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BIOPLASTICS Novel feedstocks

RUSSIA & UKRAINE

The impact of unrest

BIOTECH

Terminator genes Cover July/August.indd 1

16/07/2015 11:49

Leading edge technologies for refining plants

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

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

Detoxification

Bleaching

• Combiclean Process • Active carbon Purification

• Sparbleach Bleaching • Unibleach with prefiltration • Silica Purification

Deodorising

Winterising

• Qualistock Deodorising • Multistock Deodorising • Sublimax Ice Condensing

• Wintrend Winterising • Combifrac Winterising

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

VOL. 31 NO. 6 JULY/AUGUST 2015 EDITORIAL: Editor: Serena Lim Tel: +44(0)1737 855066; Fax: +44 (0)1737 855034 E-mail: serenalim@quartzltd.com Editorial Assistant: Rose Hales Tel: +44(0)1737 855157; Fax: +44 (0)1737 855034 E-mail: rosehales@quartzltd.com SALES: Sales Manager: Mark Winthrop-Wallace Tel: +44 (0)1737 855 114; Fax: +44 (0)1737 855034 E-mail: markww@quartzltd.com Sales Consultant: Anita Revis Tel: +44 (0)1737 855068; Fax: +44 (0)1737 855034 E-mail: anitarevis@quartzltd.com Chinese Sales Executive: Erik Heath Tel: +44 (0)1737 855108; Fax: +44 (0)1737 855034 E-mail: erikheath@quartzltd.com PRODUCTION: Production Editor: Nikki Weller Tel: +44 (0) 1737 855088; Fax: +44 (0)1737 855034 E-mail: nikkiweller@quartzltd.com

PHOTO: CHERNETSKAYA/DREAMSTIME

CONTENTS FEATURES RENEWABLE RESOURCES

20 Pennycress: what’s the catch? 22 Seeking futuristic feedstocks

LIKE BIOFUELS, BIOPLASTICS RAISE CONCERNS OVER THE USE OF FOOD CROPS AS FEEDSTOCKS, BUT ARE THESE CONCERNS VALID AND WHAT WILL REPLACE THEM? P22

INSTRUMENTATION & ANALYSIS

25 The trans fatty acid conundrum 28

NEWS & EVENTS

Setting a benchmark

BIOFUELS

Lawsuits may follow FDA move on trans fat

PHOTO: KARAPIRU/DOLLARPHOTOCLUB

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Biofuels News

Petrobras and Ceres moving away from biofuels in Brazil 8

Biotech News

US GMO framework to be modernised

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If the cap fits

32 An inconvenient answer 34

The impact of unrest

BIOTECHNOLOGY Oils & Fats International

Hitting the genetic switch

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Bunge expands in Australia

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Coca-Cola launches 100% sugarcane-based PET bottle

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News

US removes GRAS status on trans fat

Comment

Diary of Events

International Market Review

Statistics

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Contents.indd 1

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NEWS

COMMENT

Lawsuits may follow FDA move on trans fat

he US Food and Drug Administration (FDA) has ended a two-year public comment period by confirming on 16 June that it is removing the ‘generally recognized as safe’ (GRAS) status from partially hydrogenated oils (PHOs) – the main source of artificial trans fatty acids in our diets. Companies will have three years to remove PHOs from their food, although they will be able to file a petition seeking the specific use of PHOs in a product if they have data proving the use isn’t harmful. However, some observers believe a wave of private lawsuits could force firms to reformulate or remove PHO-containing products long before 18 June 2018. Just two days after the FDA announcement, a California man has already filed a federal lawsuit against H J Heniz Co over the use of PHOs in its frozen potato products (see story, right). In a commentary in Forbes.com, Glenn Lammi wrote that two key omissions from the FDA will support litigation over PHOs. The FDA has not included a statement that PHO-containing products currently on the shelves up to June 2018 are marketed lawfully. Under federal law, products containing unapproved additives are considered adulterated and subject to seizure. This opens the door for people to sue food companies now over the presence of PHOs. Secondly, the FDA says nothing about its GRAS-status decision only taking effect from now. Without an explicit FDA statement, the door is open for retroactive lawsuits suing for reimbursement of public health care expenditure over the costs of treating cardiovascular disease, Type-II diabetes and other conditions. Time will tell how many lawsuits are eventually filed.

A victory for public health

In the meantime, the FDA has taken a positive step in tackling the trans fat problem. Our feature on page ? traces the development of partial hydrogenation in the 1970s to tackle fears over saturated and animal fats, to the discovery of trans fat formation and growing concerns over their effect on our health. Trans fats – used to improve the taste, texture and shelf life of foods – can be found in baked, fried and snack foods. They increase our risk of heart disease by increasing the ‘bad’ LDL cholesterol in our blood, while also lowering the ‘good’ HDL cholesterol. When the FDA first determined in 2013 that PHOs were not generally thought to be safe, it said that eliminating trans fats from the food supply would prevent 20,000 heart attacks and 7,000 deaths every year in the USA. The latest FDA move is therefore a “major victory for public health”, says Michael Jacobson, executive director of the Center for Science in the Public Interest. “I don’t know how many lives will be saved, but probably in the thousands per year when all the companies are in compliance.” w

US removes GRAS status on trans fat

artially hydrogenated oils, the primary source of artificial trans fats in processed foods, are no longer “generally recognised as safe” (GRAS) for human consumption, the US Food and Drug Administration (FDA) has said. The FDA said it had conducted a thorough review of scientific evidence, resulting in its announcement on 16 June. US food manufacturers have three years to comply and remove all artificial trans fats from their products. “The FDA’s action on this major source of artificial trans fat demonstrates the agency’s commitment to the heart health of all Americans,” said FDA’s acting commissioner Stephen Ostroff, M.D. “This action is expected to reduce coronary heart disease and prevent thousands of fatal heart attacks every year.” Although the ban will cost the food industry US$6.2bn in the next 20 years as it reformulates products and substitutes ingredients, it is estimated US$140bn will be saved during the same period mainly due to lower spending on healthcare,

according to Bloomberg estimates. In July 2003, a labelling rule was announced requiring producers to say if their products contained trans fats. The FDA estimated that there was a decrease of 78% of consumer consumption between 2003 and 2012, with the labelling rule and industry reformulation being credited for the change. Just days after the GRAS status was removed, a false marketing class action lawsuit was filed against H.J.Heinz Co (Heinz) on 18 June, accusing Heinz of making false claims on the amount of trans fats contained in two of its products, Top Class Actions reported. The lawsuit alleges that Heinz labelled both its brand name frozen French fires and tater tots as containing zero trans fats when they contained high levels of partially hydrogenated oils. Heinz is not the first company to be accused of falsely advertising levels of trans fat. Similar allegations were made against ConAgra Foods earlier in June.

Chinese producer receives death sentence for selling tainted oil

cooking oil producer in southwest China, Wei Mingjin, received the death sentence in January having been found guilty of selling more than 19,000 tonnes of tainted oil, refered to in China as ‘gutter oil’, according to a report in China Daily. The cooking oil was made from waste byproducts of slaughtered cattle that was unfit for human consumption. The death sentence, which has been reprieved for two years, is the result of rigorous new sentencing guidelines for food safety crimes that were issued in 2013. Additionally, Wei was fined RMB340M (US$56M). Two accomplices were given prison terms.

Russia extends current food embargo

ussian embargoes on many Western products including cooking oils, animal fats and dairy products are to be extended for a further six months, according to a Bloomberg report on 22 June. Russia initially imposed the bans in retaliation against EU sanctions following the crisis in Ukraine. EU foreign ministers extended the sanctions against Russia on 22 June and the

Russian prime minister Dmitry Medvedev immediately announced through a spokeswoman that a proposal for the continuation of the Russian bans, which were due to expire on 8 August, had been submitted to the president. Australia, Canada, the EU, Norway and the USA are all affected by the bans. The current banned import list is expected to remain the same.

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Comment and News.indd 1

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NEWS

Complaint over illegal land grabs in Borneo A

Borneo based human rights organisation, Lingkaran Advokasidan Riset (LinkAR), filed a complaint on 11 May against PT Swadaya Mukti Prakarsa (PT SMP) – a key Wilmar Group supplier and subsidiary of First Resources Group – claiming the company had breached standards and made illegal land grabs, a press release publicised in June. The complaint letter was delivered to the Roundtable on Sustainable Palm Oil (RSPO) and was presented on behalf of the indigenous communities living in West Kalimantan, Borneo, where PT SMP owns a permit covering

an area of around 3,700ha. Batu Daya Village in Simpang Dua Sub District, Ketapang Regency is surrounded by plantation operations and has been the site of multiple clashes between PT SMP and the indigenous communities. The press release said that on 5 May, five members of the village were forcibly arrested by the West Kalimantan Police Mobile Brigade and PT SMP security staff following demonstrations by community members, who accused PT SMP of conducting landclearing operations in an area outside its

authorised permit zone. The complaint includes allegations that PT SMP cleared land using fire (which is illegal in Indonesia), not informing the community about the environmental impact analysis (EIA) of its proposed development. and intentions to withhold profits from the community for up to 18 years. The district administration also asserted in a subsequent decree that even though the location permit had expired, PT SMP continued to clear and develop land. PT SMP has not responded to the allegations.

International Olive Council agrees on new draft

embers of the International Olive Council (IOC) met before the Council’s 24th session in Madrid in June to discuss the new draft text that will replace the 2005 International Agreement on Olive Oil and Table Oils – as it is officially known. The Olive Oil Times reported the news, adding that the draft text will form a basis for negotiations taking place in October at the United Nations conference in Geneva. Once agreed, the new document will enter into force on 1 January 2017 and will continue to be used until the end of 2026. The 2005 agreement was also negotiated in Geneva, in April 2005. It is understood to have come a long way from previous agreements and new, innovative features would “help the IOC to adapt to the changing demands of the olive sector and society”, according to the IOC website.

Sustainable palm oil deal in India

uchi Soya Industries Limited, India’s number one edible oil and soya foods company, has signed a €4.5M deal with NGO Solidaridad to expand sustainable production of palm oil in the country, a press release announced on 5 June. Ruchi will share 55% of the investment, and Solidaridad – which works across supply chains to facilitate social and ecological responsibility – will take 45%. Farmers will be trained to grow more palm oil with less land, water and energy, while also protecting the environment. “The aim over the next five years is to make a significant volume of sustainable palm oil available for India, to save at least 1.5tr litres of water in palm production and generate major employment in the rural areas,” Solidaridad said. Ruchi said the government had identified two million hectares of land for oil palm cultivation in India and it hoped to help India in saving valuable foreign exchange.

According to Olive Oil Times, there are several important changes that the new draft text makes to the current agreement. These are: t More weight given to consumer countries. A formula has been proposed which will calculate each member’s participation shares in the budget by equally considering production, exports and imports. t A new decision-making process for topics related to the IOC’s international trade standard. This includes new steps aimed at consensus-building, which will incorporate a new voting procedure. After the discussions had come to an end, the Council of Members session was held from 16-19 June. The specialist committee discussed several measures for possible adoption.

KTG looks to expand in China

erman farm company KTG Agrar announced plans for a major expansion into the Chinese food and grain sector – including GMO-free soyabeans, Reuters reported in June. The announcement follows the news that a unit of the Chinese group Fosun International bought a 9% stake in KTG. KTG said it hoped to increase food sales to China to between €100-200M annually in the next three years. This year, the Europeanlisted farm company expected to make sales of between €20-30M, KTG CEO Siegfried Hofreiter told Reuters. Around 80% of KTG’s sales are currently made in Germany, with the remaining 20% being exports. Hofreiter hoped that China could soon become the company’s largest market. KTG cultivates organic grains, rapeseed, soyabeans, sugar beet and other crops and said it was seeing strong demand from 700M middle-class Chinese consumers for organic, GMO-free products.

Sungai Budi plans to expand plants

ungai Budi has set aside a sum of Rp1.67tr (US$125M) for the construction of new sugar and palm oil plants, the Jakarta Globe reported in June. The agriculture-based manufacturer, one of the largest in Indonesia, controls Tunas Baru Lampung and Budi Starch & Sweetener. Tunas Baru’s vice president Sudarmo Tasmin told the Jakarta Globe that the company would

be investing Rp1.5tr (US$237bn) in a new sugar mill this year in Lampung. The mill will have a processing capacity of 8,000 tonnes/day of cane and should be operating by the end of 2016. In addition Tunas Baru has plans to build a Rp200bn (US$3bn) biodiesel plant, Sudarmo said the plant was expected to contribute to 35% of the company’s revenue in 2017.

IN BRIEF USA: The Agricultural Research Service of the US Department of Agriculture and Oklahoma State University have collaborated to grow foundation seed for a new type of Spanish peanut called OLé, they announced. It contains a greater proportion of oleic to linoleic acid than other high-oleic peanuts. EGYPT: A new protocol on the recycling of used cooking oil was signed in Cairo in June, The Cairo Post reported. Under the new protocol, cooking oil would be collected by the Ministry of Supply in return for points to be exchanged for food, and then delivered to Alexandria Company for Petroleum Additives (ACPA) to be turned into biodiesel. DENMARK: The European Commission has launched an investigation into the nowrepealed Danish ‘fat tax’, according to a report in TaxNews. The tax was added to saturated fat in certain products in 2011 and was abolished in January 2013. The investigation will focus on whether some companies illegally benefitted by not being taxed correctly; all products containing more than 2.3% saturated fat should have been taxed. The Danish government said it planned to have a dialogue with the EC to find a sensible solution, TaxNews said. DENMARK: Emulsifier producer Palsgaard has announced in its 2014 CRS report that sustainability and CO2 neutrality are its top concerns for the next five years, and that its sustainability efforts are in line with the principles of the UN Global Compact.

3 OFI – JULY/AUGUST 2015 www.oilsandfatsinternational.com

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NEWS

IN BRIEF WORLD: The cheap price of petroleum has been recognised as causing the lowest global food prices for five years, according to the Food Price Watch’s latest edition in July. Less expensive fertiliser, fuel and transportation costs benefitted the agriculture and food sectors. Food prices continued to be steady despite a recent hike in petroleum prices recently, the report said. However, the arrival of El Niño could cause prices to increase again in the coming months. PHILIPPINES: Small coconut farmers have reached a sustainability milestone by producing the world’s first Rainforest Alliance certified copra, thanks to the work of German international development company GIZ, BASF and Cargill, Cargill announced on 17 June. Agricultural training, sustainability training and access to new drying technology had resulted in 300 small farmers meeting the standards of the copra, the dried coconut flesh needed to process coconut oil, Cargill said. MALAYSIA: Mr D Chandramohan, director of corporate affairs for Cargill Malaysia, has been appointed as chairman of the Palm Oil Refiners Association of Malaysia (PORAM) for 2015-2017. PORAM said Chandramohan’s expertise in government and industry relations, palm sustainability, communication and corporate responsibility activities for Cargill would serve the industry well. PORAM was formed in 1975 to present a representative voice to the government and trade in matters related to the palm oil industry. This year PORAM will celebrate its 40th anniversary. MALAYSIA: The government’s Malaysian Sustainable Palm Oil (MSPO) certification standard has helped more than 400,000 smallholders become certificated as sustainable palm oil producers, the Jakarta Post reported in July. The report said the government’s standard made it easier for small producers to become certified, compared to the rules and costs of Roundtable on Sustainable Palm Oil (RSPO) certification.

Fish oil market to grow by 6% T

he global fish oil market will grow to US$2.63bn by 2020, with supplements and functional foods evolving as a promising application market, according to a report published in May by Allied Market Research. A compound annual growth rate of 6.1% between 2015 and 2020 is estimated for the market. Aquaculture is currently the largest market for fish oil, although the study predicts that the supplement and functional food market will evolve to become a promising contender. The report said fish oil is a prime ingredient in aqua feed, which meant the market tended to grow in proportion with the aquaculture industry. It was also affected by the demand-supply gap, caused by strict fishing quotas and adverse climate conditions. Fish oil had a high content of essential long chain omega 3 fatty acids, resulting in its wide use in many human and animal nutrition applications as a food and feed supplement. Omega 3 fish oil was becoming increasingly popular in nutraceutical and

pharmaceutical markets, which was providing a boost for the industry, the report said. More than 50% of the world’s fish oil was produced in Latin America, chiefly Peru and Chile. The study found that China and Japan collectively accounted for about 39% of the market share, with Denmark and Norway both being major producers and consumers in the European market. Aquaculture production was rising in Asia in countries such as China, India, Vietnam and Indonesia, causing a rise in aquaculture grade fish oil requirements in the region. In North America and Europe the consumption for fish oil was for use in pharmaceuticals and the supplement and functional food industries – together these regions accounted for around two-thirds of global revenue for these applications. Furthermore, in Japan nutritional fish oil consumption was high as the aging population took advantage of its health benefits.

Hong Kong proposing new regulations for ‘gutter’ oil

n 7 July, the Hong Kong government announced a three-month consultation on a new regulation to control the quality of edible oils and fats manufactured in the city, the South China Morning Post reported. The proposals are in response to the Taiwanese gutter oil scandal last year (see News, OFI October/November 2014) and would amend the current Waste Disposal Ordinance, including a new licensing system. Individual licenses will be required for collectors, disposers, importers and exporters of waste oil.

Operating without a license could result in a fine or imprisonment. It will be mandatory for food manufacturers, canteens and restaurants to hand their used cooking oil to licensed collectors only, and records must be kept. Furthermore, producers must provide official certificates, the South China Morning Post said, issued by a recognised independent testing institution. The report said that vegetable oils, animal fats, and edible fats and oils used as ingredients would be covered. Fat emulsions (such as butter and cocoa butter) would be exempt.

Taiwan adds tracers to waste oil

he Environmental Protection Administration of Taiwan has revealed 10 tracers for waste cooking oil in an attempt to crackdown on substandard oil re-entering the food supply, the Taipei Times reported in February. Under the new system, a tracer would be added at the food outlet, with an additional dose going in at the recycling facility before the oil is transported to soap and biodiesel manufacturers. “The source of most problematic oil samples would be revealed following an analysis of the tracers, which would then lead us to the recycling or reuse facility the oil is originating from,” EPA Minister Wei Kuo-yen told the Taipei Times. Out of the 10 tracers, six would be transparent. Wei said that these would be prioritised over the four additional opaque tracers. The scheme is still being trialled and is voluntary at the moment. However, three local governments had already agreed to their use.

PHOTO: IVOLODINA/ DOLLARPHOTOCLUB

Wilmar and Volac in animal feed fat partnership

ilmar International and Volac International announced the creation of a global animal feed fat joint venture on 6 July. The two companies said that the new partnership, Volac Wilmar Feed Ingredients (VWFI), would become a global leader in animal feed fats and support the dairy farming industry through a range of feed fat products, which were sourced responsibly and sustainably by “maximising operational efficiency”. UK-based Volac brought its nutritional reputation, global brand and sales network to the partnership, with Singapore’s Wilmar providing operational raw material logistics. According to David Neville, managing director of Volac Animal Nutrition, responsibly sourced feedstocks would play a vital role in sustainable livestock nutrition in the future. Therefore the company’s strategy was to expand the fat business. Napoleon Pefianco, managing director of Wilmar Europe Holdings BV, said he hoped the joint venture would lead the way in the ethically sourced feed fat ingredients market, creating a global and sustainable solution.

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Comment and News.indd 3

13/07/2015 11:30

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BIOFUELS NEWS

IN BRIEF FINLAND: The government has announced plans to increase the share of renewable fuel use to 40% by 2030, according to Biofuels Digest. Currently the country’s renewable fuel use is 8%. MALAYSIA: Mercedes-Benz Malaysia has backtracked on its previous claim that its vehicles could not be run on B10 by saying that all Malaysian vehicles are fine to run on the blended biodiesel, according to Biofuels Digest. Mercedes-Benz Malaysia, UMW Toyota and Volkswagen Malaysia all followed in the footsteps of BMW Malaysia and in June issued warnings saying using B10 would cause adverse effects in their engines. ARGENTINA: The biodiesel export tax for May has been cut to 9.8%, down from 13.2%, which was set for April, according to a report in Biofuels Digest on 22 June. Although it was a decrease of more than a quarter from April, the export tax was still nearly double any of the taxes set last year. BRAZIL: Changes were made to the country’s tax policy on imported ethanol on 22 June, Ethanol Producer reported. President Dilma Rousseff signed a decree creating equal tax for domestic and imported products, including ethanol. This was a levelling of the playing field rather than an importation tariff, a statement from Brazil’s sugarcane association UNICA stressed. EU: 2013-14 was a difficult year for the European ethanol industry due to a 30% decrease in domestic prices, the annual report from the European renewable ethanol association (ePURE) published 16 June revealed. Europe consumed 7.7bn litres of ethanol in the 2013-14 period, the main uses were fuel (86%), industrial (7%) and food and beverages (7%), according to the report. Additionally the main feedstocks used were corn (42%), wheat (33%), sugar beet (18%) and other cereals (7%). ePURE’s secretary general, Robert Wright, said the decrease was ultimately driven by “the uncertainty surrounding Europe’s biofuels policy.”

Petrobras and Ceres moving away from biofuels in Brazil C

onfidence in the Brazilian biofuels sector appears to be falling following reports that Petrobras and Ceres are planning to move away from investments in the market. Petrobras, Brazil’s state-run oil company, is planning to sell its stake in ethanol producer Guarani SA to raise money for investment elsewhere and to pay off debts, according to a Reuters report on 17 June. The company’s ethanol plants would be the first to go as they were less profitable than other assets although it was reported that Petrobras does not plan to leave the biofuels sector completely.

However, on 23 June, Reuters reported that Petrobras’ plans had hit a hurdle, and the US$200M that its partner in Guarani, Tereos was willing to pay was not enough. In its latest financial reports, Petrobras valued its investment in Guarani as being worth US$407M. In an interview with Reuters, Tereos Brazil head Jacyr Costa said “we are not in the market to buy or to sell mills at the moment.” Following a corruption scandal and stagnant output, Petrobras wanted to sell around US$3bn in assets this year and US$13.7bn by the end of 2016, Reuters said. US-based biotech group Ceres

also announced a shift away from research into advanced biofuel crops in Brazil in June due to Brazil’s struggling economy and low oil prices causing “serious challenges”, according to an Agrimoney report (see story p8). Ceres has been working alongside Brazil’s energy giant Raízen to develop sweet sorghum as a biofuel feedstock. However Agrimoney quoted the company as saying it considered sugarcane “a more attractive use of capital”. Ceres chief executive Richard Hilton said Ceres wanted to direct its attention to “markets being fuelled by global prosperity growth”.

B15 mandate will lead to EU on target to 54% consumption increase hit energy goal T W hen Indonesia moves from its current B10 mandate to B15, consumption of biodiesel is expected to increase by 54%, according to a Platts report in June. Typically the country consumes 1.3M tonnes/ year, which would increase to 2M tonnes/year with the increased blending percentage. It still remains unclear whether the mandate would be introduced as planned, an official from Pertamina, the country’s state-owned oil corporation, said. Platts said Pertamina had not bought any biodiesel since February, instead relying on inventories. A total of 767M litres of biodiesel had been contracted to Pertamina this year from producers Pelita Agung Agrindustri, Wilmar International and Darmex Agro, none of which had yet been delivered. This was largely due to biodiesel not being economically viable, the report said. An export tax of US$50/tonne on crude palm oil and US$30/tonne for processed palm oil product shipments was finally introduced on 16 July after weeks of delays, Reuters reported. Proceeds from the tax, first announced in March, would be partly used to fund biodiesel subsidies.

Ensus ethanol plant remains closed

ropEnergies’ UK-based Ensus plant, which closed in February, is unlikely to reopen unless there is prolonged improvement in the European ethanol market, Agrimoney reported in May. Low margins when producing ethanol from grain have meant that the plant cannot operate on a costcovering basis, a letter from CropEnergies signed by Joachim Lutz, the group’s chief executive explained. According to Agrimoney, CropEnergies said 2014-15 was the “most difficult financial year in the history” of the company and it unveiled a loss of €11M

for the period, which ended in February, with further losses expected. Agrimoney said that government support for increased blending of ethanol into gasoline was lacking, which was causing a constant decline in EU fuel ethanol consumption. However, positive news came in June, when CropEnergies announced a minor profit for the first quarter, according to Platts. Lower operating costs from the closed Ensus plant played a part, as well as higher prices due to there being less ethanol on the market.

he European Union (EU)’s goal of sourcing 20% of its energy from renewables by 2020 is on track, according to an announcement on 16 June from the European Commission (EC). Although, as a whole, the EU is due to meet its target, the Netherlands, Luxemburg and the UK are falling behind. The report said that as targets would only get tougher in the next five years, those countries falling behind (and those at risk of falling behind – Belgium, France, Malta and Spain) would have to intensify their efforts and look to use cooperation mechanisms with other member states in order to meet their targets.

Waste to ethanol plant completed

t1 Biofuels Oy completed the building of an Etonolix plant in Gothenburg, Sweden in June, the first outside Finland. The plant would utilise feedstocks such as biowaste and process residues from local bakeries and bread past its sell-by date into ethanol for transport fuel, a press release from the company said. The plant has an annual production capacity of 5M litres.

6 OFI – JULY/AUGUST 2015 www.oilsandfatsinternational.com

Biofuel News July.indd 1

20/07/2015 13:55

BIOFUELS NEWS

United Airlines invests US$30M in advanced biofuels T

years that it spans. This represented 3% of United’s annual fuel consumption. United hoped to be receiving fuel by 2018 and could be taking 90M gallons/year by 2021, AP Airlines reported. Fulcrum BioEnergy produces aviation biofuels from municipal solid waste. Its first commercial facility is currently under development near Reno, Nevada and is expected to open before the end of 2017. Cathay Pacific also invested in Fulcrum BioEnergy in 2014 and signed offtake agreements from the first facility. Fulcrum CEO Jim Macias said in an interview with Biofuels Digest: “This is a big event for us.

Renewable energy targets on the up

argets for renewable energy have increased globally since 2005, and 164 countries have adopted at least one type of renewable energy target, according to an International Renewable Energy Agency report published in June. “Governments are increasingly adopting renewable energy targets to meet multiple objectives including energy security, environmental sustainability and socio-economic benefits,” Adnan Amin, director-general of IRENA told Biodiesel Magazine. “The rapid growth of targets is just one more signal of the world’s ongoing shift towards renewable energy and away from fossil fuels.” Out of the 164 countries, 131 are developing and emerging economies, and 150 of the countries have adopted renewable electricity targets. Additionally, targets for renewable fuel use in transport have increased from 27 in 2005 to 59 countries now.

We are seeing more and more that United is going to be a prime mover. Having companies come in with a very significant commitment to participate is good news all around. For us, it tightens up our schedule and gives us greater certainty that these plants will be built on schedule and on time.” The five new plants would range in size from 30M gallons to 60M gallons/year, according to Biofuels Digest. United Airlines made its first test flight using biofuels in 2009 and, in 2011, powered its first passenger flight with algae-based fuel. It expects to begin flights from Los Angeles using AltAir Fuels’ biofuel this summer.

49 2014

he USA’s United Airlines has announced a large biofuel agreement with advanced biofuels developer Fulcrum BioEnergy, Biofuels Digest reported on 30 June. The agreement includes a US$30M direct investment in Fulcrum, the option to invest in five future commercial-scale aviation biofuel plants, and signed offtake agreements for up to 90M gallons/year of biofuel for 10 years. According to AP Airlines, United chose to invest in the renewable energy company to reduce its vulnerability to oil price shocks and limit its carbon emissions. Biofuels Digest said the offtake agreement was worth around US$1.58bn over the 10

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Malaysia plans to implement B10 mandate by October

he Malaysian government has announced plans to implement the B10 biodiesel programme in October, The Rakyat Post reported in June. The programme will raise the country’s biodiesel mandate to 10%; the current mandate of 7% was implemented in November 2014. The Star Online quoted Douglas Uggah Embas, the Minister of Plantation Industries and Commodities, who said: “We are looking at about 1M tonnes of crude palm oil (CPO) usage/year from the B10 biodiesel programme.” It is hoped that the B10 mandate would support palm oil prices which are currently at RM2,344 (US$631)/tonne. 7

Biofuel News July.indd 2

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ust be updated BIOTECH NEWS

US GMO framework to be modernised

he White House issued a memo on 2 July directing three US agencies overseeing biotechnology products to modernise and improve their regulatory framework, accordiing to reports from Reuters and Ethanol Producer magazine. The memo was directed to the heads of the US Department of Agriculture (USDA), the US Food and Drug Administration (FDA) and the US Environmental Protection Agency (EPA). The move was designed to boost public confidence in a regulatory framework which some critics had called a failure, Reuters said.

The memo defines biotechnology products as those developed through engineering of the targeted or in vitro manipulation of genetic information of organisms including plants, animals and microbes. It said each agency had developed its own regulations, resulting in a complex system which protected health and the environment but sometimes left uncertainty over agency jurisdiction, processes and timeframes for review. Several one-year objectives have been outlined including updating the 1986 Coordinated Framework for the Regulation

of Biotechnology (CF) to clarify the roles and responsibilities of the three agencies; formulating a long-term strategy to ensure the risks of any future products are efficiently assessed; supporting innovation, health and environmental protection; promoting public confidence; and increasing transparency and predictability while reducing unnecessary costs and burdens. The memo also called for the commissioning of an independent analysis of the future landscape of biotech products. The White House has established a new Biotechnology Working Group to support these objectives.

$2.5M investment for field pennycress

rvegenix, a mid-western US company developing field pennycress for use asan advanced biofuel feedstock has successfully raised US$2.5M from investors including Monsanto and Cultivation Capital, according to the St. Louis Business Journal in a report published on 8 May. The company would use the money to expand its research and development programme, fund regulatory studies and grow operations, the

report said. In addition, a general partner of Cultivation Capital, Rick Holton, would join the board at Arvegenix. According to the report, another investor – the St Louis Arch Angels – invested US$500,000. The company invests in early-stage companies that it considers to have high growth potential. The Yield Lab, an agtech start-up developer led by Thad Simons, committed US$100,000.

China’ changes GM approval regulations C hina is reported to have made an about-turn on its policies regarding genetically modified organisms (GMO) through changes to its current GMO approval laws and its own research into the controversial science, according to reports from Reuters and Bloomberg in May. China’s current regulations include three fixed deadlines each year for submitting new GMO crops for approval – 1 March, 1 July and 1 November. A biosafety committee meets at each deadline to review pending applications. Reuters Africa said China revealed plans to remove these deadlines in April. This would result in further delays to an already lengthy approval process for importing new GMO crops, according to CropLife Asia, a plant science industry association whose members include Monsanto, Bayer CropScience and DuPont. In addition, the new version of the law stipulated

that “scientific, economic and social factors” would affect the ministry’s decision-making. This meant that consideration for approval would be broader, allowing scientific considerations to be taken into account, Reuters Africa said. As well as law changes for importing GMOs, Bloomberg reported that China’s officials were preparing to turn the country into a GMO superpower. China’s leaders saw self-sufficiency in grain as a strategic imperative Bloomberg said. It quoted Origin chairman Han Gengchen who said, “Biotechnology is our investment for the future”. Papers in China have called for more GMO research, a pro-GMO ad campaign was issued and companies were working on new rice varieties. Bloomberg said that at least US$3bn had been distributed by the government to institutes and companies to develop GMOs.

Ceres realigns away from biofuels research B razilian agricultural biotechnology company Ceres announced on 19 June that it plans to realign its activities. The restructure will move the company away from biofuel research, which was already announced earlier in the year and shift focus towards biotechnology traits for sugarcane and other crops, as well as food and forage opportunities. Ceres wants to expand the number of market opportunities

available for its technology and products and said it would begin “prioritising its working capital in additional areas beyond Brazil.” It is expected that most of the realignment will be completed by the end of October this year. Once the restructure has taken place, Ceres’ Brazilian operations will focus primarily on sorghum breeding and sugarcane. This will predominantly mean an expansion of the company’s sugarcane trait development activities for the

Brazilian sugarcane market. Ceres will fund these activities in part through a grant from the Brazilian government. As Ceres implements its realignment plan, there will be a workforce reduction mainly in Brazil but also in the USA, and over US$1M of charges will be incurred through this process. However, Ceres said the plan was expected to deliver cash savings of US$6-8M in fiscal year 2016.

IN BRIEF USA: SunOpta Inc, which processes non-GMO, organic soyabeans and corn, has become the first company in the USA to receive official verification that its manufacturing facility uses no genetically modified organisms or genetically engineered products, it announced in May. The facility in Hope, Minnesota gained an initial six-month period of certification from the US Department of Agriculture Process Verified Program. At the end of the period, SunOpta plans to apply for an extension. SunOpta will be the first US company to be able to label its products as non-GMO/GE. WORLD: Monsanto’s talks with Syngenta shareholders were “very constructive”, Swiss newspaper Le Temps reported in an interview with Monsanto’s chief executive Hugh Grant on 7 July. Syngenta rebuffed Monsanto’s last offer of US$45bn plus an additional US$2bn reverse breakup fee on 8 June due to it ‘undervaluing’ the company. Grant told Le Temps that if Syngenta could detail why it believed it was worth more, then Monsanto may reconsider its offer. USA: On 24 June, Monsanto reported net sales for its fiscal year 2015 third quarter rising to US$4.6bn, with gross profit increasing to US$2.7bn. It also reiterated its strategic rationale for buying Syngenta to create a new company providing a comprehensive portfolio to help farmers address current and future agricultural, environmental and sustainability challenges.

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IN BRIEF BRAZIL: Archer Daniels Midland Company and Norton Lilly International announced on 15 June that their joint venture Agri Port Services LLC had acquired Brazilian port and shipping agency Blue Ocean Agencia Maritima (BOAM). BOAM serves as a shipping company at ports throughout the country and will expand Agri Port Services’ logistics offerings in Brazil.

BRAZIL: Raízen transported its first shipment of biodiesel by rail in June, according to Biofuels Digest. The Brazilian biofuel giant’s shipment travelled from Rondonópolis to Paulina. By taking advantage of reverse logistics, Raízen would be able to transport its biodiesel for much cheaper rates on railcars that would otherwise be empty, returning from delivering fossil fuels. According to the Biofuels Digest report, 50M litres of the fuel could be transported in this way annually.

lobal processor and trader Bunge Ltd has begun construction of an inland grain storage site near Kukerin, Western Australia, it announced in June. It hopes that the site will be fully operational by the harvest time later this year. The first stage will create capacity for 120,000 tonnes, which will increase to 200,000 tonnes in time. Bunge is also planning the construction of a second site in Arthur River, Tasmania with an initial 160,000 tonne capacity, growing to 250,000 tonnes. General manager of Bunge Australia, Chris Aucote, reiterated the importance of storage in the supply chain to assist with a smooth grain flow to port. He also said Bunge would like to provide solutions for

each grower to more efficiently manage harvests. In April, Bloomberg reported that Bunge was contemplating opening an additional third port in either eastern or southern Australia. Currently Bunge has a port in Bunbury, Western Australia with another under construction in Geelong, in the southeast of the country. Schroder told Bloomberg that Bunge prefered to convert or build new facilities in Australia rather than making acquisitions. Chief executive officer Soren Schroder also told Bloomberg that Bunge was looking at ways to access crop exports from the west coast of Canada. Australia and Canada would complete the company’s “global footprint”, he said. PHOTO: WWW.BUNGE.COM.AU

WORLD: Inspection, testing and certification company SGS and BeFlexi, a leading flexitank provider, announced a new partnership on 7 July to provide a global flexitank logistics service to industries involved in break bulk cargo transportation.

Bunge expands in Australia

EARTHMOVERS IN ACTION AT KUKERIN, AUSTRALIA WHERE BUNGE IS BUILDING A GRAIN STORAGE SITE

EU duties affected imports More ethanol moved by rail A T nti-dumping taxes and duties imposed by the EU on Argentina and Indonesia are said to have contributed to a drop of 36% in biodiesel imports into Europe in 2014, according to a report from the Port of Rotterdam. The duties were introduced in 2013 for five years as a measure to curb dumping (selling the

fuel for below cost) which was severely affecting EU producers. As a consequence of the taxes, domestic production has increased and Europe is becoming more of an internal market for biofuel. The most important suppliers were Spain (contributing 60%) and Malaysia, with the largest amount being imported into the UK (42%) followed by France (17%).

India planning to use B20 at 12 major ports

ndia’s Union Shipping Ministry has announced that it will be using 20% blended biodiesel (B20) at 12 major ports, according to a report in The Hindu on 24 June. The Bureau of Indian Standards had been asked by the government to set higher biofuel standards for cars, trains, heavy engineering machines and generators, the report said. The country’s first biodiesel dispensing pump was opened

in June at Haldia Port and will be supplied by Emami Agrotech, the edible and biodiesel arm of India’s Emami Group. Emami’s 300 tonnes/day Haldia, West Bengal biodiesel plant, which makes use of palm oil residues among other things, was eastern India’s first and largest biofuel facility set up in technical collaboration with Desmet Ballestra in 2006. According to the union minister

for road transport, highways and shipping, Emami’s biodiesel is cost effective. “We are looking at the possibility of buying biodiesel for all major ports at a price much lower than the petroleum diesel price”, he told The Hindu. In January, the government made a decision to allow biodiesel to be sold directly to consumers for transport use, which will expand India’s clean energy market.

Push for Sea-Tac airport to offer biofuels to all airlines

he Seattle Port Commission wants the SeattleTacoma (Sea-Tac) International Airport to be the first in North America to offer biofuels to all airlines, the Puget Sound Business Journal reported in June. The commission wants financial incentives, such as those in Oslo and Amsterdam, to make biofuels more affordable for aviation. Currently biofuels cost significantly more than traditional petroleum-based

fuels. Several airlines including Alaska Airlines and Boeing had demonstrated the safe use of blended aviation biofuel, the commission said. Sea-Tac is trying to minimise its greenhouse gas emissions and the port has already converted all its ground vehicles to electric. However, a representative for the Seattle Port Commission told the Puget Sound Business Journal that a study showed 89% of emissions from the airport came from jet engines.

he US ethanol industry is experiencing a rail-induced revival, according to Reuters, which reported that plummeting lease rates on cars, weak crude oil prices and new safety measures for transporting oil by rail may be responsible. Rail car owners are apparently cleaning their tank cars so that they can carry corn-based ethanol instead. Reuters’ report was not clear on how widespread or longterm the trend is. New tank safety standards were announced in May following a growing number of derailings and research which said the disasters would continue unless something was done. Although the standard applies to ethanol and petroleum, it is more lenient for the less volatile corn-based fuel. It has also become more economical to transport crude oil by sea, which has caused a surplus of car capacity. It is though that the ethanol industry is taking advantage of the overcapacity and much lower tank car lease rates that it has resulted in. The Reuters report said the cost of taking a car off the rails was as much as US$100, so it was more cost effective to clean out the cars and make them suitable for ethanol transportation.

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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 WORLD: The natural fatty acids market sourced from vegetable oils, animal fats and crude tall oil was worth US$17.1bn in 2013, and is expected to climb to US$25.7bn by 2019, according to a new report from BCC Research. This will be equal to a compound annual growth rate of 7.1% over the five-year period.

Coca-Cola launches 100% sugarcane-based PE T bottle T

he Coca-Cola Company unveiled the world’s first PET plastic bottle made entirely from plant materials at the World Expo in Milan on 3 June. Coca-Cola said its PlantBottle packaging built on its vision to develop a more responsible plantbased alternative to packaging traditionally made from fossil fuels and other non-renewable materials. PlantBottle packaging used patented technology that converted natural sugars found in plants into the ingredients for making PET plastic bottles. “The packaging looks, functions and recycles like traditional PET but has a lighter footprint on the planet and its

ITALY: Bio-on S.p.A. has made an advancement in the technology able to produce bioplastics from glycerine, Biodiesel Magazine reported in June. The high-performing PHA plastics are made from a combination of crude glycerine, sugar beets, sugarcane and potatoes and have been certified by Vincotte in Europe and the USDA in the USA. WORLD: New research from MarketsandMarkets has projected that the oleochemicals market will reach US$25.91bn by 2019, equaling a compound annual growth rate (CAGR) of 4.2% from 2014 to 2019. Asia-Pacific dominated the oleochemicals market in 2013 and is projected to remain the major market, growing at a CAGR of 5.1% between 2014 and 2019. USA: Renewable energy company Methes Energies announced in May that it will begin offering epoxidised soyabean oil (ESO) and natural polyol from its Sombra, Ontaria facility, with an expectation that production and sales will begin by the third quarter of this year.

Bio-based leather breakthrough

n innovative artificial leather fabric using bio-based materials supplied by BioAmber and DuPont Tate & Lyle has been developed by the Flokser Group, according to a press release in June. The fabric makes use of a polyester polyol made from BioAmber’s Bio-SA bio-based succinic acid and DuPont Tate & Lyle Bio Products’ Susterrea biobased 1,3-propanediol. The artificial leather had 70% renewable content and was softer and more durable than petroleumbased leather alternatives, Flokser said.

scarce resources.” Coca-Cola said its 100% plantbased packaging was made from sugarcane and the waste from the sugarcane manufacturing process – materials which met the company’s sustainability criteria. “Since its 2009 launch, Coca-Cola has distributed more than 35bn bottles in nearly 40 countries using its current version of PlantBottle packaging which is made from up to 30% plant-based materials,” the company said. “It is estimated the use of PlantBottle packaging since the launch has helped save equivalent annual emissions of more than 315,000 tonnes of carbon dioxide.”

Glycerine use forecast to fall TerraVerdae’s

here will be a slowdown in glycerine use in China this year but an increase in 2016 to over 1M tonnes, according to HBI’s Fred Wang at the third Global Glycerine Conference on 26-27 May 2015 in France. The conference concluded that there is unlikely to be much discretionary blending of biodiesel in 2015 and 2016 and this, together with increased production globally of hydro-treated vegetable oil (HVO) biodiesel and the use of more double-counted raw materials in Europe, will see glycerine generation decline to below 18M tonnes by the end of 2016. Increased demand and declining production is likely to result in a tighter glycerine market by the end of next year.

Investing in sustainable LEGO

he LEGO group announced in June that it plans to invest DKK1bn (US$150M) to research and implement new sustainable materials to manufacture LEGO toys as well as packaging. The group will establish a Sustainable Materials Centre at its current headquarters in Billund, Denmark during 2015 and 2016, and said it

would employ an additional 100 specialists during the coming years. In 2012, LEGO announced it would implement sustainable alternatives to its current raw materials by 2030 and, at the company’s general assembly in May this year, the decision was made to significantly boost the search.

biodegradable microspheres

ustainable materials biotechnology company TerraVerdae BioWorks announced in June that it has released a line of biodegradable, natural microspheres to directly replace non-degradable plastic microbeads. The traditional plastics used in abrasive cosmetic products are currently the subject of restrictive legislation worldwide due to their ability to pass through water filtration systems and build up in lakes and reservoirs, harming wildlife. Companies such as Johnson & Johnson, Proctor & Gamble, Unilever, L’Oreal and ColgatePalmolive have already pledged to end the use of polyethylene microbeads in their products. The TerraVerdae microspheres were biodegradable, non-toxic and environmentally safe, the company said.

Avantium and Tereos announce bioplastic partnership

ugar producer Tereos is to partner with catalytic research company Avantium to produce bioplastics made from 2,5 furandicarboxylic acid (FDCA), Bioplastics News reported on 16 June. A formal announcement has not yet been made but is expected to be released soon. According to Bioplastics News, Avantium has

developed a proprietary two-step chemical, catalytic process to produce FDCA from sugars called the ‘YXY’ process. The FDCA will be combined with bio-based MEG to produce PEF, an alternative to PET with enhanced oxygen barrier properties. The PEF will be produced at Tereos’ site in Lillebonne, France.

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DI ARY OF E V E NT S

oils+fats 2015 acts as bridge between research and industry

uilding bridges between R&D and industrial applications is a central aim of oils+fats 2015, the International Trade Fair for Business, Technology and Innovations being held on 15-17 September at the MOC Veranstaltungscenter in Munich. A key component in this initiative is the innovations platform in the exhibition hall where experts will discuss the markets and technologies of the future. In the opening lecture at the innovations platform, Thomas Mielke, ISTA Mielke GmbH, Oil World, Hamburg, will be casting a glance at the factors at play in oil processing worldwide. “Falling growth rates in worldwide palm oil production have led to an increased demand for soya oil, rapeseed oil and sunflower oil and therefore to a rise in the quantity of oilseeds processed,” explains the expert. In his lecture, Mielke will also set out how global demand for vegetable oil in the food and biodiesel industries will be trending in future and what can be expected in the protein market. Around 50 exhibitors and approximately 1,000 participants from around the world are expected to attend oils+fats 2015. Among the trade visitors are producers of crude and refined oils and fats, fatty acids, margarine, nutraceuticals, edible oils and fats, as well as producers of feedstuffs, biofuels, detergents, glycerine, lanolin, lubricants and waxes. Exhibitors will be presenting the latest solutions in the production and processing of oils and fats including process and quality control, raw and auxiliary materials, logistics, filling and packaging technology, and – for the first time – deep frying. In addition, the 8th International Symposium on Deep Frying will be held, for the first time, as part of oils+fats 2015. The symposium is organised by Euro Fed Lipid. It will look at aspects of deep frying, with the aim of optimising and enhancing understanding of the deep frying process, and thereby strengthening the market for deep-fried products in future. Also running in parallel with oils+fats 2015 is the 15th Practical Short Course on Advanced Oilseed and Oil Processing and Food Applications aimed at young professionals and newcomers. For further information on oils+fats 2015, contact: Messe München GmbH, oils+fats Press Office, Johannes Manger and Isabella Lauf Tel: +49 89 94921482/94921487 E-mail: Johannes.Manger@messe-muenchen.de or Isabella.Lauf@messe-muenchen.de www.oils-and-fats.com

Clean and efficient vacuum systems Hall 3 S tand 30

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Come and visit the OFI stand at oils+fats 2015

OFI events 13-14 April 2016 OFI India 2016

VENUE: Hyderabad International Convention Centre, 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 Erik Heath, Chinese Sales Executive Tel: +44 1737 855108; E-mail: erikheath@quartzltd.com

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D IARY OF EVEN TS

20-21 AUGUST 2015

22-24 SEPTEMBER 2015 8th Biofuels International Conference

Palmex Thailand 2015 Exhibition

VENUE: Surat Thani, Thailand CONTACT: Fireworks Media (Thailand) Co Ltd Tel: +66 2513 1418 E-mail: thai@asiafireworks.com Website: www.thaipalmoil.com

2-4 SEPTEMBER 2015

VENUE: Porto, Portugal CONTACT: Ishemin Juma, Biofuels International, UK. Tel: +44 20 3551 5751 E-mail: shemin@biofuels-news.com Website: www.biofuels-news.com/conference

27-30 SEPTEMBER 2015 13th Euro Fed Lipid Congress

2nd High Oleic Oils Congress

VENUE: Paris, France CONTACT: FAT & Associés, France Tel: +33 567 339 206; Fax: +33 567 339 203 Website: www.higholeicmarket.com/hoc-2015

6-11 SEPTEMBER 2015 FOSFA - Basic Introductory Course

VENUE: Royal Holloway, Egham, Surrey, UK CONTACT: Anna Baran, FOFSA, UK Tel: +44 20 7283 5511 E-mail: anna.baran@fosfa.org Website: www.fosfa.org

9 SEPTEMBER 2015 3rd International Conference – Black Sea Veg Oil Trade 2015

VENUE: Hilton Hotel, Kiev, Ukraine CONTACT: Julia Feofilova, UkrAgroConsult, Ukraine. Tel: +38 044 451 46 34 E-mail: fjs@ukragroconsult.org Website: http://bso.blackseagrainconference. com/en

15-17 SEPTEMBER 2015 oils+fats International Trade Fair for the Technology and Trade of Oils and Fats

VENUE: Messe München, MOC Veranstaltungscenter München, Germany CONTACT: Messe München GmbH, Germany Tel: +49 89 949 11 328 E-mail: info@oils-and-fats.com Website: www.oils-and-fats.com/en

15-17 SEPTEMBER 2015 Deep Fat Frying Symposium

VENUE: MOC, Munich, Germany CONTACT: Euro Fed Lipid, Germany Tel: +49 69 7917 533; Fax: +49 69 79 17565 E-mail: info@eurofedlipid.org Website: www.eurofedlipid.org/meetings/ munich2015/index.php

18-19 SEPTEMBER 2015 Malaysia-Poland Palm Oil Trade Fair & Seminar (POTS) 2015 VENUE: Warsaw, Poland CONTACT: Malaysian Palm Oil Council Tel: +603 78064097; E-mail: azriyah@ mpoc.my or kumar@mpoc.eu Website: www.mpoc.org.my

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

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

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

6-8 OCTOBER 2015 PIPOC 2015

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

14-15 OCTOBER 2015 9th Global Oils and Fats Forum 2015

VENUE: Los Angeles, USA CONTACT: Mohd Izham Hassan, Haznita Husin, Malaysian Palm Oil Council Tel: +603 7806 4097; E-mail: izham@ mpoc.org.my or haznita@mpoc.my Website: www.mpoc.org.my

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

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

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

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

27-30 OCTOBER 2015 SODEOPEC2015 – Soaps, Detergents, Oleochemicals and Personal Care

VENUE: Miami, Florida, USA CONTACT: Doreen Berning, AOCS, USA Tel: +1 217 693 4813 E-mail: doreenb@aocs.org Website: http://sodeopec.aocs.org/index.cfm

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

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

3-5 NOVEMBER 2015 7th Palmex Indonesia 2015

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

5 NOVEMBER 2015 FOSFA Annual Dinner

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

20-21 NOVEMBER 2015 PORAM Annual Forum and Dinner

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

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

VENUE: Marrakech, Morocco CONTACT: Société Marocaine pour l’Etude des Lipides (SMEL). Tel: +212 0522 704 672 Fax: +212 0522 704 675 E-mail: adlounia@yahoo.fr CONTACT: (French): Société Francaise pour l’Etude des Lipides (SFEL). Tel: + 33 567 339206; E-mail: fturon@fat-associes.com

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

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

14 OFI – JULY/AUGUST 2015 www.oilsandfatsinternational.com

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I NTE RN ATION AL M ARKET REVIEW

‘Weather market’ stalls price drop Despite smaller rapeseed and flattening sunflowerseed production, oilseed raw material supply should remain adequate thanks to the highest ever global soyabean stock, and provided palm oil output doesn’t falter with El Niño. However, things could change quickly if rapeseed seriously underperforms crop forecasts. John Buckley writes

ilseed raw material markets have been stronger than expected in the second quarter of 2015, as soya futures responded to rain-delayed sowings in the US and traders began to take more notice of declining prospects for global rapeseed and sunflower crops. El Niño might also be raising medium/longer-term dry weather risk for Asian palm oil output – usually the largest contributor to growth of global oil supply and subject to new demand pressures from origin countries’ biodiesel expansion plans. Analysts also continued to debate the impact of financial squeezes on the coming autumn’s Latin American soyabean plantings. All that said, the global oilseed complex has done well to rally as far as it has (CBOT soyabean futures recently by as much as 12% off their May lows). For what still can’t be ignored is the backdrop of the largest-ever global soyabean stock – both in absolute terms and in relation to consumption needs. Yet, due to soya’s relatively low extraction rate, the direction in which stocks of vegetable oils seem to be travelling looks far less bearish. The USDA, for example, recently forecast global stocks of the nine main oils declining in the coming season (starting in October) to a five-year low of 15.77M tonnes. That also assumes consumption will be rising by a below trend 3.5% (versus last season’s 4.3% and the previous year’s 5.7%).

Raw material supplies Some important changes have been seen over the past two months in estimates of raw material supplies. For soyabeans, Latin American output estimates have continued to increase, as was expected. Combined Argentine, Brazilian and Paraguayan output is now up to at least 162.5M tonnes. Possibly as much as 3M more will be added if the highest local estimates prove correct. The two leading Latin American producers also started the new season with record carryover stocks, expected to increase yet again in 2015/16 based on current new crop estimates. The USDA has Brazil’s next crop at 97M tonnes versus this season’s (already a record) 94.5M tonnes. Some local sources are either side of the new crop figure, due to uncertainty over how farmers will respond to farm credit and other economic squeezes. If Brazil does finish with the 28M tonnes or so of surplus soyabean stocks that the USDA forecasts, then that would be double the amount taken forward just four years earlier. Similarly, Argentina is seen starting next season with 33M tonnes and expanding that to around 34M tonnes in 2015/16 (versus a mere 16M tonnes in 2011/12). The USA, meanwhile, expects to start the new season with about 9M tonnes of soyabean carryover against an unusually low 2.5M tonnes for 2015/16. The USDA has global soyabean ending stocks for 2015/16 about 3M tonnes lower than in May (largely due to historical upward revisions to Brazil’s crush). However, this total would still be 10M tonnes higher than in 2014/15, 30M 16 OFI – JULY/AUGUST 2015 www.oilsandfatsinternational.com

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FIGURE 1: WORLD SOYABEAN CARRYOVER STOCKS

tonnes over 2013/14 and almost 40M tonnes above 2011/12. Thus there remains plenty of leeway here to cover any oilseed crop problems occurring in 2015/16, whether in the USA, Latin America or any other major producing country. Some residual bullishness looks likely to persist in the soyabean market for now due to uncertainty over the US crop outcome. Even the USDA’s survey-based area update in June remains exposed to considerable adjustment, having been taken before the main rainy period that held up and maybe downsized sowing from farmers’ original intentions. A late crop, some of it spoiled by ‘wet feet’ (condition ratings are drooping as OFI went to press) is also at more risk from summer heat.

CHART: JOHN BUCKLEY

I NT E RN ATION AL M ARKET REVIEW

However, while those now guessing where US production will end up could be literally millions of tonnes out, the abundant carryover remains a formidable supply cushion that does not justify runaway soyabean prices. The current forecast for global soya stocks is over 93M tonnes and more could be added if Latin American 2014/15 crop estimates continue to grow (see Figure 1, above). As a proportion of crush, stocks equal 34.8% versus this season’s 32.5% and the previous three-year average of 24.7%. Moreover, demand for soyabeans is seen growing less fast (4.5% or 11M tonnes) than the past season (6.5% or 15.5M tonnes). The main factor is Chinese crush growth slowing from 7.2% to 4.3%. In the

light of China’s economic slowdown, this is an aspect that needs to be watched. Argentine crush growth also offers good potential for the season ahead, however. For the oil industry, these numbers are offset by soya’s low oil yield – half or less than is obtainable from rape and sunflowerseed. Yet, large soya supplies are there to crush if needed and if the price/margin justifies it. Even at soya’s 18.5% extraction rate, those stocks still add up to a lot of extra oil. World consumption of soya oil is seen growing 1.83M tonnes or +3.9% next season. This is due to the record supply and the price of soya being more competitively priced against its main rival, palm oil. Even though more soya oil is going to US and other biodiesel outlets, this is slower than last season’s 4.4% growth (when rapeseed oil demand was expanding by a faster 6.7%). While the question remains – ‘where will all the soya go?’ – the forward futures picture for soyabeans shows no major descent in prices. Does that suggest the markets think supply growth has been overstated? Or have soyabean prices got further to fall once the coming US crop is assured?

Rapeseed taking a big hit Among the major oilseeds, rapeseed now seems likely to take the significantly bigger hit in terms of new production. The USDA has global output dropping from this season’s record 71.7M tonnes to 68.5M tonnes (see Figure 2, following page). However, that may now be too high as it was based on higher Canadian and EU estimates than v

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FIGURE 2: WORLD RAPESEED CROP EXPANSION FALTERS

FIGURE 3: WORLD SUNFLOWER OIL CONSUMPTION – NEAR DOUBLE SINCE 2002/3

currently expected to be not far off last year’s 40M tonnes but still about 3M tonnes under the 2013/14 record. High production in 2013/14 left larger stocks that helped supplement the next season’s smaller crop. Main supply elements for 2015/16 include the EU’s crop, seen down from about 9M tonnes to 8.5/8.2M tonnes on slightly smaller area and lower yields than last year. Ukraine’s crop is forecast slightly below last year’s 10.2M tonnes (versus 2013’s 11.6M tonnes). This is due mainly to falling yield, which some analysts say may take it lower still. Russia’s crop, on the other hand could improve from last year’s 8.9M tonnes to 9.4M tonnes on bigger area and yield. Overall, Russia and Ukraine could export almost as much as 2014/15 but price premiums over soya and palm may have to increase further to ration supplies among customers who consumed more sunflower oil last season (some Asian countries as well as Europe and the CIS countries themselves) Overall, world sunflower oil use is seen by the USDA as rising from 14.8M tonnes to 15M tonnes, a narrow new record (see Figure 3, left). However, crushing that much seed would, on present crop pointers, mean cutting sunflower stocks by 27% to a very low 1.9M tonnes.

Taxes cause problems for palm oil

v those that are now circulating. Over the past two months, unusually dry weather held up and reduced Canadian sown area. This was followed by a cold spell delaying development. The warmth that was needed to speed things up might now veer towards becoming excessive, further damaging late crops’ yield potential. The Canadian Wheat Board recognised the deterioration at the end of June when it issued a crop range of 12.6M to 13M tonnes, versus the USDA’s 14.8M tonnes and last year’s 15.56M tonnes. As drought drags on in some major areas, some private analysts have been suggesting the crop will be lucky to make 10M tonnes – but that seems a bit too pessimistic at this stage. To keep crush stable around 7.2M tonnes and assuming exports are within 500,000 tonnes of the past season’s 8.8M tonnes, Canada will have to cut carryover stocks to the bone. The USDA says stock will need to be cut from 2.1M to 1.6M tonnes but, on their demand assumptions, the lower crop estimates above would actually imply a considerable negative carryout. Within the EU, all the talk has been about lower yields after dry weather accompanied by heatwaves in some regions. This has especially affected leading producers France and Germany. The total crop is probably at least 500,000 tonnes under the USDA estimate of 22.1M tonnes. Europe is also expected to draw stocks down by at least 800,000 tonnes to maintain crush anywhere near a 25M tonne level but, at this stage, projections for carryout at 1.6M tonnes look optimistic. This also assumes that the EU can find imports close to last year’s 2.5M tonnes in a year of tighter global supplies. In the CIS region, as expected, the tighter fiscal climate seems to be taking a toll on planted area (Ukraine) and yields (Russia and Ukraine), implying a drop of 10-15% in output and a corresponding fall in exports from these major suppliers to the EU.

Local estimates have also marked down output in another key supplier, Australia, possibly as low as 3M tonnes (3.4M tonnes last year). Globally, rapeseed stocks will hit their lowest level for some years. Prices have already responded by racing to 14-month highs on the Paris and 21-month highs on the Winnipeg futures markets. The rise may not quite be mirrored on the Canadian physical markets. However, amid a slower advance in product value, it has been enough to collapse margins and take crush down to unusually low levels recently. Although this is currently well underutilising Canada’s crush capacity, it is unlikely to make a huge difference to the country’s tight carryover stocks if product value eventually rises accordingly. The tighter European supply is already reflected in advancing prices for rapeseed oil, which is also being boosted by the chronically weak Euro. Since the last review, the cost of bulk crude rapeseed oil has moved from a modest 4% discount to a near 9% premium over soya oil. It will be interesting to see to what extent this move – which is surely not over yet – tests consumer loyalty to an oil that has enjoyed a value boost in recent years from successful ‘healthy eating’ promotions. EU food consumption of rapeseed oil is, in fact, still forecast by the USDA to grow 4.6% in 2015/16 after an 11% jump in 2014/15, whereas industrial use is seen flattening out (down about 3%) with pausing expansion in the biodiesel sector.

Extension of sunflower oil premium Sunflower oil’s premium over the other soft oils and palm has also been extended lately on what appears to be a deteriorating supply outlook. On the European market, RBD sunflower has recently been quoted almost 22% over soya and 17.5% over rapeseed oil. World production of sunflowerseed is

Palm oil markets have been erratic over the past couple of months. Traders have tried to divine the impact of origin biodiesel expansion programmes, Indonesia’s new export taxes, the extent of the seasonal uptrend in Asian production and still rising competition from unusually cheap soya oil. Malaysian May exports showed an impressive 37% jump when China, Europe and India came back to buy in a big way as prices fell to new lows. However, preliminary June export figures suggested a drop to between 2% and 9% growth and the early July estimates little or no gain. Importers turned to Indonesia to beat the latter’s punitive new export taxes (US$50/tonne on crude, US$30/tonne on processed palm oil). Markets also wondered if Indonesia was getting cold feet as it twice postponed the levies’ introduction into mid-July. Traders also questioned again whether the new Indonesian biofuel programme really could consume 4M tonnes of palm oil as some reports suggested. Of the current year’s output of 32.5M tonnes, about 10M tonnes is used domestically and about half of that in biofuel. Some leading auto-industry firms have also criticised plans to raise blending to as much as 15%, claiming many vehicles’ engines cannot cope with that. Another boost to demand could come from India. There, the oil industry is looking for a possible 2M tonne rise in the leading vegetable oil importer’s intake, led by palm, to offset lower crush from last year’s drought-hit domestic soya crop. Although El Niño remains a possible threat to forward palm oil production, this is yet to be proved. Additionally, the effect of any related dryness on fruiting and oil output wouldn’t be expected until six to 12 months down the road. In the meantime, production should be rising into the September/ October period, needing higher exports to avoid w another price-depressing stock build-up. John Buckley is Oils & Fats International’s market correspondent

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A Pennycress: what’s the catch?

s researchers move to find a renewable energy source that may eventually break our ill-fated marriage with fossil fuels, focus has shifted onto pennycress. In March this year the United States Environmental Protection Agency (EPA) completed an analysis of the greenhouse gas (GHG) emissions attributed to the production and transportation of pennycress oil for biofuel production and invited comments on its report.

Thlaspi arvense

PHOTO: ZPRECECH/DREAMSTIME.COM

In the running as a new biofuels feedstock is field pennycress. The crop is ideal for growing and harvesting in rotation with soyabean and corn and has a high oil yield, but it still hasn’t taken off. Rose Hales reports

Field pennycress, also known as stinkweed or frenchweed, couldn’t be called new by any stretch of the imagination and is, in fact, an enthusiastic weed which has been incensing farmers and land owners for centuries. Part of the brassicaceae family, related to mustard and canola, the reason for its oversight is, ironically, the same thing that lies behind its possible success – pennycress is not edible, and cannot be used for food production, but grows quickly and easily in reasonably hostile conditions.

A clutch of positive attributes So why is pennycress being considered for biofuels? Pennycress, like most weeds, is quite an unfussy plant and is happy growing just about anywhere. It doesn’t require much work, indeed, the weedlike traits of this plant mean that once the seeds have been sown, no maintenance is required at all until harvest. Its flat, heart-shaped pods contain tiny black seeds with 36% oil – this is double the oil contained in soyabeans and very similar to rape/ canola – and is considered to be a high yield. The seeds also contain 32% protein meal, which is a viable animal feed. In the form of oil, pennycress has attributes which make it a strong contender in the biodiesel market. A United States Department of Agriculture (USDA) study published in 2010 expounded the outcome of research into pennycress’ properties. As part of its study, the USDA’s Agricultural Research Service (ARS) produced a small amount of biodiesel from pennycress oil and evaluated it. Commenting on the research, it was said: “All diesel-based oils start to gel when it’s cold enough. So the cloud point, which is the temperature at which crystals become visible in the fuel, is a crucial factor in both biodiesel and petrodiesel production. Another important property is the pour point, the temperature at which the fuel fails to pour as a result of excessive solidification. The average cloud and pour points for field pennycress biodiesel were 14°F (–10°C) and –0.4°F (–18°C), respectively. These temperatures were well below the cloud and pour points of soyabean oil-based biodiesel.” These findings indicate that pennycress-based biodiesel could be utilised in cold climates. In addition the researchers observed that: “… field pennycress methyl ester characteristics, such as acid value, oxidative stability, cetane number, cold flow properties, viscosity, sulphur content, and phosphorous content, are all satisfactory under ASTM D6751 (Standard Specification for Biodiesel Fuel Blend Stock (B100) for Middle Distillate Fuels).” Significantly, pennycress is not a food crop. Therefore using it to produce biofuel does not 20 OFI – JULY/AUGUST 2015 www.oilsandfatsinternational.com

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compete with food use, quashing the food versus fuel debate that has clouded so many potential oilseeds in the past. The debate is fixed upon the risks of diverting farmland suitable for producing food to biofuel production. However, the EPA’s research determined that pennycress “is not expected to have significant indirect land use changes (ILUC).” It is a winter annual that is sown in the early autumn and harvested in late spring, meaning it is not in competition with the rotations of soyabean or corn, and can be grown while the fields would otherwise be empty, as exemplified in Table 1 (below). Even better, growing pennycress actually benefits the food crops it is grown in rotation with; it acts as a cover crop, holding nutrients in the soil and preventing erosion. To produce oil from the seeds, only the traditional and highly available production, logistics and processing equipment is required. Seeds need to be crushed using a cold press – high pressure from an expeller squeezes the oil from the seeds leaving behind a press cake. This process is less complex than soyabean oil extraction or ethanol production. USDA research found that the oil can be converted to fatty acid methyl esters (FAME) using a sodium methoxide catalyst in methanol.

What’s the catch? Even as a consideration for biofuel, the plant is not new. Reports have been appearing for years, quietly evangelising the positive attributes of so-called ‘stinkweed’. So what’s holding it back? The simplest reason why pennycress is still on the sidelines of the biodiesel industry is cost. Growing the crop is not yet economically viable and thus persuading farmers to cultivate it is difficult. Pennycress is caught in a ‘catch 22’ – it will only become cost effective once it is grown in large quantities but no one is willing to commit to growing it until it is clear that it can make money. An answer to this problem is, however, already on its way from a young US biotech firm called Arvegenix. Arvegenix may only be two years old, but it’s got experience on its side. Jerry Steiner, the company’s founder, is a former Monsanto executive, and many other members of the modest team also bring decades of knowledge to the table. In its 1,000 row nursery near Labadie, Missouri, Arvegenix is studying and investigating pennycress with a view to future cultivation. An article published in February this year in the Seattle Times reports on the company’s research. Arvegenix is attempting to domesticate a wild strain of pennycress (just as soyabean was

PHOTO: ARVEGENIX

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that the plant will take over their fields”. Corn and soyabean’s ordinary herbicide programmes should control the spread of pennycress. However if rotated with other winter annuals, he admits a problem could be created.

Greenhouse gas emissions

FIELD PENNYCRESS SEEDS CONTAIN 36% OIL, A HIGH YIELD SIMILAR TO RAPESEED

domesticated in the 1920s). The company is aware of the qualities of pennycress, but it also has a strong understanding of what needs to be done to make a future with pennycress-based biodiesel a reality; it is focusing on “using advanced breeding technology to nudge the plant toward something better than it is today. A plant needs to be more predictable, more consistent and one that produces a higher oil yield.” Achieve these simple goals and the crop will have “no trouble attracting the attention of farmers”, Dennis Plummer tells the Seattle Times. Arvegenix is hoping to achieve domestication of the crop by the end of this decade. According to a report in the St. Louis Business Journal in May this year, Arvegenix have succeeded in raising US$2.5M from a group of investors including Monsanto, Cultivation Capital and BioGenerator to be used to expand the R&D programme, as well as fund regulatory studies and grow operations.

Once a weed, always a weed The final hurdle facing the large-scale production of pennycress is that it is currently listed on the restricted weed list in nine prospective growingstates of the northern Unites States, including Michigan (where it is also on the invasive species list) and Iowa. The EPA’s report on the crop notes that this indicates “limitations on the use of the plant in those [states] and a high probability of impacting production systems such as agriculture, nurseries and forest plantations”. Many farmers may need convincing that pennycress isn’t going to become invasive. Biodiesel Magazine interviewed Terry Isbell, lead researcher in the new crops and processing technology group at the National Center for Agricultural Utilization Research in Peoria, Illinois, who explained: “Farmers will be concerned

Pennycress is clearly becoming an oilseed to watch, and in just a few short years it could be at a stage where planting the winter annual is the more popular choice. In preparation, Arvens Technology – pennycress developers seeking to produce biofuel and aviation jet fuel from the crop – filed a petition with the EPA, leading it to undertake the previously mentioned analysis of the crop’s GHG emissions. The report thoroughly examines the production and transportation of the oil and notes that: “new agricultural sector modelling is not needed to evaluate the lifecycle GHG impacts of using pennycress oil as a biofuel feedstock for purposes of making GHG reduction threshold determinations for the RFS program. This is in part because of the similarities of pennycress oil to soyabean oil and camelina oil, and because pennycress is not expected to have significant land use change impacts. Instead of performing new agricultural sector modelling, EPA relied upon the soyabean oil analysis conducted for the March 2010 rule to assess the relative GHG impacts of growing and transporting pennycress oil for use as a biofuel feedstock.” Additionally the report looks into the future of pennycress cultivation and what could be achieved. As the crop can be rotated with soyabeans the USDA determines “pennycress could be cultivated on 31M acres in Illinois, Iowa, Ohio, and Indiana” – current soyabean growing spaces. “However, industry is also considering cultivating pennycress in other Midwest corn-belt states, and according to their estimates, 40M acres could be cultivated”, the report adds. The report is now closed for comments, which the EPA will review, combining them with its own evaluations of GHG emissions associated with the agricultural use of pennycress oil feedstock and emissions attributed to producers’ production processes to “determine whether the proposed pathways satisfy CAA lifecycle GHG emissions reduction requirements for RFS-qualifying renewable fuels.” The report concludes that it anticipates biofuel produced from pennycress “could qualify as biomass-based diesel or advanced biofuel (when using typical fuel production w processes).” Rose Hales is OFI’s editorial assistant

TABLE 1: EXAMPLE OF SOYABEAN, CORN AND PENNYCRESS ROTATION Jan Year 1

Feb

March

April

May

June

July

August

Corn Planting

Indicates fallow months

October

Nov

Dec

Corn harvest / pennycress planting Pennycress harvest

Year 2

September

Soyabean planting

Soyabean harvest

Indicates growing months

Compiled by the Environmental Protection Agency

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Seeking futuristic feedstocks Bioplastic is becoming a serious contender to supplement traditional plastics by challenging high greenhouse gas emissions and our reliance upon shrinking natural gas and petroleum supplies. Like biofuels, bioplastics raise concerns over the use of food crops as feedstocks, but are these concerns valid and what will replace them? Rose Hales writes

hen Leo Baekeland created the first fully synthetic plastic, Bakelite, in 1907, he caused a revolution that has lasted for more than a century. Although we use more modern versions than the original Bakelite, plastic has changed the way we build and package, finding its way into food packaging, cars, planes, scientific instruments and almost every other common use item. Being both durable and long lasting, it’s no surprise that plastic is so prolific. Unfortunately, its omnipresence has become a burden rather than a celebration in recent years; apart from a small amount which is incinerated, every piece of plastic ever made is still present on the planet. Traditionally plastic is made by ‘cracking’ crude oil or natural gas to convert it into hydrocarbon monomers such as ethylene, propylene, styrene, vinyl chloride and ethylene glycol – a process which produces a large amount of greenhouse gas (GHG) emissions and also uses precious and irreplaceable fossil fuels. In response to the problems created by conventional plastics and fast diminishing supplies of petroleum and natural gas (the International Energy Association says in a report that output from the world’s oil fields is declining at a rate of 9% with oil prices set to exceed US$200/barrel by 2030), researchers have been experimenting with at least partly replacing conventional feedstocks with vegetable oils and plant-based feedstocks to create so-called ‘bioplastics’. Bioplastics differ from traditional plastics because they are either derived from bio-based feedstocks, are biodegradable, or both. The bioplastics industry currently makes up less

PHOTO: MONTICELLLLO/DOLLARPHOTOCLUB.COM

than 1% of all plastic produced annually. In 2013 this amounted to a global production of around 1.6M tonnes, with 300M tonnes of plastic produced overall, according to industry association European Bioplastics. Although this seems small, demand is rising steadily and it is expected that production capacity will reach 6.7M tonnes by 2018 (see Table 1 following page). Its uses are wide and varied and include packaging (the leading market segment), food services, agriculture and horticulture, consumer electronics, automotive, consumer goods and household appliances. It was estimated in 2012 that the US bio-based plastics market was worth more than US$490M, according to The Society of the Plastics Industry Bioplastics Council’s executive summary. Extending the industry makes economic and environmental sense, and is also backed by the majority of consumers: about 80% of European consumers want to buy products which have a minimal impact on the environment (according to a eurobarometer survey EC 2013).

The challenge has been set Our appetite for plastic isn’t slackening even though in its conventional form it is unsustainable, thus it is necessary that a suitable equivalent is found. Even though the first bioplastic – polyhydroxybutyrate (PHB) – was discovered by Maurice Lemoigne in

1926, the finding was overlooked for decades due to the affordability and abundance of petroleum at the time. The mid-1970s brought a petroleum crisis that rekindled an interest in bioplastics, and by the early 1990s, numerous types had been established and the industry was growing rapidly. Like any sustainable alternative, a plastic replacement must replicate the desirable qualities of plastic if it is going to become a long-term solution, while responding to the material’s undesirables. Traditional plastic is attractive for a number of key reasons; it is versatile, strong, durable, long lasting, takes on virtually any form and is relatively cheap to produce. However, plastic has its undesirable qualities too: durable and long lasting it is indeed – it is estimated that each piece of plastic will take between 300- 500 years to biodegrade (interestingly, plastic hasn’t existed long enough for anyone to know for sure). A considerable amount of energy is required to produce traditional plastics. Brian Momani states in his paper, Assessment of the Impacts of Bioplastics, that “the plastics industry in the United States consumes about 6% of all energy used by American industry.” He then estimates that “if all plastics in the world were replaced by bioplastics and the energy used came from renewable sources the fossil fuel saving would be approximately 3.49M barrels/day. That is 4% of the world’s fossil fuel usage.”

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Feedstocks According to European Bioplastics: “Bioplastics are mostly made of carbon hydrate rich plants, such as corn or sugarcane, so-called food crops or first generation feedstock.” The association continues by explaining that the reason that first generation feedstock is predominantly being used is because it is “the most efficient feedstock … it requires the least amount of land to grow and produces the highest yields.” Recently there have been developments in the creation of soya-based polymers said to be on the cusp of transforming the industry. Composite Manufacturing Magazine reports on the activities of bioplastics start-up Biobent Polymers, which makes no secret of its use of soyabeans as an abundant agricultural resource. In particular it makes use of unrefined soya meal and other coproducts. Biobent created a unique soya-based polymer that can replace up to 40% of the petroleum used in polypropylene and polyethylene, moreover the bioplastics produced maintain the properties of the base plastic. The company’s findings were approved in June last year by the US-based United Soybean Board (USB), which confirmed the polyols as a reliable and lower carbon footprint alternative to conventional polyurethane, according to Bioplastics News. The USB supported research and testing into the soya-based polyols, Bioplastics News reported that its study confirmed: “5.5 pounds of CO2 equivalents are removed or prevented from entering the atmosphere for every pound of soyabased polyol that replaces a pound of petroleum-based polyol in a product.” Anyone familiar with the biofuels industry will be aware of the increasing move away from first-generation feedstocks and fierce opposition to their use on the basis of indirect land use change (ILUC) and the food vs fuel debate. An EU ruling was signed on 28 April enforcing a limitation on the percentage of first-generation biofuels that can be used in the transport sector, which has been capped at 7%. So exactly how much land is being used to produce the feedstocks needed for current bioplastics production? European Bioplastics estimates that the global agricultural area is 5bn ha, and the percentage used by the bioplastics industry in 2013 stood at 0.01% – or 0.6M ha. It is expected that this will rise and by 2018 the total land area used to grow bioplastic feedstock will be 1.3M ha, or 0.02% of total agricultural land. To provide a comparison, the percentage of global agricultural land used to grow biofuel feedstock is 1%, totalling 53M ha, and 26% is used to grow food and feed, 1.24bn ha (see Table 2 following page). Some of the main players currently working in the area of bioplastics creation include NatureWorks LLC, which manufactures plant-based Ingeo biopolymer (polylactic acid); Solegear Bioplastics, producers of bio-based and compostable bioplastics; chemical producer giant BASF, which has a biodegradable plastics arm; Braskem, world leader in the production of green polyethylene (Green PE) from sugarcane ethanol; and BIOTEC, which produces sustainable bioplastics and thermoplastic materials which are 100% biodegradable.

Purity Rules

Developments and the future

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As with biofuels, development in bioplastics is concentrating on second and third generation feedstock in order to move away from food crops. ETH Zürich announced in December last year that researchers at its Institute for Chemical and Bioengineering had developed a process that produces lactic acid (PLA) from glycerol – the waste by-product of biodiesel production. This new way of producing PLA, a staple for disposable cups, bags and other packaging, is more productive, cost-effective and climate-friendly than the typical sugar fermentation production. There is a huge amount of glycerol left over following biodiesel production that, due to its impurity, has limited uses. Glycerol can be converted enzymatically to an intermediate called dihydroxyacetone, it is then processed with a heterogeneous catalyst into PLA. The procedure reduces overall CO2 emissions by 20% compared to fermentation, according to a statement from the company. Biofuels Digest reported in April that California-based Solazyme played a part in producing the world’s first algae-based surfboard; traditionally surfboard manufacturers use petroleum. The company supplied algal oil to scientists at the University of California San Diego who used the oil to create the board. The oil was changed into polyols and mixed with silicate to produce a hard foam substance. Biofuels Digest quoted Solazyme as saying: “This new application of Solazyme’s oil underscores the innovative, flexible and sustainable capabilities of microalgae.” An additional second-generation bioplastics feedstock is palm leaves. Omroep Zeeland reports the discovery, which when mixed with pre-existing v

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v biological plastic from beet and cane makes bioplastic that breaks down after only six months. Of course, for this reason it isn’t suitable for all types of packaging, but it could be particularly suited to wrap perishable food items, according to the Omroep Zeeland report’s interview with the bioplastic’s Dutch creator, Nico Osse. In most recent and important developments in the industry, UK-based Biome Bioplastics announced in April that it is developing sustainable chemicals to be used in the creation of bioplastics. Following research in June last year, which confirmed that bioplastic could be made from extracting organic chemicals from lignin in order to manufacture bioplastics, the company is now leading a programme which aims to progress the research through to industrial scale production. Lignin is an abundant waste product from the pulp and paper industry. Bioplastics derived from certain proteins have also been said to show antibacterial properties, according to a report in Biomass Magazine in April this year covering ground-breaking research conducted by the University of Georgia. Researchers tested three non-traditional bioplastics materials – albumin (a protein found in egg whites), whey and soya proteins – and blended them with glycerol, producing bioplastics with “complete inhibition”,

Biomass Magazine quotes Alex Jones, a doctoral student at the university, as saying that, “no bacteria would grow on the plastic once applied”. Additionally the aforementioned bioplastics break down fully in a maximum of two months. Such studies show that not only is bioplastic seeking and achieving comparable success to traditional plastic, but it is even exceeding the uses of plastic in radical and beneficial ways.

Better than plastic? Plastics are used extensively in food and drink packaging although fear is growing on the safety of this utility. Additionally problematic is the amount of GHG the industry produces. According to European Bioplastics, bio-based alternatives “possess the unique potential to reduce GHG emissions or even be carbon neutral” since plants absorb CO2 as they grow. Bioplastics significantly outstrip their fossilfuel rivals on the ability to biodegrade or in any way break down during or after use. The ability of certain bioplastics (such as PHB and PHA) to break down over time due to the degradation of the chemical links between monomers makes them especially useful for medical applications. The degradable products are natural metabolites

TABLE 1: GLOBAL PRODUCTION CAPACITY OF BIOPLASTICS

SOURCE: EUROPEAN BIOPLASTICS, INSTITUTE FOR BIOPLASTICS AND BIOCOMPOSITES, NOVA-INSTITUTE (2014)

TABLE 2: LAND USE FOR BIOPLASTICS 2013 AND 2018

SOURCE: EUROPEAN BIOPLASTICS, INSTITUTE FOR BIOPLASTICS AND BIOCOMPOSITES, NOVA-INSTITUTE (2014) *IN RELATION TO GLOBAL AGRICULTURAL AREA **ALSO INCLUDES APPROXIMATELY 1% FALLOW LAND

and can be used in absorbable surgical stitches and controlled release drugs. Traditional plastics do not degrade. A type of plastic known as ‘enzyme-mediated’ exists, and regardless of claims is not biobased, instead it has been enriched with small amounts of organic additive, supposedly the additives are degraded by microorganisms and the process natural extends to the plastic, degrading the product faster. According to European Bioplastics there is no current scientific test for enzyme-mediated plastics that proves biodegradability or compostability. A study posted by the American Chemical Society in February titled Evaluation of BiodegradationPromoting Additives for Plastics, found that none of the five different additives tested significantly increased biodegradation of PE or PET polymers – in opposition to claims made on packaging and by manufacturers.

Safety issues and BPA Although almost all food and drink is packaged using a form of plastic, it has not yet been agreed or confirmed that the chemicals used in plastic production are safe when indirectly consumed. The main concern is with a chemical known as BPA (Bisphenol A) – a carbon-based synthetic compound that makes plastic clear and tough, part of a group called phthalates. Since its commercial use began in 1957, BPA has crept into the majority of our food and drink packaging, as well as baby toys and drinking bottles. Arguments continue to rage back and forth on the effects of BPA, but according to a report by the Guardian, “researchers have linked phthalates to asthma, attention-deficit hyperactivity disorder, breast cancer, obesity and type II diabetes, low IQ, neurodevelopmental issues, behavioural issues, autism spectrum disorders, altered reproductive development and male fertility issues.” It continues by saying that “enough distinct phthalates have been studied to indicate that companies should proceed with caution when using any chemical in the phthalate class, particularly in products for pregnant women or young children, whom the research has indicated are the most vulnerable to the effects.” Considering that such accusations cannot be 100% disproved, it is the general consensus that exposure to BPA and other phthalates should be limited, especially for babies and young children. And particularly as the long-term effects of high exposure cannot yet be fully certified, taking into account plastic’s relative newness. If bioplastics are to be seen as a genuine replacement, they must respond to this chemical fear. So how safe are they? According to Momani’s assessment “bioplastics have not been implicated in any health problems”, as either monomers do not leach from the bioplastics, or are relatively harmless when they do. Although he does admit that bioplastic is an even newer product than conventional plastic and still in development, meaning implications may yet become apparent. However, plasticisers (additives that increase flexibility) used in bioplastics are more understood; most use bioplasticisers such as sorbitol, glycerin and triethyl citrate, which are all low in toxicities and would cause no health effects, Momani w asserts. Rose Hales is OFI’s editorial assistant

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The trans fatty acid conundrum The development of analytical methods and equipment has greatly helped the understanding of the harmful effects of trans fatty acids. Ray Cook writes

n the past two decades, a great deal has been written about the hazards of trans fatty acids in our food supply. Some countries have virtually banned industrially produced trans fatty acid use in food. The USA has declared them unsafe, others like Denmark have made it a criminal offence to exceed specified limits. In the UK, the food safety agencies have requested that food companies impose voluntary restrictions. Many people including some technologists do not know the full story about how trans fatty acids are formed and the paradox that natural trans fatty acids, found in animal and dairy fats, are not harmful, whereas industrially created ones are. The development of analytical equipment in the mid-1990s was key in accurately measuring trans isomers which, until then, were very difficult to detect. More sophisticated methods and equipment eventually led to greater understanding of the damaging impact of partially hydrogenated oils and high temperature refining.

The structure of fatty acids Fatty acids are nature’s food store. They all have a similar structure, regardless of the plant or animal which formed them. A number of carbon atoms (typically 12 to 18) are strung together and linked by chemical bonds. The 18 chain length is predominant. Each carbon atom is then additionally linked to two hydrogen atoms. Sometimes, nature creates a situation where there is only one hydrogen atom on each of two adjacent carbon atoms. Chemistry then compensates by creating a new double bond between the two carbon atoms. This is known as an unsaturated bond. An example is C18:1, oleic acid. Sometimes there may be two or three such double bonds, for example, C18:2 and C18:3 or polyunsaturated fatty acids (PUFAs). One sub group of the PUFAs are C18:2 linoleic acid (LA) and C18:3 alpha linolenic acid (ALA). These are known as essential fatty acids (EFA). The elongation and desaturation processes to convert short-chain essential fatty acids (EFA) to

FOR MANY YEARS, THE FOOD INDUSTRY UNWITTINGLY USED FATTY ACIDS WITH HIGH LEVELS OF TRANS ISOMERS IN INGREDIENTS FOR SNACK FOODS, MAYONNAISE, MARGARINES AND SALAD OILS

long-chain EFAs in the human body are generally accepted. The mechanism is believed to be more dynamic in women than men, possibly due to the need to produce eicosapentaenoic acid (EPA) and docosahexaenoic acid (DHA) during foetal and child growth if these long-chain fatty acids are deficient in the mother’s diet. The main differences in physical characteristic of fatty acids is the melting point. A saturated fat (one with no double bonds) will have a melting point of ~65°C whereas a PUFA fat could have a melting point of –20°C. Another feature of PUFA fats is their ease of oxidation and poor stability, making them unpopular for use as frying fats or in snack foods. Oil refiners can counter this by carrying out a partial hydrogenation reaction, whereby hydrogen gas is allowed to react with the PUFA at high temperature in the presence of a nickel catalyst. This converts some of the double bonds, reducing the content of C18:3 fatty acids (these being the most vulnerable to oxidation and rancidity) and converts them to C18:2. This process has an intermediary stage where the double bond will twist around its axis before accepting the hydrogen. This twisting is known as trans isomerisation. The melting point of the trans isomer is significantly higher than the natural cis isomer, as the twisting effectively straightens the molecule, giving it a similar shape to a saturated molecule (see diagram, following page). The prefix trans is a chemical term which simply indicates that a molecular structure has a different shape or arrangement of the same atoms. Ruminants carry out a similar process but using enzymes. Grass contains low levels of PUFAs, which the bacteria in the gut of a cow is able to change from a low melting point oil into butter fat or tallow. The big difference is that the ruminant is very selective and only creates specific fatty acids, some of which are mono trans fatty acids and some with two double bonds. These particular trans fatty acids – conjugated linoleic acid (CLA) and vaccenic

acid – have been found to be effective at countering cancer and certain diseases in human trials. The industrial trans fatty acids, on the other hand, are more random and include dozens of new isomers which are foreign to our bodies and are suspected to be the cause of some non-transmitted diseases and illnesses. The isomerism can also involve the movement of the double bond to a new location on the carbon chain. To complicate matters further, there is another family of artificial trans isomers, created not by hydrogenation, but by subjecting the PUFAs to extremely high temperatures, typically over 260°C. At this temperature, the fatty acid with three double bonds, C18:3 (ALA) will isomerise readily. For many years, levels of up to 40% isomerised ALA molecules were unwittingly used as ingredients in large segments of the food industry, including mayonnaise, margarines, salad oils and snack foods. The key problem was that PUFA trans isomers were very difficult to detect and measure. It was only in the mid-1990s that analytical equipment became readily available which could accurately measure the content of these isomers. Unfortunately, this situation has lead to a great deal of confusion in the food industry. Two types of industrial trans isomers, animal fat trans isomers, combined with a lack of analytical capability, created a damaging legacy.

Industry turns to hydrogenation In the 1970s several studies were carried out in the USA, suggesting that saturated fats were the main cause of increases in cholesterol and associated risk of coronary heart disease (CHD) and diabetes. This news sparked a major revolution in the food trade. Companies such as McDonald’s were compelled by market forces and in some cases legal action, to stop frying chips in animal fats. All of the major crisp and snack food manufacturers were similarly impacted and the domestic market for oils and fats also moved away from butter and other animal fats. Every western country turned to hydrogenation v

25 OFI – JULY/AUGUST 2015 www.oilsandfatsinternational.com

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Developments in measuring trans fats

uch of the development of trans fatty acid analysis has been driven by major companies and research establishments in the USA. Health issues were initially the main driving force. This was coupled with free market competitive propaganda, where controversies raged on the harmful effects of saturated fats, then palm oil, then trans isomers. Funds were made readily available for research into these areas, which not only examined the health implications of dietary variants but also the equipment needed to measure the fatty acid profiles. The American Oil Chemists Society (AOCS) provided a centralised focal point for the methodology used in the research in the USA. The international field involved the Association of Analytical Communities (AOAC). This is an independent international body, with members from industry, government agencies and research establishments. The International Organization for Standardization (ISO) fulfils a similar function and many of the methods used in oils and fats analysis will be found in ISO standards.

Before 1992

Fatty acid composition would typically be determined by AOCS method Ce 1-62-2. This method used a gas chromatograph (GC) with a simple glass column (2-3 mm ID) which could resolve the main peaks. This could be used for oil identification and provide a simple control for hydrogenation reactions and blending products. Most manufacturers and refiners would have this capability. More sophisticated GC equipment was also becoming available using packed capillary tube technology which, by 1992, had become rugged enough to be used by regular laboratory staff. This early equipment could be used according to AOCS method Cd 14-61(2) to determine monoenic trans and positional fatty acids, but not the polyunsaturated isomers.

Post 1992

SOURCE: WIKIPEDIA

The demands from universities and research establishments led to the development of much more sophisticated methods and equipment. Many new standards were introduced. In 1997, for example, the AOAC method 965.34 for the determination of isolated isomers in margarines and shortenings was published. This was followed in 1998 by method 994.14 to determine the isolated trans fatty acid content in partially hydrogenated fats. The equipment has also became more sophisticated. In order to resolve and measure the peaks associated with trans isomers of the C18:2 and C18:3, the packed column length was increased to typically 100m, with 60m regarded as the minimum. The methods and the equipment used can produce variations in results and this sector of analysis still needs standardisation between laboritories. The technology continues to progress with GLC systems now being developed, using specially created short columns. The current method of analysis used to determine trans and positional isomers in many laboratories is based on the AOAC Official Methods of Analysis 969.33 and 963.22, which are very similar to ISO 12966-2, Transmethylation using a Boron Trifluoride Catalyst. The oil or fat sample is saponified by refluxing with methanolic potassium hydroxide followed by refluxing with boron trifluoride in methanol to form fatty acid methyl esters (FAMEs). The FAMEs are extracted with heptane after addition of saturated sodium chloride solution. The FAMEs are analysed by gas chromatography (GC) using a BPX70 capillary GC column (60m x 0.22mm x 0.25µm) which is suitable for separation of cis and trans isomers. The fatty acid peak areas are normalised to produce the fatty acid profile.

The geometric structure of trans and cis isomers Trans (Elaidic acid) Elaidic acid is one of the principal trans unsaturated fatty acid often found in partially hydrogenated vegetable oils

Cis (Oleic acid) Oleic acid is a cis unsaturated fatty acid making up 55–80% of olive oil

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

Saturated (Stearic acid) Stearic acid is a saturated fatty acid found in animal fats and is the intended product in full hydrogenation. It’s neither cis nor trans because it has no carboncarbon double bonds

Not isomeric with the previous two

v as the wonder process to solve this problem. The process had been around for several decades and mainly used in the manufacture of hard ingredients for block margarine. The new process involved only light or partial hydrogenation and was tailored to reduce the C18:3 content without affecting the melting point too greatly. Initially, soyabean oil was the main source and later rapeseed oil, as that became a major industrial crop in the 1980s. Millions of tonnes of this hydrogenated material were produced annually worldwide for use in snack food manufacture and soft margarines. A decade later, health authorities began to identify a very worrying trend with coronary heart diseases (CHD) and type 2 diabetes being linked to the consumption of trans fatty acids in hydrogenated oils. However, the analytical equipment available at the time could only measure the mono trans fatty acid isomers, not the PUFA trans isomers, so the blame was firmly placed on the mono trans fatty acids. A major study in the USA of 120,000 nurses over 1976-1990 confirmed that the consumption of trans isomers was indeed resulting in a higher level of CHD events compared with saturated fats. More detailed analysis discovered that the hydrogenated fats were increasing the ‘bad’ low density cholesterol and also reducing the ‘good’ high density cholesterol. The saturated fats, on the other hand, were increasing both the good and bad cholesterol in similar proportions. The reaction to these observations was slow but in the late 1990s and over the next 10 years, there was powerful pressure to move away from hydrogenated ingredients. Labelling laws were introduced, obliging food manufacturers to declare if the product was hydrogenated. Manufacturers started to reformulate products using palm oil fractions. New strains of seed oils and other new processes were developed, thus avoiding hydrogenation altogether. These discoveries, however, could not explain why the mono trans isomers found in dairy products were not harmful but the industrially produced isomers were. It was not until 2002 that a study of a large number of actual CHD deaths established a correlation between CHD and the presence of C18:2 trans isomers, not C18:1 isomers. The analytical facilities had finally caught up with the reality that partial hydrogenation produces very high levels of polyunsaturated isomers and relatively low levels of mono trans isomers. The mono trans isomers as found in dairy produce were not the cause after all, thus explaining the paradox. While the scientists were still getting to grips with the impact of hydrogenation in our diets, another new and equally damaging process was being introduced.

The effect of high temperature refining Oils and fats have to be refined before being introduced as food ingredients. The traditional process involves the use of caustic soda to react with the ‘loose’ free fatty acids (FFA). These are the ones that have broken away from the triglyceride molecule structure. The caustic soda reacts with the FFA to make soap which can then be separated from the oil in the aqueous phase. The final stages then comprise of bleaching the oil to improve the colour, followed by a deodorisation step which involves bubbling steam through the oil under v

26 OFI – JULY/AUGUST 2015 www.oilsandfatsinternational.com

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I NST RUM EN TATION & AN ALYSIS

v vacuum at around 200-220 °C. Refiners discovered in the early 1990s that they could cut out the costly and environmentally unfriendly step of caustic refining by simply increasing the temperature of the deodorisation stage to above 260°C. The FFAs could now be removed by distillation in a process known as physical refining. What they did not know for many years was that this process was having a dramatic effect on the molecular structure of the C18:3 molecules and, to a lesser extent, the C18:2 molecules. Both rapeseed and soyabean oils are rich in omega 3 and omega 6 fatty acids, having typically 10% content of C18:3 ALA and 25-50% of C18:2 LA. The body needs these molecules as building materials. Various enzymes and bacteria in our bodies can then convert them into much more complex omega 3 molecules such as EPA and DHA. These molecules are then further modified to create blood and brain cells, hair, tissue and even the molecules used to transmit electrical signals. EPA and DHA are also found in oily fish, an important route to obtaining these fatty acids in our diet. The new high temperature process was rapidly introduced in most of the western world and was having a huge effect. Large percentages of the ALA were being structurally changed. Some studies reported up to 40% was being isomerised. While seemingly high, it was 4% when related to the oil as a whole and was generally dismissed as minor, compared to the higher levels of C18:1 trans isomers found in hydrogenated and animal products.

During the mid 1990s, scientists all over the world started to express concern at the metabolic effects of this isomerism. By the late 1990s, it became possible to measure what was happening. Many experiments were conducted to examine the consequences. It was ultimately shown through animal experiments, that a diet rich in these trans isomers could have a significant effect on brain cells, vision, tissue structure and allergic reactions. The scientists deduced that the trans isomers could be mis-identified because the trans bond had the same shape as a saturated bond. It was also demonstrated that the inclusion of high levels of these isomers could inhibit the enzymes used to carry out the next metabolic stages, thus reducing the body’s ability to create EPA and DHA. This provoked a great deal of concern. In the EU, the TransLinE study was carried out in 1998-99 involving healthy male volunteers in France, the Netherlands and Scotland to examine the effect of a diet rich in trans C18:3 fatty acids compared to a diet with virtually zero trans isomers. One of the key findings was that all of the groups fed a diet containing trans isomers at the high end of levels then prevalent in the industry produced EPA containing the trans isomerised acids. The TransLinE Study also determined that ALA, with a trans double bond in position 15, is preferentially incorporated into cardiolipin, a phospholipid rich in linoleic acid, suggesting that this isomer is misrecognised by the metabolic system as linoleic acid. It was also observed, before the trial even started, that the group from the

south of France had a baseline level of isomerised EPA significantly lower than the Dutch or Scottish subjects, possibly reflecting their superior Mediterranean diet. Another strange conclusion was that the high trans diet induced weight gain, whereas the low trans diet induced weight loss. The TransLinE study was published in 2000. In 2001, Denmark petitioned the EU to introduce a legal limit of 1% industrially produced trans fatty acids in any oil used in food manufacture. This petition was strongly opposed by all the other member states. In reality the major refiners could not meet this target unless they scrapped high temperature refining plants. In the past 10 years, there have been improvements. Many refiners have now reduced the use of high temperature refining. Denmark and several other EU states have introduced a 2% upper limit enforceable by law. The US Food and Drug Administration has just removed its ‘Generally Recognised as Safe’ (GRAS) status for partially hydrogenated oils on 16 June. The evidence on the risks from trans fats is continuing to mount, with poly trans fatty acids being investigated for links to asthma, autism, diabetes and heart disease. Without legislation and accurate analysis, this aspect of food safety will remain at risk from poor quality imports, poor refining and cost cutting.  Ray Cook is a retired process engineer and has been responsible for building and managing a number of refining facilities in the UK and abroad, mainly for the Aarhus Oliefabrik group and later through his own company, Ebortec Ltd

Setting a benchmark

enchtop NMR (Nuclear Magnetic Resonance), also known as Time Domain (TD) or Low Resolution NMR, has been commonly used for the measurement of oil and fat content for over 30 years, particularly in the oilseed and food industries. It is faster, more reproducible and potentially more accurate than the ‘gold standard’ Soxhlet extraction. The versatility of the NMR method was put to the test in two separate NMR studies on more than one type of oil-producing crop and over a wide range of oil contents using the MQC5 analyser for large volume samples (80ml and 40ml). Figure 1 (right) shows a good correlation between the NMR value (signal/mass) and the total oil content determined by the Weibull-Stoldt method (acid hydrolysis followed by Soxhlet extraction) without drying. To a good approximation, both canola (seed, cake and meal) and corn (germ and meal) products appear on the same calibration across a wide concentration range (approximately 10-50%). Furthermore, a good correlation can also be obtained between NMR and the crude oil content determined by Soxhlet in soyabeans (whole), wheat (ground) and maize by-product (ground) for concentrations ranging from 1-22%. It should be noted that ISO methods exist for the NMR measurement of oil and moisture content in both oilseeds (ISO 10565) and their residues (ISO 10632). Oil and moisture content are normally calibrated against Soxhlet and oven drying respectively. In addition, NMR is the method of choice for sunflowerseeds and has been adopted by the US Grain Inspection, Packers and Stockyards Administration (GIPSA). A variety of meat products with fat content between 4% and 20% were also analysed by the MQC23 fat analyser for comparison against the Weibull-Stoldt method for total fat content. Samples were dried in an oven at 103°C overnight, then equilibrated at 50ºC for 30 minutes before analysis, which took 16 seconds. There was a good correlation between the NMR value (signal/mass) and the total fat content in a variety of meat pastes (beef, pork, chicken and mixtures), demonstrating that these products can be measured using just one calibration. As samples that require measurement of

crude fat need to be dried, NMR replaces the Soxhlet reference method, leading to faster fat analysis. In conclusion, NMR can be applied to a wide variety of natural and processed foods and benchtop NMR has many advantages:  No solvents or other chemicals are required.  In comparison to Near Infra Red (NIR), it is simpler to calibrate, using a small number of reference samples, and is not affected by parameters such as colour, particle size, air voids and biological diversity.  It is more accurate than other techniques as it measures all of the sample (up to 80ml).  Samples are easy to prepare.  It is non-destructive, so the same sample may be measured multiple times by NMR before being analysed by other techniques.  Measurement time is typically less than one minute.  It is not limited to measuring a small number of samples every few hours and therefore potentially has greater sample throughput.  It can take a range of sample sizes (0.2-80ml) on just two instruments: MQC5 for large samples of bulk agricultural products (40 and 80ml) MQC23 for smaller quantities used in food analysis (up to 14ml). By Kevin Nott, applications scientist at Oxford Instruments, UK

28 OFI – JULY/AUGUST 2015 www.oilsandfatsinternational.com

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BIOFU ELS

If the cap fits Response to the new EU deal capping first-generation biofuels for transport and reporting of indirect land use change (ILUC) has been mixed. In particular, many say they want a more rational debate over subsidies in future. Alan Osborn writes

fter more than four years of protracted negotiations that included bursts of occasional intense lobbying, the biofuels standards and subsidies saga in Europe has been settled with a compromise that allows both the industry and environmental groups to draw some satisfaction. The broad outlines of the deal became clear at the end of April, when the European Parliament (EP) voted to approve measures to revise the European Union (EU)’s renewable energy (RED – 2009/28/EC) and fuel quality (FQD – 2009/30/ EC) directives in a package commonly known as the ILUC (indirect land use change) proposals. At its heart, the legislation is designed to put a limit on crop-derived biofuel production and accelerate the shift to alternative sources in order to cut greenhouse gas (GHG) emissions caused by the growing use of farmland for biofuel crops. Following the approval of the measure, the Finnish liberal MEP Nils Torvalds, who had steered it through the parliament, raises doubts on if it went far enough: “We had much higher goals, both in terms of GHG emissions reductions, and technological progress,” he says, adding that “if Europe doesn’t move forward, it will be left behind.”

The new directive

PHOTO: CONNEL_DESIGN/DOLLARPHOTOCLUB

For the biofuel industry, the key element in the proposal as agreed by the parliament is a 7% cap on the share of biofuels from food-based crops in the context of the 10% target for using renewable sources to create transport fuels by 2020, a goal agreed for the RED and FQD in 2009. The directives had no limit on food-based biofuels but, in 2012, the European Commission proposed a 5% limit in response to growing evidence that using food-based crops to make biofuels displaced food production into virgin land, such as rainforest (the ILUC effect). This 5% figure was subsequently amended by MEPs and the EU member governments (in the EU Council of Ministers) – the final agreed 7% is lower than the Council’s favoured figure but higher than the Commission had wanted. Furthermore, under the law, fuel suppliers must report to EU governments and the European Commission the estimated level of GHG emissions

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BIOFUELS

PHOTO: CARPATHIAN/DOLLARPHOTOCLUB

caused by ILUC issues. The Commission will also have to report ILUC-related emissions to the Parliament and Council, giving scope for including ILUC emission figures in the existing sustainability criteria. EU member states will have to set a national target, no later than 18 months after the new EU amending directives enter into force, for the share of advanced biofuels in transport fuel mixes – those sourced from certain types of waste and residues and new sources such as seaweed and algae. Member states will have to enact the legislation by 2017, by then they will also be required to show how they are going to meet subtargets for advanced biofuels. In policy papers, the Commission has indicated this is just a first step – and that it intends to scrap all support and targets for food-based biofuels after 2020.

Responses from industry players The EU’s biodiesel industry chain – the European Biodiesel Board (EBB), the European Oilseed Alliance (EOA) and the Federation of European Vegetable Oil and Proteinmeal Industry in Europe (FEDIOL) – say they are “relieved that a compromise could be found, which recognises the importance of the EU biofuels sector and the investments made, while acknowledging the existing doubts around the concept and measurement of the so-called ILUC factors.” That said, in a joint statement, the three bodies say that “revisiting the directive so soon after its first adoption was...a dangerous signal to send out. If closure on the file...partially restores the much needed regulatory certainty, the compromise is far from perfect”. And the trio are clearly unhappy at what amounts to a major policy U-turn with some significant financial implications. The new text “fails to fully protect with a grand-fathering clause the huge investments undertaken by our industries in the last decade. It also imposes disproportionate reporting obligations on all operators based on ILUC factors, which are not cohesively supported by the international scientific community”, they say. The group says that after very confused and emotional debates, it “looks forward to tackling the future of renewable transportation in Europe in a different way”. Notably, it wants a more rational policy discussion going forward: “The debate on biofuels in the post-2020 period needs to be more pragmatic, based on real facts and perspectives for biofuels. Among other considerations, the direct contribution of biodiesel to substitute diesel imports from Russia, or improving the environmental profile of diesel-driven transportation (including lorries, maritime and aviation fuels) should be evaluated more objectively,” the statement says. Raffaello Garofalo, secretary general of the EBB, adds: “Our industries stand ready to open a constructive dialogue with all stakeholders and will strive to continuously improve the sustainability of biodiesel in order to fully contribute to the decarbonisation of fuels in the EU in the next decade.” Meanwhile, the European Biofuels Technology Platform (EBTP) notes that while the new legislation had been given a cautious welcome by non-governmental organisations (NGOs), many in research and industry “view the compromise legislation as a reaction to political lobbying rather than scientific evidence”. Although industry acknowledged the need for sustainability, “the

THE NEW EU LEGISLATION LIMITS THE USE OF CROP-BASED BIOFUELS IN TRANSPORT TO 7%

‘The capping ... could undermine EU fuel security, cost thousands of jobs, and leave Europe trailing behind other parts of the world’ EBTP arbitrary capping of the conventional biofuels industry could undermine European fuel security, cost thousands of jobs, and leave Europe trailing behind other parts of the world in developing innovative technologies to tackle emissions from transport”. An EBTP statement says the measure “doesn’t fully take into account advice and concerns from industry and research experts that the rapid commercialisation of advanced technologies was dependent on a thriving conventional biofuels industry, hence significant investment in advanced technology by 2020 is now very unlikely”. The platform says recent research had suggested that ILUC models and assumptions about the impacts of biofuels production were not reflected in real-world scientific studies and there was a need for feedstock diversity, utilising both waste sources and energy crops to maximise the viability of advanced biofuels production.

“Biofuels from algae are at the pilot stage and will not make any significant contribution to renewable transport fuel targets by 2020. The best new technologies will be developed and deployed faster in other parts of the globe, leaving Europe behind in the race to develop sustainable transport fuels,” says the EBTP, which warns that Europe will become more dependent on imported technology and fuels “and new investment in technology and facilities is scrapped (or moved to overseas markets with more supportive biofuels policies)”’. Another advocacy group, representing biofuel users, the Leaders of Sustainable Biofuels (LSB), say they are pleased that a decision has finally been made, but that the compromise “lacks concrete and harmonised measures.” Marko Janhunen, chair of the LSB, whose members include the CEOs of UPM, British Airways, Biochemtex, BTG, Chemrec, Clariant, Dong Energy and St1 Biofuels Oy, among others, says they have been calling for regulatory measures for years. “What has been agreed is a first step but uncertainty continues. An opportunity to kickstart the roll-out of advanced biofuels in the EU has been missed,” he says. “Our industry provides solutions to EU’s climate, energy, environmental and industrial policy. All of these subjects are at the core of EU policy today. We hope that member states will show leadership and implement the subtarget in their national policy creating the certainty needed for the new and emerging advanced biofuels industry”. Thomas Nagy, executive vice-president of the Danish company Novozymes, the world’s largest producer of industrial enzymes, is also far from thrilled at the deal. He says that “unfortunately the final compromise is lacking ambition and fails to provide the certainty and direction needed for the sector.” Nagy told Oils & Fats International that the absence of a robust incentive for advanced biofuels is “particularly disappointing”. With the closure of the ILUC file, “the EU should now focus on the longer term policy to decarbonise the transport sector where sustainable biofuels play an important role,” he says. Comment from conservation and environmental groups is to the effect that while a long-needed start has been made on ousting crop-based biofuels from the fuel supply mix, the measure does not go far enough. Kenneth Richter, biofuels expert at Friends of the Earth, says: “We would have liked the cap to be lower, a maximum of 5%. But this is a clear signal to the markets that crop-based biofuels are not the future and this is not where people should be investing. It represents a U-turn if you look at the position when the RED was agreed in 2009.” The other interesting element for Richter was the EU announcement that, after 2020, there would be no state aids for crop-based biofuels: “That’s absolutely needed and we have been asking for it or a long time,” he adds. The EP’s decision has still to be confirmed by the Council of Ministers for the ILUC proposal to become law, but this seems fairly certain. “It’s unlikely the Council will say no as this is their own proposal,” Richter says, referring to negotiations before the EP vote. He agrees that Poland and other eastern European countries favour a higher cap than 7%, or none at all, “but many others, including the UK, wanted it lower – it is a genuine compromise.” w Alan Osborn is a freelance journalist

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Is it a drug? Is an energy crop? The growing of hemp is controversial due to its association with cannabis. Charlotte Niemiec assesses the properties of hemp seed and oil and the strict regulations surrounding the crop

n a bid to secure global renewable energy, governments and scientists around the world are searching for a biofuel that is efficient and does not compete with food crops. So far, few have passed the test, though the last decade has seen miracle crop ‘fads’ such as jatropha and switchgrass. Nevertheless, there are whispers that the answer to the problem is staring the industry in the face. Inconveniently, however, the crop in question is a legal and moral minefield. Hemp, a cousin to marijuana, is banned in many countries due to its association with the cannabis plant. While marijuana – smoked for its intoxicating effects – contains tetrahydrocannabinol (THC), hemp contains little to no THC and is a hugely versatile plant. It produces durable clothing and can be used to make paper and pulp. Its seeds are exceptionally nutritious, high in both omega-3 and omega-6 fatty acids and a complete protein. Around 44% of the weight of hempseed is edible oil, containing around 80% essential fatty acids. It has an amino acid profile similar to other sources of protein such as meat, milk, eggs and soyabeans. Hemp has been used to replace plastic in the production of car parts and can even be mixed with lime to create ‘hempcrete’, strong building blocks similar to concrete that are energy efficient, nontoxic and resistant to mould, insects and fire. Most importantly, hemp is a viable contender for the biofuel spotlight. The Huffington Post reported in March 2014 that a 2009 study from the University of Connecticut’s Biofuel Consortium had found that hempseed oil made a “viable and even attractive” feedstock for producing biodiesel. It proved to be of high efficiency (97% of the hemp oil was converted to biodiesel) and could even be used at lower temperatures than other biodiesels. Over the past few years, numerous companies and research institutions have examined hemp’s advantages. Biofuels Digest reported in July 2014 that Extreme Biodiesel and subsidiary XTRM Cannabis Ventures received pre-approval for a US$5M line of credit to purchase land for the purpose of hemp cultivation. It also noted researchers at the University of Connecticut, who are experimenting with hemp as a potential biodiesel feedstock and are preparing development of a multi-feedstock manufacturing facility. The plant will have a capacity of 200,000 gallons/year and is being built with a US$1.8M grant from the US Department of Energy (DoE). Besides biofuels, hemp is a lusted-after crop for farmers. It cleanses the soil, reducing toxins and groundwater. As it is a weed, it naturally fights off most pests and thrives in climates around the world with little water. It is a profitable crop (farmers in Canada are reportedly making US$300/acre profits from growing hemp); it grows very tightly spaced and has a fast growing rate.

An inconvenient a

However, the laws on hemp, particularly in the USA, are extremely strict. While the country is changing its legislation to provide licences to farmers who intend to grow industrial hemp, the legislation is stringent and has been dubbed ‘overkill’ by farmers trying to grow a crop in which the drug content bears no real threat. Until recently, US drug policy dictated that all cannabis varieties are considered controlled substances under the Controlled Substances Act. That policy, however, was relaxed slightly in 2014 to allow for industrial hemp to be grown for research purposes, including the production of biofuel.

US moves towards legislation change Nevertheless, as The Huffington Post article notes, the USA imports huge amounts of its hempseed and hemp oil from China and Canada, adding that “in 2011, the USA imported US$11.5M worth of hemp products, up from US$1.4M in 2000”. Additionally, it highlights the advantages of changing US legislation. “The USA has a chance to create domestic jobs and capitalise on the growing market. Some estimates value the US industrial hemp market at US$500M/year; Canada’s hemp industry is reportedly going to break a billion dollars [in 2014] in earnings.” The Huffington Post explains that 23 US states have now enacted pro-industrial hemp legislation and, since the beginning of 2014, more than 70 bills related to hemp have been introduced in more than half the country’s states. The passage of the February 2014 Farm Bill, which legalised the crop for research purposes, further cleared the way for industrial hemp production. The rules are only slightly more relaxed in Canada, which began issuing licences to grow the

crop for research purposes in 1994, followed by commercial licences in 1998. Currently, according to a 24 July 2013 Congressional Research Service (CSR) report prepared for US Congress, ‘Hemp as an Agricultural Commodity’, by Renée Johnson: “To obtain a licence to grow hemp, Canadian farmers must submit extensive documentation, including background criminal record checks, the Global Positioning System (GPS) coordinates of their fields and supporting documents (from the Canadian Seed Growers’ Association or the Canadian Food Inspection Agency) regarding their use of low-THC hemp seeds and approved cultivars; and they must allow government testing of their crop for THC levels.” Furthermore, according to the CSR report, Canada’s regulation states that all industrial hemp grown, processed and sold in Canada may contain THC levels no more than 0.3% of the weight of leaves and flowering parts (where THC is located in the plant) and there is a maximum level of 10 parts per million (ppm) for THC residues in products derived from hemp grain, such as flour and oil. Despite the relaxation of the rules in both the USA and Canada, farmers are still finding it very difficult to obtain licences. Nevertheless, Paul Bobbee – a Canadian hemp grower – explains, hemp is such a staple of the health food industry, with farmers raking in profits up to C$1,000/45-gallon of hemp oil, that redirecting it to biofuel is not commercially viable. That is not to say that, if production were ramped up, this situation would not change.

The global hemp market The CSR report notes that hemp is grown in approximately 30 countries in Asia, Europe and

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FIGURE 1: GLOBAL PRODUCTION OF HEMPSEED AND FIBRE (1999-2011) Million lbs. 600 500 400 300 200 100 0

1999

2001

Source: FAOSTAT

nt answer

South America. Production in the European Union (EU) is centred in France, Hungary, Romania and the United Kingdom. EU hemp acreage reached around 26,000 acres in 2010, but this signified a decline from previous years, when more than 50,000 acres of hemp were grown. In Canada, 66,671 acres were licensed for cultivation in 2013, according to the Canadian Hemp Trade Alliance. Canada and China are the largest producers of hemp textiles and related products, which they export to the USA. Other countries with active hemp growers and/or consumer markets are Australia, Chile, Egypt, India, Japan, Korea, New Zealand, Russia, Switzerland, Thailand, Turkey and Ukraine. Worldwide, the CSR report say, “acreage in hemp cultivation … has been mostly flat to decreasing,

2003 Hemp fibre

reported at around 200,000 acres globally in 2011. Although variable year-by-year, global production has increased overall by 250M pounds in 1999 to more than 380M pounds in 2011, mostly due to increasing production of hempseed. Upward trends in hempseed production roughly track similar upward trends in US imports of hempseed and oil, mostly for use in hemp-based foods, supplements and body care products.”

Not viable for biofuel Professor David B Levin of the research group at the University of Manitoba has been investigating the use of hemp biomass residues (hurds) as a feedstock for biofuel production (ethanol and hydrogen) using specialised bacteria that can use the cellulose as a food source. However, his research is not altogether encouraging. He explains: “We have not looked at the use of hemp oil as a source of lipids for biodiesel production. Biofuel production (ethanol or biodiesel) is the lowest value that one can get from a feedstock. In other words, biofuels are a high volume, low value commodity, so whatever you use to make it has to be very low cost to start with. My understanding is that hemp oil has a high commercial value, so it is unlikely that you would want to use it to make biodiesel. However, if there are large volumes of ‘waste’ hemp oil – oil that is contaminated with something or has oxidised (gone rancid) and has no commercial value – then it

2005

2007 Hempseed

2009

2011

might be worth investigating its use as a feedstock for biodiesel production.” Bobbee agrees. He told Biodiesel Magazine in January 2007 that, when the Canadian hemp industry was not as well-established as it is now, he found himself with a surplus on his hands. A large hemp purchasing company went bankrupt and suppliers like Bobbee were faced with low prices and few marketing options. The situation was particularly dire because hemp seed deteriorates after about a year in storage. The seed that Bobbee had was beginning to go rancid. Since it could no longer be used in the food market, he took 20,000 litres of hemp oil and turned it into biodiesel. Not only did the biodiesel have wonderful properties – better cloud point and cetane value than biodiesel made from canola or soya oil – its distinctive green colour was a great marketing tool. However, it is not economically viable. Arthur Hanks, executive director of the Canadian Hemp Trade Alliance, says that there are too many factors working against the use of hemp as a biodiesel feedstock. Additionally, there’s the hurdle of limited supply. Although healthy demand has increased hemp production numbers in Canada, there is just not enough quantity to go around. In 2005, 24,000 acres of hemp were planted in Canada, more than double to 50,000 acres in 2006. “That, particularly, is very much an issue of economies of scale”, Hanks w says. “It is still very much a speciality crop.” Charlotte Niemiec is the former assistant editor of OFI

TABLE 1: VALUE AND QUANTITY OF US IMPORTS OF SELECTED HEMP PRODUCTS 1996-2011 Units 1996 2000 2005 2007 2008 2009 2010 2011 Hempseeds US$1,000 – – 271 2,350 3,111 3,320 5,154 6,054 Hemp oil and fractions US$1,000 – – 711 693 835 726 1,129 839 Hempseed oilcake and other solids US$1,000 – – – – 460 1,811 2,369 2,947 True hemp raw/processed (not spun) US$1,000 100 525 101 88 57 52 33 41 True hemp yarn US$1,000 25 396 68 82 202 212 115 425 True hemp woven fabrics US$1,000 1,291 1,617 923 1,579 1,924 751 1,024 1,188 Total 1,416 2,538 2,074 4,789 6,589 6,872 9,822 11,494 Tonne – – 92 355 523 602 711 623 Hempseeds Hemp oil and fractions Tonne – – 114 99 98 92 134 137 Hempseed oilcake and other solids Tonne – – – – 56 201 2,239 298 True hemp, raw/processed not spun Tonne 53 620 121 102 44 36 28 16 True hemp yarn Tonne 6 60 8 9 51 45 22 64 Subtotal 59 680 335 565 772 976 1,134 1,138 True hemp woven fabrics m2 (1000) 435 654 248 411 479 167 268 251 Source: Compiled by CRS using data from the US International Trade Commission (USITC) and republished in ‘Hemp as an Agricultural Commodity’, Renee Johnson, 24 July 2013

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RU SSIA & UKRAIN E

The impact of unrest Oils and fats producers in Ukraine and Russia are feeling the effects of their countries’ recent conflict. Not only are sanctions resulting in scarcity of some items and price increases but the reality of conducting business operations in a conflict zone is setting in. Currency devaluations have triggered rising food prices and a lack of disposable income, reducing demand. Mark Rowe reports

he conflict in eastern Ukraine and Russia’s annexation of Crimea has had significant ramifications for both countries’ oils and fats industries. These are sizeable sectors in Russia and Ukraine, and the industries – and consumers – have certainly felt the impacts of these often traumatic geopolitical events. The international sanctions against Russian institutions and individuals (rather than sectors) sparked by the crisis have, of course, been met with a more blanket response from Russia, which has banned many food products from Australia, Canada, the EU, Norway and the USA including dairy products and many processed foods containing oils and fats. This has promoted scarcity of some items and price rises, with both countries facing rising food costs as their currencies have weakened. The Russian ruble lost nearly half its value in 2014 and the Ukrainian hryvnia has fallen by more than 70% against the US dollar since the start of 2014. Food price inflation reached 20.7% year-on-year in Russia and 30% in Ukraine in January. Bread prices in Russia rose 11% in January compared to a year ago, while in Ukraine they rose 41%, notes the Russian Grain Union and Russia’s agricultural ministry. Ukraine is the world’s largest exporter of sunflower oil and Russia the second, and this segment has been hit hard by the conflict. Ukraine does not export sunflower seeds to Russia, although until the conflict erupted, it did export 15,00020,000 tonnes of refined and bottled sunflower oil to Russia. According to Ukrainian analysts UkrAgroConsult, these exports have declined sharply, although

not primarily because of the conflict, director Sergei Feofilov says: “It’s mainly because Russian production of oil has increased very impressively to meet demand in Russia.” Ukraine’s sunflower industry produced a record harvest in 2013 of 11.5M tonnes and although this dipped in 2014 to 10.5M tonnes, forecasts suggest that production in 2015 will rise to 10M tonnes. A record area, 5.6M hectares, is expected to be planted with sunflowers this year, although Feofilov anticipates that poor weather means the yields will not reflect this increase in plantings.

Business as usual? The precise production of sunflowers and crushing of seeds in the occupied parts of the country in the east and the fortunes of the industry there remain opaque still, which is important because Ukraine has a significant crushing industry in the east. “It’s a question that is not easy to answer,” admitts Feofilov. “Last September, we know that farmers in eastern Ukraine collected a nice sunflower crop and this was delivered to Ukrainian enterprises. Ukrainian seed crushers certainly did not feel any deficit in resources. It’s only our estimate, and nobody knows for sure, but we think the major part of it is still being delivered to other parts of Ukraine.” The European Bank for Reconstruction & Development (EBRD) has funded more than a dozen sunflower oil plants across Ukraine and sees a significant impact on the sector. “The east of Ukraine has been affected, particularly Luhansk and Donetsk oblasts,” says Anton Usov, a spokesperson for the EBRD in Ukraine. “Traditionally, sunflower is a very popular crop in Ukraine. There are big v

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v players in this segment practically in every region in Ukraine. Brands like Chumak and Oleina (which produce sunflower oil and mayonnaise) have been successful exporters in the CIS (Commonwealth of Independent States) region and beyond. But the question of vulnerability is there – you cannot carry out normal business operations in a military conflict zone.” Cargill stopped operations at its Donetsk sunflowerseed crushing plant in July 2014 and since then has had no employees on the site. Unconfirmed reports suggest it may have been struck by a missile. “The plant was subsequently occupied by a small number of armed individuals whose intentions are not clear to us,” says a Cargill spokesperson. “We are unable to make any further assessment of the facility.” The company has another sunflower oil facility in Ukraine, at Kharkiv, which is under the control of the Ukraine government. This has not stopped Cargill from developing its presence in Russia. “We are in the process of finalising the build of a sunflower oil crush plant in Novoanninskiy, Volgograd, Russia,” the spokesperson says. “It will be completed late this year.” As for Crimea, Feofilov says “information is rather scarce”. According to Krymstat, (the statistical agency run by the de facto government of Crimea) in the year to February 2015, the price of dairy products rose by 45.4%, sunflower oil by 65.1% and bread by 35.7%. Crimea has historically produced 130,000150,000 tonnes of sunflower seeds a year. Feofilov suspects that seed produced there still finds its way to other parts of Ukraine. This happened last year because of what Feofilov calls “processes on the spot”, but adds, “we shall just have to wait and see this year. I’m sure sunflower oil finds its way to and from Crimea because people still need to eat.”

Falling demand

Strong demand for cheese continues In Russia, the oils and fats sector has suffered significantly, with one exception: the cheese market. Cheese prices rose by between 20%-35% year-on-year from March 2014, according to Andrei Sizov of agricultural analysts SovEcon, although to some extent, this is a product of scarcity: “The main reason is the restrictions imposed by Russia back in August 2014,” he says. “The EU was a major supplier of cheese, so prices for cheeses have significantly increased. Local cheese producers had unused capacity and they increased production very fast. It’s the only industry that has benefited from the bans.” Demand for cheese has been so strong that the industry has been able to take a rise in Russian milk prices in its stride: “Domestic milk production is stagnant but the cheese makers have crazy margins so they can cope with the high cost of milk,” Sizov says. Russia’s sunflower crop was weak last year though this is unrelated to the conflict in Ukraine. “It’s not been disastrous, just weak,” he says. As a result, Russian cheese makers have increased imports of palm oil as a substitute from Indonesia and Malaysia. A belated boost may come from Russia’s World Trade Organization (WTO) membership, which is gradually seeing Russia lower its export tariffs on sunflowers, which currently stand at around 9.8% – there are no tariffs applied to sunflower oil exports.

Lack of disposable income in Russia Meanwhile, Russia’s confectionery and baking sectors – key oils and fats consumers – have not been directly affected by the conflict with Ukraine. Instead, Sizov believes its problems have more to

do with declining disposable incomes. “The bread sector is not prospering,” he says. “They have to cope with increasing prices. Bread producers are under pressure. The federal government and local authorities are traditionally very concerned about bread prices, that producers should not increase prices in line with production costs. They are in a tough situation, with low margins.” Russian oils and fats processors and end users have also faced the problem of access to loans, both for short-term working capital to pay millers and bread producers, and longer-term investment in factories and equipment. “In 2014, you could get a loan at 10%-12%, which is more or less okay for Russia,” says Sizov. “But at the beginning of 2015, interest rates were more than 20%. That put additional pressure on all food sectors, particularly bread baking as their margins are very low. “The number one choice for borrowers would be Russian state banks and the western capital markets are closed to those banks, so their interest rates are significantly higher. I don’t think many companies would be willing to invest in significant expansion of capacity in baking production under current conditions.” Despite the sanctions, trade into Russia has continued through third parties in unusual fashions. The consequence of sanctions has been the emergence of efforts to bust the sanctions imposed by Russia – with implications for the oils and fats industry. “Companies will sometimes walk close to the line, which is why we’ve suddenly seen Belarus become a major ‘producer’ of Italian mozzarella,” says Bernard Sucher, who sits on the board of UFG Asset management. Dr Bryan Early, assistant professor at the political science department, State University of New York, sees sanctions busting as an inevitable consequence. “Russia has problems of corruption and the presence of organised crime. It’s the kind of country where sanctions busting opportunities become available and there are a number of actors who are in prime position to exploit these,” he says. “The European producers who have lost their ability to sell to Russia now have to work with intermediaries who take a cut of their profits. They find these people either knowingly, or they find a partner in, say, Belarus, who just happens to want to import more Italian cheeses than they have ever w done before.” Mark Rowe is a freelance writer PHOTO: SARYMSAKOV.COM/DOLLARPHOTOCLUB

However, Ukraine’s oils and fats industry faces a shrinking market, warns Feofilov. “Ukraine’s production of food items based on sunflower oil is significant, and enough to meet domestic demand. But production of margarine declined last autumn because of the general decrease in purchasing power.” In addition, the sector has been hit by the sharp currency devaluation, which has restricted the import of raw materials for sunflower oil-based foodstuffs. “That is both positive and negative,” says Feofilov. “It does mean more local raw materials

are used.” Ukraine does not produce sunflower oil for biofuels in any mainstream capacity, he adds. “It would require very significant investment, and crude petroleum oil prices are low and declining, so there is no incentive,” Feofilov says. According to Ukrrydprom (Ukrainian Association of Confectionery Industry), 2014 was unsuccessful for the country’s confectionery sector. The output of chocolate products decreased by 29.7%, flourbased products by 22.4%, and there was a slight reduction in the sugary products segment – only 8.7%. By the end of 2014, Ukrainian confectionery exports to Russia had reduced by 68% year-on-year.

UKRAINE AND RUSSIA ARE THE WORLD’S LARGEST EXPORTERS OF SUNFLOWER OIL

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BIOTEC H N OLOGY

Hitting the genetic switch SEED SAVING IS ESTIMATED TO ACCOUNT FOR BETWEEN 15% AND 20% OF THE WORLD’S FOOD SUPPLY, PRACTISED BY 100M FARMERS IN LATIN AMERICA, 300M IN AFRICA AND ONE BILLION IN ASIA

Terminator technology offers seed companies an effective way to police and protect their intellectual property and investments in biotechnology, but concerns about monopolisation, food security and ethical boundaries prevent its use. Charlotte Niemiec writes

here are whispers of a subtle shift in the global consensus regarding so-called ‘Terminator’ technology – the process of genetically restricting the future use of GM seeds and preventing farmers from seed saving. In October 2013, Brazil’s Judicial Commission prepared to consider a bill that would allow the commercial sale of genetic use restriction technology (GURT), sparking uproar around the globe. Later in the month, however, the country upheld its ban on Terminator seeds and the President of the Commission pledged that he would not allow the topic to be discussed while he remained in office. But is this the end of the debate? According to Maria Jose Guazzelli of the nonprofit Centro Ecológico, no. “The Terminator bill was withdrawn from the agenda, but it could be resuscitated at some point, and we know there is a second Terminator bill lurking in the labyrinth of the legislature. However, the immediate and unequivocal mobilisation from inside and outside the country reminded those in Brazil that attempts to legalise Terminator won’t go unnoticed or unchallenged.” Nevertheless, over the eight years following the affirmation of a global moratorium on the commercial sale of GURTs at the 2006 COP8 meeting of the United Nations Convention on Biological Diversity (UNCBD), multinational seed companies have been quietly logging patents

behind the scenes. While giants such as Monsanto, Syngenta and DuPont uphold public commitments not to commercialise sterile seed technology, they have nevertheless invested in research and development (R&D) and hold patents on the technology. If preparation is the key to success, these companies stand to hit the ground running should the moratorium be lifted. There are, conceptually at least, two types of GURT. The first developed was the variety-level GURT (V-GURT), in which seeds are modified so that second-generation seeds are sterile. A farmer could purchase seeds optimised for maximum productivity or drought resistance and harvest an excellent crop. The seeds produced by that crop, while safe for human or animal consumption, would not grow if replanted. Therefore, the farmer would have to purchase new seeds every year. These first GURTs were jointly developed by the United States Department of Agriculture (USDA) and seed companies as a way of protecting US technology. The second GURT developed was the trait GURT (T-GURT), which modifies the seed at the trait level so that the genetic enhancement does not function without the additional use of a chemical that is sold by the biotechnology company. Using this method allows the farmer to replant the seeds produced by the first generation – saving the seed company production and distribution costs – but they will be ‘average’ seeds unless a chemical is added.

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One advantage of T-GURT technology is that a seed genetically modified to resist drought may not need this characteristic ‘activated’ by chemicals if the season brought plenty of rain. The chemical turns these ‘genetic switches’ on and off and need only be purchased if circumstances require it, saving the farmer money. The seed could be modified to carry any number of these switches so that, in the case of specific disease or pest problems, chemicals could be purchased to activate the required genes to fight the disease. A lucky farmer may never need to purchase chemicals if conditions were favourable for his crop. This would curtail the use of potentially harmful chemicals and could prevent resistance build-up in the plant. Other chemicals could activate genes that improve productivity – larger oilseeds in the case of sunflower, for example, or broader leaves in the tobacco plant. Another advantage is a lowered risk of cross contamination. If a bee that had visited a GURT plant pollinates a ‘normal’ plant, the secondgeneration seeds from the normal plant would be sterile – or inactive until a specific chemical was added – and the contamination would end there. GURT proponents argue that this should appease those with concerns about containment.

Unethical but necessary? On the face of it, sterile seed technology would seem a fair and unbiased way for seed companies to protect their investments. This was certainly the aim of the USDA when it began developing the technology. In 1998, Willard Phelps, the official spokesman for the USDA at the time, made clear the department’s position on GURTs in an interview with New Scientist: “Our system is a way of self-policing the unauthorised use of American technology. It’s similar to copyright protection. This technology is designed to increase the value of proprietary seed owned by US companies and to open up new markets in second- and third-world countries.” He added: “The centuries-old practice of farmersaved seed is really a gross disadvantage to thirdworld farmers who inadvertently become locked into obsolete varieties because of their taking the ‘easy road’ and not planting newer, more productive varieties.” However, not everyone agreed with him. Many felt that, on an ethical basis, seed companies should not prevent these ‘third-world farmers’ from replanting the seeds they had grown, when they relied so heavily upon them for a livelihood. Others questioned whether GURTs would be a help or hindrance to global food security: if farmers could not afford to purchase the optimised seeds each year, surely fewer would be planted? If the seed industry was monopolised by giant corporations, what would prevent them from raising their prices and, by so doing, force farmers to dig ever deeper and deeper in their wallets? Even more cynically, if seed companies could manipulate genes to that extent, what was to stop them removing desirable traits so that farmers were forced to buy chemicals to reactivate them and return them to ‘normal’ seeds?

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Creating a superseed

T-GURT TECHNOLOGY MODIFIES THE SEED AT THE TRAIT LEVEL AND ENHANCEMENTS MUST BE ACTIVATED BY A CHEMICAL

More questions than answers Currently, it is against the law for farmers to replant seeds produced from patented GM crops. This was brought into the media spotlight in 2013 in the second of just two cases ever put before the US Supreme Court relating to the patenting of living organisms, Bowman v Monsanto. For many years, Indiana farmer Vernon Hugh Bowman purchased legitimate herbicide-resistant Monsanto seeds through its licensed distributor, Pioneer. One year, he purchased some additional seeds from a local commodity seed provider that he believed were non-GM but, when he planted them, he found they too were herbicide-resistant. Occasionally, GM seeds become mixed with nonGM seeds in grain elevators and can be accidentally re-sold, a practice over which Monsanto has little control. While Bowman continued to purchase legitimate seeds from Pioneer, he replanted the progeny seeds of the illegitimate seeds on the side – and continued to do so for seven years. Upon discovery, Monsanto sued. The Supreme Court ruled in favour of Monsanto and Bowman was ordered to repay US$84,000, but the case generated more questions than answers. Do seed companies have any right (ethical or political) to restrict the use of GM progeny seeds, which are a natural result of the growing process? Can this be effectively policed? Should patents extend to self-replicating technologies such as seeds and, if so, what would this mean for other selfreplicating technologies such as vaccines, cell lines and even DNA? How, if not by enforcing the issue via sterile seed technology, are seed companies to protect their intellectual property and retain the financial incentive to continue R&D? For biotechnology companies, the answer is tantalisingly available and yet firmly out of reach. The technology is there, but the global consensus is that it cannot ethically be used.

The future of Terminator Is Terminator technology unethical? On the one hand, the rewards appear to work both ways: farmers are all but guaranteed a healthy and profitable crop (as long as they pay for it), while seed companies see a reasonable return on their investment.

On the other hand, there remain too many unanswered questions. What would be the longterm implications of using Terminator technology on global food security when ‘seed saving’ is estimated to account for between 15% and 20% of the world’s food supply (practised by 100M farmers in Latin America, 300M in Africa and one billion in Asia)? What are the risks of cross contamination? Is it fair to force farmers to comply with the rules of large multinationals such as Syngenta, Bayer, BASF, Dow, Monsanto and DuPont which, together, control 60% of the global commercial seed market? How much of this argument, which seems weighted towards the production of more food to meet rising population levels is, in fact, simply about adding to the pockets of biotech giants? Will there be market restrictions when it comes to the export of these GM goods – to the European Union, for example, which actively excludes GMOs? Would the technology end at crops or could it be extended to encompass mammals; will we next be modifying cattle to produce sub-par milk unless it is fed with chemicals produced by biotechnology companies? Before any commercial sale of GURTs is considered, companies must first satisfy the requirements laid out at the UNCBD in 2000, which recommended that “in the current absence of reliable data on genetic use restriction technologies, without which there is an inadequate basis on which to assess their potential risks, and in accordance with the precautionary approach, products incorporating such technologies should not be approved by parties for field testing until appropriate scientific data can justify such testing, and for commercial use until appropriate, authorised and strictly controlled scientific assessments with regard to, inter alia, their ecological and socioeconomic impacts and any adverse effects for biological diversity, food security and human health have been carried out in a transparent manner and the conditions for their safe and beneficial use validated.” Despite continued R&D behind the scenes, we have not moved forward since 2000. While our developing technologies are ever more sophisticated, our ethical quandry remains unchanged. w Charlotte Niemiec is OFI’s former assistant editor

39 OFI – JULY/AUGUST 2015 www.oilsandfatsinternational.com

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STATISTIC S

SUNFLOWER OIL AND SEED PRICES (US$/TONNE)

STATISTICAL NEWS FROM MINTEC Sunflower oil and seed Prices for sunflower oil in Russia have risen due to forecasts that ending stocks in 2015/16 will be down 70% year-on-year to 29,000 tonnes. This followed a decrease in production in 2014/15 due to reduced supplies of sunflowerseed. Production of sunflowerseed in Russia is expected to recover by 5% year-on-year to 9.4M tonnes in 2015/16. In Ukraine, sunflower oil production is forecast to decrease by 2% year-onyear to 4.2M tonnes, driven by reduced supplies of sunflowerseed, down 2% year-on-year to 10M tonnes.

SUNFLOWER VS RAPESEED OIL PRICES (US$/TONNE)

Sunflower and rapeseed oil prices EU prices for sunflower oil rose in the first half of 2015. Prices were driven by concerns about tight supplies due to a lower harvested area in the EU and lower yields in Ukraine. Prices for rapeseed oil increased from March to June 2015 as global consumption is expected to exceed production, leading to a supply deficit in 2015/16. However, prices for both oils fell in June and July. This was driven by a downward trend in the vegetable oil market due to low crude oil prices and the resulting reduced demand for biofuels.

Production/consumption sunflower and rapeseed oils

RAPE AND SUNFLOWER OIL PRODUCTION AND CONSUMPTION

PRICES OF SELECTED OILS (US$/TONNE) 2013

2014

Apr 15

May 15 June 15 July 15

Soyabean 1,052 897 738 777 781 758 Crude Palm 854 825 657 665 672 660 Palm Olein 803 762 603 625 637 618 Coconut 948 1,276 1,057 1,120 1,117 1,066 Rapeseed 1,080 906 736 762 802 801 Sunflower 1,108 905 833 908 915 839 Palm Kernel 904 1,120 960 951 917 879 Average price 964 INDEX 228

956 226

798 189

830 197

834 803

803 190

In 2015/16, global sunflower oil consumption is expected to rise by 2% year-on-year to 15.1M tonnes and at a faster rate than production, up 1% year-on-year to 15.2M tonnes. Consequently, ending stocks are forecast down 23% year-on-year at 1.1M tonnes. Global rapeseed oil production in 2015/16 is forecast to fall by 2% year-on-year to 26.7M tonnes. However, global consumption is expected to rise by 1% year-on-year to 27.5M tonnes leading to a supply deficit. As a result ending stocks are forecast at 2.8M tonnes, down 20% year-on-year. 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

40 OFI â&#x20AC;&#x201C; JULY/AUGUST 2015 www.oilsandfatsinternational.com

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