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CONTENTS VOL. 34 NO. 6 JULY/AUGUST 2018 EDITORIAL: Editor: Serena Lim Tel: +44 (0)1737 855066 E-mail: serenalim@quartzltd.com

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Oils & Fats International

Biofuels News

EU sets rules on palm oil ban 10

Transport & Logistics News

Improvements at Ukrainian ports 12

Renewable Materials News

Wilmar completes MSCF tech installation in Chinese facility 13

UKRAINE

Ukraine’s re-export potential

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Fashioning designer genes

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Comment

A quiet revolution

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MANY CAR COMPANIES, INCLUDING FORD, ARE EXPLORING THE USE OF RENEWABLE PLASTICS AND OTHER MATERIALS MANUFACTURED FROM OILSEED CROPS IN ORDER TO IMPROVE THEIR SUSTAINABILITY AND PRODUCT PERFORMANCE P18

Garçon, where’s the butter?

Biotech News

Neonicotinoid resistant aphids in canola 14

Diary of Events

International Market Review

Statistics

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NEWS

EDITOR’S COMMENT

A quiet revolution F

urther oils and fats products are being drawn into the escalating trade war between the USA and China as they are named in a new list of items that may be subject to US tariffs (see story, p3). The trade war took real effect on 6 July, with US soyabean producers now facing a 25% tax on their exports to China. As US growers deal with the immediate impact of the dispute, it is worth noting that farmers are also at the centre of a fundamental change in the way world’s biggest agricultural traders make their money. For a long time, the ag giants known as the ABCDs – ADM, Bunge, Cargill and Louis Dreyfus – have bought millions of tonnes of soyabeans, corn and other crops from farmers for processing into food, or for export to regions of tight supply. In recent years, they have struggled with profits as bumper crops have depressed prices and stymied trading opportunities. Some assume that a drought or other supply shock will return riches to these traders. But it appears that the industry is undergoing a more structural transformation. In years past, what separated these grain traders was the inside knowledge they possessed, says World Grain. However, up-to-theminute data on commodity prices, weather, crop yields and trade flows are now available and affordable for those who want them. Farmers in countries such as Brazil, Ukraine and the USA are also building larger storage facilities, making them less reliant on grain elevators operated by trading houses, and allowing them to store their crops until prices rise, or sell directly to end users. At the same time, some grain merchants have overbuilt ports and silos needed to handle flows of grain and oilseeds. Faced with a fall in the volume of crops stored and handled, profit margins have whittled. This shift in the balance of power between farmers and ag traders has been acknowledged by the agribusiness giants themselves. In November, Bunge CEO Soren Schroder cited “a growing understanding within the industry that something has to change, particularly in the USA”. At the FT Commodities Global Summit in London this spring, Gary McGuigan, ADM president of global trade, said that the traditional ways of buying crops at one origin and dropping it off at a port were becoming outmoded, World Grain adds. Certainly, new entrants to the trading market have not had an easy time. Japanese commodity trader Mitsui & Co recently announced that it was closing its Brazilian Multigrain business, which it bought in 2011 and trades in soyabeans and corn, after several years of financial losses (see OFI News, June 2018). And China’s state-owned COFCO International, which fully bought out Dutch ag trader Nidera last year and Noble’s agricultural unit in 2016 in an attempt to challenge the ABCDs, has spent most of the past year integrating its purchases rather than expanding, Reuters said. The ABCDs themselves may further consolidate, with ADM approaching Bunge in January about a potential takeover, just eight months after Swiss commodities trader Glencore proposed a tie-up with Bunge. These giants are trying to tackle the problem by diversifying and moving into high value markets. Bunge announced in September that it was buying a 70% stake in IOI Loders Croklaan, an established player in the US$33bn semispeciality and speciality B2B oil market with a focus on confectionery, bakery and infant nutrition applications. ADM has just announced that it is buying aFrench feed supplier Neovia for €1.535bn (see story, p4). For the ABCDs and indeed for all businesses, adjusting to change and finding creative solutions is the key to continued success. l

Nestlé regains membership of RSPO after ban T

he Roundtable on Sustainable Palm Oil (RSPO) has reinstated consumer goods giant Nestlé’s membership after dismissing it and revoking its certification earlier in the summer. Effective 16 July, RSPO rescinded its 27 June dismissal of Nestlé from the RSPO organisation and the revoking of its certificates following the submission of a time-bound plan to achieve 100% RSPO certified sustainable palm oil supply chain by 2023, the roundtable said. In its reasoning for the earlier suspension, RSPO said Nestlé had not submitted the required Annual Communication on Progress (ACOP) for 2016 and its 2017 ACOP did not include a time-bound plan, in addition to an overdue €2,000 (US$2,308) membership fee. Submitting an ACOP report was compulsory for RSPO members to communicate their commitment to the organisation’s goals, as required by its Code of Conduct for Members, established in 2017. Existing RSPO members were required to line out in each annual ACOP report the actions they had taken in the previous year, what they planned to do in the coming year and their long-term intentions in the form of a time-bound plan working towards producing or purchasing sustainable palm oil and applying any RSPO supply chain mechanisms. Welcoming Nestlé back to the Roundtable, RSPO CEO Darrel Webber said: “We’re confident Nestlé will live up to our membership obligations and succeed in delivering on their time-bound plan. We trust that by working collectively, we are able to realise a sustainable, respectful and responsible palm oil industry.” Benjamin Ware, Nestlé’s global head of responsible sourcing, said the company supported RSPO’s role in driving “industry-wide change”. “We appreciate RSPO’s decision following the submission of our action plan, which focuses on increasing traceability primarily through segregated RSPO palm oil. This builds on Nestlé’s ongoing activities to achieve a traceable and responsible palm oil supply chain,” Ware said. Nestlé would play a leading role within the RSPO by participating in working groups and sharing its experiences in addressing some of the critical environmental and socio-economic challenges affecting the sector, the firm added.

Wilmar heads quit due to deforestation

wo top executives of the world’s largest palm oil trader Wilmar International have stepped down after Greenpeace published a report linking the company to a supplier accused of deforestation. Co-founder Martua Sitorus and Indonesia country head Hendri Saksti resigned after a Greenpeace June report revealed Wilmar’s links to Gama Plantation, which was alleged to have destroyed an area of Indonesian rainforest twice the size of Paris, wrote Eco-Business on 5 July. According to Greenpeace, Gama was founded by Sitorus and his brother Ganda in 2011 and managed by senior Wilmar executives and members of the Sitorus family. The NGO claimed that Wilmar

had sold its most controversial plantations to Gama to shirk responsibility for deforestation and human rights abuses. Trade data acquired by Greenpeace also showed that Wilmar continued to purchase palm oil from Gama despite being aware the company violated its No Deforestation, No Peat, No Exploitation (NDPE) policy, set up in 2013, Eco-Business reported. In response, an unnamed Wilmar spokesperson told EcoBusiness that the firm reaffirmed its commitment to its NDPE policy and that every non-compliance case was “reviewed and monitored closely”. The spokesperson said Wilmar had ceased sourcing from all suppliers associated with Gama.

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NEWS

US targets Chinese oilseed products A

range of oils and fats products are included in a list of more than 6,000 items on which the USA may impose additional import tariffs, in its escalating trade war with China. The list of more than US$200bn worth of Chinese imports was announced on 11 July, just a few days after the countries imposed US$34bn worth of tariffs on each other, BBC reported. It includes a slew of oils and fats products, among them soyabeans, soyabean oil and meal, flaxseed, sunflower seed, rapeseed, fish oils, wool grease, animal fats and oils, and various oilseed flour, meal and cakes. Additionally, the list includes butter, fish, various vegetables and fruit, cereals such as barley, oats and sorghum, chemicals, minerals and consumer goods. A public comment period on possible 10% tariffs on the listed products would run until the end of

August, the US administration said. China said it would again respond to the new tariffs in kind but, according to the BBC, it could not directly match the total of US$234bn worth of goods due to the country not importing enough US products, one of President Donald Trump’s biggest grievances. Instead, China could target US companies operating in the country by taking more aggressive regulatory action, such as safety and financial inspections. In early July, the USA imposed tariffs on some Chinese imports, accusing China of “unfair trade practices”. China responded with 25% tariffs on a number of US imports, including soyabeans, which are the USA’s largest agricultural export to China. Due to the Chinese tariffs, several news channels reported that soyabean prices in the USA had crashed.

UK museum considers preserving piece of fatberg he Museum of London is considering preserving a piece of the enormous fatberg found in the sewers of Whitechapel district in 2017, which has proven to be an unexpectedly popular attraction. The rotting chunk of fat, oil and wet wipes that was “sweating”, crawling with maggots and had begun to change colour had caused a “marked increase” in visitors to the museum, reported BBC on 27 June. Museum of London curator Vyki Sparkes said the preservation of the piece was now being considered after its exhibition was wrapped up at the end of June. The piece of fat came from the Whitechapel fatberg, which was 250m long, weighed roughly the same as an adult blue whale at 130 tonnes and took workers nine weeks to break up with drills, BBC wrote. The rest of the Whitechapel fatberg had already been taken for processing into biodiesel.

PHOTO: LORD BELBURY, WIKIMEDIA COMMONS

The museum’s collections committee was due to make the final decision on whether to keep the fatberg chunk either in storage or on display in July, but Sparkes believed there was a “strong case for keeping it”.

IN BRIEF TANZANIA: The East African nation of Tanzania is planning to increase its production of edible oil crops to wean its import-dependent cooking oil market off foreign products. The country’s Prime Minister Kassim Majaliwa said Tanzania was ready for major investment into the production of oil palm, sunflower, sesame and coconut crops, Devdiscourse reported on 28 June. Tanzania imported nearly 50% of its annual edible oil demand of 200,000-300,000 tonnes, which demonstrated a healthy marketplace and potential to develop the production of crops like sunflower, oil palm and coconut in the country, wrote Devdiscourse. PHILIPPINES: Swedish-Danish ingredients firm AAK is gearing up to open a new coconut oil plant in the Philippines by the year’s end as a part of the firm’s programme to expand its footprint in Asia-Pacific. The plant in Batangas was co-located with a San Pablo Manufacturing Co and was projected to come online by the end of 2018, wrote Food Navigator Asia on 9 July. AAK said the location was near many of the firm’s customers and offered good logistics and shipping connections.

New Indian UCO rules take effect SA upholds cartel charges on Unilever

he Indian Food Safety and Standards Authority (FSSAI) says a concentrated effort is needed to ensure implementation of the country’s new regulations on used cooking oil (UCO), effective from 1 July. The new rules gave edible oils a maximum permissible limit of 25% of total polar compounds, hazardous chemicals that are formed in cooking oil during heating, reported The Hindu Business Line on 2 July. FSSAI said all food business operators would be required by law to monitor their cooking oil quality, for which the agency had also established testing protocols. FSSAI was engaged in discussions with the Indian Biodiesel Association, aiming to establish a nationwide system

for collecting UCO for conversion into biodiesel, wrote The Hindu Business Line. “Annually, about 23M tonnes of cooking oil is consumed in India. There is potential to recover and use about 3M tonnes of this for biodiesel production,” the FSSAI said. The food safety authority had also advised state food safety commissioners to focus on public awareness and education programmes, surveillance and enforcement activities. Currently, UCO in India was disposed in an environmentally hazardous manner, said The Hindu Business Line. UCO could also find its way into reuse at smaller food establishments , posing a danger to human health, the newspaper added.

he South African Competition Commission (SACC) has approved the sale of Unilever South Africa’s (ULSA) spreads business to Robertsons Holdings while still holding the firm liable for earlier cartel charges. The sale of Silver 2017 (Pty) Ltd, trading as Newco, to Robertsons Holdings was approved with conditions, wrote Bakery and Snacks on 13 June. In 2017, ULSA was found guilty of colluding with margarine producer Sime Darby Hudson Knight to avoid competing with each other in the spreads and oils market. and SACC was seeking to uphold ULSA’s liability for any penalty that was imposed post-merger. It was also seeking an order from the tribunal to fine Unilever an administrative penalty equal to 10% of its annual turnover, wrote Bakery and Snacks. The SACC said that between 2004 and 2013, Sime Darby had agreed not to supply industrial clients with margarine pack sizes smaller than 15kg and to steer clear of the the retail sector in which Unilever was active. In addition, Sime Darby agreed not to supply retail customers with its Crispa branded edible oils and to only produce 25-litre packages of oils for industrial customers. In return, ULSA agreed not to supply industrial customers with any of its Flora branded edible oils, said Bakery and Snacks. Sime Darby was fined 35M rand (US$2.5M), which it settled with the SACC in 2016.

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NEWS

ADM advances plans in Egypt and France gribusiness giants Archer Daniel Midlands (ADM) and Cargill have formally launched their Egyptian SoyVen joint venture in order to supply the country’s growing demand for soyabean oil and meal. First announced in March, the deal established SoyVen as the owner and operator of the National Vegetable Oil Co soya crush facility in Borg Al-Arad, alongside related commercial activities, including a separate Swiss entity supplying the plant with soyabeans, Cargill said in a

IN BRIEF PHILIPPINES: Shell’s Filipino subsidiary Pilipinas Shell Foundation Inc (PSFI) has signed a collaboration agreement with JNJ Oil Industries to fund a sustainability programme looking to boost the livelihoods of 150 coconut farmers. The US$150,000 of funding would go to the Collaboration for Coconut Productivity and Nurturing Farmers’ Trade (Coconut) Sustainable Livelihood Program – or Project Coconut – managed by Pilipinas Shell Petroleum Crop (PSPC), reported BusinessMirror on 6 June The initiative was mainly aimed at securing the supply of coconut methyl ester (CME) for JNJ, which used it as a biodiesel component, with the farmers benefiting from having Shell as a guaranteed buyer. ETHIOPIA: Ethiopia’s oilseed sector is heading for a strong year ahead, a 14 June US Department of Agriculture (USDA) GAIN report finds. Ethiopia’s exports of soyabeans, sesame and Niger seeds generated nearly US$360M, wrote World Grain on 11 July. In 2018/19, soyabean production was forecast to grow by 5,000 tonnes, reaching 120,000 tonnes. Local consumption was poised to reach 43,000 tonnes in 2018/19, due to demand for oil from consumers and meal from the poultry sector. Soyabean exports would stay level at 80,000 tonnes, with 95% of them going to Canada, China, India, Pakistan and Vietnam.

2 July statement. The Borg Al-Arab facility’s daily crush capacity had been doubled to 6,000 tonnes with the aim to reduce reliance on imports in Egypt, where the demand for high protein soyabean meal and soya oil was soaring. “The demand for high quality soyabean meal and for oil from both the food manufacturing and animal feed sectors continues to rise and I’m confident customers will turn to SoyVen as the premier provider in Egypt,” said Ahmet Ertürk, SoyVen CEO.

ADM and Cargill – each holding a 50% share of the joint venture – would continue their separate business operations in Egypt. SoyVen’s assets did not include Cargill’s grain business and port terminal in Dekheila, nor the ADMMedsofts joint venture at the Port of Alexandria. n On 2 July, ADM agreed on exclusive terms to purchase French animal nutrition solution provider Neovia. Neovia’s product portfolio included a wide range of nutrition solutions for the feed industry

using a variety of feedstocks such as soyabean, sunflower and rapeseed for protein, ADM said. Saint-Nolff, Franceheadquartered Neovia had a strong presence in 25 countries, including Western Europe, South and Central America and Southeast Asia, but a very limited US presence, which ADM said complemented its footprint. ADM said the US$1.535bn deal would be a transformative step for ADM’s animal nutrition business and a strategic investment in France.

Industry, retailers agree to limit krill fishing for oil

epresentatives of the krill fishing industry and major UK krill oil retailers have signed a voluntary agreement with Greenpeace to restrict krill fishing in areas around the Antarctic. Among the signatories were the British Retails Consortium and grocery and nutrition supplement retailers Aldi, Asda, Boots, Cooperative Group, Holland & Barrett, Lidl, Morrisons, Ocado, Sainsbury’s, Tesco and Waitrose, reported Food Navigator on 12 July. On the supplier side, the signatories represented 85% of the krill fishing industry and included Aker Biomarine, CNFC, Insung, Pescachile and Rimfrost. The agreement followed the March publication of the Greenpeace report, ‘License to Krill’, which claimed that the krill fishing industry, which had been growing steadily since 2010, was threatening krill stocks in crucial marine feeding areas. However, Ellen Schutt, interim executive director for the Global Organization for EPA and DHA Omega-3 (GOED), said there was “robust evidence”

PHOTO: ZEYUS MEDIA, FLICKR

that Antarctic krill was a well-regulated fishery. “The fishery is MSC-certified and has strong oversight by the Commission on the Conservation of Antarctic Marine Living Resources. Catch limits for krill are less than 1% of the stock biomass, far below even the ‘precautionary principle’ catch limits,” she said. Holland & Barrett in April 2018 announced it would replace krill oil supplements with algal oil-based omega 3 products and other fish alternatives, wrote Nutraingredients on 19 June.

Palm ban no biodiversity solution ‘Dirty’ buns boost

anning palm oil might displace, rather than stop, global loss of biodiversity due to a resultant increase in the production of other oil crops, a new study claims. Released following the EU’s June decision to phase out palm oil biodiesel by 2030 (see p8), the survey by the International Union for Conservation of Nature (IUCN) acknowledged that palm oil was causing destruction in tropical forests, a 26 June Reuters report said. Due to being grown in species-rich tropical areas, palm oil production could lead to catastrophic loss in biodiversity, with more than 190 species directly threatened by it, the study said. However, switching to other oil crops may only shift the problem to regions such as South American rainforests and

savannahs due to oil palms’ comparatively very high yields. Other oil crops could require up to nine times as much as land to produce the same amount of oil as oil palm. The study added that certified palm oil was only marginally better in preventing deforestation than the non-certified variety, wrote Reuters. It also called on governments to protect forests in all vegetable oil producing countries and to limit the use of palm oil in non-food applications. The IUCN report only examined the impact palm oil had on biodiversity without considering social or economic impacts. The study was released on the sidelines of the European conference of the Roundtable on Sustainable Palm Oil (RSPO) in Paris.

demand for butter

ultinational dairy co-op Fonterra is commissioning a new butter production line due to a growing demand for butter, driven by celebrities scarfing down its chocolate croissants. The line in Edgecumbe, New Zealand, would boost the facility’s butter output from 4,500 tonnes to 7,000 tonnes with production starting on 1 September, the company said on 10 July. The firm’s butter demand was driven by its Muddy Buns – or Dirty Dirty Bread – which had gained popularity, particularly in China. “They are popular with celebrities who have taken to social media to share images of their ‘muddy bun face’ experience,” Fonterra’s general manager of marketing for global foodservices, Susan Cassidy, said.

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NEWS

FRANCE: At least 10 people were injured after a grain silo exploded and was engulfed in a fireball in the southern port area of Strasbourg, France. Four people were seriously injured and taken to a hospital by helicopter while six others were treated for injuries and shock at the site, owned by agri cooperative Comptoir Agricole, reported France 3 news channel on 6 June. The cause of the explosion and the subsequent fire was not clear but, according to L’Alsace.fr news outlet, it was suspected that sparks from welding operations may have ignited asbestos fibres that were possibly present in the silo’s roof structures. Comptoir Agricole is a French agri cooperative that operates in several sectors, including oilseeds, animal feed, cereals, vegetables, hops and grape farming. USA: US soyabean crusher Tri-State Crush and commodity trading firm The Redwood Group have formed a strategic relationship to improve the marketing opportunities for Indiana soya producers. According to the agreement, Redwood would procure organic and non-GMO soyabeans for Tri-State’s crushing facility in Nappanee, alongside marketing the produced soyabean oil and meal, World Grain reported on 17 July. USA: The Wisconsin Soybean Marketing Board (WSMB), in collaboration with the City of Waupun, is planning to construct a US$150M soyabean crushing facility, the first such plant in the US state. The Wisconsin Soybean Crushing Plant (WSBCP) LLC would be located in the Waupun Industrial Park and have a daily processing capacity of 100,000 bushels, World Grain said on 8 June. The plant would purchase 33M bushels/year of soyabean from farmers in Wisconsin, which currently lacked its own soyabean crushing facility, said WSMB. This meant its soya crop had to be transported elsewhere for processing into oil, protein and meal.

St1, C2Biotrade aim to set up oil palm plantations to capture carbon dioxide

t1 Norge, Finnish energy firm St1’s Norwegian subsidiary, has entered into a preliminary collaboration agreement with oil palm plantation firm C2Biotrade to develop plantations in Colombia for biofuel production. The companies signed a letter of intent on 25 May, establishing their intent to afforest low alternative land to biologically capture and store atmospheric carbon while at the same time producing biofuels, St1 said in a statement. C2Biotrade was looking to plant 60,000ha of African palm, with a palm oil yield of 250,000 tonnes/year, that could capture more atmospheric CO2 than current unfertile, low productive grassland. With the reduction in atmospheric carbon, the biofuel produced from the palm oil could reduce

greenhouse gas emissions by 134% compared with fossil fuels, according to St1. The arrangement with C2Biotrade would establish a new sustainable biofuels supply chain to the Nordic countries and contribute to international afforestation efforts. “In parallel with our efforts to develop technology for the production of even more climate friendly biofuels, we are developing carbon farming. In other words, we are working on finding the most suitable method for biological carbon capture and storage through afforestation,” said St1 director of renewable energy Thomas Hansen. The current letter of intent covered a framework for how to establish an off-take agreement that would enable an increase of biofuels supply to the Nordics and boost employment levels in Colombia.

High saturated fat diets could result in depression

diet rich in saturated fats could suppress the brain’s ability to process certain neural chemicals, leading to lack of motivation and depression, a Canadian study suggests. The research, published by the University of Montreal, connected overconsumption of saturated fat to decreased function in mesolimbic dopamine release and signalling, reported The Olive Oil Times on 16 July. Dopamine is a neurotransmitter that has a large role in how people experience motivation and the feeling of gratification after completing a task. The Canadian study discovered that intake of saturated lipids could suppress dopamine signalling, with a resulting lack

PHOTO: PIXABAY

IN BRIEF

of motivation to complete daily tasks, such as exercise, possibly exacerbating the development of obesity, also associated with high saturated fat intake. The study noted, however, that fats’ effect on brain chemistry was dependent on the lipid class and not on weight gain or associated metabolic change.

Monounsaturated fat from olive oil did not produce similar dopamine-inhibiting effects as saturated fat. However, the researchers could not overrule the possibility of overconsumption of monounsaturates developing similar effects over an extended period of time.

China accelerating domestic olive oil industry

rowing Chinese demand for olive oil is putting pressure on the country’s government to accelerate the development of its domestic olive oil industry, reported The Olive Oil Times on 16 July. In July, the number of olive trees in China reached 59M, having gone up by 20M trees in five years from the 39M counted in 2013. Healthy eating habits were becoming increasingly popular among China’s growing middle class urban population and more frequent travel to countries like Spain and Italy had introduced them to olive oil, resulting in a potentially huge market. To meet the growing demand, the Chinese government had embarked on a national strategy to boost domestic olive oil production. The government said the plan would also improve the living conditions of local farmers and prevent their migration within China, thus reducing rural depopulation. The most suitable regions for growing olive trees in China were the Bailong River Valley in southern

Gansu province and the Jinsha River Valley at the border between Yunnan and Sichuan provinces, said The Olive Oil Times. However, differences between China and the Mediterranean – which included higher soil Ph and more frequent rains centring on the summer months – could cause problems in olive fruits, leaves, roots and yields. Additionally, newly planted olive trees took a long time to begin producing fruits so, in the short term, China would still require imports to meet its olive oil demand. However, in the mid and long term, its large land area, cheap labour costs and scientific approach to industry development could give domestic production a competitive advantage, The Olive Oil Times said. In 2016/17, approximately 5,000 tonnes of olive oil was produced in China, more than double that produced in 2014/15. It was estimated that in 2017/18, production would climb to 6,000 tonnes.

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BIOFUELS NEWS

IN BRIEF USA: Renewable chemicals firm Gevo has signed its first longterm supply agreement for its alcohol-to-jet fuel (ATJ) renewable aviation fuel with aviation fuel supplier Avfuel Corp. In the first phase of the deal, Gevo would supply Avfuel with ATJ from its Silsbee, Texas, facility, with a capacity of 70,000 gallons/year of hydrocarbon products consisting of 50% ATJ, Gevo said on 21 June. Upon the completion of Gevo’s Luverne, Minnesota, plant, the second phase of the agreement – lasting for five years – would begin, with Gevo ramping up ATJ deliveries to 1M gallons/year. BOLIVIA: Bio Clean Energy SA’s subsidiary Bio Petro Biofuels has signed a biodiesel contract with Bolivian state-owned oil firm YPFB, wrote Biodiesel Magazine on 11 June. The contract called for the supply of 1.5-3M litres/month for one year, totalling around 18-36M litres.

EU sets rules on palm oil ban E

U lawmakers have reached an informal agreement to phase out palm oil-based biodiesel by 2030, putting an end to more than a year and a half of debate. According to a Luxembourg Green MEP Claude Turmes, the phaseout would start with a freeze imposed on the current levels of palm oil imports, reported Platts on 14 June. The move was likely to upset the world’s two largest palm oil producers Indonesia and Malaysia, who had threatened the EU with trade retaliation if it enacts a palm oil ban. The phaseout decision was a part of a more expansive agreement to update the EU’s Renewable Energy Directive (RED), which included a binding 32% target of renewables in the EU energy mix, tweeted EU climate action and energy commissioner Miguel Arias Canete. Environmental activist group Greenpeace called the 32% target “disappointing”, saying it fell far behind the level needed to avert “catastrophic” climate change In addition, the agreement would set a 14% renewable energy sub-target on transport, put a freeze on crop-based biofuels in each EU member state at the level reached by 2020, and set a 3.5% target on second generation advanced biofuels. According to an analysis by Euractiv, the 14% renewables target in traffic – alongside the biofuel restrictions – could be seen as a way for the EU to

encourage the uptake of electric vehicles. The European Parliament originally sought a 12% transport target, while the final 14% level was one endorsed by the EU Council, representing national governments. The informal deal would next have to be approved by both the EU Parliament and the Council, which Platts said could take a few months but was usually only a formality for an informal decision. However, Fediol – the EU’s vegetable oil and protein meal industry association – said that fine tuning was still necessary. It called for establishing a “credible methodology” to define low and high indirect land use change (ILUC) risk biofuels to avoid “unjustified discrimination” of sustainable biofuels. “Assigning to the EU Commission the responsibility to come up at a later stage with a methodology to define biofuels that are produced from land with high carbon stock, as well as those at low risk of causing adverse effects, leaves huge uncertainty on biofuels producers and investors,” said Fediol director general Nathalie Lecocq in a statement. “A fair and transparent methodology will be essential to avoid unjustified discrimination of sustainable cultivations in other parts of the world,” she added Fediol also said the inclusion of “excessive” multipliers could hamper conventional biofuels’ role in meeting the EU energy targets.

Investment in gas-to-ethanol tech EPA proposes boosting biodiesel chemical firm BASF’s subsidiary BASF Venture Capital is volumes under its next RFS plan investing in Lanzatech, US firm that has developed a technology to German transform residuel steel industry gases into ethanol. The technology converts carbon dioxide and monoxide from off-gases into ethanol using special microbes, BASF said in a 13 June statement. The produced ethanol could be used for manufacturing diesel, petrol or jet fuel and as a precursor to plastics and polymers. Lanzatech could also produce various biochemicals from the gases besides ethanol, including chemical specialities and intermediates. The technology could also potentially be used to treat and recycle waste streams from the chemical industry and from municipal waste disposal. On 11 June, multinational steel maker ArcelorMittal broke ground on a new plant at its site in Ghent, Belgium, utilising Lanzatech’s technology. BASF said re-using waste streams instead of incinerating them could help industrial companies reduce CO2 emissions.

First Czech UCO biodiesel facility

hemoprojekt, a Czech biofuels company based in Ústí nad Labem, is preparing to launch the country’s first second generation biofuels facility, producing fuel from waste frying oil. The firm, which was the first in the Czech Republic to manufacture biofuel from rapeseed oil, was now switching to used cooking oil (UCO) as a feedstock and had already invested several dozen million Czech korunas in the project, reported Radio Praha on 19 June.

“We are currently transforming the unit from rapeseed oil into waste cooking oil. We believe second generation biofuels have a more promising future,” said Radomir Kucera, director of biodiesel operations at Chemoprojekt. “We expect to launch production at the end of September or beginning of October. The capacity of the production line will be between 6,000 and 8,000 tonnes/month.” The facility would use only plant oil-based UCO without animal fats.

he US Environmental Protection Agency (EPA) is proposing to increase the volumes of biomass-based diesel and advanced biofuels to be blended under the Renewable Fuel Standard (RFS). Under the proposal, the renewable volume obligation (RVO) of biomass based diesel would increase from 2.1bn gallons in 2019 to 2.43bn gallons in 2020, the National Biodiesel Board (NBB) said in a 26 June statement. The advanced biofuel RVO – which included some biodiesels – would increase from 4.29bn gallons in 2018 to 4.88bn gallons in 2019. But despite the proposal sending a positive message to the industry, the EPA’s granting of dozens of retroactive small refinery hardship exemptions had undercut volumes in previous years and could still have a negative impact. Kurt Kovarik, vice president of federal affairs at NBB, said former EPA administrator Scott Pruitt (pictured) had provided numerous waivers to petroleum

refiners, releasing them from their blending obligation. The waivers had effectively reduced the overall RFS biodiesel volumes by 100M gallons (454.6M litres) in 2016 and 275M gallons (1.25bn litres) in 2017. According to the NBB, the Trump administration’s actions on the RFS so far had been disappointing for both the biodiesel industry and US Midwest farmers. n EPA administrator Scott Pruitt resigned on 5 July due to a number of ethicsrelated controversies and has been replaced by EPA deputy administrator Andrew Wheeler, Reuters reported.

8 OFI – JULY/AUGUST 2018 www.ofimagazine.com

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TRANSPORT & LOGISTICS NEWS

IN BRIEF USA: Landus Cooperative, based in Iowa, has purchased Archer Daniels Midland’s (ADM) grain storage facility in Manilla, Iowa. The facility had more than 2.3M bushels of storage capacity, including 775,000 bushels of upright storage, more than 1.5M bushels of bunker storage, and receiving capacity of 32,000 bushels/hour, reported World Grain on 9 May. EGYPT: Ukrainian oilseeds and grains trader Nibulon intends to invest US$2bn to construct new grain silos and transport barges in Egypt’s Nile River Delta region, according to Egyptian supply ministry. A Reuters report on 2 July said the silos would be built on two sites near the ports of Alexandria and Damietta and that 20 barges each with a capacity to transport 2,000 tonnes of grain would be built. Construction would begin in the next two years.

Improvements at Ukrainian ports U

the Ukrainian economy and were responsible for 45% of its importexport operations. The total revenue created by the country’s ports was around US$1.7bn, making up 2% of the Ukrainian GDP, according to Ukrinform. Ukraine’s maritime industry included 14 ports on the Black Sea and the Sea of Azov, wrote Xinhua. n Elsewhere in Ukraine, agritrader Risoil has launched an expansion of its Chornomorsk terminal, while the Port of Olvia has finished the first phase of a grain terminal construction project. Risoil aimed to increase capacity from 15,000 to 22,000 tonnes/day at the JV Risoil Terminal, wrote World Grain on 15 June. It had also begun assembling a Neuero ship loader with a capacity of 1,000 tonnes/ hours. Risoil stores grain and oilseeds and manufactures vegetable oil.

kraine is has launched a major infrastructure modernisation plan, composed of 46 projects targeting its sea ports by 2030 with a total price tag of over one billion dollars. Ukrainian Deputy Prime Minister Volodymyr Kistion, who unveiled the project during the Ukrainian Ports Forum 2018, said its aim was to develop new transhipment capacities, including the construction of new berths and cargo handling terminals, reported Ukrinform and China’s Xinhua news agency. The government would invest 90bn Ukrainian hryvnia (US$168bn) in the programme, which Kistion said would boost throughput capacity of the ports from the current 130M to 157M tonnes of cargo. According to Kistion, Ukraine – the world’s largest exporter of sunflower seeds – was dependent on its sea ports, which played a key role in the development of

The Chornomorsk terminal came online in March 2016 and has an annual liquid cargo throughput of more than 1.5M tonnes. It can separately load six different types of liquid or dry cargo to six vessels. Olvia Port had completed the first stage of construction of a grain terminal at the seaport and begun the handling of agricultural goods, said Ukraine Open For Business on 11 June. The first stage involved construction of four silos with a capacity of 6,500 tonnes each. The construction of a storage warehouse is also underway, said investment firm BT Invest Ltd’s CEO Aivaras Karalius at the Ukrainian Ports Forum 2018. Karalius said that once the terminal was fully completed, the terminal would be able to handle up to 4M tonnes/year of cargo, with a throughtput of 300 trucks and 200 railway cars each day.

Cargill invests in logistics network expansion Siwertell ships

lobal agribusiness giant Cargill is expanding its global transportation and logistics network with an expansion investment in the Russian grain terminal of Rostov and the purchase of new babycape vessels. The company planned to invest 600-660M rubles (US$9.5-10.5M) to increase the capacity of the Rostov terminal by 50% to 1M tonnes/year, build a 20,000 tonne silo and extend the quay wall from 142m to 314m, wrote World Grain on 5 July. Construction work at the terminal was expected to begin in 2019. In addition, Cargill signed an agreement on 27 June with China’s CSSC Leasing, a division of China State Shipbuilding Corp, to time-charter four new baby-cape vessels with an option for two more.

Baby-cape vessels were typically between 90,700 and 109,000 deadweight tonnes and could provide suppliers with the opportunity to load an optimum amount of cargo, Cargill said. “These vessels will be among the most efficient in the market. Every aspect of the design, build and management ensures they will perform at the highest level,” said Cargill ocean transportation business president, Jan Dieleman. The ships, which would primarily transport grains and coal, would be built by CSSC’s Huangpu Wenchong Shipbuilding and delivered throughout 2020. Jeremy Bryan, Cargill’s global physical trading lead, said demand for baby-cape vessels had grown significantly in recent years.

anadian agri-food enterprise La Coop fédérée (LCF) is planning to build a new grain transfer terminal at the Port of Quebec (pictured) in order to tap into new markets, such as Asia and Europe. To be located at Anse au Foulon, the new CAN$90M (US$68M) terminal would have a throughput capacity of 1.3M tonnes/year of grains, which LCF valued at CAN$450M (US$340.4M), LCF said in a 5 July statement. “[This terminal] will increase storage capacity and open up new

export markets,” said Sébastien Léveillé, LCF executive vice president of agri-business. Quebecoise farmers produced 4.7M tonnes/year of grain, including soyabeans, canola, corn and wheat. The project included the

PHOTO: DXR, WIKIMEDIA COMMONS

LCF plans to construct new Quebec grains terminal installation of grain storage and handling equipment near deep water docks that would be able to accommodate large vessels. LCF would carry out the works in four phases with completion projected for 2021, wrote World Grain. LCF said Anse au Foulon was chosen as the location as it provided access to the St Lawrence Seaway and deepwater wharves. LCF is Quebec’s largest agrifood firm, trading oilseeds and grains alongside seeds, fertilisers and crop protection products.

soya unloader

ngineering and machinery company Siwertell, part of Bruks Siwertell Group, will deliver a high capacity unloader to Gramosa Agroalimentos SA’s (GA) new agribulk terminal in Mexico for use with various grains, including soyabeans. Siwertell said in a 22 May statement that the totally enclosed, rail-mounted SW 640-M unloader was chosen after it outperformed competing systems during a four-month selection process. The machine had a rated capacity of 1,200 tonnes/hour and could handle grains, corn, soyabean meal and dried distillers grains with solubles (DDGS), the firm said. The new unloader would be delivered fully-assembled from China to GA’s terminal in Veracruz for testing and commissioning, which was expected in mid-2019. Bruks Siwertell Group, Siwertell’s parent company, was formed on 9 May as a joint venture between Sweden’s Cargotec and JCE Invest, wrote World Grain on 11 May. Bruks Siwertell owned Siwertell and Bruks Holding, previously part of JCE Group.

10 OFI – JULY/AUGUST 2018 www.ofimagazine.com

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7/18/2018 11:08:50 AM

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

IN BRIEF SLOVAKIA: Researchers at the Slovak University of Technology (STU) have developed a new solution to manufacture bioplastics from waste cooking oil for use in a variety of sectors, including packaging and medical applications. Professor Pavel Alexy of the STU Faculty of Chemical and Food Technology in Bratislava said a patent application had been filed at the Slovak Patent Office for producing polyhydroxybutyrate, a biodegradable bioplastics component, according to a 6 June statement by the STU. SWEDEN: Nordic furniture firm IKEA and Finnish fuel company Neste are launching the worldfirst commercial scale pilot project producing polypropylene (PP) and polyethylene (PE) plastics out of used cooking oil (UCO) and vegetable oils. The Neste-IKEA collaboration would begin producing the bioplastics in autumn 2018, Neste said in a 7 June statement. The plastic would initially have a 20% renewable content, based on Neste’s renewable hydrocarbons, and would be used in the current IKEA range, including plastic storage boxes, starting with a limited number of products.

Wilmar completes MSCF tech installation in Chinese facility

S agrichem supplier Inventure Renewables has successfully implemented and operated for nearly a year its mixed super critical fluid (MSCF) technology at a Wilmar International Chinese oleochemical plant. Using MSCF, the processing facility in Taizhou, Jiangsu province has been producing fatty acid methyl esters (FAME) from various vegetable oil feedstocks for use in oleochemical and biodiesel manufacture, reported Biodiesel Magazine on 13 June. “The launch of the plant in Taizhou is a validation of our MSCF technology’s scalability to a commercial level. The plant is an example of the end-to-end, customised solutions Inventure provides,” said Inventure CEO Mark Tegen.

Rahul Kale, group head of oleochemicals and biofuels at Wilmar International, said the firm was beginning to see “tangible returns” from using Inventure’s technology. Inventure Renewables was founded in 2007 and produces solutions for agribusinesses and oleochemical and biofuel companies to turn waste and by-products into value-added materials. It also manufactures its own branded biobased oleochemicals. Wilmar International is the world’s largest palm oil trader and a leading Asian agribusiness group, with activities in oil palm cultivation, oilseed crushing, edible oil refining and production, speciality fats, oleochemicals and biodiesel. Wilmar Oleochemicals has more than 10 production bases in China.

Italian biofuel firm begins collecting household UCO

talian biofuel firm Eni SpA has begun collecting used cooking oil (UCO) near Venice in northern Italy for processing into a renewable diesel fuel. On 4 June, the company began collection UCO from the homes of its employees for processing at its biorefinery in Venice following an agreement between Eni and Veritas, the company responsible for waste collection in the city, reported Biodiesel Magazine. Over the span of a few weeks, the project would be extended to the Porto Marghera petrochemical plant, where Eni subsidiaries

Versalis and Syndial also operate. A container made specifically for the collection of UCO had been installed at Porto Marghera and employees given special jerry cans for the disposal of their household UCO.

On 9 March, Eni, Veritas, public transport company AVM/ACTV and the City of Venice signed an agreement to deliver purified UCO to Eni’s Venice biorefinery. The collected UCO would then be processed into Enidiesel+ fuel, which contained 15% biofuel. Eni also planned to progressively extend the project to collect UCO from other company sites elsewhere in Italy as well. According to the firm, each Italian family produced approximately three litres/year of UCO and waste frying and cooking oil.

Bio-on starts up bioplastic facility SABIC may grow Clariant stake The beads were aimed at io-on, an Italian bioplastics

producer, has inaugurated its first plant, aiming to produce bio-based and biodegradable PHA bioplastics. The new plant would produce materials for high value added niche markets initially at a 1,000 tonnes/year capacity but the firm hoped to double that amount soon, wrote Bio-based World News on 26 June. Located at a 30,000m2 plot in Castel San Pietro Terme, just outside the city of Bologna, Bio-on invested €20M (US$23.5M) to convert an existing facility into a bioplastics plant. Construction work began in March 2017 and finished on schedule, said Bio-on chair and CEO Marco Astorri. The first product to roll out from the facility would be Bio-on’s Minerv Bio Cosmetics branded bioplastic microbeads.

replacing fossil-based plastic microbeads in applications such as cosmetics, shampoos, bath foams and toothpastes. Fossil oil-based microbeads are extremely harmful for the environment as they do not degrade and are ingested by plankton, thus introducing them to the food chain. Due to their highly polluting nature, the USA banned plastic microbeads in 2015. Several other countries, such as Canada, France, the UK and Sweden, had followed suit, wrote Bio-based World News. Bio-on said that its beads were naturally biodegradable in water and even decomposed into nutrients that some microorganisms and plants could consume. The plant would also be a base for R&D into bioplastics.

audi Basic Industries Corp (SABIC) may be considering acquiring a larger share of Swiss chemicals firm Clariant, Reuters reported on 28 June. SABIC, which in January acquired a 24.9% stake in Clariant, was also expected to intensify R&D efforts with the firm, unnamed sources were quoted by Reuters as saying. SABIC and Clariant already operated a chemical process technology licensing business, located in New Jersey, USA. According to the Reuters sources, SABIC was “clearly not” intending to sit on its 25% share, but in order not to be seen as an aggressive acquirer, Sabic in January said it had no intention to launch a full takeover of Clariant. However, Saudi companies had increased their efforts to promote their influence outside the kingdom as part of Crown Prince Mohammed bin Salman’s Vision 2030 plan to diversify the country’s economy, said Reuters. The news agency’s sources said SABIC would initially stop short of taking complete control of Clariant, which had a market value of US$7.8bn. Under Swiss company takeover rules, anyone controlling 33.3% of a firm’s shares could make a full acquisition offer. According to the sources, SABIC’s plan to increase its stake would be cleared during the summer. Clariant is a bleaching earths supplier to the oils and fats industry.

12 OFI – JULY/AUGUST 2018 www.ofimagazine.com

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BIOTECH NEWS

Neonicotinoid resistant aphids in canola

ustralian canola farmers are urged to use integrated pest management practices after more populations of the green peach aphid (GPA) were found to have developed resistance to neonicotinoid pesticides. Research commissioned by the Grains Research and Development Corp in 2017 discovered that a number of new GPA populations in major Australian grain regions exhibited neonicotinoid resistance, wrote Country News on 21 June.

GPA is a widespread canola pest, which can transmit viruses that reduced oilseed rape yield by up to 26% and cause crop damage when feeding on the plants in high numbers. The aphids were confirmed to be resistant to four different chemical mode of action groups, including synthetic pyrethroids, carbamates, organophosphates and neonicotinoids, according to Country News. Paul Umina, director of research organisation Cesar, said the

findings reaffirmed the importance of farmers using integrated pest management practices. When GPA were colonising crop margins and population development is in early stages, Umina recommended border spraying to prevent or delay further growth of the population and to retain beneficial insects. Farmers should also assess aphid and beneficial insect populations through checks to determine if chemical control was needed and to avoid “insurance

BASF to register herbicide for soya, oil palm use

erman chemicals firm BASF has submitted for regulatory approval two new herbicides intended for controlling challenging grasses and broadleaf weeds with various crops, including soyabean and oil palm. The company had submitted the Tirexor brand herbicides for approval in Australia, while the Luximo brand’s dossier had been sent to regulators in Australia and the EU, BASF said in a 25 June statement. Out of the two, Tirexor was a protoporphyrinogen oxidase (PPO) inhibitor

herbicide aimed at controlling PPO resistant weeds, such as the difficult-to-control pigweed and ragweed species, said BASF. The fast-acting chemical – BASF said it could produce foliar effects in just one day – was expected to find use on a wide variety of crops, such as soyabeans, oil palm, corn, small grain cereals and tree and fruit crops. BASF expected to launch Tirexor in Australia from 2020 onwards, while Luximo was anticipated to hit the markets in Australia by 2020 and in the UK by 2021.

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spraying” at all costs. Neonicotinoid seed treatments should also be avoided in the same paddocks over consecutive years unless there was a high risk of feeding damage or virus transmission. The resistance discovered was luckily metabolic and not targetsite, making it was less likely to lead to a loss of field efficiency. Complete control failures with neonicotinoids were not expected, but Umina added that there was “no room for complacency”

New Syngenta fungicide

wiss agritech firm Syngenta launched a new seed treatment fungicide on 4 June to combat fungus-based diseases in crops such as canola, soyabeans and rice. Containing Syngenta’s fungicide molecule Adepidyn, Saltro could control diseases such as blackleg in canola, sudden death syndrome in soyabeans and bakanae in rice, the firm said. Syngenta expected the first registrations of Saltro in Canada and the USA in 2019, followed by Australia in 2020. Saltro can be used in combination with the company’s existing seed treatments.

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D IARY OF EVEN TS

28-30 AUGUST 2018

15-18 SEPTEMBER 2018

US Soy Global Trade Exchange & Midwest Specialty Grains Conference and Trade Show 2018 VENUE: Sheraton Hotel, Kansas City, USA CONTACT: Midwest Shippers Association, USA Tel: +1 952 2536231 E-mail: staff@mnshippers.com www.grainconference.org

The International Exhibition of Edible Oil, Oilseeds, Related Products, Machineries & Related Industries VENUE: Tehran, Iran CONTACT: Nikatis, Iran Tel: +98 21 22657072 E-mail: info@Nikatis.ir www.seedex.nikatis.ir/en

16-19 SEPTEMBER 2018

2-7 SEPTEMBER 2018 FOSFA Basic Introductory Course 2018 VENUE: Royal Holloway University, Egham, UK CONTACT: FOSFA, UK Tel: +44 20 73742346 E-mail: amy.morrell@fosfa.org www.fosfa.org

16th Euro Fed Lipid Congress VENUE: Belfast Waterfront Congress Centre, Northern Ireland CONTACT: Euro Fed Lipid, Germany Tel: +49 69 7917533 E-mail: info@eurofedlipid.org www.eurofedlipid.org/meetings/belfast2018

4-6 SEPTEMBER 2018

18-20 SEPTEMBER 2018

5th High Oleic Oils Congress (HOC2018) VENUE: Montreal, Canada CONTACT: FAT & Associés, France Tel: +33 567 339206 www.higholeicmarket.com/hoc-2018

4 Advanced Biofuels Conference VENUE: Conference Centre Wallenberg Gothenburg, Sweden CONTACT: Svebio, Sweden Tel: +46 8 4417083 E-mail: tomas.ekbom@svebio.se www.svebio.se/en/events/ advanced-biofuels-conference th

4-6 SEPTEMBER 2018 AusCanola2018, 20 Australian Research Assembly on Brassicas VENUE: Perth, Australia CONTACT: Grain Industry Association of Western Australia Tel: +61 8 62622128 E-mail: RNash@giwa.org.au www.australianoilseeds.com/conferences_ workshops/ARAB/AusCanola_2018 th

5 SEPTEMBER 2018 Sunflower Oil Production, Quality and Applications VENUE: Balkan Congress Center, Edirne, Turkey CONTACT: International Sunflower Oils Association (ISOA), Italy Tel: +38 0676 342639 E-mail: info@isoa-sunoil.org www.isoa-sunoil.org/events/sunflower-oilproduction-quality-and-applications-1-1/ about-program

11-13 SEPTEMBER 2018 Global Grain South America 2018 VENUE: São Paulo, Brazil CONTACT: Global Grain, UK Tel: +44 20 77797222 E-mail: registration@ggrain.com www.globalgrainevents.com/south-america/ details.html

18 SEPTEMBER 2018 Surfactants Business Essentials Training Course VENUE: Marriott Hotel, Amsterdam, Netherlands CONTACT: ICIS, UK Tel: +44 20 86522182 E-mail: kathryn.bloxham@icis.com www.icisevents.com/ehome/ europeansurfactants/training

19-20 SEPTEMBER 2018 7th ICIS European Surfactants Conference VENUE: Marriott Amsterdam, the Netherlands CONTACT: ICIS, UK Tel: +44 20 8652 4659 E-mail: events.registration@icis.com www.icisevents.com/europeansurfactants

19-20 SEPTEMBER 2018 5th International Palm Oil Sustainability Conference (IPOSC) 2018 VENUE: Shangri-La’s Tanjung Aru Resort & Spa Kota Kinabalu, Malaysia CONTACT: MPOC, Malaysia Tel: +60 603 78064097 www.mpoc.org.my/International_Palm_Oil_ Sustainability_Conference_(IPOSC)_2018. aspx

For a full events list, go to: www.ofimagazine.com

19-20 SEPTEMBER 2018 Algae Tech Conference VENUE: Munich, Germany CONTACT: Cogiton Group, Poland Tel: +48 61 2504350 E-mail: office@cogitongroup.com www.algaetech-conference.com

20 SEPTEMBER 2018 Black Sea Oil Trade 2018 VENUE: Hilton Hotel, Kiyv, Ukraine CONTACT: UkrAgroConsult, Ukraine Tel: +38 044 4514634 E-mail: conference@ukragroconsult.org www.ukragroconsult.com/bso/2018/en/ conference

25-27 SEPTEMBER 2018 International Agricultural Fair on Processing and Storage of Agricultural Products “Fat and Oil Industry” VENUE: KiyvExpoPlaza, Kiyv, Ukraine CONTACT: Agroinkom, Ukraine Tel: +38 044 5931901 E-mail: info@agroinkom.com.ua www.oil.agroinkom.com.ua/en

26-28 SEPTEMBER 2018 Globoil India 2018 VENUE: Renaissance Hotel, Mumbai, India CONTACT: Tefla’s, India Tel: +91 022 62231245 E-mail: events@teflas.com www.globoilindia.com

3-4 OCTOBER 2018 Bulk Liquid Storage Conference 2018 VENUE: Cartagena, Spain CONTACT: Active Communications International, UK Tel: +48 61 6467058 E-mail: mkielerska@acieu.net www.wplgroup.com/aci/event/europeanbulk-liquid-storage

4-5 OCTOBER 2018 Poultry Protein & Fat Seminar VENUE: Doubletree Hotel, Nashville, USA CONTACT: US Poultry & Egg Association Tel: +1 770 4939401 E-mail: info@uspoultry.org www.uspoultry.org/educationprograms/ index.cfm#ppfs

7-10 OCTOBER 2018 Vegetable Oil Processing and Products of Vegetable Oil/Biodiesel VENUE: Rudder Tower, Texas A&M University CONTACT: Mohammed S Alam, USA Tel: +1 979 8452740 E-mail: msalam@tamu.edu www.perdc.tamu.edu/event/vegtetableoil-processing-and-products-of-vegetable-oilbiodiesel

14 OFI – JULY/AUGUST 2018 www.ofimagazine.com

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7/12/2018 3:44:54 PM

DI ARY O F E V E NT S

www.dsengineers.com

10-11 OCTOBER 2018 Biofuels International Conference & Expo 2018 VENUE: Crowne Plaza, Berlin, Germany CONTACT: Woodcote Media, UK Tel: +44 20 86874138; E-mail: tracy@woodcotemedia.com www.biofuels-news.com/conference/biofuels/biofuels_index.php

11-12 OCTOBER 2018 2 ICIS Indian Surfactants Conference VENUE: Mumbai, India CONTACT: ICIS, UK Tel: +44 20 8652 2182; E-mail: kathryn.bloxham@icis.com www.icisevents.com/ehome/indiansurfactants nd

18-20 OCTOBER 2018 13th International Congress on Biofuels and Bioenergy VENUE: Ottawa, Canada CONTACT: Conferenceseries, USA Tel: +1 213 2339462; E-mail: biofuels@chemseries.com www.biofuels-bioenergy.conferenceseries.com

22-26 OCTOBER 2018 National Renderers Association 85th Annual Convention VENUE: Ritz-Carlton, Laguna Niguel, USA CONTACT: National Renderers Association, USA Tel: +1 703 6830155; E-mail: co@martycovert.com www.nationalrenderers.org

25-26 OCTOBER 2018 3 ICIS Pan American Oleochemicals Conference VENUE: Fontainebleau Hotel, Miami Beach, USA CONTACT: ICIS, UK Tel: +44 20 86524659; E-mail: events.registration@icis.com www.icisevents.com/ehome/panamoleochemicals/home/ rd

28-31 OCTOBER 2018 Fabric and Home Care World Conference VENUE: Boca Raton Resort & Club, Boca Raton, USA CONTACT: AOCS, USA Tel: +1 217 3592344; E-mail: meetings@aocs.org www.fabrichomecare.aocs.org

12-15 NOVEMBER 2018 16th Annual Roundtable Meeting on Sustainable Palm Oil (RT16) VENUE: Magellan Sutera Resort, Kota Kinabalu, Malaysia CONTACT: RSPO, Malaysia Tel: +603 2302 1500; E-mail: caroline.yeo@rspo.org www.rt.rspo.org

Serving the Vegetable Oil Industry From Basic Engineering to Full Turnkey Project Single Point Responsibility through EPC or EPCM+® with guaranteed: � Process Performances � Time Schedule � Budget

29-30 NOVEMBER 2018 Omega-3 Summit 2018 VENUE: Crowne Plaza Le Palace, Brussels, Belgium CONTACT: VVZRLHealth Claims Europe, Belgium Tel: +32 51 311274; E-mail: info@healthclaims.eu www.omega3summit.org

31 OCTOBER-2 NOVEMBER 2018 14th Indonesian Palm Oil Conference (IPOC) and 2019 Price Outlook VENUE: The Westin Resort Nusa Dua, Bali, Indonesia CONTACT: Gapki, Indonesia Tel: +62 21 57943871; E-mail: info@gapkiconference.org www.gapkiconference.org 15 OFI – JULY/AUGUST 2018 www.ofimagazine.com

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I NTE RN ATION AL M ARKET REVIEW

CRUDE VEGETABLE OIL PRICES

averages (except palm, rbd) FIGURE 1: CRUDE VEGETABLE OIL monthly PRICES, 2007-2017 (US$/TONNE) 2,500

2,000

rading near the bottom of their 10-year price trends, the mainstay vegetable oils present good value to the consumer, even before taking account of years of global inflation. Plenty of soyabeans (despite a crop shortfall in major player Argentina) and a palm output recovery (though not yet fully going to plan) – even with less rapeseed and sunflower than expected – suggest comfortable supplies and enough inter-oil competition to maintain a restrained price trend going forward. Competition from the biofuel sector remains a potential offset, although recent analyses of crude’s medium/long-term price prospects have gone in both directions. Palm oil producers, especially, plan to offload more surplus towards biodiesel. Forecasts for soya oil use in diesel, including in the USA, have also been up recently. During the past four-five years, the main vegetable oil components have stayed mostly within a US$500-800 trading band (and narrower than that in the past year) for their crude versions. That’s a far cry from the peak US$1,300-2,000 users had to pay during the shortfall period that peaked in 2008 when demand growth stagnated (see Figure 1, above). A relatively strong US dollar has taken some of the cost windfall for many importing countries. However, prices are at a level that should help consumers’ forward planning, sustaining if not improving on the annual 4% consumption growth trend of recent years. The biggest supply gains in the current season have been down to the market leaders, palm and soya oil. The forecast for world soyabean supplies, according to the US Department of Agriculture (USDA), has tightened somewhat since our March review, when the Argentine crop was expected to reach 47M tonnes. That is now down to 37M tonnes, some say as low as 35M tonnes. Yet it has been heavily offset by an expected increase in Brazil’s crop, from 113M tonnes then to a new record 120.5M tonnes. Alongside last year’s record 119.5M-tonne US harvest – plus bigger Chinese and Canadian crops – it adds up to a world total approaching 337M tonnes. While that is over 11M tonnes under the previous season’s crop, the mitigating factor has been the near 97M tonnes carried into 2017/18 from the last bumper season – 16M tonnes more than the previous year. Global supplies will still be up slightly on the year.

Soya

1,500 $/tonne

Cheap vegetable oils may improve demand CHART: JOHN BUCKLEY

Vegetable oil prices are at a 10-year low, which spells good news for consumers. Producers may not be as excited, particularly in the case of soyabean, where the trade tensions between China and the USA have trampled prices down. Demand for palm oil has fallen as well, but might pick up again at the end of the year. John Buckley writes

Rape Sun

1,000

Palm

500

Moreover, as the soyabean futures slump is demonstrating, those record carry-in stocks arguably need to be reduced in order to ease downward pressure on the market as it is a potential disincentive for farmers planting next season’s crops. However, chances of soyabean stocks eroding have evaporated in the past month due to an expected slump in Chinese demand, springing directly from US President Trump’s attempts to rebalance trade between the USA and China. Whereas in June, the USDA expected the world soyabean stock to erode by around 6M tonnes, it now sees it growing by a further 2M tonnes. Prior to June, the Argentine crop shortfall and the shift it caused to market shares had been a main price strength driver. The reversal since has been dramatic, as the US tariffs on China shut down demand for US beans, with China switching to Brazil. At the time of writing, US sales to China are down by 28% , in a year when one of the US main export rivals, Argentina, has lost 18-20M tonnes. The latest USDA forecasts for the 2018/19 season have reflected these developments and how they might evolve. Even allowing for China taking more from alternative suppliers, the USDA has slashed the top buyer’s import potential from 103M to 95M tonnes, putting it 2M tonnes under last season’s. China’s crush estimate was also cut by 5.5M tonnes, if still 4.5M tonnes up on the year, anticipating a larger domestic crop for the second year running and drawdowns in its domestic stocks. Meanwhile, the USA loses 6.8M tonnes of export business and adds most of that to its end-season stocks, which rise 50% to a new peak of 15.8M tonnes. This assumes a US crop of 117.3M tonnes – 2.2M below last year’s. The USDA raised this in July from 116.4M tonnes forecast in June, based on higher estimates of planted area. Some analysts think the USDA could also have

raised the yield forecast from 48.5 bushels/acre, based on current high crop ratings and favourable weather. With a yield similar to last year’s, the crop would rise to almost 119M tonnes and, at 2016 yields, nearly 126M tonnes. US crush has remained supportive, rising 3.5M tonnes to meet meal export demand boosted by Argentina’s supply shortfall. US exports – China aside – have not been as bad as feared for the current season to date, running only about 4% lower thanks other customers snapping up cheaper US beans. Even so, the USA starts next season with a large stockpile of some 12.6M tonnes, compared with 8.2M last season and 5M tonnes or less in recent earlier years. Based on the July USDA/WASDE reports, which include a record 120.5M tonne Brazilian crop and a 20M tonne Argentine bounce-back to 57M tonnes, global soyabean production is seen at 359.5M tonnes. Even before the bearish 2018/19 data was released, Chicago soyabean futures had plunged to a near 10-year low, weakening product values and applying downward pressures across the vegetable oil sector. It will be interesting to see how the Latin American producers respond to low soya prices when they start planting in just four months’ time. The weak Brazilian currency is protecting growers to some extent from the price fall in Chicago and alternative crops do not offer much better returns. The Latin American supply expansion seems likely to continue. Soya oil futures have also come under pressure from earlier bouts of weakness in energy markets and India raising import levies on soft oils. The strong, meal-driven US crush has also generated more oil stocks, further weighing on values. Recently, US meal export trade has been running about 15% up on the year.

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I NT E RN ATION AL M ARKET REVIEW

Poor palm recovery Benchmark Bursa Malaysia palm oil futures dropped sharply in second quarter 2018, hitting their lowest level in almost three years amid disappointing demand. The decline escalated as Chinese commodity markets sold off in the wake of the USA and China imposing tariffs on each other. Palm oil has also responded to the weak trend in soya oil. Rabobank suggests palm oil supply will slow down in a few years due to less replanting and lower yields from older plantations. But that is way ahead to much influence the current bearish sentiment. Questions also remain on whether global consumption of palm oil will hold up as Europe aims to eject palm from its biodiesel programmes. Palm oil producers recently had a reprieve as the EU decided to postpone this measure from 2021 to 2030. However, the risk remains that some European countries’ moves to reduce palm oil use in the food sector will spread to other regions. Ukraine’s parliament was recently reported to have voted to ban its use in foods. It is not in the league of major importers but, alongside European moves to cut use of the oil, this decision was another psychological blow for the market. The plus factor for palm remains origin countries’ ambitious plans to use a lot of product in biodiesel. Indonesia leads the way, aiming for a 25% mix with conventional fuel in some transport sectors. However, challenges remain in respect of auto producers’ ability to supply suitable engines, the need to expand fuel distribution systems and, not least, the volatility in energy markets. Recent official data showed Malaysian exports still falling in May and June. The effect on prices would have been greater if not for production also slowing down, keeping stocks stable rather than rising. Mixed trends were seen within an overall 12.6% decline in June exports – China 19% less than in May, India 112% more, Pakistan 23% less, the EU steady. Year-to-date exports in total were still up by 5% with gains to all the top customers – EU up 11.7%, India and China both up about 25% and Pakistan 43%. Some of these gains can be attributed to Malaysia’s temporary export tax relief over much of this period. However, with July exports to date already running even lower, things look bearish for Asian producers bracing for the third quarter seasonal production increase. It suggests stocks rising over coming months unless production has been overrated or demand picks up. Palm oil trade to India might improve in the second half of 2018 as it raises import duties on soya, rape and sunflower oils, easing higher-taxed palm oil’s competitive disadvantage. However, this probably will not be a game-changing event. China has also been indicating it could use more palm oil, especially in its own biodiesel programme, and recently indicated it could raise its import quota for Indonesian oil by 500,000 tonnes. The USDA has been predicting world palm oil output would rise by 7.3M tonnes over the 2016-2018 seasons, resulting in a 3.4M tonne increase in carryover stocks. Another 2.7M tonnes could be added to production in 2018/19, keeping it ahead of consumption (despite that rising by 3.4M tonnes) and boosting stocks by a further 1.2M tonnes. Also bearish, Thailand plans to export at least 600,000 tonnes of palm oil this year as higher than usual output raises its surplus stocks. The third largest producer, not usually a large exporter, also plans to improve cropping efficiency and plant better varieties, which could spell more exports down the road. Raising yields is becoming a watchword for the Asian palm oil industry as it attempts to improve its image amid growing blame for deforestation and biodiversity loss. Malaysia wants to go from an average of 4.0 to 4.8 tonnes/ha and has hybrids that could produce as much as 7 tonnes/ha. Palm’s defenders note that competing oilseeds use far more land to produce a tonne of oil, although critics say it is the type of land that counts and what was on it before the plantations.

Despite a less than ideal start to the sowing season, that could mean a crop significantly larger than the recent 21.1M tonne forecast. AAFC has also revised up its old and new crop stock estimates, indicating a comfortable supply balance. Mixed conditions in Europe suggest the crop may now struggle to approach last year’s 22.2M tonnes – the USDA recently forecast 20.2M tonnes based on declining prospects for top producers France and Germany. However, the Ukrainian crop is said to be in its best shape for some years, promising something similar to last year’s 2.2M tonnes, which was up from 1.25M tonnes in 2016. Russia’s crop, earlier seen up slightly at 1.65M tonnes, might have lost some potential amid dry weather. Australia has also had drought issues, taking a bite out of earlier 4M tonne forecasts, maybe putting it under last year’s 3.2M tonnes. World rapeseed oil output in 2018/19 had earlier been forecast by USDA to rise 800,000 tonnes. By July, it had slashed the increase back to 300,000 tonnes, assuming a drawdown in both rapeseed and rape oil stocks. China was expected to use 8.5M tonnes of rapeseed oil – about a quarter of its total vegetable oil needs versus about 50% from soya oil. China is believed to be still carrying large stocks of rapeseed oil from past seasons, having taken these down by about 1M tonnes in the past year. It could step up consumption as it seeks to replace soya oil derived from US soyabeans. Early estimates for the 2018/19 global sunflower crop had suggested potential for growth of about 2.5M tonnes or some 5.4%, implying an additional 1M tonnes of sunflower oil. However, in July, the USDA slashed 3M tonnes from drought-affected Russian and Ukrainian production, leaving the global total slightly down on the year. Europe’s crop is estimated to have been sown on a slightly smaller area and current yield prospects suggest a decline of about 600,000 tonnes, leading to reduced sun oil production and potentially more imports. Global consumption of the oil is seen similar to last year’s – around 17M tonnes – if prices remain competitive with rival soft oils.  John Buckley is OFI’s market correspondent

Rapeseed inching up Rapeseed markets had been under some downward pressure recently from the slumping soya complex weighing on oil values and crush margins. The offset has been Canadian hopes that more will be sold to China as it cuts back on imports of US soyabeans. Canada’s own crop estimates for 2018 from Agriculture and Agri-Food Canada (AAFC), and those from the USDA, have been on the conservative side and many in the trade think these may be revised up. 17 OFI – JULY/AUGUST 2018 www.ofimagazine.com

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THE AWARD-WINNING INTERIOR OF THE 2016 FORD F-150 INCLUDES MATERIALS BASED ON SOYABEAN AND CASTOR OIL

The automotive industry is using renewable materials derived from oilseeds in all parts of a car, from body panels to interior components and electrical wiring. Ile Kauppila takes a look at how Ford began its journey to replace petroleum with oilseeds

oyabeans and the automotive industry are no strangers. Biodiesel has been a hot topic for years now and, in the USA in particular, soyabeans are the dominating feedstock for fuel production. In January 2018, the US biodiesel industry processed some 210M tonnes of soyabeans, representing roughly 50% of all biodiesel feedstocks used during the month, according to the US Energy Information Administration. But the auto industry has uses for soyabeans and their oil – and other oilseeds, for that matter – besides fuel applications. Materials derived from oilseeds are used to replace petrochemicals or as raw materials in their own right for a wide variety of purposes. It would not be surprising to find them in all parts of the car, from the engine to the tyres to the passenger compartment. For Ford Motor Co, 2018 is a fairly significant year when it comes to soyabeans. It marks the 10th anniversary of its programme to replace petroleumbased polyols in the foam used in its seat cushions. The anniversary is an appropriate time to highlight the results of the soya drive. More than 18.5M Ford vehicles now use the foam and, since the programme’s launch in 2008, the firm says it has used more than half a trillion

At the wheel of susta

soyabeans. According to North Carolina State University, this has saved more than 103M tonnes of CO2 emissions, an amount comparable to that consumed by 4M trees in a year. Debbie Mielewski, senior technical leader at Ford Materials Sustainability Lab, considers the use of soyabeans to produce seat cushions a learning experience. “We’ve learned a lot over the past decade-plus. Most importantly, we’ve learned we can provide the world with a host of alternative material choices that have less impact on the environment,” she says.

Historic precedent As a company, Ford’s special relationship with soyabeans stretches far further than 2008. Henry Ford himself was fascinated with the possibilities of soyabeans and was a proponent of biofuels. However, like the company now, he did not limit his vision to only fuels, and August 1941 saw the unveiling of Ford’s ‘Soybean Car’. The car’s body consisted of plastic panels that used soyabeans as their key ingredient. According to the Henry Ford Museum, the plastic car was Mr Ford’s answer to the shortage of metal at the time. He also claimed the plastic frame made the car safer than full metal cars. The original car has unfortunately not survived to this day and shifting priorities due to the outbreak of World War II meant no more prototypes were ever built. Nonetheless, the car illustrates Ford’s long

tradition in using alternative renewable materials. In this vein, Michael Erker, director of bio-based products at the United Soybean Board (USB), tells Oils & Fats International that Ford attended one of USB’s technical advisory panel meetings. During these meetings, companies can present their ideas and projects to potentially receive support and funding from the USB. “Probably 12 years ago, Ford happened to come to a technical advisory panel meeting. Agri machinery firm John Deere was also there and they had done some testing on using soya polyols in polyester panels for tractors and combine harvesters. Ford said they also used polyols in seating, so once they heard Deere’s presentation, they asked us for some additional information,” says Erker. According to Mielewski, there are roughly 15kg of foam in a typical vehicle, alongside 130kg of plastic, making up 10% of the vehicle’s weight. She says Ford figured it could have a huge impact if it could take all the petroleum-based materials that went into making this foam and replace them with a bio-based alternative. Soyabean oil was chosen due to its abundant availability in the US Midwest. USB agreed to fund the initial research into Ford’s soya-based seat cushions. For Ford, there was a financial case to be made for moving away from petroleum polyols. In 2007/08, oil prices skyrocketed, taking petroleum derivative prices with them. Suddenly, the previously expensive soyabased materials began to look more attractive, says Mielewski. “But just bringing the idea to market in

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REN EWABLE R E S OURC E S Other plant-based materials used by Ford include, among others, coconut fibres, wheat straw and rice hulls. The fibres from these materials are used like carbon fibre and mixed into plastic as a reinforcement material. Coming together, all of them result in cars that are more environmentally friendly to produce. This has not gone unnoticed and Ford cars have received several accolades. The 2015 Ford F-150 pickup – which incorporates soyabean oil in its seat cushions, castor oil in its fuel lines and recycled cotton in its surface materials – won the Green Truck of the Year award at the 2016 San Antonio Auto & Truck Show. “The 2016 Ford F-150 is a great example of the environmental leadership that can, and should, be accomplished in the immensely popular pickup field,” said Ron Cogan, editor and publisher of the Green Car Journal. In November 2017, Ford’s castor oil foam and its use in the 2018 Ford Fusion won the Environmental category at the US Society of Plastics Engineers’ 47th annual Automotive Innovation Awards Gala.

Not alone in the game

ustainability

the first place was a real challenge. The first foams, frankly, were terrible,” she says. “They met none of the rigorous requirements for automotive seating.” The early foams, both Mielewski and Erker say, suffered from a number of issues. Their durability fell far short of the standard requirements for car seating, which state that the cushions must rebound for the equivalent of 15 years. The soya- and petroleum-based materials also began to separate in the finished foam, causing it to fall apart. One more surprising side effect was the foam’s revolting smell. “We made some really bad foams. I mean, really bad, stinky things you would not want to sit on,” Mielewski says, describing the cushions leaving the whole car smelling like rancid vegetable oil.

Soya coming together Determination, extensive research and hard work ultimately paid off. In August 2008, Ford introduced its then-latest model of the Mustang (pictured above), which included the soyabean oil-based foam in its seat cushions, seat backs and headrests. Customers and media liked the material and, since 2011, it has been a key material in all seat cushions in all Ford vehicles manufactured in North America, says Mielewski. Using soyabean oil has allowed the company to save more than 680,000 tonnes/year of petroleum oil. With its success in seat panels, Mielewski says the company is now expanding the use of the oil to

door panels, steering wheels and carpet insulation. “We’re migrating it out and that was the whole intent. You don’t want to develop one of these materials if you’re not going to use it extensively and actually do good for the environment. If it can be done for seat cushions and backs, it can probably be done for all the other applications as well,” Mielewski says in an interview with Triple Pundit. With soyabean having been such a hit and finding uses in many places, a logical follow-up question is whether other oilseed or plant materials could prove as successful. Erker says Ford has asked this question and is working to provide an answer. “They’re not only looking at soyabeans but at all different kinds of fibres and oils and thinking what they can do with them. Some of them might be used as fillers in their body parts or formulations, while some – like the soya polyol – could make basic ingredients when producing foams.”

Not only soyabeans One such material is castor oil. Teaming up with German chemical maker BASF, Ford began in 2012 to develop a new kind of foam for the instrument panel of that year’s Ford Focus model. The castorbased foam that was born out of the collaboration is more durable than petroleum foams, with BASF tests revealing a 36% better tensile strength, which measures the foam’s ability to hold its shape over time and use. Using castor oil also improved the foam’s tear strength by 5%, while elongation – stretching under temperature or impact stress – was reduced by 12%. From a customer perspective, the castor foam is softer to the touch that previous materials. Finally, BASF reports that the castor foam cures 43% faster than petroleum foam, leading to increased productivity. In a nutshell, replacing petroleum with castor oil lead to a better product.

But Ford is by no means the only motor company engaged in developing sustainable solutions from oilseeds and plants. As Erker mentions, Ford may have initially gotten the spark to develop its soya foam from the solutions used by the tractor maker John Deere. According to the USB, the company uses nearly 1M tonnes/year of Envirez brand sheetmoulding compound, which is based on soyabeans. John Deere’s global manager of materials engineering and technology, Jay Olson, says the material adds strength, flexibility and endurance to the firm’s HarvestForm body panels. Looking at the personal vehicle sector, Ford is not alone there either. According to MultiBriefs, Toyota began using bioplastics based on thermoplastic polyactic acid (PLA) in the floor mats and spare tyre covers in its 2003/04 Raum model. PLA is a biodegradable polyester that can be derived from a variety of sources, such as corn starch, cassava or sugarcane. Since then, Toyta has developed what it calls “ecological plastics”, which are used in scuff plates, headliners, seat cushions and other parts. For example, the 2010 Toyota Lexus HS 250H hybrid made extensive use of these materials in its interior panels, seats and floors. Approximately 30% of the interior and boot areas of the car was covered with these ecological plastics. Additionally, like Ford, Toyota has developed plant oil-based coatings for wires in the engine compartment. In Toyota’s case, these coatings are based on soya. As other examples, Toyota’s Japanese compatriot Mazda has also launched its own bioplastics project, developing polypropylene (PP) based on nonfood biomass, such as plant waste, for its vehicles since 2013. France’s PSA Peugeot Citroën, too, has started on the same path and is striving to have 20% of the materials used for its cars come from renewable sources, such as hemp, linen and “biomaterials produced using renewable sources”, which includes oilseed-based plastics. Besides companies making the cars themselves, oilseed-based renewable materials are also being embraced by firms making single vehicle parts. One such company is the global tyre manufacturer Goodyear, which in September 2017 introduced the Assurance WeatherReady tyres utilising a new

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PHOTO: FORD (INTERIOR), THE CAR SPY (EXTERIOR)

R EN EWABLE RESOURC ES

got his wires fixed even retained a special “mouse man” dealing solely with rodent-chewed wires. “The environmentally friendly and less expensive soya-based coating is the problem ... older vehicles with non-soya-based insulation that are exposed to similar conditions do not experience rodent-caused damage,” Roscoe says in his complaint. Oils & Fats International was not aware of any court decisions related to the cases at the time of printing. THE 2008 FORD MUSTANG INCLUDES A SOYABEAN-BASED FOAM IN ITS SEAT CUSHIONS, BACKS AND HEADRESTS

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soyabean oil-based rubber compound. Like Ford’s soya foam, Goodyear’s tyres were developed in collaboration with the USB, which provided funding support. “These tyres have the soya oil in the tyre tread,” explains Erker. The new tread formulation has helped Goodyear enhance the performance of the WeatherReady tyres in dry, wet and winter conditions. The material keeps the rubber compound more pliable in low temperatures, which is a key performance achievement in maintaining and enhancing the tyres’ grip on the road surface during rain and snow, the company says. Its tests show that the soyabean oil rubber mixes more easily in the silica-reinforced compounds used in tyre manufacture, which also improves production efficiency and reduces energy consumption. As with Ford’s soya foam, Goodyear’s efforts have also been rewarded with official recognition. In February 2018, during the Tire Technology Expo in Hannover, Germany, Goodyear was presented with the Tire Technology International Award for Innovation and Excellence in the Environmental Achievement of the Year category for its use of soyabean oil in tyres. “Our work with the USB presented a unique challenge and opportunity for our material scientists and tyre engineers to employ soyabean oil in the development of superior performing tyres. It is exciting to see that work pay off,” Goodyear chief technology officer Chris Helsel said at the time.

Unexpected challenges But no invention is without its problems and replacing petroleum products with plant-based materials is not an exception to this rule. As mentioned above, Ford had to overcome problems with the brittleness of the soya foam and its unpleasant stench. The smell, according to Ford formulation chemist Christine Perry, originally stemmed from the high heat and catalysts used to formulate the soya polyol. “Using high temperatures for the chemical reaction can cause numerous side effects, which produce the rancid odour. It also requires a metal catalyst and more energy,” says Perry. The brittleness was caused by an imprecise

balance between the different constituents of the foam. Containing both soya and petroleum polyols, an isocyanate crosslinking agent and nine other additives, hitting the sweet spot was a challenge. “We have done a lot of work on the formulation. Because none of the additives is independent of one another, when you make a change to one, it affects all the others,” Perry explains. In the end, a new ultraviolet light-based process replaced the expensive high heat treatment, which removed the foul smell and allowed for controlled exposure times. Extensive testing at high and low soya percentages eventually revealed that substituting between 40% and 50% of petroleum with soyabean oil gave results comparable to that of 100% petroleum polyols. While Ford generally uses a 40/60 mix of soya oil and petroleum, Perry says the chemistry can be altered in case softer or harder foams are needed. Not all setbacks are so easy to foresee and mitigate, though. Several bewildered American owners of cars including Honda, Kia, Subaru and Toyota have taken their automobiles to the mechanic with unexplained and repeated damage to their soya-coated engine wires. After some investigation, the mechanics were able to pinpoint the culprit – rodents looking for a snack. According to a complaint submitted to the courts in Massachusetts, “the inclusion of soyabased materials in class vehicle electrical wiring and wiring components attracts rodents and other animals that nest under the hoods and feast on the soya insulation and electrical wires”. The list of pests that have gotten to the wiring includes mice, rats, squirrels and even rabbits, according to Tire Review. Why the cars’ owners have taken their manufacturers to the court is due to them refusing to cover the mechanic’s bills to repair the damage in their extended warranties. The car makers consider rodents an outside source of damage and do not stem from a manufacturing fault. The car owners counter the argument by claiming that the underlying cause is not the rodents but the use of soya-based materials. Ray Roscoe, who submitted the Massachusetts complaint, supports this claim by noting that the dealership where he

Slow but steady development Despite the threat from ravenous rodents, there is no stopping motor companies from continuing to develop existing renewable materials and exploring new ones. All of them have their own priorities and materials of focus, and in Ford’s case, those include agave and bamboo. In July 2016, Ford and tequila giant Jose Cuervo began exploring the use of agave fibres – a byproduct of tequila production – to develop new bioplastics for use in vehicle interior and exterior components. These include wiring harnesses, HVAC units and storage bins. Ford says that initial assessments suggest the agave fibres hold great promise due to their durability and aesthetic qualities. They are also lightweight, which could reduce total vehicle weight and thus lower fuel consumption. Bamboo as well has performed much better than other natural and synthetic fibres in Ford’s tests. In addition to resisting extreme heat, it has performed well in impact and tensile strength evaluations. Bamboo is also readily available in East Asia and has been successfully used in other building materials, such as composite materials for fencing. But can soyabeans present further possibilities or have their uses been exhausted? Mike Erker says there might well be new applications for soyabased materials that just have not been discovered yet, but it could take a long period of research and testing to figure them out. “For example, with Ford, it took a little over 10 years to get all their vehicles converted over to using soya polyols. With our research project with Goodyear, it took almost seven years to put their new tyres in the marketplace,” explains Erker. The saying, ‘good things come to those who wait’, applies to soyabeans, too. Erker says soyabean producers naturally hope things would happen much faster, but – when looking at the big picture – companies like Ford and Goodyear really are moving forward at a quick pace. “Companies such as these have had success in the past and they want to continue working with something that’s from a natural source. We’re confident that we’re going to have success in the future,” Erker concludes.  Ile Kauppila is the assistant editor at OFI

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IN 2016, CHINA PRODUCED AROUND 1.35M TONNES OF FRYING OIL PHOTO: ADOBE STOCK

Rapid development in China F China has the world’s largest food consumer market. With increasing demand from the food industry, catering sector and household use, production of frying oil is expected to rise by 7-8%/year to reach 17-18M tonnes in 2020, according to Ruiyuan Wang and Prof Xingguo Wang

ried food is popular all over the world, imparting incomparable colour, flavour, texture and taste to food products. Americans love fried chicken, doughnuts, and potato chips. The Japanese are fond of tempura and instant noodles. In China, it is estimated that the annual output value of fried food in 2016 was more than RMB250bn (US$40bn) including convenience food, leisure food and fast food (see Table 1, following page). China has the world’s largest food consumer market with a population of 1.3bn people. As the country’s economy steadily develops, an improvement in living standards and a change in eating patterns is occurring, and the food industry is entering a period of rapid development. China’s per capita consumption of edible oils is 24.8kg and its total consumption was 34.265M tonnes in 2015-2016. ‘Special’ oils and fats, including frying oil, only account for 8% of China’s total edible oil consumption. In 2016, China’s special oil production totalled 2.75M tonnes in 2016, with frying oil accounting for nearly half of this total, at 1.35M tonnes (see Table 2, following page).

Frying is one of several traditional food processing techniques in China, both in family and restaurant cooking. The frying oil segment is therefore an important part of the Chinese special oil market, and frying oil is an indispensable raw material in Chinese cuisine. In China, almost all varieties of oils can used for frying, including vegetable oil, animal fat and blended oils and fat products, such as margarine and shortening. Palm oil and its fractionated products are widely used in the catering and food industries due to their high stability in frying, good taste, stable supply and low prices. Many regions in China also use other oils for frying, such as soyabean oil. In terms of yield and price, soyabean oil is the most consumed vegetable oil in China today. In traditional fried food, such as fritters, soyabean oil is preferred due to its flavor and taste.

Current frying oil consumption In China, frying oil is mainly used in household and catering, fast food and industry frying. Ordinary cooking oil and blending oil are usually used but

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DEEP FRYIN G

their consumption is not included in special frying oil consumption figures. In terms of the proportion and amount of frying oil used in 2016, the total was 3.6M tonnes, with 2.5M tonnes going towards Western food (76.04%), one million tonnes (19.79%) used for instant noodles, and 0.1M tonnes (4.17%) for potato chips and other snack food (see Figure 1, below right). It is estimated that the edible oil consumption of the Chinese catering industry totals some 10M tonnes, of which about one-third is used for panfrying, with deep-frying not generally counted in the special frying oils category.

The effect of frying Frying is a process in which food is cooked in oil or fat, combining thermal dehydration and decoction (the process of boiling a substance in water to extract its essence) processing from the food surface to the interior. Suitable frying oil should have the following characteristics: n The content of polyunsaturated fatty acids (PFAs) should be lower, ideally below 30%, because PFAs are more unstable at high temperature. n There should be a low content of impurities and a high smoke point. n There should be high oxidation stability. In China, frying oil often contains a certain amount of solid fat in order to impart a better flavour to fried products. Frying oil can contribute many important characteristics to fried foods, including texture, flavour, taste, shape, colour and aftertaste. It can enhance the nutrients of foods and kill bacteria, prolonging the shelf life of foods effectively. The oil plays two roles in the process of frying. One is as the heat transfer medium between the food and equipment. The oil also transports, enhances, and releases the flavour of other components, forming a good texture and taste. During frying, the oil – along with the fat-soluble nutrients – is absorbed into foods. This can increase the energy content of the food and its nutrients. The oil will be also be subjected to many desirable and undesirable physical and chemical reactions. It also penetrates into the food, which can influence the quality and nutrition of fried foods. Studies indicate that the quality of fried foods and corresponding frying oil are closely related. Therefore, the frying oil’s quality can directly influence the fried foods’ quality and health of consumers. The quality of fried food can be guaranteed by controlling the quality of the frying oil.

Frying oil standards Along with most countries in the world, China has not yet developed national standards for frying oil products. Instead, frying oils usually follow the national quality standard for cooking oil. However, in order to standardise and promote the development of the frying industry, as well as better adapt to the requirements of modern food processing, China began developing industry standards for frying oil products in 2016 to differentiate them from other oils. Specific standards for frying oil are necessary

TABLE 1: ANNUAL OUTPUT VALUE OF FRIED FOOD IN CHINA, 2016 (BILLION RMB) Products

Output value

Convenience food

4.3 (US$0.68bn)

Leisure food

34.5 (US$5.49bn)

Western cuisine

86.0 (US$13.68bn)

Chinese cuisine

86.5 (US$13.76bn)

TOTAL

250.0 (US$39.76)

oil) or when the polar component content (the main component is the oxidative polymer and hydrolyzate) reaches 27%. Some large catering and food processing enterprises in China have also had good manufacturing practices (GMP) for frying operations in place for many years. For the recovery of waste oil and resource conversion, the Chinese government has formulated strict regulatory requirements to prevent the misuse of used cooking oil.

SOURCE: RUIYUAN WANG, 9TH INTERNATIONAL SYMPOSIUM ON DEEP FRYING, CHINA, OCTOBER 2017

Development prospects

TABLE 2: CHINESE MARKET OF SPECIAL OILS AND FATS (MILLION TONNES)

The development of frying oil in China tallies with plans for the grain and oil processing industry in the social and economic development initiatives of the 13th Five-Year Plan, 2016-2020. The initiatives promote structural reform in the supply side of the edible oil industry, making it important to actively develop special oils such as shortenings and frying oils. Since 1980s, the development of fried food in China has gone through several stages. Traditional fried food continues to be popular today, including classic snacks such as the Tianjin fried dough twist. The 1980s saw the introduction of fried instant food with a long shelf life, such as instant noodles. In the early 1990s, US food giants – such as McDonald’s and KFC – entered the country. Now, fried products such as fried chicken and french fries form a huge part of the industry. According to the China food chain association, the number of Western fast food stores was 13,671 in 2014, 14,486 in 2015 and 16,083 in 2016, and is increasing year by year Within the last decade, Chinese restaurants have become more industrial and convenient. Chinesestyle fast food, in particular, has taken over a large share of the domestic fast food market through competitive pricing and the variety of food its offers. This has provided the frying industry with rapid expansion opportunities. As well as expanding use in the food and catering industries, frying oil use will also develop in families with the introduction of refined and diversified household special frying oils. To meet the demands of individual consumption in families, more oils with different compositions will be manufactured. Lipid scientists have developed a new generation of frying oils that are tasty and nutritionally balanced, contain endogenous natural antioxidants, and where health hazards such as trans fatty acids and 3-MCPDs are minimised. For example, blends with high-oleic rapeseed oil and high-oleic sunflower oil have proved to be excellent frying oils, and have good potential in fast food chain restaurants. Taking into account the demand from the food industry, catering sector and domestic use, the production of frying oil in China will develop rapidly and is expected to increase at a rate of 7-8%/year to reach 17-18M tonnes in 2020. l This article is based on a presentation made at the 9th International Symposium on Deep Frying in Shanghai, China, on 30-31 October 2017 by Ruiyuan Wang, chief expert at the China Cereals and Oils Association (CCOA) and president of its oil branch; and Xingguo Wang, a professor at Jiangnan University

Products

Usage amount

Shortening

0.40

Frying oil

1.35

Cocoa butter substitute

0.20

Baking lipids

0.50

Emulsifier

0.15

Baby food lipid

0.08

Sandwich, coating etc

0.05

Other lipids

0.02

TOTAL

2.75

SOURCE: RUIYUAN WANG, 9TH INTERNATIONAL SYMPOSIUM ON DEEP FRYING, CHINA, OCTOBER 2017

FIGURE 1: PROPORTION AND AMOUNT OF FRYING OIL USE, 2016 Western foods (2.5M tonnes) Instant noodles (1M tonnes) Potato chips and other snack foods (0.1M tonnes) 4.17%

19.79%

76.04%

SOURCE: RUIYUAN WANG

because oil deterioration occurs more easily during the lasting and intense high temperature created by frying. The key to food frying is process management, and China has some of the most stringent standards relating to the frying process. In order to better implement frying process management, China is accelerating the establishment and improvement of fried food production, management and standard systems covering the whole industry chain including raw and auxiliary materials, additives, end products and waste oil treatment, which includes quality standards, operation norms, arbitration methods and quick check methods. China’s ‘hygienic standard for edible vegetable oils used in frying food’ stipulates that oil should be discarded when the acid value reaches 5mg KOH/g (5mg of potassium hydroxide per gram of

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OILSEED S

Fashioning designer genes New technologies, collectively called genome engineering, are unlocking new ways to improve oil crops while avoiding the stigma associated with traditional GMOs. Ile Kauppila explores their potential, limitations and regulatory issues

enetically modified organisms (GMOs) have been around since the 1970s. During the decades they have existed, they have provided tremendous advantages to agriculture but also sparked debate around their safety and ethics. However, in the last decade, a new player has entered the field of genetic modification and it could change the game for everybody. Genome engineering (GE) or editing – sometimes also referred to as gene editing – is a relatively recent group of various different technologies that allow genetic material to be added, removed or altered in a particular location in an organism’s genome. These genome editing methods enable an organism’s DNA to be split at a targeted location and then repaired through either non-homologous end-joining (NHEJ) or homologous recombination (HR), resulting in the desired change. To put this opaque explanation in plainer language, GE technologies work with what has been

called “molecular scissors”. While the exact method and enzymes used differ from one technology to another, all of them function in more or less similar ways. By using them, scientists can target single genes in the target genome and cut the DNA at that particular point. Then, they make use of the DNA’s own cell repair mechanisms to either delete or add a piece of related genetic material or turn a gene on or off.

Not GMOs But for something that is supposed to change the field for genetically modified crops, this sounds an awful lot like traditional GMO development. On a superficial glance it might seem so, but looking at the details reveals there is actually a great difference between GE and “old school” GMO methods. “With GMOs, we introduce a foreign material into the plant,” Adrian Percy, global head of R&D at Bayer Crop Science says. “With gene editing, we make changes to the existing genome, rather than introducing foreign genetic material.” As mentioned, there are multiple technologies available for genome engineering. The most popular – and possibly the most easily accessible one – is known as CRISPR/cas9. Its name comes from clustered regularly interspaced short palindromic repeats, which are genetic elements that bacteria store in order to be able to identify viral DNA. When the bacterium is attacked by a virus, Cas9 enzymes process the stored DNA and cut the viral DNA at the corresponding spot, destroying the virus. Scientists at companies such as DuPont

Pioneer and Cellectis have been able to use this mechanism to cut DNA in plant cells, thus either introducing DNA stored in a carrier bacterium into the sequence or deleting/inserting an existing gene (see Figure 1, p28). Another technology that has already been used to produced engineered plants is TALEN (transcription activator-like effector nucleases), which is proprietary to Minnesota-based biotech firm Calyxt. It achieves ultimately the same results as CRISPR, but using restriction enzymes to cut the DNA sequence. Other common technologies include the use of zinc finger nucleases, meganucleases and oligonucleotide-directed mutagenesis (ODN). All vary in method and efficiency. The kinds of changes that are being made with GE also happen naturally through a process called mutagenesis. Mutagenesis takes place randomly and over time for a variety of reasons. One very common cause of DNA change is organisms being hit by rays emitted by the sun, the same reason why we should wear sunscreen on the beach. Mutagenesis has been used by humans to alter crop varieties for ages but, so far, this process has been slow and random, sometimes taking years only to result in unwanted or no changes at all. GE promises to take control of this process and to speed it up. The time it takes to develop a new crop trait can be cut from years to months, while also significantly reducing the time it takes to get the product to the marketplace. Additionally, GE trumps GMO technology in precision, eliminating the factor of randomness almost entirely.

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OILSEED S

“One of the differentiators of genetic [engineering] technology is the amount of specificity we can achieve,” says Federico Tripodi, CEO of Calyxt. “We identify a genetic sequence only involved with that gene and not the rest of the genome. To get sulfonylurea herbicide resistance in canola, we have made two- to three-letter changes in the codes for that gene.” Tripodi adds that GMO products might take 13 years and US$130M to commercialise but, with GE, that time can be cut by half.

Oilseed applications Already, agritech companies have jumped on the chance to make use of these new technologies. Calyxt has developed through its TALEN platform a soyabean variety in response to legislation banning trans fats in partially hydrogenated soyabean oil. As a high linoleic oil, soyabean oil goes rancid fast and manufacturers have long been partially hydrogenating the oil to extend shelf life. According to Calyxt, its GE soyabean variety has a higher oleic acid content and less saturated fatty acids than other soyabean varieties. These properties increase the oil’s shelf life by up to five times and fry-life by three times. Through the technology, the company has been able to decrease trans fats, allergens and toxic compounds, while increasing dietary fibres, nutrients, vitamin content and plant proteins, says Calyxt. By April 2018, it had contracted over 6,400ha with 75 farmers in the US Midwest to farm the engineered soyabeans, with more than 90% of them signing to replant and double their hectarage. “Strong interest from farmers and food companies for our first product to market is a reflection that Calyxt’s gene editing platform with its unique business model is a disrupter in the ag and food space,” says Manoj Sahoo, Calyxt chief commercial officer. Another company that has successfully developed GE oilseeds is US firm Cibus, which has developed the SU Canola variety. The canola – developed using the Rapid Trait Development System (RTDS) – is resistant against sulfonylurea (SU) herbicide, which, according to Cibus, makes it a good fit for crop rotation with glyphosate tolerant soyabeans, thus reducing weed pressure caused by glyphosate tolerant canola in soyabean fields. “SU Canola offers many opportunities to farmers, including high yields and an economical and easyto-use weed control system,” says Dave Voss, Cibus vice president of commercial development. “Canola growers are really responding to Cibus canola because of the new options and flexibility this system brings them.” Due to its development through GE, the canola is non-transgenic, meaning it does not contain genetic material from unrelated organisms. There is a growing market for non-transgenic canola oil, according to Cibus, and the firm is expecting to launch SU Canola outside North America in the coming years. The firm has also developed a glyphosate resistant flax, with support from the Canadian government. It is projected to launch in the USA in 2019, when it will be the world’s first nontransgenic crop with glyphosate tolerance.

Not a silver bullet But, for all its potential, GE is not the be-all and end-all of agricultural technology. Among its limitations are the need to map the genome of the target organism and the sometimes questionable accuracy of the edits, despite their touted high precision. Needing to know the genome – the complete genetic sequence – of the crop to be edited is a primary requirement for GE, alongside having the know how and physical equipment to perform the edits. Without the genome, scientist will not know what the genes they’re trying to turn off or on are, nor where they are located. Many oil plant genomes have already been mapped out, mostly major ones such as soyabean, and the list is constantly expanding. For example,

the sunflower’s genome was unlocked in May 2017 (see p29). Having a mapped out genome is not enough, though, says Dean Bushey, global regulatory manager for research at Bayer Crop Science. “We have to know what genes do before we can edit them. We may know the sequence of the genes, but we have to know how they work,” he says. Some researchers are also questioning the precision of GE. Some of the technologies – CRISPR among them – are known for making unintended edits, although Maywa Montenegro, a food systems researcher at UC Berkeley, says in Ensia that such ‘off-target edits’ are getting less frequent as the technologies develop. But even if the correct gene is properly activated or silenced, there may be unexpected effects. Genes are not solitary, self-contained entities and making

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SOURCE: MARIUS WALTER

OILSEED S

FIGURE 1: CRISPR OPERATING PRINCIPLE

In genome engineering, scientists cut a plant’s DNA at a particular point. Due to the cut, the DNA begins to naturally repair itself, either without the removed snippet of DNA or by incorporating an introduced piece of related genetic material into itself u changes to one may cause other ones to react in unforeseen ways, possibly producing side effects or traits that were not intended. Or there is the possibility that the single edited gene fails to produce the sought-after result. As Montenegro points out, many of the traits agritech companies are looking for – such as drought or pesticide resistance – are not dependent on one particular gene but on the combined workings of a multitude of them. Environmental interactions throw yet another spanner in the works. Gene function can be affected by factors such as heat, moisture or nutrients available in the soil. An engineered crop in the wrong environment might not display the traits it was designed to do. Each crop’s genetic background also has a role to play. Therefore, at best, an engineered crop should not be expected to work as intended outside the particular environment and conditions it was designed for. Finally, GE can only express or suppress a trait if it is an inherent quality already present in the crop. This means that if a crop does not naturally contain the genetic features necessary to, say, resist glyphosate pesticides, GE cannot make that resistance manifest out of nowhere. Because of

this shortcoming, some experts do not expect that genome engineering will be able to completely replace traditional GM technologies.

The regulatory question Another possible stumbling block for GE, with its peculiarities in the field of genetic modification, is the regulatory ambiguity currently surrounding it. It seems GE has left legislators around the world scratching their heads. Most of the regulatory obscurity stems from one question – do GE crops count as GMOs? Using brief pedestrian logic, the answer would of course be ‘yes’. After all, doesn’t tinkering with a plant’s genes count as “genetic modification”? But current laws governing GMOs – written decades before GE was developed – are not so simple, with many of the issues related to the defintion of GMOs. In the USA, the US Department of Agriculture (USDA) defines GMOs as organisms or products developed through “the genetic modification of organisms by recombinant DNA techniques”. In plainer terms, to count as a GMO under the US definition, a crop or product requires DNA from multiple sources. This definition does not apply to GE crops, which do not contain foreign DNA.

The USDA has already decided in several cases that GE products will not be regulated as GMOs. In April 2016, it determined that a white button mushroom engineered to resist browning did not need to be regulated as a GMO, making it the first CRISPR-edited crop to receive such a decision. Before that, crops such as Calyxt’s TALEN engineered soyabeans had received similar decisions. The determining factor in both cases was the lack of foreign DNA. However, developers of GE crops would like clear wording in the law in order to be able to say their crops do not count as genetically modified for the purposes of foreign trade and GMO labelling laws. To their disappointment, the draft proposal for USDA’s new GMO regulation rules, published on 3 May, did not mention GE technologies. With a comment period scheduled to run until 3 July, biotech companies engaged in GE are sure to put their demands forward to the USDA. The agency is set to miss its mandated deadline of 29 July to publish its final determination. In the EU, GMO regulation is not concerned with the end product, but the production process used to create it. The law states that a GMO is “an organism whose genetic material has been altered by genetic engineering to include genes that it would normally contain”. Once again, GE muddles the waters. Does it alter a plant’s genetic material? Yes. Does it introduce genes a plant would not normally contain? No. Do crops produced through GE then count as GMOs? Under the current legislation, it’s anyone’s guess. However, it seems that the EU’s attitude towards GE crops may not be as hostile as it has traditionally been towards GMOs. In January 2018, the European Court of Justice (ECJ) advocate general Michal Bobik released a legal opinion stating that GE plants should be exempt from the EU’s GMO rules, provided no foreign DNA is introduced into them. The ECJ is expected to give a final determination later in 2018. But even if regulators decide that GE crops and foods are not GMOs, the public might not agree. In both the USA and the EU, anti-GMO consumer groups have opposed decisions stating that GE crops will not be regulated. In Europe, for example, the organic trade body IFOAM EU says the ECJ advocate general’s opinion ignores the “precautionary principle”. “There are no legal or scientific reasons to exempt from risk assessment, traceability and labelling, recently developed GE. Exempting these new GE [products] from a risk assessment would be a blatant denial of the precautionary principle and of the citizens’ right to know how their food is produced,” says IFOAM EU policy manager Eric Gall. GE technologies hold an undeniable power and they are becoming more and more efficient and accurate, with the latest ones – such as MAGESTIC – able to deliver DNA more accurately and without the use of bacterial carriers. While the regulatory environment is unclear, it seems there is a lenient undercurrent that could pave the way for increased commercialisation of GE crops that are more resilient and provide higher yields. Perhaps the next goal for their developers, then, should be editing the minds of consumers to welcome these crops.  Ile Kauppila is the assistant editor at OFI

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OI L SE E DS

First sunflower genome sequence mapped out I

n genome engineering (GE), mapping out a crop’s genome is the first step to being able to edit it. Genome mapping allows scientists to know exactly what genes there are in a crop and where they are located. This, in turn, enables them to discover how these genes function and how they could be changed to achieve traits such as herbicide and drought resistance. In May 2017, a team of researchers from the University of Georgia (UoG) in the USA published the first sunflower genome sequence. Sunflower is the last of the five major oil crops to have its genome mapped, the others being soyabean, rapeseed, peanut and cotton seed, according to The Sunflower. According to the researchers, the genome will help future research in increasing sunflower’s oil production and to improve crop resilience. A difficult task Discovering what makes the sunflower tick was not an easy task, and the sunflower genome ranks amongst one of the most challenging genomes published to date. The problem so far has been that the sunflower genome consists of highly similar, related sequences. “As the first sequence of the sunflower genome, it’s quite the accomplishment. The sunflower genome is over 40% larger that the corn genome and roughly 20% larger than the human genome. Its highly repetitive nature made it a unique challenge for assembly,” says the study’s co-author John M Burke, professor of plant biology at the UoG. “Like many plant genomes, the sunflower genome is highly repetitive, though in this case the situation is a bit worse. The repetitive elements within the genome arose relatively recently, meaning that they haven’t had time to differentiate. It’s therefore like putting together a massive puzzle wherein many pieces look exactly the same, or nearly so,” he adds. With the first sequence of the sunflower genome now known, it could lead to the development of higher yielding and more resilient sunflower varieties through technologies such as GE. The USDA, for example, is looking to compare the mapped out parts of the sunflower genome to that of crops that have been more closely researched. This study could reveal which genes in sunflower are responsible for certain traits, which would in turn enable genetic engineering to improve those traits. One of the traits the UoG researchers set out to discover was seed oil content and quality and the genes that affect it. The study captured all 40 genes that have already been described as affecting oil production in sunflowers. In total, the UoG team found 429 genes, corresponding to 12 metabolic pathways involved in oil synthesis. “The availability of this reference genome and companion resources will not only strengthen interest in the sunflower as a model for ecological and evolutionary studies, but will also accelerate breeding programmes. “This genome represents a cornerstone for future research programmes aiming to exploit genetic diversity to improve biotic and abiotic stress resistance and oil production, while also considering agricultural constraints and human nutritional needs,” the study concludes.  29 OFI – JULY/AUGUST 2018 www.ofimagazine.com

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UKRAIN E

Ukraine could emerge as a new major palm oil re-export hub to East European markets due to its location on the Black Sea

kraine is the largest sunflower seed and oil exporter in the world and could also have significant potential to become a major palm oil re-exporter in the Black Sea region and Eastern Europe, according to the report, ‘Ukraine’s potential to become a prospective destination for palm oil re-export in Eastern Europe’, presented by the Malaysian Palm Oil Council Russia (MPOCR) at the Palm Oil Internet Seminar (POINTERS) on 21-27 August 2017. MPOCR presents five different facts that contribute to Ukraine’s promising position in the European palm oil supply chain.

Ukraine’s re-export p FIGURE 1: UKRAINE’S MAJOR IMPORT PORTS

Fact #1: Geographical location Ukraine is the second-largest country by area in Europe after the Russian Federation. Its various regions have diverse geographic features ranging from the highlands to the lowlands as well as climatic range and a wide variety in hydrography. The country has a strategic position in East/ Central Europe. It lies on the northern shores of the Black Sea and the Sea of Azov, bordering a number of European countries, including Poland, Slovakia and Hungary in the west, Belarus in the north, Moldova and Romania in the southwest and Russia in the east (see map, right). The total geographic area of Ukraine is 603,550km2. The land border of Ukraine totals 4,558km, with the Belarus border accounting for 891km, Hungary for 103km, Moldova 939km, Poland 428km, Romania 169km on the south border and 362km in the west, Russia 1,974km and Slovakia 90km. Ukraine is also bordered by 3,783km of coastline. The border with Russia is the country’s longest border and it runs in part through the Sea of Azov.

Fact #2: Palm oil imports Ukraine is the third largest importer of palm oil in the Black Sea region after Russia and Turkey, which respectively imported 937,000 tonnes and 602,000 tonnes of palm oil in 2015, according to Oil World. However, the whole imported volume in Turkey is for domestic consumption, whereas Ukraine has export experience. Ukraine is one of the world’s largest producers of oilseeds and a global leader in sunflower oil exports. In 2015, at more than 3M tonnes, the country’s sunflower oil exports accounted for 35.4% of the global total of approximately 8.5M tonnes, according to Trademap.org. Ukraine’s output was more than twice that of Russia, which held the second place with roughly 1.2M tonnes. Behind the two leaders were Turkey at 0.68M tonnes, the Netherlands at 0.43M tonnes and Argentina at 0.42M tonnes. Despite its dominance in the sunflower oil market, Ukraine actively imports other types of vegetable oils, including palm oil. Imported palm oil is used for further processing and domestic consumption, as well as for re-export. The share of palm oil and its fractions in

Ukraine’s vegetable oil consumption structure is in the range of 140,000-180,000 tonnes, or 20-24% over the past five years, the report says. In 2007/2008, imports of palm oil to Ukraine reached their highest point at 434,000 tonnes. Back then, Ukraine exported up to 40% of the palm oil imports to Russia. There is also some re-export activity with Kazakhstan, Moldova, Romania, Armenia, Belarus and other Commonwealth of Independent States (CIS) countries, but the exported amounts were insignificant when compared to Russia. However, palm oil exports from Ukraine have decreased significantly since 2012 due to a massive reduction in the Russian share. Russia used to take the lion’s share of Ukrainian exports of palm oil due to trade preferences granted to products originating from Ukraine under the Russo-Ukrainian free trade agreement. Since then, the definition of a ‘country of origin’ in the agreement has been changed and palm oil can no longer be considered a commodity of Ukrainian origin. As a result, palm oil exports to Russia plummeted to zero. Almost all palm oil exports from Ukraine are carried out by Delta Wilmar CIS. In 2008, there was a sharp increase in Russian imports (see Table 1, p32). However, exports dropped tangibly when the Taman sea port with bulk facilities was built in southwest Russia near Ukraine. Taman sea port began operating in December 2008 and, in the first 10 months of 2009, the volume of bulk cargoes exceeded 70,000 tonnes. The port keeps growing due to a development programme approved by the Russian government. In 2016, the total volume at Taman reached 13.5M tonnes. At the same time, in 2008, the largest importer of tropical oils in Russia launched a new production site in the town of Volna near Taman, manufacturing

speciality fats. The opening of the facility further reduced imports of palm oil from Ukraine.

Fact #3: Ukraine’s sea ports Despite the crash in Russian exports, Ukraine still has good potential in terms of tropical oils re-export to neighbouring countries due to its inport facilities and great location on the Black Sea. The country has well developed infrastructure and logistics that cover the entire country. Currently, there are 20 sea ports and 12 functioning transhipment complexes in Ukraine, with a total transhipment capacity of more than 6.6M tonnes/year of oil (see Figure 1, above). The largest edible oil bulking terminals are Chornomorsk, Dnepro-Bugsky and Nikolayev. The main import volume goes through two main ports – Yuzhny and Odessa – that are responsible for 55% and 45% of total imports, respectively. All of Yuzhny’s volume falls on the Delta Wilmar CIS terminal. As for Odessa port, oil transhipment is carried out through the Odessa Port Transshipment Terminal (OPTT), while an insignificant volume is handled at the sea port of Chornomorsk. OPTT is used mostly by the Zaporozhsky, Kharkov and Lviv oils and fats plants. These companies work mostly under DAP and DAT aid programme conditions and are some of the largest producers of oil and fat products in Ukraine. The general transhipment capacity of vegetable oils in Ukraine is about 6.6M tonnes/year. About 400,000 and 450,000 tonnes/year of vegetable oil can be transhipped through the Delta Wilmar CIS terminal and Odessa OPTT respectively. Ukraine’s total storage capacity for vegetable oils in port complexes (terminals) is up to 640,000 tonnes. The Delta Wilmar CIS terminal’s single storage capacity is 100,000 tonnes, with 78,000 tonnes allocated for palm oil and 22,000 tonnes

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UKRAIN E

ort potential

to more than 100 countries via the port. The port of Chornomorsk has facilities enabling it to handle more than 32M tonnes/year of cargo. Its berthing line totals about 6km with 129 modern berths. The port’s storage areas allow for the storage of 1.5M tonnes of different cargoes, with outdoor storage area covering 575,000m2 and sheltered warehouses covering another 27,000m2. The complex specialised in the storage and handling of liquid vegetable oils is located on the upper plateau at the rear of berths 8-11. An oil pipeline is fed out onto berth 11. The complex is equipped with an electronic system overseeing control, storage and pumping. The reservoir park enables storage of 90,000 tonnes of cargo. Vegetable oils are supplied from the tank battery to the berths by pipelines connecting five pump stations. There are six separate pipelines at the complex with capacities of up to 12,000 tonnes/ship, depending on vessel type. The pipelines also handle the discharging of 88 railway tanks and 50 road tankers per day. The complex is equipped with wage and platform truck scales located in immediate proximity to the discharge jetties. The throughput capacity of the complex amounts to 1.5M tonnes/year of vegetable oils.

for sunflower oil. The terminal is equipped with heated tanks used for transhipment of tropical oils. The Odessa Sea Port and OPTT storage capacity amounts to 60,000 tonnes. Tank park capacity allows them to store up to 20.6 tonnes of solidifying tropical oils, up to 18,300 tonnes of sunflower oil, and up to 5.1 tonnes of molasses. A promising development plan is expected to increase total tank capacity to 96,000 tonnes of single storage. Transportation of vegetable oils to and from Ukrainian ports is carried out mainly by railway tanks and automobile tanks.

Nikolayev Port The Nikolayev port is located in the city of Nikolayev, on the left bank of the bend of the Yuzhniy Bug river, 35km upstream from where the river flows into the Dneprovskiy Liman estuary. The port joins the sea via the Bugsko-DneprovskoLimanskiy Channel (BDLC) passing through the Dnepro-Bugskiy Liman and Yuzhniy Bug river. The channel starts at Berezan Island and stretches over 71km to Nikolayev Port. The channel consists of 13 bends, six of which pass through the Dneprovskiy Liman, and the others through the Yuzhniy Bug river. It is 100m wide and 11.2m deep. Nikolaev port is navigable all year round. The Oiltransterminal and Avery terminals handle vegetable oil cargoes at Nikolayev sea port.

Chornomorsk Port One of the largest in Ukraine, the port of Chornomorsk is situated on the coast of the Sukhoy Liman estuary, 12 miles southwest of Odessa. It was founded in 1958 as a cargo handling area for Odessa port. Together with the port, an adjacent town Ilyichevsk - was built, which acquired independent municipal status in 1973. Today, Ukraine is linked

Odessa Port The port of Odessa is located on the northwestern coast of the Black Sea in the southwestern part of Odesskiy Gulf, on 141ha of man-made territory. Navigation is possible year round, but during severe winters, ice conditions can last about 30 days and icebreaker assistance is often necessary. Odessa port can handle over 21M tonnes of dry

cargo and 25M tonnes of liquid cargo. Its container terminal is designed to load over 900,000 TEU/ year. The port is outfitted with modern equipment, machinery and devices for handling various cargoes. Odessa port has 54 protected berths with depths ranging from 6.2m up to 13m. The berthing line totals over 8km. The port has eight terminals for handling dry cargo, as well as passenger, oil and container terminals, harbours and terminals to handle tropical and technical oils (vessels of 12.5m draft and 330m long are accommodated). Facilities are designed to receive a wide range of cargoes, including tropical and vegetable oils. Vegetable oil transhipment is performed through the OPTT. Yuzhny Port Yuzhny port, 30km to the east of Odessa, is one of the youngest and deepest ports of Ukraine, having opened in 1978. Two vital circumstances coincided in the founding of the port. First, the country needed a new specialised deepwater port on the Black Sea coast furnished with the most modern port equipment. Second, on the banks of Adjalykskiy Liman, the construction of the new Odessa Priportoviy plant had begun and its products were to be exported by sea transport. Port terminals are located on the eastern and western banks of the Adjalykskiy Liman. Total length of berths at Yuzhny is approximately 3km. The port has two cargo handling areas and three railway stations that are on Odessa railway line, namely Beregovaya, Chimicheskaya and Promyshlennaya. These stations are connected to the outer railway system through the Chernomorskaya station. The inner port roadways are connected to the Odessa– Nikolaev highway. Port berths are connected to the access railway lines and equipped with gantry cranes of rated lifting capacity up to 84 tonnes. Cargo handling operations can be performed 24 hours a day, Sundays and holidays included. The port is open to navigation all year round. There are 185,500m2 of open storage areas in the port. The area of sheltered warehouse comprises 2,000m2. Delta Wilmar CIS’s oil handling and processing complex is operating in port Yuzhny to handle vegetable oil cargoes.

Fact #4: Few competitors Ukraine has no competitors in Eastern Europe in u terms of in-port capacities or import volumes, apart

31 OFI – JULY/AUGUST 2018 www.ofimagazine.com

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morsk

UKRAIN E

SOURCE: OIL WORLD

69km 17h 89km 4h 44km 12h 19km 20h

2009

2010

2011

2012

2013

2014

2015

Belarus

0.6

2.1

1.0

0.2

0.1

Kazakhstan

0.3

1.8

2.8

3.2

1.9

Moldova

0.4

1.1

0.8

0.9

0.3

Romania

0.6

1.4

0.3

85.1

90.4

21.9

42.2

Uzbekistan

1.1

0.2

0.4

0.1

Others

1.7

1.0

0.4

1.4

1.1

100M tonnes/year and 156 berths, of which 140 are operational. The total quay length is 29.83km, and the depths range between 8m and 19m. According to Oil World, in 2015, Romania imported 50,000 tonnes of palm oil, which made up roughly one-tenth of the total oil consumption of 539,000 tonnes. The major share of imports in Romania’s case belongs to the Netherlands with 17,500 tonnes in 2015, followed by Malaysia with 9,400 tonnes and Bulgaria with 9,000 tonnes. Due to the low degree of palm oil consumption, MPOCR considers there to be a huge opportunity for Ukrainian palm oil exports to Romania. The country uses all of its palm oil imports to meet domestic consumption.

89.7

98.1

28.2

47.4

2.7

1.4

1.1

Fact #5: Favourable connections

TABLE 1: PALM OIL EXPORTS FROM UKRAINE, ‘000,000 TONNES

Russia

Total u

from Russia. Bulgaria, Georgia, Romania, Russia, Turkey and Ukraine all have access to the Black Sea and they all import tropical oils. However, not all sea ports are equipped with edible oil terminals. Palm oil import volumes in these countries vary. Russia and Turkey are among the leaders in terms of imports, with Russia importing 937,000 tonnes of palm oil and Turkey 602,700 tonnes in 2015. Ukraine follows these two countries with a volume of 136,000 tonnes. Imports in neighbouring countries amounted to 50,000 tonnes for Romania, 46,000 tonnes for Bulgaria and 47,000 tonnes for Georgia, according to Oil World. Below is a closer look at the main import ports of Bulgaria, Georgia and Romania and their oil consumption and import patterns. Bulgaria Bulgaria has two main ports – the port of Burgas and the port of Varna. Varna West is the most modern port facility at the northern Bulgarian Black Sea coast. It is located 30km west of Varna City, on the west shore of Beloslav Lake. It is adjacent to the chemical factories of Devnya, which enables effective ‘factory-to-ship’ handling of goods. The port has modern lines for handling soda, fertilisers, cement, coal, ores, phosphates, silica and liquid chemicals. All berths and warehouses have access to the national rail and road networks. In recent years, the port of Varna West has been recognised as Bulgaria’s container gate. In 2013, the handled container traffic exceeded 103,000 TEU. A state-of-the-art information system has been developed and implemented by the port, so that clients can keep track of their containers at any time. For some time now, the port has been exporting grain cargo and it is making major investments for this purpose. The port successfully handles heavy lift and out-of-gauge cargoes, such as windmill components, transformer equipment and specific project cargoes. It has two mobile harbour cranes with capacities of 100 tonnes and recently took delivery of an additional two units with capacities of 63 tonnes. An integral part of Varna East’s structure is the storage base, also known as the dry port. It is a separate unit with a license for customs bonded storage. Located 5km away from the port, on a total area of 1.5ha, it has six warehouses that are used for storing varied grain and general goods. Domestic oil consumption in Bulgaria was around 202,000 tonnes in 2015, with palm oil comprising a fifth of the total, according to Oil World. Malaysia

and Indonesia were the two main suppliers of palm oil to Bulgaria at the time, providing 15,000 and 16,300 tonnes, respectively. Third on the list was Greece, which exported 11,200 tonnes of palm oil to Bulgaria. Based on these numbers, MPOCR believes there is potential for Ukraine to re-export palm oil to Bulgaria, despite a small dip in domestic palm oil consumption in 2015, falling to 35,000 tonnes from the 37,900 tonnes the year before. According to Trademap.org, Bulgaria also re-exports a part of its palm oil imports, with its palm oil exports reaching 9,862 tonnes in 2015. Georgia Batumi Sea Port handles up to 15M tonnes/year of cargo. The terminal specialises in refining crude oil and almost all types of petroleum products, including diesel fuel and petrol. Berths are leased to Batumi Oil Terminal until 2019. Throughput efficiency of the container terminal is 100,000 TEU annually. According to Oil World, domestic consumption of oils and fats in Georgia in 2015 was 97,000 tonnes, half of which was palm oil. Indonesia and Malaysia supplied roughly equal shares of the total palm oil imports of 47,500 tonnes, totalling 23,600 and 23,900 tonnes respectively. Imports from Malaysia have increased significantly from 2013 to 2015, growing from 800 tonnes to 23,900 tonnes. Domestic consumption of palm oil in Georgia has grown from 28,000 tonnes in 2013 to 48,800 tonnes in 2014, dipping slightly to 45,500 tonnes in 2015. Virtually all of Georgia’s palm oil imports are for domestic consumption. Romania Romania’s major sea port is the port of Constantza, located at the crossroads of trade routes linking the markets of the landlocked European countries to Transcaucasus, Central Asia and the Far East. The port has excellent connections with Central and Eastern European countries through the Corridor IV (rail and road), Corridor VII – Danube (inland waterway) to which it is linked by the Danube-Black Sea Canal, and Corridor IX (road), which passes through Bucharest. The two satellite ports – Midia and Mangalia – that are located near Constantza Port are part of the Romanian maritime port system under the coordination of Maritime Ports Administration SA Constantza. The port of Constantza covers 3,926ha of which 1,313ha is land and 2,613ha is water. Constantza Port has a handling capacity of over

The majority of palm oil imports to the EU and Eastern Europe comes from Malaysia, Indonesia, the Netherlands or Germany. Malaysia and Indonesia are understandable sources, as they are the world’s largest producers. Germany and the Netherlands are two strategically important destinations for the further re-export of edible oils. The Netherlands has been strong in the processing of vegetable and animal oils and fats for many years. The country’s geographic location and agricultural background have enabled it to take maximum advantage of its logistics possibilities. Rotterdam is Europe’s number one destination for oils and fats imports, with Germany holding second place. It is known for its facilities and is number one in terms of storage and refining in the EU. It also has crushing, margarine and biodiesel production facilities. The Dutch oils and fats chain has a leading position in Europe and is a key world-class player. With imports of 11.8M tonnes and an import value of €7.1bn (US$8.7bn) in 2013, the Netherlands is Europe’s second largest importer of oilseeds, oils and fats, behind Germany. Like the Netherlands, Ukraine has a strong agricultural background. Being a world leader in sunflower exports, its ports are equipped with terminals, refineries and high storage capacities. Moreover, in terms of delivery logistics, Eastern European countries are much closer to Ukraine than the Netherlands. The majority of them nonetheless buy palm oil from both the Netherlands and Germany. However, MPOCR’s calculations of logistics of palm oil to Belarus, Bulgaria, Moldova and Romania show that transporting palm oil from Ukrainian ports to these destinations is much cheaper. Consumption is an essential part of Ukraine’s potential in the Black Sea region. Annual per capita palm oil consumption is relatively low in all of the region’s countries, excluding Russia, Georgia and Bulgaria. MPOCR believes this low consumption is due to poor delivery logistics. If delivery costs can be reduced, there is the potential to increase palm oil imports and consumption in the Black Sea region. Ukraine has the capacity to become a major palm oil re-export hub due to the cost and time advantages it offers compared to Germany and the Netherlands. l This article is based on report ‘Ukraine’s potential to become a prospective destination for palm oil re-export in Eastern Europe’ by the Malaysian Palm Oil Council Russia, prepared by Emilia Dazhuk and Aleksey Udovenko.

32 OFI – JULY/AUGUST 2018 www.ofimagazine.com

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BUTTER

Garçon, where’s the butter?

BAKERIES PRODUCING PRODUCTS SUCH AS BUTTER-RICH CROISSANTS, A FRENCH FAVOURITE, BEGAN TO FEEL THE EFFECTS OF THE EU’S BUTTER SHORTAGE LAST YEAR

A global butter shortage threatened to leave many countries, including France, without butter last Christmas. The crisis was averted, but how did this extraordinary situation arise? Ile Kauppila writes

s people celebrating Christmas were pulling out their pots and pans last year to start cooking their Christmas Day meals, some ran into a peculiar problem – butter, if the stores were carrying any, was exorbitantly expensive. But it was not the stores trying to turn a quick profit from holiday cooking. Towards the end of 2017, parts of the world, particularly Europe, were struggling with a shortage of butter. While the shortage hit consumers by Christmas time, the events that led up to it started much earlier and they were first felt by the food industry, such as bakeries. According to data from online grocer FreshDirect UK, EU butter production dropped 9% year-on-year in April 2017, marking the first signs of a possible butterless Christmas. Prices began to spike in May due to a high demand and tight supplies. By September, butter in the UK had broken the £6,000/tonne (US$8,340) benchmark, reaching the highest price level it had seen in a decade. To provide a point of comparison,

just in the beginning of 2017, the UK butter price was £3,800/tonne (US$5,282). “I would like to point out that the prices were so high that they can’t rationally be explained only through market fundamentals,” Klaudia Feurle, economic and trade adviser at the European dairy trade association Eucolait, tells Oils & Fats International. “The butter prices should not have climbed so high.”

What goes up… But if the price crisis cannot be explained rationally, is there an explanation? According to Feurle there is, but it was the sum of several factors coming together. To begin with, she says, we must look back a few years. The EU milk quota, which set a limit on how much milk member countries could produce and heavily fined those who produced too much, had been in effect since 1984 but was abolished in 2014 in order to allow EU dairy businesses to compete with international production. The change came into effect in April 2015 and, as a result, many EU countries increased their milk production. Production jumped up by about 10M tonnes between 2013 and 2014, from approximately 141M tonnes to 151M tonnes, according to European Commission (EC) statistics. However, the international market let the EU down. “2014 was the year of the Russia-Ukraine crisis and the trade embargo on dairy products to Russia was established. We lost an important export market,” says Feurle. “During the same year, China

PHOTO: ADOBE STOCK

imported less dairy products than it did before.” By 2015/16, the situation had led to an oversupply of milk, not only in the EU but also on a global level in other milk exporting countries. The ample milk supply began to push milk prices down globally, which ultimately led to cuts in production worldwide. In fact, farmers were encouraged by the powers that be to produce less milk. In September 2015, the EU launched its Milk Production Reduction Scheme, which paid out 14 euro cents per every kilogramme of milk dairy producers agreed to reduce, calculated on the basis of actual reduced production. By July 2017, 48,000 farmers had taken part in the scheme, receiving €112M (US$138.3M) in payments out of the allocated budget of €150M (US$185.3M).

…must come down The EU was successful in reducing its milk production, which naturally led to a drop in butter production as well. However, it became evident in the months before Christmas 2017 that the plan had backfired. This is where the market laws of supply and demand came into play, says Feurle. “Less butter was produced in the EU and also in other main dairy export markets, particularly New Zealand, which is the largest butter producer, but also in Argentina, the USA and Uruguay. With less milk available overall, there was obviously less milk for dairy products,” she explains. Making butter is a very resource-demanding process. The amount required to produce one

34 OFI – JULY/AUGUST 2018 www.ofimagazine.com

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kilogramme of butter varies based on the fat content of the milk, but as butter has more than 80% of fat, producers are not talking about small amounts. But, as it turned out, limited availability of milk was not the only problem butter makers faced in 2017. According to The Grocer, in 2016, grass energy levels were below the six-year average for most of the grazing season. As milk prices were depressed from the overproduction in 2015, many farmers could not afford feed supplement, which resulted in dairy herds entering winter with less than ideal body condition and producing milk with lower fat levels. Consequently, more milk was needed to make that one kilogramme of butter, which further reduced available raw material stocks. As if that was not enough, Feurle notes that demand for other high-fat dairy products, such as cheese and cream, increased in 2017. Due to the demand from world markets, more milk was put into cheese production, which once again meant less milk for butter production. To top it all off, demand for butter is going up as well. “Butter demand increased in the past year and is expected to keep increasing for the next two decades, according to our consumption figures. We can’t give 100% certain answers to why the demand is going up but in the past years, there’s been growing health awareness about butter. “It’s seen as a healthy product again, with more healthy fats than margarine. In the USA, for example, it’s used in coffee, and globally more butter is used in industrial products, such as cookies and other bakery products,” Feurle says.

A nightmare before Christmas So where did all these developments leave us for Christmas? Europe was not the only region struggling with low butter shortage, as reports on a similar situation came all the way from Australia as well, but the problem was perhaps most pronounced in France. US news agency NPR reported in November 2017 that many supermarkets were forced to put up signs apologising to their customers for their empty butter shelves. For French home cooks, who appear to love butter, this was a nightmare. “We are in an area of the country where we talk a lot about good eating. We’re against processed foods and chemical things. For us, margarine is a heresy,” Cindy Maisonneuve, head of marketing at Laiterie les Fayes dairy, told the news agency. “Good eating is about simple products that haven’t been transformed. Like butter.” The lack of butter led to consumers stockpiling butter in some parts of France, which put a further strain on already limited supplies. However, while market dynamics and production limitations explain a part of the problem, in France the supermarkets self-inflicted some of the damage. Analysts quoted by NPR said the country’s stores had refused to pay higher prices for butter due to butter prices being fixed annually. French butter producers shrugged their shoulders and sold their butter overseas, where buyers were willing to pay a premium. But just as the situation looked most dire, stubborn minds gave in and, towards the end of November, French retailers agreed to increase their prices. Shelves were refilled, the croissants were

SOURCE: EUROSTAT

BUTTER

FIGURE 1: EU BUTTER PRODUCTION, MONTHLY % CHANGE Y-O-Y, NOV 2015-NOV 2017

baked and Europeans could butter up for their Christmas meals. As Feurle puts it, the markets resolved the issue on their own.

EU picking up the pace But while the butter situation has stabilised, it has not normalised. EC statistics from December 2017 show that butter production in the bloc was down 2.5% in 2017, against a projected decrease of 3%. While butter prices in EU fell 6.3% towards the end of the year from the records reached in September, the EU report notes that “EU butter is still the most expensive in the world markets”. Feurle agrees, saying that while the prices are stable, they are still very high. Possible relief is on the horizon, though. According to the Agriculture and Horticulture Development Board (AHDB), a UK levy board representing cattle, sheep, pigs, milk, potatoes, cereals, oilseeds and horticulture, EU butter production could increase 3% in 2018 on the tails of expectations of both higher milk production and an increased butterfat content in milk. “Despite a 1% decline in EU cow numbers, milk collection is expected to increase 0.7% on the year in 2017 and could potentially grow by more than 1% in 2018. Yields are forecast to increase around 2% due to a higher replacement rate and better feeding, helped by good forage and cheaper feed due to higher milk prices. This means the average butterfat content is also expected to improve,” AHDB says. Feurle urges on the side of caution, although she says that in general, the EU is well placed to serve global butter demand, which is growing approximately 2%/year. “In the past years, dairy and butter exports have been rising continuously. Some EU countries export a lot of butter to the USA, especially product branded as quality butter, such as some Irish butters.” According to Eucolait, the EU exported a little over 164,000 tonnes of butter in 2016. Meanwhile, the US Department of Agriculture’s (USDA) Global Agricultural Information Network (GAIN) projects that, in 2017, butter exports from the EU decreased by 15% to 175,000 tonnes, but could rebound to 185,000 tonnes in 2018. “There are a few countries in Europe where dairy

production has increased. One of them is Belarus,” says Feurle. “However, they have only delivered to Russia so far, so they’re rather closed or limited on the world market.”

A global market, after all Outside of Europe, Canada has been increasing production, alongside Turkey, Iran and India. Feurle notes that India is the world’s largest butter producer at around 5.4M tonnes annually, but so far its output has been consumed by the domestic Indian market. This should not be taken for granted, however, and Feurle underlines that if the situation were to change, it could significantly shake current market dynamics on butter. There is possibly a growing slice available in the market for these growing countries, since consumption of butter is growing and old dairy big boys – New Zealand and Australia – may not be able to significantly increase production. According to Feurle, New Zealand, for example, is reaching the limit of how much dairy it can put out due to an already intensive dairy industry being restricted by environmental regulations, among other factors. “But it’s a global market, and so price plays a very important role,” reminds Feurle. “If the EU price of a product, like butter, is very low or very competitive, demand will grow in some countries that are very price sensitive. Of course, it also works the other way around.” When asked by Oils & Fats International whether we can expect a new butter shortage in the near future, Feurle laughs and says she does not have the crystal ball necessary to make that kind of predictions. What she knows is that when looking at consumption forecast figures going up to 2030, butter is the only dairy product that is expected to experience significant growth. “That is the trend. Demand will stay high and keep increasing all the time. But it’s important to be aware that not everything is rational on the marketplace. It all depends on butter supplies and how much dairy producers are able to put out. However, butter is a part of a whole range of dairy products and it shouldn’t be seen as isolated since the products affect each other,” she explains. l Ile Kauppila is the assistant editor at OFI

35 OFI – JULY/AUGUST 2018 www.ofimagazine.com

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STATISTIC S

UKRAINE SUNFLOWER SEED PRICE, 2015-18 (US$/TONNE)

STATISTICAL NEWS FROM MINTEC Sunflower seed Sunflower seed prices have fallen in June, driven by forecasts of increasing production in the 2018/19 season. Global production of sunflower seed has been estimated to increase 5% y-o-y to 50M tonnes. Higher production has been driven by increased sowing area in the main growing regions of Russia and Ukraine, alongside good growing conditions earlier in the planting period. Rapeseed Prices for rapeseed fell at the beginning of June, driven by large opening stocks and prospective increases in production in the 2018/19 season. Global production of rapeseed is forecast to rise by 1% y-o-y to 75M tonnes in 2018/19, with opening stocks expected to climb 17% y-o-y to 6.6M tonnes. Prices faced some upward pressure at the end of the month due to hot and dry weather conditions affecting crops in major producing countries. Dryness in Australia, the EU, Russia and Ukraine offset improving growing conditions in Canada.

EU RAPESEED PRICE, 2015-18 (US$/TONNE)

Soyabean Soyabean prices declined significantly during June due to forecasts of high global production for the 2018/19 season. In the USA, prices were pushed downwards, driven by reports stating that up to 71% of soyabean plantings were in good to excellent condition. They were considerably higher than in 2017, when farmers recorded a record harvest of 117M tonnes. In addition, forecasts pointed towards a 2% increase y-o-y in US production during 2018/19 to 119.5M tonnes. Prices faced further downward pressure driven by expectations of record production from Brazil, up 0.5% y-o-y at 8.3M tonnes.

US SOYABEAN PRICE, 2015-18 (US$/TONNE)

PRICES OF SELECTED OILS (US$/TONNE) 2017

Feb 18

Mar 18

Apr 18

May 18

Jun 18

Soyabean

829.0

822.9

823.1

815.9

792.4

782.0

Crude Palm

690.0

691.8

684.1

675.6

663.4

638.3

Palm Olein Coconut Rapeseed Sunflower

661.0

672.6

656.5

654.0

640.9

615.6

1,537.0

1,245.0

1,124.3

1,130.0

1,040.3

937.3

855.0

821.9

795.2

791.8

807.7

811.9

800.0

799.5

798.5

815.2

789.9

759.6

1,250.0

1,142.9

1,019.5

1,010.8

944.1

851.4

Average price

946.0

885.0

843.0

842.0

811.0

771.0

Index

224.0

210.0

200.0

199.0

192.0

183.0

Palm Kernel

Mintec works in partnership with sales, purchasing and supply chain professionals to deliver valuable insight into worldwide commodity and raw materials markets using innovative technology and a knowledgeable team of specialists. We provide independent insight and trusted data to help the worldâ&#x20AC;&#x2122;s most prestigious brands to make informed commercial decisions. Tel: +44 (0) 1628 851313 E-mail: sales@mintecglobal.com Website: www.mintecglobal.com

36 OFI â&#x20AC;&#x201C; JULY/AUGUST 2018 www.ofimagazine.com

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