10,381 10,358 Source: Coconut Research Institute (CRI) www.cri.gov.lk

2001 3,691 3,120 1,840 442 326 260 165 226 96 96 65 59 25 17 8 14 10,450

2002 3,701 3,182 1,892 442 327 260 165 159 96 96 54 59 25 17 8 0 10,678

2003 3,883 3,217 1,919 422 328 260 165 131 96 93 60 59 25 17 8 0 10,654

2004 3,797 3,259 1,934 395 343 260 133 143 96 96 61 59 27 17 8 0 10,628

2005 3,804 3,243 1,935 395 344 260 132 121 96 93 60 59 27 17 8 0 10,594

2006 3,789 3,311 1,947 395 226 260 133 115 96 93 60 59 28 17 8 0 10,782

2007 3,788 3,355 1,937 395 225 260 133 120 96 93 60 59 29 17 8 0 10,575

2008 3,799 3,380 1,903 395 247 221 141 115 96 93 60 59 29 17 8 0 10,563

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v extraction. The gross domestic production of Thailand is 8,084,067M baht, to which the coconut industry contributes 0.3% of total export earnings.

Production worldwide Fiji’s coconut production has been declining in terms of copra – the dried meat or kernel of the coconut – over the past 40 years. In the 1950s, over 40,000 tonnes/year was produced. Today, that figure has fallen to less than 20,000 tonnes/year. This is due to the age of trees, low prices for copra, high production and freight costs, and competition from more lucrative cash crops. Around 70% of Fiji’s coconut palms are more than 100 years old, while a further six percent of trees are around 50 years old. The total value of coconut that indirectly benefits the subsistence sector is estimated to be around US$20.2M/year. Coconut covers an area of around 60,085ha of arable land. In 1991, the area under coconut was 49,512ha, with 4,350ha planted as scattered crops. It is estimated that around 65%, or 107M nuts, is available for copra processing, which yields approximately 18,000 tonnes of copra. Coconut production in Kiribati, in the central tropical Pacific Ocean, contributed 46% in 2010, 76% in 2011 and 59.6% in 2013 to the export earnings of the country. The country is focusing on organic coconut production and has set a target to replant 422.5ha/year. To achieve this target, a major national replanting project was extended in 2014. Located in the Central Pacific region with a total land area of 181.3km2, the Marshall Islands

COCONUT TREES TAKE AN AVERAGE OF EIGHT YEARS TO MATURE BUT CAN PRODUCE NUTS FOR OVER 100 YEARS

dedicate a total area of around 8,000ha to coconuts, which produce over 35M nuts or around 7,000 tonnes/year of copra equivalents. It is estimated that over 30% of the total population of the country depends on the coconut industry. Total copra production for 2013 reached over 7,200 tonnes or an average of around 600 tonnes/month, which is higher compared to 2012 production figures of 4,800 tonnes. In 2011, production was slightly less than 4,800 tonnes. In the first quarter of 2014,

copra collected was around 1,300 tonnes. It is estimated that copra meal export of over 2,000 tonnes and crude coconut oil of more than 3,200 tonnes/year earns the Marshall Islands’ government approximately US$3M/year. In Tonga, an archipelago located in the southern Pacific, comprising 176 islands over 700,000km2, around 51,093ha, or 74% of the land, is under coconut. The total nut production required to meet local consumption needs is 23.4M nuts, requiring one million plants. The total estimated nut production is 122.6M nuts/year, equivalent to 24,525 tonnes of copra. Further west, the area under coconut cultivation in Sri Lanka is estimated at 417,000ha and coconut production in 2012 was recorded at 2,940M nuts. In 2013, due to the severe drought experienced in the latter part of 2012, coconut production was reduced to 2,550M nuts. The country aimed to achieve production of 3,300 nuts in 2014. Over in the Caribbean, 14,700ha of Jamaica’s land is under coconut cultivation – approximately six percent of the island’s agricultural land. It is traditionally grown on a commercial basis in the eastern and northern coastal areas of the island, as well as in isolated pockets in the interior of the central region. A total of 96.4M nuts/year, equivalent to 16,067 tonnes/year of copra, are produced and around 93.9M used for domestic consumption. Just two million nuts are converted to oil and 19 tonnes of seed nuts exported to the USA. Coconut palms of bearing age of seven years and over comprised 79% w of the island’s palm population. Charlotte Niemiec is OFI’s assistant editor

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PHOTO: LAGARDE SEBASTIEN/FOTOLIA.COM

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Attracting fresh investment India is a net importer of edible oil and plays a vital role in the global oils and fats marketplace. Charlotte Niemiec provides a round-up

country struggling for self-sufficiency in oilseed production but hugely reliant on imports, India has enormous influence on the global oils and fats industry. As its population grows and becomes wealthier, edible oil consumption is rising and imports are growing. Surprisingly, India has the highest percentage of arable land in the world – 57% versus a 16% average elsewhere – according to Dr Davish Jain, managing director of Prestige Group of Industries, Indore, India, who submitted an article on the subject to All About Feed in July 2011. Nevertheless, India’s land is not being exploited for oilseeds and the country remains dependent on other markets.

According to research company GGN International, in the late 1980s and early 1990s, self-sufficiency in vegetable oils production was high on India’s list of priorities. However, trade reforms in the mid-1990s, followed by meagre growth in domestic oilseed production, fuelled the resurgence of imports to keep up with India’s growing requirements. Historically, government price support programmes and policies have favoured crops that compete with oilseeds, which has resulted in a waning oilseed crop production and stagnant yields. Before 1994, edible oil was imported through India’s State Trading Corporation (STC), which imported palm oil, soyabean oil and rapeseed oil under the Public Distribution Scheme (PDS) and distributed it to the vanaspati (hydrogenated fat) industry. In 1994, however, the import of refined/ bleached/deodorised (RBD) palm olein was placed under Open General Licence (OGL) and import of all other edible oils met the same fate in March 1995. From then on, India’s import of edible oils increased rapidly, providing little

TABLE 1: PRODUCTION OF OILSEEDS IN INDIA 2000-01 2007-08 2008-09 64.1 91.82 71.68 5.2 7.57 6.4 1.1 1.1 1.17

Groundnut Sesamum Nigerseed Rapeseed Mustard 41.9 58.34 72.01 Linseed 2 1.63 1.69 Safflower 2 2.25 1.89 Sunflower 6.5 14.63 11.58 Soyabean 52.8 109.68 99.05 TOTAL 175.6 287.02 265.47 Source: Directorate of Economics and Statistics

2009-10 54.29 5.88 1 66.08 1.54 1.79 8.51 99.65 238.74

2010-11 2011-12 82.65 69.33 8.93 8.21 1.08 1 81.79 1.47 1.5 6.51 127.36 311.29

67.76 1.41 1.21 4.99 122.82 276.73

2012-13 87.14 7.58 0.87 81.93 2.76 2.79 11.61 126.19 320.87

incentive for farmers to produce domestic oilseeds. Additionally, Jain notes that “very small and marginal land holdings, low penetration of technology, dependence on monsoon rains for almost 58% of the arable land and non-availability of hybrid/certified seed” hinders the domestic industry further. The supply chain, he says, is also very fragmented, which prevents farm produce from quickly and cheaply reaching the market. “As a result, the farmer is able to realise only 30-35% of the final price paid by the customer, whereas elsewhere in the world, the farmer realises 60-65%. This acts as a substantial deterrent for farmers to invest in farm inputs.” India has now become the world’s largest importer of edible oils and is likely to remain so in the foreseeable future, according to GGN International. The country imports some 11M tonnes/year of edible oil, against domestic production of 7-8M tonnes/year, and consumes 19M tonnes of edible oil with per capita consumption standing at around 14-15kg. Its dependence on imports increased from 44% in 2001/02 to 60% in 2013/14, while per capita consumption rose from 4kg in 1973 to 14.40kg in 2013/14. This rapid growth in consumption has resulted from increased incomes, a rising urban population, supply of oils from the government at a subsidised rate and an increase in out-of-home consumption.

Edible oil preferences Currently, India produces around 37M tonnes of oilseeds, including soyabeans, rapeseed, mustard seed, peanuts, sunflowerseed, cottonseed and copra. It also produces other oilseeds such as castor, sesame, safflower and niger seed. In terms of volume, palm oil, soyabean oil and mustard/ rapeseed oil are the three largest consumed edible 

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GRAPHS: GGN INTERNATIONAL

Percentage share of population and edible oil consumption

FIGURE 1: NORTH INDIA CONSUMPTION PATTERN

Jammu & Kashmir

West India Population: 26.1% Consumption: 30.1%



North India Population: 24.8% Consumption: 23.6%  

Himanchal Pradesh

East India  Population: 28.2% Consumption: 26.0%

South India Population: 20.9% Consumption: 20.3%

Punjab

Haryana

Uttarakhand

al ch na h Aru rades P

Rajasthan

Uttar Pradesh

Bihar

Traditionally a mustard oil market, North India has partially shifted to soyabean oil for household consumption and palm oil for outof-home consumption. FIGURE 2: EAST INDIA CONSUMPTION PATTERN

Jharkhand

West Bengal

Ch ha

ttis g

Madhya Pradesh

arh

Gujarat

Kandla Port

Odisha

Maharashtra Hyderabad

Mumbai Port Karnataka

Vizag Port Kakinada Port

Andhra Pradesh

Krishnapatnam Port

Mangalore Port

This is the lowest per capita consuming region due to lower income levels, with a 54% share of palm oil and 21% share of mustard oil. FIGURE 3: SOUTH INDIA CONSUMPTION PATTERN

Chennai Port Tamil Nadu

Cochin Port la Kera



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Source: (map) Bruce Jones Design Inc 2010  oils in India, with respective shares of 46%, 16% and 14% of total oil consumption in 2010, according to data from the Indian Information Credit Rating Agency (ICRA). Palm oil’s food use consumption is expected to rise to 9.2M tonnes in 2014/15, against 3.2M tonnes for soyabean oil and 2.6M tonnes for rapeseed oil. However, with its widespread area and population, regional preferences exist for edible oil within India. Coconut, peanut and sunflower oils are popular in south India; peanut and cottonseed oil in Gujarat and Maharashtra; rapeseed oil in the northeast and northwest; soyabean oil in central India; and rice bran oil in eastern India. As public perception changes, the import and consumption of olive oil is also on the rise, seen growing 25%/year. This is a recent development; until 2002, statistics from the India Law Offices (ILO) show, the olive oil sector in India was predominantly unorganised and people used olive oil for cosmetic rather than edible purposes. On the production side, groundnut, soyabean and mustard oils comprise around 85% of the country’s oilseed, according to the ILO. Coconut is the most important plantation crop – Kerala has the largest number of coconut trees in the country and is famous for its coconut-based products. It accounts for 45.22% of India’s production, while Tamil Nadu, Karnataka and Andhra Pradesh account for 26.56%, 10.85% and 8.93%, respectively. Coconut is also grown on the Andaman and Nicobar islands.

Palm oil remains the most widely consumed oil in India, due to its blending versatility with other oils and competitive price.

The highest consumer of palm oil in percentage terms, South India is also the biggest market for sunflower oil in India. There is also a small share of soyabean oil.

Refining, storage and logistics

FIGURE 4: WEST INDIA CONSUMPTION PATTERN

Jain notes that, in the 1990s, solvent extraction and refining plants in India were capable of producing 500 tonnes/day for crush and 250 tonnes/day for refining. However: “At the close of the 20th century, two new developments took place – the entry of low-cost palm oil in the world’s oil basket, and Wilmar joining with Indian company Adani to build a state-of-theart refinery of 1,000 tonnes/day capacity, with a fractionation unit for palm oil.” This was the first step towards modern-day capacity levels in India, as it “immediately caught the eyes of others and a series of new refineries of this size were developed.” These refineries began producing quality products at a much lower processing cost. As Jain explains: “This expansion is on-going, as the import of oil continues to increase to meet the everincreasing demand of Indian consumers. As of now, the capacity of both solvent extraction and refining is hardly utilised in full, and is currently up to 33% of installed capacity.” According to the ILO, by 2008, India had 150,000 crushing units, 779 solvent extraction units and 127 refineries (with vanaspati units attached). India’s edible oil situation will,

This is the most prosperous region of India, having the highest per capita consumption of edible oil. Acceptability of palm oil has improved and it has a nearly 40% share. This is the highest soyabean oil consuming region as the major domestic soyabean crop is grown here and there is good household demand for its oil. Mustard oil consumption is 5%, the majority of which is in Rajasthan. says Jain, “persistently influence the world demand and supply to a large extent”. The total market size of the Indian edible oil industry, as of 2008, was Rs600bn, with an import/ export trade of Rs130bn. Domestic turnover had reached around Rs70,000 tonnes and import/

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export turnover of about Rs16,000 crores/year, which comprised Rs10,000 crores for import and Rs6,000 crores for export of oil meals, oilseed castor oil, groundnut oil and vegetable fats of treeborne oilseeds. However, the ICRA notes, the edible oil industry in India is very fragmented, with a large number of participants in both the organised and unorganised sectors. This has resulted in severe competition and inherently thin profitability margins. To tackle this, the government’s 12th five-year plan (2012/13-2016/17) aims to increase domestic production of oils from 7.06M tonnes to 9.51M tonnes by the end of the period, by increasing oilseed area and productivity. Furthermore, a report by India Rating says the Indian edible oil industry is set to attract fresh capital investment of Rs450 crore (US$7.5M) in the financial year 2014/15, compared to Rs100.7 crore (US$1.7M) in 2013/14, following a 2.5% rise in the import duty on refined oil, taking it to 10%. The import duty on crude oil is 2.5%, making its import and refining operations more attractive and economically viable. Logistically, imports of vegetable oil enter India via eight important ports, which service a vast hinterland – Mumbai and Kandla in the western region; Mangalore and Cochin in the south west; Chennai, Kakinada and Vizag in the south east; and Calcutta in the eastern region. Out of these ports, Mumbai and Chennai account for as much as 60% of total vegetable oil imports. The Port of Kandla has a capacity of 261,600m3 and is considered one of India’s largest independent

storage facilities for chemicals and vegetable oils. In 2011, Vopak acquired the port under the new name Vopak Terminal Kandla. Another important port, Krishnapatnam Port on the east coast of India in Andhra Pradesh, has six edible oil refinery plants in the surrounding area. These consist of South India Edible Oils, with a 1,000 tonnes/day capacity; Emami Foods, 1,000 tonnes/day; Adani Wilmar, 650 tonnes/ day; Saraiwaala Agri Refineries, 650 tonnes/day; Gemini Oils, 650 tonnes/day; and Foods, Fats and Fertilisers, 650 tonnes/day. It is the first port in India to have discharged one million tonnes of edible oil through a single pipeline in 2012-13 and is strategically located for Andhra Pradesh, Karnataka and Tamil Nadu.

Major players In 2013, Ruchi Soya Industries, Adani Wilmar, Gujarat Co-operative Milk Marketing Federation, Cargill, K S Oils and Marico were the leading players within oils and fats, with an anticipated combined retail value share of 52%. Ruchi Soya Industries, with a turnover of US$5bn/year, is one of India’s leading edible oil manufacturers (see ‘Family fortunes’, p26). It produces the popular brands Nutrela, Sunrich, Ruchi Gold and Mahakosh. The company has 21 manufacturing facilities across 19 locations and 139 company depots (with storage and other logistical facilities) across the country providing strategic access to key regions. Its production capabilities total 3.72M tonnes of oilseed extraction in 10

locations; 3.04M tonnes of edible oil refining in 12 locations; 0.9M tonnes of palm fruit processing in two locations; 0.53M tonnes of vanaspati and bakery fats in seven locations; and 3.05M tonnes of soya meal extraction in 10 locations. Another giant in India is Adani Wilmar, a 50/50 joint venture between the Adani Group and Wilmar International, which set up India’s first port-based refinery at Mundra, Gujarat. The company has production infrastructure across the country, with crush capacity of 6,200 tonnes/day and refining capacity of over 9,100 tonnes/day. It produces the brands Fortune, King’s, Raag, Bullet, Fryola, Jubilee, Alpha, Alife and Aadhaar. Cargill India handles soyabeans, rapeseed, groundnut and other vegetable oils and meals, distributing the Leonardo brand of olive oil and other brands such as Gemini, Sunflower Vanaspati, Nature Fresh, Sweekar and Rath. The company also owns and operates three vegetable oil refineries located at Paradeep (Odisha), Kandla (Gujarat) and Kurkumbh (Maharashtra). K S Oils produces the brands Kalash, Double Sher and K S Gold, among others, and processes mustard seed, soyabean oil and palm oil, enjoying an 11% market share in mustard oil. The company’s manufacturing plant is located on the belt of Madhya Pradesh and Rajasthan, with the capacity to crush 1,475 tonnes/day of mustard seed. According to the company’s website, four further plants are planned. w Charlotte Niemiec is OFI’s assistant editor

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India’s largest manufacturer of edible oils, Ruchi Soya, is taking steps to double its domestic production of palm oil over the next four years. Charlotte Niemiec looks at the joint ventures and strategic decisions that have helped contribute to Ruchi’s success in the soyabean, edible oil and renewable energy industries

Family fortunes

uchi Soya Industries Limited is India’s largest manufacturer of edible oils, vanaspati, bakery fats and soya foods. It is the second largest fast moving consumer goods (FMCG) company in India and among the 50 fastest growing in the world. Ruchi Soya has 21 manufacturing facilities across 19 locations, 11 wind power generating locations and 139 company depots (with storage and other logistical facilities) across the country providing strategic access to key regions. It has a large distribution presence in India with over 6,000 distributors covering 2,210 towns and over 600,000 retail outlets. Its production capabilities, spread across various locations, total 3.72M tonnes of oilseed extraction in 10 locations; 3.04M tonnes of edible oil refining in 12 locations; 0.9M tonnes of palm fruit processing in two locations; 0.53M tonnes of vanaspati and bakery fats in seven locations; 3.05M tonnes of soya meal extraction in 10 locations; and 85.3MW of wind power generation in 11 locations. Today a giant in the country, delivering products such as Nutrela and Ruchi Gold – and enjoying a turnover of US$5bn – Ruchi Soya has humble beginnings. The company was integral to the ‘soya revolution’ of the 1960s in the state of Madhya Pradesh, when founder Mahedeo Shahra created awareness on the potential of soya among the farmers of that state. As soyabean cultivation began on a commercial scale, the Shahra family, with experience in commodities trading, entered into the oil milling business. Today, according to the company’s website, Madhya Pradesh is considered the soya bowl of the country and India is the fifth largest producer of soyabeans in the world after the USA, Brazil, Argentina and China, respectively. Ruchi’s food processing facilities in the state were constructed in 1986 and, in 1992-93, Ruchi established India’s first soyabean seed processing facility of 400 tonnes/day capacity. A few years later,

DINESH SHAHRA IS THE FOUNDER AND MANAGING DIRECTOR OF RUCHI SOYA INDUSTRIES LIMITED, INDIA’S LARGEST MANUFACTURER OF EDIBLE OIL, VANAS

Ruchi entered into the edible oil and distribution business and, shortly after, it expanded its soya processing facility to 2,000 tonnes/day. By 1990, it was well positioned to establish the first port-based edible oil refinery at Chennai, South India’s biggest industrial and commercial centre and the capital of Tamil Nadu. Here, the company introduced its palm oil in packed form under the ‘Ruchi Gold’ brand, which remains one of its most popular edible oil products. Not content with imports, Ruchi began domestic oil palm production in 2004-05 and, in 2005-06, it amalgamated its soya-based and other edible oil companies. In 2009-10, Mac Oil Palm Limited and Palm Tech India Limited were merged, which gave Ruchi access to 80,000ha for oil palm plantations and palm fruit processing capacity of 518,400M tonnes/year. Currently, Ruchi Soya has oil palm procurement

TABLE 1: RUCHI SOYA’S MANUFACTURING CAPABILITIES IN INDIA Business operations Capacity/year Oilseed extraction Edible oil refining Palm fruit processing Vanaspati and bakery fats Soya meal capacities Wind power generation Source: Ruchi Soya Industries

4.02M tonnes 2.99M tonnes 0.52M tonnes 0.52M tonnes 3.29M tonnes 85.3 MW

Locations 11 14 2 7 11 11

rights for oil palm plantations covering a land bank of 200,000ha across six Indian states. Dipping its toes into the renewable energy industry, in 2010-11, Ruchi entered into a joint venture (JV) with Indian Oil Corporation Limited and set up wholly-owned subsidiaries in Singapore and Dubai for overseas ventures. The following year, it set up a refinery and vanaspati unit at Karanpura (Bihar) and another refinery in Guna, Madhya Pradesh, where it launched its Dal Analogue and Nutrela Table Spread brands. The same year, it signed a Memorandum of Understanding (MoU) with Thermex, a leader in energy and environment solutions in India, to set up a one megawatt fluidised bed biomass gasification plant, laying the foundation for large-scale commercialisation of biomass power in the country. Ruchi’s latest foray into the food industry is a joint venture with Kagome and Mitsui to revolutionise 17M tonnes in the Indian tomato market. Ruchi has also teamed up with J Oil Mills and Toyota Tsusho Corporation to enter into the business of production and marketing of high quality functional edible oil. It has also established a joint venture with D J Hendrick International Inc and JMDI International to research, produce, market and distribute high-yielding, non-genetically modified (non-GM) soyabean seeds, which the company says have a higher oil percentage and nutritional value. Today, Ruchi has a pan-India presence, according to a Business India corporate report on the

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PHOTO: RUCHI SOYA

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(MD), one brother chairs the group, another is MD of Anik Industries Ltd (an agricultural, dairy and other commodities concern), and another brother is the MD of General Food Ltd and Ruchi Pvt Ltd. The brothers’ sons are also the MDs, directors and heads of the Ruchi Group’s various subsidiaries and related companies, such as Ruchi Strips & Alloys Ltd, Indian Steel Corporation Ltd and Ruchi Agritrading Pte Ltd. But the model works. The company is poised to double its turnover to 50,000 crore (US$8.1bn) in three years, by launching new products and reaching out to new markets, a Hindu Business Line article explained in October last year. In addition to its current offerings, Ruchi plans to launch a series of edible oils such as soyabean oil, kachhi ghani mustard oil, rice bran oil, sunflower oil, groundnut oil and cottonseed oil under its Mahakosh brand. The decision comes as demand for edible oils increases in the country. Ruchi Soya’s market share in the packed edible oil sector, which currently stands at 19%, is expected to reach 25% in the next three years.

Joint venture strategy

R OF EDIBLE OIL, VANASPATI, BAKERY FATS AND SOYA FOODS

company, with five port-based refineries, three stand-alone crushing plants, eight integrated crushing and refining units, one refinery (not located at port), one vanaspati unit and two palm fruit processing factories.

Keeping it in the family The Ruchi Group is very much family-run. While Dinesh Shahra – the youngest son of Mahadeo Shahra – joined the company in 1972 and is the managing director

Part of the company’s success is due to its strategic joint ventures which, Dinesh Shahra told Business Line, are vital for innovation in India. “India’s FMCG sector is currently undergoing a paradigm shift, driven by a ‘lifetime change of the customers’”, which has “forced major players in the sector to promote products with customer preferences.” He adds: “Our view of innovation has been multifaceted; we understand evolving customer needs and focus on providing high quality products through innovation to attract increasing numbers of customers.” The company’s latest joint venture occurred in February last year which, it said, had the potential to revolutionise soyabean production in India. The JV was with D J Hendrick International of Canada and KMDI International of Japan for research, production, marketing and distribution of high-yielding non-genetically modified (non-GM) soyabeans in India. Ruchi Soya will hold 55% of the equity. The Business Line article explains that, while India produces large amounts of soyabeans, with yields around 12M tonnes/year and an additional 1.8M tonnes/year of soyabean oil, its productivity of just 1.02M tonnes/ha is less than half the global average of 2.5M tonnes. India is thus a net importer of soyabean oil, purchasing almost 1.2M tonnes/year. “India’s soyabean oil consumption far

outstrips domestic production so, if corrective action is not taken, the country’s foreign exchange bill will continue to inflate”, explains Ruchi’s CEO, Satendra Aggarwal. “This JV plans on reducing import dependency through improving the oil content of domestically grown soyabeans which, in turn, will benefit public health, conserve precious foreign exchange, raise farmer incomes and improve the rural economy.” Other joint ventures include that made in June 2013, when Ruchi entered into a JV with Japan’s edible oil major J-Oil Mills Inc and a global trading company Toyota Tsusho Corporation. The partnership required Ruchi to sell and transfer its soya processing plant in Shajalpur, in Madhya Pradesh, to the JV for producing and marketing high quality functional edible oils from the second half of 2014. These JVs are set to support and supplement the research and development (R&D) capabilities of Ruchi, which has an R&D centre in Powai, Mumbai, which focuses on new product developments and modern testing and quality control laboratories across India.

Pushing for palm and sunflower What began as a foray into palm is now becoming a focus – the company proposes to produce 300,000 tonnes of fresh fruit bunches (FFBs), produce 53,000 tonnes of crude palm oil (CPO) and 6,000 tonnes of crude palm kernel oil (PKO) by 2014-15. This figure is to double over the next four years to reach levels of 100,000 tonnes of CPO and 11,000 tonnes of PKO, N K Akora, corporate head of Ruchi’s oil palm division told Business Line. Charlotte Niemiec is OFI’s assistant editor

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(PHOTO: DENNIS VAN DE WATER/DREAMSTIME.COM)

TR ANS POR T, SH IPPIN G, LOGISTIC S

IN 2009, SHIPPING WAS RESPONSIBLE FOR 18-30% OF THE WORLD’S NITROGEN OXIDE POLLUTION AND NINE PERCENT OF GLOBAL SULPHUR OXIDE POLLUTION

New regulations fuel concern O

As of January this year, a restriction of 0.1% sulphur emissions is active in Emission Control Areas (ECAs) around the world. Charlotte Niemiec looks at how this will impact the shipping industry and how it is preparing for the change

n 1 January this year, shipping regulation MARPOL Annex VI was amended to restrict sulphur emissions to 0.1% in Sulphur Emission Control Areas (SECAs). Existing SECAs include the Baltic Sea and North Sea, the North American ECA – including most of the US and Canadian coastline – and the US Caribbean ECA, including Puerto Rico and the US Virgin Islands. Additionally, as of 2020, a restriction of 0.5% sulphur emissions will apply at all times across the globe. Since 2008, a big focus for the International Maritime Organization (IMO) has been to reduce sulphur emissions across the globe in an industry increasingly stigmatised for the level of pollution it generates. Plans drawn up in 2008 consisted of progressively reducing the level of sulphur emissions allowed globally over a period of years. The first step was to reduce the global sulphur cap to 3.5% in January 2012 – from its previous limit of 4.5% – and then, subject to a feasibility review to be completed no later than 2018, progressively to 0.5% from 1 January 2020 (or 2025 at the latest). In SECAs, however, the requirements have been more stringent and, since July 2010, the maximum sulphur limits in these areas have been set at one percent. The regulations that came into force this January are even stricter and require a maximum of 0.1% sulphur emissions in SECAs.

Nevertheless, the way forward is not entirely clear to the industry. Peter Hinchliffe, secretary general of the International Chamber of Shipping (ICS) explains: “The regulation was agreed in 2008, but it was done with no clear understanding of the availability of suitable compliant fuel and the cost implications. The year 2008 marked the start of the recession, which had a major impact on the global shipping industry – an impact from which it has yet to recover. The impact is now starkly clear as European ferry companies start to look at the viability of certain routes and some have already declared routes that will be shut.” Among a myriad of concerns, two pose significant threats to the shipping industry. Problem one is how to cope with the inevitable increase in fuel costs as a switch to more expensive fuel is required – an expense that will be passed on to the consumer. Problem two is how to mitigate the threat that goods will be transported more by road and rail as consumers try to avoid these higher shipping costs. Hinchliffe says: “While we believe that, probably, there will be sufficient fuel to service the ECA needs, this is likely to be severely tested in 2020 with the new global cap. The issue of concern at present is financial at a time when the industry is trying to recover from the recession. But, in 2020, the issue really switches to the unknown availability of sufficient compliant fuel and the likely impact on other land-based fuel markets.” v

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According to a European Maritime Safety Agency (EMSA) technical report, published 13 December 2010, it will be the general cargo ships and container vessels that will be most affected, with those carrying agricultural products particularly so.

Keeping costs down There are currently three main options available in order to be compliant with the 0.1% regulation, says Odfjell Tankers, a Bergen, Norway-based provider of ocean transportation of bulk liquid chemicals, acids, edible oils and other special products. Option one is to consume Low Sulphur Heavy Fuel Oil (LSHFO), but this comes with high operational costs and limited capital costs. The EMSA report states that this low sulphur fuel is up to 70-80% more expensive than the currently-used Heavy Fuel Oil (HFO). Option two is to install Exhaust Gas Scrubbing Equipment (scrubbers) on the vessels to remove the sulphur from the fuel, making it possible to continue using Heavy Fuel Oil (HFO), but this comes with high capital costs. Hinchliffe says this option is not yet viable: “Sea trials of a few scrubbers are underway but there are operational and reliability problems. Perhaps more significantly, ports are being very slow to declare whether they will accept the waste products from scrubbers that ships will have to land.” The third option is to consume Liquefied Natural Gas (LNG) fuel instead of HFO/marine gas oil (MGO), but this involves substantial capital costs and is not a realistic alternative for existing vessels.

“While we believe that, probably, there will be sufficient fuel to service the ECA needs, this is likely to be severely tested in 2020 with the new global cap” Hinchliffe notes that “the LNG infrastructure is very immature and there are insufficient bunkering port facilities to make this viable for a few years yet.”

He adds: “For the time being, at least, some ships will elect to carry both HFO and distillate as the most cost-effective solution. This means segregated bunker tanks and two sets of pumping systems.” Since 2008, the ICS’s focus has been to argue that the IMO needs to undertake a fuel availability study to be certain that the regulation can be implemented and to smooth the implementation process. However, Hinchliffe says that, so far, the ICS “is not aware of any increased refinery investment to prepare for the needs of 80,000 ships.” Therefore, he says, “it seems inevitable that, in a market-driven situation, prices will once again experience a steep increase.” Furthermore, while the regulation change has been in the wind for some time, there are no clear guidelines on the likely penalty for non-compliance. Hinchliffe explains: “[The ICS] did a survey earlier in 2014 and found that many administrations have yet to decide how to implement the regulation for its start date of 1 January 2015.”

Preparing for the change Some companies have already made moves to meet the new regulation. Erik Hjortland, manager of fleet performance at Odfjell Tankers, explained in the company’s June 2014 quarterly magazine the steps Odfjell has taken to ensure compliance and how it has positively affected the company. “Our fleet’s daily fuel consumption on main engines, auxiliary engines in port and at sea, and boilers in port are currently at an all-time v

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v low, and our energy efficiency has improved 10% compared to 2008. Translated into saving figures, these reductions represent 110,000 tonnes of fuel and US$66M on an annual basis. This is the combined result of our fleet renewal programme, our energy campaigns, speed reduction scheme, establishment of engine and fuel consumption key performance indicators (KPIs), introduction of our Ship Energy Efficiency Management Plan (SEEMP) and the Energy Efficiency Operational Indicator (EEOI), weather routing scheme, engine surveys, retrofitting of fuel saving devices and equipment, conferences, routes, reports and speeches but, first and foremost, it is the result of hard work both onshore and on board our vessels.” Nevertheless, he is not complacent. He adds: “With the upcoming sulphur regulations in mind, we cannot afford to rest on these results. In the months and years to come, we need to improve even more to meet the upcoming fuel regulations.”

Positive benefits While the shipping industry will bear the brunt of the expense and inconvenience of the new regulation, EMSA cites a Ricardo-AEA study – an EU commissioned cost-benefit analysis – that estimates the net health benefits to society of the new regulations, which range from €8bn to €16bn, will be far greater in 2015 than the costs of the new measures, which are projected at €3.7bn in the highest estimate. By 2020, the study says, these net health benefits will have increased to €10-23bn.

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TABLE 1: PRICE ESTIMATES OF LOW SULPHUR FUEL TO 2025 €/tonne Fuel sulphur content 1.50% 1.00% 0.10% 2009 166.56 178.72 425.80 2010 281.75 293.91 492.11 2015 399.60 411.76 656.24 2020 424.74 434.34 705.83 2025 466.38 752.99 Source: Skema, Compass reports Another study from the UK also indicated a high annual health benefit in that country (£302622M), which had been calculated in terms of avoided life lost and a reduction in respiratory and cardiovascular hospital admission, among others. Aside from the obvious health benefits of cleaner air, some of the studies indicated positive environmental effects, as acidity and nutrient nitrogen deposition are expected to decrease under the new regulations. In the AEA study, the reduction in acidification is expected at -25% in ECA areas, while eutrophication is estimated to be reduced by –3 in 2015. Other environmental benefits from a shift from high sulphur fuel to MGO referred to in the UK study include the fact that, as distillates have fewer hazardous components than residual fuels, the environmental consequences are less damaging for distillates in case of a bunker fuel oil spill and the use of distillates further reduces the onboard production of oily waste which, in turn, may reduce the problems related to operational

discharges of oily waste by ships. Furthermore, outside the realm of environmental benefits, it is noted that a series of monetary benefits are likely to result from the new rules. The UK study estimates that savings in the form of less damage to buildings (including monuments and buildings of special interest) and materials will amount to £6.32M/year in the UK alone. The UK study also provides for a carbon assessment of the new sulphur in fuel requirements. The ‘all vessels switch fuel’ by 2020 is the most CO2efficient scenario, with a total estimated reduction of 1.5M tonnes of CO2, valued to £38M. Conversely, the ‘all vessels use wet scrubbers’ scenario is the least CO2 efficient, providing for an increase of 593,000 tonnes of CO2 by 2020, representing an additional cost of £14M to society. CO2 emissions from refineries processed to produce distillates fuel and emissions linked with the scrubber’s production were not integrated in the w estimate. Charlotte Niemiec is OFI’s assistant editor

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PHOTO: SHUTTERSTOCK

SH OW PREVIEW

HYDERABAD IS A MAJOR BUSINESS AND INFORMATION TECHNOLOGY HUB IN INDIA AND IS KNOWN FOR ITS RICH HISTORY AND CULTURE

India is the world’s largest edible oil importer. With its burgeoning population, growing middle-class and rapidly developing markets and infrastructure projects, it is the ideal location for OFI India 2015, to be held from 21-22 April at the Hyderabad International Convention Centre

Book now! Sales & sponsorship

Mark Winthrop-Wallace Sales Manager markww@quartzltd.com (English) Tel: +44 (0) 1737 855 114 Sachin Dawda, Sales Manager, India sachindawda@quartzltd.com (Indian & English) Tel: +91 (0) 99 204 74017 Anita Revis, Sales Consultant anitarevis@quartzltd.com (English) Tel: +44 (0) 1737 855 068 Erik Heath, Sales Executive erikheath@quartzltd.com (English & Chinese) Tel: +44 (0) 1737 855 108

To present a paper

Serena Lim, Editor, OFI serenalim@quartzltd.com Tel: +44 (0) 1737 855 066

OFI India in Hyderabad

FI is proud to announce the launch of OFI India 2015, to be held from 21-22 April at the Hyderabad International Convention Centre (HICC). OFI India will feature a twoday exhibition featuring leading providers of plant, equipment and technology to the oils and fats industry. A two-day conference will feature four modules covering global and regional issues impacting the oils and fats industry; drivers and challenges in the Indian and South Asian markets; geographic and feedstock issues impacting Indian imports; and new markets, applications and opportunities for oils and fats players. Confirmed speakers include James Fry, chairman of LMC International, UK; Ali Muhammad Lakdawala, assistant manager, procurement, foods division, ITC Limited, India; and Fabrice Turon, Head of Oilseeds and Oils Research, Fats & Associés, France. In addition, Smart Short Courses is staging a two-day “Oilseed and Oil Processing Technology and Utilisation” programme, which will run parallel to the OFI India conference. The programme for marketing, technical and plant personnel offers the opportunity for those who are experienced to meet experts in the field to discuss their current problems and enhance their product innovation or plant operation. The course materials serve as a useful reference for processors, product formulators, chemists and technicians, as well as marketers and business managers familiar with the topic.

Major 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 11M tonnes/ year of edible oil and per capita consumption stands at around 14-15kg, compared with a global average of 22.8kg. With its burgeoning population

and growing middle class, the country offers a variety of business opportunities for international companies through its rapidly developing markets and infrastructure projects.

Industry supporters OFI India 2014 has the support of FOSFA International and the Council of Scientific and Industrial Research – Indian Institute of Chemical Technology (CSIR-IICT). Based in Hyderabad, CSIR-IICT is an R&D organisation in the field of chemical sciences and technology, with activities in oils and fats through its Centre for Lipid Research (CLR). CLR’s research focus includes processing of oils, biolubricants, surfactants, castor oil-based products, speciality oleochemicals, bioactive compounds, nutraceuticals and structured lipids and biodiesel. Major activities of the CLR include: contract R&D in vegetable oils and allied products, technology transfer/technology licensing, detailed project reports, feasibility studies, technical/advisory consultancy, new product/process development, and testing/analytical services. As part of its support, CSIR-IICT will be offering a tour of its facilities. Hyderabad is a major business and IT hub, easily accessible from anywhere in the world and extensively connected to all of India’s major cities via air, road and rail. The HICC is a 35-minute drive from Rajiv Gandhi International Airport and is India’s largest and most technologically advanced convention facility, adjoining the official event w hotel, the Novotel Hyderabad.

Supporting organisations

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Intensifying production Indonesia’s palm oil production levels are set to grow from 41M tonnes in 2013 to 192M tonnes by 2025. Key challenges the country must address include its new biofuel mandate, global environmental concerns, increasing productivity, decreasing land area and improving infrastructure. Charlotte Niemiec writes

s the world’s population grows, vegetable oil production and consumption is set to grow alongside it. President director of PT Sinar Mas Agro (PT Smart), Daud Dharsono, explains that, by 2025, world consumption of vegetable oil is expected to reach 192M tonnes, an increase of 151M tonnes from 2013 levels of 41M tonnes. Palm oil will contribute 77M tonnes to global consumption of edible oil. Indonesia – the world’s largest producer of palm oil alongside Malaysia, the second largest producer – is and will remain a major player as it seeks to grow world production levels. Indonesia’s oil palm plantation area totals 10.01M ha scattered across 22 provinces. The largest is Sumatra, with 6,422,000ha dedicated to oil palm, then Kalimantan, 3,205,000ha; Sulawesi, 290,000ha; Papua, 64,000ha; and Java, 30,000ha. As can be seen in Figure 1 (following page), just two of Indonesia’s islands comprise 90% of its oil palm plantation area. The country’s palm oil production totals 28.4M tonnes, as of 2013, 57% of which is produced by private companies, while smallholders produce 34% and nine percent is state-owned. Of this total, eight million tonnes is consumed domestically, while 21.4M tonnes is exported. Some of Indonesia’s domestic production is converted to biodiesel, of which it consumes one million tonnes domestically

and exports a further 1.5M tonnes. Seven million tonnes of refined palm oil is used in Indonesia’s domestic food and oleochemicals markets, while 13.9M tonnes is exported. A further six million tonnes of crude palm oil (CPO) is exported. The major importers of Indonesian palm oil are India (28%), the European Union (16%) and China (12%), with other countries importing significant amounts (see Figure 2, following page). But there are changes afoot as the country looks to increase its productivity while addressing environmental concerns. In an attempt to use more palm oil domestically, Indonesia is changing its energy mix scenario. This year, 22M tonnes of energy will be derived from new and renewable sources, but this has been mandated to increase to 87M tonnes by 2025, comprising 23% of the country’s energy. Furthermore, there have been changes to Indonesia’s biofuel mandate. In an update to the 2008 Ministry of Energy Decree, last year it was ruled that 20% of fuel used in the Medium and Smallscale Enterprise (MSE), agriculture, fishery, transportation and Public Service Obligation (PSO) markets must be biodiesel. This will increase to 30% in 2020 and remain at 30% until 2025. These figures are the same for the non-PSO transportation market and the industrial and commercial markets. In power generation, however, a mandate of 30%

biodiesel was ruled to begin this year and the mandate will remain the same until at least 2025. Therefore, domestic consumption in Indonesia will increase alongside these new mandates. The domestic diesel fuel demand in 2013 was 15.5M tonnes but, in 2015, will reach 18.4M tonnes and, by 2025, 41.3M tonnes. Domestic biodiesel consumption in 2013 was 1.08M tonnes, with 3.68M tonnes expected this year and 12.39M tonnes by 2025. The consumption of palm oil in the food and oleochemical sectors will also rise, from 7.06M tonnes in 2013 to 7.86M tonnes in 2015, reaching 13.43M tonnes in 2025. As a result, domestic consumption will increase to 26M tonnes in total, spread across the biodiesel, food and oleochemical industries.

Increase productivity The question, says Dharsono, is how to increase production without increasing the amount of land upon which oil palm is planted. One answer is intensification: with new planting materials, research and development (R&D), innovative practices and a government-funded replanting scheme, Indonesia hopes to vastly increase its oil palm productivity. Current production levels for a well-managed plantation are around 7.2 tonnes/ha, although Indonesia’s average is 3.8 tonnes/ha and smallholders average around 3.4 tonnes/ha. This is compared to a wild grove of oil palm, which averages just 0.2 tonnes/ha. However, with R&D, the maximum theoretical yield is 18.2 tonnes/ ha, with individual trees averaging 13.6 tonnes/ ha and selected progeny 12.2 tonnes/ha. The best experimental plot, so far, has yielded 9.5 tonnes/ha. v

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FIGURE 1: DISTRIBUTION OF OIL PALM PLANTATIONS IN INDONESIA Aceh 374,323ha Kalbar 967,290ha

Riau 2,126,038ha Kepri 9,125ha

Kaltim 754,734ha Kalteng 1,026,820ha Sulteng 112,661ha

Jambi 722,095ha

Papua Barat 23,575ha Papua 39,928ha

Sumsel 865,596ha

Sumut 1,240,934ha Sumbar 394,852ha Bengkulu 322,989ha

Babel 202,253ha Kalsel 456,492ha

Lampung 163,618ha

Sulbar 95,396ha Sulsel 41,982ha

Sultra 40,041ha

Banten 21,044ha Jabar 9,030ha Source: Ministry of Agriculture 2014

v Furthermore, production can be increased through what Dharsono dubs ‘extensification’. He explains that, currently, Indonesia is under 51% forest cover, compared to Europe’s 37.8%, the USA’s 9.15%, Canada’s 9.1% and Argentina’s 2.7%. As oil palm is the most productive crop in the world, yielding six to 10 times more than other crops, Dharsono says oil palm helps to minimise land use change (LUC) as the land required to produce palm oil compared to that required by other vegetable oils is significantly lower. Developing Indonesia’s downstream industry is also key to increasing productivity. The country currently exports 21.4M tonnes (73%) of its CPO and intermediate products, but if that were to be redirected into domestic refining, it would create an opportunity for further processing. More consumer goods will also be developed to meet the increase in domestic production and local demand for them, which will stimulate the economy.

Domestic and global challenges Nevertheless, there are significant challenges. Internally, a lack of infrastructure in Indonesia hinders the development of the industry – port facilities and handling, road conditions, power supply and railway transportation must be developed. There is a general lack of research funding in the country, alongside slow yield improvement, increasing production costs and disharmony between central and regional regulations. Better governance of the industry is required. Another vital requirement is international recognition of the Indonesian Sustainable Palm Oil (ISPO) standard, so that producers see a benefit to becoming certified and palm oil can be more easily traded on the world market. Externally, global competition and trade protectionism measures in different countries make development difficult. A challenge the oil palm industry faces the world over is the negative campaign against the crop; environmental issues such as deforestation and GHG emissions; social issues such as land and local customary issues; and health issues.

On the land problem, Dharsono says that the amount of land upon which oil palm is planted will decrease over the next 10 years. From 2015 to 2025, expansion will be around 350,000ha/year in 2015 and gradually decline to 150,000ha/year in 2025. The ownership distribution of oil palm is also expected to change, with plantations and smallholders taking a 45% share each and the state owning the remaining 10%. Replanting will also take place. The government’s ‘innovative financing scheme’ will help independent smallholders replant around 1.5M ha of oil palm. The scheme will significantly increase yields due to the use of certified seeds and the implementation of better agricultural practices, notes Dharsono, and the replanting will also use the latest planting methods. Meanwhile, the downstream industry will address increasing local demand by creating more value-added products.

To 2025 and beyond In 2015, Indonesia’s palm oil area will reach 13M ha, its CPO production 50M tonnes and its palm kernel oil (PKO) production 10M tonnes. In the lead-up to 2025, oil palm plantations and palm oil products will remain one of Indonesia’s ‘economics sustainable growth pillars’ (pro-poor, pro-job, progrowth and pro-environment).

The Indonesian government’s priorities in the energy sector from 2015 to 2019 include accelerating infrastructure development and developing a grand design for long-term oil palm development research. It plans to use renewable energy for both transport and power generation; harmonise central and local government rules and regulations; and promote the production of sustainable palm oil through the ISPO standard and the Indonesian Palm Oil Pledge – an agreement among leading palm oil producers that commits them to industry-leading sustainability practices, including proactive government engagement on policy reform and a principle of no planting on high carbon stock or peat lands. Furthermore, it will encourage smallholders to increase their productivity, without expanding land area, by introducing an accelerated replanting scheme, which will be government-financed. Additionally, priorities include accelerating the downstream industry, including biodiesel, to gain higher value-added products and to promote the use of biodiesel and direct burning of CPO for w power generation. Charlotte Niemiec is OFI’s assistant editor. This feature is based on a presentation given by Daud Dharsono, president director of PT Smart at OFIC 2014 and OFI Asia 2014, held 5-7 November 2014 in Kuala Lumpur, Malaysia.

FIGURE 2: IMPORTERS OF INDONESIAN PALM OIL IN 2013

Source: Ministry of Trade figures & Oil World figures

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Pakistan – a net importer of edible oil – imported a vast oversupply of oilseeds last year. Charlotte Niemiec looks at why the market requires such large volumes and what factors prevent an increase in domestic production

A mountain of oilseeds

akistan, located at the crossroads of South Asia, the Middle East and Central Asia, is home to some of the world’s highest mountains in the north, which gravitate to deserts in the east and alluvial plains leading to the Arabian Sea. Despite its varied climate – ranging from tropical in the south to temperate in the north – and potential for agricultural production, Pakistan is not a large producer of oilseeds or oil but maintains a position as the world’s fifth largest net importer of edible oil. In 2014, Pakistan imported a vast oversupply of oilseeds. In October, the country had imported 825,571 tonnes – much higher than its average annual import of 725,000 tonnes/year. A further 400,000 tonnes, mostly of Black Sea rapeseed and sunflowerseed, was due to arrive before the end of the year. Why has Pakistan rushed to increase its oilseed imports so dramatically? Abdul Rasheed Janmohammed, vice chairman of the Pakistan Edible Oil Refiners Association (PEORA) and chief executive officer of Mapak Edible Oils (Pvt) Limited says importers were perhaps misguided by their experience in the first quarter of 2014, when a steady supply of canola seed from Canada was difficult to obtain due to Canada’s logistical problems. However, he says, the Pakistan oilseed industry perhaps underestimated the huge levels of production in the Black Sea and may have feared that political problems in the Ukraine would multiply and cause problems with oilseed imports.

Imports into Pakistan Pakistan imports around two million tonnes/year of edible oils, the majority of which is palm oil (see Figure 1, below). In 2013, it imported 979,308 tonnes of palm olein, 998,619 tonnes of refined/ bleached/deodorised (RBD) palm oil, 278,118 tonnes of crude palm oil (CPO) and 55,214 tonnes of crude degummed soyabean oil (CDSBO), totalling 2.3M tonnes of edible oil. In 2013, Malaysia’s share of palm oil exports to Pakistan was 58% and Indonesia’s share was 42%. As of August 2014, Malaysia’s share was 30%, and Indonesia’s 70%, because Indonesia had been very aggressive in selling to Pakistan, Janmohammed says. FIGURE 1: IMPORT OF EDIBLE OILS IN PAKISTAN Product 2012 Olein RBDPO CPO CDSBO* Total

752,603 749,513 428,352 40,500 1,970,968

Source: Abdul Rasheed Janmohammed, PEORA

PAKISTAN’S DOMESTIC PRODUCTION OF OILSEEDS IS LOW, BUT A VARIETY OF CROPS GROW IN THE COUNTRY’S RANGING CLIMATE

Nevertheless, the import of CPO into Pakistan is gradually coming down, he adds. The main reasons for this are the aggressive prices of RBD palm oil from Indonesia and the export duty imposed at origin on CPO. This export duty structure, which greatly increases the cost of importing CPO, is causing serious problems for refineries in Pakistan. Elaborating, Janmohammed explains that the decision of the Malaysian Government to impose a 4.5% export duty on CPO over and above the Malaysia Derivatives Exchange (MDEX) level of RM2,250 (US$687)/tonne had changed the entire complex for edible oil refineries in Pakistan. The increased cost of raw materials is so damaging that it has effectively shut refineries down. It is devastating to Pakistani entrepreneurs, who have invested a huge amount in physical refining plants that are now suffering greatly, as refiners are dependent on CPO as the basic raw material. Pakistan has not been as fortunate as those in the Indian edible oil industry, who have convinced the Indian government to increase the duty on refined products from 7.5% to 10% when CPO was not workable due to the export duty. A Global Agricultural Information Network (GAIN) report published in May 2013 explains that Pakistan has historically been chronically deficient in domestic edible oil production. As a 2013

Jan-Aug 2014

979,308 998,619 278,118 55,214 2,311,259

664,903 739,894 58,492 90,249 1,553,538 *Crude degummed soyabean oil

result, imports have grown and now account for around 76% of the country’s requirements. The rise of oilseed imports, which began in the 1970s, is a trend expected to continue in tandem with the country’s burgeoning population growth. Sporadic efforts have been made to increase local oilseed production but, so far, these have proved unsuccessful at narrowing the vast gap between production and consumption. One factor contributing to this rise is a change in dietary habits – a global phenomenon from which Pakistan is not exempt. Consumers, particularly those that are wealthier and who live in urban areas, are switching from ghee or vanaspati – traditionally believed to be more nutritious but which contain high levels of saturated fat – to the more unsaturated edible oils. According to an article in the July/August 2012 issue of Food Journal, ‘Edible oil tops food industry’, almost five percent of consumers in urban areas of Pakistan are shifting to cooking oil from vanaspati ghee. Demand for edible oils in Pakistan is, therefore, fast increasing, with total oilseed crush in MY 2013/14 anticipated at 5.6M tonnes, six percent higher than in MY 2012/13. The GAIN report notes that almost 85-90% of total oilseed production is crushed for oil, with the remainder used for food, feed and seed purposes.

Ever increasing oilseed imports However, imports are due to increase still further. Total imports of oilseeds for crushing are forecast at 937,000 tonnes in MY 2013/14, up 19% over MY 2012/13. This estimate includes 827,000 tonnes of rapeseed/canola, mainly from Australia, Canada and Ukraine; 90,000 tonnes of sunflowerseed; and 20,000 tonnes of soyabeans from different origins.

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(PHOTO: RENE/FOTOLIA.COM)

yields and so average yields are very low. The yields of rapeseed, cottonseed, sunflowerseed, soyabean and canola are 852kg/ha, 1,244kg/ha, 1,271kg/ ha, 573kg/ha and 1,246kg/ha, respectively, the Food Journal article says. It adds that the current growing of crops such as sunflowerseeds, for example, overlaps the growing season of wheat, which provides better returns than the oilseed crop. Additionally, sunflower is an exhaustive crop that consumes a large amount of nutrients essential for growth and depletes the soil. From a policy perspective, the government is making small efforts to change the lay of the land for oilseeds. In an effort to curb expenditures that rose to more than US$2.5bn in 2012 alone on imports of oil and oilseeds, the Pakistan Oilseed Development Board (PODB) was established in 1995. However, the PODB’s attempts to increase production have been unsuccessful and it has not implemented sustainable policies to develop a longterm approach to increase oilseed production.

Major edible oil companies

The GAIN report explains that, since June 2005 – under a reformed import policy regime – the government of Pakistan exempts oilseeds from import duty, central excise duty and federal excise duty. While Pakistan’s domestic production of oilseeds is relatively low, its ranging climate allows it to produce a variety (see Figure 2, below). The GAIN report notes that domestic production meets only around 24% of the country’s demand, with the remainder imported mostly from Malaysia and Indonesia. The primary crop grown in Pakistan is cottonseed, which contributes to its vast textile industry, considered the backbone of the economy. In MY 2013/14, cottonseed production was forecast at 4.44M tonnes, eight percent higher than the MY 2012/13 crop. Rapeseed mustard is also grown and has been a major source of edible oil in the subcontinent for centuries. However, MY 2013/14 rapeseed production is forecast at 320,000 tonnes, a nine percent reduction from MY 2012/13 rapeseed production estimates of 350,000 tonnes. Commercial cultivation of sunflowerseed in Pakistan began in the 1960s and its production

remains cyclical due to its competition with major crops such as maize and sugarcane, along with marketing issues related to the size of the crop and offered prices from the private sector. MY 2013/14 sunflowerseed production is forecast at 600,000 tonnes, 14% down from MY 2012/13 estimates due to an increased area allocated to maize, sugarcane and rice, which command more attractive prices.

Policy problems hinder production Why is Pakistan not focused on increasing its domestic production of oilseeds, which would help boost its economy and lessen its reliance on foreign imports? The answer is that there is very little incentive for farmers to switch from food-based crops to oilseed crops. The Pakistani Government prioritises foodbased crops, such as wheat, in order to ensure food security; it provides farmers with better support prices and marketing systems if they grow wheat or maize. Other problems include a lack of seed technology or modern production technology. Farmers have little access to hybrid seeds that might improve crop

FIGURE 2: PRODUCTION OF MAJOR OILSEEDS CROPS IN PAKISTAN (‘000 TONNES) 2011-2012 2012-2013 2013-2014 Production Production Production Cottonseed Rapeseed Sunflowerseed Canola Total

Oilseed

Oil

Oilseed

Oil

Oilseed

Oil

3,212 202 473 30

385 61 179 11 636

3,324 216 244 16

400 66 95 6 567

3,592 218 265 16

431 68 101 6 606

Source: Pakistan Oil Seed Development Board/Economic Survey of Pakistan

Nevertheless, due to rising demand, edible oil manufacturers are thriving in Pakistan. IFFCO Pakistan (Private) Limited, located at Port Qasim, Karachi, is one such major player in the industry. It owns the largest edible oil refinery in the country and processes, packages and markets cooking oil, fats and margarine. According to its website, it is the only multinational company in the Pakistani edible oil industry and procures its raw materials both internationally and domestically. IFFCO produces brands such as Golden Sun Cooking Oil, Golden Sun Vanaspati, Evian Cooking Oil, Aghaaz Cooking Oil and the various Star brand of margarines. Bulk Oil Terminals (Private) Limited (BOT) is an associated company of IFFCO Pakistan. It is a shore tank terminal company and a custom-bonded warehouse capable of handling around 250,000 tonnes/year of liquid cargo at its facilities in Port Qasim. IMGC Edible Oils, again located at Port Qasim, is one of the biggest edible oil players in Pakistan. It owns a state-of-the-art facility in Karachi, where over 75% of the raw material used in the industry is imported. Its modern refining facility produces RBD palm oil from CPO for the production of ghee and the company has plans to build an oleochemical processing unit to cater to the cosmetic and confectionery industries. Waheed Group of Companies is another giant in the country. According to the company’s website, it has the largest oil producing capacity in Pakistan, producing over 1,000 tonnes/year of vegetable oil and ghee. The group installed its own physical oil refinery at Port Qasim in 2005, which has the capacity to refine 500 tonnes/year of CPO and produce 300 tonnes/year of ghee and oil. Kisan Food says it was the first Pakistani company to establish a physical refinery, fractionation plant and interesterification plant in the country. It produces premium brand cooking oil and hydrogenated cooking mediums. Finally, Mapak Edible Oils, of which Janmohammed is CEO, has been involved in the trading, import, export and storage of liquid bulk commodities such as edible oils, ethanol, chemicals and molasses for over 30 years. Charlotte Niemiec is OFI’s assistant editor

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PR OC ESSIN G & TEC H N OLOGY

Plant and technology round-up IN BRIEF USA: Cavitation Technologies Inc announced in October that its strategic partner and licensee of CTi’s vegetable oil refining technology, Desmet Ballestra Group, had entered into a sales agreement with a soyabean oil refining plant in the USA. This newly built refinery will process approximately 500 tonnes/ year of soyabean oil. Desmet projects the new system will be fully installed and operational in 2015. AUSTRALIA: Renewable fuels company Muradel has launched an integrated demonstration plant to convert algae into green crude oil in Whyalla, Biofuels Digest reports. The A$10.7M (US$8.6M) plant – the first of its kind in the country – will produce 30,000 litres/year and represents the company’s first step towards an 80M litres/year commercial-scale plant. Muradel’s technology, Green2Black, uses microalgae produced on site, and plant biomass and organic waste in an energy-efficient subcritical water reactor that converts the feedstock to crude oil in minutes, the company said. The demonstration plant was partially funded through a A$4.4M (US$3.8M) grant from the Australian Renewable Energy Agency. USA: Listed technology leader BDIBioEnergy International AG announced last October it had signed a contract to optimise Crimson Renewable Energy’s biodiesel plant in Bakersfield, California. Crimson has operated a biodiesel plant in Bakersfield since 2010 using self-developed technology and it is currently the largest biodiesel producer in California. BDI will supply engineering services and equipment to increase the plant’s capacity to 75,000 tonnes/year and modernise the plant. This will enable waste materials to be processed more efficiently and more sustainably into high quality, ultra-low carbon biodiesel transportation fuel. The plant will run on waste oils and greases as raw material. The project represents the next milestone in the eight-step BDI RetroFit programme upon which BDI began work in 2013. AFRICA: Cameroon’s cotton development corporation has revealed plans to invest CFA15bn (US$28.5M) for the modernisation of vegetable oil plants, with the aim of increasing their drilling and refining capacities by 50%, Soyatech reported in November. In the medium term, vegetable oil production could increase from 17,000 tonnes/year to 27,000 tonnes/year, and then to 34,000 tonnes/year later on.

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

Southeast Asia lines up first commercialscale advanced biofuels plant in Malaysia

outheast Asia’s first industrial-scale biofuels plant has moved a step closer to becoming reality after three biotech firms signed a letter of intent to supply the facility in Malaysia, BusinessGreen reported in November. The plant, which is expected to convert napier grass (pictured) or other fast-growing energy crops into bioethanol fuel, is seen as the first stage in a proposed Sarawak Biomass Hub, which could eventually make use of some of the 100M tonnes/year of byproducts that are expected to be generated by the region’s palm oil plantations by 2020. Brooke Renewables, a joint venture

Ergon BioFuels to restart Vicksburg ethanol plant

rgon BioFuels LLC, a subsidiary of Ergon, Inc, announced plans in November to restart the ethanol facility in Vicksburg, Mississippi, USA, beginning May this year, Soyatech reports. With nearly 60M gallons/year of production capacity, Ergon BioFuels is one of the largest ethanol producers in southeastern USA. Upon restart, the facility will purchase feedstock from local suppliers, providing substantial new market opportunities for the region. Craig Busbea, general manager for Ergon BioFuels, said: “Bringing the ethanol facility back online is an exciting development for Ergon. It will restart with a state-of-the-art technology that not only increases ethanol yield and improves the dried distillers’ grain, but also allows for the production of corn oil.”

Germany’s Triton acquires GEA Heat Exchangers

n Germany, investment company Triton has finalised its acquisition of GEA Heat Exchangers, Biofuels Digest reports. With the deal closed, Triton

between Hock Lee Group, Brooke Asia Ltd and Biochemtex Agro, has teamed up with local partners to invest US$1bn over the next five years in developing the hub. Hock Lee Group and Biochemtex Agro have also signed a memorandum of understanding (MoU) to establish a dedicated biomass plantation to provide crops to the plant, while Novozymes and Beta Renewables have been enlisted to provide the conversion and process technology, respectively. Mark Rozario, chief executive of government-backed Agensi Inovasi Malaysia (AIM), said the project could result in RM20bn (US$5.9bn) for the state, a similar amount in investment, and the creation of more than 10,000 new jobs by 2023. “This is not only a huge project but also one that has multiple and continuous benefits to the state and national economy”, he added. “Currently, there is no commercial scale 2G bioethanol facility in Southeast Asia and, by doing this, we are indeed establishing a leadership position for the region.” will be looking to push GEA’s products further into the markets of power generation, exploration, chemistry/petrochemistry, food and beverages and other process industries, including water and air treatment. The business units within GEA Heat Exchangers are also being reorganised, with one segment to focus specifically on areas related to climate and the environment. This segment will include all products for applications of heating, ventilating and air conditioning (HVAC) technology. The company will also soon be debuting a new brand, which is yet to be established.

BioTfueL project’s next phase constructs plants

aunched in 2010, the BioTfueL project, which focuses on producing second-generation biodiesel and bio-jet fuel via thermochemical conversion, has reached the end of its engineering phase and is now moving forward, the company said in a press release. The next phase includes the construction of two demonstration plants at the Sofiprotéol site in Venette (Picardy) and the Total site in Dunkirk. Bionext has just awarded the construction contracts for the main packages at Total’s

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IN STRUM EN TATION PR OC ESSIN G & TEC H N OLOGY

Dunkirk site to the French SMEs Prosernat (for syngas treatment) and RBL-REI (for feedstock preparation) and to ThyssenKrupp-Industrial Solutions for the gasification unit and overall site integration. The start-up of the Dunkirk plant is scheduled for 2017. The project aims to develop a technology that will create second-generation biofuel to supplement the current supply of first-generation biofuels. BioTfueL’s concept is based on its capacity to process the broadest spectrum of biomass or to co-process it with fossil resources, both liquid and solid. This flexibility guarantees continuity of supply for future industrial plants while reducing production costs. BioTfueL is the first project of its kind in the world targeting such a high level of flexibility in terms of feedstocks. At present, the press release said, it is the only project in Europe presenting a homogenous level of progress in terms of demonstrating the full chain on various scales, from biomass preparation through to production of liquid products that can be fully incorporated into conventional fuels.

Biomass Japan to collect UCO for biofuel facility

apanese-owned Biomass Japan is eyeing investment in a facility in Davao City, Mindanao, the Philippines, that converts used cooking oil (UCO) to biodiesel, Sun Star reports, in a project that is the first of its kind in the city.

Davao City Investment Promotion Centre (DCIPC) officer in charge, Ivan C Cortez, said the company would “collect all used cooking oil from restaurants and households, filter and process this into biodiesel, which will be used by cars and generators.” He said the Japan-based company was undergoing negotiations with big food establishments for the oil they would purchase. DCIPC has assisted the company with a survey and data gathering to determine the volume of UCO the company could obtain from the city. Cortez said the company would be able to purchase UCO from households and restaurants at a competitive price.

Faster, cheaper test to detect olive oil fraud

talian researchers have created a new, cheaper and faster way to test for olive oil frauds, Olive Oil Times reports. In 2013, the University of Calabria, Italy, presented a method to detect olive oil frauds based on magnetic resonance testing. The method was considered highly reliable for the detection of freshness and origin, but was quite expensive. The new method, developed over four years by researchers at the Industrial Chemical Department at Pisa University, Italy, looks at the process by which olive oil ages and the effects of heat, and uses ‘oil pigments’ that dominate the light absorption to extract chemical information in less than a minute. Even if these pigments represent only two

percent of the total compounds in olive oil, they are essential to test and verify its organoleptic qualities and to detect fraud and adulteration. Valentina Domenici, who coordinated the research, explained: “Our method allows us to quantify, through a mathematic process of deconvolution of the UV-vis absorption spectrum, the concentration of four main ‘oil pigments’: lutein, pheophytin-a, pheophytin-b and beta carotene. With a few simple procedures, the oil is inserted into a small quartz cell. We then obtain the spectrum, which takes a distinctive shape and which allows us to understand immediately whether the cell has been adulterated or not.” The method makes it easier and cheaper to unmask the most common olive oil frauds: heattreatments often used to erase unpleasant smell and taste, bad storing conditions and exposure to light or oxygen, or mixing with different vegetable oils. “In all such cases”, Domenici said, “the spectrum curve that is obtained substantially changes and it becomes a clue to unveil the fraud. It only takes a few minutes to have the response while other, more expensive methods that are the only ones approved by EU regulations at the moment need one or two days in specialised labs.” In developing the research, the team worked with Andrea Serani, quality manager at Salov, a huge olive oil company in Tuscany that was sold last October by its Italian owners to the Chinese group Bright Food, a multinational food and beverages manufacturing company headquartered in Shanghai. w

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STATISTIC S

PALM OIL PRODUCTION AND EXPORT (‘000 TONNES)

STATISTICAL NEWS FROM MINTEC Palm oil production and stocks Palm oil production is forecast to continue increasing year-on-year (YOY), reaching a record level of 63.3M tonnes in 2014/15, up six percent YOY. This will once again be largely driven by rising production in Indonesia. Demand is also set to increase, driven by both an increase in palm oil’s use as a feedstock in the biofuel industry and in food use. World-ending stocks are expected to increase to 8.4M tonnes, up nine percent YOY.

SOYABEAN VS PALM OIL PRICES, ROTTERDAM (US$/TONNE)

Soyabean vs palm oil prices Soyabean oil prices gradually decreased throughout 2014 due to good supply expectations. Palm oil prices fell in the first half of 2014 as supply continued to increase. However, in the second half of 2014, prices rose as lower yields were expected. This led to a drop in soyabean oil’s premium over palm oil, as soyabean oil prices were steadier.

Lauric oils

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

PRICES OF SELECTED OILS (US$/TONNE) 2012

2013

Aug 14

Sep 14

Oct 14

Nov 14

Soyabean 1,230 1,052 850 835 828 820 Crude Palm 1,014 854 746 718 758 761 Palm Olein 997 803 697 691 697 702 Coconut 1,122 948 1,173 1,175 1,151 1,194 Rapeseed 1,240 1,080 853 822 832 830 Sunflower 1,256 1,108 837 825 863 890 Palm Kernel 1,119 904 943 908 937 984 Average price 1,140 964 INDEX 270 228

871 853 866 883 206 202 205 209

Lauric oil prices rose slightly in the second half of 2014 due to increased demand and a reduction in ending stock levels. Coconut oil production is expected to remain stable YOY at 3.4M tonnes. However, ending stocks are expected to fall 25% YOY to 0.3M tonnes in 2014/15. Production of palm kernel oil is forecast to increase by five percent YOY to 7.3M tonnes.

Mintec is the principal independent source of global information for commodities and raw materials. We specialise in helping supply chain professionals minimise risk. We provide services that range from detailed market reporting and consultancy projects to packages of sophisticated tools for analysing and interpreting market information. Mintec supports leading suppliers, processors, retailers, service providers and major end-users across a wide range of industrial and consumer goods sectors with statistical information and expert market analysis. Tel: +44 (0) 1628 851313; E-mail: sales@mintec.ltd.uk Website: www.mintecglobal.com

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Access to the world

Vopak Vlaardingen, located in the Port of Rotterdam, is a subsidiary of Royal Vopak, the worldâ&#x20AC;&#x2122;s largest independent liquid bulk tank storage service provider with a global network of terminals. Vopak Vlaardingen is specialized in storing vegetable oils and fats, oleochemicals as well as biodiesel. Recent investments consisted of a brand new tank pit with a total capacity of 140,000 cbm. This mild steel tank pit has improved heating facilities and is connected to a new truck loading/unloading station. A number of tanks are equipped with mobile mixers. Next to that nine stainless steel tanks of 1,000 cbm each have been added to create even more flexibility and improve the service level for the distribution activities of the customers. In 2015 a rail station with a larger capacity will be built in order to complete the service portfolio. All transport modalities can be handled now in the same efficient way. Vopak Vlaardingen, offering a total capacity of around 600,000 cbm, is ready for the future.

Vopak Terminal Vlaardingen Telephone +31 (0)10 460 8613 | www.vopak.com

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