OFI March/April 2015 by Oils & Fats International

March/April 2015 t Vol 31 No 3

www.oilsandfatsinternational.com

OLIVE OIL Heading for a crash The magic ingredient?

OLEOCHEMICALS Southeast Asia focusing on exports

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

Science behind Technology

A4-Refining-OF-15122014.indd 1

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T H E BUSI NE SS MAG AZI N E FOR TH E OILS AN D FATS IN D USTRY

CONTENTS VOL. 31 NO. 3 MARCH/APRIL 2015 EDITORIAL: Editor: Serena Lim Tel: +44(0)1737 855066; Fax: +44 (0)1737 855034 E-mail: serenalim@quartzltd.com

FEATURES OLIVE OIL

From waste to energy

Heading for a crash

Sales Manager: Mark Winthrop-Wallace Tel: +44 (0)1737 855 114; Fax: +44 (0)1737 855034 E-mail: markww@quartzltd.com

The magic ingredient?

Sales Consultant: Anita Revis Tel: +44 (0)1737 855068; Fax: +44 (0)1737 855034 E-mail: anitarevis@quartzltd.com

25 Tunisia heading for the top

Editorial Assistant: Rose Hales Tel: +44(0)1737 855157; Fax: +44 (0)1737 855034 E-mail: rosehales@quartzltd.com SALES:

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 CORPORATE: Vice President: Steve Diprose Tel: +44 (0)1737 855164 E-mail: stevediprose@quartzltd.com

28 Changing tastes

NEWS & EVENTS

Growth in Egypt despite Arab spring

© 2015 Quartz Business Media ISSN 0267-8853 Website: www.oilsandfatsinternational.com A member of FOSFA Oils & Fats International (USPS No: 020-747) is published eight times/year by Quartz Business Media Ltd and distributed in the USA by DSW, 75 Aberdeen Road, Emigsville PA 17318-0437. Periodicals postage paid at Emigsville, PA. POSTMASTER: Send address changes to Oils & Fats c/o PO Box 437, Emigsville, PA 17318-0437

Olam buying ADM’s cocoa business 6

Biofuels News

EPA to release RFS in spring 8

Biotech News

EU approves new law on GM crop cultivation 10

32 Southeast Asia focusing on exports

Oils & Fats International

News

Transport & Logistics News

ADM to sell stake in Brazil export terminal to Glencore

SHOW PREVIEW @oilsandfatsint

2 PHOTO: LES CUNLIFFE/DOLLARPHOTOCLUB.COM

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Comment

Shift in thinking

OLEOCHEMICALS

Printed by Pensord Press, Gwent, Wales

P20

MIDDLE EAST

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

WORLD OLIVE OIL PRODUCTION AND CONSUMPTION LEVELS ARE SET TO FALL THIS SEASON DUE TO POOR HARVESTS IN PRODUCING COUNTRIES (PHOTO: ANGEL SIMON/DOLLARPHOTOCLUB.COM)

OFI North Africa 2015 in Marrakech

Renewable Materials News

BASF exits venture to develop bio-based 3-HP and derivatives 14

International Market Review

Diary of Events

Statistics

1 OFI – MARCH/APRIL 2015 www.oilsandfatsinternational.com

NEWS

COMMENT

Shift in thinking

n a major shift in thinking, the USA’s top nutrition advisory panel has stated that cholesterol in the diet no longer needs to be considered ‘a nutrient of concern’. The move is in contrast to the panel’s findings five years ago, when it deemed excess cholesterol in the American diet a public health concern. Many nutritionists now believe that, for healthy adults, eating foods high in cholesterol – such as eggs – does not significantly affect the level of cholesterol in the blood or increase the risk of heart disease. Cholesterol guidelines were first developed by the American Heart Association in 1961 and subsequent warnings by the federal government helped shift eating habits – per capita egg consumption dropped about 30%, the Washington Post said. Now, the USA is the last country in the world to set a specific limit on dietary cholesterol of 300mg/day, according to David Klurfeld, a nutrition scientist at the US Department of Agriculture (USDA). The change in thinking was contained in the Dietary Guidelines Advisory Committee (DGAC)’s February report to the US Department of Health and Human Services and the USDA. The report advises on current scientific evidence related to diet, nutrition and health and forms the foundation for national nutrition policy and the ‘Dietary Guidelines for Americans’, which is revised every five years and will be released later this year. What the change serves to highlight is just how complex the science of nutrition is and how it is evolving. In the case of cholesterol, it was believed that a diet high in cholesterol would clog up arteries because part of the plaque clogging arteries consisted of cholesterol. Now, science has shown that only 15% of circulating cholesterol in the blood comes from what you eat and the other 85% comes from the liver, according to Dr Steven Nissen, chairman of cardiovascular medicine at the Cleveland Clinic. Furthermore, there is ‘good’ and ‘bad’ cholesterol, with ‘bad’ cholesterol contributing to plaque clogging arteries, but ‘good’ cholesterol helping remove bad cholesterol from the arteries. People also process cholesterol differently, with some – probably due to genetics – appearing to be more vulnerable to cholesterol-rich diets. In a similar way, previous views that all fats are bad have also shifted, with the Swedish Council on Health last year advocating a low-carbohydrate, high-fat diet as the most effective weapon against obesity and diabetes (see OFI Comment, January 2014). Saturated fats, though, are still considered unhealthy. The DGAC singled out saturated fats, sodium and added sugars as nutrients which are over-consumed. But it said that these should not be reduced in isolation, but as part of a healthy dietary pattern. “Sources of saturated fat should be replaced with unsaturated fat, particularly polyunsaturated fatty acids. Similarly, added sugars should be reduced in the diet and not replaced with low-calorie sweeteners, but with healthy options such as water in place of sugar-sweetened beverages. For sodium, emphasis should be placed on expanding industry efforts to reduce the sodium content of foods and helping consumers understand how to flavour unsalted foods with spices and herbs.” So if consumers are still confused, then a general common sense approach is still the way forward; that is, we should have a diet higher in vegetables, fruits, whole grains, low- or non-fat dairy, seafood, legumes and nuts; moderate in alcohol; lower in red and processed meat; and low in sugar-sweetened foods and drinks and refined grains. Serena Lim

Olam buying ADM’s cocoa business

ingapore-based commodities firm Olam International announced in December that it would buy Archer Daniels Midland (ADM)’s cocoa business for US$1.3bn. The acquisition is its largest to date and makes it the third largest cocoa bean processor behind Cargill and Barry Callebaut. With this purchase, Olam will account for up to 16% of the world’s total cocoa processing capacity and source over 20% of total bean output, company executives told a briefing, with eight factories from the Ivory Coast to Singapore that will process and supply cocoa liquor, powder and butter. Olam said demand for cocoa had risen three times faster than population growth in the last 15 years. While it already had the world’s largest bean sourcing network, the acquisition would give it processing capacity so that it could sell directly to chocolate manufacturers such as Nestlé SA and Hershey Co. As part of the deal, Olam will add 600,000 tonnes of processing capacity from Brazil to Singapore on the 100,000 tonnes it already owns and pick up the deZaan and Unicao cocoa brands. According to Olam, the cocoa processing market is worth US$16bn, while sourcing and trading amount to US$13bn. For ADM, the deal comes just months after it agreed to sell its smaller, under-performing chocolate business to rival Cargill for US$440M. However, the European Commission (EC) announced on 23 February that it had opened an in-depth investigation into the deal, amid concerns that it could

lead to higher prices. The EC said its preliminary investigation had shown potential competition concerns in the supply of industrial chocolate to customers in Germany and Britain, where Cargill, ADM and Barry Callebaut were the main suppliers to customers. “The proposed transaction could eliminate an important competitor and reduce the choice of suitable suppliers in already concentrated markets, which could lead to price increases,” the EC said in a statement. The EC has until 8 July to look into the acquisition but Cargill spokesman Louis de Schorlemer said the company still expected its acquisition to be completed in the middle of this year. ADM chairman and CEO Patricia Woertz had said the deal would allow it to redeploy capital to investments with better potential returns and less volatility than the cocoa business, or distribute excess capital to shareholders, or a combination of both. The Olam deal is the latest in a series of diverse global acquisitions for the company including rice farms in Nigeria, almond orchards in Australia and dairy operations in Uruguay, backed by its majority shareholder, Singapore wealth fund Temasek Holdings Pte, Finance Asia said. Earlier in December, Olam had announced it was buying US peanut sheller McCleskey Mills Inc for US$176M. In addition, Olam is investing US$61M in a cocoa processing facility in Indonesia, which will have an initial capacity of 60,000 tonnes and is slated to begin operations in 2016. The plant will produce cocoa butter, cocoa cake and high quality cocoa powder.

Sime Darby completes acquisition

ime Darby Plantation (SDP) announced on 2 March that it had completed its acquisition of Papua New Guinea-based New Britain Palm Oil (NBPOL), bringing its total land bank to almost one million hectares spread over five countries. Sime Darby offered to buy NBPOL for some US$1.74bn in October last year (see OFI News, October/November 2014). The deal adds 135,000ha of land in Papua New Guinea to SDP’s total land bank. SDP is the plantation arm of Sime Darby Bhd, one of the world’s largest plantation companies, producing some 5% of global crude palm oil output.

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NEWS

ADM signs plan to strengthen relationship with Unilever A rcher Daniels Midland Company (ADM) has signed a Joint Business Development Plan (JBDP) to continue to grow its relationship as an oils and fats supplier for Unilever in Europe, North America and Africa, Soyatech reported in January. The JBDP defines the long-term strategy and goals for the relationship and provides a clear framework for how ADM and Unilever will work together to achieve those objectives. It also sets measurable goals around volume, new product development, growth, innovation and sustainability. In addition, the JDBP will help advance

existing cooperation between the two companies, such as the ADM/Unilever Soybean Sustainability Program in the USA, through which ADM sources and processes sustainable soyabeans and supplies Unilever with oil for Hellmann’s mayonnaise; and ADM and Unilever’s partnership with Linking Environment and Farming (LEAF) in Europe, which promotes sustainable agricultural practices at the farm level to produce sustainable rapeseed oil for Unilever’s Flora spreads, as well as for Hellmann’s UK. The JDBP will also strengthen ADM’s existing European sustainability initiatives, particularly

in Central and Eastern Europe, enhancing the company’s supply chain to provide Unilever with more sustainably-produced oils and fats products. “ADM’s end-to-end value chain allows us control of our product flow in ways that few in the industry can offer,” said Matt Jensen, ADM senior vice president and president of oilseeds. “Strengthening our existing partnership with Unilever will allow us to build upon those capabilities and leverage our unique supply chain to continue to provide highquality, sustainable ingredients and innovative solutions to Unilever and their customers.”

GrainCorp restructures operations to focus on canola

rainCorp will restructure its oil processing operations due to a growth in demand for canolabased oils and spreads, the company said in November. ABC Rural reported that the company was spending A$125M (US$98M) on expanding a canola crushing plant at Numurkah, in northern Victoria, and an oil refining plant in Melbourne’s

western suburbs, while ceasing production at its Murarrie site in Brisbane from 2016. GrainCorp’s group general manager of oils, Sam Tainsh, said the changes would bring manufacturing of oils closer to southern-based canola growers, as products derived from canola seed made up an increasingly large proportion of oil production.

He added that, of the 110,000 tonnes to 120,000 tonnes of oil that is currently transported by truck out of GrainCorp’s Melbourne factory, the majority had come from canola seed and that percentage was growing. He said that, in an average year, about four million tonnes of canola seed was harvested in Australia.

Amazon soya moratorium extended until May 2016

razilian oilseed crushers and exporters have agreed to extend a moratorium on Amazon soyabean purchases until 31 May 2016, amid concerns that deforestation is creeping higher, according to the Progressive Farmer. The moratorium was due to end on 31 December 2014 but was given a last-minute reprieve while a new system of environmental controls, laid out in the 2012 Forestry Code, is implemented. Under the moratorium, the soyabean industry undertakes to avoid buying soyabeans from illegally cleared properties or properties cleared after July 2006 in the Amazon basin.

In a slight modification, as of 1 January 2015, the moratorium will only apply to land cleared after 2008, bringing it in line with the new Forestry Code. The extension of the moratorium follows news that Amazon forest clearance rose 29% in the 12 months to July 2013 and jumped some 122% in August and September 2014 compared with the year before. Environmental groups celebrated the decision to extend the moratorium. “The soya moratorium is one of the most effective tools available to allow companies to confidently source deforestation-free commodities,” said National Wildlife Federation senior manager Nathalie Walker.

World olive oil Wilmar aims for online transparency Wilmar International Ltd, the world’s largest palm oil production to fall Singapore-based processor, opened its supply chains to outside scrutiny on

he International Olive Council (IOC) has forecast that world olive oil production will fall to its lowest level in 15 years in 2014/15 as a result of poor harvests in Spain and Italy, the two biggest producers of olive oil, reports Olive Oil Times. While 3.27M tonnes of olive oil was produced in 2013/14, the output for 2014/15 is forecast to be only 2.39M tonnes, 433,000 tonnes less than the world will consume (see ‘Heading for a crash’, p20). The fall is expected to lead to a significant rise in olive oil prices while the IOC predicts that global consumption will fall from 3.03M to 2.82M tonnes.

22 January in what environmentalists called an unprecedented step to help safeguard tropical forests, Reuters reports. Wilmar said it would give outsiders, from customers to environmentalists, access to online maps showing where it buys palm oil at more than 800 mills in Indonesia and Malaysia. Environmentalists would be able to check Wilmar’s information about its suppliers against satellite images, for instance, to see if the mills are in an area of deforestation. According to The Forest Trust (TFT), a global non-profit group that worked with Wilmar on the project, Wilmar is the first agro-industrial group to allow outsiders to track palm oil back to processing mills. “Wilmar has grown huge in the shadows”, Scott Poynton, founder of TFT, told Reuters. “This will bring the suppliers into the light.” Anyone wishing to access the website will have to request a password from Wilmar. Poynton said he hoped other companies harvesting commodities such as soyabeans, cocoa, sugar or cotton would follow suit. In 2013, Wilmar pledged to end purchases of palm oil grown on deforested land.

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IN BRIEF THE NETHERLANDS: On 1 December, IOI Loders Croklaan announced it had unloaded its millionth tonne of segregated (SG) Roundtable on Sustainable Palm Oil (RSPO) certified palm oil, placing it as one of the frontrunners in the supply of sustainable palm oil in Europe. Ben Vreeburg, sustainability director of the company, said: “At present, we import 53% of our European palm oil as SG RSPO certified. This corresponds to approximately 450,000 tonnes of SG RSPO certified palm oil. The demand for sustainable palm oil has now risen to 42% of our total demand in the last quarter.” MOROCCO: The government has proposed a draft law to define and regulate the quality of commercial olive oil produced in the country, Olive Oil Times reported in January. The proposal aims to harmonise the grades and definitions of olive oil with those of the International Olive Council by determining the physicochemical criteria to be used, the organoleptic characteristics that should be taken into account and the maximum permitted levels of contaminants. CHINA: AAK’s new SEK400M (US$47.8M) speciality and semispeciality edible oils factory in Zhangjiagang is expected to start up at the beginning of 2016, the company said. When fully utilised, it will increase AAK’s total capacity by some 100,000 tonnes, with room for further expansion at a later stage as part of the company’s long-term investment plan in the country.

NEWS

IN BRIEF INDIA: Desmet Ballestra Group is installing Cavitation Technologies Inc (CTi)’s nano reactor system in a 300 tonnes/ day soyabean refinery in India, CTi said in December. The installation is CTi’s second system sale in India and third in Southeast Asia. BRAZIL: SLC Agricola, one of the country’s biggest farm operators, announced in November its plans to switch from corn to soyabeans, Agrimoney reports. The group was increasing oilseed sowings by 24%, while cutting grain area, and would raise its 2014-15 sown area by 20,000ha to 363,754ha. It planned to boost soyabean sowings by more than 23,000ha to 208,348ha, the report said. Corn sowings would drop by some 12,000ha to 38,652ha, reducing the crop’s share of SLC’s overall plantings to 10.6%. ITALY: The tax police of Palermo has exposed an olive oil business as a front for Matteo Messina Denaro, the boss of Sicilian mafia group Cosa Nostra, Olive Oil Times reported. Extra virgin olive oil was produced by the Fontane D’Oro company in Trapani, Siciliy, run by two brothers. Officials said the business was managed by jailed mafioso Francesco Luppino through his wife and the business was reportedly profitable. After being initially investigated by the Sicilian police, Fontane D’Oro was supposed to be handed over to other nominees in two different branches but this was just another ploy to cover Luppino’s dealings from prison via Messina Denaro, the report said. ARGENTINA: Leading soyabean producer, Los Grobo, has halved its farm area to 50,000ha from 120,000ha three years ago as inflation, trade restrictions and high taxes have drained growers’ profits, Reuters reported in January. Los Grobo president Gustavo Grobocopatel cited problems for farmers including rising costs, falling grain prices, double-digit inflation, heavy foreign currency and import controls, a strict quota system for exporting corn and wheat and a 35% tax on soyabean exports.

WHO presents action plan to reduce obesity and diet-related diseases

he World Health Organization (WHO) has presented an action plan to be implemented before the end of the decade to reduce preventable diet-related non-communicable diseases, obesity and malnutrition across the European region. Its European Food and Nutrition Action Plan 2015-2020 was presented at the 64th session of its Regional Committee for Europe late last year. Policies centre around the promotion of healthy diets, as exemplified by the Mediterranean and Nordic dietary patterns, which are defined as high in fruit, vegetables and wholegrains, with adequate intakes of protein and low-fat dairy products, and low in saturated and trans fats, sugar and salt, with limited intakes of energy-dense, micronutrient-poor foods. As well as suggesting that economic policies could be used to promote healthy eating, that governments should lead product reformulation initiatives and that universal access to healthcare for diet-related issues should be available, one of the more specific goals is

to “develop and implement national policies to ban or virtually eliminate trans fats from the food supply, with a view to making the European region trans fat-free”. No distinction is made between ruminant and industrial trans fats and the recommendation states there should be no concurrent increase in saturated fats. Overall calorie reduction, package nutritional labelling and appropriate portion sizing are also addressed. A separate concern is expressed in the document over the way products are marketed to children. European states are to develop nutrient profiles to support marketing restrictions, in conjunction with the World Trade Organization. Companies such as Unilever, Nestlé, McDonalds and Mondelez International have pledged to expand their marketing limitations on advertising to under-12s to cover all media, not just television, print and online advertising. Products must meet specific nutritional criteria for this age group.

Algeria to raise its grain production

lgeria is seeking to raise domestic production of grains – beginning commercial maize production last year – and will soon approve applications from foreign investors to boost output and reduce reliance on imports, Reuters reports. The country imports nearly all of its maize needs and uses it for animal feed, with maize imports reaching 3.2M tonnes in 2013 and US$891.78M. “We started maize cultivation in the southern provinces. We got encouraging output levels,” Mohamed Alioui, head of the farmers’ union, told Reuters. The government plans to increase irrigated areas by one million hectares to two million hectares in the next five years to reduce the agriculture sector’s reliance on rains. The move is part of a wider target to diversify the economy, which relies heavily on oil and gas. The government has been providing financial incentives, including loans with low interest rates, to farmers who grow grains. Algeria had also invited expressions of interest from foreign and local investors to take stakes in pilot farming enterprises, with firms from Canada, Italy, the UK and the USA submitting applications to invest in maize cultivation projects, the report said.

Oilseed sales boost bank reserves

armers sold 365M tonnes of grains and oilseeds for a total of US$24.1bn in 2014 to boost Argentina’s central bank reserves, which had slid to a seven-year low in October, exporter group CieraCec said in a statement. The previous record for such exports was US$25.1bn in 2011. Fourth-quarter sales in 2014 helped stabilise the economy in Argentina, which received around one-third of its export revenue from commodities, Ciera-Cec said. President Cristina Fernandez’s government persuaded farmers

on 22 October to stop hoarding harvests and sell to replenish reserves. Argentina’s reserves, which plunged 37% to US$27.2bn before the accord between government and exporters, were US$31.4bn at the end of 2014, according to central bank data. “The sizeable 2014 harvest, as much as the measures taken by the government during the first half of 2014, were critical to stabilise the economy,” said Sebastian Vargas, an economist at Barclays Plc.

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Goodman Fielder takeover approved

n 2 March, the Federal Court of Australia approved the acquisition of Australian food manufacturer Goodman Fielder by Asian agribusiness group Wilmar International and Hong Konglisted conglomerate First Pacific Company. The takeover was due to become legally effective and implemented on 17 March. The acquisition comes as Goodman Fielder continues to report decreasing revenue amid “difficult trading conditions”, Australian Food News has reported. Goodman Fielder had seen pressure in its baking and grocery businesses lead to a 6% drop in overall revenue for the company. The firm manufactures, markets and distributes bread, milk, margarine, dressings, condiments, mayonnaise, cake mix, pies, savouries, desserts, sauces and cooking oils in Australia and New Zealand, with an estimated annual turnover of A$2bn (US$1.56bn). Its household brands include Meadow Lea butter and margarine, and Meadow Fresh yoghurts. Wilmar is the world’s largest palm oil processor and is seeking to expand from its agricultural commodities business into more branded products. Its main consumer brands are cooking oils.

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BIOFUELS NEWS

IN BRIEF BRAZIL: The country is expected to increase its biodiesel production by 25% to over four billion litres this year, sector association Abiove said in January. Last year, the country consumed 3.27bn litres of biodiesel mixed with diesel, a growth of nearly 15% versus 2013. The price of biodiesel fell 5.7%, while that of diesel went up 9.4%. Brazil will produce 7.5M tonnes of soyabean oil, a raw material for the biofuel, along with animal fats, cottonseed and frying oils. UAE: Dubai has signed an agreement with Neutral Fuels LLC to replace diesel in the city’s vehicles with clean biodiesel. Dubai would become the first city in the world to formally adopt biodiesel produced locally from 100% waste cooking oil for use in its municipality vehicles, Neutral Fuels said. The company has been producing biodiesel in the UAE since 2010, when it became the first biodiesel maker to be licensed in Dubai. BRAZIL: Petrobras Biofuels will begin producing biodiesel from fish oil, buying 15 tonnes/month of fish waste from around 300 fishing families, Biofuels Digest reports. The company expects to double this by the end of the year. Production will take place at the company’s facility in Quixadá near Ceará. THAILAND: The Energy Ministry will cut the proportion of palmbased biodiesel (B100) in retail biodiesel to 3.5% from 7% to spare crude palm oil supply and help prevent a shortage in the food industry at a time when domestic palm oil production is in seasonal decline, the Bangkok Post reported in January. USA: Ethanol exports hit 836M gallons in 2014, six percent of the total 14.3bn gallons produced nationwide, according to Renewable Fuels Association figures. Several countries have significantly increased US ethanol imports including Brazil, which bought 112.2M gallons in 2014, up 147% from 2013; South Korea, which bought 36M gallons, up 666%; and Tunisia, which bought 21M gallons, up 438%.

EPA to release RFS in spring

he Environmental Protection Agency (EPA) is expected to release the 2014 Renewable Fuel Standard (RFS) mandate in spring, Progressive Farmer reported in January. The EPA proposed but never finalised the RFS renewable volume obligations for 2014. The statement on the RFS date was made by Paul Argyopoulos, senior policy adviser at the EPA’s Office of Transportation and Air Quality – the division that oversees the RFS. A spokesperson for the EPA confirmed Argyopoulos’ comments but declined to release any more detail. “That timing does track with recent statements our senior officials have made,” the spokesperson said. The language, expanding upon the 2007 RFS – found in the Energy Independence and Security Act – increases the demand mandate for renewable fuels each year until 2022. However, the EPA proposed but never finalised the renewable volume obligations (RVOs) for 2014. Facing “blend wall” issues in expanding the market for ethanol within the gasoline pool, in November 2013 the EPA proposed a reduction in the mandate for 2014 for the statute requirement of 18.1bn gallons to a 15-15.52bn gallon range. After lobbying and a review process of public comments on their proposal, the EPA said last

November it would not mandate an RVO for 2014 that year, instead planning to address 2014, 2015 and 2016 RVOs this year. By statute, the RVO must be finalised by 30 November of the prior year. The largest proposed cut in the 2014 RFS was for the D6 renewable fuel category from 14.4bn gallons stated by statute to 13bn gallons, which would be the first reduction in this category, primarily satisfied with corn-based ethanol. Actual production in the D6 category last year totalled 12.915bn gallons. The EPA also proposed an adjustment to this year’s volume requirement for D3 cellulosic biofuel from 17M gallons to between eight million and 30M gallons. Actual cellulosic biofuel produced in 2014 was 32.97M gallons. The EPA proposed a range between two billion and 2.51bn gallons for D5 advanced biofuels compared with statute volume of 2.2bn gallons. D5 gallons produced in 2014 totalled 131,082M gallons. The D5 category includes D3 and D4 blending volumes, with D4 representing biomass-based diesel. The EPA proposal left unchanged at 1.28bn gallons this year’s D4 biomass-based diesel volume mandate, which is above the statute’s one billion gallon requirement. Actual production of biomassbased diesel meeting the D4 qualification in 2014 was 1.751bn gallons.

Brazil increases national blend to 27% Indonesia boosts

he Brazilian government is increasing the national blend of ethanol in gasoline to 27% from its previous 25% from 16 March to help the country’s struggling sugar and ethanol mills. The higher blend is the latest of several measures expected to have a positive effect on the industry’s bottom line. In the past year, local firms such as Raízen, Biosev, Bunge, São Martinho and Guarani had struggled to post consistent and robust profits as a result of rising production costs and government gasoline subsidies squeezing mills’ margins, Reuters reported. Also improving the outlook for mills was the government’s decision in January to raise taxes on gasoline starting on 1 February 2015, allowing ethanol mills to raise prices in tandem and recover profit margins. In recent years, the government, concerned about consumer inflation, had zeroed out the taxes on gasoline and even subsidised the price of the fuel on the local market, prior to the fall in global oil prices in past months. The president of Brazil’s cane milling industry, Elizabeth Farina, said mills had sufficient supplies of biofuel to meet additional demand.

ovozymes and Beta Renewables are working to establish a 75M litres/year cellulosic ethanol plant in Punjab, India, using 60,000 tonnes/year of paddy straw as feedstock, Biofuels Digest reported in January. The plant marks Asia’s first ever second-generation biorefinery. If successful, the US$153.7M plant could lead the way for a US$1bn investment in five other plants in the state. A Business Standard report

he Indonesian House of Representatives has approved a move to almost triple the nation’s biodiesel sales subsidy from Rp1,500/litre to Rp4,000/litre (44.7c/gallon to US$1.19/gallon), effective from March, Biodiesel Magazine reported in February. An ethanol subsidy increase from Rp2,000/litre to Rp3,000/ litre (59c/gallon to 89c/gallon) was also approved. The approvals are part of the government’s decision to boost the development of biofuels in a bid to substitute conventional fuels. The government has put in place a 10% biofuel mix of diesel fuel oil called B10. If successful, the biofuel mix will be increased gradually to 20% (B20) in 2016, added that the proposed plant when the biofuel mix is expected would also generate co-products to reach eight million kilolitres. of biogas, pellets and compost However, in a report in the through processing biorefinery Jakarta Globe, industry officials effluents and pellets through and traders said the new subsidy processing surplus lignin. would only cover 1.7M kilolitres, The state of Punjab produces or half, of the total estimated 15M tonnes of paddy straw and biodiesel production of some 3.4M its maximum usage for such kilolitres in 2015. This would mean bioethanol refineries could the non-subsidised fuel market help avoid burning paddy straw, would find it uneconomical to which could positively affect the blend the mandated biodiesel in environment, and create direct and its fuel, unless higher costs were indirect jobs. passed to consumers.

New cellulosic ethanol plant for India

biodiesel subsidy

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BIOFUELS NEWS

New 6% cap on biofuels from food crops proposed he European vegetable oil sector stands to lose €7.2bn out of a current total turnover of €24bn if the European Parliament environment committee’s new 6% limit on biofuels made from food crops is adopted, says the European Vegetable Oil and Proteinmeal Industry association (FEDIOL). The ENVI committee’s proposal on 24 February states that biofuels made from food crops should not exceed 6% of final energy use in transport – a tougher limit than the 7% limit backed by member states last year (see OFI, Biofuel News, July 2014). The 7% cap was agreed last June as part of a political agreement to incorporate indirect land use change (ILUC) into EU biofuels policy. “The European Parliament seems to ignore the growing evidence that ILUC methodologies are not fit to be included into legislation,” said Nathalie Lecocq, the director general of FEDIOL. “The International Standards Organisation (ISO) has recently reviewed 161 publications on ILUC and agreed by consensus that ILUC modelling is

France to ban diesel vehicles from 2015

he French government, which owns around 15% of car makers Renault and PSA Peugeot Citroën, has pledged to “progressively” ban diesel vehicles from 2015 – which account for two-thirds of car sales in the country and almost two-thirds of Renault and Peugeot’s European sales. The announcement was made in November by prime minister Manuel Vallas. In January, this was followed by a promise from Paris mayor Anne Hidalgo to ban these vehicles from the city by 2020. France’s stance highlights a big shift taking place in the European debate over vehicle pollution. For a decade or more, policymakers have focused on targets to reduce CO2 emissions and this has prompted car makers to invest heavily in diesel vehicles because they emit less CO2 than the petrol equivalents. But now the focus is turning to air quality, which raises far-reaching questions about the volatility of diesel vehicles. This is because they emit harmful pollutants such as nitrogen oxide that can cause serious respiratory problems – studies suggest as many as 60,000 deaths a year in the UK stem from this pollution. Most exposed, according to research by Exane, are BMW and Daimler, whose ‘diesel mix’ – those vehicles as a proportion of total sales – is 81% and 71%, respectively, in Europe. Volvo is even higher, at 90%.

inconclusive.” She said disqualifying so-called food crops from use in biodiesel would put production of six million tonnes of vegetable oil and 9.7M tonnes of protein meal in jeopardy, putting jobs and investments at risk, and cutting down EU agricultural production at farm level. Current EU legislation requires EU member states to ensure that renewable sources account for at least 10% of energy in transport by 2020. The ENVI committee said that negotiations between member states, the European Commission and the Parliament should start now on a final legislative text, rather than

waiting for a plenary parliamentary vote. FEDIOL is calling on the EU Council to keep ILUC for accounting out of the legislation and to introduce safeguards to protect current investments and jobs from the application of ILUC methodology on current biofuels consumption volumes until and beyond 2020. Both the European Biodiesel Board and the European Renewable Ethanol Association (ePure) have criticised the new 6% limit. However, Thomas Nagy, executive vice president at Novozymes, which supplies enzymes for biofuel production, said the decision was long overdue and should help spur investment in the right kind of biofuels.

49 2014

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BIOTECH NEWS

EU approves new law on GM crop cultivation O

n 11 March, the European Parliament approved a new law on growing genetically modified (GM) crops in the European Union, clearing the way for new strains to be approved after years of deadlock. The law was expected to be published in the EU’s Official Journal on 13 March and enter into force 20 days later. The new rule still allow member states to ban or restrict GM crops on their territory, according to euobserver. First, during the EU authorisation process, they will be able to adjust the geographical scope of the cultivation. Second, if a crop

is authorised by the European Commission (EC), they will be able to restrict or prohibit cultivation on their territory. The directive gives member states the possibility to ban GM cultivation on environmental grounds, but also for other reasons, such as socio-economic impact or public policy. Member states will no longer need to provide new evidence of risk to health or the environment, unlike the old rules. According to a Reuters report, one of the first crops likely to receive EC endorsement would be an insect-resistant maize known as

1507, whose developers DuPont and Dow Chemical, had been waiting 14 years for authorisation. So far, Monsanto’s maize MON810 is the only GM crop grown in Europe, where it has been cultivated in Spain and Portugal for a decade. In addition, some GM crops to be imported for food or animal feed use, less controversial than those to be grown in Europe, were expected to get approval, the Reuters report said. EC President Jean-Claude Juncker had also announced a review of the approval process.

Stricter enforcement of Turkish biosafety regulation

he US Grains Council warned in December that Turkey was no longer accepting imports of US corn co-products following the increased enforcement of existing biosafety laws that restrict which GM corn varieties enter the country’s grain supply. The council reported at least three shipments of US dried distillers’ grains with solubles (DDGS) being rejected following the detection of unapproved genetically modified (GM) traits, and at least one other vessel diverted from Turkey to another buyer while on the water. “Internal issues are the apparent cause of new enforcement measures that are leading to these rejections,” the council said. “One factor is that some companies inside Turkey that do not import DDGS have encouraged the Turkish government to increase its oversight of those that do import

DDGS.” Turkey has approved 16 GM corn varieties, including 13 in December 2011 and three more in February 2012. It has rejected six corn GMOs and there have been no new applications for approval since February 2012. All the approvals and rejections were based on applications from the Turkish Federation of Food and Drink Industry Associations and the Turkish Feed Millers Association, rather than technology providers, the council said. “Since the Turkish biosafety law was put into effect in 2011, US exports of DDGS to the country have varied as trading companies took differing approaches to working within the restrictions that are now being fully enforced. Because US DDGS are now being rejected under existing law, options for quick recourse are limited.”

China ends ban on Syngenta MIR 162 corn S wiss biotech firm Syngenta announced on 22 December that China had finally agreed to accept imports of its Agrisure Viptera MIR 162 corn, almost five years since it applied for approval. Syngenta originally applied to the Chinese authorities for import approval in March 2010. The new approval covers corn grain and processing by-products, such as dried distillers’ grains (DDGs), for food and feed use. US corn trading with China had essentially shut down since Beijing began turning away cargoes containing the Syngenta corn strain in November 2013. Some 1.2M tonnes of US crops were rejected, which resulted in Cargill, ADM and dozens of farmers suing Syngenta and claiming hundreds of millions of dollars in damages from the lost trade. The corn has a genetic modification that makes it more resistant to lepidopteran insects, including corn earworm, black

cutworm, fall armyworm and Western bean cutworm. It was approved in the USA in 2010 and represents about 30% of Syngenta’s corn seed sales, reported AgWeb.com. China’s decision could boost American DDGs exports to the country by as much as several million tonnes, the AgWeb report quoted Gregg Hunt, a broker at Archer Financial Services in Chicago, as saying. The China National Grain and Oils Information Center said China had signed contracts for as many as 15 cargoes of DDGs or 900,000 tonnes for shipment between December and March, Bloomberg reported. So far, neither Cargill nor ADM have dropped their lawsuits against Syngenta. “We don’t believe the approval will have a material impact on the lawsuit,” said Mark Klein, a Cargill spokesperson. His view was echoed by

Syngenta. “We do not think this approval will have any direct impact on the current litigation, which we intend to defend vigorously,” said Paul Minehart, Syngenta’s head of communications for North America. Syngenta did, however, drop its lawsuit against Bunge North America over its refusal to handle MIR 162 since 2011, Reuters reported on 17 December. The two companies agreed to dismiss the litigation without paying any fees or costs to each other. Agrisure Viptera has been approved for cultivation in the USA since 2010 and has also been approved for cultivation in Argentina, Brazil, Canada, Colombia, Paraguay and Uruguay. It has been approved for import into Australia/New Zealand, Belarus, the EU, Indonesia, Japan, Kazakhstan, Korea, Mexico, Philippines, Russia, South Africa, Taiwan and Vietnam.

8 OFI – MARCH/APRIL 2015 www.oilsandfatsinternational.com

Favourable field tests in China

S agricultural biotechnology company Ceres Inc announced in January favourable results from its biotech corn evaluations in China, where a second year of field trials demonstrated significant yield advantages under normal and drought conditions. Ceres reported that its multigene combinations in corn achieved about a 25% yield advantage over controls in many of its research-scale field trials involving two different hybrids. The trials were conducted in two different climatic regions in China through the company’s development collaboration with the Chinese Academy of Agricultural Sciences. In other news, Ceres said it had also developed a biotech variety of sorghum for ethanol production that produced greater biomass and contained more fermentable sugars than non-GM sorghum, offering a higher yield potential.

Monsanto, DuPont ending lawsuits

uPont and Monsanto Company announced on 23 December that they had agreed to settle and dismiss their respective patent infringement lawsuits pending in the US District Court in St Louis, Missouri, USA. The litigation related to claims by Monsanto that DuPont had infringed certain Monsanto seed chipping patents and claims by DuPont that Monsanto had infringed certain DuPont patents related to seed processing. The companies no longer have any litigations against each other.

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TRANSPORT & LOGISTICS NEWS

IN BRIEF BRAZIL: On 11 February, Brazil’s anti-trust regulator approved the takeover of the country’s main railway operator, America Latina Logistica SA, by Cosan Logistica SA, reports Reuters. Cosan would need to guarantee thirdparty access to its two dry bulk terminals at Santos to address fears that the deal would create a monopoly on railway access to the port, the report said. BRAZIL: Raízen, the sugar and ethanol joint venture of Brazilian conglomerate Cosan and AngloDutch oil major Shell, launched an US$9.5M ethanol receiving terminal in the city of Ourinhos, southeastern São Paulo state, at the end of last year, Valor Economico said. The terminal can handle one million litres/day of ethanol and will service the southern part of São Paulo via rail and road.

ADM to sell stake in Brazil export terminal to Glencore A

rcher Daniels Midland Company (ADM) announced on 3 February that it had agreed to sell a 50% stake in its export terminal in Barcarena, Brazil to Glencore Plc. Barcarena is located in the northern Brazilian state of Pará. The ADM-Glencore joint venture that will own and operate the facility also plans to quadruple the terminal’s capacity from 1.5M tonnes to six million tonnes. “ADM is continuing to take actions to improve our returns on invested capital,” said ADM CEO Juan Luciano. “One of the ways we’re doing this is by taking an asset-light approach where it makes sense. This agreement will both quadruple the capacity and increase the utilisation of this strategically-located port facility, enhancing our ability to serve the expanding Brazilian agricultural sector. By sharing the investment with a partner, we are able to do all of this in a cost- and capital-efficient way.” In addition to its increased capacity, the upgraded terminal will be able to handle larger Panamax vessels. “The Barcarena terminal will continue to be a vital component of our Brazilian logistics network,” said

Valmor Schaffer, president, ADM South America. “Agricultural production is expanding rapidly in northern and western Brazil, and the Barcarena terminal is very well positioned to capitalise on that growth. By quadrupling that terminal’s capacity, we are also expanding our ability to serve growers in Brazil and meet customer needs here as well as in Europe, Asia and other key global markets.” The transaction is subject to regulatory approvals and is expected to close in the first half of this year. ADM is one of the largest agribusiness companies in Brazil. It processes soya at four facilities and markets the soya oil brands Concórdia and Corcovado. It also operates the largest biodiesel plant in Brazil, a cocoa processing plant, a sugarcane plant that produces ethanol and more than 40 elevators across the country. ADM is also building a soya protein production complex next to its existing soyabean processing facility in Campo Grande, Mato Grosso do Sul. Glencore is a major global producer and marketer of over 90 commodities focused on agricultural products such as oils and oilseeds; cotton and sugar; metals and minerals; and energy products.

Regulations delayed for phasing out older US freight-rail tank cars

he US Department of Transportation announced in January that final regulations for phasing out older freight-rail tank cars carrying crude oil and ethanol will be released on 12 May, instead of 31 March as originally planned. The delay will also apply to the release of standards for the next generation of replacement tankers. The delay comes after many railroad industry groups warned in public comments that the proposed phase-out of DOT-111 tankers carrying Class 1 flammable materials

by October 2017, and a phase-out of those carrying Class 2 liquids by October 2018, would lead to shortages of tank cars, reports lohud.com. The Association of American Railroads (AAR) and the American Petroleum Institute (API) have said that the tank car industry does not have the capacity to retrofit the estimated 143,000 tank cars that would need to be modernised to meet new specifications. According to the American Fuel and Petrochemical Manufacturers, some 70% of crude petroleum oil shipped to refineries

from the Bakken Shale Formation in North Dakota and Montana – and 70% of ethanol shipped to refineries – is transported by rail, the report said. The rail shipments contain at least 100 tank cars filled with crude oil or ethanol, raising safety concerns. A new report by economic research firm, The Brattle Group, said that the proposed rule change could cost the economy as much as US$60bn. In 2019, the peak impact year for ethanol, about half of ethanol traffic would be diverted to trucks, increasing costs for the ethanol industry by nearly US$5.3bn.

Nidera acquires USA/USC terminal at port of Constanta in Romania

gribusiness and trading company Nidera has fully acquired the USA/USC Terminal in the port of Constanta, Romania, company representatives announced on 18 December. The terminal has a capacity of 250,000 tonnes and can load two Panamax vessels at the same time, with loading facilities for trucks, trains and barges. Nidera, which is controlled by state-owned Chinese food giant Cofco Corp, said it had been using the terminal for years for the export of grains and oilseeds. “However, with an ever increasing market share as a result of improvements in our origination programme, full

ownership of such a terminal in the port of Constanta is essential for the realisation of our growth strategy in this region,” the company said in a press release. “The port of Constanta is a traditional partner for central and eastern European countries with high agricultural production and plays a key role in the export of these products from the inlands of Romania and the Balkans. “The USA/USC terminal is known to be the most efficient in the port of Constanta.” Nidera already owns two inland silos in Romania and plans to build another two. It said the terminal would allow it to further increase its origination

capacity and optimise its logistics. Nidera has an annual global turnover of over US$17bn. It was founded in Rotterdam in 1920, with its early activities focusing on grain and foodstuffs merchandising in the regions, from which it took its acronym: Nederland, (East) Indies, Deutschland, England, Russia and Argentina. Currently, Nidera has domestic and international operations in 21 major export and import countries and distributes its products to more than 60 countries in the world. The port of Constanta is emerging as Europe’s biggest grain transport hub in the US$4.2bn

10 OFI – MARCH/APRIL 2015 www.oilsandfatsinternational.com

global wheat trade, Bloomberg reported in October last year (see OFI Transport News, January 2015). t Nidera will build a 180,000 tonne grain silo for some £3M on the Romanian section of the Danube at Corabia, Ziarul Financier reported on 21 January. The silo, in Olt county, would facilitate the collection of up to 60,000 tonnes/season of grain from the region and is the first of five planned in southern Romania, the report said. It would allow Nidera direct access to the Danube for the first time following its purchase of the grain export terminal at Constanta.

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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 MALAYSIA: Construction is due to begin this year on Verdezyne’s first commercial-scale renewable chemicals plant in Bio-XCell’s biotech park in Nusajaya, Iskandar. The US industrial biotech company announced at the end of last year that it was building the plant, which will have the capacity to produce some 30M pounds/year of diacids, including dodecanedioic acid (DDDA). Verdezyne develops yeast strains to produce biobased chemicals using non-food, plant-based feedstocks. It said that diacids could be used to produce nylon or other polymers for a variety of applications including engineering resins, automotive parts, athletic apparel, carpeting and toothbrush bristles. INDONESIA: Finland-based biorefinery technology provider, Chempolis Ltd, signed a Memorandum of Understanding with Indonesia International Institute for Life-Sciences (i3L) late last year to jointly promote and develop commercial biorefinery projects. The companies have agreed to form a research centre to investigate the technical, economic, social and policy aspects of developing sustainable biorefineries to catalyse the development of bioeconomy in Indonesia.

BASF exits venture to develop bio-based 3-HP and derivatives

hemical company BASF is leaving an R&D collaboration with Novozymes and Cargill to develop a bio-based process for producing 3-hydroxypropionic (3-HP) and acrylic acid from renewable raw materials, Novozymes announced on 27 January. Germany-based BASF joined the collaboration with Novozymes and Cargill in 2012. The two companies, which have collaborated on the project since 2008, said they would continue their work to commercialise bio-based 3-HP and derivatives and had initiated efforts to find a new partner. They said their R&D cooperation had achieved technical and business targets. In 2013,

the project accomplished the production of 3-HP on pilot scale and, in September 2014, they announced the successful conversion of 3-HP to glacial acrylic acid and superabsorbent polymers (see OFI, Renewable Materials News, October/November 2014). Acrylic acid is a high-volume chemical that feeds into a broad range of products. One of the main applications is in the manufacture of superabsorbent polymers that can soak up large amounts of liquid and are used mainly in nappies and other hygiene products. Acrylic acid is also used in adhesive raw materials and coatings. Presently, acrylic acid is produced by the oxidation of propylene derived from the refining of crude petroleum oil.

BioAmber to supply succinic acid

ndustrial biotech company BioAmber Inc, USA, announced on 2 December that it had signed an exclusive supply agreement for bio-based succinic acid with Oleon, a leading European producer of oleochemicals Under the five-year contract, which runs from 2014 to the end of 2018, BioAmber Sarnia – a joint venture with Mitsui & Co – will supply Oleon with bio-based succinic acid for the development and production of succinate lubricants. It will supply Oleon from its Sarnia plant, which is expected to be completed in early 2015 and have an initial capacity of 30,000 tonnes/year. Oleon – a division of France’s Sofiproteol – is combining biosuccinic acid and bio-based alcohols to produce a new line of lubricants for industrial uses requiring high performance, biodegradability and renewable content. The company – which has five manufacturing facilities, four in Europe and one in Malaysia – said the market for succinic acid in speciality lubricants was estimated to be US$100M. Oleon said its new line of succinic acid-based lubricants targeted strong performance in extreme conditions, including cold weather, where they offered improved temperature flowability without compromising seal compatibility.

New Croda plant for surfactants

peciality chemical manufacturer, Croda International, UK, announced in December that it plans to make a significant investment at its Atlas Point manufacturing site in Delaware, North America to allow it to produce 100% sustainable non-ionic surfactants derived from plant materials. The new plant would use bioethanol as a feedstock and was expected to be operational in 2017, Croda said. While it is being commissioned, Atlas Point will continue as one of Croda’s main manufacturing sites for non-ionic surfactants, which it produces from petrochemical ethylene.

Over-capacity and PKO price volatility in Asian fatty alcohol market

he Asian fatty alcohol market is expected to be mixed in the first half of 2015 because of a slew of new capacities, unpredictable volatility in upstream palm kernel oil (PKO) prices and worries over slower economic growth, particularly in China, the largest consumer of Southeast Asian fatty alcohols, according to an ICIS News report. A growing middle class population and rapid urbanisation would spur demand for consumer goods in personal and home care, and Asian demand for fatty alcohols would outpace growth in Europe and the USA to 2022, with China and India leading, and expected to grow at a compound annual growth rate (CAGR) of 8.9% and 10% respectively, from 2012-2022. However, in the nearer term, PKO volatility, over-capacities in fatty alcohols amid rapid expansion in the past three years, in addition to a competitive landscape in downstream derivatives such as alcohol ethoxy sulphate (AES) in China, had dragged down overall market sentiments, the report said.

Two new fatty alcohols plants, including one plant outside the Asia Pacific, were expected to start up this year. These new plants would potentially boost the total annual capacity of Asia’s fatty alcohol market by 260,000 tonnes by the end of 2015 from the current capacity of around 2.1M tonnes/year, according to ICIS. Talk of four new fatty alcohols plants in China – expected to start in late 2015/2016 – totalling around 400,000 tonnes/year of capacity, had further fuelled worries about over-supply. High PKO costs in the third quarter of 2014 contributed to rising production costs for fatty alcohols, with several major suppliers reducing operating rates in the second half of 2014. The ICIS report said India’s recently implemented 20% safeguard duty against fatty alcohols imports from Malaysia, Indonesia and Thailand, which began on 28 August for 200 days, had led to decreased imports from the Indian market. “Some fatty alcohol buyers in India might

switch to importing non-dutiable AES for their surfactant production line,” a major broker in India was quoted as saying. Additionally, a growing number of industry players were moving downstream into surfactants in an attempt to ensure valuechain utilisations. This included Musim Mas Group’s ethoxylation facility at Dow Chemical’s site in the Netherlands that was expected to come on-stream in 2015, the report said. SABIC’s new natural fatty alcohol plant in Saudi Arabia, that would be integrated back to the company’s ethylene oxide derivatives business, as well as Wilmar’s acquisition of Huntsman’s European commodity business and ethoxylation facility in France, were other examples. The acquisition of Belgium-based surfactant company TensaChem by major oleochemical player KLK Oleo, completed in September, also indicated downward integration as a trend moving forward, ICIS said.

12 OFI – MARCH/APRIL 2015 www.oilsandfatsinternational.com

I NT E R NATION AL M ARKET REVIEW

Farmers in the Americas are continuing to respond to the economic arguments for growing more soyabeans versus corn, promising an extended period of supply surplus – probably lasting far into the new season that starts in September. However, delayed South American crops and stronger than expected demand for US soyabeans are propping prices at higher than expected levels. John Buckley writes

ven though some of the components have altered, the surplus equation facing the oilseed raw material sector remains much the same as at the end of the last quarter of 2014. As widely expected by the markets, the US Department of Agriculture (USDA) did trim its estimate of 2014 US planted area but the effect was over-ruled by a higher harvest/planted ratio and a small increase in average yield, leaving output slightly higher – rather than lower – and still 16.6M tonnes over the previous year’s crop. Dry weather has ruled out earlier hopes of a Brazilian soya crop approaching 100M tonnes but the recent 94-95M tonne forecasts are still up by almost eight million tonnes on the year. Argentina’s estimate has meanwhile risen from 55M tonnes to 56-58M tonnes. As South American harvests roll in, a world awash with soya is moving from prediction to reality. Despite that, Chicago Board of Trade (CBOT) soyabean futures have managed to steer well away from their February lows (in the US$9.50s/bushel range) as later-than-expected Latin American harvests continue to deliver a late season demand windfall into the laps of US soyabean and meal exporters. Just over halfway through the season, the USA has already sold most of the 49M tonnes of soyabeans it expects to export in total. It is also well ahead of the needed pace on meal exports, keeping US domestic crushers busy as well. As usual, China has led demand, buying 29.3M tonnes of US soyabeans as we went to press against 27.8M tonnes this time last year. It has also shipped the bulk of that, reducing potential for cancellation of any deliberately ‘overbooked’ shipments made as insurance against South American crop problems during the latter’s main November/February growing period. Demand for US soya has also been boosted by ideas that Latin American shipments might be delayed further by producers hanging onto their

FIGURE 1: USA SOYABEAN PLANTED AREA (MILLION ACRES)

CHARTS: JOHN BUCKLEY

Strong demand props up soyabeans

FIGURE 2: PALM OIL CONSUMPTION GROWTH

crops in the hope of better prices. Both major origins have sold less than usual for the time of year. In Argentina, producers have been hoarding still quite substantial old crop supplies as a hedge against inflation and a declining currency. Although a weak Real tends to spur Brazil’s commodity exports for strong dollars, the threat of logistical shipping snarl-ups recently returned as striking truckers blocked roads from the interior growing regions to ports in protest at fuel price hikes. While the government has intervened to clear roads, the risk remains that this dispute might flare again to slow soyabeans moving to exports or fuel supplies to areas entering the peak harvest period. Global soyabean crush is expected to grow at an above trend 5.7% or 13.7M tonnes this season compared with 4.6% in 2013/14 and just 0.8% in the ‘tight’ 2012/13 year. Biggest gains are seen in China (+5.7M tonnes), Argentina (+3M tonnes), the USA (+1.7M tonnes) and Brazil (+1.3M tonnes). However, world soya oil consumption is seen rising more slowly this season, at 3.2% (1.45M tonnes) against last season’s 6.1%. The main reason is Chinese growth easing to 4.4% (+600,000 tonnes) compared with last year’s hefty 8.8% (1.7M tonnes). The USA is, meanwhile, expected to reduce demand in both the diesel fuel and food sectors by a net 275,000 tonnes.

Even with all this additional crush, the world will still be left with an expected surplus of 23M tonnes of soyabeans to put into store for 2015/16 onward, the US share of these stocks jumping from last season’s paltry 2.5M tonnes to a burdensome 10.5M tonnes. Brazil’s surplus is also expected to rise from 16.5M tonnes to 24.8M tonnes and Argentina’s from 29M tonnes to 34.7M tonnes. The looming surplus will probably be bloated further if the US successfully sows another large crop over the next few months and gets normal growing weather. Markets have been anticipating that farmers there will respond to current soya/ corn price ratios and soya’s lower growing costs by boosting area to a new record high – perhaps 1.2M-2.8M ha more than last year’s 33.48M ha. The consensus still seems to swing that way, even after the USDA’s ‘Outlook Forum’ conference in late February coming up with a lower 33.4M ha figure. (Last year, the ‘Outlook’ was way out with a preliminary 31.8M ha forecast). There seems more widespread agreement with the USDA’s view that the odds are stacked against yields reaching last year’s stellar 47.8 bushel/acre (versus 44 bushel/acre in 2013 and just 40 bushel/ acre in 2012). Nonetheless, the foundations appear to be moving into place for another potentially huge harvest. v

14 OFI – MARCH/APRIL 2015 www.oilsandfatsinternational.com

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Palm oil sales disappoint

FIGURE 3: WORLD RAPESEED/SUNFLOWERSEED OUTPUT (MILLION TONNES)

Palm oil markets have offered more bullish input in the last quarter. This started at the turn of the year, when flooding in Malaysia and too much rain in Indonesia caused the steepest seasonal drop in Asian production for many years. Malaysian production fell 22% on the month in December and a further 15% in January, taking origin stocks down to their lowest in six months at 1.77M tonnes. Indonesia’s output, for which figures tend to be sparse and delayed, was meanwhile estimated by traders there to have declined by about 6-7% for each month. The impact was mitigated, however, by declines in export trade, Malaysia’s dipping by 22% in January and by a further 7% in preliminary figures for February, despite maintaining a zero export tax policy since November. All the big buyers have been taking less palm oil so far this year than last – China, India, Europe as well as moderate-sized users like Pakistan, the USA and Middle Eastern countries. A key factor remains the small discount palm oil continues to offer versus soya oil, its key rival for international trade – still running at about a quarter of its usual size. Many buyers will doubtless be hoping that a promised record supply of soya oil will bring even cheaper prices across the edible oil sector as this arrives on the market. Indonesia – which also had an estimated surplus stock of around 2.45M tonnes in January – gave palm oil prices a briefly impressive lift when it announced a tripling in government subsidies for its own palm biodiesel sector, taking effect from March (see Biofuel news, p6). Some industry analysts think this could almost double offtake in this sector to around 3.3M tonnes/year but others doubt it will remove that much from traditional outlets due to the frequently cited inadequacies in its infrastructure, difficulties distributing supplies over the country’s vast island complex and, not least, not enough newer vehicles capable of handling biodiesel’s tendency to increase engine wear. Malaysian palm biodiesel producers have been asking for similar incentives to Indonesia’s but were seen less likely to get satisfaction as their government moves away from subsidies, (recently removing them from both petrol and diesel from conventional sources). In the meantime, some plantation sources have suggested that Malaysian output might, far from sustaining a long-term hit from the December floods, actually benefit from the extra soil moisture with higher output during the peak summer months. Even if yields simply return to trend, production will rise seasonally in coming months, requiring better export interest than this market has seen recently, to defend current price levels. Overall, it is difficult to see palm oil prices sustaining a big long-term recovery on the diesel factor as this would merely put it at greater disadvantage to soya and other soft oils in the more traditional – and larger – food oil outlets. Malaysian officials recently estimated combined Malaysian/Indonesian production at 51.5M tonnes in this calendar year against last year’s 49.2M tonnes. For the season (ending 30 September) the USDA is forecasting a bigger gain from 50.66M tonnes to 53.5M tonnes for a world total 62.44M tonnes. However, it also sees demand in a slightly more optimistic light – plus 4.1M tonnes at 60.78M

tonnes, led by Indonesia (+1.7M tonnes), India (+800,000 tonnes) and China (+460,000 tonnes).

Rapeseed tightening The rapeseed market has shown independent strength over the last few months, recently achieving its highest prices since July last year on Canada’s ICE exchange. Support came from a rallying soya complex and from ideas that the global supply picture for canola itself is starting to tighten amid the prospect of a smaller 2015 crop. Preliminary estimates for this are around 69M tonnes versus last year’s which has been variously estimated by Oil World at 70.2M tonnes and the USDA at 71.2M tonnes. Lower plantings, due to less attractive prices before and during the sowing season and bans on neonicotinoid herbicides, are expected to result in a big decline in EU production from last year’s record 24.1M tonnes. Recent estimates range from the International Grains Council (IGC)’s low 21.2M tonnes to EU farm lobby COPA-COGECA’s 22M tonnes. The effect will be buffered somewhat by expected larger carryover stocks from last year’s giant harvest. IGC has stocks at around 2M tonnes and the USDA at 2.6M tonnes. However, likely smaller supplies from the CIS countries suggest the EU may have more limited choice on imports (which have run to around 3-3.5M tonnes in recent seasons), probably depending more on the top supplier, Australia. Recent Ukrainian forecasts suggest this crop will drop by 23% or 500,000 tonnes to about 1.7M tonnes. Russia’s crop (last year at 1.45M tonnes) may also decline due to unfavourable weather and higher winterkill risks. However, Australia expects a crop only slightly lower than last year’s 3.3-3.4M tonnes. With sowing of its mainly spring crop still ahead, estimates of largest exporter Canada’s 2015 output are more open to guesswork depending on planted area, weather and prices in the sowing (and growing) period. Canola is reportedly offering less attractive returns than last year versus spring wheat but the gap is thought to have narrowed in the past two or three months. A recent trade poll by Reuters came up with a wide range of planted area from 7.7M to 8.5M ha but with a similar median point to last year’s 8.2M ha. Assuming some recovery in yields from last year’s weather-reduced levels, preliminary crop forecasts are around 16M tonnes versus 2014’s 15.6M tonnes. Canadian crush has been running at about 5%

higher this season versus the USDA predictions of a 3.6% increase across the industry, mainly to meet higher rapeseed oil exports. Canadian rapeseed exports are, meanwhile, expected to end this season well down on last year’s due to the smaller crop and lower Chinese imports as the top consumer/ importer raises rapeseed oil imports by about 400,000 tonnes instead. The net result will still be lower Canadian starting stocks of rapeseed for 2015/16, probably well under 2M tonnes. Canadian officials see these dropping further next season, to around 1.4M tonnes while leading trade house Louis Dreyfus recently speculated these could fall below one million tonnes. While rapeseed value is always heavily tied to soya price trends, the overall tightening in supplies suggests some leeway for independent strength in both the seed and the oil.

Higher sunflower oil prices Sunflower oil’s still unusually small premium over the other soft oils suggests this market has yet to fully take on board the perceived tightening in supplies over last season and probably the next one as well. The latest global crop figure for 2014/15 is around 40M tonnes – about three million tonnes lower than last season’s, mainly due to lower production in the key exporting countries, Russia and Ukraine. The resultant decline in global crush is expected to cut sunflower oil production this season by about 3.6% even as consumption increases by about 2% in response to the lower premium. The lion’s share of this growth is in India (imports up 38% to over 500,000 tonnes in its season to date) and China (up 4% to 455,000 in calendar 2014). Potential for a recovery in the CIS countries’ sunflowerseed output may be limited by the Russian/Ukrainian conflict, both countries’ collapsing currencies and parlous credit situations, blocking farmers’ access to quality imported seeds, fertiliser and other inputs. Yields, if not planted areas, may drop, leading to even lower 2015 crops. Although Argentina seems to be expecting a larger crop (just reaching harvest), that will not alleviate supplies much, putting the onus on southern Europe’s farmers to try to make up some of the shortfall. Given the upward momentum in 2014/15 demand for sunflower products, this seems to stack the odds in favour of higher sunflower oil prices to bring this market into better balance. w John Buckley is Oils & Fats International’s market correspondent

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CHART: JOHN BUCKLEY

I NTE R NATION AL M ARKET REVIEW

PPHOTO: VKARA/DOLLARPHOTOCLUB.COM

OLIVE OIL

THE EXTRACTION OF OLIVE OIL GENERATES HUGE QUANTITIES OF WASTES THAT HAVE A GREAT IMPACT ON LAND AND WATER ENVIRONMENTS BECAUSE OF THEIR HIGH PHYTOTOXICITY

From A waste to energy An EU-funded project in southern Spain is transforming olive oil waste into energy, offering the opportunity to improve profit margins and reduce the environmental impact of the some 30M cubic metres of olive oil production waste which is generated every year around the world. Poorna Rodrigo writes

breakthrough project that could return all olive oil waste back to the olive oil production cycle by turning it into onsite energy could bring significant profit margin improvements to the industry, while reducing its environmental impact. The European Union (EU)-funded pilot project Biogas2PEM-FC, based in Andalucía, southern Spain, uses “valourisation” techniques to deal with waste, as opposed to the traditional method of “depositing or using physical, physicochemical or biological methods for detoxification, which is costly,” explains Per Ekdunge, the Swedish fuel cell technology company PowerCell’s vice president and chief technology officer. PowerCell is the coordinator of the project. The initial phase of research on Biogas2PEM-FC was completed in November 2014. The technology in this project has three phases. In its first stage, the technology uses anaerobic digestion to break down organic waste to produce biogas. Then a reformer converts this biogas into hydrogen. And in the final step, a fuel cell system turns this hydrogen into energy, which can be used on-site to power olive oil production. These are proton exchange membrane fuel cells (PEM FCs), which can work at lower temperature and pressure ranges, using a special polymer electrolyte membrane. Ekdunge summarises: “The coupling of anaerobic digestion, a reforming stage and the use of a fuel cell allows the conversion of olive mill waste into energy by transforming waste into biogas, biogas into hydrogen and hydrogen into energy.” The project’s benefits are many, according to PowerCell: “The proposed solution allows lowering environmental impact and producing energy as a value added,” Ekdunge tells OFI. “It provides a modular, reliable, cost-effective and efficient combined heat and power system suitable for a distributed, on-site power generation from agricultural wastes.” Moreover, “the on-site application makes the process suitable for small

and medium olive mill cooperatives, making the waste valourisation and treatment more costeffective”, he says. Therefore, the price of the overall solution in a commercial format is expected not to exceed €20,000/kW production installed to achieve a return on investment (ROI) of about 10 years. The technology behind the project is innovative: while it increases biogas generation rates using agri-food wastes as raw materials, it generates new low-cost biogas reforming technologies. Power generation from treated biogas by means of PEM fuel cells integrated in the system is also groundbreaking. “By developing this process, all the wastes return to the olive oil production cycle, making it more sustainable,” Ekdunge says.

Partners across Europe While these technologies have been developed within the project site in Andalucía, project partners from across Europe have played key roles. Sweden’s KTH Royal Institute of Technology; Spain’s research institute Leitat Technological Centre; and five small-and-medium sized enterprises – Idener, Ingenostrum and olive mill cooperative Andalusian Federation of Agrarian Cooperatives (FAECA) in Spain; Marches Biogas, UK; and Helbio, in Greece, worked with PowerCell on the project. Regarding the anaerobic digestion technology, Leitat developed the technology in cooperation with Marches Biogas and Helbio. Helbio and Idener developed the biogas reforming technology. KTH cooperated with PowerCell on developing the PEMFCs. System control and integration was developed by Idener, with support from Ingenostrum. Site manager FAECA has conducted the scale-up, deployment, start-up and operation of the built prototype, Ekdunge says. The Australian Olive Association (AOA) has welcomed the project: “We support all endeavours to research and adopt environmentally-friendly processing methods,” AOA CEO Lisa Rowntree says.

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OL I V E O I L

“Anything that can make a source of energy from waste product has the potential to benefit, not only olive growers, but the wider community and environment as well.” She says while it is still hard to determine if the EU project will solve the waste problem entirely, it looks promising.

Addressing the waste problem

Purity Rules

The extraction of olive oil generates huge quantities of wastes that have a great impact on land and water environments because of their high phytotoxicity, says Ekdunge. “These wastes include olive pomace, a mixture of liquid and solid wastes with 55-60% water content. Because of [its] characteristics (higher water content and organic compound concentration such as carbohydrates, pectins and polyphenols), a huge disposal and potential pollution problem for the industry is generated.” Additionally, olives are cleaned – producing washing wastewater containing pollutants including pesticides – and olive oil production also involves centrifuges, producing oil washing wastewater with high acidity, salinity and organic load. As a consequence, the potential to send olive oil production wastewater discharges into public wastewater collectors and for use in crop land irrigation is limited. There is a lot of olive oil production waste to process. The International Olive Council (IOC) estimates that globally, some 30Mm3/year is generated. Spain is the world’s leading olive producer and generates more than four million tonnes of two-phase (both solid waste and wastewater) olive mill waste, Ekdunge says. The two-phase olive mill waste has become a critical environmental problem in the Mediterranean areas where this extraction process is used, for example, in Spain. In addition, in countries where other extraction techniques are common, such as three-phase techniques (oil-water-paste) used widely in Greece and Israel, the average amount of olive mill wastewater produced is 1.2-1.8m3/tonne of manufactured olive oil. In Mediterranean olive-growing countries, approximately 30Mm3 of olive mill waste effluents are produced as by-products per year, of which about 370,000m3 are produced in the Middle East region, Ekdunge says. So EU producers, notably Spain, produce by far the most waste. The IOC also notes that “in some olive producing countries, it [olive processing wastewater] is still discharged into urban sewage systems and watercourses, causing environmental pollution,” adding: the EU funded project “appears to be an alternative to dumping olive oil waste into sludge pits”.

Alternative solutions

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That said, there are already alternative solutions to recycle olive oil waste, from using it to fertilise herbaceous or tree crops to raise crop yields, to converting it into bio-plastics, the IOC executive secretariat says in a note. In addition “the IOC carried out a technical project a few years ago in cooperation with the international development agency, Common Fund for Commodities, to use wastewater and composted olive pomace as fertilisers on agricultural land”, it says. Its aim was to reduce the use of chemical fertilisers, benefiting the agricultural economy and the environment. Interestingly, in Australia, olive oil processing waste is not considered “toxic” Rowntree says. “Australian growers produce olives using the least amount of chemicals possible, mostly because it is better for the environment and end consumer, but also because chemicals are costly and growers are always looking to reduce their cost of production,” she explains. In Australia, most of the waste material is returned to the grove as ‘fertiliser’. Some growers make ‘briquettes’ out of their waste for use as solid fuel and others sell the waste to companies who use it to make compost and animal food. There is still a percentage of oil that remains in the waste that is useful for these other by-products, she stresses, adding: “The idea of making energy from the waste has been on the radar for a while, so it is good to see someone actually doing it.” Going forward, the EU project looks promising. The IOC says that if the technology proves viable, it will very probably find a market: “Therefore, the IOC can only encourage such an initiative and the use of technology for the production of clean energy. It could help to supply a great part of the processing plants’ needs in electricity.” Rowntree agrees: “If the project can achieve its goal of cost-effective and efficient combined heat and power system derived from olive waste, then the system should be able to be applied to other agricultural waste products which would definitely open up more opportunities.” Looking ahead, Ekdunge adds that the project partners are planning to apply for EU funding to scale up the research, having already received €1.1M in EU funding so far. w Poorna Rodrigo is a freelance writer

OLIVE OIL

Heading for a crash

World olive oil production and consumption levels are set to fall in the upcoming season due to poor harvests in the major producing countries. As a result, prices are expected to reach record highs

he International Olive Council (IOC) has predicted that world olive oil production will fall to its lowest level in 15 years in the upcoming 2014/15 season. While 3.27M tonnes of olive oil was produced in 2013/14, the output for 2014/15 is estimated to plummet 27% and reach only 2.39M tonnes – 433,000 tonnes less than the world will consume, the IOC says. The IOC adds that world olive oil consumption is also set to slide seven percent from 3.03M tonnes in 2013/14 to 2,82M tonnes in 2014/15, as a result of rising prices and other market pressures. Poor olive harvests in Spain and Italy, the biggest producers of olive oil, are to blame for the drop to the lowest levels since the 1990/91 season. Spain is expected to experience a 54% reduction in olive oil production; only 825,700 tonnes compared to the record output of the year before at 1,780,000 tonnes. Production in Italy is expected to decrease from 461,200 tonnes to 302,500 tonnes – a 34% drop. Spain’s olive crop was adversely affected by disease – and hot weather during the flowering season – while Italy’s olives suffered from olive fly infestation and an excessively wet summer. However, some countries are experiencing

surplus production. Tunisia’s output is expected to increase significantly to 260,000–300,000 tonnes from 70,000 tonnes in 2013/14 (+271%) (see ‘Tunisia heading for the top’, p25). Greece, the third biggest olive oil producer in the world, will have an expected yield of 300,000 tonnes, up from 131,900 in 2013/14 (+127%). As a result of total decreased output, olive oil prices are expected to rise significantly. Since September 2014, prices for extra virgin olive oil (EVOO) have risen sharply. Italy has experienced the biggest price rise, peaking at €5.86/kg at the end of November, a 121% increase compared to the year before. In Spain, prices rose from €2.74/kg at the end of September to €2.93/ kg at the end of November, representing a 29% increase from the year before. In Greece, the cost of EVOO peaked at €2.96/kg during the second half of November, 23% more than the year before. Prices in Tunisia increased to €2.88/kg at the end of November, a 24% rise compared to the previous crop year. The production levels of olive oil-producing countries outside the EU have fared better, with Tunisia leading and Albania, Egypt, Iran, Israel and Jordan also reporting bigger yields. Production is expected to be stable in Algeria, Libya and Turkey,

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PHOTO: ANGEL SIMON/DOLLARPHOTOCLUB

OLIVE OIL

season before), Algeria at 44,000 tonnes, Argentina and Jordan each at 30,000 tonnes, Lebanon at 20,500 tonnes, Israel and Libya each at 15,000 tonnes, Albania at 10,500 tonnes and Iran at 5,000 tonnes. Spain stands out in that its production in 2013/14 was 187% higher than the previous crop year and accounted for a 54% share of world output. World consumption in 2013/14 was assessed at 3,030,000 tonnes. EU28 consumed 1,717,000 tonnes, representing a 6% growth on 2012/13. Consumption in the rest of the IOC member countries was 11% lower than the season before. The biggest decreases were concentrated in Albania, Algeria, Egypt, Syria and Tunisia. In non-IOC member countries, consumption increased 6%. The most significant increases were seen in Australia (+19%), Canada (+9%), Japan (+6%) and the USA (+5%). In contrast, consumption fell sharply in China (–18%) and slightly in Brazil (–1%). Olive oil imports in 2013/14 totalled 794,000 tonnes while exports came to 817,500 tonnes.

A 27% drop expected this year

but Argentina, Lebanon, Morocco and Syria will show a decrease compared to the previous year.

A positive start to last season The 2013/14 crop year opened with 557,500 tonnes in world stocks of olive oil. World production was assessed at 3,270,500 tonnes, up by 36% from 2012/13. It was the second best crop year to date; the first was 2011/12, when output totalled 3,321,000 tonnes. Aggregate olive oil production by IOC member countries stood at 3,199,500 tonnes, equal to 98% of the world total. European Union (EU) countries produced 2,476,500 tonnes of olive oil, 69% more than in the previous season. Individually, Spain produced a record tonnage of 1,775,800 tonnes, followed by Italy at 461,000 tonnes, Greece at 131,900 tonnes, Portugal at 91,600 tonnes, Cyprus at 5,600 tonnes, Croatia at 4,900 tonnes, France at 4,900 tonnes and Slovenia at 600 tonnes. Output in the rest of the IOC member countries was 16% lower overall. The leader was Turkey at 190,000 tonnes, with Syria in next position at 165,000 tonnes and then Morocco at 120,000 tonnes, Tunisia at 70,000 tonnes (well down on the

In the upcoming 2014/15 crop year, the latest estimates supplied by countries point to a 27% drop in world olive oil production, forecast at 2,393,000 tonnes, compared with the season before. Bad weather has caused output to drop in some of the producer countries. Aggregate output by IOC member countries is estimated at 2,320,000 tonnes, of which EU producers are expected to account for 1,532,000 tonnes, showing a 38% season-on-season decrease. A further breakdown of the estimates show Spain with a production of 825,700 tonnes, much lower than the previous season, followed by Italy (down to 302,500 tonnes), Greece (up to 300,000 tonnes), Portugal (steady at 90,000 tonnes). The volumes produced by the rest of the EU producers are expected to be lower. Elsewhere among IOC member countries, olive oil production is forecast to be nine percent higher than in 2013/14. In first position is Tunisia, where production looks set to rise sharply to 260,000 –300,000 tonnes, followed by Turkey (stable at 190,000 tonnes); Morocco (down slightly to 110,000 tonnes); Syria (down sharply to 50,000 tonnes); Algeria (steady at 44,000 tonnes); Jordan (up to 35,000 tonnes); Egypt (up to 21,000 tonnes); Israel (up to 17,500 tonnes); Lebanon (down to 16,500 tonnes); Libya (steady at 15,000 tonnes); Albania (up to 12,000 tonnes); Iran (up to 9,000 tonnes) and Argentina (down sharply to 6,000 tonnes – the crop year in Argentina is for the harvest beginning in April 2014).

Rising global imports At the close of the 2013/14 crop year (October 2013-September 2014), the data for olive oil and olive pomace oil imports by Australia, Brazil, Canada, China, Japan, Russia and the USA show higher figures for Canada (+10%), the USA (+5%), Japan (+4%) and Australia (+1%), versus the season before. Imports have moved downwards in China (–15%) and, to a smaller extent, in Brazil (–2%). In Russia, figures are only available up to April 2014 – in other words, for the first seven months of the season – and

reflect an increase of eight percent in imports. As of November 2014, EU figures were not available for September 2014, but the data for the first 11 months of the season (October 2013-August 2014) flagged up a 17% increase in intra-EU acquisitions and a drop of 63% in imports from outside the EU versus the same period in 2012/13. This cumulative fall in extra-EU imports seems logical, says the IOC, given Spain’s high production in 2013/14.

Olive oil hitting record prices In Spain, producer prices for (EVOO) have been rising constantly since June 2014. By the second week of September, they had reached €2.74/ kg. Prices fell in October but, in November, they reversed direction, moving up to €2.93/kg at the end of November. This level is 28% higher than a year earlier and 49% higher than the low recorded in May 2014 (€1.96/kg). The highest price seen during the period, €3.02, was recorded at the beginning of March 2014. Towards the end of last year, producer prices in Italy were on a very clear upward trend. In the week from 10-16 November, they hit the highest level in the last decade, reaching €6.79/kg. This price hike was probably prompted by the forecast of a lowerthan-usual harvest. However, the IOC does not know the volume of product sold at these prices. After a small dip in the second last week of November, prices switched back upwards to reach €5.86/kg at the end of November, an increase of 121% on the year before and 122% compared with the low recorded in the second week of December (€2.64/kg). In Greece, after holding steady at €2.51/ kg through July and August, producer prices in Greece climbed for several weeks, then fell back at the beginning of October only to peak at €2.96/ kg, showing a 23% growth on the same period of 2012/13. In Tunisia, at the end of October 2013, producers were paid €2.53/kg for EVOO. Prices then started moving downwards until late December 2013, when they levelled off after some fluctuations. At the end of November they had rallied to €2.88/kg (+24% compared with a year earlier) and they remained at that level for three weeks. Producer prices for refined olive oil have been very similar in Spain and Italy and started to move upwards from June 2014. In Spain, they then dipped slightly in the last two weeks of September 2014, only to pick up again to reach €2.69/kg by the end of November. This is 25% higher than the level in the same period of 2012/13. In Italy, while prices moved in parallel with those in Spain, they peaked in the third week of January (€2.83/kg). At the end of November, prices were hovering around €2.71/kg, translating into a period-on-period increase of 25%, which restored Italian prices to their usual position above Spanish prices. No price figures are available for this product category in Greece. At the end of November 2014, the price of refined olive oil and EVOO in Spain differed by €0.24/kg, with €2.69/kg being paid for the first category and €2.93/kg for the second. In Italy, the difference in price between the two categories is quite a lot wider w than in Spain (€3.55/kg). This feature is extracted from the International Olive Council’s November 2014 market newsletter

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OLIVE OIL

PHOTO: SUBBOTINA ANNA/DOLLARPHOTOCLUB.COM

The magic ingredient?

Olive oil is said to be a superfood that aids in the prevention of cancers, heart disease and which improves cognitive performance. Charlotte Niemiec provides a round-up of studies that have assessed olive oil’s positives and negatives

fter the excess of the Christmas period, healthy eating and losing weight are often priorities for the New Year and a poll this year found they were the most common resolutions on 1 January. The question is how to do so effectively and healthily. Numerous studies have suggested you can do little better than kick-starting the year with a Mediterranean diet rich in olive oil. More and more scientists and food nutritionists are promoting olive oil as an essential fat for the human diet. However, not all agree. For every positive of olive oil, there seems to be a negative. It has been noted that populations that consume large amounts of olive oil, such as those in Mediterranean countries or North Africa, live longer than populations that do not. Replacing butter and other fats high in saturated fat with olive oil has been shown to prevent or delay a number of diseases or ailments and promote good health in general. The world’s longest-living female, Jeanne Louise Calment, lived to 122 years, 164 days and credited her longevity to the regular use of olive oil

in her diet. It is not just olive oil producers or refiners that make these claims; they are backed by the US Food and Drug Administration (FDA) and a number of other health-promoting organisations around the globe. Over the last decade, the FDA has scrutinised a myriad of scientific literature and concurred that replacing saturated fatty acids with monounsaturated fatty acids reduces total cholesterol levels and LDL cholesterol, both of which are known to increase the risk of coronary heart disease. Following a petition from the North American Olive Oil Association, the FDA has allowed a qualified health claim on food labels of olive oil. Qualified health claims are placed on products recognised by the FDA to be beneficial after extensive scientific enquiry. Similarly, the Dietary Guidelines for Americans (2010) states that: “Consuming less than 10% of calories from saturated fatty acids and replacing them with monounsaturated and/or polyunsaturated fatty acids is associated with low blood cholesterol levels and, therefore, a lower risk

of cardiovascular disease.” Although olive oil is a fat, health professionals are anxious to stress that it is the type of fat we consume, rather than the amount, that counts. Some studies have found that a diet rich in monounsaturated fat, such as those found in olive oil, nuts and seeds, could protect against some chronic diseases. While it is high in calories, olive oil may nevertheless help reduce levels of obesity, especially if consumed in conjunction with a Mediterranean diet. The Mediterranean diet involves the consumption of monounsaturated fats in the form of olive oil, daily consumption of fruits, vegetables, whole grain cereals and low-fat dairy products, weekly consumption of fish, poultry, legumes and a relatively low consumption of red meat, often alongside a daily glass of red wine.

Decreasing the risk of cancer, disease One promising study shows that the phytonutrient in olive oil, oleocanthal, mimics the effects of ibuprofen in reducing inflammation. This can decrease the risk of breast cancer and its recurrence – the most common type of cancer in Western countries. Olive oil is rich in antioxidants, especially vitamin E, which has long been thought to minimise cancer risk. While a high-fat diet is directly related to a higher incidence of cancer, it is said that some types of fat can actually protect

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OL I V E O I L

against the development of cancerous tumours. Furthermore, virgin olive oil, which has large amounts of oleic acid – a monounsaturated fat – contains several bioactive compounds that have been found to be effective in preventing breast cancer. Squalene and lignins are among the other olive oil components being studied for their possible effects on cancer. Additional studies have suggested olive oil could also reduce the risk of skin, prostate, colon and digestive tract cancers. Heart disease could also be prevented by consuming olive oil, along with TypeII diabetes and metabolic syndrome. Type-II diabetes is the most common and preventable form of the disease and a Mediterranean-style diet reduces the risk of contracting it by 50%, according to recent studies. Metabolic syndrome is a combination of abdominal obesity, high blood pressure, abnormal cholesterol and high blood sugar. An Olive Oil Times report released late last year noted Dr Antonio Pothoulakis, an international cardiologist at the Iasis Clinic in Chania, Crete, as saying: “Metabolic syndrome is connected to the obesity epidemic of our time. A big belly poisons our metabolism and a poisoned metabolism can result in Type-II diabetes, heart attacks, strokes or sudden death.” Olive oil helps lower ‘bad’ lowdensity lipoproteins while improving blood sugar control and enhances insulin sensitivity, he says. Another study suggests olive oil lowers the levels of total blood cholesterol, LDL-cholesterol or ‘bad’ cholesterol. At the same time, the study claims, it does not alter the levels of HDL-cholesterol or ‘good’ cholesterol – and may even raise them – which plays a protective role and prevents the formation of fatty patches, thus stimulating the elimination of low-density lipoproteins.

Claims disputed However, the Pritikin Longevity Center in Florida, USA, disputes the cholesterol claim and most other claims on olive oil’s health benefits. In a February 2015 report titled “What’s wrong with olive oil? Separating the truth from the hype”, the centre claims that while, yes, olive oil is ‘better’ for you, this does not mean it is good for you; olive oil is still a fat. It cites a study carried out on monkeys that showed a monounsaturated-fat-rich diet was equally damaging as a saturated-fat-rich diet. Dr Lawrence Rudel, who was involved in the study, wrote: “The monkeys fed monounsaturated fat developed equivalent amounts of coronary artery atherosclerosis as those fed saturated fat.” He further noted that science supporting claims that monounsaturated fats are heart protective is weak, based largely on population studies, not controlled trials. The Pritikin report also criticises claims that olive oil is healthier than consuming a diet high in saturated fat. Dr Jay Kenney of the Pritikin centre says: “There is reason to believe that whatever modest health benefits are associated with consuming olive oil are largely due to the beneficial plant chemicals, such as polyphenols and plant sterols, found in the extra virgin olive oils, but these plant chemicals are largely lost in the more processed ‘light’ olive oils. These phytochemicals may provide some protection from the harmful effects caused by consuming a high-fat meal.” The Pritikin report points out that LDL cholesterol may be lowered if the saturated fats normally used in one’s diet are replaced by olive oil, but consuming olive oil in addition to saturated fats such as butter will not lower LDL cholesterol. The science, it says, is misleading. It emphasises the qualifiers in the FDA’s health claim: “Limited and not conclusive scientific evidence suggests that eating about two tablespoons (23 grams) of olive oil daily may reduce the risk of coronary heart disease due to the monounsaturated fat in olive oil. To achieve this possible benefit, olive oil is to replace a similar amount of saturated fat and not increase the total number of calories you eat in a day.” The Pritikin report even disputes that populations consuming large amounts of olive oil live longer. Instead, it states that it is people who consume a diet rich in whole, natural foods – like vegetables, fruits, whole grains and beans – and are active, who live longer. It points out that citizens of Okinawa, Japan – a population most likely to live to 100 years – do not use olive oil at all.

Healing body and mind And yet the health claims still continue. Other studies suggest an olive oil-rich diet could slow down the natural ageing process of the heart; a Spanish study found that consuming large amounts of the oil improved the arterial function of elderly individuals. Other studies have shown that people whose diets include high levels of olive oil are less likely to develop rheumatoid arthritis. Additionally, a high consumption v of olive oil appears to improve bone mineralisation and calcification, helping 23 OFI – MARCH/APRIL 2015

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OLIVE OIL

cognitive impairment was completely v calcium absorption and so playing an important prevented by aglycone administration role in aiding sufferers and in preventing the onset to the mice. of osteoporosis. Past studies have shown that Osteoporosis is a disease characterised by a olive oil may be effective in decrease in bone mass which, in turn, causes the treatment and healing the architecture of bone tissue to become of skin burns when used fragile. This can then increase the externally. Now, a new possibility of fractures. study has shown that Olive oil may be effective, not just for consuming olive oil physical illness, but also in combating can also expedite the certain mental illnesses. Spanish healing process. Burn researchers have recently discovered patients have increased that a higher intake of olive oil and nutritional needs in polyunsaturated fats found in fatty calories and proteins, fish and vegetable oils was associated as well as minerals and with a lower risk of depression. vitamins, so nutrition The findings suggest that is an important factor cardiovascular disease and in burn care and depression may share some common healing. Antioxidant mechanisms related to one’s diet. and anti-inflammatory One study from the University therapy have been of Florence said olive oil could also known to be beneficial in prevent or delay Alzheimer’s disease. It the treatment of burns showed that dietary supplementation and a study on 100 of oleuropein aglycone – the main people with secondpolyphenol found in extra virgin and third-degree burns olive oil – improved the cognitive showed that those who performance of mice compared to a ingested olive oil control group of mice. took less time The scientists also to heal and conducted memory spent less time performance tests and noted DOCTORS IN ITALY RECOMMEND ADDING OLIVE OIL TO BABY MILK in hospital. that, in the mouse model, (PHOTO: BETACAM-SP/DOLLARPHOTOCLUB.COM)

Excellent for babies Finally, another study shows that olive oil and breast milk are surprisingly similar. Extra virgin olive oil contains omega-3 and omega-6 in similar portions to breast milk and has the same percentage of linoleic acid, making it an indispensable food for the myelination of nerve fibres and brain development. It is easy to digest and helps gastric functioning, preventing constipation and colic. It also helps in the absorption of vitamin D, which is important for growing babies and children because it regulates calcium and phosphorus and encourages the intake of minerals that are essential to the process of ossification. This gives children added protection against bone fractures in their younger years and the risk of osteoporosis in old age. In Italy, doctors strongly recommend using olive oil in solids for babies that are being weaned off breast milk. They even recommend adding it to a baby’s bottle of expressed or formula milk. This is because olive oil may facilitate the natural gastric process and it contains oleuropein, a natural anti-inflammatory substance that reproduced the natural effects of ibuprofen, the active ingredient widely used in the production of pain medication. From all science, it is clear that olive oil does offer some health benefits, but only if it replaces a similar amount of saturated fat consumed, as it is still highly calorific. w Charlotte Niemiec is the former assistant editor of OFI

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OLIVE OIL

Tunisia heading for the top Tunisia’s century-long history of producing olive oil is paying off as it places second in global production figures this year. Charlotte Niemiec looks at the market conditions that have enabled it to produce four times more oil than the previous season

unisia, the northernmost country in Africa, is bordered by the Mediterranean Sea, the Atlas Mountains and the Sahara desert, with incredibly fertile soil suitable for growing a variety of crops. The country counts just under 11M inhabitants and is one-third smaller than the state of California in the USA. Famous for its olive oil, the country is expected to produce 280,000-300,000 tonnes this year, a 400% increase from last year’s figure of 70,000 tonnes, reports Olive Oil Times. This makes it the second largest global producer after Spain and the first time Tunisia ranks second place in world production. Spain’s production is estimated at 600,000 tonnes, placing it first once again in the global ranking, despite its poor olive

harvest. While many European olive producers in Italy and Spain have experienced an exceptionally bad harvest because of poor weather conditions and olive fly infestations, Tunisia has had a record olive season. Perfect weather conditions for productivity helped ready olive trees for a bumper crop. The country has also experienced an excellent crop of citrus fruits and dates and the cereal crop has experienced an 80% increase in yields. Although Tunisia is a major olive oil producer, only a small percentage of the oil it produces is consumed domestically, as olive oil is often replaced by other vegetable oils in the traditional Tunisian diet. Between 60-70% of the country’s olive oil is exported to the European Union (EU), mostly to Spain and Italy. Tunisian olive oil is also exported to over 60 markets around the world, including some Arab countries, Canada, China, France, Russia and the USA, under as many as 80 different brand names. Tunisia’s olive oil exports represent 40% of its agricultural exports and 10% of total exports. While the country’s bumper crop is a great gain, the harvest is also posing some problems, the Olive Oil Times report notes. The high cost of v

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OLIVE OIL

PHOTO: DEYAN GEORGIEV/DOLLARPHOTOCLUB.COM

v manpower, a lack of skilled workers and the danger of robberies are real threats for producers. Nevertheless, Tunisian exporters will be looking to thrive in Europe, taking advantage of poor harvests in an olive oil stronghold that will fall short of satisfying the region’s own internal demand. Special measures have been undertaken by experts and local authorities for the larger-than-normal harvest operations and new initiatives are also being considered to market Tunisian olive oil to meet high demand in the international market.

A rich olive oil history Tunisia has been producing olive oil for the past 100 years. According to a presentation given in November 2014 by Chokri Bayoudh, director general of agriculture production at Tunisia’s Ministry of Agriculture, there has been an increase in production over the last 40 years, but this has stagnated in the last 10. This is because 97% of production relies on rainfall. Exports have increased in line with production and the quality of the oil has also improved. Only 1% of olives produced are eaten as table olives, the remaining 99% are crushed for oil. Fourteen percent of olive groves are not yet in production and 96% of olive groves are located in the dry regions of the country. Seventy-seven percent of oil produced is extra virgin olive oil and 3% is virgin. Bayoudh’s presentation says that olive trees cover 1.8M ha, comprising one-third of cultivated land. More than 309,000 (65%) of people in agriculture rely on the olive market for their livelihood. There are 15 refineries, 1,700 factories, 10 extraction facilities and over 40 bottling plants. There are over 200 private merchants that export some 140,000 tonnes. Currently, 70% of olive oil produced in the country is exported. The majority of olive production is in the north, where olive trees are planted on 100ft/ha. Trees cover 50-60ft/ha in the centre and 17ft/ha in the south.

OLIVE TREES COVER 1.8M HA OF LAND IN TUNISIA

“One long-term problem is the age of trees; many are old and there is no investment in replanting”

Current production In the 2012/13 growing season, initial stock for the year was 20,000 tonnes, while 220,000 tonnes was produced, 40,000 tonnes was consumed and final stock levels totalled 30,000 tonnes, according to Bayoudh’s presentation. There were 1,750 factories in Tunisia dedicated to olive oil production, 35% of which were traditional factories, 25% were super presses and 40% were continuous systems. Tunisia’s exports totalled 170,000 tonnes, of which 41% went to Italy, 35% to Spain, 13% to the USA, 6% to France, 2% to Portugal, 2% to others and 1% to Canada. In the 2013/14 growing season, initial stock for the year was 30,000 tonnes, while 70,000 tonnes was produced, 35,000 tonnes was consumed and final stock levels totalled 7,000 tonnes. The reason for the decline was bad weather – the country experienced a lack of rainfall and subsequent low yields. Olives were grown on 1,803,300ha; 99% of this was crushed into oil. In the 2013/14 season, 14% of olive groves were in production and 96% were located in dry areas. Seventy percent of olive oil produced was extra virgin and 4% was virgin. The total number of factories was 1,760, comprising

35% traditional factories, 25% super presses and 40% continuous systems. Exports in the 2013/14 season expanded to 48 different countries, totalling 58,000 tonnes. Canada took 27% of exports, Italy 20%, Spain 15%, France 11%, the USA 11%, other countries 8%, Saudi Arabia 2%, Libya 2%, China 2% and Morocco 2%. Estimates for the upcoming olive oil season in Tunisia are for an initial stock of 7,000 tonnes, 260,000 tonnes of production, 40,000 tonnes to be consumed and 170,000 tonnes exported, with a final stock expected to be 57,000 tonnes.

Old ways die hard Despite its place in the international ranking, Tunisian producers are still strongly tied to old traditions, according to Olive Oil Times. In most of the country, the harvest season begins in late November – when olives start to turn black – and groups go into the fields with big green nets and ladders to climb and collect the olives. The olives are then loaded in sacks onto carts pulled by donkeys, or in the back of a pickup truck.

The number of continuous lines for olive oil production has increased but, in 2012, 1,050 mills out of 1,707 were still using traditional presses. Farmers or brokers present the mill owner with a basket filled with a sample of olives. The mill buyer inspects the olives carefully, presses some of them by hand to verify the yield and, once he decides to buy, starts to negotiate the price. The Olive Oil Times says most farmers prefer to give their olives to mills with traditional systems because they believe that they will obtain a greater yield and a better oil from old presses. Olives are stored in stalls until they are ready to enter the mill and are crushed by a stone into a paste that will be pressed into oil. The oil-water mixture exiting the press is separated by gravity. The whole process is monitored by the director of the mill who coordinates the workers. At the end of the extraction and separation process, the oil is stored in underground basins in order to preserve its quality. In a good year, these operations are repeated 24/7 from late November to late April. In time, a more modern and mechanised approach will increase the competitiveness of Tunisian olive oil, reducing the costs of the harvest and of the extraction process. This could be the challenge for the next generation of Tunisian olive oil producers, the Olive Oil Times says. Bayoudh adds that in Tunisia, there is a vast amount of productive olive area but it varies by region and the country needs to increase irrigation to stabilise production and move closer to the EU market. One long-term problem that must be addressed is the age of the trees; many are old and there is no investment in replanting. Bayoudh says the country needs to rejuvenate the sector by rotating crops and reviewing the way the industry is structured. The market needs to diversify and develop proper brands if it is to succeed, along with increasing its local market quality and improving packaging. Nevertheless, there is great potential to develop on different levels and increase production in general. w Charlotte Niemiec is the former assistant editor of OFI

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n the Gulf, the harsh desert climate has always made agricultural production difficult, so fats in the form of animal lard or milk ghee, have traditionally dominated diets. However, due to population growth in the Gulf Cooperation Council (GCC) countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia – and the United Arab Emirates – UAE), as well as rising affluence, booming expatriot populations, and increasing diversity in imports, sales of higher end edible oils in the region have been driven up. These products form part of a large GCC market in edible oils amounting to 1.2M tonnes sold in 2013 alone, according to the Gulf Organisation for Industrial Consulting (GOIC). The GCC is almost exclusively an importer of edible oils in the high end and mass market. The exceptions to this are smaller factories and refineries, which import grains and seeds for oil extraction, and where unrefined oils are treated. There are domestic edible oil industries in Oman, Saudi Arabia, and increasingly Iran, but their production is not significant – 47,000 tonnes in 2012 according to industry data. In addition to oils, there is also limited production of animal fat in the region from the growing dairy cattle herds kept to satisfy the demand for fresh dairy products. This goes mainly into cheese and butter production, according to India-based market researcher Mordor Intelligence.

Olive oil and infused oils One key segment of high-end oils and fats is the growth in olive oil sales in the region. In the wider Middle East – in the Levant and North Africa, most notably – olive oil consumption has been a historical staple. This is not the case in the Gulf, but there has been considerable growth in olive oil imports into the GCC. Market analysts Euromonitor International says that Saudi Arabia has experienced around 45% of import growth of olive oil, which includes pomace as well as more exclusive extra virgin and virgin sales over the last decade. Some high-end restaurants and hotels in the UAE’s Dubai are increasingly using infused olive oils, with one chef at Dubai international seafood restaurant Le Pirate explaining, “our signature dishes make growing use of these kinds of ingredients – and our customers have an equally growing expectation for us to use them. Truffleinfused oil is one, in particular, that is in much greater demand – as is chilli-infused oil.” Infused olive oils are readily available in westernoriented supermarkets across the GCC with numerous brands, such as Lebanon-based Zejd, at the higher end of the olive oil price range. Some are imported through UK-based supermarket chains

PHOTO: VITALINA RYBAKOVA/DOLLARPHOTOCLUB.COM

The Gulf region, known for its diversity and with a growing population of ex-patriots, is seeing a rise in the market for higher-end oils and fats, in particular olive oil, as well as infused oils. Nigel Holt writes from Dubai

VEGETABLE OILS – IN PARTICULAR SOYA, SUNFLOWER, RAPE AND CORN – ARE THE COOKING MEDIUM OF CHOICE IN GULF STATES

Changing tastes such as Spinneys and Waitrose, which have outlets in the region.

Foreign brands in the GCC There is a growing presence in the GCC of foreign brands, partly through the developing health and luxury sector. The largest premium retailers are Spinneys and Waitrose – the Dubai-based Abraaj Group owns the UAE franchise for both companies and runs more than 30 stores there. Spinneys and Waitrose both share branded premium oils and fats that include middle range olive oils such as Bertolli, Borges, Rafael Salgado and Waitrose’s own-brand premium olive oils that are mainly sourced from Greece, Italy and the Maghreb. Cheaper extra virgin olive oils on offer come from Syria, Tunisia and Morocco; premium rapeseed oil is also available, which is a new trend in high-end oil sales, along with basil and chilli-infused oils, according to a spokesperson for Spinneys Ajman. At Spinneys in the UAE’s Ajman city, as in Sharjah

city and Dubai (dealing with a select, mainly expatriate clientele as well as UAE nationals seeking internationally-based brands), the trends are for fragrant oils that are used as condiments, rather than for cooking, according to a spokesperson. “We’ve seen a definite increase in the purchase of high-end oils, especially those with infusions. This has been the case for around two years now, with a slow but steady uptake,” he says. Prices for these goods range from around US$4 for lowerend premium oils, to around US$15 for the more expensive brands. The only other source of exotic oils in the region – particularly in Dubai – is through single operator delicatessens. Many of these have only a physical presence, although Secrets Fine Foods operates exclusively online. Stephanie Duriez, the founder and owner, told Oils & Fats International there is a growing demand for boutique products, and the online model is effective. She says she is able to stock oils that would not be feasible with the current supermarket model. She carries a sizeable

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range of products and high-end brands that include: Terre Exotique Argan oil from Morocco; lemon or grapefruit-perfumed olive oil; Percheron’s grapeseed, walnut and hazelnut oil; as well as Passepartout extra virgin olive oil with chilli; Tartufi Morra’s infused olive oil with black or white truffle; and other top brands that include Santagata, Terre Bormane, Galateo & Friends, Château d’Estoublon and Treurer. Prices here range from around US$10 for smaller-sized premium bottles, to nearly US$100 for collectors’ editions, or very-high end quality oils. “Dubai’s middle classes do seem to be going against the current economic trend, and rather than belt-tightening, they are – at least in gourmet foods – spending more,” said Ms Duriez. “While it might just be a case of selective buying, I can’t help feeling that even when economies slow down, people always need an escape valve. Good food, whether it’s fine dining out, or at home, is one of the best and most cost-effective ways there is of doing that. I sense the trend for affluent people in the Gulf is to buy more premium olive and other oils – especially when there is a definite health benefit in doing so,” she adds. The GCC is still clearly in a period of substantial growth, especially in the import and preparation of high-end oils and fats, particularly olive oil and its derivatives. With private and government investment in food security a priority for the region over the next decade, and given its sparse resources, the trend is likely to accelerate. While the high-end olive oil market is relatively small in the region, it is growing.

Health concerns inform change Moreover, local health ministries are also encouraging the consumption of more expensive healthier oils and fats, given growing health concerns in the GCC, such as diabetes. Obesity in the Middle East, and in particular, in the GCC region, is reaching levels that come second only to North America, according to data from UK-based think tank the Overseas Development Institute. More than 58% of adults in the GCC (of all nationalities) have a body mass index of over 25 (i.e. clinically overweight) compared to 70% in the USA, according to institute data. Despite increasing consumption by young people of fast food and nontraditional foods in national populations, there is also a growing level of food and lifestyle education and a developing healthy-living drive underway that includes promotion of the Mediterranean diet and the benefits of olive oil by national health ministries in the region. Such eating habits are becoming popular also thanks to the Levantine Arab presence in Gulf society and through regional Arabic media, which has significant cultural and lifestyle influence. The large number of expatriots in the region is also having an impact on food tastes, especially in the UAE where only 13% are local nationals and in Qatar just 12%.

Vegetable oils overtake animal fats Vegetable oil, rather than animal fats, is now the cooking medium of choice in the region. While this has facilitated the growth in higher end oil sales, cheaper products predominate. Oilseeds comprise the vast majority of oil consumed in the region, especially palm oil, due to its low cost. Historically it has been the oil of choice for many Asian consumers, who constitute over 70% of the UAE’s population, and are present in large numbers in Saudi Arabia and elsewhere in the GCC region. Other important oils are made from US-sourced corn (especially popular with east Asians, notably from the Philippines) followed by rape, soya and sunflower oils (favoured by westerners) and coconut (used mainly by south Asians from India). Asian populations are increasingly using small quantities of more unconventional oils that are largely used for food dressings or flavouring in cooking, such as flax, olive, peanut, and sesame, according to the Spinneys Ajman spokesperson. Regional importers and refiners such as AJWA Group (Egypt), the Abu Dhabi Vegetable Oil Company and Al-Ghurair Resources (the United Arab Emirates – UAE) do not sell any oils outside of standard palm and seed cooking oils. Furthermore the majority of regional consumption of all oils and fats is in Saudi Arabia, with just under 619,000 tonnes, and the UAE with 295,000 tonnes according to GOIC 2013 figures. This is slightly over 75% of all imports for the GCC region with 25% divided among other GCC members (Kuwait and Oman together account for just two-thirds of the oils and fats volumes consumed in the UAE). Local production is limited, but growing. Abdulaziz Bin Hamad Al-Ageel, the secretary general of GOIC, said in a January 2015 communiqué that over the past decade the number of regional processing operations in the edible oil sector has increased from 24 to 37. Their collective revenues have grown from w US$278M to US$646M. Nigel Holt is a freelance writer based in Dubai 29 OFI – MARCH/APRIL 2015 www.oilsandfatsinternational.com

PHOTO: ANGEL SIMON/DOLLARPHOTOCLUB

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COTTONSEED PRODUCTION IN EGYPT IS FLUCTUATING DUE TO INSTABILITY AND PRICE ISSUES, WITH CUSTOMERS SHIFTING TO SOYA, PALM AND SUNFLOWER OILS. (PHOTO: CONSTANTINOS/DOLLARPHOTOCLUB.COM)

Growth in Egypt despite Arab Spring Recovery has been slow in Egypt’s post-revolutionary environment following the 2011 uprising. However, population growth is causing increased demand in the oils and fats sector, which is resulting in oilseed production being expanded. Paul Cochrane writes

gypt’s US$1.23bn oils and fats market has still to recover from the country’s post-revolutionary environment following the January 2011 uprising that ousted President Hosni Mubarak. Since then, Egypt’s economy has been on a downward trajectory, affecting consumer demand across the board. In oils and fats, lower purchasing power and a rise in prices has led to higher demand for lower cost oils, while the drop in tourism and fewer people going out to eat due to instability has reduced demand in the restaurant sector. While the country’s burgeoning population growth is boosting sales, the country’s poverty rate has increased, reaching 26.3% in 2013, compared with 25.2% in 2011, according to the governmentrun Central Agency for Public Mobilisation and Statistics (CAPMAS). GDP per capita is US$3,723, according to 2015 International Monetary Fund (IMF) figures, while an estimated 35% to 40% of Egyptians earn less than US$2/day. “The economic situation has led to a rise in sales of cheaper products like palm oil,” says a manager at an Egyptian oil crushing plant who wished to remain anonymous. “The highest price is usually for corn, followed by sunflower oil and soyabean oil third. Restaurants, particularly fast food chains, are mainly using palm oil.” Indeed, palm oil and sunflower oil accounts for the lion’s share of the market at 67% in 2013, according to market researchers Euromonitor

International. Blended oils are witnessing big growth due to lower prices compared with pure oils, and reflecting consumer behaviour change toward liquid oils from solid cooking fats. Egypt has one of the highest per capita consumptions of oils and fats in the Middle East and North Africa (MENA), at 10kg/person, according to Euromonitor. Total consumption has increased dramatically over the past several years, rising from 1.47M tonnes in 2008, to 1.92M tonnes in 2012, according to 2013 figures from Oil World. The biggest rise has been in sunflower oil consumption, rising from 195,600 tonnes in 2008 to 747,800 tonnes in 2012 – including consumption of government and subsidised production, as well as commercial retail sales. Euromonitor estimated its commercial retailonly value at EGP9.4bn (US$1.23bn), while commercial retail volume sales grew one percent in 2013 to 659,000 tonnes. While volume sales have remained below expectations, the oils and fats sector has experienced underlying demand growth due to the rising population, which reached 85.5M in 2014, up by 13M on 2006 figures, according to CAPMAS. Around 77% of Egypt’s edible oil is imported and, until 2014, was subsidised, costing the government EGP2bn (US$4262M)/year, according to the agency.

Reforms in food subsidies In July 2014, public distribution of subsidised foods shifted from the General Authority for Supply Commodities to the state-owned Food Industries Holding Company, which is involved in the production of subsidised cooking oil. As part of a raft of economic reforms and to rein in spending, the government last year cut fuel subsidies and has amended its food subsidy programme. Under the reforms, Cairo increased the allocation of ration cards to more than 65M eligible Egyptians while raising prices. Prior to these changes, introduced in July 2014, families of four were entitled to six litres of cooking oil at

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EGP3/litre (US$0.39/litre). Following the reform, prices have risen per litre to between EGP8-10 (US$1.04-$1.31), according to CAPMAS. As for production of oils and fats in Egypt, the 2014/15 production of cottonseed in Egypt is estimated at 160,000 tonnes; peanuts at 190,000 tonnes; soyabeans at 20,000 tonnes; and sunflowerseeds at 17,000 tonnes, according to the US Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS). Cottonseed production has fluctuated over the past five years, rising from 167,000 tonnes in 2010/2011 to 227,000 tonnes in 2011/2012, then dropping as demand and production tailed off due to the instability following the uprising. Production slumped to 149,000 tonnes in 2012/13, and dropped further in the following year to 133,000 tonnes. “In the past, cottonseed was the main oil but as people shifted to soya, palm and sunflower oils, production of cottonseed dropped. It is a price issue and, for cottonseed, you need specific extraction plants to process it but there is not enough capacity,” says the crushing plant manager. That said, there is potential for increasing production. “There is an opportunity to increase cottonseed production (instead of) importing as many seeds for the oil market,” says Ahmed Elbosaty, president of the Alexandria Cotton Exporters Association. However, rising labour costs in rural areas and reduction in government subsidies for fertilisers could impact that potential, in addition to the recent 76% rise in fuel prices. Nevertheless, production of cottonseed rose this current year to 160,000 tonnes. Soyabean production, however, has not returned yet to previous levels of 25,000 tonnes in 2011/2012, staying at 20,000 tonnes in 2013/14 and this year. Oilseed production has remained constant throughout that period from 2010-2015, at 190,000 tonnes. Bucking the trend for other edible oils, sunflowerseed production has risen, increasing from 5,000 tonnes in 2011/12 to 11,000 tonnes in 2012/13, to 16,000 tonnes in 2013/14 and 17,000 tonnes in 2014/15, according to USDA’s FAS.

Reliance on imports With over 90% of the country being desert and not suitable to agriculture, the area of cultivated land per head of 0.05ha is among the lowest in the world and means Egypt will remain reliant on imports of edible oils. This is demonstrated by soyabeans and

palm oil being the third and fourth largest imports respectively, and soyabean oil and sunflower oil the seventh and eighth, according to the Food & Agricultural Organization (FAO) of the United Nations. In 2013/14, Egypt’s major suppliers of soyabean oil were Argentina with almost 98,000 tonnes (valued at US$87M), Brazil with over 42,000 tonnes (US$36M), Paraguay with more than 37,000 tonnes (US$29M) and Russia with more than 31,000 tonnes (US$30M), according to the FAS. New modern crushing plants have increased oilseed processing capacity, estimated at 8,000 tonnes/day. However, facilities are currently only operating at 60% to 70% of capacity, according to the USDA agency. Crushing is dominated by two large companies, which account for more than 80% of crushing, and 11 medium-sized firms. The crushing plants of the top two soyabean oil producers are located in Borg al Arab in north Egypt, south-west of Alexandria. The National Oil Company processes 2,500 tonnes/day and the Alexandria Company for Seed Processing and Derivatives 2,000 tonnes/day, while Borg Al Arab for Industry (BAI) crushes 450 tonnes/day. Three of the other largest crushers are in Sadat City, 94km north of Cairo, with the Al Majd Crushing Plant processing 600 tonnes/day, Idafat – part of the Wadi Group – 700 tonnes/day, and International Oil Extraction Company (Oilex) 500 tonnes/day. Plans are underway to expand overall crushing capacity. “Two more projects are coming, one of the existing ones (run by Belgium’s Desmet Ballestra), is doubling capacity within the next six months – and the other is a brand new plant under study,” says the crushing plant manager. “There will always be a shortage in market, and the majority of people fry food, hence the demand,” adding there was potential for exports to the African markets through free trade agreements with the Common Market for Eastern and Southern Africa (COMESA). In 2014/15, Egypt is forecast to export 150,000 tonnes of palm oil, 65,000 tonnes of soyabean oil, and 35,000 tonnes of sunflower oil. By comparison, 2013/14 exports of palm oil are estimated at 120,000 tonnes, soyabean oil at 70,000 tonnes, and sunflower oil at the same level of 35,000 tonnes. Imported sunflowerseed is primarily processed by the Food Industries Holding Company, and locally produced sunflowerseed by smaller enterprises.

In 2013/14, major suppliers of sunflower oil were Russia with almost 441,000 tonnes (value US$364M) and Ukraine with more than 327,000 tonnes (value US$267M). The manager said it was not clear if imports from Ukraine would be affected by the current conflict. In 2014/15, Egypt is forecast to import 1.2M tonnes of palm oil, 850,000 tonnes of sunflower oil, and 280,000 tonnes of soyabean oil. In comparison, 2013/14 imports of palm oil were estimated at 1.16M tonnes, sunflower oil at 800,000 tonnes, and soyabean oil at 213,000 tonnes, according to the FAS. In 2013/14, major suppliers of palm oil were Indonesia with more than 806,000 tonnes (valued at US$637M) and Malaysia with almost 268,000 tonnes (US$215M).

Olive oil Unlike the rest of the MENA region, which consumes large amounts of olive oil per capita due to local production and diet, Egypt has low consumption, largely due to the price. Indeed, olive oil is significantly more expensive in Egypt than other oils, retailing at around EGP52 (US$6.81)/ litre, compared with EGP37 (US$4.84) for three litres of sunflower oil. “Around 50% of olive oil consumed is locally produced in the north and the rest is imported from southern Europe, Turkey and Tunisia,” says the crushing plant manager. “Health concerns are low here, but [awareness] is slowly coming and you see it in advertising and statements from the health ministry. But I don’t think there is going to be major change [in demand for olive oil as a result], as it is a high-end oil and only affordable to a thin slice of society.” Nevertheless, due to its low base, olive oil is expected to have a compound annual growth rate (CAGR) of four percent from 2015 to 2019, while organic olive oil demand is expected to grow by five percent, according to Euromonitor. Only two percent to three percent of Egyptians are considered wealthy, according to IMF figures. Over the next five years, from 2015 to 2019, Euromonitor forecasts that Egypt’s volume CAGR for cooking fats will increase by two percent and for edible oils by three percent. “Edible oils is an ever increasing market due to the habits of people as, even in the worst economic situation, people don’t stop eating, and the oil sector is progressing,” says the crushing plant manager. w Paul Cochrane is a freelance writer

31 OFI – MARCH/APRIL 2015 www.oilsandfatsinternational.com

OLEOC H EM IC ALS

PHOTO: LES CUNLIFFE/DOLLARPHOTOCLUB.COM

Southeast Asia focusing on exports Southeast Asia is a key global producer of oleochemicals. Rising consumer preference for natural and environmentallyfriendly products and emerging new applications for fatty acids, fatty alcohols and glycerine will be key drivers in this industry. Sharmila Subramaniam writes

leochemicals are chemicals derived from natural fats and oils, irrespective of whether they are derived from animal, marine or vegetable sources. They are analogous to petrochemicals, which are chemicals derived from petroleum. The hydrolysis or alcoholysis of oils and fats forms the basis of the oleochemicals industry. The five basic oleochemicals are fatty acid, natural fatty alcohol, glycerine, fatty methyl esters and fatty nitrogen compounds Basic oleochemicals are considered the building blocks of the chemical industry. These building blocks are raw materials used to establish a downstream chemical industry. Examples of downstream oleochemicals and derivatives include fatty amines, soaps, alkanolamides and esters. The Southeast Asian oleochemicals industry is generally capital intensive and export-orientated, and uses highly sophisticated technology and minimal labour. The industry uses renewable raw materials, namely palm oil, palm kernel oil and coconut oil. In 1967, production of oleochemicals in the Philippines started when Cocochemical Plant Inc started producing methyl esters, fatty alcohol and butyl cocophtalate using a technology provided by Japan’s Kao Corporation. The oleochemicals industry in the Philippines is mainly dependent on coconut oil as its main feedstock. Production of oleochemicals in Malaysia started in the early 1980s when a local company (IOI

SOAP AND DETERGENTS ACCOUNT FOR NEARLY HALF OF FATTY ACIDS AND NATURAL FATTY ALCOHOL APPLICATIONS GLOBALLY

Oleochemicals) produced 10,000 tonnes of fatty acids and glycerol. Since then, the industry has been expanding rapidly and Malaysia is one of the largest oleochemicals producers in the world. The two factors that contributed to the rapid expansion of the oleochemicals market in Malaysia were the joint ventures of multinational companies (MNCs) with local companies and the incentives provided by the Malaysian government that acknowledged the oleochemicals market as the potential growth area for the palm oil industry. The development of the oleochemical industry in other Southeast Asian countries such as Indonesia and Thailand occurred at about the same time as in Malaysia. Since 1980, the oleochemical industry in the region has been growing steadily due to the development of the palm oil industry in Malaysia, Indonesia and Thailand, and the coconut oil industry in the Philippines. Southeast Asia has become the key production centre in the oleochemicals production space. This is due to a combination of factors: the abundant

availability of raw materials, escalating consumer preference for vegetable-based products, and low manufacturing costs. The products manufactured by oleochemicals companies in Southeast Asia are mainly basic oleochemicals that include fatty acid, natural fatty alcohol and glycerine.

The fatty acid market Fatty acid is a basic oleochemical product that is produced by splitting crude palm oil (CPO) or palm kernel oil (PKO); glycerin is obtained as a byproduct in this process. High temperature and pressure distillation of the crude fatty acids produces distilled or fractionated fatty acid, which is a high-purity fatty acid. Frost & Sullivan’s most recent analysis, ‘Southeast Asia Oleochemicals Market’, finds that the overall Southeast Asian natural fatty acid market was estimated at US$1.26bn in 2013 and it is expected to increase to US$2.74bn in 2020 (see v Figure 1, page 35).

32 OFI – MARCH/APRIL 2015 www.oilsandfatsinternational.com

Leading edge technologies for oleochemicals Fatty Acids processes n n

Oils & Fats Pretreatment n Oils & Fats Splitting n Fatty Acids Fractional and Total Distillation Fatty Acids Fractional Crystallization n Fatty Acids Hydrogenation

Glycerine process for sweet water, spent lyes and methylesters n n

Sweet Water/Spent Lyes Treatment n Sweet Water/Spent Lyes Concentration Glycerine Distillation/Refining

Fatty alcohol processes n

Fatty Acids Esterification n Methylester Hydrogenation n Fatty Alcohol Refining

Methylesters processes

Transesterification n Esterification with Glycerol n Methylester Fractional and Total Distillation n Methylester Fractional Crystallization n

Science behind Technology

A4-Oleochemicals-2015-OFI.indd 1

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OLEOC H EM IC ALS

REFINED GLYCERINE TYPES AND APPLICATIONS Food and food ingredients Sweetener [as a sugar substitute] in cake and drink mixes Additives [E422] in food flavourings and extracts [vanilla] Texture improver in ice cream Food emulsifier in the manufacture of mono- and di-glycerides As a polyglycerol ester going into shortenings and margarines Pharmaceuticals Main ‘body’ in cough syrups and ear infection lotions Nitrification of blood cells for storage in liquid nitrogen Laxative when carried in a suppository Plasticiser in gelatin-based capsules Prevents tannin precipitation in ethanol extract of plants and used as a substitute for ethanol in herbal extractions Personal care Replaces lost moisture in skin lotions Improves flowability in shampoo Transparent soap bar formulation Component of glycerol soap for ultra-sensitive skin as it prevents dryness Tobacco – Functions as a humectant for tobaccos Technical Manufacture of triacetin, diacetins, medium chain triglyceride oil and glycerine monostearate Component for alkyd resin and polyether polyols production Manufacture of nitroglycerine Industrial Mould release agent Manufacture of polyurethane hard foams

The top three producers had a total production capacity of 44.6% of the total Southeast Asian fatty acid production capacity in 2013. The average price of natural fatty acid was estimated to be US$1,800/ tonne in 2013.

The natural fatty alcohol market Natural fatty alcohols are oleochemicals derived from vegetable feedstock. Feedstock raw materials include coconut and palm kernel oils. Through a chemical process, vegetable oils are first converted to a methyl ester or fatty acid. This reaction generates crude glycerine. The intermediate methyl ester or fatty acid is then fractionated and hydrogenated to produce natural fatty alcohol. Alcohols are often distilled and fractionated to achieve chain length distribution. The overall Southeast Asian natural fatty alcohol market was estimated at US$471.6M in 2013 and it is expected to increase to US$1.03bn in 2020 (see Figure 2, above right). Frost & Sullivan expects the market to grow at a volume CAGR of 5.2% from 2013 to 2020. The top three producers accounted for 41.4% of the total Southeast Asian natural fatty alcohol production capacity in 2013. The average price of natural fatty alcohol was estimated to be US$1,900/tonne in 2013.

The refined glycerine market In the oleochemicals industry, glycerine is produced as a by-product of refining fats or oils. This is a valuable by-product of the industry and

34 OFI – MARCH/APRIL 2015 www.oilsandfatsinternational.com

OLEOC H EM IC ALS

FIGURE 1: FATTY ACIDS MARKET, % REVENUE BY APPLICATIONS (2013)

FIGURE 2: NATURAL FATTY ALCOHOL MARKET, % REVENUE BY APPLICATIONS (2013)

its economic value is significant to the profitability of the oleochemicals industry, especially when the produced glycerine is further processed into refined glycerine. Frost & Sullivan estimates that the overall Southeast Asian refined glycerine market was some US$61.1M in 2013 and it is expected to increase to US$131.9M in 2020. It expects the market to grow at a volume CAGR of 4.9% from 2013 to 2020. The top three producers had a total production capacity of 36.8% of the total Southeast Asian refined glycerine production capacity in 2013. The average price of refined glycerine was estimated to be US$965/tonne in 2013.

Increasing global demand Increasing global demand from end-user industries such as cosmetics, food, plastics and rubber, is driving the consumption of fatty acid and natural fatty alcohol for derivatives. Exports of fatty acid and natural fatty alcohol are also on the rise as the products offered by many Southeast Asian participants, especially those in Malaysia and Indonesia, are competitively priced and highly valued in the global market. However, the markets are pegged back by the cost of feedstock such as palm oil and coconut oil. The intensifying demand for vegetable-based raw materials has had a substantial bearing on the profit margins of manufacturers, as raw materials account for 80%-90% of the costs of fatty acid or natural fatty alcohol. Consequently, the frequent fluctuations in the prices of vegetable oils, namely palm oil and coconut oil, ripple into the oleochemicals market. Oleochemicals manufacturers can manage price volatility and promote value creation by integrating their business with upstream plantations. Integration of raw materials and production in the supply chain will not only reduce production cost but ensure that oleochemicals manufacturers have a constant supply of raw materials without compromising their bargaining power with suppliers. Overall, rising global consumer preference for natural and environmentally-friendly products and emerging new applications for all three derivatives – fatty acid, natural fatty alcohol and glycerin – will drive the Southeast Asian oleochemicals market. w Sharmila Subramaniam is a Frost & Sullivan Chemicals, Materials & Food Consultant 35 OFI – MARCH/APRIL 2015 www.oilsandfatsinternational.com

PHOTO: KASTO/DOLLARPHOTOCLUB.COM

S H OW PREVIEW

JAMAA EL FNA IS THE MAIN SQUARE OF MARRAKECH, THE HOST CITY OF OFI NORTH AFRICA

OFI North Africa 2015 in Marrakech Book now! Sales & sponsorship

Mark Winthrop-Wallace Sales Manager E-mail: markww@quartzltd.com Tel: +44 (0) 1737 855 114 Anita Revis, Sales Consultant E-mail: anitarevis@quartzltd.com Tel: +44 (0) 1737 855 068 Erik Heath, Sales Executive E-mail: erikheath@quartzltd.com Tel: +44 (0) 1737 855 108

7th JIEL

Prof Ahmed Adlouni President, SMEL Mobile : +212 0663636455 Tel: +212 0522704672 Fax: +212 0522704675 E-mail: adlounia@yahoo.fr Fabrice Turon, President, SFEL (for French participants) Tel: + 33 567 339 206 E-mail: fturon@fat-associes.com

www.ofievents.com/north-africa

OFI is holding OFI North Africa in Marrakech, Morocco on 3-4 December 2015, the first event of its kind in the region bringing together players in the North Africa/West African oils and fats supply chain

FI is pleased to announce that it will be holding OFI North Africa 2015 in Marrakech, Morocco on 3-4 December 2015. The two-day OFI North Africa exhibition will be held in conjunction with the three-day 7th biennial Journées Internationales d’Etude sur les Lipides (JIEL) conference, organised by the Société Marocaine pour l’Etude des Lipides (SMEL) and the Société Francaise pour l’Etude des Lipides (SFEL) of France. OFI North Africa 2015 will be the first event of its kind in the region, bringing all players involved in the North Africa/West African oils and fats supply chain under one roof, including:

t Importers and exporters of oilseeds and oils t Refiners and producers of oil, ingredients and products t Suppliers of technology and services to the oils and fats industry t Scientific and technical experts in oils and fats nutrition and processing t Expert speakers on oils and fats prices and trends

Delegates and visitors are expected from Morocco, neighbouring Algeria and Tunisia, French-speaking West Africa (Benin, Burkina Faso, Ivory Coast, Mali, Mauritania, Niger and Senegal) and Frenchspeaking countries in Europe such as France and Spain.

Why Morocco? Morocco is the hub of North Africa and the gateway to Europe in the north, French West Africa in the south and the Middle East towards the east. It is a politically stable country with a growing and vibrant economy, open to free trade. It is the government’s aim to make Morocco the fourth largest olive oil producer in the world and to increase the country’s production of the rare and native argan oil.

The Moroccan oils and fats market Morocco produces approximately 420,000-430,000 tonnes/year of edible oils and imports some 400,000 tonnes/year. Imports consist of soyabean oil and some 30,000

36 OFI – MARCH/APRIL 2015 www.oilsandfatsinternational.com

S H OW PREVIEW

tonnes/year of palm oil for industrial use, such as for frying and for use in food ingredients, rather than direct consumption. Sunflower oil comprises 8-10% of the market and is mostly used for salad dressings. The main oils and fats producers in Morocco are Lesieur Cristal (300,000 tonnes/year), the Belhassan group (150-180,000 tonnes/year) and the Savola group (100,000 tonnes/year). Important ports in Morocco are Agadir, Casablanca, Jorf Lasfar, Laayoune, Nador, Safi and Tangier, with Casablanca accounting for the handling of some 90% of edible oil imports. The government is aiming to increase olive oil production from some 80,000 tonnes/year to 150,000 tonnes/year and turn Morocco into the fourth largest olive oil producer in the world. Currently, 50% of the olive oil produced in the country still comes from small producers but large companies such as Lesieur – which has some 3,000ha planted to olive oil – and Belhassan are now looking into plantations as well. The government would also like to increase production of argan oil from 2,500 to 4,000 tonnes/ year by 2020. Argan oil is one of the rarest oils in the world produced from the kernels of the Argan tree, native to Morocco. It is said to help prevent cancer and cardiovascular disease and is also used in cosmetics and hair care.

Event partners Société Marocaine pour l’Etude des Lipides (SMEL) SMEL organises the Journées Internationales d’Etude sur les Lipides (JIEL) conference with SFEL every two years in Morocco. Its 2013 conference was held at the Hotel Idou Anfa in Casablanca on 5-7 December with the theme, ‘Oils and Beneficial Health: Advances and Technological Innovations’. Société Francaise pour l’Etude des Lipides (SFEL): Founded in 1943, the French Association for the Study of Fats (AFECG) became, in 2010, the French Society for the Study of Fat (SFEL).

SFEL brings together industry players, research laboratories, and specialists in the oils, fats and related fields at a national and international level. It organises meetings, conferences and exhibitions; compiles and publishes research work and scientific and technical papers; and assigns grants or prizes to encourage research of general interest in the oils, fats, lipids and related industries and, in particular, the annual award of the Chevreul Medal. SFEL is a member of the European Federation for the Science and Technology of Lipids (Euro Fed Lipid) and the International Society for Fat Research (ISF ). w

Enviable destination Marrakech is one of the former imperial cities of Morocco. Today, it is one of the busiest cities in Africa and serves as a major economic centre and tourist destination. It is the fourth largest city in Morocco, after Casablanca, Rabat and Fes, and lies near the foothills of the snow-capped Atlas Mountains. Marrakech is a few hours from the foot of the Sahara desert. Its location and contrasting landscape has made it an enviable destination in Morocco. Like many Moroccan cities, Marrakech comprises an old fortified city packed with vendors and their stalls (the Medina), bordered by modern neighbourhoods, the most prominent of which is Gueliz or Ville Nouvelle. Gueliz plays host to modern restaurants and big brand stores. The Medina is full of intertwining narrow passageways and local shops full of character. The two main routes into the Medina are rue Semarine and rue Mouassine. Every section of the Medina has its own speciality: carpets and textiles; woollen hats; cooked snails and spices; magic supplies; cotton, clothing, kaftans and blankets; and raffia bags and baskets. Visible from near and far is the minaret of the Koutoubia Mosque, Marrakech’s most famous symbol – built in a traditional Almohad style and topped with four copper globes. The minaret is not really that high (77m), but thanks to local topography and an ordinance that forbids any other building in the Medina to be higher than a palm tree, it towers majestically over its surroundings. It is still an active place of worship. With green space at a premium in Marrakech, just outside the Medina is the world-famous La Mamounia with its equally famous gardens. The Arset El-Mamoun gardens were established in the 18th century by Crown Prince Moulay Mamoun and is designed in traditional axis style, with walkways, flowerbeds, orange groves and olive trees. 37 OFI – MARCH/APRIL 2015 www.oilsandfatsinternational.com

OFI_IRC2015-FullPage.pdf 1 11/02/2015 2:23:05 PM

CMY

DI ARY OF EVEN TS

27-28 APRIL 2015 Operational and Commercial Aspects of Palm Oil Trade VENUE: Grand Dorsett Subang Hotel, Selangor Darul Ehsan, Malaysia CONTACT: Palm Oil Refiners Association of Malaysia. Tel: +60 3 74920006; E-mail: susila@poram.org.my; poram@poram.org.my Website: www.poram.org.my

3-7 MAY 2015 106th AOCS Annual Meeting & Expo

VENUE: Rosen Shingle Creek, Orlando, Florida, USA CONTACT: AOCS Meetings Department, USA Tel: +1 217 6934821; E-mail: meetings@aocs. org; Website: http://annualmeeting.aocs.org

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

OFI India attracts all players

FI India, to be held at the Hyderabad International Convention Centre will bring together all players in the oils and fats supply chain in India and regionally. The event will feature a two-day exhibition with leading providers of plant, equipment and technology to the oils and fats industry; a two-day business conference; and a two-day Smart Short Courses programme. Business conference: The business conference, ‘Fostering Market Growth and Facing Challenges in the Oils and Fats Industry’, features four modules covering global and regional issues impacting the oils and fats industry; drivers and challenges in the Indian and South Asian markets; geographic and feedstock issues impacting Indian imports; and new markets, applications and opportunities for oils and fats players. Smart Short Course: The ‘Critical issues in Crushing, Refining, Processing, Product Formulation and Packaging’ programme is for marketing, technical and plant personnel. It offers the opportunity for those who are experienced to meet experts in the field to discuss their current problems and enhance their product innovation or plant operation.

10-11 JUNE 2015 Oleofuels 2015

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

16-17 JUNE 2016 1st Sustainable Oils & Fats International Congress VENUE: FIAP Jean Monnet, Paris, France CONTACT: FAT & Associés, France Tel: +33 567 339 206; Fax: +33 567 339 203 Email : contact@fat-associes.com Website: www.fat-associes.com/ our-seminars/?lang=en

5-9 JULY 2015 14th International Rapeseed Conference

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

2-4 SEPTEMBER 2015 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

Tour of CSIR-IICT: On Tuesday 12 April, the eve of OFI India, the Council of Scientific

15-17 SEPTEMBER 2015 8th International Symposium on Deep Fat Frying VENUE: Munich, Germany CONTACT: Euro Fed Lipid, Germany. Tel: +49 69 7917 345; E-mail: amoneit@eurofedlipid. org; Website: www.eurofedlipid.org/meetings/ munich2015/index.php

and Industrial Research – Indian Institute of Chemical Technology (CSIR-IICT) is offering a tour of its facilities. The focus of the CSIR’s Centre for Lipid Research includes oil processing, biolubricants, surfactants, castor oil-based products, speciality oleochemicals, bioactive compounds, nutraceuticals and structured lipids and biodiesel. 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 For the business conference, contact: Serena Lim, Editor, OFI E-mail: serenalim@quartzltd.com For the Smart Short Course, contact: Ignace Debruyne, E-mail: info@ smartshortcourses.com or Sefa Koseoglu, E-mail: sefa.koseoglu@membraneworld.com

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

OFI events December 2015 OFI North Africa 2015

16-19 SEPTEMBER 2015

VENUE: Marrakech, Morocco www.ofievents.com/ north-africa

oils+fats International Trade Fair for the Technology and Trade of Oils and Fats VENUE: Münich, Germany CONTACT: Messe München GmbH, Germany Tel: +49 89 94911328; E-mail: info@oils-andfats.com; Website: www.oils-and-fats.com/en

13-14 April 2016 OFI India 2016

VENUE: Hyderabad International Convention Centre, India www.ofievents.com/india

27-30 SEPTEMBER 2015 13th Euro Fed Lipid Congress 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

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

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

39 OFI – MARCH/APRIL 2015 www.oilsandfatsinternational.com

STATISTIC S

EU SUNFLOWER OIL AND SEED PRICES

STATISTICAL NEWS FROM MINTEC EU sunflower oil vs sunflowerseed In Europe, prices for both sunflowerseed and oil have fallen, driven by the falling prices of alternative oils and oilseeds, despite a fall in sunflowerseed production. Global sunflowerseed production is set to fall to 39.9M tonnes in 2014/15, down 7% year-on-year. Oil production is also forecast to fall, reaching 15.2M tonnes, down 4% year-on-year, due to lower production from Ukraine and Russia.

Groundnut oil

US GROUNDNUT OIL PRICES AND WORLD PRODUCTION

Groundnut prices fell sharply at the start of 2014 but have subsequently been relatively stable since then, despite a decline in global production. World groundnut oil production is forecast to fall to 5.52M tonnes in 2014/15, down 1% year-on-year. However, production of groundnuts in major producer, the USA, is expected to rise to 24% year-on-year to 2.4M tonnes in 2014/15. Opening stocks in the USA are estimated at 0.89M tonnes, a 5% increase year-on-year.

Soyabean vs palm oil

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

PRICES OF SELECTED OILS (US$/TONNE) 2012

2013

Nov 14

Dec 14

Jan 15

Feb 15

Soyabean 1,230 1,052 820 797 787 750 Crude Palm 1,014 854 761 701 708 693 Palm Olein 997 803 702 652 649 651 Coconut 1,122 948 1,194 1,201 1,155 1,152 Rapeseed 1,240 1,080 830 805 776 754 Sunflower 1,256 1,108 890 874 843 808 Palm Kernel 1,119 904 984 969 1,015 1,042 Average price 1,140 964 INDEX 270 228

883 857 847 835 209 203 201 198

Soyabean oil prices have fallen over the past 12 months, with global production expected to rise around 6% year-on-year to 47.4M tonnes for 2014/15. However, the soyabean oil premium over palm oil has remained relatively stable over this period as palm oil prices also fell. Palm oil prices have fallen, primarily driven by strong global supply. World palm oil production for 2014/15 is forecast to reach 62.4M tonnes, up 5% 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; MARCH/APRIL 2015 www.oilsandfatsinternational.com

ye ar s o f PARTNERSHIP/ TECHNOLOGY

TRUST/

INNOVATION/

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