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HEALTH Oils, fats and obesity

Bulgaria: Looking from Europe to Asia

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CONTENTS VOL. 34 NO. 2 FEBRUARY 2018 EDITORIAL: Editor: Serena Lim Tel: +44 (0)1737 855066 E-mail: serenalim@quartzltd.com Assistant Editor: Ilari Kauppila Tel: +44 (0)1737 855157 E-mail: ikauppila@quartzltd.com

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OVERCONSUMPTION OF OILS AND FATS HAS MADE AN UNFORTUNATE CONTRIBUTION TO THE GLOBAL OBESITY EPIDEMIC. BUT WHAT EXACTLY ARE THE MECHANICS OF OBESITY AND HOW DO FATTY FOODS RELATE TO IT?

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HEALTH & NUTRITION

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Bulgaria: Looking from Europe to Asia

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OLEOCHEMICALS

Past, present and future in ASEAN

TRANSPORT & LOGISTICS

Oils & Fats International

Biofuels News

EU Parliament votes out palm biodiesel Biotech News

EPA says glyphosate ‘not likely’ to be carcinogenic to humans 9

Transport & Logistics News

Cargill plans new Brazilian terminal in Pará 10

Renewable Material News

Saudi Arabia’s SABIC buys a quarter stake in Clariant

Freight putting margins at risk Pumps transform business

News

ADM rumoured to be planning Bunge takeover

TECHNOLOGY @oilsandfatsint

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Comment

Palm oil targeted

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NEWS & EVENTS

Oils, fats and obesity

Diary of Events

Statistics

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Contents.indd 1

01/02/2018 10:20

NEWS

EDITOR’S COMMENT

Palm oil targeted P

alm oil is once again in the spolight, with the European Parliament voting to remove palm oil-based biodiesel from its list of renewable fuels by 2021 (see Biofuels News, p6). The decision has been denounced as a form of ‘crop apartheid’ by Malaysia and Indonesia – which produce nearly 90% of the world’s palm oil. The vote on what the EU Renewable Energy Directive will look like after 2020 indicates a move away from food- and feedbased fuels. But singling out one oil as the ‘worst’ biofuel is surely too simplistic a view to take. To put the issue in context, the EU produces around 11.5M tonnes/ year of biodiesel, with rapeseed accounting for 49% of production, used cooking oil 17%, palm oil 14% and soyabean oil 7%, according to the German vegetable oil industry group, UFOP. Of the 7M tonnes/year of palm oil that the EU imports, roughly 46-48% goes into biodiesel. One of the most compelling arguments in favour of palm oil generally is that it is the best yielding oil crop (around 4-5 tonne/ha against 1.2 tonne/ha for rapeseed oil and 0.5 tonnes/ha for soya oil). Oil palms account for 19M ha or 0.96% of global crop land, says Carl Bek-Nielsen, chief executive Malaysia’s United Plantations. While taking up 5% of the land used for all oil crop cultivation, palm oil accounts for 33% of total oil production. “Why isn’t the EU looking at other oil crops – crops that require 7 to 12 times more land to produce the same amount of oil as palm oil?” Bek-Nielsen asks. “In the last 10 years alone, 14.5M ha of rainforest were cleared in Brazil and Argentina for soyabean plantations.” That is not to excuse the cases of deforestation and human rights abuses that still occur with palm oil. But the various certification schemes, NGO work, and the boycott of suspect plantations by giant end users such as Unilever mean that palm oil is subject to a level of scrutiny that should ensure good practices are the norm, not the exception. It means we should have progressed further in this argument than putting the spotlight on one oil, when the world needs the sum of all edible oils to meet its consumption needs. By maintaining sustainable demand, the EU will do more to incentivise smallholders and plantations to produce responsibly, while cutting off demand may lead them to sell to less stringent buyers. It is important to note that the European Parliament’s vote is not binding. The European Commission and the Council of Ministers will also need to approve the decision in negotiations beginning in spring (see ‘Renewing renewables rules’, p14). And of course, I have not looked at which oil is ‘best’ as a fuel, in terms of emissions, or whether shipping palm oil to Europe leads to more emissions. Or whether the EU could produce enough rapeseed oil to meet all its biofuel needs. But in the wider picture, the EU needs to do more to reduce greenhouse gas emissions, which has risen for the third year in a row, according to a European Environment Agency report in November. “We need to apply all available biofuel options to considerably improve the emissions situation in transportation,” says Germany Bioenergy Association chair Artur Auernhammer, speaking on behalf of the EU biofuel industry after the Fuels of the Future conference in January. “Biofuel production is also a source of valuable by-products, which help reduce emission-laden imports of animal feed.” The industry says a minimum content of 10% of fuels from waste and residues is “unrealistic” and biofuels from residues and waste must not replace biofuels from crop biomass, but make an additional contribution towards reducing fossil fuel use. Otherwise, at the end of all this debate, it will be fossil fuels – and their higher emissions – that benefit. w

ADM rumoured to be planning Bunge takeover

S-headquartered Archer Daniels Midland (ADM), one of the world’s largest grain traders, has approached its rival Bunge with a possible takeover offer that could rattle international agri markets. According to an anonymous source, the move came as a response from ADM to the difficult global market situation large grain traders are facing due to oversupply of several key crops worldwide, Reuters reported on 19 January. Several companies – such as Dow and DuPont, and Monsanto and BASF – had resorted to consolidation to remedy the situation, while others, including ADM, had expanded into higher margin sectors such as food ingredients. “News of the ADM bid is a bit surprising given that ADM had been indicating the company’s strategic direction was more towards value-added rather than traditional commodities,” Farha Aslam, analyst at financial services firm Stephens Inc, told Reuters. In 2014, ADM acquired natural ingredient firm Wild Flavors for approximately US$3bn in the company’s biggest deal to date. Glencore approached Bunge in 2017 with a takeover offer, but Bunge rejected the deal at the time and a standstill deal was in effect until February 2018, prohibiting Glencore from making new unsolicited offers. However, according to the Reuters source, Bunge rebuffing

the Glencore deal could indicate that ADM might get the cold shoulder as well. Aslam estimated that a reasonable value for the ADMBunge deal would be around US$90-95 per share of Bunge, but investment research and management company Morningstar said that the price could surpass US$100. Should any merger deal materialise, it would likely face heavy scrutiny from regulators, who could be concerned about a lack of competition in the market. Regulators around the world have recently approved some large agri firm mergers, such as the US$150bn DowDuPont merger, completed in September. The largest hurdle could be ADM’s and Bunge’s overlap in grain origination and oilseeds processing and they would likely need to divest facilities in North America and possibly in Europe, wrote Reuters. The acquisition was also expected to face opposition from farmers, who feared giving a larger market share to ADM could negatively impact the prices of soyabean, corn and wheat. Peter Carstensen, law professor at the University of Wisconsin, told Reuters that grain farmers needed five or six active buyers to get a fair price for their crops, but the number of buyers had already been reduced to a “handful”. “This is the kind of transaction that will screw farmers,” Carstensen summarised.

Amaggi to buy grain company Ciapar

razilian grain trader Amaggi announced on 10 January that it had entered into negotiations to acquire Mato Grosso, Brazil-based grain producer Companhia Agricola do Parecis (Ciapar). Amaggi, owned by the family of Brazilian Agriculture Minister Blairo Maggi, said the deal had been approved by Brazil’s Administrative Council for Economic Defense (CADE), but was subject to other conditions, reported World Grain on 11 January. Included in the deal, for which financial terms were not disclosed, was the Italmarati Norte farm, which has approximately 105,000ha of cultivation area for soya, corn and cotton. Founded in 1977, Amaggi is active in agriculture worldwide.

2 OFI – FEBRUARY 2018 www.ofimagazine.com

Comment and News.indd 1

01/02/2018 11:35

NEWS

EFSA more than doubles allowed 3-MCPD intake rate T

he European Food Safety Authority (EFSA) has more than doubled the tolerable daily intake of the chemical 3-monochloropropane diol (3-MCPD), a contaminant formed during vegetable oil processing which is linked to reduced male fertility and kidney damage. In an updated scientific opinion published on 10 January, the EFSA raised the safe level of daily 3-MCPD intake from 0.8μg/kg of body weight to 2μg/kg of body weight, two-and-ahalf times its previous limit but still only half of the Joint FAO/WHO Expert Committee on Food Additives (JECFA) tolerable limit of 4μg/kg of body weight. The chemical and its related substance, 3-MCPD ester, are formed unintentionally during vegetable oil refining, particularly of palm oil. The EFSA originally evaluated the potential risks of 3-MCPD in 2016, concluding that it was

a potential health concern. “EFSA decided to review its assessment after the JECFA subsequently established a different safe level of tolerable daily intake [for 3-MCPD],” said Christer Hofstand, the professor who chaired the 2016 scientific review. The updated review, based on the same evidence but using an updated methodology, found evidence that male rats exposed to more than 1mg/kg of body weight of 3-MCPD developed reduced sperm mobility and male fecundity, Food Navigator reported on 11 January. “We checked again the data concerning the effect on development and reproduction, particularly male fertility, as these were highlighted by the JECFA,” said Hofstand. “We calculated the levels at which possible adverse effects on the kidney and on male fertility could occur. The updated tolerable daily

intake is protective for both types of effects,” he told Food Navigator. In its 2016 review, the EFSA also established a limit on another food contaminant called glycidyl fatty acid ester (GE), which the agency concluded was genotoxic and carcinogenic, meaning it both damaged DNA and caused cancer. The revised review dealt only with 3-MCPD and its esters and not GE, EFSA said, emphasising that its stance on GE had not changed. The European Commission, the EU’s executive, was currently finalising new legislation aimed at reducing GE levels in vegetable oils and foods, said EFSA. Henri Rieux, president of European oil suppliers’ and manufacturers’ association Fediol, said the EFSA’s opinion was important for ongoing risk management discussions.

New US tax code could cut grain traders’ supplies

S grain traders and ethanol producers – among them Archer Daniels Midland (ADM), Bunge and Cargill – have expressed concern over a provision embedded in the new US tax code that they say is giving cooperatives an unfair tax advantage. Provision 199A gave farmers such a massive tax deduction when selling their crops to cooperatives that large private firms now feared their supplies would run dry, Reuters wrote on 10 January. Added only in the final stages of the tax law’s rushed passage in December, it allowed farmers and ranchers to claim a 20% tax deduction on all products sales – including soya, corn and wheat – to cooperatives, which did not apply to private or investor-held firms. Previously, both cooperatives and private companies were on level ground when it came to applying tax deductions. “It is going to put us out of business if something is not changed right off the bat,” Doug Bell, president and general manager of Illinois-based grain handler Bell Enterprises, told Reuters. “There is just no reason whatsoever why a farmer would do business with anyone other than a co-op,” Bell lamented.

The provision was, according to World Grain, most likely a last-minute addition to the new tax bill to appease farm groups and cooperatives, which had been facing significant pass-through benefit losses after the removal of the original Section 199 provision, which provided similar tax benefits. Some farmers had already begun calling up private grain elevators to transfer their crops to cooperatives instead, according to Bell Enterprises. Section 199A was set to expire naturally in 2025, but work to fix the legislation had already been started, wrote World Grain. The US National Grain and Feed Association (NGFA), which has both co-op and private members, said in an email on 11 January that it was working to “address the unintended consequences of Section 199A in a way that replicates the tax treatment previously available to co-op farmer members under the previous Section 199, but does so in a way that restores a level playing field and does not provide a tax-based incentive that influences farmers’ marketing decisions”. The NGFA said it had on 12 January begun working with the National Council of Farmer Cooperatives on finding a solution.

Arla Foods to form dairy joint venture in Indonesia

nternational dairy cooperative Arla Foods is forming a joint venture with Indonesia’s PT Indofood CBP Sukses Makmur Tbk (ICBP) to expand its presence in the Indonesian market. The Denmark-headquartered company would control 50% of Arla Indofood Sukses Makmur (plus one share) while ICBP would control 50% (minus one share), a World Grain report said. “Teaming up with ICBP will allow us to offer our highquality dairy products to more Indonesian consumers,” said

Tim Ørting Jørgensen, executive vice-president of international business at Arla Foods. Arla Foods is the fourth largest dairy company in the world with

respect to milk volume, and seventh with respect to turnover, according to Reuters. It owns the Lurpak (pictured left) and Anchor brands of butter and spreads, Arla milk and Castello cheeses. ICBP is a leading player in the consumer branded products sector in Indonesia, with operations in dairy products, noodles, snack foods, food seasonings, nutrition and special foods and beverages. It also operates a packaging business, producing both flexible and corrugated packaging.

IN BRIEF BOLIVIA: US-headquartered global agribusiness Archer Daniels Midland Co (ADM) entered into an agreement on 11 December to sell its Bolivian oilseeds operations to Peruvian Inversiones Piuranas SA. The sale includes ADM’s soyabean and sunflower oil and meal processing facility in Santa Cruz de la Sierra, alongside nine grain storage silos and ADM’s Bolivian distribution network, ADM said in a statement. ADM would keep operating the Bolivian facilities until the transaction closed, which was projected for the first half of 2018, subject to regulatory approvals. SOUTH AMERICA: On 10 January, Germany-based life sciences firm Bayer renewed a cooperation agreement with the Round Table on Sustainable Soy (RTRS) to help South American soya producers certify their crops. Originally established in 2015, the Bayer-RTRS collaboration had improved communication, mobilised farmers to certify production and kick-started the certification process of several large cooperatives in Brazil, Bayer said in a statement. RTRS is a global platform that strives to improve soya production in a dedicated and practical way to assure soya is not involved in deforestation and its production has a positive impact on workers, communities and the environment.

3 OFI – FEBRUARY 2018 www.ofimagazine.com

Comment and News.indd 2

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NEWS

China sets stricter procedure for US soya stricter export procedure for US bulk and container shipments of raw, unprocessed soyabeans to China took effect on 1 January. The new procedure, to comply with China’s phytosanitary import requirements, will involve the US Department of Agriculture’s (USDA) Animal and Plant Health Inspection Service (APHIS) notifying China when a soybean shipment exceeds 1% foreign material by placing an additional declaration on the phytosanitary certificate. It has been put in place following concerns raised by China in September about foreign material exceeding Chinese standards as well as weed seeds of quarantine concern. According to World Grain, Chinese officials have assured the USA that the new procedure would allow all US soybean exports to China, including those with more than 1% foreign material, to continue without interruption until the USA was able to fully implement a series of science-based measures from farm to export terminal.

IN BRIEF USA: Global confectionery conglomerate Ferrero Group entered into an agreement on 16 January to purchase Nestle’s US confectionery business for US$2.8bn. The acquisition, expected to close by the end of first quarter 2018, would see Ferrero take control of many iconic brands, including Butterfinger candy bars and Wonka chocolate products. Ferrero would acquire Nestle’s three Illinois manufacturing facilities and continue operating offices in Glendale, California, alongside its current offices in Illinois and New Jersey. Ferrero is best known as the maker of Nutella, using around 160,000 tonnes/year of palm oil to produce the hazelnut spread. WORLD: Both olive oil production and consumption decreased on a global scale in the 2016/17 season, the latest report by the International Olive Council (IOC) says. Worldwide production shrank 20%, with Europe the hardest-hit single region, suffering a 25% production decrease, the Olive Oil Times wrote on 11 December. An exceptionally hot and dry summer caused production dips in practically all countries in the Mediterranean area, including Croatia, Cyprus, France, Greece, Italy, Slovenia and Spain.

PHOTO: USDA

However, the new rules could require additional processing of US soyabeans at Chinese ports to remove impurities, raising costs and reducing sales, a Reuters report on 27 December said. Half of the 473 vessel shipments and half of the total 27.5M tonnes of US soybeans exported to China in 2017 contained more than 1% foreign material, according to USDA data compiled by grain broker McDonald Pelz Global Commodities LLC, the report said. Former chairman of the American Soybean Association Richard Wilkins said growers often

received a higher price for selling soybeans with 1% or less foreign material, known as No 1 grade, because importers paid more for better quality. The change would deliver higher-grade soyabeans to Chinese buyers without requiring a premium price, he claimed. However, Osama El-Lissy, a deputy administrator at the USDA, said in the Reuters report that farmers should not face additional burdens under the new standards. “Nothing in the agreement we have with China would lead anyone to believe that there would be a change in whatever price arrangement (is) currently being agreed to.” He said some Chinese buyers may already apply additional processing to soya shipments. Reuters said that China accounted for roughly two-thirds of global soyabean imports, totalling about 86M tonnes, chiefly from Argentina, Brazil and the USA. Argentina and Brazil were not covered by the same agreement as the USA, it added.

EU food safety lobby calls for legal acrylamide limit

onsumer advocacy group Safe Food Advocacy Europe (SAFE) is calling for the EU to enact mandatory acrylamide limits after several Italian potato crisp brands tested as containing more of the potential carcinogen than recommended. In 2017, the EU enacted a new regulation setting an acrylamide benchmark level of 750μg/kg of product and making mitigation measures mandatory from 11 April onwards, but it did not impose a legal limit, EU Food Law wrote on 12 January. SAFE’s Italian member, the consumer magazine Il Savagente, carried out tests on 18 brands of

potato crisps sold in Italy, out of which seven contained acrylamide in excess of the EU benchmark. The highest concentration of acrylamide was found in Auchan brand crisps, which contained 1,600μg/kg of the chemical. Other “concerning results” were found for Lidl (1,300μg/kg), Amica Chips (1,200μg/kg), Pam (1,000μg/kg), Coop (990μg/kg), San Carlo Classica (950μg/kg) and Amica Chips Eldorada (800μg/kg). “It is concerning to see that three months before the regulation becomes applicable in the EU, the food industry is so far from keeping acrylamide below the benchmark levels,” SAFE said in a

statement. “The EU needs to introduce maximum levels of contaminants in food because relying on benchmarks does not protect the health of consumers,” said SAFE secretary general Floriana Cimmarusti. Acrylamide is formed naturally by a reaction between amino acids and sugars when foods like potatoes or other root vegetables are cooked in temperatures exceeding 120°C. Acrylamide has been found to cause cancer in animals and the general scientific consensus is that is has a potential to be carcinogenic in humans as well.

Malaysia temporarily suspends palm oil export tax

alaysia lifted its export tax on crude palm oil (CPO) on 8 January for a period of three months in an attempt to boost exports and prices, as well as reduce its growing stockpiles. The country’s Minister of Plantation Industries and Commodities Datuk Seri Mah Siew Keong said at a press conference that the export tax suspension would be lifted before the end of the three-month deadline if CPO stocks fell to 1.6M tonnes, Reuters wrote on 5 January. According to a Reuters poll, Malaysia’s CPO stocks grew 16% to 2.56M tonnes in November 2017 and were expected to climb to 2.69M tonnes by the end of December, the highest they had been in two years. CPO prices plummeted 20% in 2017, but the tax suspension was expected to lead to a boost in demand from foreign buyers in January, which could

raise prices with it. “With this development, we expect a 30-50% increase in the export volume to major importing countries like India, Pakistan, China and Europe,” Malaysian agri trader Felda Global Ventures’ president and CEO Zakaria Arshad said. However, Reuters quoted another unnamed Kuala Lumpur-based trader as urging caution as the impact of the tax suspension could be absorbed by the strengthening Malaysian ringgit, which in turn could lead to importers turning to soyabean oil instead of CPO. “The recent strengthening of the ringgit may negate some of the effects, as well as the narrowing gap between palm oil and soya oil. The overall trend is that stocks are high and we haven’t seen production declining at a higher magnitude yet,” the trader said.

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Comment and News.indd 3

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BIOFUELS NEWS

EU Parliament votes out palm biodiesel T

he European Parliament voted on 17 January in favour of a Renewable Energy Directive (RED II) proposal that would remove palm oil-based biodiesel from its list of renewable fuels by 2021 and freeze cropbased biofuels at levels reached in 2017. The decision to remove palm oil biodiesel from the list of biofuels that counted towards the EU’s renewable fuels targets was likely to mark the end of palm methyl ester (PME) imports from Southeast Asia from 2021 onwards, Platts wrote on 17 January. “Today’s parliament vote sends a clear message to the biofuels industry that growth can only come from sustainable advanced fuels such as waste-based biofuels, not from food crops. This compromise redirects investments into the fuels of the future and eliminates palm oil biodiesel, the highest emitting biofuel,” said Laura Buffet, clean fuels manager at industry body Transport and Environment. Indonesia and Malaysia, the world’s two largest palm oil producers, have voiced their strong opposition to the plan, with Indonesian

BRAZIL: Brazil has approved a national biofuels policy recognising the strategic role of all types of biofuels in the country’s national energy supply. The new law was approved by Brazilian president Michel Temer on 26 December after the Senate approved the bill on 12 December. The RenovaBio policy’s goals included contributing to Brazil’s compliance with the Paris climate agreement, improving energy efficiency and removing greenhouse gas (GHG) emissions and boosting biofuel production and use, wrote Ethanol Producer on 19 December. EU: The European ethanol industry group ePure has filed an appeal to extend the EU’s anti-dumping duty on US ethanol exports, which is set to expire on 23 February. The appeal, made according to World Trade Organization rules, was being evaluated by the European Commission to see if there were grounds to extend the duty, which was enacted in 2012, said Argus Media on 15 January. Should the appeal be successful, the EU would extend the duty for an additional 18 months.

The countries have threatened to retaliate in trade and to take the matter to the World Trade Organization (WTO). In addition to eliminating palm oil, the EU Parliament voted to limit the contributions of crop-based fuels to the level each member state had reached in 2017. “Biomass fuels consumed in transport, if produced from food or feed crops, shall be no more than the contribution from those to the gross final consumption of energy from renewable energy sources in 2017 in that member state, with a maximum of 7% of gross final consumption in road and rail transport,” the Parliament’s decision read. The Parliament also voted for an overall renewables fuels target of 12% in transport, which contained a 10% blending mandate for “advanced” fuels, such as electricity, wastebased biofuels and recycled carbon fuels. The Parliament vote is not binding but must be approved by the European Commission and the Council of Ministers in three-way negotiations coming up this spring (see also ‘Renewing Renewables Rules’, p14).

Argentine 8% export tax on biodiesel could affect EU market

he government of Argentina has set an 8% export duty on biodiesel, which is expected to have a large effect on the European fuel market. The export tariff, which came into effect on 1 January 2018, could now support fatty acid methyl ester (FAME) 0 biodiesel, either by raising import costs or reducing the overall volume of imports, Platts wrote on 14 December. “With the new tax coming in, it will make the landing price much higher and probably pull up FAME,” an unnamed source told the news agency.

PHOTO: PIXABAY

IN BRIEF

Foreign Affairs Minister Retno Marsudi saying the country was “disappointed” with the decision and considered it “discriminative”, Jakarta Post reported on 19 January. She added that Indonesia planned to engage in talks with the EU and present data about the Indonesia Sustainable Palm Oil (ISPO) programme, alongside figures of how palm oil had helped “millions of people” escape from poverty through sustainable farming. “The ISPO is one of Indonesia’s ways to achieve sustainable development goals. That is what [the EU] does not see. We are talking about the lives of millions of people who depend on oil palm plantations for their living,” said Marsudi. Malaysia’s Minister of Plantation Industries and Commodities Mah Siew Keong also described the EU plan as discriminatory and said Malaysia’s ambassadors to the 27 EU member states would raise objections. “This vote is very disappointing. It’s a black day for free trade,” Mah told the Bangkok Post on 19 January.

The source added that rising FAME prices could narrow rapeseed methyl ester’s (RME) premium over FAME due to it not being affected to the same degree by the new tax. According to Platts, European soya methyl ester (SME) imports

had kept biodiesel prices – particularly FAME 0 premiums – suppressed in Europe due to the large amount of SME available. The Argentine government said the imposition of the tax was justified to harmonise the exporting rights of biodiesel and soyabean oil, the main raw material for Argentine SME biodiesel. The move was seen as a response to the USA imposing anti-dumping duties on Argentina in November after the US biodiesel industry claimed Argentine biodiesel exports were being subsidised.

WTO rules in favour of Indonesia in EU duty row

he World Trade Organization (WTO) has ruled in favour of Indonesia over EU anti-dumping measures imposed on Argentine and Indonesia biodiesel back in 2013, Reuters reported on 25 January. Indonesia had opposed the measure by bringing a case to the WTO in 2014. In its ruling on 23 January, the WTO stated that the EU had disregarded biodiesel prices recorded by Indonesian producers and failed to correctly calculate a normal profit margin. The bloc now had to conform its measures with WTO agreements. Indonesian Trade Minister Enggartiasto Lukita projected that the ruling would boost the value of the country’s biodiesel exports, which had plummeted from US$649M in 2013 to US$150M in 2016. Lukita now expected the exports to reach a value of US$1.7bn by 2020, Reuters wrote.

The EU originally imposed the duties, ranging from 8.8% to 20.5% for Indonesia, based on claims that biodiesel producers in both Indonesia and Argentina imposed an export duty on the raw material for their biodiesel, which allowed their producers to lower their costs and dump biodiesel into Europe. Since then, Indonesia and Argentina have been involved in a series of legal challenges against the duties. In a related move, the European Commission (EC) is set to launch an investigation into whether Argentine biodiesel producers have benefited from unfair subsidies, in response to a complaint by the European Biodiesel Board (EBB), Reuters wrote on 25 January. The EC did start a probe in 2012 into alleged subsidies for Argentina and Indonesia, but stopped its investigation in 2013 after the EBB withdrew its complaint.

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BIOTECH NEWS

IN BRIEF USA: DuPont and Japanese chemical firm Sumitomo Chemical Co have entered into a global agreement for the development and commercialisation of seedapplied technologies for agricultural crops. The aim of the collaboration deal was to explore technologies to improve early plant growth and yields, the two companies said on 4 December. The collaboration would be carried out between DuPont and Sumitomo’s regional affiliate Valent USA and focus on the North American region with potential expansion for multiple crops globally, DuPont said. ISRAEL: Isreali biotechnology firm Evogene has completed the second year of field trials for its bio-stimulant microbial seed treatments for improving corn yields, the company said on 10 January. The seed treatments, which the firm said improved corn yield by 20% in the most recent trials, were under exclusive license to DuPont Pioneer. They were based on microbial strains identified by Evogene, which had demonstrated yield boosts in previous trials. Based on these results, they had undergone optimisation of microbial formulation and fermentation processes. Evogene and DuPont planned to conduct further field tests in the future as part of their multiyear research collaboration agreement.

EPA says glyphosate ‘not likely’ to be carcinogenic to humans

he US Environmental Protection Agency (EPA) has concluded that glyphosate, the key ingredient in Monsanto’s top-selling weed killer Roundup, is not likely to be carcinogenic to humans, Reuters reported on 20 December. In a draft risk assessment report issued on 18 December, the EPA said it found “no other meaningful risks to human health” when glyphosate was used according to its label instructions. Glyphosate is the world’s most widely used herbicide and is used in conjunction with crops such as soyabeans, corn, canola and cotton, which are genetically engineered to be immune to it. The World Health Organization (WHO)’s International Agency for Research on Cancer (IARC) said in March 2015 that glyphosate was “probably carcinogenic”, a conclusion rejected by US

agrochemical firm Monsanto and farmer groups. The EPA’s latest assessment “confirms exactly what we’re saying: that agencies across the world say glyphosate is safe and the IARC report is a flawed analysis,” Gordon Stoner, president of the National Association of Wheat Growers, said in the Reuters report. In November, the wheat growers’ association, Monsanto and other US farm groups sued California to stop it from requiring cancer warnings on products containing glyphosate by July 2018. California added glyphosate to its list of cancer-causing chemicals in July 2017. On 27 November, the European Union voted to extend the licence for glyphosate for five years, after two years of debate over the herbicide, just weeks before its license was due to expire on 15 December.

Monsanto looks to test dicamba-resistant soya in Brazil

onsanto’s Brazilian unit plans to launch field tests of its genetically modified dicambaresistant soyabean in Brazil in the 2019-20 season, with commercial introduction in 2020/21. Brazilian regulators approved Monsanto’s INTACTA2 XTEND soyabeans in 2016 and the company said it would present them in the state of Mato Grosso do Sul in mid-January, breaking from its earlier stand of not releasing marketing plans for the products, Reuters wrote on 11 January. The firm’s earlier soya varieties carried genes that made them resistant to the glyphosate weed killer, but some weeds had become resistant as a result, prompting Monsanto to begin pushing its dicamba-resistant seeds. Dicamba-based herbicides caused a controversy in the USA in late 2017, when farmers flooded state agri departments with complaints that the product had evaporated from the fields and drifted to non-resistant crops, causing mass crop damage.

Data from the University of Missouri showed that approximately 4% of US soya plantings – or nearly 1.5M ha – suffered damage from dicamba in 2017, Reuters reported. But according to Monsanto and BASF, which is in the process of acquiring the agrochemicals manufacturer for US$63.5bn, dicamba was safe when properly applied. Nonetheless, the US Environmental Protection Agency (EPA) said in December that farmers using dicamba must attend special training sessions and keep records of compliance with the product’s label instructions. On 19 January, Arkansas also banned the use of dicamba in the summer growing season between mid-April and the end of October. Additional usage restrictions were also planned in North Dakota and Missouri, which had already banned BASF’s dicamba weed killer Engenia statewide from 15 July 2018, Reuters wrote.

DuPont Pioneer introduces dozens of new soyabean varieties for 2018

uPont Pioneer, a business unit of the DowDuPont Agriculture Division, has introduced more than 50 new soyabean varieties for US and Canadian farmers to use in the 2018 season. The firm said on 13 December it would offer a total of 56 new high yield potential A-Series soya products in addition to its existing 110 varieties. “This new 2018 class builds upon the performance of the A-Series soyabean line-up, which has the highest yield potential of any line we’ve ever introduced,” said DuPont Pioneer North America region leader Judd O’Connor. “Not only do we have the yield-leading line-up with A-Series soyabeans, but also the most comprehensive soyabean offering to meet grower needs for weed, pest and disease control,” she added. The new class included nearly 40 new

PHOTO: PIXABAY

varieties with Roundup Ready 2 Xtend technology, which made seeds resistant to Monsanto’s glyphosate-based Roundup herbicide and had an average yield advantage of 2.7 bushels/acre in 2017, according to DuPont comparisons. Out of the Roundup resistant beans, nearly

half were rated good or better for white mould tolerance and five were also resistant to the sulfonylurea herbicide. Ten new soyabean brands featured the LibertyLink gene, which brought the total of A-Series beans with the gene to 14. The majority of the new varieties contained native tolerance to pre-plant or pre-emergence application of the protoporphyrinogen oxidase (PPO) herbicides, sulfentrazone and saflufenacil. DuPont Pioneer also said 51 of the new varieties had native resistance to the soyabean cyst nematode, 41 were resistant to Phytophtora root rot, 12 had strong tolerance to sudden death syndrome and five had good chloride sensitivity ratings. An additional five soyabean types in the 2018 class had Pioneer’s Plenish high oleic genes.

8 OFI – FEBRUARY 2018 www.ofimagazine.com

Biotech News.indd 1

01/02/2018 11:10

TRANSPORT & LOGISTICS NEWS

Cargill plans new Brazilian terminal in Pará

lobal agribusiness giant Cargill is planning to build a new port terminal in Baía do Capim, Abaetetuba city, located in Brazil’s Pará state adjacent to Tocantins river. The group had submitted environmental studies with the state’s Department of Environment and Sustainability and was planning to start operations at the terminal between 2022 and 2025, depending on demand and other strategic decisions, according to a 27 December World Grain report. “Like other exporter companies in Brazil, we consider Barcarena a strategic region to transport grains,” said Clythio Backx van

Buggenhout, director of ports for Cargill. “For Cargill, the northern region is essential and, in this regard, a port in Barcarena will complete our logistics matrix in Rota Norte.” Soyabean is Brazil’s top agricultural export product and the country is the world’s second largest producer of the oilseed after the USA. Landlocked Mato Grosso, with Pará to its north, is the country’s largest soya-producing state. Barcarena port, just downstream of Abaetetuba, is developing as a major transshipment point, taking goods from all over Brazil by rail from nearby inland ports for international export. Buggenhout said Baía do Capim was chosen

as a potential site partly due to its features, such as appropriate depth and feasible access for barges, as well as lower exposure to winds and waves that were important factors for safe operations in the region. Cargill said it would invest approximately BRL700M (US$212M) in the port project, which would have the capacity to handle some 6M tonnes/year of grains. “In conjunction with our Santarém terminal, we will have a total capacity to transport 12M tonnes/year of grains” Buggenhout said, adding that in 2016, expansion works at Santarém had finished, increasing the terminal’s annual capacity from 2M to 5M tonnes.

Yuzhny port terminal due for completion in spring 2018

new 5M tonnes/year grain terminal being built by agribusiness giant Cargill and MV Cargo in Ukraine’s Yuzhny port is due for completion in spring this year, Interfax-Ukraine reported at the end of last year. At an estimated cost of US$150M, construction work has included dredging down to 16m, carried out by China’s CHEC Corporation. This will enable the terminal – in Odessa state, southwest Ukraine – to handle

large vessels up to 100,000dwt. Ukrainian logistics and port infrastructure firm MV Cargo said two covered warehouses with a capacity of 80,000 tonnes and 14 silos with a total capacity of 210,000 tonnes were currently being built on a site of 28ha. The Ukrainian Sea Ports Authority, Cargill and MV Cargo signed a memorandum of intent to build the terminal in 2015. “Through this investment Ukraine’s port infrastructure will

be expanded and will provide greater efficiencies to connect Ukraine’s surplus agricultural crops with the parts of the world demanding more food,” said Andreas Rickmers, head of Cargill’s grains and oilseeds business in Europe. Andrey Stavnitser, on behalf of MV Cargo, said the deepwater terminal would allow the processing of vessels with high tonnage and generate over US$10.4M in tax payments.

Louis Dreyfus joins Sustainable Shipping Initiative

lobal agrimerchant Louis Dreyfus Co (LDC) joined the Sustainable Shipping Initiative (SSI) on 18 December. The SSI aims to develop more sustainable global shipping by 2040 and comprises firms spanning the entire shipping value chain, from charterers and ship owners to shipyards and technology companies. The initiative has a six-step roadmap, including improving transparency and accountability in the shipping industry and developing financial solutions that reward sustainable performance. “The sharing of ideas and best practice across different organisations is a critical part of our

journey towards reducing greenhouse gases, developing new technology and becoming more transparent and accountable,” said SSI general manager Tom Holmer. Sebastien Landerretche, head of freight at LDC, said the company recognised that the SSI could help it address the challenges it faced with its 81M tonnes of agricultural goods shipped annually. LDC originates, processes, transports and merchandises a diversified product range around the world including oilseeds, grains, rice, coffee, cotton, sugar, fertilisers and metals. It joins 13 other companies already engaged with the SSI, including agri traders Bunge and Cargill.

IN BRIEF MYANMAR: Japan’s Kamigumi Co Ltd announced on 11 December that it would establish a terminal operating company – International Bulk Terminal (Thilawa) (IBTT) – mainly focused on the handling of grain, feed and other bulk cargo at the Thilawa region of Yangon port in Myanmar. IBBT is a joint venture with Myanmar food company Lluvia Ltd, itself a joint venture between Japan’s Mitsubishi Corporation and Myanmar conglomerate Capital Diamond Star Group (CDSG). “Myanmar continues to see robust economic growth underpinned,” Kamigumi said. “Its per capita consumption is also increasing rapidly, and with the Westernisation of diets and greater diversity of food choices, we expect growth in the trading of food products and raw materials in the future.” “By operating a port facility through IBTT, Kamigumi will establish a solid foothold in the food logistics business, which is expected to see further growth.”

9 OFI – FEBRUARY 2018 www.ofimagazine.com

Transport News.indd 1

01/02/2018 11:10

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

EU: EU bioplastics producers have urged European Commission president JeanClaude Juncker to forego the 40-60% import duties on bioethanol from South America when the feedstock is used exclusively for applications in chemical intermediates, plasteurope.com reported on 3 January. René van Sloten, executive director of industrial policy at the European Chemical Industry Council (Cefic), said the duties affected their ability to compete with players in the Americas and compounded problems of having to compete with conventional plastic producers in Europe, who benefited from access to petrochemical feedstocks imported duty-free. EU prices for bioethanol were about 60% higher than in Brazil, where petrochemicals conglomerate Braskem was a major producer, Cefic said. According to the Bio-based Industries Consortium, the EU’s bio-industries including chemicals, plastics, pharmaceuticals, paper, textile, biofuels and bioenergy, had an annual turnover of €674bn. ITALY: US biochemicals firm Genomatica has signed a deal with Italian nylon 6 producer Aquafil to develop a commercial process for sustainable nylon, the companies announced on 23 January. Aquafil will license Genomatica’s technology to make the nylon raw material, caprolactam, from sugar via fermentation with GM microbes. Used in a variety of nylonbased products including carpets and apparel, caprolactam had a worldwide market of over 5M tonnes/year, the firms said. Genomatica has already developed a bio-processing route to produce the chemical intermediate 1,4-butanediol (BDO) from renewable feedstocks, which it has licensed to BASF and Italy’s Novamont group. In 2016, Novamont started up a commercial-scale plant in Bottrighe, Italy, to produce 30,00 tonnes/year of bio-BDO, which is used in making elastic fibres and other products.

Saudi Arabia’s SABIC buys a quarter stake in Clariant

audi Basic Industries Corp (SABIC) has agreed to buy a 24.99% stake in Swiss specialty chemicals maker Clariant AG, becoming the company’s largest shareholder, Reuters reported on 25 January. SABIC did not say how much it paid for the deal, but Clariant’s 24.99% stake was worth US$2.4bn based on its market capitalisation, Reuters said. Clariant supplies the oils and fats industry with bleaching earths and had agreed a US$20bn merger with Huntsman Corporation last May, only to call it off in October after activist investors blocked the deal on the grounds it would destroy shareholder value. “Clariant is complementary to SABIC’s existing specialties business and is well in line with SABIC’s strategy of opening up new growth opportunities in speciality chemicals,” said SABIC CEO Yousef al-Benyan. SABIC, currently the world’s fourth largest chemical firm, said it currently had no plans to launch a full takeover of Clariant.

However, some analysts said in the Reuters report SABIC might seek to buy the holding owned by Clariant’s second biggest shareholder group – a family linked to Germany’s Süd-Chemie. “SABIC is not known to be satisfied with minority stakes,” said Baader Helvea analyst Markus Mayer. “As a consequence, I think they’ll try to get the SüdChemie families’ 14% holding and then make an offer for the rest.” Swiss stock exchange rules required those holding more than a third of a company to make an offer for the remainder, Reuters said. SABIC is 70% owned by Saudi Arabia’s sovereign wealth fund, Public Investment Fund. Reuters said Middle Eastern energy players were eager to expand into more advanced downstream chemicals operations, such as the catalysts that Clariant produced. The closing of the transaction is subject to regulatory approvals.

New biopolymer for cosmetics Expansion into

ndustrial biotech firm Global Bioenergies and Swiss speciality chemicals producer Clariant announced on 2 January that they had developed a new bio-based polymer for cosmetic creams and lotions. Based on Global Bioenergies’ sugar-based isobutene, Clariant’s new ingredient is a rheology modifier that influences viscosity and achieves specific sensorial and texturising properties for creams and lotions. The ingredient is currently produced on a small scale at a demonstration plant in Leuna, Germany, operated by Global Bioenergies, which is developing a full-scale plant to produce larger volumes through a joint venture with French sugar

PHOTO: ADOBE STOCK

IN BRIEF

cooperative Cristal Union. Global Bioenergies said it had developed a process to convert renewable resources into hydrocarbons through gas fermentation. Its process creates a series of enzymatic reactions which, when implanted into a host micro-organism, can convert sugars into isobutene, a 15M tonnes/year, US$25bn market.

ethoxylated range

erman oleochemicals distributor Hammonia Oleochemicals announced on 26 January that it had expanded its range to include ethoxylated specialities by starting to distribute products from Italian speciality chemicals firm SABO. The range will cover anionic and nonionic surfactants, esters and softeners, used as surfactants, emulsifiers, wetting and solubilising agents. This includes ethoxylated natural alcohols, synthetic alcohols, natural fatty acids and amines, ethoxylated sorbitan esters which can be used in detergents, coatings and agrochemicals; softeners for textile and leathers; and ethoxylated esters for lubricants.

Royal DSM completes $58M acquisition of Amyris

utch life and material sciences company Royal DSM completed its US$58M acquisition of the Brazilian arm of US industrial bioscience firm Amyris and the establishment of a long-term manufacturing partnership for Amyris’ products on 29 December. The acquisition of Amyris Brasil Ltda includes its Brotas 1 production plant for farnesene in São Paulo state, Brazil, and the intellectual property related to farnesene, plus a value share arrangement over a three-year period totalling US$37.5M. “DSM will continue existing supply agreements to Amyris and other parties,” the company said. “DSM will also supply Amyris with speciality compounds until it realises its Brotas 2 specialties facility.” DSM said acquiring the Brotas 1 plant gave it

a state-of-the-art production site in Brazil, with abundant availability of sugarcane feedstock. The alliance between DSM and Amyris started in May 2017 with a US$25M equity investment by DSM in Amyris, and has since been expanded with several product development collaborations. Amyris CEO John Melo said the deal would allow it to accelerate the development and manufacture of speciality, high-performance ingredients. As well as Brotas 2, the company also expected to complete its São Martinho plant to focus on sweeteners. Amyris engineers yeast strains to convert plant sugars into hydrocarbon molecules. It has developed products such as sugarcane-derived squalene for cosmetics and farnesene for base oils and lubricants.

10 OFI – FEBRUARY 2018 www.ofimagazine.com

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MORE THAN ENERGY

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D IARY OF EVEN TS

22-23 FEBRUARY 2018 Fatty Acid and Lipid Analysis Course VENUE: Dundee, Scotland CONTACT: James Hutton Institute, UK Tel: +44 1382 568 568 E-mail: info@huttonltd.com www.huttonltd.com/lipid-course-bios.aspx

2nd Sustainable Oils & Fats International Congress (SOFIC 2018) VENUE: Paris, France CONTACT: FAT & Associés, France Tel: +33 567 339 206 E-mail: contact@fat-associes.com www.fat-associes.com/en/home

5-7 MARCH 2018

18-19 APRIL 2018

Price Outlook 2018/2019 (POC2018) VENUE: Shangri-La Hotel, Kuala Lumpur, Malaysia CONTACT: POC2018 Secretariat, Malaysia Tel: +603 7727 8458 E-mail: poc@bursamalaysia.com www.pocmalaysia.com

Black Sea Grain: Moving Up the Value Chain VENUE: InterContinental Hotel, Kiev, Ukraine CONTACT: UkrAgroConsult, Ukraine Tel: +380 44 451 4634 E-mail: conference@ukragroconsult.org www.ukragroconsult.com/bsg/2018/en/ conference

Oils & Fats Conference VENUE: Hilton London Gatwick Airport, UK CONTACT: Trade Essential, UK Tel: +44 208 144 6702 E-mail: ap@tradeessential.com www.tradeessential.com/events/oils-and-fats

1 Global Conference for the Use of Lauric Oils in the Manufacture of Oleochemicals VENUE: Westin Kuala Lumpur, Malaysia CONTACT: Oleoline, France Tel: +33 139 3466 04 E-mail: samuel.chevigny@hbint.com www.oleoline.com/conference.html

25-26 APRIL 2018

18-20 MARCH 2018

8 European Algae Industry Summit VENUE: Vienna, Austria CONTACT: Active Communications International, UK Tel: +44 203 141 0627 E-mail: dpavlyk@acieu.net www.wplgroup.com/aci/event/ european-algae-industry-summit th

NIOP 84 Annual Convention VENUE: Hyatt Regency Indian Wells Resort & Spa, Palm Springs, USA CONTACT: National Institute of Oilseed Products, USA Tel: +1 202 591 2461 E-mail: niop@kellencompany.com www.niop.org th

25-27 APRIL 2018

19-20 MARCH 2018 2nd Practical Short Course: Enzyme Technology in Oilseeds, Oils & Fats Processing and Transformation VENUE: Ghent, Belgium CONTACT: ID&A VOF, Belgium Tel: +32 51 311 274 E-mail: info@smartshortcourses.com www.smartshortcourses.com/lipidenzymes2/ program.html

World Bio Markets VENUE: Amsterdam, Netherlands CONTACT: Bio-Based World Ltd, UK Tel: +44 207 045 0900 E-mail: info@biobasedworldnews.com www.biobasedworldnews.com/events/ world-bio-markets

Fundamentals of Edible Oil Processing VENUE: Minneapolis Convention Center, USA CONTACT: ID&A Ignace Debruyne & Associates VOF, Belgium Tel: +32 51 311 274 E-mail: info@smartshortcourses.com www.annualmeeting.aocs.org/program/ short-courses-x2524

6-9 MAY 2018 109 AOCS Annual Meeting VENUE: Minneapolis Convention Center, USA CONTACT: AOCS Meetings Department, USA Tel: +1 217 6934821 E-mail: meetings@aocs.org www.annualmeeting.aocs.org th

24-25 APRIL 2018

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20-22 MARCH 2018

5 MAY 2018

29-30 MARCH 2018

AGQM Intensive Seminar – How to understand Biodiesel VENUE: ASG Analytik-Service GmbH, Neusaess Germany CONTACT: AGQM, Germany Tel: +49 30 31 90 44 37 E-mail: maren.dietrich@agqm-biodiesel.de www.agqm-biodiesel.de/ agqm-intensive-seminar-april-2018

9-11 MAY 2018 8 ICIS World Surfactants Conference VENUE: Hyatt Regency Jersey City, New Jersey USA CONTACT: ICIS, UK Tel: +44 20 8652 4659 E-mail: events.registration@icis.com www.icisevents.com/ehome/ worldsurfactants th

24-26 MAY 2018 Grain & Maritime Days in Odessa VENUE: Odessa, Ukraine CONTACT: APK-Inform Agency, Ukraine Tel: +38 048 703 7510 E-mail: conference@maritimedays.odessa.ua www.maritimedays.odessa.ua

3-8 JUNE 2018 2nd International Symposium on Lipid Oxidation and Antioxidants VENUE: Karl-Franz University, Graz, Austria CONTACT: Euro Fed Lipid, Germany Tel: +49 69 79 17 533 E-mail: info@eurofedlipid.org www.eurofedlipid.org/meetings/graz2018

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29 APRIL - 3 MAY 2018 Trends in Margarine and Shortening Manufacture, Non-Trans Products 2018 VENUE: Texas A&M University, Bryan, USA CONTACT: Mohammed S Alam, Texas A&M University, USA Tel: +1 979 845 2740 E-mail: msalam@tamu.edu www.perdc.tamu.edu/event/trends-inmargarine-and-shortening-manufacture-nontrans-productsseminar-april-2018

See our full list of industry events at: www.ofimagazine.com

IGC Grains Conference 2018 VENUE: Queen Elizabeth II Centre, London, UK CONTACT: International Grains Council, UK Tel: +44 20 7513 1122 E-mail: conf@igc.int www.igc.int/en/conference/confhome.aspx

20-23 JUNE 2018 EFPRA Congress 2018 VENUE: Fairmont Hotel, Barcelona, Spain CONTACT: EFPRA, Belgium Tel: +32 2 203 5141 E-mail: info@efpra.eu www.efpra.eu/congress-2018

12 OFI – FERBUARY 2018 www.ofimagazine.com

Diary.indd 1

01/02/2018 10:24

DI ARY O F E V E NT S

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8-13 JULY 2018 2 International Symposium on Plant Lipids VENUE: Osanbashi Hall, Yokohama, Japan CONTACT: Tokyo Institute of Technology, Japan Tel: +81 45 924 5527 E-mail: ispl2018-secretariat@lipid.bio.titech.ac.jp web.apollon.nta.co.jp/ispl2018 nd

4-6 SEPTEMBER 2018 5 High Oleic Oils Congress (HOC2018) VENUE: Montreal, Canada CONTACT: FAT & Associés, France Tel: +33 567 339 206 www.higholeicmarket.com/hoc-2018 th

4-6 SEPTEMBER 2018 AusCanola2018, 20 Australian Research Assembly on Brassicas VENUE: Perth, Australia CONTACT: Grain Industry Association of Western Australia Tel: +61 8 6262 2128 E-mail: RNash@giwa.org.au www.australianoilseeds.com/conferences_workshops/ARAB/ AusCanola_2018 th

15-16 SEPTEMBER 2018 20th Practical Short Course: Novel Technologies in Oilseed Processing, Edible Oil Refining and Oil Modification VENUE: Belfast, UK CONTACT: ID&A Ignace Debruyne & Associates VOF, Belgium Tel: +32 51 311 274; E-mail: RNash@giwa.org.au www.smartshortcourses.com

16-19 SEPTEMBER 2018 16 Euro Fed Lipid Congress VENUE: Belfast Waterfront Congress Centre, Northern Ireland CONTACT: Euro Fed Lipid, Germany Tel: +49 69 79 17 533 E-mail: info@eurofedlipid.org www.eurofedlipid.org/meetings/belfast2018

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3-4 OCTOBER 2018 Bulk Liquid Storage Conference 2018 VENUE: Cartagena, Spain CONTACT: Active Communications International, UK Tel: +48 61 646 7058 E-mail: mkielerska@acieu.net www.wplgroup.com/aci/event/european-bulk-liquid-storage

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7-10 OCTOBER 2018 Vegetable Oil Processing and Products of Vegetable Oil/Biodiesel VENUE: Rudder Tower, Texas A&M University CONTACT: Mohammed S Alam, Texas A&M University, USA Tel: +1 979 845 2740 E-mail: msalam@tamu.edu www.perdc.tamu.edu/event/vegtetable-oil-processing-and-products-ofvegetable-oil-biodiesel

22-26 OCTOBER 2018 National Renderers Association 85th Annual Convention VENUE: Ritz-Carlton Laguna Niguel, Dana Point, USA CONTACT: National Renderers Association, USA Tel: +1 703 683 0155; E-mail: co@martycovert.com http://www.nationalrenderers.org/ 13 OFI – FEBRUARY 2018 www.ofimagazine.com

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BIOFU ELS

Renewing renewables rules E The EU is moving towards reforming its renewable energy directive. But issues such as the share of crop-based fuels and overall renewable energy targets must still be ironed out in the upcoming three-way negotiations within the EU government. Keith Nuthall writes

ven with the spectre of Brexit looming over the EU, the authority and power of the union over environmental policy across Europe remains of critical importance. As such, the oils and fats sector has been closely watching the discussion of proposed reforms to the EU’s renewable energy directive (RED). These were proposed in November 2016 by the European Commission and were debated intensely by the European Parliament and the EU Council of Ministers throughout 2017. The reforms attempt to ensure that the directive – currently numbered 2009/28/EC – meshes with the EU’s broader new green energy target of ensuring that by 2030 renewable sources supply at least 27% of energy consumed, which is written into the EU’s framework on climate and energy for 2030, released in 2014. This broad policy has sparked a range of detailed reforms – among them the RED changes now under discussion. By following existing EU renewable energy legislation dating back to before the 2014 policy, only 24.3% of energy consumed across the EU would be green, according to projections from the EU executive. This cannot stand, because it

will breach commitments made at the 2015 Paris Agreement on climate change. So, reforms have been proposed to the directive, many having a significant impact on Europe’s biofuel sector. How the final text turns out will depend on negotiations between the Parliament, Council and Commission, but it is sure that the commitment within the old directive for member states to ensure biofuels are a key part of the transport energy mix will remain.

The devil’s in the details It is the details that will change. Overall, the European Parliament wants 35% of EU energy consumed to come from renewable sources by 2030, and has been proposing amendments in line with this desire. It is more ambitious than the EU Council of Ministers, which committed itself on 18 December 2017 to a target of reaching at least 27% renewable energy out of overall energy consumption by 2030. That vote will pave the way for spring negotiations with the European Parliament and the European v Commission on a final text.

14 OFI – FEBRUARY 2018 www.ofimagazine.com

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BIOFU ELS

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Garofalo is happy that the Parliament decided not to open discussions on the EU’s indirect land use change (ILUC) rules within the RED, which were approved in 2015. A statement from European renewable ethanol association (ePURE) says that the EU “needs a renewable energy policy that looks beyond labels like ‘conventional’ or ‘advanced’ and instead to the real sustainability credentials of biofuels.” It argues that European renewable ethanol – produced from European crops – “delivers 66% average greenhouse gas reductions over fossil petrol with no adverse effects.” Ethanol’s production helps offset Europe’s need to import high-protein animal feed, ePURE adds.

A deal of three

CROP-BASED ETHANOL FUELS, SUCH AS THE GERMAN SUPER E10, HAVE BEEN A CONTENTIOUS TOPIC DURING THE EU’S RED NEGOTIATIONS

The Council’s ‘common position’ version of the revised RED says that biofuels should make up at least 14% of energy consumption in the transport sector across the EU by 2030. That is up from the current target of 10%. Importantly, the Council agreed that half of this consumption (that is 7% of total transport energy usage) can still be made up of biofuels produced from food or feed crops – a cap imposed over concerns that this industry can lead to the cultivation of naturally vegetated land, releasing carbon emissions. This cap is, however, more relaxed than many biofuel producers feared, although it may still be tightened in later negotiations. “This is good news,” says EU farm association Copa-Cogeca working party bioenergy chair Dietrich Klein, as the Commission had wanted to reduce crop-based biofuels use still further. “The Commission initially proposed a minimum share of 6.8% for biofuels only from waste and residues and no minimum share open for biofuels from agricultural crops.” That said, the deal does give member states encouragement to promote the use of ‘advanced’ or ‘second generation’ biofuels – for example using lignocellulosic feedstock, waste or algae – which do not have the same land use impact. Under the EU Council position, member states would have a target of ensuring 3% of energy consumption by the EU transport sector comprises these fuels by 2030, with a binding 1% milestone for 2025 – twice today’s 0.5% – “to increase investment security and guarantee the availability of fuels throughout the period,” says a Council statement. Member states will even be allowed to ‘double count’ such fuels when measuring the proportion of transport energy coming from renewable sources – an extra encouragement for their use. One problem in the Council text, highlighted by a European Biodiesel Board (EBB) statement, is that it allows EU member states to reduce their renewable energy target in transport if their cap on crop-based biofuels is equally reduced. “This approach is highly concerning as it might lead to internal market disruption and reduced investor confidence and, coupled with the introduction of high artificial multipliers for the electricity sector, it would end up benefiting fossil

fuels and lower transport decarbonisation ambition in the EU,” warns the EBB.

Parley in the Parliament Meanwhile, the European Parliament voted on its position on 17 January. It says the directive should mandate that a lower proportion of energy used by the transport sector come from biofuels than the Council’s position – at 12%. However, like the Council, the Parliament also insists that each member state must achieve this rate individually. That reduces the flexibility allowed to member states should these calculations be made on an EU-wide basis, allowing some member states to dip below this target if others exceed it. The Parliament also says that first generation biofuels made from food and feed crops should be capped at 2017 levels, although it mirrors the Council’s view that a maximum of 7% of road and rail transport biofuels could be of this type. MEPs also want a ban on the use of palm oil to make biofuels from 2021. The Parliament voted to say that the share of advanced biofuels, renewable transport fuels of non-biological origin, waste-based fossil fuels and renewable electricity should deliver at least 1.5% of transport energy consumption in 2021, rising to 10% in 2030. EU agriculture organisation CopaCogeca is keen that the negotiations give longterm flexibility for automakers to allow the use of biofuels. It is one group calling for the maximum share of crop-based biofuels to be calculated at EU level to allow some member states to exceed the 7% cap if others fall below it. “With at least 80% of new vehicles expected to have an internal combustion engine, the EU will rely on liquid fuels in transport beyond 2020,” Klein says. As a result, he does not want the text to impede member states from including sustainable cropbased biofuels in their liquid biofuel target from 2030. An EBB statement adds that the Parliament’s decision to limit the contribution of crop-based biofuels to current consumption levels “does not recognise their key role in the decarbonisation of the EU energy mix”. Nor does it “support the EU agriculture and protein sectors or respond to COP21 [Paris] climate ambitions,” says the EBB. That said, EBB secretary general Raffaello

Looking ahead, so-called tripartite negotiations will now be staged, with the goal being to finalise a text that is acceptable to the EU executive and can be approved formally by the two EU legislative bodies. If all goes well, a new revised RED and its associated biofuel targets could be written into EU law within its official journal by the EU’s summer break in late July. Certainly, EU officials will be hoping to see a conclusion to talks on the reforms by the end of this year. The EBB’s Garofalo says: “Now, in the trialogue negotiations we expect a realistic and fact-based discussion to raise further the EU decarbonisation ambitions in the transport sector and secure a role for the EU biodiesel industry.” Assuming these talks are completed in good time, each member state will have to send to the European Commission by January 2019, and every 10 years thereafter, an integrated national energy and climate plan, which will include biofuel development. The first plan will cover 2021 to 2030. The following plans will each cover the subsequent 10 years. The Commission will assess these plans, and could make recommendations or take remedial measures if it considers that insufficient progress has been made.

Carbon into credits Of course, RED targets are easier for some member states to achieve than others. There is one directive rule that has just started helping EU member states to achieve their renewable energy targets without using more biofuels or indeed generating energy from any renewable source. All they need to do is pay money to another EU state, which can then notionally transfer some of their own renewable energy production. The system, perfectly legal under the directive, was first used in November 2017, when Luxembourg struck a deal with Lithuania, offering it €10M (US$12.2M) for Vilnius to transfer a minimum of 700GWh’s worth of its 2018-2020 renewable energy production on paper to the Grand Duchy. That money has been earmarked for other renewable energy projects and research in Lithuania. It can spare the green energy credits because the Baltic state met its 2020 renewable energy target of 23% in 2015 – green sources now supply 25.75% of energy production. And while Luxembourg has yet to meet its 11% goal, managing only 5%, as the EU’s richest country per capita it has plenty of green assets of another kind – money. w Keith Nuthall is an international regulatory journalist with the International News Services

16 OFI – FEBRUARY 2018 www.ofimagazine.com

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H EALTH & N UTRITION

n a d s o t b a f e s , i s ty l iO The global obesity rate has nearly tripled since 1995, with an estimated 650M people classiﬁed as obese in 2016. Oils & Fats International takes a look at what obesity is, what are its causes, and which oils and fats are the good, the bad and the worst for managing weight gain

istorically, gaining weight has been far from an easy task. For most of human history, food has been a relatively scarce commodity. Whatever calories our ancestors managed to scrape up, they quickly burned off in heavy manual labour in order to secure their next meal. In an environment like this, being able to build a large stomach was in many places considered a status symbol. It signified the individual had the means to acquire large amounts of food, even more than they needed, and that they could pay others to do their hard labour for them. During the Renaissance, for example, the mighty and powerful flaunted their weight, making sure that their portraits showed off their robust physiques. Attitudes began to change in the 19th century and since then, a slim figure has become the new beauty standard. While some argue that we have now gone too far in the opposite direction and promote unrealistic standards of thinness, few would deny that obesity is unhealthy. Such conclusions were reached as far back as in the Egypt of the Pharaohs and modern medicine certainly does not disagree.

Prevalence of obesity Obesity is defined by the United Nations’ World Health Organization (WHO) as a condition where abnormal or excessive fat accumulation may impair health. The simplest way to determine whether an individual is obese, according to WHO, is

using the body mass index (BMI). The BMI score is determined by dividing a person’s weight by a square of their height. A BMI score equal to or greater than 25 is defined as overweight, while the threshold for obesity runs at BMI 30, according to WHO guidelines. The BMI is a rather inaccurate calculation method as it does not account for fluctuations in body structure and other differences between individuals. As such, fat distribution tests and other examinations need to be conducted to actually diagnose obesity. However, the BMI score gives a rough guideline that can establish whether a person is too fat. While rampant obesity used to be considered an ailment of the developed nations – and perhaps there was a time when it was – it has become a global issue. WHO data shows that worldwide obesity has nearly tripled since 1975 with an estimate of more than 650M people being obese in 2016. If the number of those who are “merely” overweight is added to the figure, the total increases to a whopping 1.9bn people – a full quarter of the entire world population. The list of the most obese countries in the world provides further proof that obesity is not just found in rich western countries any more. The CIA World Factbook’s ‘Top 20’ list of the most obese places in the world includes only one such nation, the USA, which shares the 18th place with Saudi Arabia. The top 10 features countries almost exclusively from the Pacific islands, with American Samoa (74.6% of population overweight), Nauru

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H EALTH & N UTRITION

(71.1%) and the Cook Islands (63.7%) having the questionable honour of being the leading three. All in all, the WHO says most of the world’s population lives in countries where being overweight and obese kills more people than malnutrition. Looking at these statistics, it comes as no surprise that the organisation declared obesity a global health epidemic in 1997.

Obesity and health Hippocrates, an ancient Greek philosopher who is often called the father of medicine, wrote of obesity: “Corpulence is not only a disease itself, but a harbinger of others.” His evaluation from over 2,000 years ago still holds, according to the WHO. Obesity has been linked to a slew of noncommunicable diseases. Among them are musculoskeletal disorders – particularly osteoarthritis, a degenerative joint disease stemming from excessive body weight – certain types of cancer, such as breast, ovarian, kidney and colon, and diabetes. Additionally, obesity significantly increases the risk of developing cardiovascular diseases such as heart disease and stroke, which in 2012 became the leading cause of death worldwide. Obesity is also often accompanied with high cholesterol and consequently high blood pressure, which again increases strain on the heart. Mental health can be impacted as well and several studies have linked obesity to depression due to possible chemical imbalances in the brain, a negative selfimage and society’s attitude to the overweight. General quality of life can be severely impacted due to amassing difficulties in performing every day tasks, including work. According to a review by the Department of Public Health Sciences of the Karolinska Institutet in Sweden, overweight employees took more sick days than those with a normal body weight. The study also found that when obese subjects lost weight, they took fewer sick days, suggesting an improved general health condition. In addition, all the combined health effects of obesity resulted in a significantly heightened risk of death. A BMI of more than 30 can reduce life expectancy by anywhere between two to 10 years.

Causes of obesity What makes obesity a difficult problem to tackle is that it is not caused by any single factor that can be easily pinpointed and eliminated. There are cases where obesity is present as a major feature of certain syndromes or medical conditions (so called syndromic obesity). These instances, however, only account for a very small fraction of the global obesity epidemic. In most cases, obesity stems from lifestyle. Increasing automation and mechanisation has led to a significant shift towards less physically demanding work. As a result, the WHO estimates that at least 30% of the world’s population are not getting enough exercise, although the rate at which people engage in physical activity varies heavily from country to country. All in all, however, a sedentary lifestyle greatly increases the risk of developing obesity. A more significant reason, and a more relevant one for the oils and fats industry, however, is the impact of diet.

A 2016 study by researchers from the Medical University of Lodz, Poland, highlighted excess food as the primary factor in obesity. The average daily caloric intake has increased significantly over the past two centuries. From 1970 to 2000, the average food energy available per person grew everywhere in the world apart from Eastern Europe. Combined with the increased availability of food, more efficient agricultural practices have pushed global food prices down, while industrialisation in developing countries is lifting living standards for an increasing number of people. As people can afford more food, they also start eating more. While most of the extra energy from food is consumed as carbohydrates – in the forms of sugary drinks, potato chips and other starchy foods – fats and oils are far from blameless. Martin Grootvelt, professor of bioanalytical chemistry and chemical pathology at the UK’s De Montfort University, who has studied fats and their health effects for more than 20 years, sees high fat consumption as a definite culprit in the obesity epidemic. “When it comes to obesity, obviously people are eating more fat. There’s a general limit of less than, or equal to, two fried meals a week that is fine, while others talk about a maximum of four meals. But your average person [in western countries] is having more than that, certainly more than four,” Grootveld tells Oils and Fats International.

The mechanics of fat Before attempting a further evaluation of the contribution fats and oils make towards obesity, it is necessary to briefly look at what science says about the structure of fat and what our bodies do with it. Our caloric intake composes mostly of three macronutrients – protein, carbohydrate and fat. While carbohydrates might make up most of the extra energy we get, fat is by far the most energypacked of these three nutrients. Proteins and carbohydrates both contain approximately four calories/gram, while fat has more than double that at nine calories/gram. Considering this significant difference, perhaps it is a silver lining that we use more carbohydrates than fats. Our bodies, however, need fats, as they are essential for maintaining the basic operations of the human body. Some essential nutrients, such as vitamins A, D, E and K, are fat-soluble and therefore cannot be transported around or absorbed into the body through water. Fats help cells maintain their structure, supply energy and form the backbone in the production of many hormones. In addition, they maintain skin and hair health,

FAT MOLECULES IN FRIED FOODS, WHICH ARE ALREADY FATTENING, UNDERGO HEAT-INDUCED CHANGES THAT PRODUCE TOXIC COMPOUNDS KNOWN AS ALDEHYDES

insulate organs against shock, maintain body temperature and can bind certain substances if their levels in the bloodstream get dangerously high. In a nutshell, without any fat in our bodies, we would most likely perish, or at least be extremely unhealthy. Out of all of fat’s functions, energy supply and storage is the one that’s immediately most apparent when talking about obesity. Forming fatty tissue, or adipose tissue, is the body’s method to store metabolic energy for extended periods of time. Fat cells called adipocytes store fat molecules derived from the diet and from liver metabolism. When the body faces a lack of energy, this stored fat can be metabolised to fulfil the body’s energy needs. Adipose tissue is present in all animals and it is a perfectly natural way for the body to have a bit of extra in reserve for a rainy day. However, when our energy intake becomes much higher than what we need, the only response our body has is to keep storing this extra energy by creating more and more adipose tissue. As the fatty tissue accumulates, problems begin to pile on as well. The stored fat is generally present as two different types – visceral fat, which is packed in the abdominal cavity and around organs, and subcutaneous fat, which build up under the skin. v

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H EALTH & N UTRITION

FIGURE 1: STRUCTURE OF A TRIGLYCERIDE WITH SATURATED, MONOUNSATURATED AND POLYUNSATURATED FATTY ACIDS

1 2 9

α 1. Palmitic acid – Saturated fatty acid with no double bonds 2. Oleic acid – Monounsaturated fatty acid with one double bond 3. Alpha-linolenic acid – Triunsaturated (omega-3) fatty acid, an example of a polyunsaturated fatty acid (PUFA) with three double bonds. Note: Linoleic (omega-6) fatty acid is a PUFA with two carbon-carbon double bonds (rather than 3 in alpha- linolenic acid), and the great majority of edible oils have a higher content of this fatty acid over that of alpha-linolenic acid

Out of the two, excess visceral fat is more dangerous, as studies have linked it to type 2 diabetes, insulin resistance, inflammatory diseases and other obesity-related diseases.

Classification of fats The fats we get from food come in the form of triglycerides, esters with three fatty acid chains attached to an alcohol glycerol. Simplified, a fat molecule resembles the capital letter ‘E’, with the vertical ‘backbone’ being the glycerol. The three horizontal lines trailing off are fatty acids chains consisting of carbon atoms linked by a chemical bond. In addition, each carbon atom is linked to two hydrogen atoms. Fats are classified as saturated, monounsaturated or polyunsaturated based on the number of double bonds between the carbon atoms in the fatty acid chains (see Figure 1, above). This molecular structure is important in determining the physical qualities and health effect of different fats and oils. In saturated fats, there are no double bonds between the carbon atoms. These kinds of fats are generally solid at room temperature, turning into a liquid when heated. They are found in meat, eggs

and dairy, but also in some plant-based fat products, such as coconut, cocoa butter and palm oil. Monounsatured fats have one set of carbon atoms that are linked to each other by a double bond. This structure gives them their name – ‘mono’ meaning ‘one’. These kinds of fats tend to be solid when refrigerated and turn into a liquid at room temperature. Monounsaturated oils include canola, olive and peanut oils. Finally, polyunsaturated fats have more than one set of carbon atoms bonded to each other with a double bond, leading to the term ‘poly’ meaning ‘many’. Primarily vegetable and fish oils, polyunsaturated fats stay liquid at both room temperature and in the refrigerator. Oils in the polyunsaturated category include corn, cottonseed, safflower and sunflower. In addition to these ‘big three’, there are essential fatty acids (EFAs). This group includes two fatty acids – omega 6 or linoleic acid, and omega 3 or alpha linoleic acid. From these two fats, the body can process four other essential fatty acids. “This group of fats are a requirement for normal health and cellular function,” says Jacqueline Jacques, a neuropathic doctor and chief science officer at Catalina Lifesciences, USA. “The body

cannot make these fats itself, so it must obtain them from an outside source such as a food or a dietary supplement.” There are also hydrogenated and partially hydrogenated fats, which are artificially created saturated fats formed through an industrial process that adds hydrogen to normally unsaturated fats. The process makes them more solid and prolongs their shelf life, which is desirable in many industries, such as margarine and baked goods production. However, partial hydrogenation has the side effect of producing trans fatty acids. The name stems from the hydrogen atoms being attached on opposite sides of the carbon molecules instead of the same side as in regular – or cis – fats. Artificial trans fats have been linked to several negative health effects, including cardiovascular disease, and it is believed, according to Jacques, that they function in the body more like saturated than unsaturated fats. Natural trans fats are created in the stomachs of ruminant animals, such as cattle, sheep and goats, and can be found in their milk and fat.

Oils, fats and health The current consensus among the nutritional science community is that saturated fats are generally the ones that have the largest negative impact on health. According to Jacques, they are known to contribute to elevated cholesterol and are associated with heart disease risk when consumed in excess. The modern western meat-heavy diet contains plenty of saturated fats and, as such, health authorities recommend limiting daily intake of saturated fats. For example, the US Department of Agriculture (USDA) dietary guidelines recommend consuming less than 10% of daily calories from saturated fats and keeping total fat intake to between 20-35% of daily calories. Instead of using saturated fats, the WHO and the European Food Safety Authority (EFSA) recommend replacing them with unsaturated oils, such as those contained in vegetable oils. According to the EFSA, unsaturated fatty acids lower the ‘bad’ LDL cholesterol and increase the levels of ‘good’ HDL cholesterol, leading to increased heart health. However, Jacques points out that within unsaturated fats, the choice between monounsaturated and polyunsaturated can v

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H EALTH & N UTRITION

TABLE 1: FATTY ACID, CHOLESTEROL AND VITAMIN E CONTENT IN OILS AND FATS SATURATED

MONOUNSATURATED

POLYUNSATURATED

CHOLESTEROL

VITAMIN E

g/100g

mg/100g

ANIMAL FATS Lard

40.8

43.8

9.6

0.6

Duck fat

33.2

49.3

12.9

100

2.7

19.8

2.6

230

85.2

6.6

1.7

0.66

Butter VEGETABLE FATS Coconut oil Cocoa butter

32.9

1.8

Palm kernel oil

81.5

11.4

1.6

3.8

Palm oil

45.3

41.6

8.3

33.12

Cottonseed oil

25.5

21.3

48.1

42.77

Wheat germ oil

18.8

15.9

60.7

136.65

Soybean oil

14.5

23.2

56.5

16.29

Olive oil

69.7

11.2

5.1

Corn oil

12.7

24.7

57.8

17.24

Sunflower oil

11.9

20.2

Safflower oil

10.2

12.6

72.1

40.68

Hemp oil

12.34

Rapeseed oil

5.3

64.3

24.8

22.21

v make all the difference. “Though this sounds like a small change, the difference is quite large when it comes to health. Monounsaturated fats are known to be some of the healthiest around. They are much more stable than other oils and are not prone to being damaged by heat,” says Jacques. “Polyunsaturated fats are delicate and can be damaged by light and heat. They should be kept refrigerated to prevent rancidity and are not the best choice for sautéing and frying.”

Opposing opinions

However, new evidence and research is surfacing that shows that unsaturated fats and oils are perhaps not the solution to obesity and health problems they’ve been made out to be. Grootveld’s research has shown, as Jacques suggests, that many of the ‘healthy’ vegetable oils become highly unhealthy when they are exposed to heat, degrading into compounds known as aldehydes. “Unsaturated fats degrade at high temperatures, generally at 180°C. There are different types of aldehydes – unsaturated aldehydes that are more toxic and saturated aldehydes that are less toxic. But the ballpark really is that they’re all toxic,” Grootveld says. The polyunsaturated fats’ tendency to degrade is an issue due to modern populations’ penchant for fried foods. Frying in oil greatly increases the fat content in foods, consequently making them more energy-rich, which adds to obesity. It is also these high frying temperatures that Grootveld talks about when he warns about using polyunsaturated oils in cooking. “The basic line is, anything that’s rich in monounsaturates is better for frying because they’re more resistant to oxidation,” says Grootveld. “People should avoid anything with more than 20% of polyunsaturates. Health authorities recommend that we use polyunsaturates, but they don’t consider

the fact that they are used for frying.” For frying purposes, Grootveld recommends processed coconut oil. It has been panned historically as being unhealthy due to its high saturated fat content and many health organisations – among them the WHO and USDA – advise against its food use. However, it is precisely the saturated fats that make coconut oil more stable during heating, causing it to form less aldehydes than the recommended polyunsaturated oils. “Interestingly, coconut oil is the staple oil used for cooking and frying in Sri Lanka and according to a 1978 demographic handbook, the occurrence of cardiovascular disease was the lowest there. It does not prove cause and effect, but it’s a recorded fact,” muses Grootveld. A 2015 study by researchers from the University of California looks at coconut oil from the angle of obesogenic properties. According to the study, the use of polyunsaturated soyabean oil in the USA has increased by astronomical amounts since the trend against saturated fats began in the 1950s, while the US obesity rating has also skyrocketed. Tests carried out on mice – which were fed soyabean and coconut oil at a ratio corresponding to US food use – showed that soyabean oil increased negative metabolic effects, inducing more weight gain and adiposity. Coconut oil, while increasing the mice’s weight due to a high-fat diet, did not cause weight gain at such a high rate. “[This study] suggests that this dietary shift [to soya oil], while perhaps beneficial for cardiac health, may have aggravated other problems, such as obesity, diabetes, glucose intolerance and fatty liver,” the researchers say. Of course, people are not mice, and the study’s results are not directly applicable to humans. However, Norway’s National Institute of Nutrition and Seafood Research in 2012 released a study that claimed that vegetable oils promote obesity due to their high omega 6 fatty acid content.

Anita Røyneberg Alvheim, lead researcher of the study, says people in the western world are eating less and less fat, but at the same time our body weight is increasing, so the type of fats we eat – not just how much fat we consume – would seem to be significant in the development of obesity. According to Alvheim, the omega 6 – found in soya and sunflower oils, for example – forms part of the system controlling appetite, the feeling of hunger and energy and fat storage. When the body receives too much omega 6, our brains refuse to send a signal that our need for food is satiated. Omega 6 also competes with omega 3 for space in cellular tissue and a high intake of omega 6 replaces omega 3. As a result, our own brains are fooling us into overeating, says Alvheim, who recommends switching to a more omega 3-rich diet.

No simple solution As stated above, obesity is not easily tackled, not even when the question only concerns oils and fats. The opinion of global health authorities is that we eat too much fat, so cutting back on fat consumption at least should not hurt. However, evidence also suggests that we should keep an eye on what kind of fat we consume. While organisations such as the WHO and EFSA swear by polyunsaturated oils, they have been proven to lose their health edge when they’re used in cooking at high temperatures. There are also the rogue cases where consumption and general health consensus just do not add up. Grootveld brings up what he calls ‘the French paradox’. “This was noticed a long time ago when researchers were looking at saturated fat intakes. The French have lower instance of cardiovascular and other diseases related to diet, yet they have a greater intake of saturated fat and meat. It doesn’t agree with what popular science says,” he explains. Oxidation is also an issue, as many vegetable oils sold in stores are stored for long periods. Switching to oils such as coconut oil, which are high in saturates, can on the other hand be prohibitively costly, and with our current high fat consumption, it might make the situation worse. So what is a consumer to do in this crossfire of conflicting recommendation? Experts such as Grootveld suggest using the right oil in the right place. “If they’re not used for frying purposes, then polyunsaturates are great. I recommend oils like sunflower oil, when they haven’t been stored for a long time, as a salad dressing,” Grootveld says. “If it’s for frying, go for oils rich in monounsaturates, like olive oil. Canola oil is an intermediate between olive and sunflower because it contains high levels of both mono- and polyunsaturates.” But even if the perfect fat was found, it alone will not be enough to eradicate obesity if we keep eating too much of it. Additionally, since most of our everyday calories come from carbohydrates, cutting back on overconsumption and becoming more physically active are essential for losing our collective weight. And that is just in the West. In developing countries – where food may have been very scarce until the last few decades – it might be a whole other task altogether to explain to people why they should watch what they eat, now that they can finally have their fill. w Ile Kauppila is the assistant editor at OFI

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Bulgaria:

Looking from Europe to Asia Sea. Bulgaria’s most significant port for oils and oilseeds, according to Veselinov, is the Port of Varna, which in 2013 celebrated record grain throughput of more than 4M tonnes. The port also states that it has on occasion exported more than 33,000 tonnes of grains, including oilseeds, a day. Other significant ports include Balchik and Burgas.

Difficult trade policies and falling demand in Europe are causing the oilseed processors in Europe’s second largest sunflower seed producer to start looking for greener pastures elsewhere. Ile Kauppila writes

Sunflower production and markets

ulgaria’s oilseed production relies on the holy trinity of sunflower, rapeseed and soya. Out of the three, the sunflower industry is by far the largest, as sunflower is the country’s third most widely cultivated crop behind wheat and maize. Bulgaria is no small player Europe-wide either when it comes to sunflower. According to the European oil processors’ association Fediol, Bulgaria was the fifth largest EU crude sunflower oil producer in 2016, behind Hungary, France, Spain and Romania. In sunflower seeds it does even better, rising to the second place, overtaken only by Romania. “Sunflower oil production is typical for Bulgaria,” Georgi Veselinov, commercial director at Klas Olio, one of the leading companies in the Bulgarian food industry, tells OFI. The rapeseed and soya sectors are, admittedly, much smaller than sunflower, leaving Bulgaria far behind the larger European producers. However, both yields and harvests are growing alongside European demand. Most of the country’s oilseed production is located along its eastern coastline with the Black Sea. Klas Olio, for example, is located in the region of Dobrudzha, where Veselinov says its has excellent access not only to sunflower and and rapeseed, but also to corn and wheat. Being located near the coast gives producers also easy access to the exporting ports on the Black

Sunflower production in Bulgaria has been growing since the fall of communism in 1989, but the real upwards trend began around 2003, when production leaped to 715,500 tonnes from the 367,500 tonnes in 2001. The 1M tonne benchmark was reached in 2006 and – apart from a massive dip to just 512,000 tonnes the following year – Bulgaria’s sunflower seed harvest has stayed above the 1M tonne line since. There has also been significant growth in processing as well, says Veselinov. “In the last 10 years, we have a seen a big increase in the capacity of our production facilities, which are currently able to crush more than 2M tonnes/year,” he says. In the 2016/17 season, the Bulgarian sunflower harvest was negatively impacted by unusually dry and hot weather in July and August 2016. According to a US Department of Agriculture (USDA) report on Bulgarian oilseeds production from April 2017, there was good soil moisture until the end of June 2016 but the scorching temperatures in the following two months impacted the quality of the sunflower harvest, leading to lower oil content and smaller seed size. Despite the poor weather conditions, both planted area and average yields increased in the 2016/17 season. At the time of writing, the latest information on the 2017 harvest confirmed a 6.5% increase in planted area with an average yield of 2.28 tonnes/ha, which was up 1.8% year-on-year, according to a report by UkrAgroConsult in early November, based on data from the Bulgarian

agricultural ministry. Total production was projected by the US Foreign Agricultural Service (FAS) in Sofia to reach 1.75M tonnes, including oil bearing, high oleic and confectionery sunflower seeds, while Bulgarian industry officials gave an estimate of 1.8M tonnes. The industry estimate seems to have been the more accurate one, given the total harvested crop of approximately 1.84M tonnes – up 9% year-on-year – reported by UkrAgroConsult. The USDA, however, said the final harvest could up being 100,000150,000 tonnes higher. While seed production seems to be higher in 2017/18, sunflower crush is projected to go down, mostly due to increasing regional competition and trade policy issues. Crushers have been active in sourcing sunflower, which has lead to intensifying competition between exporters. The crushers also have to compete with non-crushing processors, such as de-hullers and snack manufacturers. Competition in the crushing sector is also intensified by current meal and oil prices and challenging crushing margins, which are either lower historically or in the negatives, the USDA says. Combined, these factors had resulted in slow exports up to December 2017, when exports were reported at 173,000 tonnes, says the USDA. Most of these exports – 143,000 tonnes or 82% – were sold to other EU member states. Bulgaria’s Ministry of Agriculture reported domestic sales at in the same period at 343,000 tonnes. “The main markets for Bulgaria have always been the central and eastern European (CEE) countries and Greece. “However, in the last few years we have seen a shift to Asian and African markets due to lower consumption in Europe and the high level of imports coming from Ukraine,” Veselinov says. While the latest data was not available at the time of writing, the USDA projects total exports to surpass 700,000 tonnes. According to statistics

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from Fediol, in 2016, Bulgaria exported 687,000 tonnes of sunflower seeds, less than in 2015, when the total was 715,000 tonnes. As such, Bulgarian exports may have bounced back in 2017. On the import side, the 2016/17 season saw unusually high sunflower imports due to the abundant supply in the Black Sea region, along with lower prices and good quality, says the USDA. There appears to be an upward tick in Bulgarian sunflower imports as they have grown from 92,000 tonnes in 2015 to 143,000 tonnes in 2016.

Rapeseed production and markets Rapeseed is harvested in Bulgaria early in the year and thus planting was undergoing at the time of writing. According to the country’s agriculture ministry in November 2017, planting was completed on 158,100ha, which marked a 2% increase year-onyear. The USDA in April autumn planting was reported at 173,353ha, up 3% from 2016. Total harvest area, however, is projected to reduce to 155,000160,000ha during the 2017/18 season, which corresponds more or less with the planted are reported by the agri ministry. Production expectations for 2017/18 vary widely, with average yields projected to remain below the record 2.93 tonnes/ha reached in 2016/17. This is not that surprising, considering that 2016/17 yields were up 18% from 2015/16 due to very favourable weather early in the year, according to the USDA. Fediol says rapeseed production jumped from 415,000 tonnes in 2015 to 510,000 tonnes in 2016, a nearly 23% increase. The upward trend is expected to continue in 2017, with the Bulgarian industry saying the country could see a total harvest of up to 548,000 tonnes. In December, official post-harvest data showed production of 460,000 tonnes, which still marked a 6% increase from 2016/17. Despite the excellent production, Bulgarian crushers were not expected to join the celebrations as most of the harvest was exported as soon as it came off the fields. In the first half of the marketing year ending in March 2017, 490,000 tonnes of rapeseed – 99% of the total harvest – was exported. The high degree of exports in turn stimulated imports, particularly from Romania and Moldova. By the end of March, imports were reported at 34,000 tonnes and are estimated to reach up to 67,000 tonnes by the end of the marketing year. A more conservative estimation of 50,000 tonnes is also circulated, but in either case, imports for the 2017 marketing year are likely to end up much higher than the 40,000 tonnes reached in 2016. It seems, however, that even the significant increase in imports might not be enough to meet local crushing demand and the USDA says 2017 crush could end up seeing an 8-10% reduction when compared to the 97,000 tonnes in 2015/16. Output of meal and oil would respectively decline, the agency says. Industry projections for 2016/17 crush range wildly from 70,000 to 110,000 tonnes, while the FAS gives an estimate of 85,000 tonnes.

scorching summer months in 2016 that affected sunflower also impacted on soya, resulting in what the USDA called a “disappointing” crop. However, the industry expects better results for the 2017/18 season. In 2016, the soyabean crop plunged 52% to 18,000 tonnes from the 38,000 tonnes recorded in 2015, according to Fediol. Low yields and market issues also resulted in a drastically smaller pltanted area, for which the official estimate in April was 14,000ha, only 40% of the hectarage seen in the previous season. Average yields also fell due to the hot summer, ending up at 1.36 tonnes/ha, which was nonetheless above the 1.18 tonnes/ha in 2015. For the 2017/18 season, soyabean planted area was expected to bounce back to 20,000-25,000ha. Planting got to a good start in 2017 due to

favourable weather in spring, but according to the USDA in December, soyabean planted area ended up falling by 23%. Production was also projected to increase up to 30,000-53,000 tonnes in early 2017, but latest harvest data at the time of writing showed only a disappointing 18,000 tonnes, on par with the 2016/17 harvest. With the poor 2016/17 harvest, soyabean crush also took a dive, ending up with estimates of 35,000 tonnes, 30% less than in 2015/16, when total crush was reported by Oilworld at 52,000 tonnes. With low local production, imports increased, mainly from Romania, Serbia and Ukraine. In the first quarter of the 2016/17 marketing year, the USDA reported Bulgaria had already imported nearly double as much as in the previous season and in December the agency projected v

Soya production and markets Soya’s share is the smallest out of the three major oilseeds cultivated in Bulgaria. The 2016/17 season was, unfortunately, not kind to soya. The same 25 OFI – FEBRUARY 2018 www.ofimagazine.com

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v that soyabean and meal imports would increase in 2017/18.

Challenges to overcome

FIGURE 1: SUNFLOWER SEED EXPORTS TO EU COUNTRIES, 2011-2015 (KT)

SOURCE: EUROSTAT

While the production outlook is mostly positive, the Bulgarian oilseed industry is facing some significant challenges. One of the larger ones, Veselinov says, is globalisation and the concentration of the edible oil business. “The competition currently is not only about the clients but also about the raw material. Especially the smaller eastern European producers – and with smaller I mean all the producers that are not multinationals – often face unfair competition coming from Ukraine,” he says. The Oilseed Oil Producers Association in Bulgaria (Sunoil-BG) lists 15 private oilseed crushing companies on its website as its key members. These companies – which in addition to Klas Olio include Papas Olio AD, Biser Oliva AD, Oliva AD and Rosa AD among others – are active not only in processing and bottling oils but also in meals and oilcakes, production of fatty acids and energy briquettes from sunflower hulls. All of them are now threatened by new EU trade rules. “According to the EU trade agreement with Ukraine, starting from 2015 Ukrainian companies were allowed to export sunflower oil in the EU territory without paying any import duties. “At the same time, Ukraine was allowed to collect export duty on the raw material, which is a form of state support for the Ukrainian companies,” explains Veselinov. Due to the export tax, there are practically no seeds coming out of Ukraine, which has resulted in around 10% lower prices on seeds from Bulgaria, Hungary and Romania. Their producers are thus facing dwindling margins. “Meanwhile, a lot of multinational companies are crushing in Ukraine and then exporting the crude oil to their branches in other EU countries, where it is refined and bottled. “These same multinationals are exporting the seeds, especially from Bulgaria and Romania, to western European markets and offering higher prices to the farmers than us, the local producers, are able to offer,” he laments. Additionally, Veselinov says most retailers are looking for prices that are valid for 12 months, which is something mainly multinational firms offer in the CEE countries as they are able to hedge their risks by relying on crude oil from Ukraine. This has resulted in Bulgarian producers turning their eyes eastward. “For Bulgarian companies, it is extremely important to be active on markets where they are able to sell refined and bottled oils at higher margins than in Europe. Such markets are currently mainly found in the Middle East and Asia.” In the end, however, Veselinov says that Bulgarian producers must remain hopeful. Production forecasts are up and if the companies manage to open new export channels out of Europe, the future may be much brighter. “The business is getting more and more dynamic and the biggest challenge of all is to stay positive and do your job as perfectly as possible. But this is a challenge for all industries, not only for ours,” he concludes.  Ile Kauppila is the assistant editor at OFI

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Dehulling technology

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OLEOC H EM IC ALS

In just four decades, the oleochemical industry in the ASEAN region has grown out of its infancy and developed into a fully functioning sector serving a multitude of applications. Qua Kiat Seng writes

alaysia has a highly successful agricultural industry that has nurtured equally successful downstream processing sectors. The first commercial planting of oil palm took place in 1917 in Tennamaran Estate in Selangor on the west coast of Peninsular Malaysia. In the 1960s, the pace of oil palm cultivation accelerated, with the Malaysian government encouraging technological improvements to further add value to its exports. One such value addition stream is oleochemicals. In Malaysia, the first milestone for oleochemical processing was reached in 1979 when the government put science and technology behind the palm oil industry by setting up the Palm Oil Research Institute of Malaysia (PORIM). In 2000, PORIM became the Malaysian Palm Oil Board (MPOB), which was a merger of PORIM and the Palm Oil Registration and Licensing Authority (PORLA). The first significant oleochemical plant in the Association of Southeast Asian Nations (ASEAN) area was Acidchem in Penang, Malaysia. Its founding was quickly followed by European, Japanese and US producers entering the market. The Malaysian Oleochemical Manufacturers Group (MOMG) was set up in 1984, followed in 1986 by the Philippines Oleochemical Manufacturers Association (POMA). The founding of these trade associations made it possible for the ASEAN Oleochemical Manufacturers Group (AOMG) to be formed, comprising MOMG and POMA members and one player from Thailand. Indonesia was a late entrant, but Asosiasi Produsen Oleochemical Indonesia was set up in 1996, adding one more country to AOMG. From the late 1990s, prominent western producers sold or limited their oleochemicals activities to focus on the more profitable consumer goods business. Akzo, Henkel, Petrofina and Unilever sold their plants, while Procter & Gamble (P&G) closed or sold its fatty acid facilities. By 2015, the ASEAN area already had excess natural alcohol producing capacity and low oil prices saw manufacturers install new synthetic plants elsewhere using petroleum feedstocks, exacerbating the supply situation..

State of technology The oleochemical plants that were set up in Malaysia in the 1980s generally had capacities of around 30,000 tonnes/year, making them smaller than similar plants in Europe or the USA. Due to low margins and the drive for larger volumes, producers kept pressing engineering companies towards larger and more modern plants with increasingly efficient technologies. Due to an increase in competition among

OLEOCHEMICALS ARE COMMONLY USED IN THE PRODUCTION OF SOAPS AND DETERGENTS

Past, present and future in ASEAN plant suppliers, particularly in the area of methyl esters, investments in glycerine and fatty alcohols were falling. By the 2010s, the largest plants had grown in capacity to the region of 150,000-250,000 tonnes/year. Today a single splitter – a piece of equipment used to separate fatty acids from the feedstock – can reach efficiencies of 600 tonnes/day, operating at 260°C and at pressure of 63 bar, achieving splitting degrees of about 99%. Such processing efficiencies mark a significant increase from the early days of the ASEAN oleochemicals industry when a splitter would process approximately 150 tonnes/day at a temperature of 250°C and pressure of 52 bar. The modern technologies consume less highpressure steam with lower exit temperatures for the

split fatty acids and sweetwater. The new splitting columns also foul at a slower pace, facilitating lower maintenance costs. Technology available today is superior to the technology used by the traditional industry leaders. In the past, there was generally only one supplier of technology for a specific process, but that situation no longer holds today. The Davy methyl ester processing technology, which converts fatty acids to non-acidic intermediate methyl esters and hydrogenates these to alcohols, is the favoured choice for the ASEAN oleochemical industry today. However, the older technologies of Henkel, P&G and Kao are still used in some plants, alongside synthetic fatty alcohols technologies using the Ziegler and hydroformulation processes. v

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SOURCE: DESMET BALLESTRA

FIGURE 1: OLEOCHEMICAL PRODUCT MANUFACTURE ROUTES

FIGURE 2: MULTIPURPOSE SECOND GENERATION OLEOCHEMICAL PRODUCTION PROCESS

Safety and sustainability In the 1990s, the oleochemical industry in Malaysia experienced a number of process safety incidents, including a hydrogen generation plant explosion in Malaysia in 1997. The industry’s reputation was at an all-time low and players were either uninsurable or had to pay high premiums. As the situation was not sustainable, the industry took a number of steps to address it. In 1992, the MOMG Technical Committee launched a forum to share and discuss technical issues as well as share process safety best practices. In 2007, the effort was elevated to the ASEAN level with the formation of the AOMG Technical Committee. It has organised annual process safety workshops since 2011, the latest of which – the 7th AOMG Process Safety Workshop – took place on 2728 July 2017 in Yogyakarta, Indonesia. The safety situation improved after 1998 with many manufacturers outsourcing their hydrogen gas supply. With the MOMG and AOMG members coming together to share their knowledge from process safety incidents, there have been much fewer and less major accidents. On the sustainability side, AOMG members hold Rountable on Sustainable Palm Oil (RSPO) supply chain certificates for mass balance (MB) and/or segregated (SG). The AOMG has pushed hard for a physical transition for oleochemicals and helped to draft the rules that were approved in July 2013. MOMG members also have an ongoing life-cycle assessment exercise with the MPOB.

Promising industries

Products and feedstocks One of the first applications of distilled fatty acids produced by the first ASEAN oleochemical plants in Malaysia was for soap production outside the country. Fatty acids are unstable and do not travel well and the resultant soap was of rather low quality. At the time, even soap made from freshly distilled fatty acids resulted in beige soap with an unpleasant odour. In 1982, Unichema, an oleochemical company previously owned by Unilever, successfully produced soap noodles that were white and carried no odour, using distilled fatty acids as feedstock. Its soap noodles were, subsequently, the feedstock for Lux soap bars produced by Unilever in Malaysia. This development opened the door for a new approach to the industry, where the company manufacturing the final soap product focuses only on its own market and uses soap noodles of its specifications, which it makes into soap bars with proprietary additives and production techniques. The messy part of making the raw soap, says Qua, is no longer the producer’s responsibility. This development has received little attention, but it has resulted in an “evergreen market”, as the move to liquid soaps takes place only when the

annual usage of soap bars exceeds 1kg/person/year. Apart from soap production, Malaysia got an early start in the biodiesel industry, with the MPOB commencing an R&D project in 1982. Successful field trials were conducted from 1986 to 1994 before the first commercial pilot plant began production in 2000. In 2008, the Biofuel Industry Act 2007 was passed with a B5 (diesel containing 5% biodiesel) mandate enacted in 2011, B7 in 2014 and B10 in 2016. Indonesia and Thailand, on their parts, have made much more rapid progress. Many companies in the region are able to offer efficient transesterification technologies with the technology continuously improving to meet ever more stringent standards. With pressure on costs, there is now a move towards cheaper raw materials such as palm fatty acid distillate (PFAD) and used cooking oil (UCO). Before 1980, tallow and coconut oil were the main raw materials for the oleochemical industry, but after 1980, palm oil and palm kernel oil started to replace them. At the time some end users claimed they could not replace tallow, but after the bovine spongiform encephalopathy (BSE – mad cow disease) outbreak in 2000, more users switched to vegetable oils, including palm oil.

Today, there is growth in end-use industries for oleochemical bioproducts, including in the personal care, surfactants, lubricants and polyols sectors, which drive the demand for bio-based oleochemicals. These products are often manufactured in biorefineries, facilities that integrate biomass conversion processes and equipment to produce fuel, power, heat and value-added chemicals from biomass. They are analogous to petroleum refineries, which produce multiple fuels and products from petroleum. An example of a growing oleochemical industry is biolubricants, which benefit from energy saving properties, a high viscosity index, biodegradability and non-toxicity when compared to their petroleum counterparts. They are usually produced from esters with high oleic acid content and, in industrial segments, biolubricants have replaced more than half of petroleum-based lubricants in applications such as drilling, metal working fluids and process oils. Another growing segment is bioprocess engineering, which focuses on the role of living organisms in the manufacturing process. An example is the enzymatic process used in biodiesel production. As mentioned above, there is an ongoing shift towards using cheaper feedstocks, like UCO and PFAD, with a range of free fatty acids. For oils, the transesterification catalyst is an alkali, such as sodium methoxide, and for fatty acids the catalyst is an acid, such as paratoluene sulfonic acid (PTSA). As both cannot work together, fatty acids are usually esterified first before undergoing transesterification. Enzymes, for example Novozymes Eversa Transform 2.0, can do both and

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there are already several plants in operation using enzymes to produce palm biodiesel. Another example application is yeast fermentation to produce diacids, such as adipic acid. This process was previously based on petroleum, but now uses lauric acid, which Verdezyne – a US synthetic biotech firm – claims helps lower costs and produce less pollutants. Adipic acid is a key component in products such as nylon 6,6. In the field of second generation biofuels, the Malasyian Economic Transformation Program EPP 7 project promotes bio-oil production through biomass-to-liquid technology. There are two extraction technologies to produce syngas. A thermochemical conversion and a biochemical conversion. In biochemical conversion, bio-based material is fermented with a unique or genetically modified bacteria. Plants producing biogas in Malaysia and Indonesia could utilise this process, although converting gas-toliquid to produce biofuels through the FisherTropsch process requires a high energy investment. Going forward and with the EPP 6 project promoting high-value oleo derivatives and bio-based oleochemicals, metathesis technology can be used to break carbon-carbon double bonds to recombine oleochemical and petrochemical molecules into new di-functional molecules. There are three product streams for this technology. t Olefins: 1-decene for co-polymers such as acrylonitrile butadiene styrene (ABS) t Speciality chemicals: Di-functional products from oleochemicals and petrochemicals in a

single molecule, such as 9DDDA (9-dodecenoic acid) that is a key product for nylon 6,12, t Oleochemicals: C16 and C18 methyl esters for methyl ester sulphonates (MES). The Elevance Wilmar joint venture biorefinery in Indonesia utilises metathesis technology and has been in operation since 2013, while the Genting Integrated Biorefinery in Malaysia is being commissioned in stages.

A view to the future The push for bio-products began at the end of 2011 when palm oil and palm kernel prices stopped tracking Brent crude oil prices. Whilst Brent crude prices stayed high at US$100/barrel until the end of 2014, palm oil and palm kernel prices came down, making oleochemical alternatives for petrochemicals attractive, and bringing to the fore new technologies to replace petrochemicals. Unfortunately, from 2015 the plunge of Brent crude oil to the level of US$50/barrel and the rise of palm oil and palm kernel prices made these new technologies less attractive. When the first plants were set up in ASEAN, they were designed for a specific purpose, such as producing distilled fatty acids (DFAs) for soap manufacture, fractionation for fatty acid cuts and then adding transesterification leading to fatty alcohols and surfactants. Going forward, and taking into account market demands, which are also influenced by mandates and crude oil prices, a flexible second generation

multi-purpose facility may become the leading trend (see Figure 2, left). It could also include an edible oil refinery to supply some of the feed. Further downstream, when producing high value speciality oleochemicals, there are a number of challenges. The tonnages are lower and the production is carried out in batch reactors. The know-how does not lie with plant suppliers and production intervention by experienced staff is often needed. Specifications alone are not enough to define the product and there is a need for specialised application research and marketing. Speciality esters could include product categories such as sorbitan esters, glycol esters, lactate esters, trimethylolpropane (TMP) esters, and others. Owing to their feasible chemical characteristics, glycol esters have witnessed increased demand as emulsifiers in soap, shampoos, and other personal care consumables. The oleochemical industry began developing in Malaysia barely four decades ago, and there has been unprecedented progress. Nevertheless, many challenges remain, such as overcapacity and low crude oil prices. The industry has shown resilience, however, and process engineering and innovations will continue to overcome some of the issues. The future of the industry lies in multi-purpose plants and bioprocesses, with the line between oleochemicals and petrochemicals blurring. w This article is based on the presentation ‘Oleochemicals: Process Engineering & Innovation – Past, Present and Future’ made by Qua Kiat Seng of the ASEAN Oleochemical Manufacturers Group at the PIPOC 2017 conference in November 2017

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Freight putting margins at risk

A slowing supply of newly built dry bulk cargo ships and higher bunker fuel costs will result in a rise in freight rates for grain and oilseeds trade, giving an edge to exporting countries close to their destination markets

igher global freight rates are expected to have an increasing influence on grain and oilseed (G&O) trade dynamics and trade flows in 2018 as the cost of dry bulk sea freight increases. Dutch multinational banking and financial services company Rabobank, a global leader in food and agriculture financing, anticipates that the margins of G&O importers and exporters are at risk. In its latest report ‘A Bigger World to Sail: Impact of Rising Freight Rates on Global Grains & Oilseed Trade’, Rabobank projects that increasing time charter rates as well as high bunker fuel costs will lead to higher freight costs in the coming years. As a result, it expects a shift in the movement of commodities worldwide with higher freight rates eroding the competitiveness of exports that come from farther afield. The Baltic Dry Index (BDI) – an indicator of global commodity freight costs – has increased almost 60% since January 2017 as additional supply of new bulk freight capacity has slowed. With demand growth for dry bulk capacity forecast to surpass supply growth in the next two years, dry bulk time charter rates are forecast to increase between 10% and 20% year-on-year in 2018 and 2019, following an increase of 62% in 2017. At the same time, crude oil prices have increased to their highest level in two years in 2017, appreciating to over US$60/barrel (Brent Oil Futures), making bunker fuel for vessels more

expensive and adding to the rise in freight rates. The World Bank expects bunker fuel costs to increase in 2018 and 2019, on the back of the elevated crude oil price forecast With more than 85% of global G&O trade – more specifically corn, wheat, soyabeans, and soya meal – transported by dry bulk carriers, the higher freight costs will have increasing influence on G&O trade dynamics and trade flows in 2018-2019. This will lead to export countries closer to destination markets having an advantage over more distant countries, Rabobank says.

Share of dry bulk Ocean transportation is the heart of global trade, with more than 90% of international trade of goods – excluding intra-EU trade – carried by sea. Out of this, dry bulk cargo, which includes most G&O products, is the largest type of cargo carried in international seaborne trade. According to Rabobank, total international seaborne trade has trebled since 1980 to 10bn tonnes in 2015, including a five-fold increase of dry bulk cargoes to 2.9bn tonnes. G&O is the third largest dry bulk cargo, overtaken only by iron ore and coal. It accounted for 480M tonnes, or 9.8%, of 2016 global dry bulk trade. G&O shows the strongest percentage of volume growth of all three major dry bulk cargoes between 2011 and 2016 at 39.1%, outpacing the volume growth of both iron ore (34.0%) and coal (13.9%). Global G&O exports (through all modes of transportation) are forecast at 550M tonnes in 2017/18, up 57% in the past decade. Dry bulk carriers’ G&O cargoes – comprising the above-mentioned four products – have increased by 39.1% since 2011 to 480M tonnes in 2016. Asian countries are net importers of G&O and rely heavily on dry bulk carriers to supply G&O products from major export regions. Argentina holds the lead as the largest dry bulk G&O exporter, with approximately 94% of its 2016 G&O exports

shipped on dry bulk carriers, followed by Brazil and Ukraine (both at about 90%).

The vessel fleet Total world fleet capacity has also trebled since 1980 to 1.8bn deadweight tonnage (dwt) in 2016. Dry bulk carriers are the largest vessel type available worldwide in terms of capacity, and they command 43.1% of the market share of total world fleet capacity. Dry bulk carriers are typically categorised into four main vessel types based on their capacity – Capesize (120,000dwt and more), Panamax (65,000-119,999dwt), Handymax (40,00064,999dwt), and Handysize (25,000-39,999dwt). The current dry bulk fleet profile is rather young, with 73% of total capacity younger than 10 years old, as most old vessels were scrapped in the past few years when low freight rates prevailed, says Rabobank. The average age of the current dry bulk fleet profile is 8.9 years, as compared to 15.1 years in 2007. Capesize represents 39.7% of total fleet capacity, while Panamax, Handymax, and Handysize represent 24.7%, 23.9%, and 11.7% respectively. Dry bulk freight rates have been on the rise since early 2016, Rabobank says, with grain freight rates having increased more than 50%. The increase is due to a slowing additional supply of new vessels. The BDI has trebled since early 2016 to a score just under 2,000 as supply and demand factors for dry bulk vessels have tightened slightly following a massive oversupply situation. However, the index is still nowhere near the peak of 12,000 encountered in 2008, when growing Chinese demand for steel and industrial raw material drove demand for dry bulk carriers. In the next two years, Rabobank expects slower dry bulk vessel supply growth. Some 90.4M dwt, or 11% of the dry bulk capacity in 2017, was scrapped between 2014 and 2017, representing 11.9% of total dry bulk capacity in 2014. At the same time, 187.1M dwt of dry bulk capacity was added in terms of new builds, representing 22.7% of total dry bulk

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capacity in 2017. The current order book shows that there will be 41.6M dwt additional dry bulk capacity in 2018-2019, or 5.1% of the 2017 capacity.   Due to the current dry bulk fleet’s young age, the potential to scrap more vessels in 2018-19 is low, with current forecasts at 16.82M dwt. Total dry bulk capacity is forecast to increase to 838.6M dwt in 2018 and 846.1M dwt in 2019, representing yearon-year growth of 2.1% and 0.9%, respectively.

FIGURE 1: DRY BULK FREIGHT MARKET FORECAST, 2007-2019

Markets and rates forecast Dry bulk market recovery is underway, which will impact the G&O trade and different key exporters’ competitiveness. With a stable outlook for world GDP growth, total demand for dry bulk capacity is forecast to increase 3% in both 2018 and 2019, thus surpassing growth in the total supply of dry bulk capacity. The dry bulk utilisation rate is therefore forecast to increase to 74% in 2019, compared to 69% in 2016. A higher dry bulk utilisation rate will support daily vessel charter rates. Rabobank expects time charter rates to increase between 10% and 20% year-on-year in 2018 and 2019. Freight rates are expected to become more expensive in the coming years due to the increasing time charter rates and bunker fuel costs. Similar to movement in crude oil prices, bunker fuel prices have dropped by 78% since the high of late September 2012, reaching their lowest level in February 2016 at US$147/tonne. Since then, bunker fuel prices have more than doubled, reaching US$348.5/tonne in October 2017. The bunker fuel price is expected to stay strong in 2018 and 2019 on the back of elevated crude oil price forecasts, as per the World Bank. It is closely correlated to the crude oil price. The correlation between Nymex and Brent crude oil prices with the IFO380 bunker fuel price in Singapore, on average, is 97% and 99%, respectively.   High bunker fuel prices will also continue to support freight rates. Over the last five years, bunker fuel costs have represented between 20% and 30% of total freight costs, on average. However, increased time charter rates will have a more pronounced effect on freight costs than bunker fuel prices as time charter accounts for a greater proportion, about 60%, of freight costs. In addition, the implementation of the International Maritime Organization’s (IMO) 2020 global sulphur limit could potentially increase bunker fuel costs further.

Higher freight rates, ‘bigger’ world Increasing freight rates will drive up the landed cost of G&O in importing countries, which will negatively affect importers’ margins as higher landed cost will translate to higher ‘cost of goods sold’.   As part of its report, Rabobank ran simulations representing soyabean exports to China (55,000 tonnes to 60,000 tonnes) from the US Gulf Coast, the US West Coast, and southern Brazil (see Figure 2, right). In the simulation cases, freight rates from southern Brazil to China show increases of between 11.4% and 62.4%. The landed cost of Brazilian soyabeans in China will increase between 0.8% and 4.7% as freight rates increase. As a result, soyabean processors’ margins will be reduced between 5.1% and 31.3% as long as prices for the finished products

FIGURE 2: SIMULATION CHART OF SOYA EXPORTS TO CHINA

– soya meal and oil – do not increase. In order to maintain the same crush margins, the Chinese domestic soya meal price will need to increase between 0.6% and 3.0% and the Chinese domestic soya oil price will need to increase between 1.1% and 6.2%.   On the other hand, G&O exporters who are closer to their destinations will be less affected by increasing freight rates. Freight rates from Australia to Indonesia show increases of between 10.2% and 48.6% in Rabobank’s simulations, while rates from the Black Sea to Indonesia show increases of between 12.8% and 60.9%. In simulated cases, the landed cost of US wheat to Indonesia is 1.6% cheaper compared to Australian wheat. However, this competitive edge will lessen as freight rates increase. As the freight rates were increased in the simulation, the landed cost of US wheat in Indonesia ended up being 0.16.5% more expensive.

Preparing for the future Asian countries, which imported a total of 242.5M tonnes in G&O in 2016, rely heavily on dry bulk carriers to supply their G&O products from South America, the USA, and the Black Sea. However, these more distant G&O exporting regions will see their competitiveness impacted as freight rates

increase, Rabobank forecasts. Meanwhile, exporting countries closer to Asia, such as Australia, stand to benefit. To stay competitive, G&O exporters at a greater distance from their destination will need to reduce their G&O purchasing costs, supply chain costs and margins to trim their FOB price in order to remain competitive. Faced with higher freight rates, both G&O exporters and importers should position themselves to preserve their margins. There are a number of strategic options for them to do this, such as choosing an appropriate shipping strategy, improving supply chain efficiency and choosing an appropriate origination and procurement strategy. Importers may also opt to pass the rising freight costs to customers, which will result in increased food prices. According to the Food and Agriculture Organization of the United Nations’ (FAO) latest ‘Food Outlook – Biannual Report on Global Food Markets, November 2017’ report, the cost of importing food is set to rise in 2017 to US$1.213trln, a 6% increase from the previous year and the second highest tally on record. Consumers should be ready to face increasing food prices. w This article is based on ‘A Bigger World to Sail: Impact of Rising Freight Rates on Global Grains & Oilseed Trade’ report, published in November 2017 by RaboResearch and authored by Oscar Tjakra, senior analyst – grains & oilseeds

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Pumps transform business

FRANCE’S OLVEA GROUP SAYS THAT MOUVEX PUMPS HAVE PLAYED A SIGNIFICANT ROLE IN ITS GROWTH AS A COMPANY. PICTURED FROM LEFT TO RIGHT ARE FRANCOIS DAUDRUY, TECHNICAL DIRECTOR, OLVEA GROUP; PASCAL GEHANT, COMMERCIAL DIRECTOR, SORETEC PUMPS; AND VINCENT LEJEAU, REGIONAL SALES MANAGER, FRANCE NORTHWEST, OF MOUVEX AND PSG

When Francois Daudruy took over his family’s fish, lard and vegetable oil business, his first challenge was to find a replacement for the inefficient and fault-prone pumps that were causing loss of product and risking cross-contamination in storage. Luckily an answer could be found and a new kind of a pump has helped the company solve its problems. Vincent Lejeau writes.

he day in 1990 that Francois Daudruy joined what is now known as the Olvea Group as its technical director was a proud one for him. He became part of the third generation of Daudruys to operate the company that had been founded by his grandfather, Charles Daudruy, in 1929 in the small town of Fecamp, close to the English Channel in the northwest of France, as a supplier of cod liver oil for human and animal consumption. Soon, it was time to go to work and Francois Daudruy knew that the only way his grandfather’s company could continue to grow and prosper was if some noteworthy changes were made in the way the fish, lard and vegetable oils that had become the company’s bread and butter were handled, stored and packaged. “When I arrived in 1990, we were using centrifugal pumps, but they were not very efficient,” Daudruy recalls. “When air got into the pump, they would not work any more and we had problems emptying the lines.” This was problematic because the oils that were arriving at the Fecamp plant for processing were to be used for specific end products. This included the manufacture of cosmetics, pharmaceuticals, human food and animal feed, as well as various technical uses, such as the building of lasers and as lubricants for leather and metal work. These processes require strict purity for the oils as they move from transport truck to storage tank

to intermediate bulk containers (IBCs) and drums, meaning that no cross-contamination could be tolerated. Additionally, because of the high value of the oils, any products that were left in the transport truck, storage tank or hoses after the transfer process was completed would essentially be lost during the necessary cleaning process.

A suitable replacement At the time of Daudruy’s arrival, the company had begun experimenting with another type of pumping technology – eccentric disc pumps from Mouvex, headquartered in Auxerre, France, and a product brand of USA-based firm PSG. Specifically, Olvea was testing the A Series model for the transfer of the oils from storage tanks to shipping containers, and P Series vane pumps for the unloading of transport trucks. “When I arrived at the company in 1990, we had started to purchase Mouvex pumps,” says Daudruy. “The products we pump are sometimes very solid and the Mouvex pump will move the product without problems.” Mouvex A Series pumps operate via the ‘eccentric movement principle’ that was further developed by company founder Andre Petit in 1906. Eccentric disc pumps are driven by an eccentric bearing that is installed on the pump shaft. This creates four distinct pumping chambers that increase and decrease in volume as the disc is rotated by

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TEC H N OLOGY

the eccentric bearing, producing both suction and discharge pressures as the chambers move in pairs that are 180° apart. This method of operation ensures that the fluid passes through the pump at a constant and regular flow rate. The A Series pumps, which are Mouvex’s landmark model, feature high self-priming capabilities that enable dry running and pipe-clearing operation. An automatic clearance makeup system maintains initial performance levels over time without the need for adjustment. Constant output is also maintained even as product viscosities and delivery pressures vary, which allows the pumps to reliably handle viscous, non-lubricating, volatile or delicate liquids with no shear. “It’s very important for us to avoid crosscontamination between the different products,” says Daudruy. “This pump has very good suction and it cleans the lines. It is very, very efficient.” Mouvex’s P Series vane pumps use the rotation of the pump rotor and vanes to transfer liquids from the suction to the discharge side of the pump body in a continuous movement. This method of operation allows P Series pumps to be used in a large range of applications that involve the transfer of very thin to very viscous fluids, whether they are non-lubricating, abrasive or corrosive. The vane-style design also allows the pumps to deliver exceptional volumetric performance and reliability, leading to reduced energy consumption. Maintenance is also easy since P Series pumps can be dismantled in place without the need to disconnect the suction and discharge lines. “When we unload trucks and air makes its way into the pump, the Mouvex continues pumping and empties the lines, which is important for us,” Daudruy says. “Even when the truck is empty, the pump pushes the air in the tank and we can empty the pipes.”

Contributing to success It is not hyperbole to say that the Mouvex A Series

“It’s important to empty the lines to avoid product crosscontamination” and P Series pumps have played a significant role in the growth of the Olvea Group. The company that Charles Daudruy founded nearly 90 years ago as the Societe d’Importation et de Raffinage d’Hulles (Oil Import and Refining Company) has been transformed through the dogged efforts of three generations of Daudruys (Francois’ cousin, Arnaud Daudruy, is currently president of the Olvea Group) into a leader in the fish, lard and vegetable oil industries and is now recognised as the largest producer of lard oil in Europe. Today, the Olvea Group – which became the company’s official name in 2013 after the completion of a series of internal reorganisations – annually handles 40.8M tonnes of oils with exports to 90 countries and annual sales of €80M (US$94.5M). Olvea Group operates a total of 12 business units in Burkina Faso, France, Ghana, Mauritania, Morocco, the Netherlands and the USA, with more than 300 storage tanks with a total capacity of approximately 34,500 tonnes. All of the facilities feature Mouvex pumps. Closer to home, the Fecamp facility is outfitted with a total of 13 Mouvex pumps, which are mounted on skids so they can be easily moved where needed during the course of the day. Each pump is dedicated to a different type of oil, with

hoses of differing colours (such as red, green, blue, orange and silver) snaking around the grounds to indicate which product they are to be used for. In 2010, however, the company began to outgrow its long-time facility near the harbour in Fecamp and moved its office headquarters 2.5km south to an old valve factory in the town of Saint Leonard. On an adjacent plot of land, the finishing touches are being put on a new processing facility that will feature dedicated lines for fish, lard and vegetable oils. The new plant is expected to be operational in early 2018. “We are outfitting our new factory with 18 Mouvex pumps,” says Daudruy. “We will be able to handle about 60 different kinds of vegetable oils and with that many, it’s important to empty the lines to avoid product cross-contamination. With the Mouvex pumps, I am totally confident that our new factory will run efficiently.”

Breaking the cliché The French, in a textbook example of their famous Gallic sense of gallows humour, have a saying regarding family-run businesses – “The first generation builds it, the second generation improves it and the third generation destroys it.” While there is an unfortunate ring of truth to that adage, it definitely does not apply when speaking of the Daudruys and Olvea Group. Through the determination and passion of three generations, Olvea has become a leader in its field – with no sign of slowing down – and Mouvex A Series and P Series pumps have played a significant role in the company’s success. “I arrived at the company in 1990 and now we have Mouvex pumps everywhere because they are very efficient,” says Daudruy. “We have total confidence in them and there is great loyalty between our company and Mouvex.” Vincent Lejeau is the regional sales manager for France Northwest at Mouvex and PSG

OLVEA’S CURRENT HEADQUARTERS FACILITY IN FECAMP, FRANCE IS OUTFITTED WITH 13 MOUVEX PUMPS

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STATISTIC S

RAPESEED & RAPESEED OIL PRICES, 2014-2018 (€/TONNE)

EU BIODIESEL & DIESEL PRICES, 2014-2018 (US$/LITRE)

STATISTICAL NEWS FROM MINTEC Rapeseed and rapeseed oil Rapeseed oil prices trended highly in 2017, as production remained low for the second season in succession. However, prices fell to an 18-month low in January, driven by high stocks of rapeseed in the EU, Australia and Canada. In the EU, supplies were forecast up 4% y-o-y at 72.4M tonnes for the 2017/18 season, as a result of larger than expected production, reduced crushing and record high imports, wich were up 87.5% y-o-y in 2017. As a result of large stocks, EU rapeseed oil production is forecast up 2% y-o-y to 10.4M tonnes in 2017/18, reversing the two-year decline in production. Stiffer competition has also weighed on pricing as Argentine biodiesel arrived in the EU at discounted prices in comparison to rapeseed oil. Diesel and biodiesel Diesel prices rose on the back of higher industrial demand and rising crude oil prices. Continuing growth of the global economy was the main driver for increasing diesel prices. Use of diesel and other middle distillate oil products in ships, trucks and airplanes rose, in order to transport goods. Global demand for diesel grew 2% y-o-y to 28M bbl/day during 2017. Biodiesel prices fell 7% y-o-y pressured by high palm oil and soyabean oil production and low crude oil prices.

SUNFLOWER OIL PRODUCTION & EXPORTS, 2014-2017

PRICES OF SELECTED OILS (US$/TONNE) 2017

Sep 17

Nov 17

Dec 17

Soyabean

829.0

872.4

830.2

868.3

842.4

836.1

Crude Palm

690.0

720.1

704.0

718.8

680.5

689.1

Palm Olein Coconut Rapeseed Sunflower

Oct 17

Jan 18

661.0

692.1

669.5

680.0

644.5

660.2

1,537.0

1,501.0

1,381.0

1,536.3

1,448.1

1,411.3

855.0

888.3

880.0

894.5

862.7

844.0

800.0

811.5

804.5

800.7

785.6

803.6

1,250.0

1,306.7

1,296.0

1,401.1

1,282.4

1,256.1

Average price

946.0

970.0

938.0

986.0

935.0

929.0

Index

224.0

230.0

222.0

234.0

222.0

220.0

Palm Kernel

Sunflower seed and oil Sunflower oil prices fell steeply during 2017 as a result of record sunflower seed production from Ukraine and Russia. Large stockpiles of the seed and resultant high crushing kept sunflower seed and oil prices low moving into 2018. Sunflower oil production is forecast to fall 3% y-o-y over the next season. However, this remains 7% above the five year average.

Mintec works in partnership with sales, purchasing and supply chain professionals to deliver valuable insight into worldwide commodity and raw materials markets using innovative technology and a knowledgeable team of specialists. We provide independent insight and trusted data to help the world’s most prestigious brands to make informed commercial decisions. Tel: +44 (0) 1628 851313 E-mail: sales@mintecglobal.com Website: www.mintecglobal.com

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