OFI January 2020

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OILS & FATS INTERNATIONAL

JANUARY 2020 VOL 36 â–ª NO 1 Cover2.indd 1

16/12/2019 09:33:40

CONTENTS

OILS & FATS INTERNATIONAL

IN THIS ISSUE – JANUARY 2020

FEATURES

26

The benefits of mini mills

Palm oil mini mills can benefit smallholders while helping them to secure finance and improve the crop’s image

Coconut Oil

NEWS & EVENTS

Plant & Technology

28

Global round-up of projects

The latest projects, technology and processing news around the world

Technology

Comment

22

Keeping up with rising demand

Indonesian smallholders, who make up more than 90% of the country’s coconut industry, are struggling with production due to aging trees and low returns

3

Making a distinction

News

4

Palm Oil

31

Energy efficiency needed

The oilseeds industry can reduce its emissions by introducing energy efficiency measures across its operations

COFCO to privatise agricultural unit

Biofuels News

10

Avril to stop using palm oil in biodiesel

Renewable News

Rendering

12

33

Transport News

African swine fever concerns While strict rules guarantee the safety of processed animal proteins (PAP) from the EU, the spread of African swine fever is still a concern among some PAP users

14

BASF launches sustainable palm oil-based surfactant Shipping industry hurt by falling soyabean exports

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Contents.indd 1

Koole Amsterdam (NL), cap. 118,731 m3 Koole Zaandam (NL), cap. 43,000 m3

16

Diary of Events

17

Koole Avonmouth (UK), cap. 24,553 m3

International events listing

International Market Review

18

Koole Nijmegen (NL), cap. 79,000 m3 Koole Liverpool (UK), cap. 22,004 m3

Soya accounts for half of all GM crops

Markets firm as crops decline

Statistics

36

World statistical data

Koole Gdynia (PL), cap. 29,900 m3

OFI – JANUARY 2020

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EDITOR'S COMMENT

OILS & FATS INTERNATIONAL

VOL 36 NO 1 JANUARY 2020

EDITORIAL: Editor: Serena Lim serenalim@quartzltd.com +44 (0)1737 855066 Assistant Editor: Gabriel Day gabrielday@quartzltd.com +44 (0)1737 855157 SALES: Sales Manager: Mark Winthrop-Wallace markww@quartzltd.com +44 (0)1737 855114 Sales Consultant: Anita Revis anitarevis@quartzltd.com +44 (0)1737 855068 PRODUCTION: Production Editor: Carol Baird carolbaird@quartzltd.com CORPORATE: Managing Director: Tony Crinion stevediprose@quartzltd.com +44 (0)1737 855164 SUBSCRIPTIONS: Elizabeth Barford subscriptions@quartzltd.com +44 (0)1737 855028 Subscriptions, Quartz House, 20 Clarendon Road, Redhill, Surrey RH1 1QX, UK © 2020, Quartz Business Media ISSN 0267-8853 WWW.OFIMAGAZINE.COM

A member of FOSFA Oils & Fats International (USPS No: 020-747) is published eight times/year by Quartz Business Media Ltd and distributed in the USA by DSW, 75 Aberdeen Road, Emigsville PA 17318-0437.

Periodicals postage paid at Emigsville, PA. POSTMASTER: Send address changes to Oils & Fats c/o PO Box 437, Emigsville, PA 17318-0437 Published by Quartz Business Media Ltd Quartz House, 20 Clarendon Road, Redhill, Surrey RH1 1QX, UK oilsandfats@quartzltd.com +44 (0)1737 855000 Printed by Pensord Press, Gwent, Wales

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Making a distinction Indonesia and Malaysia are pushing hard to increase their domestic blending of palm biodiesel.

Indonesia is launching B30 this month, with talk of B50 trials, and Malaysia is also introducing B20 in phases starting this year (see Biofuel news, p10).

It’s somewhat ironic that the world’s two largest palm oil producers – which account for some 80% of the 70M tonnes of global palm supply – are trying to take the oil out of the market, given that its yield and growth are stagnating in the long-term.

However, their move is understandable as they seek to save money on petroleum imports, prop up crude palm oil (CPO) prices and reduce their exposure to foreign markets and anti-palm oil sentiment.

“Indonesia is the world’s biggest palm oil producer with 45M tonnes of production and 13M tonnes of domestic consumption. That leaves us with 30M tonnes of excess palm oil,” Dr Ansori Nasution of the Indonesian Palm Oil Research Institute told the recent International Palm Oil Congress and Exhibition (PIPOC 2019) in Malaysia in November.

The 4M tonnes of crude palm oil (CPO) used for Indonesian B20 biodiesel in 2018 saved the country US$2.8bn in petroleum imports and the projected 10M tonnes of CPO for B50 in 2023 would save the country US$9.7bn, he said.

The EU has also decided to impose tariffs on Indonesian palm-based biodiesel imports to protect its domestic biofuels industry (see p10), while its decision to phase out palmbased biofuel for environmental reasons is creating tensions with both Jakarta and Malaysia. The two Asian producers have threatened to take the EU to the World Trade Organization over the bloc’s delegated act, which classifies palm oil as a high-risk indirect land use change (ILUC) biofuel feedstock, which must be capped at 2019 levels until 2023 and phased to zero by 2030.

At the same time, Malaysia is working to certify its whole industry through its compulsory Malaysian Sustainable Palm Oil (MSPO) scheme, which took effect on 1 January. Some critics say that the MSPO scheme is not as stringent as the Roundtable on Sustainable Palm Oil (RSPO)’s but all the current schemes available – there are around seven – do address key sustainability issues.

“For global acceptance, oil palm must be grown sustainably,” IOI global head of sustainability Dr Surina Ismail told the PIPOC conference. “We need to differentiate between sustainable and non-sustainably produced oil.”

While that might be stating the obvious, it is actually a key point. It is time that consumers make the distinction between sustainable and non-sustainable palm oil, just as we would between free-range eggs, organic chicken or virgin olive oil and their lowerpriced or lower quality alternatives.

It’s harder to make this distinction because palm oil is an ingredient in so many food and non-food products and not something we buy off supermarket shelves. But the debate must move beyond palm oil being an ‘evil’ crop that causes deforestation and kills orangutans.

Those in the industry know this. It is now a question of education so that consumers can learn to put pressure on the users of palm ingredients, and for manufactuers themselves, to use only certified palm oil, thereby allowing the sustainable growth and use of an oil crop that the world can’t do without.

Serena Lim – serenalim@quartzltd.com

www.ofimagazine.com

Comment.indd 1

OFI – JANUARY 2020

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16/12/2019 09:18:37

NEWS

USA and China reach trade deal China and the USA announced on 13 December that they had reached a preliminary trade deal including some tariff relief, increased agricultural purchases and structural change to intellectual property and technology issues.

The trade war between the world’s two largest economies has taken a toll on world economic growth and hit American soyabean farmers particularly hard, with China cutting back on purchases of the oilseed since their dispute began 17 months ago.

US President Donald Trump said his administration would cancel its next round of tariffs on Chinese goods, which had been set to take effect on 15 December, CNBC

IN BRIEF EUROPE: The European Commission (EC) adopted private storage aid for virgin olive oils on 11 November to prop up prices hit by an oversupply of oil.

Prices over the last few months in the Greek, Portuguese and Spanish markets had been particularly low, the EC said. Spanish extra virgin olive oil prices in mid-October, for example, were 33% below the fiveyear average.

“Exceptionally high EU stocks, estimated at 859,000 tonnes for 2018/19, combined with average production expected for 2019/20 threatens to keep the market under pressure,” the EC said.

The aid would be granted for bulk extra virgin, virgin and lampante olive oils for a minimum of 180 days.

reported. In tweets, he added that the White House would leave 25% tariffs on US$250bn in imports in place while cutting existing duties on another US$120bn in products to 7.5%.

Beijing would increase agricultural purchases significantly, Vice Minister of Agriculture and Rural Affairs Han Jun said, although he did not specify by how much.

US trade representative Robert Lighthizer said the two countries aimed to sign their agreement in January, adding that Washington would not impose new duties as long as Beijing negotiated in good faith.

Trump also said that the USA would begin negotiations on the next phase of the trade deal “immediately, rather than

waiting until after the 2020 [US] election”, CNBC said.

The two countries said they would move to make changes related to intellectual property, technology transfers and financial services, the initial trigger for the trade war, with the USA accusing China of discriminatory policies back in July 2018. Since then, the two countries have imposed billions of dollars worth of retaliatory tariffs on each other’s goods.

China was the top buyer of US soyabeans before the trade war began and a 22 August CoBank cooperative bank report said the total export value of US soyabeans for 2018/19 was down nearly 50% as a result of the dispute.

Bunge's plant-based fats mimick meat

US vegetable oils and fats producer Bunge Loders Croklaan (BLC) has introduced a range of plant-based fats designed to mimick the sensory characteristics of the meat it is replacing, the company said on 29 November.

The plant-based fats were made from palm oil and shea butter and possessed unique melt-

ing profiles that could be applied as crucial fat ingredients to meatless burgers, BLC said.

“Both can deliver more bite, a juicy mouthfeel and full flavour while producing no oil leakage or excessive smoking on a cooking surface.”

BLC Europe marketing director Feike Swennenhuis said a significant number of European consumers were adopting a vegan or flexitarian lifestyle. “They are seeking sustainable meat alternatives that can deliver the same eating experience.”

Euromonitor International reported that 24% of surveyed global consumers were trying to cut their meat intake, driving sales of global meat substitutes to reach US$19.5bn in 2018.

BLC said its palm-based fat was a flaked product which could mimic the fat bubbles and pocket characteristics of animal fat in hamburgers, and was easier to process than liquid oils or waxy fats such as the more commonly-used rapeseed or sunflower oils.

Additionally, both its fats were non-hydrogenated and trans fat free, and could improve parameters such as firmness, cohesiveness and springiness, potentially reducing the need to add emulsifiers and gum-based texturisers.

COFCO to privatise agricultural subsidiary for US$1.2bn China’s largest food processor and manufacturer, COFCO, plans to privatise its agricultural subsidiary, China AgriIndustries Holdings (CAIH), in a deal worth up to US$1.2bn, Reuters reported on 28 November.

COFCO said the move was due to the underperformance of CAIH’s share price, which had restricted its ability to raise funds to finance business development.

4 OFI – JANUARY 2020

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The underperformance was due to uncertainty over the company’s development, brought about by the slowdown of global economic growth, trade tensions and heightened geopolitical risks, Reuters wrote.

CAIH is a leading producer and supplier of processed agricultural products – including oilseeds, wheat and rice – in China. It is one of the largest producers of vegetable oil and oilseeds meals in China, processing

mainly peanuts, rapeseed, soyabeans, palm and safflower oils.

It is also involved in the storage, logistics, trade and distribution of related products.

Upon completion of the deal, COFCO would hold 100% of the shares of CAIH, which would apply to withdraw its share listing from the Hong Kong Stock Exchange, according to UK law firm Slaughter and May, which is advising COFCO. www.ofimagazine.com

16/12/2019 10:22:40

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NEWS IN BRIEF WORLD: US food giant the Coca-Cola Company is launching a new beverage this month containing omega-3 fatty acids, just-drinks reported. Gomega contained 32mg of docosahexaenoic acid (DHA) and would be the first drink from Coca-Cola to contain omega-3 and one of the only few on the market, just-drinks said.

OmegaWater claimed to be the first omega-3 beverage when it was launched in the early 2010s, according to just-drinks. More recently, health and wellness companies had released nutritional drinks containing omega-3 fatty acids, including Swedish company Veg of Lund and its range of My Foodie organic beverages.

Brazil scraps sugarcane expansion ban in Amazon Despite international outrage over recent forest fires in Brazil’s Amazon, Brazilian president Jair Bolsonaro has annulled a 10-year-old regulation banning the expansion of sugarcane planting in the region.

The regulation had banned sugarcane expansion in a wetland savanna area known as Pantanal – which covered parts of Bolivia, Brazil and Paraguay – and in indigenous and reforested areas, Bloomberg said on 7 November. It had only allowed sustainable expansion, helping Brazilian sugarcane-based ethanol to become globally recognised as a fuel with high sustainability standards.

Reuters said that the 2009 decree was scrapped because it was considered obsolete and other regulatory instruments, such as the country’s new forest law and RenovaBio programme, were thought to be more efficient for oversight.

Brazilian agricultural groups had warned that major importers could start snubbing purchases from the commodity powerhouse because of environmental concerns, Bloomberg wrote.

Brazil’s agriculture minister Tereza Cristina Dias also told journalists on 12 November that a 2008 commitment from the country’s grain traders not to buy oilseed from land cleared in the Amazon was “absurd”, Reuters reported.

“The soya moratorium is a private affair between private parties. I think it is absurd ... we have ... means to show where our soya is produced and if it can be produced there,” she said.

Reuters said that farming group Aprosoja Brasil was intensifying lobbying efforts to end the soya moratorium.

Dias said the country’s forestry code was already strict about land usage in the Amazon region, allowing farmers to use up to 20% of the land for agriculture.

FDA panel backs fish oil-derived drug in heart conditions A US Food and Drug Administration (FDA) panel has recommended the use of a fish oil-derived drug as an addon therapy for reducing the chance of heart attacks and strokes in high-risk patients with cardiovascular disease.

The drug, Vescepa, produced by US pharmaceutical company Amarin, was a highly purified form of omega-3 fatty acid that won US approval in 2012 to lower high levels of triglycerides, Reuters reported on 14 November.

A late stage trial in 2018

found that Vascepa, when administered to patients on cholesterol-lowering statin

drugs, cut the combined rate of heart attacks, strokes and other cardiovascular events by

25% compared to a placebo.

“There is no doubt that this is a medication that could benefit a substantial portion of the USA” said panel member Dr Jack Yanovski of the National Institutes of Health.

Some trial patients reported a slightly higher risk of bleeding and a small increase in irregular heart rhythm, which the panel members suggested highlighting on the drug’s label.

The FDA was not mandated to follow the panel's recommendation but generally did, Reuters said.

RSPO launches new certification standard for smallholders With 40% of global palm oil produced by smallholders, the Roundtable on Sustainable Palm Oil (RSPO) has adopted a new smallholder standard to make certification more inclusive.

The Independent Smallholder (ISH) Standard applies to ‘independent’ farmers who have the power to choose what is planted on their land of less than 50ha, as opposed to farmers connected to a miller or company, according to foodnavigator.com.

It was adopted on 6 November during the RSPO Annual General Assembly and

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will give smallholders three years to achieve RSPO certification in a phased scheme.

During the first ‘eligibility phase’, farmers would learn about certification and be trained in sustainable farming methods, foodnavigator.com wrote. They would then have two years to progress to the second, interim Milestone A phase. After this, smallholders had one year to move towards full compliance or Milestone B. In order to incentivise smallholders, they would be allowed to sell 40% of their volume as credits during the first phase,

70% on reaching Milestone A and 100% as credits or in a physical supply chain at Milestone B. “Credit trading is a virtual model which connects smallholders with consumer goods manufacturers, brands and retailers, without having to wait for their buyers to be certified,” food.navigator.com wrote.

As of June 2019, just 146,133 smallholder farmers had achieved RSPO certification, the news site added. Smallholders found it harder to become certified due to costs and lack of knowledge and training.

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16/12/2019 10:22:46

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NEWS IN BRIEF AMERICAS: The Pan American Health Organization (PAHO) has agreed to eliminate trans fatty acids (TFAs) from industrial food production by 2025 to reduce cardiovascular disease, PAHO said on 3 October.

The PAHO plan proposed three options to eliminate industrial TFAs: a ban on using partially hydrogenated oil; a mandatory limit of 2% on industrially-produced TFAs as a proportion of total fat content in all food products; or a combination of the two.

“Sales of processed and ultra-processed products, which are the main sources of trans fats, are increasing by 3.1% each year in the Americas,” said Anselm Hennis, director of non-communicable diseases and mental health at PAHO. In 2008, public health authorities and food industry representatives signed the Trans Fat Free Americas: Declaration of Rio de Janeiro, expressing a commitment to eliminating industrial TFAs. Countries that had restricted or eliminated trans fats since the agreement were Argentina, Canada, Chile, Colombia, Ecuador, Peru, USA and Uruguay.

Bolivia was developing trans fat regulations and Brazil and Paraguay were at an advanced stage of a similar process, PAHO said.

US tariff threat on butter and other French imports US President Donald Trump has proposed tariffs of up to US$2.4bn worth of French imports including butter, cheese and sparkling wine in retaliation for France’s tax on US tech companies including Google, Amazon and Facebook.

The Office of the US Trade Representative (USTR) said on 2 December that its investigation had found that France’s new digital services tax discriminated against US companies.

The French levy is designed to prevent tech firms from dodging taxes by putting head-

quarters in low-tax European countries, the Guardian newspaper wrote. It would impose a 3% annual tax on French revenues of digital companies with yearly global sales of more than US$830M and French revenue exceeding US$27.7M. The USTR said the French tax “is inconsistent with prevailing tax principles because of its retroactivity, its application to revenue rather than income, its extraterritorial application, and its purpose of penalising particular US technology companies.”

It invited public comment on

its tariff proposals, which could reach 100% on certain French products, to be submitted by 6 January.

The USTR investigated the French tax under Section 301 of the Trade Act of 1974 – the same provision the Trump administration used in 2018 to look into China’s technology policies, the Guardian wrote.

USTR representative Robert Lighthizer said the USA was also exploring whether to pursue similar investigations into digital taxes introduced by Austria, Italy and Turkey.

Neste uses Christmas ham fat waste for fuel Finnish renewable fuel and chemicals firm Neste will be collecting Christmas ham fat waste to produce its renewable diesel for the fourth year in a row as part of its annual Kinkkutemppu (Ham Trick) campaign.

“Last year, 185,000 Finnish households participated in the Ham Trick,” the company said on 26 November. “The goal for this year is to increase the number of participants to 200,000.”

Neste would use the collected ham fat waste and other waste fats at its Porvoo refinery to produce its MY Renewable Diesel, adding that it had recycled more than 100 tonnes of waste fats in the past three Christmas seasons through its campaign.

Consumers could take part by delivering their waste fats to collection points around the country between 21 December to 7 January.

Malaysia sets out time frame for 3-MCPDE compliance Malaysia has set out a time-line for its millers and refiners to comply with expected European legislation on the carcinogenic process contaminant, 3–MCPDE. The EU is expected to introduce a maximum level of 2.5ppm for 3-monochloropropane-1,2-diol esters (3–MCPDEs) in vegetable oils and fats on 1 January 2021, according to Rosidah Radzian, director of product development and advisory services at the 8 OFI – JANUARY 2020

General News.indd 4

Malaysian Palm Oil Board.

3-MCPDE is a carcinogenic process contaminant, along with glycidyl ester (GE), formed during edible oil refining, with palm oil having the highest levels among vegetable oils.

To pre-empt the EU legislation, Malaysia was planning to introduce regulations on 1 January 2021 for all refiners of no more than 2.5ppm for 3-MCPDEs in refined palm oil; 1.25ppm for 3-MCPDEs in palm kernel oil (PKO); and 1ppm for

GEs for PKO, Radzian said.

“Our time-line may change if the EU delays introducing its legislation,” Radzian said. However, the country was working ahead to ensure that its refiners were ready when the expected EU limits were introduced.

To ensure changes within the milling sector, a Malaysian regulation would be introduced on 1 January 2020 banning all mills from mixing sludge oil and press fibre oil with crude palm oil (CPO).

On 1 July 2020, a maximum chlorine content of 2ppm would be mandatory for imported CPO. For domestic millers, the limit was a guideline as they could negotiate with refiners on the quality of oil they supplied.

Chlorine – which can come from fertilisers and pesticides – is a precursor in 3-MCPDE formation and millers can help mitigate formation by sterilising oil palm fruits and washing CPO with water. www.ofimagazine.com

16/12/2019 10:22:53

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BIOFUEL NEWS

EU tariffs on Indonesian biodiesel The EU will impose five-year tariffs on Indonesian biodiesel ranging from 8-18% to counter subsidies given to producers in the country, Bloomberg reports.

Subsidised exports of Indonesian biodiesel to the EU were causing “a threat of material injury to the union’s industry”, the European Commission (EC) said in the bloc’s Official Journal.

The duties came into effect on 10 December and were the definitive outcome of an EC inquiry opened in December 2018 following a request by

IN BRIEF PARAGUAY: Brazilian agro-energy investor, the ECB group, plans to start building Latin America’s first large-scale hydrotreated vegetable oil (HVO) plant in March, Reuters reported on 11 November.

Fuel from the 1.4bn litres/year plant in Villeta, Paraguay would be mostly exported to Canada, Europe and the USA, Reuters wrote.

At a capex cost of some US$800M, the plant would also produce synthetic paraffinic kerosene (SPK), a renewable aviation fuel.

Spain’s engineering group Acciona SA had been selected to build the plant, which would use technology from US firms Honeywell UOP and Crown Iron Works.

ECB head Erasmo Battistella said full operations were expected to begin in 2022.

BRAZIL: The country is set to increase biodiesel blending to 12% of diesel consumption (B12) in March, its second increase in less than a year, Reuters reported on 12 November.

Analysts, producers and government officials forecast the increase after a rise from 10% to 11% in September. They saw Brazil reaching B15 by 2023 and were discussing the path to higher blends after that, Reuters wrote.

10 OFI – JANUARY 2020

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the European Biodiesel Board to investigate trade-distorting aid given to biodiesel producers in Indonesia and Argentina, Bloomberg said.

The Indonesian rates are 8% for Ciliandra Perkasa, 15.7% for the Wilmar Group, 16.3% for the Musim Mas Group and 18% for the Permata Group and all other Indonesian biodiesel exporters.

Indonesian Deputy Foreign Minister Mahendra Siregar said the EU decision was “flawed” and undermined international trade rules.

“I think there is no other choice than to bring this to the WTO,” Bloomberg reported him as saying.

The EU biodiesel market was worth US$10bn/year and the Indonesian share of this market rose to 3.3% or 516,088 tonnes in the 12 months through September 2018 from 0.2% in 2017 and 0.3% in 2016, the news agency wrote.

Trade tensions between the EU and Indonesia and Malaysia are already under strain due to the EU’s announcement earlier this year that it is phasing out palm

Indonesia running biodiesel trial for B30

Indonesia has allocated an additional 72M litres of palm oil fatty acid methyl ester (FAME) to run a comprehensive trial for its planned B30 biodiesel programme, Reuters reports.

The mandatory use of B30 starting in January was announced by president Joko Widodo in August, who said the country would test

B50 by the end of 2020, the Jakarta Post wrote on 11 November.

The newspaper said that increased blending would slash petroleum imports and open new market opportunities for the domestic palm oil industry.

In Malaysia, the world’s second largest palm oil producer after Indonesia, five petroleum companies announced on 21 November that they would be upgrading biodiesel blending facilities at 35 terminals in readiness to mix up to 30% biodiesel (B30) in diesel fuel.

Primary Industries Minister Teresa Kok said Malaysia had started implementing B10 for the transportation sector on 1 February 2019, which had not required any upgrading works.

With B20 to be introduced in the transport sector in phases starting January 2020, it made sense to upgrade the terminals to handle up to B30, if the higher blend was introduced in the future, she said.

B20 implementation was targeted to be completed by June 2021.

Avril plans to stop using palm oil in biodiesel French oilseed group Avril may sell two of its processing plants and plans to stop using imported palm oil in an attempt to turn around its loss-making biodiesel division, Reuters reported on 8 November.

Avril’s Saipol unit, which produced vegetable oil and biodiesel fuel, had been affected by competition from cheaper imported biofuel and declining demand for diesel cars in Europe.

It incurred losses of €133M (US$147M) over 2015-2018 and expected another loss in 2019.

After launching a 100% biodiesel fuel for trucks and buses made from French rapeseed crops last year, Saipol said it wanted to focus exclusively on French-sourced biodiesel and vegetable oil products. It would maintain production at four French factories and look to sell or find

partners for two others at Sète and Montoir.

The company would also phase out the use of imported palm oil and soyabeans as feedstocks for biodiesel, managing director Christophe Beaunoir said.

“We are going to progressively reduce our sourcing via imports to concentrate on our strengths of rapeseed and sunflower.”

The changes were expected to cut Saipol’s biodiesel production to around 1M tonnes this year from some 1.5M tonnes in 2019, Beaunoir said.

Saipol’s move to phase out palm oil comes after French lawmakers decided last year to remove it from the list of biofuel crops eligible for public funding, effective 1 January. In addition, operators will no longer be allowed to include palm oil-based biofuels in their mass balances. www.ofimagazine.com

16/12/2019 09:23:58

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RENEWABLE NEWS ITALY: Italian bioplastics and biochemicals producer Novamont announced on 16 October that it is investing €10M (US$11M) to build a demonstration unit to produce sugar-based 2.5 furandicarboxylic (FDCA) at its current 110,000 tonnes/ year plant in Terni, Italy.

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Novamont said it would use FDCA as a raw material to produce polyesters and its Mater-Bi biodegradable and compostable bioplastics, as well as a series of products with oxygen and carbon dioxide barrier properties for the food packaging sector.

The company said it had also started production of Mater-Bi at its Patrica, Lazio plant to complement its current 100,000 tonnes production of Origo-Bi biopolyesters that were components of Mater-Bi. The Mater-Bi facility, originally a Mossi & Ghisolfi PET plant, was modified at a cost of over €100M (US$110M) to utilise biobutandiol and azelaic acid to manufacture biopolyesters and was opened in October 2018.

USA/EUROPE: US bio-base oil manufacturer Biosynthetic Technologies is partnering with SIP Speciality Oils and Fluids, UK, to expand its footprint in the European market, BioMarket Insights reported on 6 November.

Biosynthetic Technologies produced what it described as a “new class” of biobased synthetic compounds called estolides or oligomeric fatty acid esters.

“These biosynthetic oils are used in applications such as lubricants and are also used in the automotive, marine, pharma and personal care sectors,” BioMarket Insights wrote.

12 OFI – JANUARY 2020

Renewable news.indd 2

BASF launches sustainable palm oil-based surfactant German speciality chemicals firm BASF has launched a surfactant using Roundtable on Sustainable Palm Oil-certified ingredients that can be used in a range of personal care products.

The company announced its sustainable and biodegradable anionic surfactant, Texapon SFA, at the SEPAWA Congress in Berlin in October.

Speaking to CosmeticDesign-Europe, Dr Claudia Brunn, manager for global product development of surfactants at BASF, said Texapon had taken a few years to develop because of the many requirements needed for new surfactants.

“We see there is a need for sustainable surfactants based on natural, renewable raw materials; that they have to be produced with safe and clean processes, they should be readily biode-

gradable; and they should match the surfactant performance we can already find on the market.”

Brunn said because of its limited water solubility, Texapon could be dried into a noodle base to incorporate into solid cleansing bars, tapping into the industry trend to reduce plastic packaging.

It was also very gentle on skin and eyes, making it especially suitable for baby skin and tear-free shampoos.

“Texapon is 100% biodegradable and suitable as an alternative to surfactants containing sulphate,” BASF said. “The product reinforces the beneficial effect of the cationic polymers in shampoos and has been proven to make it easier to comb hair – including when added to formulas that do not contain polymers.”

Borealis to make renewable polypropylene Polyolefin provider Borealis and renewable diesel and chemical producer Neste have entered a strategic co-operation to produce renewable polypropylene (PP).

“The deal will allow us to start using Neste’s renewable propane at our facilities in Kallo and Beringen, Belgium,” Borealis said on 16 October.

“Neste can produce 3M tonnes/year of renewable products and utilise nearly any bio-based oil or fat as raw materials. Borealis will use Neste’s renewable propane, produced in Rotterdam, to create an entire portfolio of applications based on renewable PP. “This marks the first time

Photo: Borealis

IN BRIEF

that Borealis will use bio-based feedstocks to partially replace fossil feedstock in commercial production of PP. It will also be the first time ever that our renewable propane dehydrogenation (PDH) technology

is carried out on an industrial scale,” Borealis said.

PP is the second most widely produced commodity plastic after polyethylene and is often used in packaging (pictured) and labelling.

Goodyear to use more soyabean oil in tyres US tyre and rubber company Goodyear plans to replace petroleum-derived oils with soyabean oil in all its tyres by 2040 and increase its soya oil consumption by 25% by 2020.

“Using soya to replace petroleum-based raw materials provides a more sustainable and renewable product,” said United Soybean Board director Gregg Fujan on 21 October.

Tire Business wrote that soy-

abean oil allowed for greater flexibility at lower temperatures and provided better traction in the cold, making it ideal for production of all-weather tyres.

Goodyear’s scientists also discovered that soyabean oil mixed more easily with rubber compounds and reduced energy consumption in the mixing process, improving manufacturing efficiency.

Currently, Goodyear had three tyre lines produced with soyabean oil – the Assurance WeatherReady, Eagle Exhilarate and Eagle Enforcer All-Weather.

Development of the Assurance WeatherReady range allowed for soyabean oil to replace petroleum-derived oil in the tread compound, and reduced petroleum-based materials in the whole tyre by 60%, Tire Business said. www.ofimagazine.com

13/12/2019 10:21:01

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TRANSPORT NEWS IN BRIEF BELGIUM: International biodiesel marketer and distributor Targray has opened a new biodiesel terminal in Antwerp, Biodiesel Magazine reported on 7 October. The terminal was a 24/7 biofuel storage and blending centre serving fuel producers, distributors, traders and retailers in Europe.

WORLD: Global agribusiness giant Cargill has partnered with Maersk Tankers and Mitsui & Co to reduce greenhouse gas emissions in shipping.

The companies would work together to fully exploit fuel saving technologies and explore new technical solutions aimed at providing “over-theshelf” solutions to maritime players, in line with the International Maritime Organization’s target to reduce international shipping emissions by 50% by 2050, Cargill said.

Initially, the partnership would focus on testing and trialling existing technologies on ships under their command, with work already underway to install energy saving devices on vessels under their charter.

Cargill Ocean Transportation charters over 650 dry bulk and tanker vessels every year. Maersk Tankers is a leading player in the product tanker industry and Mitsui is active in trading and chartering worldwide.

Shipping industry hurt by falling soyabean exports Combined soyabean exports from Brazil and the USA were down 7.8% in the first eight months of 2019, with falling exports from the South American producer particularly hurting the shipping industry, the Association of Bulk Terminal Operators (ABTO) reported in its November 2019 newsletter.

“The fall in volumes from the two countries has also led to an 8.5% drop from 2018 in the tonne mile demand generated by the two dominant soyabean exporters,” international shipping association BIMCO said.

Accumulated soyabean exports from Brazil in the first eight months of 2019 was 7.8M tonnes lower than the first eight months of 2018. This resulted in tonne mile demand from Brazilian exports falling by 12.9% or 83.7bn tonne miles.

BIMCO’s chief shipping analyst Peter Sand said the good news was that early indications pointed to seaborne US soyabean exports increasing through September ahead of a peak in late October and November.

During the course of the US-China trade war, an easing of tensions had often been rumoured, only to end up with further deterioration of the relationship between the two countries, Sand said. “The higher levels of off-season exports to China are good news for the shipping industry, but should not be taken to mean that things are back to the status quo.

Lower Chinese demand as a result of African swine fever also meant seaborne volumes of soyabeans imported by the China may not return to levels seen in 2017 for some years.

Corrosion warning over low-sulphur fuel

Canadian microbial monitoring specialist LuminUltra has warned that some low-sulphur fuel conforming to the International Maritime Organization (IMO)’s new global sulphur emissions cap could result in increased corrosion of tanks and pipework.

On 1 January, the marine fuels sulphur cap dropped from 3.5% to 0.5% in areas outside current emission control areas (Baltic Sea, North Sea, North America and US Caribbean), where the limit is 0.1%.

LuminUltra’s director of global business development,

Patrick Taylor, said: “There is an increased biodiesel content in marine gas oil (MGO) and we are seeing high sulphur fuel oil (HSFO) now being blended with recovered distillates to reduce the sulphur level,” he said in press release on 11 November. “As biodiesel has a high water content, these new fuels can be nutrient-rich breeding grounds for microbiological growth.”

“If compliant fuels are not regularly monitored, biofilm will form and clog up fuel filters. In the worst case, we are likely to see an increase in microbiological-induced corrosion of even the most well-maintained fuel tanks and pipework.”

US may lose competitive edge due to aging waterways The USA is at risk of losing its competitive advantage in soya and grain exports due to under-investment in its aging inland waterways system, according to a study commissioned by the US Department of Agriculture and conducted

by Agribusiness Intelligence.

“The USA competes directly with Brazil for its agricultural export business, particularly 14 OFI – JANUARY 2020

Transport news.indd 2

in corn and soybeans,” World Grain quoted Ken Eriksen, senior vice-president of Agribusiness Intelligence’s consulting business, as saying. “Therefore, infrastructure investments can have a tremendous impact upon a farmer’s profitability.

“Multinational corporations, including Chinese firms, are making significant investments in Brazil’s grain and soya trans-

portation and handling systems,” Eriksen said in the 30 October World Grain report.

Last year, the China Communications Construction Co broke ground at a port in Brazil’s Maranhão state that would ship millions of tonnes of agricultural exports, World Grain wrote. The company was also considering the purchase of an infrastructure investment

fund that planned to build a large port in the southern state of Santa Catarina, mainly for soyabean and beef exports.

The study found that while the USA currently had a 5.35per-tonne advantage over Brazil when shipping soyabeans along its inland waterways (from Davenport, Iowa, to Shanghai, China), the aging system would increase end user prices. www.ofimagazine.com

16/12/2019 09:12:54

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15

BIOTECH NEWS

Soya accounts for half of all GM crops Biotech soyabeans covered 50% of the global biotech crop area in 2018, according to an International Service for the Acquisition of Agri-biotech Applications (ISAAA) report.

Soyabeans which were herbicide tolerant (HT) and additionally had stacked trait insect resistance (HT/IR) covered 95.9M ha in 2018, 2% higher than the 2017 area, the October report said.

The biotech soyabeans comprised 69.3M ha of HT soyabeans and 26.6M ha of stacked IR/HR (Intacta), accounting for

IN BRIEF USA: The number of lawsuits claiming that Bayer Monsanto’s glyphosate Roundup weedkiller causes cancer have surged to 42,700 from 18,400 in July, Reuters said on 30 October.

The German pharmaceuticals giant – which acquired Monsanto for US$63bn in 2018 – warned investors of a surge in cases, saying the prospect of a settlement was fanning efforts by lawyers to recruit plaintiffs.

The firm was ordered to pay millions of dollars in damages after losing three trials last year.

Reuters reported on 6 December that Bayer had agreed to postpone its next two US lawsuits scheduled this month to allow more time for settlement talks.

Meanwhile in Hawaii, Monsanto was fined US$10.2M for using the banned methyl parathion pesticide on corn and seed research crops in Maui, Courthouse News reported on 21 November.

THAILAND: The USA has asked Thailand to postpone its ban on glyphosate, passed on 22 October, saying it could severely impact the country’s imports of US soyabeans and other crops, Reuters reported. The USA exported US$593M worth of soyabeans to Thailand in 2018, according to the US Department of Agriculture.

16 OFI – JANUARY 2020

Biotech news.indd 2

78% of the world soyabean planted area.

Biotech soyabeans were planted in eight countries in 2018, the largest area was in the USA (34.1M ha), followed by Brazil (34.9M ha), Argentina (18M ha), Paraguay (3.35M ha), Canada (2.42M ha), Uruguay (1.26M ha), Bolivia (1.26M ha) and South Africa (694,000ha), the ISAAA report said.

In contrast to soyabeans, the global biotech canola area fell by 6% from 10.2M ha in 2017 to 10.1M ha in 2018, accounting for 29% of the global 34.7M ha of planted canola. Biotech canola was grown in Aus-

tralia, Canada, Chile and the USA. The USA and Canada had reduced their biotech canola planted areas by 61% and 9.5% respectively, while Australia had a 1.5% increase.

Since 1996, various canola varieties with multiple HR genes for glufosinate, glyphosate and oxynil tolerance were developed.

In 2018, biotech docosahexaenoic acid (DHA) canola with high oleic acid and herbicide tolerance was approved for food use in New Zealand, and for food, feed and processing in Australia and the USA.

Scientists engineer fats for formula milk A team from the UK’s Rothamsted Research Centre has genetically engineered a cousin of the mustard oilseed to produce fat molecules resembling those in human breast milk.

“The infant formula market is currently estimated to use nearly half a million tonnes of vegetable-derived fat a year,” the scientists wrote in their study, published in the Proceedings of the National Academy of Sciences of the USA (PNAS) in October.

“While some milk formulas already contain triacylglycerol that mimics the structure of human milk fat, these human milk fat substitutes (HMFS) are expensive to make, while the process generates solvent waste and uses controversial palm oil,” the centre said in a press release.

The team modified the genes responsible for a metabolic pathway in the Arabidopsis thaliana plant. They relocated the lysophosphatidic acid acyltransferase (LPAT) enzyme to the endoplasmic reticulum, an area of the cell where fats are made. This led to LPAT being incorporated into the fat production pathway, resulting in triacylglycer-

ols with more than 70% of the saturated palmitate fatty acid in the middle position on the glycerol backbone, mimicking the human milk fat stereoisomeric structure.

“Translation of our technology might conceivably provide a cheaper and more sustainable source of HMFS for infant formula,” said lead researcher, Dr Peter Eastmond.

USA approves GM cotton for consumption The US Food and Drug Administration (FDA) has approved a genetically modified (GM) cotton variety for human and animal consumption.

Ordinary cottonseed was unfit for humans and many animals to eat because it contained high levels of the toxic gossypol chemical, Reuters wrote on 11 October.

The GM TAM66274 cotton developed by Texas A&M University had virtually no gossypol in the cottonseed but retained the chemical in the rest of the plant as it guarded against insects and disease.

The university’s scientists hoped to have the plant commercially available within about five years, said Texas A&M Agrilife Research plant biotechnologist Keerti Rathore.

The team was also looking at seeking regu-

latory approval in other countries, starting with Mexico.

The US Department of Agriculture last year lifted the regulatory ban on cultivation of the modified cotton plant ahead of the FDA’s decision on human consumption, Reuters wrote.

Rathore said the new plant could address the issue of malnutrition in cotton-producing countries, particularly in Asia and Africa.

“Cottonseed can be consumed in many ways.

We will continue to crush it to extract oil. However, now the leftover meal with its high protein content can be used as a protein supplement in tortilla, bread and baked goods. The seeds kernels can be roasted and eaten as a snack, as a type of spread or in protein bars.”

The meal could also be used as a feed for www.ofimagazine.com

13/12/2019 10:22:30

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Diary Jan 2020 NEW.indd 1

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OFI – JANUARY 2020 17

16/12/2019 11:13:12

INTERNATIONAL MARKET REVIEW

Total vegetable oil production is still assumed to be rising, led by top exports palm and soya, but the annual pace continues to slow markedly – from 6.7% three years ago, to 5.4% in 2017/18 and just 1.6% projected for the season that began on 1 October 2019.

The main cause of the slowdown has been the collapse of US soyabean production. Six months ago, the US Department of Agriculture (USDA) was forecasting a harvest acreage of 83.8M acres (33.9M ha), leaving production at around 113M tonnes. After record rain delays to sowing, a cool summer and a wet, late harvest, the last survey had area down to 75.6M acres (30.6M ha) with an output of 96.6M tonnes.

Even with crushing only slightly up on the year and exports staying near last season’s poor level, this was expected to slash May’s burdensome ending stock forecast of 28M tonnes for 2019/20 (easily a new record high) to as little as 12.9M tonnes. That might not be tight by historical comparison but could become so if the US crop is revised much lower.

Along with ideas that US President Donald Trump would get his trade deal with China, at least partially restoring lost US soya exports to the top buyer, this recently helped drive Chicago Board of Trade (CBOT) futures to near 16-month highs.

China recently offered to buy an additional 10M tonnes of US soybeans (30M tonnes in total) to help smooth the path to a broader trade deal. A spate of recent purchases also rekindled ideas that the long dearth of orders could finally be ending. However, traders still need to see a wider trade agreement concluded and this is possibly at risk from the Trump administration’s voiced support for the democracy movement in Hong Kong.

The USA managed to make some export gains to other nations – Europe, parts of Asia and Mexico – but the loss of its prime custom in China caused a 40% slump in the total sales volume of the 18 OFI – JANUARY 2020

John Buckley.indd 2

Markets firm as crops decline

Source: John Buckley

Smaller than expected crops in North America, Asia and Europe have combined with underlying long-term demand growth to erode projections of surplus oilseed and oil stocks, pushing up product prices John Buckley

Figure 1: World oilseed production (million tonnes) 2017/2018 season ending 31 August – benefitting Latin American suppliers.

Interestingly, Brazil was recently reported to be getting low on old crop stocks in its attempts to win more share of the China market. If, as some analysts suggest, Brazil finds recent past crops have been over-estimated, that could further support soya prices going forward, perhaps allowing CBOT futures to return to 2018’s US$10/bushel-plus levels.

The factors still restraining soyabean futures are competition from large Latin American crops and China’s African swine fever (ASF) outbreak – reducing its need for soya meal for feed – keeping US exports lower than usual and reducing stock drawdown.

As 2020 begins, markets will shift their fixation from the final US crop numbers to how much Brazil and Argentina have sown and what sort of weather both get for the main growing season. As we go to press, sowing is a bit later than usual in Brazil due to dry weather but may now be catching up. Both countries are expected to sow at least as much as in the previous year, probably more. If their crops are successful, their weak currencies against the US dollar will help them to continue to undercut their US rivals.

Given Chinese pledges to buy more US agricultural goods – and depending on how its demand/swine flu epidemic shapes up, the USA might be expected

to recoup a chunk of lost trade. Certainly, there should be a clearer signal by the time US plantings begin in spring.

Last season, the market outlook demanded that farmers cut back or face massive, income-destroying surpluses.

After Mother Nature exaggerated the impact of that move, farmers may feel justified in hedging their bets by sowing more in spring.

Offering some incentive, the USDA recently estimated that average soyabean farm prices would rise to US$9/bushel in 2019/20 (from under US$8.50 last season). However, this is a market that retains plenty of potential for price volatility, if probably seeing the last of 2019’s mid-summer US$8/bushel lows.

Impact of biodiesel use

Vegetable oil use in biodiesel under government-encouraged policies continues to add a frisson to the firmer price trend.

In the USA, about 3.9M tonnes of soya oil will be used in biodiesel in 2019/20, compared with 3.2M tonnes in 2017/18.

Biofuels also continue to take a huge 40%-plus chunk of US corn output.

However, the biofuels market has slowed down in Europe, where rapeseed has been in tighter supply and the food versus fuel debate has combined with ecological concerns about using palm oil.

European palm oil imports have recently u

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u

Figure 2: Refined vegetable oil prices other than crude palm oil (US$/tonne) u fallen 20%, a concern for top producers Indonesia and Malaysia.

In response, both countries are boosting their domestic palm oil consumption.

Indonesia increased its total consumption (including food use) to 12.63M tonnes in 2018/19 from 11M tonnes in 2017/18 and just 9.1M tonnes in 2016/17 as it moves to a 30% palm biodiesel blend (B30). Second largest palm producer Malaysia is also expanding palm biodiesel use to B20, starting this month.

Palm oil accounts for 30% of total world vegetable oil consumption. Stocks had been starting to mount at origin, with signs of slowing demand growth and expanded production of 2M tonnes in the 2019/2020 season.

However, the relative strength of rival oils and Indonesian biofuel plans seem to have reignited bullish confidence as we went to press, pushing Bursa Malaysia contracts to two-year highs and a remarkable 40%-plus gain from their summer lows.

Top vegetable oil users China and India had been forecast to import more palm oil to fill gaps in their own oil supply.

However, there remain some concerns about trade holding up. India has threatened to curb trade with Malaysia over the latter’s stance on the disputed region of Kashmir.

China might not need to use more palm oil if it regains access to US soyabeans and soyabean oil, although that would still beg the question of meal disposal if its ASF outbreak persists or worsens.

Both countries appear to have overbought when palm oil was cheap and may cut back now that prices are up, as may many developing countries which tend to buy palm as a ‘value’ oil.

There also remains the ongoing threat of a cutback in imports by palm’s second largest market, Europe, amid claims of palm oil causing deforestation and environmental damage.

However, for the moment, the bulls 20 OFI – JANUARY 2020

John Buckley.indd 3

seem to be in the ascendant.

Origin palm production growth has recently slowed and some analysts see that trend continuing this year.

The USDA is predicting slower growth of 2.8% for palm oil in 2019/20 compared to 9.2% growth in 2018/19.

Large sunflower crops

Supplies of sunflower oil currently look promising, thanks to a second year of large crops in the EU, Russia and Ukraine.

Globally, sunflowerseed production is seen repeating 2018’s massive harvest and it should be able to supply about 9% of world vegetable oil consumption this season. That may help suppliers keep prices at more competitive levels against soya and rapeseed oils.

Shortfalls in rapeseed supply

The outsider among the top four oils remains rapeseed/canola, suffering further crop shortfalls in 2019 in the top producing countries of Europe and Canada.

After cutbacks in sown area, weather and pest challenges, the EU crop was expected to tumble from 2018’s 20M tonnes (already down by over 2M tonnes on the year) to little more than 17M tonnes in 2019 – its lowest level in more than a decade.

Because of an unusually late harvest delayed through rain and snow, a bigger question mark has remained over Canada’s final 2019 crop estimate, which has varied from 19-20M tonnes, both a bit lower than usual.

Canada has not been moving its surpluses to top customer China because of political tensions relating to its arrest of technology firm Huawei’s executive, Meng Wanzhou. Instead it has built up record stocks internally. The latest estimates are 2019/20 starting stocks of 4.1M tonnes, rising to 4.7M tonnes for the carryout to next season. That effectively put the brakes on Winnipeg futures prices after

Source: John Buckley

INTERNATIONAL MARKET REVIEW they had risen to eight-month highs.

However, Canada is crushing a lot more canola and exporting more oil – as well as rebuilding exports to other countries, some of which are rumoured to be shipping the oil onwards to China.

As Ukraine has already cleared a lot of its export surplus and Australia is suffering a drought-reduced crop outlook, EU importers may have to find ways to import more of the currently cheaper Canadian canola to supplement its crush, although GM issues may limit this trade.

The current scenario suggests plenty of Canadian canola available to other markets, which may limit the upside potential in rapeseed prices.

Rapeseed oil use in the EU industrial sector is expected to decline by another 4.5% this season, accumulating an 11%plus loss in the past four years.

The unusually poor EU crop of 2019 is expected to require record imports of 6M tonnes as well as a stock drawdown. The EU was recently reported to have shipped in over 2M tonnes, 92% more than at the same time in 2018, to meet consumption estimated at 22.9M tonnes.

Canadian crush is seen running near full capacity but the government still expects a lower seasonal average price of CAD$460 (US$346)/tonne.

Sunflower and soyabean oils have been heavily discounting rapeseed oil in Europe, while imported sunflowerseed has got more competitive as well, encouraging a shift in crush demand.

Future factors

As the market begins a new year, factors to watch out for include: • The final US soyabean crop result, the sowing progress of Latin American soya crops and the size of their hectarages (Brazil’s is tipped to grow 6.6% to a new record high).

• Winter palm oil production and forward demand trends, such as falling EU imports.

• Biofuel use of vegetable oils, which is growing in Asia and the USA. • A US trade deal with China? This could jump-start US soya exports and firm US prices. But ASF in China’s pig herd (the world’s largest) could sharply cut Chinese soya meal use and bean imports, reducing soya oil production/consumption but maybe raising its palm or soya oil imports, potentially raising oil prices generally.

• Europe has taken in less palm oil this year and could cut imports much more going forward.  John Buckley is OFI’s market correspondent

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OFI – JANUARY 2020

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COCONUT OIL

Keeping up with rising demand In the oils and fats industry, Indonesia is known for being the top global producer of palm oil. However, the country is also the world’s second highest coconut oil producer after the Philippines, exporting 600,000 tonnes of the 980,000 tonnes of oil it produced in 2019, says the US Department of Agriculture (USDA).

Indonesia has a coconut planted area of 3.81M ha, producing 15.3bn coconuts a year, according to USDA 2019 estimates.

The island of Sumatra accounts for 32% of the planted area, followed by Java (23%), Sulawesi (22%), Papua and Maluku (10%), Nusa Tenggara and Bali (7%) and Kalimantan (6%).

However, a large portion of the Sumatran crop is exported for processing overseas and coconut production is declining at a steady rate in Sulawesi, according to a 2017 USDA Global Agricultural Information Network (GAIN) report. The report attributes this decline to the conservation of land for nonagricultural uses, low grower profits and rising demand for coconut tree wood.

In addition, most of Sulawesi’s coconut plantations are well beyond their 35-year prime production period and there is little incentive to replant or make long-term investments in higher yielding cultivars.

Indonesia’s stagnating production in 22 OFI – JANUARY 2020

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As global demand for coconut products rises, Indonesian smallholders who make more up than 90% of the country’s industry are struggling to keep up with production due to aging trees and low returns Sulawesi and the rest of the country is occurring at a time when both domestic and global demand are rising.

The country saw a steep 47.73% rise in coconut oil consumption in 2015 (325,000 tonnes from 220,000 tonnes the previous year). Since then, figures have remained steady, with USDA 2019 estimates of around 372,000 tonnes/year.

Global demand for coconut products is growing by nearly 12%/year but the production growth in the Asia-Pacific region is below 2% annually, according to the Coconut Knowledge Center (CKC).

In the last decade, demand has soared for two coconut products in particular – coconut water (drained from young coconuts) and virgin coconut oil (VCO), made from pressing the meat of fresh coconuts, says Gro Intelligence.

Indonesia, the Philippines and India – which make up three-quarters of global coconut production – cannot keep up with this demand. The countries’ annual

Gabriel Day production grew by 2%/year from 20002009 but their average production has fallen by 0.1% annually since 2010.

Aging trees affecting yields and fragmented smallholders, who account for more than 90% of Indonesia’s coconut production, mean concerted efforts are needed to boost the country’s production.

Copra production and exports

Coconut oil is derived from copra, the dried kernel or ‘meat’ of the coconut.

Indonesia is the world’s second highest producer of copra, at 1.6M tonnes/year, according to the USDA. About 97% of the country’s copra is processed domestically, resulting in low exports of 45,000 tonnes in 2019, the USDA says. Despite the low figure, Indonesia is still the world’s second highest copra exporter, behind Papua New Guinea at 75,000 tonnes.

The CKC says that with current practices of copra production, one tonne requires approximately 6,000 nuts. Given u www.ofimagazine.com

16/12/2019 09:14:59

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COCONUT OIL u an average copra price of US$500/tonne

at the farm gate, this translates to only US$0.08/nut or as low as US$0.05/nut, depending on the distance of farms and the quality of the copra produced.

“At this price level, farmers have little incentive to harvest or gather coconuts and process/dry the coconut kernel into copra and no incentive to replant their senile coconut palms,” says the CKC.

Smallholders

According to Indonesian trade minister Thomas Lembong, more than 90% of the country’s coconut planted area is farmed by smallholders working an average of just 1.5ha each.

He says that smallholders are not seizing a sufficient share of the profit in the supply chain as the distribution of copra from the farm to oil mills involves several trades, with profits for farmers all but disappearing.

Oil extraction is also very crude, with farmers continuing to produce copra by drying split halves of nuts in crude kilns, a process which takes about six hours, according to the USDA. Moreover, Indonesian coconut

smallholders are not organised into viable cooperatives or community-based organisations, and have limited access to credit and capital. These smallholder ventures need marketing assistance to enable them to gain access to both domestic and export markets, the CKC says.

The center adds that in order to develop a sustainable coconut sector, a whole nut chain approach must be developed.

The whole nut chain

According to the CKC, one whole coconut can be sold for US$0.55 if it is processed for its milk and water, US$0.33 if sold for desiccated coconut and approximately US$0.11 if sold for crude oil processing including copra meal.

However, if the residue from VCO production is processed into coconut flour, it can earn a free on board (FOB) price of US$6,000/tonne, instead of being wasted or used as livestock feed.

Furthermore, the husk of the coconut can be processed into coir fibre – which can fetch an average FOB price of US$350/tonne – and be used in rubberised mattresses and geotextiles.

Project alleviates poverty in Papua The poverty level in Papua province – which makes up 10% of Indonesia’s coconut plantation area – stands at 27.8%, almost triple the national average, according to the United Nations Development Programme (UNDP).

In 2014, residents in the region’s Sarmi district were taught how to produce crude coconut oil in a project funded by the charity New Zealand Aid (NZAID) and jointly implemented by the UNDP and the Indonesian Ministry of Development Planning.

The project is part of the UNDP’s People-Centered Development Programme, which aims to harness existing local capacity and economic opportunities to improve livelihoods.

Before training, 10 coconuts produced one litre of oil priced at IDR10,000 (US$0.75). Today, once sold to the local refinery, it is priced at IDR12,000/litre (US$1).

Following the training, Sarmi produces 400 litres/month of coconut oil, providing them with a monthly income of IDR4.8M (US$360) from the 3,330ha of coconut trees.

Furthermore, in November 2018, the charity Oxfam Indonesia launched a VCO factory built by a priest to preserve the livelihoods of farmers concerned about 24 OFI – JANUARY 2020

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low yields and lack of improvement in their industry.

Father Rosarius Yansen Raring built the factory as a business unit of the Larantuka diocese on a plot of land owned by the St Maria Goreti parish, since many of his parishioners are coconut farmers.

“Coconuts hold vast potential for these people but that potential has gone untapped for many years, as the farmers have always fallen back on traditional techniques,” Raring said.

“It takes five coconuts to produce a kilogram of copra. It also requires the fruit to be picked, transported, split, dried and sold at market, resulting in farmers collecting little revenue.”

Selling unprocessed coconuts to the factory saved the farmers time and energy while earning them higher prices, he added.

The factory has the capacity to process 45,000 coconuts a month, producing three tonnes of coconut oil.

The priest said it is unlikely to ever run out of raw materials, thanks to farmers’ strong support.

The plant generates an estimated IDR45M (US$3,000) a month for farmers, almost double what they used to earn, and future growth is anticipated.

It can also be processed into coconut pith – that has an average FOB price of US$300/tonne – which is used in horticulture as a planting medium or as an organic fertiliser. The coconut shell can be processed into charcoal and charcoalbased activated carbon, fetching an average FOB price of US$500/tonne and US$2,100/tonne respectively.

Currently, only 1% of husk from coconuts is converted into coir and peat and only 8% of shells from coconuts are utilised for charcoal or activated carbon, according to the CKC. The existing coconut system only accounts for 16% of the whole coconut and 53% of the fresh coconut meat, leaving the remaining (shell, husks and water) to waste.

A whole nut model can increase the value of the coconut at the farm gate level and directly alleviate poverty for 80M people, the centre says.

Replanting crisis

According to CKC, replanting coconut trees on a massive scale is needed in the coconut-producing countries of Asia and the Pacific to meet global demand.

“Potentially, around 900M coconut seedlings are required at a value of US$2.7bn to secure the future of the global coconut estate.

“All seven species of the region’s coconut trees are aging and producing fewer raw materials.”

The CKC says that the lifespan of a coconut tree is 100 years but in economiterms, a tree reaches it peak production between 10-30 years of age, when it can produce 400 coconuts/year.

Over 50% of Indonesia’s coconut palms are considered senile and at the end of their life as viable copra sources, the CKC says. However, low copra prices meant farmers were reluctant to replant trees.

Higher yielding coconut varieties have been developed but even for these hybrids, smallholders are reluctant to face the losses that replanting entails.

Some moves have been made to increase coconut production in the country, says the USDA. These include processors entering into innovative ownership agreements, such as leases on trees, thereby handing over production to processors while allowing farmers to maintain land ownership.

Other processors have implemented strategies such as aggressive purchasing programmes, and diversifying coconut product processing, with the intention of providing better returns to producers.

Intercropping can also offer better returns to smallholders. www.ofimagazine.com

16/12/2019 09:15:00

COCONUT OIL

www.ofimagazine.com

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The direct micro expelling solution To extract raw coconut oil, copra can be pressed using traditional methods or the Direct Micro Expelling (DME) method developed by Kokonut Pacific in 1994.

The Australian equipment supplier says that the traditional coconut oil extraction process is time consuming and fuel intensive, whereas the DME process concentrates on a small, manageable, daily throughput of up to 1,000 nuts. It also offers direct local employment in rural areas in nut collection and oil production.

In the DME process, coconuts are picked and the kernel is grated, which is then dried using coconut shells as fuel for the dryer. Afterwards, it is loaded into a cylinder and positioned under the DME press with a lever mechanism which is pulled down (pictured) to extract the oil from the grated kernel.

Average daily production is typically 20-60 litres, with skilled operators obtaining an oil extraction efficiency of over 85%.

The number of nuts needed to produce one litre of oil depends on their

size, ranging between nine and 18 nuts/ litre.

Whether the oil is packaged locally or used as an input by local cosmetic soap and detergent producers, there is significant value added, Kokonut Pacific says. The residue can also be used for baking and feeding livestock.

Source: Kokonut Pacific

The CKC says that the monocropping of low-productive coconuts generates an income of only US$200/ha a year, compared with various coconut/cocoa and coconut/coffee systems, which could yield an additional US$620/ha and US$485/ha respectively.

It estimates that less than 30% of coconut producing land is used for intercropping, meaning that around 2.6M viable hectares are available in Indonesia to introduce the system.

Intercropping and the whole nut chain could be the answer to keeping smallholders financially afloat and motivated.

“Everyone wants more coconuts, from consumers who believe they are very healthy, to processors who need copra as an input, and farmers who want to take advantage of higher prices,” says Gro Intelligence. “Although it will slow down eventually, demand for coconut water and VCO is still going strong, with forecasters suggesting that there are still billions to be made on coconuts in the next few years. Therefore, we should expect high prices to induce existing farmers in Asia to switch to planting more productive trees.”

• Gabriel Day is OFI’s assistant editor

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16/12/2019 09:15:05

PALM OIL

Palm oil mini mills can benefit smallholders while helping them to secure finance and improve the crop’s image Andrew Hamilton Small is beautiful is an idea that keeps reappearing, the latest incarnations are farmers’ markets and local cafes baking homemade cakes.

“We yearn for economic systems within our control, within our comprehension and that once again provide space for human interaction – and yet we are constantly overwhelmed by finding ourselves trapped into vast global economic systems,” the Guardian newspaper wrote in 2011.

Connected to this idea is impact investing, which refers to investments made into companies aimed at generating a beneficial social or environmental impact, alongside a financial return.

This emerging asset class is not often linked to palm oil. However, mini mills surprisingly seem to fit current impact investing objectives for agribusiness.

For 20 years, the upstream palm oil industry has grappled with repeated exposes by NGOs of environmental degradation and social problems.

Palm oil – the super versatile, highly available product – now trades at a large discount to the arguably more environmentally-damaging, less versatile soyabean oil, in spite of increasing demand.

The EU – the world’s largest trading bloc and the second biggest market for palm oil – may become largely palm oil free within 10 years. Some companies in Italy, Switzerland and the UK use an absence of palm oil in their marketing.

Mini mills benefits

Mini mills – with a processing capacity 26 OFI – JANUARY 2020

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Photo: Wacapol

The benefits of mini mills of 2-10 tonnes/hour – in themselves are not a complete answer to palm oil’s sustainability image problem but they may well be an important component in certain circumstances. This is because of their human scale – they often involve ‘community’ ownership, greater transparency and social sustainability.

Oil palm smallholders can add value to their fresh fruit bunches (FFBs) and produce and sell crude palm oil (CPO) and palm kernel oil (PKO) in the same way that farmers can participate further downstream in other tropical commodity crops such as coffee and cocoa.

Mini mills and smallholder palm oil production have the backing of NGOs such as Oxfam and Solidaridad.

“At Solidaridad, we believe the crop in itself is not the problem, but rather how it is produced,” says the NGO. “Sustainably produced palm oil can play an important role in the global supply of vegetable oils for food, but to ensure sustainable palm oil production, we need to improve production practices.”

NGO and small- and medium-sized enterprise (SME) support for palm mini mills has been largely focused in West Africa, Thailand and northern Latin America. Mini mills also need to play a bigger role in Indonesia, where there is a surge in informal smallholder plantings often far from established mills.

Africa

Africa produces 2.8M tonnes/year of CPO, less than 42% of the continent’s annual requirement of 6.8M tonnes.

Domestic cultivation is spread across nearly 8M ha, often on very low output

semi wild groves. Extraction is often carried out using inefficient artisanal or semi-mechanised processing with oil extraction ratios (OERs) of less than 14%, or through larger locally-owned SME type farms which utilise mini mills of varying quality and capacity for processing less than 6 tonnes/hour of dura and tenera FFBs with OERs of less than 20%.

There are also a scattering of often foreign-owned nucleus type estates processing FFBs from estates and smallholders, occupying some 0.35M ha, using mainly Malaysian-supplied mills processing 20-60 tonnes/hour with OERs often in excess of 20%.

Some larger businesses (such as Golden Veroleum/GAR in Liberia’s Sinoe county) initially used mini mills with capacities of up to 6 tonnes/hour before moving to more complex mills from 20 tonnes/hour upwards using boilers and pressurised steam once production was fully set up.

Nigeria accounts for the majority of palm oil production and consumption in Africa. Côte d’Ivoire is the only regular regional exporter although this will change as African estates in Ghana, Sierra Leone, Liberia and São Tomé and Príncipe come fully on stream to sell the bulk of their products to Nigeria once domestic markets are saturated.

In Nigeria, the government has pushed a policy of economic nationalism and is demanding self sufficiency in essential food commodities including palm oil in a determined bid to take producers in Asia and international traders out of the picture.

The African commercial opportunity has been recognised by local, Asian and European investors. Results have been www.ofimagazine.com

16/12/2019 14:17:34

Figure 1: Indonesia palm oil plantation ownership share patchy as land titling and productivity remains a challenge. It is highly risky to open large mills early in development in uncertain environments and it is in Africa where modular or portable leased mini mills may be most appropriate in the early years.

This is reflected in reported mini mill sales in Ghana, Liberia, Nigeria and Zambia to SMEs with restricted plantings and capital, as well as pioneering businesses seeking low capital expenditure (Capex) entry into processing while plantings come on stream

Indonesia

Over the last 10 years, there has been a fundamental structural change in the palm oil production system in Indonesia, with the industry shifting from domination by estates towards a much higher proportion of smallholder production due to a moratorium on large-scale development and an expanding population.

“Researchers predict that smallholders will double their production capacity over the next decade, managing a 60% share of Indonesia’s total oil palm plantation area by 2030,” said the World Resources Institute in 2018 (see Figure 1, above) The Indonesian government has an ambitious programme of replanting 2.4M ha of smallholder land. This is an opportunity to reset the sustainability agenda and allow smallholders to participate, not just as primary producers, but also in processing and adding value, Smallholder participation may involve ownership in existing mills or potentially in new mini mills via SMEs or cooperatives “This can have important impacts as smallholders capture more value and it can provide additional incentives to increase productivity and quality,” says NGO Oxfam.

Mini mills have many advantages for smallholders by providing SME development, price transparency, a potential value-adding opportunity, www.ofimagazine.com

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employment, rapid payment, a low Capex cost and a smaller environmental footprint. The wider market can benefit from CPO with a lower free fatty acid (FFA) content from fresher FFBs, from mini mills which are more economic to operate in low crop periods.

However, in some cases, mini mills will require local government backing to oblige large mills to give up a monopolistic relationship with smallholders, many of whom live on informal blocks often very far from mills, who are unable to obtain a fair price for their FFBs from traders.

In contrast many enterprising smallholders from the former Transmigrasi (transmigration) KKPA cooperative and Plasma schemes have found ways to prosper, often by consolidating holdings and diversifying over the last few decades.

As society changes, so should the structure of the industry in Indonesia as people replant, organise and understand that leased mini mills operated by Kooperasi Unit Desa (KUDs) or village level cooperatives or SMEs may well allow farmers, hopefully supported by local banks such as Bank Mandiri and BCA, to realise more value from their FFBs than being essentially price takers. There are reports of interest in Kalimantan and Sumatra provinces.

Companies opening estates in new areas such as Aceh, Papua or Sulawesi or where title is uncertain may also choose to install a leased and potentially portable mini mill during the pioneering years to avoid stranded assets and delay major Capex.

Latin America and PNG

Palm oil has spread to areas considered remote, with family businesses converting former cattle ranches. Smallholders have also set up successful producer associations with independent mini mills in conflict-affected areas. Smaller local mills, often with miniature boilers and turbines, are seen in Peru and Colombia.

Source: World Resources Institute

PALM OIL There is ample scope for mini mills in the smaller operations also seen in Central America and areas where companies are pioneering at the edge of where palm may physically be grown in Mexico and Brazil.

In Papua New Guinea, it may be possible to use mini mills to exploit stranded palm assets. New Britain Palm Oil (a subsidiary of Malaysia’s Sime Darby Plantation) has ordered a 10 tonnes/hour mini mill for its recent Markham Valley acquisition.

In conclusion, mini mills can benefit smallholders and SMEs. Generally, the equipment attracts NGO support and may improve the securing of impact investment funding. The recent greater portability of some mini mills also opens up the possibility of leasing finance.  Andrew Hamilton is an agribusiness advisor who has worked on strategy, operations, investment and sustainability in private sector palm oil projects worldwide since 1985

SWOT analysis Mini mill strengths • Small footprint • Low field to mill costs • Operational and maintenance ease • Community ownership • Low CAPEX Weaknesses • Cost effective power generation • Small volumes/low power route to market through intermediaries • Direct costs per tonne of CPO output • Cost effective PKO processing at low volume • Cost of lab facilities for quality control • Capital cost of weighbridge facilities • Empty fruit bunch (EFB) composting and palm oil mill effluent (POME) treatment Opportunities • Phasing Capex • Scalability/modular systems • Social impact: high headcount per tonne/hour throughput and dollar spent • Social impact: empowerment of smallholders and employment • Lower environmental impact • Cost effective solution to seasonal capacity conundrum • Improved traceability • Village microgrids • Local recycling of residues • Leasing possibilities Threats • Access to finance • Input quality control – rubbish in rubbish out • Environmental controls – cost of compliance • Perceptions – bigger is better • Import duties OFI – JANUARY 2020

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PLANT & TECHNOLOGY

Global round-up of projects

IN BRIEF USA: Agribusiness Cargill’s 272M litre biodiesel plant in Wichita, Kansas is now operating at capacity, Biodiesel Magazine reported on 16 October. The US$90M project was first announced in September 2017 and opened in July 2019.

GERMANY: Technology firm HF Press+LipidTech has launched its biggest screw press for edible oils, which can press 1,000 tonnes/day of canola or 850 tonnes/day of sunflowerseeds.

The company said on 11 October that its latest screw press delivered a comparable performance to its existing SP280P and SP340P models (reaching a residual oil contents of 17% to 21% as a pre-press) while retaining a small footprint.

USA: Grease separator Greasezilla has been selected to be part of the new fats, oils and grease receiving station for the Danbury, Connecticut Waste Water Treatment facility, the company said on 18 September.

Technology would be placed upstream of the plant to separate and recover brown grease that could be used to produce biofuel.

It would also power itself with the biofuel it created.

Greasezilla could process up to 182,000 litres/day of raw grease trap waste.

2 OFI 2018 28 OFI––MONTH JANUARY 2020

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St1 building new HVO unit at existing Gothenburg refinery Finnish energy firm St1 is building a new hydrotreated vegetable oil (HVO) unit at its existing refinery in Gothenburg, Sweden.

The new 200,000 tonnes/year plant was the largest single investment in St1’s history – approximately SEK 1.5bn (US$154M), Swedish design and consulting firm ÅF Pöyry said on 4 November. It was due to start production at the beginning of 2022.

“The objective of our renewable fuels strategy is to meet the ambitious 2030 climate targets in our home markets of Finland, Sweden and Norway. A key area for us is significantly reducing the CO2 emissions of transportation fuels from our own production,” said Bo-Erik Svensson, managing director of St1 Refinery.

The project consisted of adding new and revamping existing units and building new storage facilities. ÅF Pöyry would supply all engineering, procurement and scheduling services.

The plant would use Honeywell Universal Oil Product’s (UOP) Ecofining renewable fuels technology.

Source: ÅF Pöyry

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

Orlen plans cellulosic ethanol plant Polish fuel and energy firm Orlen Południe signed a licence agreement last year to use the Sunliquid technology of Swiss chemicals firm Clariant AG at a new 25,000 tonnes/year cellulosic ethanol plant it is planning.

“The agreement supports Orlen’s intention to realise a full-scale commercial plant for the production of cellulosic ethanol from agricultural residues, which will further solidify the company’s position as a forerunner in the Polish biofuels and bio-component sectors,” Clariant said on 20 September.

Orlen would use Clariant’s technology at its existing

Jedlicze petroleum refinery site in southeastern Poland.

Clariant also tested its technology on approximately 30 tonnes of miscanthus (pictured) provided by Croatian oil and gas multinational INA. Final results proved that the Sunliquid technology could

successfully convert miscanthus biomass into lignocellulosic sugars and ethanol, Clariant said. INA was a member of the GRowing Advanced industrial Crops on marginal lands for biorEfineries (GRACE) project, which asked Clariant to run the tests on miscanthus. www.ofimagazine.com www.ofimagazine.com

13/12/2019 10:14:31

PLANT & TECHNOLOGY

Cargill to expand Ohio soyabean crushing facility US agribusiness Cargill is investing US$225M to expand its Sidney, Ohio soyabean crushing facility (pictured) to better serve farmers in the area and meet growing demand for protein and refined oils.

The expansion would increase crush capacity and modernise operations, allowing farmers around the area to deliver their soyabeans more efficiently, as the upgraded plant would unload trucks at a much faster rate, Cargill said on 16 October.

“The increased capacity will strengthen and expand our US crush footprint, enable us to meet the growing demand for soya products from our customers and further integrate our refined oil capabilities,” said Warren Feather, Cargill’s managing director of global crush.

The expansion would also provide the company’s adjacent refined oils facility with a larger, direct supply of crude soyabean oil. It would also add approximately 12 full-time jobs to the 325 currently employed at the Sidney site when the expansion was completed in 2022.

“Cargill’s decision to choose Ohio was a collaborative effort with the company, JobsOhio, the Dayton Development Coalition and the Sidney community,” said the state’s governor Mike DeWine. “This investment will secure full-time jobs at Cargill’s facility, create construction jobs for two years and increase the demand for soyabeans from local farmers.”

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Neste opens new Shanghai office Renewable diesel producer Neste has opened an office in Shanghai and started renewable raw material sourcing operations in China.

The Finnish company said on 20 September that it would purchase renewable waste and residue raw materials from local collectors in the east coast of China, especially in regions around Shanghai, but also from other big cities later on.

“Different waste and residues account for around 80% of our renewable raw materials,” stated Jennifer Jiang, general manager of the Neste Shanghai office.

“With our own NEXBTL technology, renewable products can be refined flexibly from a wide variety of low-quality raw materials while the end products retain their high quality.”

Neste had renewable diesel production facilities in Finland, the Netherlands and Singapore. www.ofimagazine.com

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PLANT & TECHNOLOGY Diamond Green Diesel evaluates new plant in Texas US energy firm Valero and rendering company Darling Ingredients will carry out an engineering and development cost review for a new renewable diesel plant in Port Arthur, Texas, USA. The new plant would be owned and operated by Diamond Green Diesel (DGD), Valero and Darling’s joint venture firm, and be located at Valero’s existing refinery (pictured).

It would produce 1.8bn litres/year of renewable diesel and 181M litres of renewable naphtha, increasing DGD’s annual production of renewable diesel to

approximately 2.5bn litres and renwable naptha to nearly 272M litres, Valero said on 9 September.

The final investment decision on the project was expected in 2021, subject to further engineering, obtaining necessary permits and approval by the two companies’ boards. If a decision was made to move forward, construction could begin in 2021, with expected operations commencing in 2024, Valero said.

“We expect low-carbon fuel mandates globally to continue to drive demand growth for renewable fuels,” Valero said.

Source: Valero

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SeQuential expands biodiesel production

Source: SeQuential

US biodiesel producer SeQuential has completed an expansion at its Salem, Oregon facility (pictured below), increasing its production capabilities by 30%.

The upgrade enabled the production of 5M litres/year of biodiesel, the company said on 5 November.

“Local demand for low carbon fuel has risen steadily over the past several years, thanks in part to the state’s commitment to carbon reduction. We expect that trend to continue, and we wanted to be sure we are prepared to meet it,” said SeQuential CEO Tyson Keever.

In addition to the expansion, SeQuential recently widened its used cooking oil (UCO) collection and recycling service territory to include the Los Angeles and Orange County areas of southern California, the company said.

It now collected UCO from nearly 20,000 customers across California, Oregon and Washington.

30 OFI – JANUARY 2020

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www.ofimagazine.com

13/12/2019 10:14:38

TECHNOLOGY

Energy efficiency needed The oilseed industry needs a sense of urgency when it comes to the reduction of greenhouse gas (GHG) emissions.

The 2016 Paris Agreement – signed by 195 countries within the United Nations (UN) Framework Convention on Climate Change – originally aimed to limit global warming to no more than 2°C higher than pre-industrial levels.

A series of Intergovernmental Panel on Climate Change (IPCC) reports have tracked progress and indicated that current work is not sufficient to meet the target, which was reduced to 1.5°C. The World Meteorological Organisation states that efforts must increase five-fold to limit the temperature rise to 1.5°C. At the most recent World Energy Congress in Abu Dhabi in September 2019, experts were suggesting that current solutions will result in a >3°C rise in global temperature by the end of the century. A 3°C temperature rise would be a disaster as environmental tipping points would be reached.

In 2017, the world saw a 1.7% improvement in energy efficiency (across all sectors including transport) against a target of 2.9%; 2018 saw a similar improvement of 1.3%.

Many countries have already committed to cut their GHG emissions by 50% by 2030 and to be carbon neutral by 2045/2050. These targets will be pushed down to all businesses including the oilseed industry. Customers will choose suppliers that demonstrate bold progress www.ofimagazine.com

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With greenhouse gas reduction targets being adopted by major businesses around the world, the oilseeds industry can reduce its emissions by introducing energy efficiency measures across its operations Andy Wilkinson and suppliers who are aligned with the Paris Agreement targets will be able to leverage this for competitive advantage.

As of September 2019, 87 multinational firms had set targets in line with UN guidelines of a 50% reduction in emissions by 2030 and to be 100% carbon neutral by 2050.

In September, consumer goods giant Unilever announced that all its factories, offices, R&D facilities, data centres, warehouses and distribution centres

Emission categories The widely-used Greenhouse Gas (GHG) Protocol Corporate Standard divides emissions into three categories.

Scope 1 are direct emissions from owned or controlled sources.

Scope 2 are all indirect emissions from the generation of purchased energy.

Scope 3 are all other indirect emissions from sources a company does not own or control such as emissions associated with business travel, procurement, waste, water and the transport of raw materials and finished goods.

across five continents were now powered by 100% renewable grid electricity.

US online retailer Amazon has pledged to be carbon neutral by 2040.

Singapore-headquartered food and agribusiness company Olam International has committed to reducing Scope 1 and 2 emissions (see box, below left) by 50% by 2030, and 100% by 2050, from a 2017 base.

UK supermarket retailer Tesco is aiming to cut Scope 1 and 2 emissions by 60% by 2025 and Scope 3 emissions by 17% by 2030, from a 2015 base.

US multinational food manufacturer Kellogg’s has a target of a 65% absolute reduction in emissions by 2050 from a 2015 base year (Scopes 1 and 2) and to reduce absolute value chain emissions by 50% from 2015-2050 (Scope 3).

Many companies have also signed up to the Science Based Targets initiative, which aims to make emissions reduction a standard business practice.

What companies need to do by 2050 can be broken into four main steps: Step 1 is to set the target in line with the UN guidelines. u Step 2 is to focus hard on efficiency OFI – JANUARY 2020

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TECHNOLOGY u improvements as these are the cheapest and fastest way of making a quick impact.

These solutions make good business sense and provide a great return on investment.

Step 3 is to look at how to transition to renewable energy sources.

Step 4 is to look at what is left, which is generally steam generated from fossil fuels. However, it is not necessarily steam that is needed but the services that it provides. So how can a company get the same service or steam from a non-fossil fuel or carbon neutral source? This is where innovation needs to be ramped up.

Improving energy efficiency

Companies cannot claim victory over climate change if they replace traditional light bulbs with LED. There needs to be much more significant change and that can only be done by looking at all aspects of energy consumption across sites including boiler house/cogeneration, compressed air, refrigeration, motors, steam traps, process thermal, insulation and lights.

Each of these needs to looked at carefully by an experienced engineer.

Collectively, it is not uncommon to uncover energy efficiency improvements in the region of 15-20% with a simple weighted average payback of three to five years.

The boiler house is often where a lot of opportunity can be found; controlling the fuel/air ratio; capturing heat from stack gases; deaerator settings; blow down and chemical controls. Biomass boilers can have even more opportunities due to poor feeding systems and also varying raw material quality. Cogeneration units can often make good financial sense.

However, a holistic view has to be taken in order to extract all useful heat generated.

Compressed air is generally regarded as the most expensive utility on site, yet often gets the least attention. A traditional approach to air leaks is to wait until the plant is stopped, then have someone walk the plant and listen for leaks.

However, leaks can easily be identified and tagged while the plant is running, using ultrasound, then repaired when the plant is stopped. Checking for leaks should be built into maintenance routines.

The compressors themselves need to be checked if they are efficient. Often plants have grown in capacity over several decades and compressors have been added. New units are often more efficient and have an attractive payback period.

A common finding is that the 32 OFI – JANUARY 2020

Processing efficiency 2.indd 3

compressors are all running on part load, rather than having a lead compressor with a second compressor picking up any surges in demand.

Refrigeration can be a small or significant aspect of the energy usage on a site depending on the operation. In factories where chilling is required, compressors can be individually or collectively set up incorrectly. Refrigeration experts can find easy wins very quickly but it is crucial not to become reliant on an expert. What is needed is a software system that ensures optimum operating levels Motors are a key area to investigate as very old inefficient motors are typically found, with many rewinds, oversized motors or pumps and fans running against partially open valves/dampers. Variable frequency drives are often installed and they can provide significant improvements, but sometimes the cabling needs to be changed. Harmonics can be created and the impact on the process needs to be considered, as does room for the installation of variable speed units. These generally have a soft-start built in which is great for reliability. The motor review has to be carried out by a competent electrical engineer combined with someone with good process knowledge.

Steam traps are an important part of any steam/condensate system and failed traps can lead not only to wasted energy but also corroded tubes in heat exchangers if water logging has occurred. This could be very detrimental to the process and quality, not to mention the repair costs of the exchanger.

Traditional traps work well when looked after but this is generally not the case.

The steam/condensate system should be reviewed by a specialist, because changes have been made over time and steam trap technology has leapt forward in this area.

It is not uncommon for significant energy reduction opportunities to be available.

Process thermal is a key area of focus and, depending upon the complexity of the operation, a good process engineer will be able to identify opportunities.

For more complex systems, a pinch analysis is very effective. Pinch analysis maps the hot streams that need to be cooled and the cold streams that need to be heated. When graphed, the two lines come close together at a ‘pinch point’.

The optimum approach is to only exchange heat between streams that are both above or both below the pinch point. The analysis will then show, in an ideal scenario, how much heat is actually

needed by the process and also how much cooling medium is required.

Insulation always uncovers opportunities for improvement. However, sometimes the scaffolding cost makes insulation cost prohibitive. Today, there are some effective spray on insulation paints.

Lights typically have quite a long payback period but they provide better working conditions for operators.

Transition to renewable energy

In some countries, it is possible to purchase ‘green power’ from the grid, typically generated by huge solar arrays, hydroelectric or wind power.

Solar power is moving very fast and the price of photovoltaic (PV) panels is continuing to drop. Solar PV module prices fell 32% and average PV inverter prices by 18% in the past two years Although transitioning to renewable energy needs to progress, it is generally agreed that this alone will not help reach Paris Agreement targets on time.

Breakthrough technologies

After reducing energy as much as possible and transitioning away from fossil fuels, there will still likely be a need for the services that fossil fuels-sourced energy provides, which is typically steam. Some countries and organisations have taken a fresh look at their energy needs and questioned the very basis of it.

In Sweden, the government has declared that the whole country will be fossil free by 2045. Eleven percent of the country’s CO2 emissions come from the steel industry, which is looking at using hydrogen as fuel instead of traditional coal. If a way is found, then the energy model for steel production is turned on its head.

Innovations to find other ways of providing the services that steam currently suuplies will come over the next few years. In oilseed processing, for example, the desolventiser toaster uses most of the steam in a crushing plant, to desolventise and toast the meal. Imagine not using a fossil fuel-based solvent – how does that change the picture? These ideas have been floating around for decades and will start to get some serious attention in the coming years. For now though, the immediate focus needs to be on bold energy efficiency improvements.

• Andy Wilkinson is managing director at Kaler Consulting Ltd, UK, having previously worked in the oilseed industry for 30 years with Cargill Plc and Bunge Ltd E-mail: andywilkinson@kalerconsulting.com

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13/12/2019 10:26:52

RENDERING The European rendering industry processed around 17M tonnes of raw materials in 2018. While strict sourcing and processing of rendered products guarantees the safety of processed animal proteins (PAPs) from the EU, the spread of African swine fever is still a concern among some PAP users Serena Lim

Figure 1: African swine fever in Europe www.ofimagazine.com

EU rendering NEW.indd 2

African swine fever concerns been confined to wild boars but has spread to farmed pigs, mainly in Eastern Europe (see Figure 1, below).

The rendering process produces two main products – fat and protein. Proteins in the higher risk Category 1 and 2 EU classifications are referred to as meat and bone meal (MBM) and protein from the

Source: Eureopean Commission

African swine fever (ASF) has not only driven up European pork prices to a sixyear high, but has prompted the European rendering industry to reiterate the safety of processed animal proteins (PAPs) and animal fats from Europe.

“Enterprises in third countries may have concerns about the safety of PAPs and animal fats. However, there is no risk of transmission of the ASF virus because of the legal safety rules regarding animal by-products within the EU,” the European Fat Renderers and Processors Association (EFPRA) declared on 6 November.

ASF is a devastating infectious disease of pigs which can be transmitted via direct animal contact between sick and healthy animals or through feeding of contaminated food, such as sausages or uncooked meat. It does not affect humans or other animal species.

The virus has ravaged pig herds in China, which is expected to produce a quarter less pork this year, says Rabobank.

In Europe, the virus has, until recently,

lower risk Category 3 is called processed animal protein (PAP) (see box, p29).

According to EFPRA secretary general Dirk Dobbelaere, the EU rendering industry produced 2.6M tonnes of PAPs in 2018.

PAP is a key component of dry pet foods and a substitute for vegetable proteins such as soyabeans. It is used to produce pet food and is also an ingredient in aquafeed. In Europe, using PAP in aquaculture was restricted until 2013.

Since then, non-ruminant (pig and poultry) PAP has been permitted. No same species PAP consumption is allowed in the EU. However, the EU does export mixed species PAP to countries outside Europe.

EFPRA said that animal by-products exclusively from healthy pigs slaughtered for human consumption are used to generate feed grade animal fats and proteins via safe rendering processes.

“Before any pigs are slaughtered for food production purposes, the animals are inspected by a qualified veterinarian. Only healthy pigs are approved for slaughter.”

The pigs can only come from farms that have no restrictions for slaughtering pigs u in relation to notifiable diseases.

OFI – JANUARY 2020

33

13/12/2019 10:13:00

Figure 2: EU biodiesel production from Category 1, 2 and 3 materials (tonnes)

Source: EFPRA

RENDERING

Production of food grade and category 3 fat

Production: 2.1M tonnes

estination of edible and category 3 fat

Folie 17/27 • June 2018

34 OFI – JANUARY 2020

EU rendering NEW.indd 3

Industry in 2018

As an industry, EU renderers processed 17M tonnes of raw material in 2018, Brexit and protein as fuel resulting in 2.75M tonnes of animal fats and nearly 4M tonnes of animal proteins, ASF virus and its perceived risk has Dobbelaere told the EFPRA congress. also led EFPRA to ask the European This compares with a record 2017, Commission (EC) to widen regulations 3M tonnes of fats and 4.5M tonnes to allow the use of PAPs as fuel in EU Folie 18/27when • June 2018 of proteins were produced from 20M combustion plants. tonnes of raw material.

The issue was first raised in relation to In 2018, the amount of raw material concerns that the UK could leave the EU processed was 4.3M tonnes of Category without a transition period, leaving the 1 product, down 7% from 2017; 850,000 bloc without enough incineration capacity tonnes of Category 2, up slightly from to safely dispose of high-risk Category 1 2017; and around 13M tonnes of meat and bone meal (MBM).

Category 3, about the same as in 2016 EU production of Category 1 MBM, but 12% less than in 2017. not including the UK, is close to 1M In 2018, almost all Category 1 MBM tonnes/year, according to EFPRA. (1M tonnes) and 105,000 tonnes of fat “Since the early 1990s, the UK – unlike were combusted, with about 400,000 other EU countries – developed an tonnes going into biodiesel, the same as in important infrastructure to incinerate the past three years.

Category 1 MBM. Hence, for many years, The majority of Category 2 MBM several EU rendering companies have (167,000 tonnes) was used for fertilisers, been shipping these products to the UK with a small amount (12,000 tonnes) for safe disposal and incineration.” going to feed for fur animals. Category A hard Brexit would mean that shipping 2 fat (about 112,000 tonnes) was mainly MBM to the UK would no longer be used in biodiesel in 2018. possible as current EU regulations ban the Use of Category 1 and 2 fats in export of animal by-products destined for biodiesel production in 2018 was up incinceration.

Figure 3: Production and destination of food grade & Category 3 fat

All processing is carried out in accordance with European regulations.

“In total, there are six approved methods for processing porcine animal byproducts. Five of these methods stipulate EFPRA Congress, Barcelona, 22.6.2018/ Dirk Dobbelaere temperatures in excess of 100°C for more than 16 minutes. This is more than sufficient to eliminate the ASF virus.”

The other method does not specify a fixed time or temperature but relies on a validated proof of efficacy over a certain time period of 30 production days.

“During that time, microbiological standards have to be guaranteed. One is the absence of Clostridium perfringens in 1g of product in a sample of material taken directly after the treatment,” EFPRA said. Clostridium perfringens is a good key indicator as the conditions needed to eliminate it are more intense than those needed to eliminate the ASF virus.

European exports of PAPs are an important factor for the EU rendering industry as domestic food and feed grade protein usage declined 17% in 2018, Dobbelaere told the EFPRA annual u congress in France in mid-June.

Source: EFPRA

EFPRA Congress, Barcelona, 22.6.2018/ Dirk Dobbelaere

u

In March, EFPRA urged the EC to draft a regulation that would authorise the shipping of Category 1 material to the UK in case of a hard Brexit.

The EC responded by preparing an amendment to allow the use of MBM as fuel in combustion plants, which was discussed by the EU Standing Committee on Plants, Animals, Food and Feed in September.

“We welcome the amendment as it offers possibilities to mitigate the possible impact of Brexit and of announced closures of coal-fired power stations, as well as upcoming new waste streams replacing MBM in incineration plants,” EFPRA wrote to Bernard van Goethem, deputy director general for food safety at the EU Directorate-General for Health and Food Safety (DG Sante).

However, EFPRA said the amendment should not only include MBMs, but PAPs and other Category 3 products as well, as a precautionary measure.

“PAP and other non-PAP Category 3 products are similar to MBM. With ASF at the borders of important pig-producing countries, a time might come when PAPs are not suitable for feed or fertiliser due to customers’ risk perception.”

This could mean that exports will not be possible and a huge volume of Category 3 based products might be unsaleable and must be disposed of, EFPRA said.

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13/12/2019 10:13:08

RENDERING slightly to 520,000 tonnes from 500,000 tonnes in 2017 as their eligibility for double-counting towards EU Renewable Energy Directive targets remained in place (see Figure 2, previous page).

Dobbelaere said that even though Category 3 fats did not qualify for double-counting and their use in biodiesel increased from 200,000 tonnes in 2012 to 500,000 tonnes in 2017, only about 440,000 tonnes was used in 2018.

Production of food grade and Category 3 fats in 2018 was around 2.1M tonnes, down from 2.4M tonnes in 2017 (see Figure 3, previous page).

Multi-species animal fat production accounted for more than half of all fats, followed by poultry/pig fat and lard.

The primary destinations for multispecies animal fats in 2018 remained oleochemicals, animal feed and some biodiesel. Pig fat was used in animal feed, oleochemicals and an increasing amount in biodiesel.

Of the 2.6M tonnes of food grade and Category 3 processed animal proteins (PAPs) produced in 2018 (down from 3.1M tonnes in 2017), just under half was multispecies, nearly 30% poultry meal, 10% pig meal and nearly 10% feather meal.

Nearly three-quarters (1.75M tonnes)

www.ofimagazine.com

EU rendering NEW.indd 4

EU risk categories for animal by-products The EU classifies animal by-products (ABPs) into three risk categories, ranging from Category 1 (highest risk) to Category 3 (lowest risk): Category 1: ▪ Specified risk materials (SRMs) linked with the transmission of transmissible spongiform encephalopathies (TSEs) including bovine spinal chord and brain.

▪ Fallen stock with SRM. ▪ International catering waste.

▪ Anything handled with Category 1.

Category 2: ▪ Material not fit for human consumption and posing a risk to animals and humans.

▪ Fallen stock without SRM. of PAPs went into pet food production in 2018, down from 2M tonnes in 2017, while 540,000 tonnes was used for fertiliser, about the same as in 2017, and 293,000 tonnes went into fish feed, a growth of 33% over 2017.

As for food and feed grade fats, feed usage declined 32%, food dropped 37%

Category 3: ▪ Material fit for human consumption at the point of slaughter.

▪ Former foodstuffs and catering waste.

▪ Animal products without a specified risk such as egg shells, feathers, bristles and horns.

The processing of all materials is carried out in segregated lines to prevent contamination between different waste categories and species. Category 1 materials are burnt as fuel or processed into biodiesel. Category 2 materials can also be burnt as fuel, used for biodiesel or in fertilisers. Category 3 materials have the widest range of uses including edible fats, oleochemicals, pet food, fish feed, fertiliser and biofuels. and biodiesel was down 14%, although fat usage in fish feed was up 440%.

There was stable usage of Category 1 and 2 fats in biodiesel.

In total, the total amount of raw material processed by EU renderers was a fall to 2016 levels, resulting in less Category 3 fats and PAPs, Dobbelaere said. 

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13/12/2019 10:13:10

STATISTICS STATISTICAL NEWS Wholesale vegetable oil prices

Wholesale prices of vegetable oils (€/tonne)

Graph: UFOP, AMI

Prices for vegetable oils firmed significantly in the second half of 2019. Rapeseed oil surged 14% since the beginning of July 2019, soyabean oil 10% and sunflower oil 2%. However, the biggest price support has come from rocketing prices for palm oil since mid-October.

According to Agrarmarkt Informations-Gesellschaft (AMI), palm oil prices soared 30% since 15 October 2019 to €573/tonne in November, the highest level in two years. This was fuelled by buoyant Indonesian and Malaysian exports in November 2019, prospects of lower output in 2020 and rising demand, especially due to Indonesia’s plan to raise its biodiesel blending programme from B20 to B30. The price gap between palm and other vegetable oils has narrowed as a result.

EU rapeseed imports

Weekly rapeseed imports into €28 (million tonnes)

CBOT SOYABEAN PRICES Latam expansion reduced volatility in recent years

Graph: UFOP

2000

CBOT soyabean prices

1800 1600 1400 1200 1000 800 600 400 200

Ja

n-

06 Ma y S Ja ep n07 Ma y S Ja ep n08 Ma y S Ja ep n09 Ma y S Ja ep n10 Ma y S Ja ep n11 Ma y S Ja ep n12 Ma y S Ja ep n13 Ma y S Ja ep n14 Ma y S Ja ep n15 Ma y S Ja ep n16 Ma y S Ja ep n17 Ma y S Ja ep n18 Ma y S Ja ep n19 Ma y Se p

0

CBOT soyabean prices (US$/tonne)

Graph: John Buckley

Prices of selected oils (US$/tonne) Jun 19

Jul 19

Mintec

Aug 19

Sep 19

Oct 19

Nov 19

Soyabean

714.0

722.2

745.5

746.8

753.8

748.5

Crude palm

514.6

531.8

564.6

578.2

615.1

692.2

Palm olein

515.0

526.1

548.3

541.4

573.1

648.8

Coconut

664.0

688.8

735.4

741.0

736.5

838.4

Rapeseed

827.5

828.2

863.3

881.7

888.4

872.4

Sunflower

735.1

738.7

762.9

751.2

720.3

758.9

Palm kernel

566.9

580.2

650.0

637.3

624.4

775.6

Average

647.0

659.0

696.0

697.0

702.0

762.0

Index

153.0

156.0

165.0

165.0

166.0

181.0

36 OFI – JANUARY 2020

Stats Jan.indd 1

A dry autumn in 2018 thwarted many farmers’ sowing plans and led to the smallest EU rapeseed area in more than 10 years in 2019. Due to unfavourable weather, total output in the EU and Germany hit rock bottom at just under 17M tonnes and less than 3M tonnes respectively.

In preceding years, European oil mills processed 47M tonnes of oilseeds, with rapeseed accounting for 24M tonnes. The EU rapeseed harvest covered around 90% of demand from oil mills. This figure is unlikely to be reached for 2019 - the EU Commission’s forecast is for 75%.

As a result, European oil mills imported around 2.6M tonnes of rapeseed from abroad in the 2018/2019 season. This compares to only 1.3M tonnes year-on-year.

The collapse of US soyabean production, most recently forecast at 96.6M tonnes, and stock reduction helped drive Chicago Board of Trade (CBOT) futures in sight of 16-month highs in November, although prices were still nearer the lower end of their long-term range.

Factors still restraining soya futures prices are competition from large Latin American crops and China’s African swine fever outbreak, reducing its need for soyabean meal for feed (see p18-20)

Mintec provides independent insight and data to help companies make informed commercial decisions.

Tel: +44 (0)1628 851313.

E-mail: sales@mintecglobal.com Web: www.mintecglobal.com The Union for the Promotion of Oil and Protein Plants represents the interests of companies and associations involved in the production, processing and marketing of oil and protein plants in Germany

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16/12/2019 09:26:29

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