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Contents Marc h18.indd 1

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NEWS

EDITOR’S COMMENT

Cancer link found W

e all know we should eat more fruit and vegetables and that home-cooked food is the best. Now, a new French study suggests that people who eat more ultraprocessed foods have a higher cancer risk. The study of 104,980 people in France, published in the British Medical Journal in February, found that a 10% increase in eating ultra-processed foods was associated with a 12% rise in overall cancer and an 11% increase in breast cancer risks. According to the study, ultra-processed foods include soft drinks; sweet or savoury packaged snacks; industrialised confectionery and desserts; mass-produced packaged breads; reconstituted meat such as hot dogs and chicken nuggets; instant soups and noodles; industrially pre-prepared pizzas, pies and ready meals; and other food products made mostly or entirely from sugar, oils and fats, and other substances not commonly used in food preparation such as hydrogenated oils, modified starches, and protein isolates. “Several characteristics of ultra-processed foods may be involved in causing disease, particularly cancer,” the authors say. They have a higher content of total fat, saturated fat, and added sugar and salt, along with lower fibre and vitamin density. These can contribute to obesity, which is the second leading preventable cause of cancer after smoking. In addition, foods preserved with salt are associated with an increased risk of gastric cancer, while eating more dietary fibre decreases the risk of colon cancer. A second reason why ultra-processed foods may lead to increased cancer risk is the wide range of additives found in them, the authors say. More than 250 different additives are authorised for use in food products in Europe and the USA. While safe maximum levels exist, the cocktail effect of eating so many different additives daily is unknown. There is further controversy over some authorised additives such as titanium dioxide, used as a whitening agent; artificial sweeteners such as aspartame; and the formation of carcinogenic nitrosamines in meats containing sodium nitrite when meat is charred or overcooked. Thirdly, there is the presence of contaminants formed during food processing, such as 3-MCPD during edible oil refining, and acrylamide in foods such as french fries, cereals and biscuits after hightemperature frying, roasting or baking. And lastly, the packaging of ultra-processed foods may contain endocrine disrupting chemicals such as bisphenol A (BPA), which has been linked to cancer and which the European Chemicals Agency has judged to be “a substance of very high concern”. The researchers admit that their study period was relatively short, with participants filling in 24-hour dietary records for 3,300 food items between 2009 and 2017. Some ‘misclassification’ of the four NOVA food groups was also possible. However, with several studies in Brazil, Canada, Europe, New Zealand and the USA suggesting that ultra-processed foods now contribute 25-50% of our total daily energy intake, “this dietary trend may be concerning and deserves investigation”. Cancer is a major global health problem, with 8.2M deaths from cancer reported in 2012. We can’t do anything about the risk factors that we can’t control, such as genetics. But smoking, obesity and alcohol intake are factors that we can. That doesn’t mean we should cut out all biscuits, ice cream, pizzas or toast from our diet. Most of us haven’t got the time or willpower for such extreme measures. But this latest study gives us another reason to eat more fruit, vegetables, grains, eggs, fish and meat, and to prepare them ourselves, something we know we should doing anyway. l

Nestlé drops firm linked to corruption case

lobal consumer goods firm Nestlé has broken off a supply contract with Guatemalan palm oil company Reforestadore de Palmas del Petén (Repsa) due to accusations of corruption. Guatemala’s prosecutor’s office launched an investigation into Repsa, accusing it of paying bribes to receive tax credits, reported just-food on 7 February. Repsa said in a statement that it would cooperate with the investigators, but Nestlé nonetheless decided to terminate its relationship with the firm due to the allegations. Nestlé said that it would honour existing contracts but would not renew them and that it expected to cease all commercial ties with Repsa by September 2018. “We worked diligently with Repsa on the ground in northern Guatemala to address serious

allegations made against it related to the violation of workers’ and communities’ rights and environmental degradation – behaviours which are totally unacceptable to Nestlé. “Through our engagement, Repsa put in place an action plan to address the issues identified, which we were monitoring through our partner, TFT,” said Nestlé in a statement. “Repsa is now accused of further corporate governance failures relating to financial irregularities in Guatemala. “As such, we have decided to end our commercial ties but hope that the company will continue to implement its action plan regardless of our decision,” the company added. In December 2017, agritrader Cargill also suspended palm oil purchases from Repsa.

Unilever discloses palm oil suppliers

nilever has publicly disclosed the suppliers and mills it directly and indirectly sources palm oil from, becoming the first consumer goods firm to do so. The mapping exercise comprised 1,400 mills and more than 300 direct suppliers and its aim was to provide greater transparency in order to effectively address systemic issues associated with palm oil cultivation, such as deforestation and human rights abuse, the firm said in a 16 February statement. “A lot of people think if you outsource your value chain, you can outsource your responsibilities. I don’t think so,” said Unilever CEO Paul Polman. Palm oil changed hands several times in its long and complex supply chain before reaching the factories of consumer goods companies, moving from the plantation where oil palm was grown to agents who sold the fruit to mills that processed it. “Next, it is transported via traders to refineries for further processing. Only after this point does it enter our direct supply chain,” Unilever said. According to Unilever, disclosing its suppliers was part of the company’s Sustainable Palm Sourcing Policy, which it launched in 2013 and relaunched in 2016. The programme helped the firm identify where the palm oil it used came from and more effectively pinpointed and addressed any possible issues together with its suppliers, NGO partners, governments and other stakeholders. Unilever was accused, together with PepsiCo and Nestlé, of being complicit in the destruction of Sumatra’s last rainforests, reported Edie in July 2017. In June 2017, Unilever dropped Sawit Sumbermas Sarana (SWS), an Indonesian palm oil producer, from its list of suppliers after SWS was found to have breached laws on deforestation and peatland clearance.

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NEWS

ADM, Cargill ink Egypt joint venture deal G

lobal agritraders Archer Daniels Midland (ADM) and Cargill entered into an agreement on 26 February to open a joint venture in Egypt to supply the country’s soyabean oil and meal market. The joint venture would own and operate the National Vegetable Oil Co soya crush plant in Borg Al-Arab on Egypt’s northern coast, ADM said in a statement. In addition, other commercial activities of the venture would include a merchandising operation based in Switzerland that would supply the Egypt plant with soyabeans. Cargill was planning to double the daily crush capacity at the Borg Al-Arab facility from 3,000 to 6,000 tonnes. The firm said it would be able to produce higherprotein soyabean meal while reducing the need to import soya meal into Egypt.

“Egypt is an important market where demand for high-quality soyabean meal and oil is outpacing the rest of the world,” said John Grossman, president of oilseed crush for EMEA at ADM. “By bringing together expertise and resources from two great companies and by utilising an existing facility and infrastructure, this joint venture would be perfectly positioned to efficiently meet growing Egyptian demand,” he added. The joint venture would be managed as a standalone entity with ownership distributed equally between ADM and Cargill. It would not include Cargill’s grain business and port terminal in Dekheila, nor the ADM-Medsofts joint venture at the Port of Alexandria. ADM and Cargill hoped to have the joint venture formally launched by mid-2018 after receiving the necessary regulatory clearances.

Continental may play key role in Bunge takeover

lobal agribusiness firm Continental Grain Co may be preparing to play a key role in the potential sale of fellow agribusiness giant Bunge, which has been struggling with its finances. According to several media outlets, Continental had filed a petition with US regulators concerning a previously undisclosed position in Bunge, World Grain reported on 6 March. It had also acquired approval to buy more shares in Bunge to comply with US Trade Commission rules that require stakeholders to seek clearance if they intend to purchase more than US$84M worth of stock in a company they have invested in. World Grain said Continental – which owned a 1% stake in Bunge – planned to hold discussions with Bunge about a potential sale of the company.

Continental and other investors had reportedly become frustrated with Bunge’s management following several consecutive disappointing earnings reports. Bunge, which has an approximate market value of US$11bn, has drawn takeover offers over the last year. Glencore put forward a takeover offer that was rebuffed in early 2017. Early this year, ADM said it had engaged in talks with Bunge about a possible merger. Continental Grain, founded in 1813 in Belgium, was a major player in the grain market until 1999, when it sold its grains unit to Cargill for US$1bn. The company has operations in oilseed crushing; the production and distribution of meat, animal feeds, flour and petroleum; and financial services.

alaysia could call off several trade deals with EU countries, including the purchase of new fighter jets for its military, if the European bloc goes forward with its planned phaseout of palm oil biodiesel. Malaysia had been looking to replace its older Russian MiG-29 aircrafts with up to 18 new ones, but Defense Minister Datuk Seri Hishamuddin Hussein said the negotiations, which involved at least France and the UK, could be put on hold if the EU palm oil ban was implemented, The Edge Markets reported on 8 March. Hussein said that bilateral relationships involved all aspects of the negotiating countries and could not be detached from economic considerations. “Let the negotiation take its course, but I would like to see our bilateral partners being genuine and not see us as a country they can sell assets to,” Hussein said.

PHOTO: GARY EMERY

EU-Malaysia fighter jet deal hinges on palm oil ban

Malaysia was considering several options for the jets, including a US$2bn deal for Rafale fighters manufactured by French Dassault Aviation and the Eurofighter Typhoon planes (pictured) by a consortium of Airbus, Aleniea Aermacchi and BAE Systems. The country’s Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong also stressed that EUMalaysia free trade agreement (FTA) negotiations could not be picked up again until the palm oil

case was resolved. “Palm oil is our most important export. In this FTA, this issue must be resolved first. There will be no conclusion on EU trade talks without a resolution on palm oil,” said Mah. The European Parliament voted in January in favour of a proposal to remove palm oil-based biodiesel from the EU’s list of sustainable renewable fuels by 2021. Malaysia sees the proposal as unfair and discriminatory and likens it to crop apartheid.

IN BRIEF NETHERLANDS: Swiss agri firm Syngenta has completed the acquisition of Netherlands-based Nidera Seeds from China’s COFCO International. Nidera was an important player in the South American seeds market across several key crops, holding a pool of germplasm and with a presence in several important countries in the region, including Argentina and Brazil, said Syngenta in a 7 February statement. COFCO International acquired a 51% stake of Nidera in 2014, but announced in November 2017 that it had agreed to offload the company to Syngenta. According to Reuters, Nidera had been experiencing losses and accounting issues. Syngenta was acquired by COFCO’s compatriot ChemChina earlier in 2017 in a US$43bn deal.

Ruchi Soya to sell off majority

ndia’s largest cooking oil and soya foods firm Ruchi Soya has confirmed it is likely to sell a majority share of the company by June. The firm, which is undergoing bankruptcy proceedings with the India National Company Law Tribunal (NCLT), had received offers from both within India, such as from commodity trader Sakuma Exports, and from overseas, with Malaysian Sime Darby Plantations’ expression of interest, wrote just-food on 27 February. “This is preliminary at this point in time and still subject to due diligence and many other steps before we can come up with an indicative offer price,” Sime Darby Plantation managing director Mohd Bakke Salleh told Reuters on 22 February. Ruchi Soya said, without naming any companies, that it had received offers ranging from 80bn to 100bn rupees (US$1.48bn1.85bn) for a majority stake and, as a result, had come close to a resolution with the NCLT. According to the company, a deal would likely be a “game changer” and could help cut its debts from 5.9bn rupees (US$90.5M) to 2bn rupees (US$30.7M).

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NEWS

Farmers fear soya retaliation from China

he US soyabean industry has voiced concerns that the Department of Commerce’s (USDC) suggested tariff on Chinese steel could lead to retaliatory measures on US soyabean exports. The USDC released a number of recommendations on 16 February – a 53% tariff on steel among them – following its investigation into restricting certain foreign imports, wrote Platts on 22 February. An anonymous source close to the matter told Platts that the situation had become a ‘what-if’ scenario and that the agricultural industry feared Chinese restrictions on US soyabean imports. “It is a general concern that the current administration is playing a risky game that could greatly affect the agricultural market,” the source said.

INDIA: India more than doubled the import duties on several vegetable oils on 1 February, wrote Economic Times. Import duties on crude groundnut, olive, cottonseed, safflower seed, saffola, coconut, palm kernel, linseed, corn, castor and sesame oils rose from 12.5% to 30%, while the duty on their refined varieties was raised from 20% to 35%. The duty on crude soya oil was raised in November 2017 to 30%, while duties on crude sunflower and rapeseed oil currently stand at 25%. MALAYSIA: Bunge completed its acquisition of a controlling 70% interest in speciality oil firm IOI Loders Croklaan from Malaysia’s IOI Corp Berhad on 1 March. The US$946M deal would allow Bunge to serve B2B customers in food processing, industrial and artisanal bakery, confectionery, human nutrition and food service applications. Loders would change its full name to Bunge Loders Croklaan. FRANCE: Two people died and one was injured in an explosion at vegetable oil producer Saipol’s rapeseed oil plant in Dieppe, northern France, on 17 February. The cause of the explosion was being investigated and Saipol, the oilseed branch of biodiesel firm Avril, said it was too early to comment on when the facility would resume operations, Reuters reported.

February, China started an anti-dumping duty investigation on US sorghum and implemented a preliminary tariff in retaliation to American restrictions on the imports of Chinese solar panels. September 2016 also saw China slapping anti-dumping and anti-subsidy duties on US dried distillers grains (DDGS), which caused the Asian juggernaut’s imports to fall 84% from 2.3M tonnes in 2016 to 378,000 tonnes in 2017. The duties bumped China down from being the number one US DDGS importer to eight place. In 2009, a 35% tariff on Chinese car tyres was countered with penalties on US chicken parts, from which Richard Chriss, president of the trade group American Institute for International Steel, said the poultry industry had never recovered.

Spanish firms mount campaign for healthier foods

ore than 500 Spanish food and consumer goods companies have pledged to reduce the saturated fat, salt and sugar content of their products following the launch of a government health drive. Called the Collaboration Plan, the voluntary commitment campaign was launched on 5 February by the Spanish Ministry of Health, Social Services and Equality, together with the Spanish Federation of Food and Beverage Industries (FIAB), Food Navigator said on 6 February. According to the ministry, the plan – to be rolled out through to 2020 – covered food and drink products that contributed 44.5% of the total energy intake of an average Spanish family. Producers of prepared dishes would reduce saturated fat and salt by 10%, while dairy product

PHOTO: PIXABAY

IN BRIEF

John Heisdorffer, president of the American Soybean Association, agreed, saying that the tariffs would make life “very hard” for American soya farmers. “Our capable competitors in Brazil and Argentina are all too happy to pick up whatever slack we leave in supplying the Chinese market,” said Heisdorffer. China was a major destination for US soyabeans, having already bought 26.6M tonnes of soyabeans from the USA in the current marketing year, representing 59.6% of total US soya exports in the period, Platts said, based on US Department of Agriculture (USDA) data. In 2016/17, China took in 60.6% of US soyabeans, up from 56.9% in 2015/16. The US agri industry was no stranger to restrictive actions from China. Earlier in

manufacturers said they would cut sugar by a similar 10%. In salted snacks, including potato crisps and popcorn, salt content would be cut 13.8% and saturated fat by 10%, while producers of baked products would settle on reducing saturated fat and sugar by 5%. Condiment manufacturers would reduce the sugar and salt content of their products, such as ketchup and mayonnaise, by 18%

and 16% respectively. Caterers to hospitals and schools said they would use leaner cuts of meat and cut back on precooked and fried foods in favour of pulses, fish and vegetables, while their suppliers said they would reduce the use of sugar and salt in their single-serving sachets. FIAB president Tomás Pascual Gómez-Cuétara said the initiative responded to the will of consumers and the industry but added that it was important to remember that not all products could be reformulated due to technological, legal and/or food safety issues. “Many sectors have also been reducing the content of these nutrients for some time. Especially during the last decade, Spanish food and beverage manufacturers have made considerable progress in this field,” Gómez-Cuétara said.

Unilever to move headquarters to the Netherlands

he Anglo-Dutch consumer goods juggernaut Unilever has chosen the Netherlands as the location of its headquarters, dashing the UK’s hopes of the Becel and Flora spreads manufacturer retaining its current two-headed structure. The company would move to a single entity situated in Rotterdam in an effort in an attempt to become “more agile”. The move would undo the split headquarters organisation that had been in place since 1930, wrote the BBC on 15 March. In addition to moving its headquarters, Unilever said it would reorganise its business into three separate divisions. The beauty and personal care unit and the home care business would stay in London while the foods and refreshments division would continue to be

based in Rotterdam. No jobs would be lost in the move, which both the company and the UK government underlined was not related to the UK leaving the EU. “Unilever has today shown its long-term commitment to the UK by choosing to locate its two fastest-growing global business divisions in this country,” a UK government spokesperson said. Paul Polman, Unilever CEO, told the BBC that the move was due to “technical reasons”. He said 55% of the firm’s shares were traded in the Netherlands. However, anti-Brexit campaigners were quick to paint the move as a blow to the UK government. Unilever produces iconic brands, such as Blue Band and Rama cooking fats and spreads, Hellman’s mayonnaise and Magnum ice cream.

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Comment and News.indd 3

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BIOFUELS NEWS

Biodiesel imports sold ‘below fair value’ T

he US Department of Commerce (USDC) has ruled that biodiesel imports from Argentina and Indonesia are sold into the country below fair value, in a final determination on its anti-dumping investigations into the two countries, announced on 21 February. As a result, importers of Argentinian and Indonesian biodiesel will continue to pay cash deposits on these imports ranging from 60.44 to 86.41% for biodiesel from Argentina, and 92.52 to 276.65% for biodiesel from Indonesia, depending on the particular foreign producer/exporter involved, according to the US National Biodiesel Board (NBB). “The USDC will instruct US Customs and Border Protection to collect cash deposits in these amounts when the final determination is published in the Federal Register some time next week,” the NBB said. The duty deposit requirements were

CHINA/EUROPE: On 2 February, UK price reporting agency Argus launched new price assessments for used cooking oil (UCO) and UCO methyl ester (UCOME) from China to Europe, in a response to growing imports by Europe’s biodiesel industry and its move towards producing second generation biodiesel derived from waste materials, Argus said. European imports of UCO grew to 42,000 tonnes between January and October 2017, a 500% increase from the 7,000 tonnes registered a year earlier. Meanwhile, UCOME imports had grown from 8,000 tonnes in 2015 to 36,000 tonnes in 2016 and finally 150,000 tonnes by October 2017, marking a 1,775% increase in only two years, Argus said. LAOS: Thai palm oil trader OPG Tech Co is planning to establish a new oil palm plantation and increase biodiesel production in neighbouring Laos, due to diminishing business opportunities in Thailand. The firm was looking into planting a 16,000ha plantation and developing it over the years to bring its biodiesel production up to 120,000l/day, wrote the Bangkok Post on 29 January. OPG chairman Apisit Rujikeatkamjorn said the company already had a 1,600ha plantation in Laos producing 30,000l/day of biodiesel.

“It is reassuring to see the administration enforcing policies that put America first,” added NBB vice president of federal affairs, Kurt Kovarik. “The biodiesel industry already deals with policy uncertainties, such as lapsing tax credits and annual unpredictability with the Renewable Fuel Standard, so we appreciate seeing illegally dumped imports remedied,” he added. The NBB’s Fair Trade Coalition, consisting on NBB and 15 US biodiesel producers, petitioned the USDC to start the anti-dumping investigation in March 2017. Under the Trump administration, the USDC has cracked down on possible trade law violations, launching 102 anti-dumping and countervailing duty investigations between 20 January 2017 and 20 February 2018, marking a 96% increase over the same period in 2016-17.

Qantas utilises carinata to fly from Australia to USA

ustralian Qantas Airways, together with Canadian agritech company Agrisoma Biosciences, flew the first dedicated biofuel-powered flight between Australia and the USA on 28 January, using a jet biofuel produced from Brassica carinata (pictured right). The QF96 flight from Los Angeles to Melbourne used approximately 24 tonnes of carinata, also known as Ethiopian mustard or rape, a non-food mustard seed developed by Agrisoma, Biofuels Digest reported on 29 January Qantas said the 10% blend used on the Los Angeles-Melbourne flight saved 18 tonnes in carbon emissions, marking a 7% reduction from “normal operating conditions”.

PHOTO: UNIVERSITY OF FLORIDA

IN BRIEF

in addition to deposits required by final countervailing duty orders published earlier this year. The final countervailing duty orders followed affirmative findings that unfairly subsidised biodiesel imports from Argentina and Indonesia had injured the US biodiesel industry. The US International Trade Commission (ITC) is also scheduled to give its final decision on 6 April on whether the Argentine and Indonesian imports had damaged the US biodiesel industry. “Today’s decision allows US producers of biodiesel to receive relief from the marketdistorting effects of foreign producers dumping into the domestic market. While the USA values its relationship with Argentina and Indonesia, even our closest friends must play by the rules,” said US Secretary of Commerce Wilbur Ross.

The carinata fuel was processed using Honeywell’s renewable jet fuel processing technology by AltAir Fuels at its 35M gallons/ year refinery in Paramount, California, which was the world’s first commercial-scale renewable jet fuel processing plant, said Biofuels Digest. Carinata could be grown in

either fallow areas where food crops did not thrive or between crop cycles, which could improve soil quality, reduce erosion and provide farmers with additional income, the news site said. One hectare of the oilseed yielded 2,000 litres of oil, which could produce 400 litres of biofuel, 1,400 litres of renewable diesel and 10% renewable byproducts, including a high-protein non-GMO meal for livestock feed. Apart from Australia and the USA, carinata cultivation was also being attempted in South America, where Finnish forestry concern UPM Kymmene was working to introduce the plant to allow farmers to use their fields during winter months and provide them with a new source of income, Biofuels Digest said.

EU must remove duties on Indonesian biodiesel

he European Court of Justice has upheld an appeal by Indonesia and ruled that the EU must remove the current 8.8-23.3% anti-dumping tax imposed on Indonesian biodiesel. The ruling by the EU’s highest court – effective from 16 March onwards – reinforced a 23 January decision by the World Trade Organization (WTO) in favour of Indonesia, wrote Reuters on 21 March. The WTO decreed that the EU had acted inconsistently with several of its policies by disregarding biodiesel prices recorded by Indonesian producers and failing to correctly calculate a normal profit margin and that it would have to bring its duties in line with WTO standards. “With the elimination of these duties, businesses can once again export biodiesel to the EU,” said

Oke Nurwan, director general of foreign trade at the Indonesian Ministry of Trade. The Indonesia Biofuel Producers Association also welcomed the EU court’s ruling and vice chair Paulus Tjakrawan said the association would ask producers to prepare to start exporting again soon. He declined to give estimations on expected export volumes, wrote Reuters. Indonesia was also planning to challenge the anti-subsidy duties imposed by the USA in US courts and at the WTO. The country was pushing its domestic biodiesel production in a drive to further develop its biodiesel industry, with plans to expand biodiesel subsidies to cover palm oil-blended fuels for use in the Indonesian mining and power sectors, Reuters said.

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3/22/2018 9:18:01 AM

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BIOTECH NEWS

BRAZIL: About 100 Brazilian sugar mills are preparing to plant an initial 400ha of the world’s first GM sugarcane variety, according to its developer Centro de Tecnologia Canavieira (CTC). The sugarcane was resistant to the cane borer, an insect that cost Brazilian sugar producers approximately US$1.5bn/year in crop losses and insecticide costs, Reuters said on 2 March. Brazil approved the commercial use of CTC modified sugarcane last year, the first country in the world to do so, Reuters said. However, some environmentalist groups feared that insect-killing modification in plants intended for mass cultivation could cause imbalances in ecosystems. CTC hopes to expand the planting area of the new GM sugarcane to 1.5M ha by 2021. AUSTRALIA: Food Standards Australia New Zealand have approved a new omega 3-producing GM canola variety for food and animal feed applications, developed by Australian agrichemical firm Nufarm’s subsidiary, Nuseed. Nufarm said one hectare of its oilseed could potentially give an omega 3 yield comparable to 10,000kg of wild caught fish, reported Undercurrent News on 13 February. Nufarm plans to initially use the omega 3 oil for aquaculture feed uses under the Aquaterra brand, followed later by human nutrition applications under the name Nutriterra. USA: The DowDuPont Agriculture Division will be renamed Corteva Agriscience after it is spun off as an independent company following the US$130bn merger of Dow Chemical Co and DuPont last September. Corteva, which will combine DuPont Crop Protection, DuPont Pioneer and Dow AgroSciences by 1 June 2019, would be headquartered in Wilmington, DowDuPont said on 26 February. The newly branded company would be active as a standalone player in the seed technologies, crop protection and digital agriculture segments. It would continue investing in its most famous brands, including the Pioneer, Mycogen and Brevant seed brands.

EU Commission gives approval to Bayer and Monsanto merger T

he EU’s antitrust authorities have approved the US$62.5bn merger of German chemicals company Bayer and American biotech firm Monsanto, which would create a company controlling more than a quarter of the global seed and pesticide market. The European Commission (EC) determined that Bayer had addressed its concerns about the possible anti-competitive effect of the merger by agreeing to offload a number of assets to its compatriot BASF, Reuters reported on 21 March. BASF had already agreed to buy significant parts of Bayer’s seed and non-selective herbicide businesses for US$7.2bn in October, including Bayer’s global glufosinate-ammonium herbicides, and major seeds

platforms such as the Invigor branded canola hybrids with the LibertyLink trait technology in North America, rapeseed mainly in EU markets, and soyabean and cotton in the Americas. The EU Commission was expected to rule on the BASF deal by 16 April, Reuters said. The Greens group of the European Parliament criticised the EC’s ruling, saying that smaller players in the agriculture industry could suffer as a result. The Bayer-Monsanto merger has been approved by China and Brazil, but was still awaiting the green light from the USA and Russia, with the competition authority in the latter having being sued by Bayer for its six-month delay in reaching a decision.

Plenish oil must carry GM labelling Monsanto fails to stop dicamba ban he European Commission

(EC) has approved the Plenish branded high oleic soyabean oil, developed by DowDuPont unit DuPont Pioneer, for food and feed applications but it must carry a GM label, reported Food Navigator on 2 February. The EC approved the oil in late December but said it must carry GM labeling according to EU rules stating that all foods containing 0.9% or more of GM ingredients must clearly carry such labels on their packaging. The Plenish oil had 20% less saturated fat than typical soyabean oil, an oleic content of more than 75% and a linolenic acid content of less than 3%, which translated to greater oil stability and a longer fry life, said DuPont Pioneer. EU oilseed industry association Fediol’s secretary general Nathalie Lecocq said the group welcomed the EC’s

PHOTO: QUALISOY

IN BRIEF

PLENISH OIL IS MEANT TO GIVE A LONGER FRY LIFE

approval of a GM product that had been “positively assessed” by the European Food Safety Authority. “Our understanding is that this soyabean and its oil is not targeted at the European market but its commercialisation in other regions increases the risk of presence in our supplies. “Hence, authorisation will remove legal uncertainty for operators and will prevent even small trace amounts creating trade disruptions.”

S agrichemicals giant Monsanto has lost its bid to prevent the US state of Arkansas from prohibiting the use of its controversial dicamba herbicide during the 2018 season. Circuit Court Judge Chris Piazza ruled that due to a recent Arkansas Supreme Court decision, the state could not be made the defendant for the lawsuit which Monsanto filed last year, Reuters reported on 16 February. Arkansas banned the spraying of dicamba between 16 April and 31 October after it caused crop damage by evaporating from soyabean fields and drifting over to areas where crops were not engineered to resist the toxin. n On 25 February, a US judge blocked California’s plans to require cancer warnings on products containing glyphosate – the main ingredients in Monsanto’s Roundup herbicide – saying it would be misleading, Reuters reported.

US$1.5bn settlement in Syngenta GMO corn case

grochemicals and seeds firm Syngenta has reached a US$1.5bn a settlement with all US corn producers, grain handling facilities and ethanol plants which had sold its GM corn after 15 September 2013, World Grain said on 13 March. The US class action suit filed in the Kansas federal court in 2016, alleged that Syngenta sold the Agrisure Viptera and Agrisure Duracade corn strains to US farmers before they were approved by China, which stopped importing US corn in November 2013, causing prices to plummet. The settlement – believed to be one of the largest agricultural settlements in US history – must be approved by the district judge of Kansas. Syngenta had preliminarily agreed to pay US$1.4-1.5bn to US

farmers in September 2017. If approved, funds could be distributed to class members in the first half of 2019, World Grain said. Earlier in June 2017, a Kansas jury ruled in favour of a US$217.7M settlement to Kansas growers. US agribusiness trader ADM also settled its case against Syngenta confidentially in December 2017, Feed Navigator said on 21 February. ADM had launched a court action in Louisiana in 2014, accusing Syngenta of negligence in commercialising its products before they were approved in China. Syngenta head of corporate communications in North America, Paul Minehart, said some elements of the case continued, with a trial with Cargill set for September 2018.

8 OFI – MARCH/APRIL 2018 www.ofimagazine.com

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3/22/2018 9:17:22 AM

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TRANSPORT & LOGISTICS NEWS

G3’s new Vancouver terminal opening early

3 Canada Ltd is opening its new grain terminal at the Port of Vancouver in 2019, one year ahead of its initial 2020 opening date, according to Reuters. It will be the first new grain terminal to be built at the Port of Vancouver since the 1960s and will have more than 180,000 tonnes of storage, World Grain said on 31 January. The terminal will feature a rail loop track capable of holding three 134-car trains and will handle grains, oilseeds, pulses and special crops, mostly supplied via a throughput agreement with G3 Canada, a partnership between Saudi Arabian agriculture company

IN BRIEF INDONESIA: The PT Jakarta Tank Terminal (JTT), a joint venture between global tank storage provider Royal Vopak and Indonesia’s PT AKR Corporindo Tbk (AKR), will expand storage capacity for petrol and biofuels by 100,000m3, Royal Vopak said on 16 February. The expansion will bring the total tank capacity of JTT to more than 350,000m3 and is expected to be commissioned in several phases during 2019. The JTT terminal is located in Tanjung Priok, the main port of Jakarta, and serves the import and distribution market for fuel products in the greater Jakarta region and Indonesia’s islands. “This expansion will add eight tanks with a total capacity of 100,000m3 for petrol, ethanol and biodiesel, a vapour recovery unit and additional blending infrastructure which will facilitate customers to comply with Indonesia’s biofuel blending mandate regulations,” Royal Vopak said. AKR is Indonesia’s leading logistics provider for petroleum products and basic chemicals, with tank storage terminals in over 15 sea and river ports. SAUDI ARABIA: Bahri Dry Bulk has secured US$96M to finance the purchase of four new bulk carriers, to be built by Hyundai Mipo Dockyard, to cater to growing demand for imports of essential grains into the country, World Grain reported on 11 January. Bahri Dry Bulk is a 60/40 joint venture between Saudi’s Bahri group and Arabian Agricultural Services Company (ARASCO), and operates a fleet of five dry bulk vessels.

SALIC and US grain handler Bunge. G3 Canada buys grains and oilseeds across Canada and markets them worldwide, with a network of grain elevators, port terminals from Saskatchewan to Québec, a Great Lake transport vessel and the largest private fleet of grain hopper cars in Canada. G3 said the storage space at its new grain terminal would allow trains to travel to Vancouver, unload while in continuous motion, and travel back to G3 Canada’s primary elevators, without detaching from their locomotives, critical to increasing supply chain efficiency. When the project was first

Handysize vessels dropped from BDI

he Baltic Exchange announced on 1 February that it would re-weight the ratios used to calculate the Baltic Dry Index (BDI) to reflect changes in dry bulk global trading patterns. Effective 1 March, the BDI will comprise 40% Capesize time charter assessments, 30% Panamax and 30% Supramax, and will no longer include the Handysize time charter average. “External research showed the contribution of the various dry bulk vessel types to the dry bulk market was 40% Capesize, 25% Panamax, 25% Supramax and 10% Handysize,” the BDI said. “The decision to exclude Handysize contributions makes no statistical difference to the BDI calculation.” The BDI said its weightings would be reviewed on an annual basis and it would continue to report on the Handysize vessel market, having already launched a trial of a new Handysize Imabari 38 benchmark vessel and seven time charter routes in November. Exchange chief executive Mark Jackson said the BDI had been published in various forms since 1985 and its composition had changed over the years to reflect the underlying market. “The new weightings are simply the next phase of development in this process.” Oilseeds and meal are an important element of the global dry bulk trade and are normally carried in Panamax size vessels, with Handysize vessels used on more regional trades.

announced in December 2016, G3 CEO Karl Gerrand said the company planned “to transform the movement of grain through the west coast, providing Canadian farmers with competitive pricing and reliable delivery opportunities.” On 26 January, Gerrand told Reuters that 90% of the capital to build the Vancouver terminal had been spent or committed through supply and service contracts. In addition to G3, other companies with grain terminals on the north shore of the Port of Vancouver included Richardson International and Cargill, World Grain said.

NGFA backs investment in US inland waterways

he US National Grain and Feed Association (NGFA) has commended the Trump administration’s legislative outline for rebuilding US infrastructure released on 12 February, saying it looks forward to working with Congress on legislation to finance rehabilitating dilapidated locks and dams on the US inland waterways system. “Inland waterways provide the lowest cost and most environmentally sustainable way to move grains, oilseeds and other agricultural products to export ports,” the NGFA said. “The USA exports approximately 25% of its grain and oilseed crop, with about 60% of that volume moving to US Gulf ports via the inland waterways, while another 27% moves by rail and barge – via the Columbia-Snake River System – to Pacific Northwest ports.” NGFA president Randy Gordon said most of the locks and dams on the US inland waterways system had long surpassed their 50-year lifespan, with unscheduled breakdowns and stoppages of barge traffic on the upper Mississippi and Illinois River System increasing 700% over the last decade. The legislative outline calls for spending US$200bn to spur at least US$1.5tr in investments with state, local and private sector partners. The NGFA said the existing public-private partnership in which commercial barge users paid a barge diesel fuel tax of 29 cents/gallon into a dedicated Inland Waterways Trust Fund, matched by general treasury funds, continued to have merit. It also called for deepening and widening navigation channels at US ports to accommodate larger vessels.

Yields down in Brazil as heavy rains spoil soyabeans

rop losses from disease and spoilage caused by heavy rains have been threatening Brazil’s ongoing 2017/18 soyabean harvest, AgriCensus reported on 13 February. Some farmers in the major soya-producing states of Mato Grosso and Rio Grande do Sul were reporting increased incidence of white mould, which had caused yields to fall by some two to seven 60kg bags/ha. “We’re seeing outbreaks of white mould with the wetter weather during harvest. It’s getting to be a bigger problem for farmers because you can only spray fungicides in the flowering phase,” said farming consultant Aureo Lantmann. Spoilage and fermentation of soyabeans had also

become a problem in Mato Grosso, which had seen nearly daily rains, according to AgriCensus. Safras e Mercado, an agriconsultancy based in the state, said 37% of Mato Grosso’s soya crop had been harvested by 11 February, significantly behind the 54% harvested by the same time last year, due to some farmers deciding to let their fields dry out to avoid paying higher freight and drying costs. Others, however, had decided to harvest their beans anyway rather than suffer greater yield losses, which had led to reports from grain warehouses that the beans being delivered to them had humidity levels up to 40%, well above the 14% standard accepted by most storage silos.

10 OFI – MARCH/APRIL 2018 www.ofimagazine.com

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3/16/2018 10:01:05 AM

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

DENMARK: The Lego Group announced on 1 March that its botanical elements – such as leaves, bushes and trees – would be made from plantbased polyethylene sourced from sugarcane in the future, with the first products appearing in Lego boxes this year. USA: US green nano-chemistry company Sylvatex and Valicor – a specialist in advanced separation and recovery – have announced a new joint development agreement to commercialise Sylvatex’s technology, which can convert distillers corn oil and other plant-based oil feedstocks into renewable compounds. The agreement would see the development, construction and commercialisation of Sylvatex’s MicroX technology, which creates nanoparticles that can be used in used in fuels, lithium battery manufacturing, and other speciality chemical applications such as food and fragrances, Sylvatex said on 13 February. Valicor specialises in the recovery of byproducts from a range of production facilities including corn oil extraction for ethanol production. FINLAND: Finnish pulp and paper manufacturer Stora Enso has launched Lineo, a bio-based lignin product which can replace petroleum-based phenolic materials, used in resins for plywood, laminated veneer lumber, paper lamination and insulation material. “Lignin makes up 20-30% of the composition of wood,” the company said on 13 February. “Yet it has traditionally been discarded by the pulp and paper industries.” Markus Mannström, executive vice president of the Stora Enso biomaterials division, said the company had increased its lignin focus in recent years. “Lineo is ideal for companies looking for alternatives to oilbased products. We believe that everything made from fossilbased materials today can be made from a tree tomorrow.” Stora Enso has been producing lignin since 2015 at its Sunila pulp mill in Finland, which has a lignin capacity of 50,000 tonnes/year.

Water treatment applications to drive fatty amines market

ncreasing demand from water treatment applications and agrochemicals is expected to spur the growth in the overall global fatty amine market, which is projected to reach a value of US$2.6bn by 2027. Fatty amines – which are produced from fatty acids – are used in filtration applications in water treatment, an area expected to contribute to nearly a quarter of overall fatty amine market revenues between 2017-2027, according to a recent market report by Future Market Insights (FMI). In addition to water treatment, the growing use of agrochemicals was expected to give the market a considerable boost as the steadily increasing global population spurred the need for more agrochemicals, with fatty amines being one of the core chemicals in the agriculture sector. This growing segment would further drive

the demand for fatty amines in land cultivation operations and manufacturers would be able to secure higher profits, said FMI. However, the growing global mining industry was seen as a possible hindrance that could slow down market growth. “Tertiary fatty acids will account for nearly 40% of the overall market revenues in 2017 and beyond. The demand for primary fatty amines will also gain traction and register high revenue growth over the forecast period,” FMI said. The Asia Pacific excluding Japan (APEJ) region was expected to lead the global fatty amines market in terms of revenues until 2027. Leading companies in the market included AkzoNobel, Albemarble Corp, Arkema, Clariant, EI du Pont de Nemours & Co, Evonik Industries, Kao Corp, Lonza Group and Procter & Gamble.

ELM to supply Japan with bio-based lubricants

nvironmental Lubricants Manufacturing Inc (ELM), a leading US manufacturer of bio-based grease and lubricants, will supply the Japanese market with its products through an exclusive distributor agreement with Hiroshima-headquartered Chugoku Kogyo Co Ltd, the companies announced on 9 January. The two firms said they believed Japan’s market was ready for bio-based products. “While there is awareness of environmentally-friendly products, concerns over cost and performance have hindered progress so far,” they said in a press release. “ELM’s patented microwavebased grease processing has reduced the cost of bio-based

PHOTO: ELM

IN BRIEF

greases to parity with their mineral oil counterparts. Its products meet some of the most stringent industry standards

including the NLGI LB and GC-LB ratings. “With the marketing and sales resources of Chugoku Kogyo, it is expected that bio-based grease and lubricant products will become a growing commodity in Japan.” Privately-owned Chugoku Kogyo manufactures and sells lubricants and engine, turbine and gear oils to the racing, construction, agriculture and forestry, diecasting, metalworking, concrete mould and transformer industries in Japan. ELM manufactures bio-based greases and a wide range of liquid lubricants in the USA (pictured), marketing its products chiefly through petroleum lubricant manufacturers and distributors.

Deinove and Oléos in partnership Squalane launch

rench biotech company Deinove announced a partnership on 30 January with Hallstar’s Oléos group to develop a new natural cosmetic active ingredient combining the properties of Deinove bacteria and Oléos’ extraction technology. France’s Oléos, which became part of US speciality chemicals firm Hallstar in 2016, already supplies some 20 active cosmetic ingredients incorporating speciality oils using its patented extraction technology, which uses no organic solvents or chemicals.

Deinove produces high-value compounds from rare bacteria and will now work to optimise the production performance of one of its bacteria strains, while Oléos team will apply its extraction process to this bacterial biomass. “The objective is to obtain a stable oil-based active ingredient with clinically proven efficacy that is easy to formulate and conforms to the requirements of the cosmetics market,” Deinove said in a press release. “The commercial launch is scheduled for the end of 2018.”

S industrial bioscience company Amyris Inc announced on 8 February that its cosmetics joint venture with Japan’s Nikkol Group, Aprinnova, had launched a pharmaceutical grade of sugarcane-derived squalane. Squalane is mainly derived from shark liver oil but endangerment concerns has led to development of plant-based alternatives. “[Pharmaceutical] approval enables our significant expansion across many product applications, such as therapeutic skin creams and ointments,” Amyris said.

12 OFI – MARCH/APRIL 2018 www.ofimagazine.com

Renewable news.indd 1

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D IARY OF EVEN TS

18-19 APRIL 2018

6-9 MAY 2018

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

24-25 APRIL 2018

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

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

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

25-26 APRIL 2018

24-26 MAY 2018

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

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

3-8 JUNE 2018

27-29 APRIL 2018

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

Globoil International 2018 VENUE: JW Marriott Marquis, Dubai, UAE CONTACT: Teflas, India Tel: +91 022 622 31245 E-mail: events@teflas.com www.teflas.com

29 APRIL-3 MAY 2018

19-20 JUNE 2018

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

5 MAY 2018 Fundamentals of Edible Oil Processing VENUE: Minneapolis Convention Center, USA CONTACT: ID&A Ignace Debruyne & Associates VOF, Belgium Tel: +32 51 311 274 E-mail: info@smartshortcourses.com www.annualmeeting.aocs.org/program/ short-courses-x2524

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

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

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

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

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

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

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

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

27 JUNE 2018 2nd International Sunflower Oil & Meal Trade Conference VENUE: Marriott Hotel Riverside, Shangai, China CONTACT: APK-Inform, Ukraine Tel: +380 562 320795 E-mail: info@apk-inform.com www.sunoil-conference.com

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

13 OFI â&#x20AC;&#x201C; MARCH/APRIL 2018 www.ofimagazine.com

Diary March 2018.indd 1

3/16/2018 2:05:42 PM

I NTE RN ATION AL M ARKET REVIEW

Drought in Argentina hits soya meal prices FIGURE 1: ARGENTINA’S ROLE IN WORLD SOYABEAN OIL SUPPLY

he severity and duration of drought in Argentina has taken markets by surprise in the opening months of 2018, encouraging a stampede by soya bulls and shifting shares of crush revenues between the products. While soya meal prices have soared in recognition of Argentina’s dominance over global meal export supply, oil consumers’ greater choice of alternative sources has kept this sector far slower to respond. The unexpected jump in soyabean value will probably also encourage the large sowings that have been predicted again in the USA this spring and, if price strength continues, Latin America in the autumn. On the face of it, Argentina’s contribution to global soya exports is actually much greater for oil (half the total – see Figure 1, right), than meal (one third), let alone its exports in bean form (less than 12%). However, the effect is magnified by soya meal making up almost three-quarters of global meal exports in total, whereas soyabean oil comprises only 14% of world vegetabe oil trade – far outweighed by palm oil’s 60% Not surprisingly, then, meal has taken the lead in a firming soya complex since the Argentine problem began, rising by over 25% on the CBOT contract since the year started. Soyabeans, in contrast, are up by about 2% on the year, and oil prices have been steady to slightly lower compared to the end of 2017. As we went to press, some surprisingly low estimates have been floated for the Argentine harvest. Initially this was seen at around last season’s level of 57M tonnes. Lately, local analysts have been talking it down below 50M tonnes – a few even nearer 40M than 50M tonnes – a potential loss of perhaps 5-10M tonnes of meal or 1.3-2.2M tonnes oil. Some obvious restraints have stopped this market running away. One is the massive leap that was seen in 2017 world soyabean production (in Brazil, India, Paraguay and USA) and its consequent build-up in end-season stocks to an all-time record 96M tonnes (although that figure reflects combined North and South American marketing years). Another factor is the far better than expected promise of Brazil’s forthcoming crop, initially expected to drop back from a record 114M to perhaps 108M tonnes but now seen by many observers in the 114-117M tonne range. So perhaps 6-8M tonnes more soyabeans could be coming from Brazil instead, with 4.5-6.5M tonnes more meal and up to 1.5M tonnes of oil equivalent.

CHART: JOHN BUCKLEY

Soya meal prices have soared in response to drought in Argentina, affecting its export supplies. However, increases in soya production in Brazil, India and the USA have prevented the market from running away, while rising palm and canola oil production will limit the effect in the oil sector. John Buckley writes

23%

Argentina 49%

Brazil USA EU

Others 13%

Interest in US soyabeans and meal One effect of the Argentine shortfall has been a revival of interest in US soyabean and meal exports. In particular, interest in US soyabeans has lagged significantly behind last year’s pace for most of the first half of the 2017/18 season. This is the result of cheaper competition from larger than usual Latin American supplies and a slowdown in this season’s growth of imports by the largest consumer, China. Even on Argentina’s current worst-case crop scenario, the two main soya producers – Brazil and USA – should be able to make up the shortfall. The main soya oil importer likely to be affected by Argentina’s woes is India, which took in 3.5M tonnes last season and is expected to import to 3.6M tonnes or more in 2017/18 – about a third of world soyabean oil trade. If Argentina’s exportable supply of soya oil does start to put the squeeze on Indian importers, there could be a switch to greater intake of top-traded palm oil. India took 9.3M tonnes of palm last season and is expected by the United States Department of Agriculture (USDA) to boost that to 10.6M tonnes in 2017/18. That could be greater still if the palm/ soya discount widens as Argentine soya oil tightens and Malaysian/Indonesian palm output continues its recovery from the 2016 El Niño drought. Other big soya oil importers are Algeria, Bangladesh, China and Morocco, with several moderate-sized customers in Latin America and the Middle East.

Opportunity for palm oil? A severe shortfall in Argentine soyabean oil supplies

could be a marketing opportunity for Asian palm exporters, recently worried about wilting trade to China (where demand growth has been mainly centred on oil produced from imported soybeans, Europe (due to planned biodiesel and ‘sustainability’ curbs) and India (which is attempting to protect its own oilseed growers and oil refiners with higher oil import tariffs all round). As we went to press, the grey areas for soya were: the final size of the Argentine crop; the extent to which the two bigger soyabean producers – Brazil and USA – can make up Argentina’s lost crush and meal exports; and how far meal importers like the EU (30% of world trade) and southeast Asian countries (the bulk of the rest) can compensate for Argentine meal supply shortfalls by importing and crushing more beans internally. Europe has been predicted by the USDA to use/import more beans and meal in 2017/18. With demand for US meal exports – and processing margins – rising, US crush has been cranking up considerably compared with the same period last year. This could result in US oil stocks or exports building, rather than falling, as the USDA has been expecting. It remains to be seen whether US soyabean exports will continue to benefit, as they have recently, from the Argentine crop shortfall. These had been expected to drop by a couple of million tonnes to around 57M tonnes this season amid the Latin American competition but, in first-half 2017/18, they have not even met the pace required to achieve that. This trade has been hit by China applying stricter rules on admixture (halved to 1%) and by reports of u

14 OFI – MARCH/APRIL 2018 www.ofimagazine.com

John Buckley.indd 1

3/16/2018 9:30:06 AM

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CHART: JOHN BUCKLEY

I NT E RN ATION AL M ARKET REVIEW

FIGURE 2: CRUDE VEGETABLE OIL PRICES, MONTHLY AVERAGES EXCEPT PALM, RBD (US$/TONNE)

u lower proteins in the 2017 US crop, encouraging China to buy more Brazilian origin soya. China remains the pivotal demand factor, expected to account for 60% of this season’s projected 11.5M tonne increase in global crush. It is also expected to take almost 48% of this season’s expected increase in global soya oil consumption, mostly from these bean imports. The surge in Brazil’s 2017 crop was reflected in a massive 71.5% y-o-y (counter-seasonal) increase in its January soyabean exports. Unfavourable currency exchange rates and farmer disappointment that prices were not rising faster slowed its shipments down in February. But analysts expect the coming large (possibly record) crop to jump-start Brazilian competition again as the harvest gets into full flow. There is one caveat as we went to press: rain has been holding up a big chunk of Brazil’s harvest and could, if it continues, have an impact on quality there as well. The potential for more soya oil use in Latin American and US biodiesel has recently helped underpin prices. US crushers were hoping that Congress would help the sector by renewing a US$1/gallon tax credit on soya use.

EU palm oil curbs unpopular EU member states have been opposing the bloc’s proposal to curb palm oil/diesel imports from the end of this decade through various diplomatic channels. They include France, Germany, the Netherlands, Spain, Sweden and the UK. In particular, Spain has been concerned at the threat to its biodiesel sector (Europe’s largest). Apart from the Netherlands’ role as a key transhipment hub for the edible oil sector, member states are understandably concerned about the spoiling of trade relations (and threats of retaliation from) some of its main Asian trading partners. So will the plan now be watered down or fail to get through the next procedural stages? Palm oil producers must also have been encouraged by surprisingly supportive January data from the Malaysian Palm Oil Board showing a 13.5% fall in production (not unexpected) but a 6% rise (rather than a forecast fall) in exports, compared with December. This left stocks down near 7% rather than up as many pundits had expected from

December’s two-year-plus high. Malaysian exports also rose by 17.5% on-year after big gains to India, Pakistan and the EU, although January production, while down seasonally, showed an even bigger 24% rise against 2017’s ElNiño-depressed level. The recovery seemed to be persisting in February – unofficially seen up 10-15% on the month. Palm oil also took support from China’s ambassador to Malaysia promising there would be no limit on the amount of palm his country would import. China, in theory, is a potential giant market for palm biodiesel. One recent report suggested a mere 5% mandate to use the green fuel could require 8.25M tonnes of feedstock – nearby Asian palm supplies being an obvious source. But when might all this get underway? Analysts, including Oil World, have also been looking for bigger Indian vegetable oil imports, led by palm rather than soft oils, although the amounts were not looking game-changing and would presumably continue against a backdrop of continuing competition for this market between the two main producers, Malaysia and Indonesia. India had slowed its trade late last year with higher import duties to protect its domestic oilseed producers and oil refiners but may need to import more oil if local crops disappoint as expected. Despite the potentially less gloomy export outlook, analysts are not looking for any real revival in palm oil prices in 2018, especially if production grows as fast as some expect into second and third quarter 2018. Prices have also been held back by Malaysia’s strong ringgit currency, running at its highest level against the US dollar since May 2016, reducing the benefit to importing consumers of lower prices in the past year (recently 9% in dollars since December 2016). That may have muted the impact of Malaysia’s decision to cut its export duty to zero for three months in the New Year to help the improvement in shipments.

Canola prices hit highs Winnipeg canola futures have been on a roll recently, reaching their highest prices since November 2017, largely following firmer soyabean prices. Thanks to a much larger than expected 2017 crop – and early

predictions of another possible record one in 2018 – Canada’s own market faces a surplus/stock-build situation for this marketing year – unless demand turns out higher than expected. Paris futures have been slower to ascend in value amid forecasts of a more balanced market this season, again with a bias towards stock accumulation. Recent trade reports have highlighted the recovery in this year’s domestic output – mainly in France, Poland and Romania – running up against a bigger crop from key EU supplier Ukraine. With limited growth prospects for rapeseed oil (a small increase is forecast for the EU), there has been a tendency for the primary product to get progressively cheaper in late 2017/ early 2018. Statistics Canada estimated high canola stocks at the end of 2017 – about 14.15M tonnes versus 2016’s 13.38M tonnes, with more held on farm and less commercially, perhaps reflecting farmer disappointment with prices. Ukraine’s winter crop was reported in mostly good/fair condition with some analysts looking for a 17% increase on larger sown area, encouraged by strong old crop exports (forecast at a four-year high). Russia also plans more spring rape and less sunflower planted area. Agriculture and Agri-Food Canada (AAFC) estimates a 4.5%, million acre y-o-y increase in plantings to a new record of 24M tonnes or 9.73M ha – only partly offset by lower yields for a potential 400,000 tonne crop increase. With bigger starting stocks, it could mean supply rising by one million tonnes as demand increases by 800,000 tonnes (exports +500,000 tonnes, domestic +300,000 tonnes), indicating another rise in end-season stocks. Old crop exports are currently running 11% higher on the year. Europe’s mainly winter-sown crop is not, at this stage, expected to change markedly from last year. The USDA has forecast world rapeseed oil consumption up by just 150,000 tonnes at 29.14M tonnes. Over the past decade, consumption has grown by an average of 1M tonnes/ year, sometimes double that in the boom years of biodiesel expansion. Previous fast growth in food use has also slowed markedly. China is still reducing its large rapeseed oil stockpiles but is expected to consume less this season. India is reported to have sown less rape/ mustardseed than expected in response to poor prices.

Limited impact in sunflower sector Ahead of the world sunflower crop’s mainly northern hemisphere planting season, there has been less to report on the supply side. Ukraine’s contribution to sunflower oil export has declined (by about 10% up to the end of January) as expected after its smaller 2017 crop and consequent decline in domestic crush. However, last season was a record one and, so far, the decline has had limited impact on prices, which have remained competitive against other edible oils. Early pointers are to some trimming back in EU sunflower sowings this spring, perhaps leading to a drop of about 3-4% in production. Ukraine’s next crop, on the other hand, has been estimated to increase by about 5% to some 14.25M tonnes, allowing some recovery in crush and exports. l John Buckley is OFI’s market correspondent

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China is making a multibillion dollar investment in a railway to connect the east and west coasts of South America in order to secure cheap and easily transported soyabean imports. But the project is muddled by politics and debates on potential routes. Ile Kauppila writes

outh America has become something of a breadbasket for the world’s edible oils industry, especially in the case of soyabeans. Despite its origins in Asia – where China is still the world’s fourth largest soyabean producer – five out of the top 10 soyabean cultivating countries are today found in South America. Brazil leads the pack, with a forecast production of 108M tonnes in 2017/18, according to the US Department of Agriculture (USDA). Behind it is Argentina with 86.8M tonnes in 2017, followed by Paraguay (10M tonnes), Bolivia (3.3M tonnes) and Uruguay (3.2M tonnes). The huge amounts of soyabeans produced must also find a consumer. As domestic demand in South America could not possibly account for the entire production, the continent’s countries are among the world’s largest soyabean exporters as well. Put together, South America’s exports amount to approximately US$24.4bn, representing about 48.9% of global soyabean exports, according to the Observatory of Economic Complexity. It is not difficult to find a customer, either. China, despite its projected domestic production of 14.1M tonnes in 2017/18, is the sovereign leader in global soyabean imports. In 2016, it bought US$34bn worth of soyabeans, equalling 67% of total global exports. Although Artem Hammerschmidt, a senior analyst at Oil World, projected in September 2017 that China’s soyabean imports would not grow in 2017/18 due to rallying domestic production, no reduction is expected either.

Over the hills and far away With South American soya producers keeping their prime buyer, their greatest question becomes how they will get their product to China. South America’s transport infrastructure is heavily

Connecting coast t reliant on roads, which in many cases can be in less than stellar condition and even unpaved for long stretches. Moving product by truck also causes a heavy strain on the already poor roads, exacerbating the issues and leading to congestion and kilometreslong truck lines at ports. Additionally, road transport produces a lot of emissions, which in our increasingly climate conscious world is generally not good publicity for carriers and producers. Transporting agricultural products to China also has an additional challenge posed by basic geography. Most of South America’s agricultural areas are either around the eastern coast or at least to the east of the Andes – one of the longest and highest mountain ranges in the world – while China lies across the Pacific to the west. Oilseed producers have to choose the lesser of two evils and either attempt to transport their product over the mountains by road or ship it to the east coast. Scaling the mountains can quickly rack up costs, time and emissions, while taking the sea route means having to take the cargo either through the Panama canal or going around the continent at its southern tip.

The bioceanic corridor China is well aware of this problem and it is taking steps to ensure it gets the goods it needs. The Asian juggernaut has begun investing in various infrastructure projects, such as the Ferrogrão railroad in Brazil (see ‘Blazing the rail through Brazil, OFI Nov/Dec 2017), to improve export logistics in South America and perhaps even increase its political influence in the area, due to the USA’s recently established ‘America First’ policies. To make transporting soya to the western coast of South America feasible, China has now begun urging the region’s governments to establish the long-discussed bi-oceanic, or transoceanic, corridor. What this corridor would be in practice is a railroad stretching more than 3,500km from the coast of Brazil to the coast of Chile or Peru.

Such a project is by no means a new idea, and in some forms it has already become reality. In late 2016, the Ruta 150 road – the Argentine portion of the road connecting Porto Alegre in Brazil and Coquimbo in Chile – was completed, opening up a truck route across the continent. While this was already an improvement to the situation, it still suffers from the road transport problems mentioned above, namely long shipping times and high emissions. Establishing a railway would, therefore, be the preferable answer, and China has already begun working towards such a goal. According to the USDA’s Global Agricultural Information Network (GAIN), in 2015 China and Brazil reached US$53.3bn worth of agreements investing in Brazilian agriculture and infrastructure, animal health, market access and climate change mitigation. A key part of the agreements was jointly carrying out basic feasibility studies into a transoceanic railway connection, which would begin in Brazil and terminate in Peru. The investigation was to be carried out in cooperation with China Railway Corp and China Railway Eryuan Group (CREEC) on the Chinese end and Empresa de Planejamento e Logística and the Ministry of Transport and Communications in Brazil. “The transoceanic railroad project is hoped to increase the facilitation of trade by reducing transportation cost and transit time. If the project were to be accomplished, Brazil may invest in developing a plan for railroad expansion to stimulate its economy,” USDA GAIN said at the time. Granted, this report was made in 2015, but the project has not been forgotten in the meantime. In October 2017, deputy director general at the Latin American and Caribbean Affairs Department at the Chinese Foreign Ministry Zhang Run invited the region’s countries to “get aboard China’s highspeed development train”. “The Latin American and Caribbean region is like an extension of China’s Silk Road project and we’re ready to get more deeply involved,” Zhang said, referring to China’s Belt And Road Initiative, which

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st to coast seeks to improve connectivity and cooperation between Eurasian countries in order to boost trade and stimulate economic growth. The key to this project is the establishment of a logistics route along the lines of the ancient Silk Road from China to Europe.

Overshadowed by politics The will to see the bi-oceanic corridor become reality is not restricted to the Asian side of the Pacific. Bolivia, in particular, is pushing for the project to go forward. While not one of the key end point countries for the railway, Bolivia would like to see its geographic position in the centre of South America turn it into a major transport hub, not only for agricultural products, but also for the hydrocarbons and ore that find their way from the continent to China. The bookends of the project, on the other hand, still have their feet on the brakes for the time being. “The governments of Peru and Brazil are at best dragging their feet, saying ‘yes’ but looking to Wall Street for favours, unwilling to move,” Executive Intelligence Review (EIR) wrote in November 2017. EIR also says Wall Street’s reluctance to fund the project has delayed its implementation. And external funding is sorely needed. With an original estimate of US$10bn, the China Railway Corp now says that due to the difficult terrain in the Andes, the bill to build the corridor will rise to US$60bn. “Given these figures and other projects that could be more urgent, it has been decided to continue studying [the railway project],” Peru’s vice president and transport minister Martin Vizcarra said in September 2016, giving a good example of the feet-dragging described by EIR. The corridor has also been pushed back by ongoing discussions about the route it would take. CREEC, in the feasibility studies carried out with Brazil, recommends starting the tracks at the Port of Santos in Brazil, crossing the Andes at their lowest point in Saramiriza, Peru, and ending them at the one of Peru’s Pacific ports, such as Paita. According to EIR, taking this route would avoid the

SUGGESTED ROUTE OF THE CBRC (KEY BOLIVIAN MUNICIPALITIES HIGHLIGHTED) trouble of crossing the Andes at their higher points. However, Peru has stated flat out that it would not go for a route stretching as far north as Saramiriza, claiming that it would be too expensive and that cutting a track through the Amazon would cause unnecessary environmental damage. While it has not given official support to any plan yet, Peru could give a warmer response to a second planned route, called the Central Bi-oceanic Railway Corridor (CBRC). The CBRC (see above) would also begin in Santos, but instead of heading north, it would push west through Bolivia and into southern Peru, finally terminating at the port of Ilo. Bolivia has for understandable reasons thrown its weight behind this suggestion and has carried out several feasibility studies. One of them, by Ghenova, states Bolivia has prioritised the project through an investment of US$7bn. “This is one of the most ambitious infrastructure project in the history of Bolivia and will enable the development, exploitation and industrialisation of its natural resources. Additionally, it will tremendously improve the country’s essential communications,” Ghenova states in the study, which concluded in 2015. While Brazil is rumoured to be gearing up to give a thumbs-up to the CBRC, president Michel Temer is currently still holding back. His reluctance has sparked rumours that Temer – who is already embroiled in accusations of corruption despite having been in power barely over a year – is delaying the project due to the USA’s opposition. China, on its part, does not really care which of the routes ends up being built as long as one of them does, but the country says it is waiting for Brazil and Peru to get through their own internal feasibility studies.

Benefits all around The CBRC route would carry the additional benefit of being able to connect Argentina, Paraguay and Uruguay – all major soya producers – into its network by connecting to the Paraná-Paraguay waterway. This would be accomplished by running

SOURCE: IDOM

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rails down from the Bolivian track of the railway to Paraguay. Ruben Galleguillo, the minister for planning and industry in the Argentine state of La Rioja, has called for plans on a bi-oceanic corridor to become reality as soon as possible. While the route Galleguillo proposes would run from Porto Alegre in Brazil to Coquimbo, Chile, Argentine producers would no doubt welcome the CBRC as well. Argentine olive oil producers say that having the corridor would boost the country’s olive oil exports to Asia by lowering costs and increasing product value. “The bi-oceanic corridor is a very interesting project,” Frankie Gobbee, CEO and co-founder of the Argentina Olive Group, told the Olive Oil Times in November 2017. “Argentina would have a direct outlet to the Pacific, lowering the cost of exporting to Asian markets by up to 25%.” Gobbee adds that being able to cut shipping times would also help deliver a fresher product to Asian consumers. “What Argentina produces during the year, it also sells that same year. That gives greater security to international buyers because they always receive fresh oil from the current harvest,” he says. So it is not only the soya producers who would benefit from establishing the corridor. Manufacturers of other edible oils, not to mention miners and oil processors, could all reap the additional income brought on by faster shipping and the railway would also cut back on emissions from trucks. With China’s clout behind the project, it is unlikely that the bi-oceanic corridor would not have the funds it needs to be built. Local political arm wrestling might, for the time being, be holding it back but EIR notes that neither China or Bolivia, nor many in Peru, are likely to take ‘no’ for an answer. The question is less about whether the railway will be built and more about where and when. Completion is – preliminarily – expected in 2023, but whether that date holds depends on when actual work finally starts.  Ile Kauppila is the assistant editor at OFI

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OLEOC H EM IC ALS

SOURCE: LMC INTERNATIONAL, PIPOC 2017

Oleochemicals utilise only 10% of global oils and fats production but add signiﬁcant value to the raw products. With overcapacity in both the fatty acid and fatty alcohol markets, which companies will make it in the future? Caroline Midgley writes

Who will survive?

leochemicals may only consume less than 10% of oils and fats production worldwide, but they add significant value to the raw products. The main oils and fats used in the oleochemicals industry are tallow, palm oil, palm stearine, coconut oil and palm kernel oil. While refined, bleached and deodorised oils may add 8% to the value of crude oil, fatty acids add 30% value and fatty alchols 50% value. Fatty acids can only be produced from oils and fats, while fatty alcohols can be produced from

FIGURE 1: GLOBAL FATTY ACID CAPACITY, 2000-2020 (M TONNES)

oleochemicals or petrochemicals. In oleochemical production, the first reaction is to produce fatty acids or methyl esters, with glycerine as a co-product. Both can be converted to fatty alcohols by hydrogenation, and fatty alcohols can also be made from petroleum derivatives, usually ethylene or higher olefins. Soaps, detergents and toiletries are the main products manufactured from oleochemicals and their derivatives. In recent years, demand for natural fatty acids and fatty alcohol has stagnated, due to a combination of slowing economic growth in major markets such as China and India, and low crude petroleum oil prices, which have made synthetic alternatives in the alcohol market more cost competitive. The recent high cost of lauric oils, resulting from the drought effects of the 2016 El Niño weather pattern, has exacerbated the difficulties facing oleochemicals. Both fatty acids and fatty alcohol are suffering from overcapacity, with the result that some countries are facing very low rates of capacity utilisation.

Developments in fatty acids Globally, fatty acid capacity has more than doubled between 2004 and 2016, from 6M tonnes to almost 13M tonnes (see Figure 1, left). The fatty acid market is now entering a period of consolidation and very little new capacity will come on stream to 2020. Recent developments include:  n Permatu Hijau finishing construction of a new 20 OFI – MARCH/APRIL 2018 www.ofimagazine.com

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BIODIESEL Options to purify feedstock } Acid Degumming } Fatty Acid Stripping } Nano Neutralisation Options to utilize high FFA feedstocks } Acid Esterification } Glycerolysis } Esterified Product Neutralization

In more than 40 years, Desmet Ballestra has installed over 400 oleochemical and biodiesel plants worldwide

Biodiesel Plant } Oil Drying } Transesterification } Glycerine Separation } Methyl Ester Washing } Methyl Ester Drying } Glycerine Purification } Glycerine Concentration } Methanol Rectification Options to further enhance biodiesel quality } Methyl Ester Prewashing } Methyl Ester Clarification } Methyl Ester Distillation Option to further enhance glycerine quality } Glycerine Distillation

OLEOCHEMICALS Fatty Acid Processing Plant } Fat Splitting } Fatty Acid Distillation } Fatty Acid Fractional Distillation } Fatty acid Hydrogenation } Fatty Acid Dry Fractionation } Sweetwater Treatment } Sweetwater Concentration } Glycerine Distillation Fatty Alcohols (Johnson Matthey Davy Technologies) } Fatty Acids Esterification } Methyl Ester Hydrogenation } Fatty Alcohol Refining } Fatty Alcohol Post Hydrogenation } Fatty Alcohol Fractional Distillation Fatty Acids Methyl Ester Process Plants } Methyl Ester Fractional Distillation } Methyl Ester Hydrogenation

Oleochemicals & Biodiesel

Science behind Technology

FIGURE 3: FATTY ACID PLANTS IN REST OF THE WORLD, 2016 (>100,000 TONNES CAPACITY)

FIGURE 4: FATTY ALCOHOL CAPACITY, 2000-2020 (M TONNES)



200,000 tonne fatty acid plant in Indonesia. n PT Dua Kuda Indonesia doubling its capacity to 300,000 tonnes in China. n UAE-headquartered IFFCO expanding its fatty acid production by 150,000 tonnes in Malaysia. n Malaysia’s KLK Oleo raising fatty acid capacity by 115,000 tonnes in China. n At end of 2016, Japan’s Kao Corporation and Indonesia’s Apcial Group announced a joint venture to build a 100,000 tonne fatty acid plant in Indonesia. These expansions may seem at odds with the general overcapacity of the market, but individual companies may make decisions to expand due to a logistical advantage or to vertically integrate their operations. In Asia, the locations of fatty acid plants are close to ports to ease exports (see Figure 2, left). In China and India, the plants are close to ports due to their import of raw materials. In the USA, plants are located close to tallow supply, inland in the Midwest, near rendering plants (see Figure 3, left). These plants are profitable, with a high degree of freight protection as any one who wishes to import raw materials or oleochemicals into the USA would have to face ocean and overland rates, where local producers are already present. The 7M tonne growth of fatty acid capacity between 2004 and 2016 has outpaced the growth in demand, which grew by less than 4M tonnes in this time period. Not all fatty acid industries have been equally affected. In 2016, the biggest losers were Indonesia and China, as both had the most spare capacity. China’s fatty acids industry struggles as it needs to import raw materials and does not have any protection because of ASEAN regulations. Indonesia suffers from poor logistics and high capital and construction costs. So who will survive in the future? An economic analysis of the profitability of stearic acid production based on stearin in Asia and tallow in the EU/USA looked at the average production costs from 2014-2016. South Asia has the lowest cost of US$800-850/ tonne and is only just profitable. Fatty acids have almost 3M tonnes of spare capacity in Southeast Asia. The USA and EU have higher capacity utilisation

FIGURE 5: SYNTHETIC VS NATURAL FATTY ALCOHOL PRODUCTION

SOURCE: LMC INTERNATIONAL, PIPOC 2017

FIGURE 2: FATTY ACID PLANTS IN ASIA, 2016 (>100,000 TONNES CAPACITY)

SOURCE: LMC INTERNATIONAL, PIPOC 2017

SOURCE: LMC INTERNATIONAL, PIPOC 2017 SOURCE: LMC INTERNATIONAL, PIPOC 2017

OLEOC H EM IC ALS

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FIGURE 6: NATURAL FATTY ALCOHOL PLANTS IN ASIA, 2016 (>100,000 TONNES CAPACITY)

Fatty alcohols The fatty alcohols market doubled in size from 2004 to 2016, reaching 4.4M tonnes in 2016 (see Figure 4, previous page). Unlike fatty acids, capacity is set to continue rising, driven by rising synthetic production. Production is expected to reach 5M tones by 2020. Recent developments include: n Sinar Mas Cepsa began operations at its 160,000 tonne fatty alcohol plant (based on acids) in Indonesia in 2017. n In Indonesia, PT Musim Mas opened a new 150,000 fatty alcohol plant in Batam. n In the USA, Shell expanded its synthetic alcohol capacity in 2016 by adapting an existing unit. n Shell also plans to expand cracker capacity and is expected to build another fatty alcohol plant. n Also in the USA, South African energy firm Sasol is building a new cracker and a 200,000 tonne synthetic alcohol plant, which may start up in 2019. n In August 2017, BASF closed its fatty alcohol plant in Cincinnati, USA. There are no synthetic alcohol plants in Asia. They are all based on palm kernel oil, with some utilising coconut oil in the Philippines. Plants in Asia are located close to ports for the same reasons as with fatty acid plants (see Figure 6, right). In the rest of the world, SABIC in Saudi Arabia and Oxiteno in Brazil are close to the coast. BASF’s fatty alcohol plant in the USA was a long way inland, and poor logistics probably led BASF to close the plant as natural fatty alcohol plants have to import their raw material (see Figure 7, right). There has been a resurgence in synthetic alcohol production as the US shale gas industry has developed and crude oil prices have fallen, making US ethylene very cheap when compared with lauric oils. Drought conditions from El Niño in 2016 leading to a fall in palm oil production also raised the prices of lauric oils. Synthetic fatty alcohols will continue to take more market share up to 2020 (see Figure 5, previous page). This will have a negative impact on utilisation rates in the natural alcohol sector. Synthetic alcohol plant utilisation rates are expected to rise from 60% in 2012 to more than 90% in 2020. Natural alcohol plant utilisation rates are expected to fall from 80% in 2012 to under 66% in 2019. Most of the surplus fatty alcohol capacity is in China and Indonesia. China has a particularly low utilisation rate of under 40% due to its high material costs, lack of import protection and outdated technology, with plants smaller than 100,000 tonnes. Nevertheless, with not enough synthetic capacity to supply demand, there will be a need for natural fatty alcohols in the future. Plotting a cost curve for C12-14 natural alcohol

FIGURE 7: FATTY ALCOHOL PLANTS IN REST OF THE WORLD, 2016 (>100,000 TONNES CAPACITY)

lw lwlw lwl lw l w

SOURCE: LMC INTERNATIONAL, PIPOC 2017

but the cost of transportation inflates costs. Stearic acid production in the EU and USA has been profitable. However, production is based on tallow and because of limited tallow supply, is only growing 1%/year. Increasing quantities of tallow are being moved to biodiesel and with stearin growing at 3%/annum, it is very likely that future growth will be based on stearin, not tallow.

SOURCE: LMC INTERNATIONAL, PIPOC 2017

OLEOC H EM IC ALS

l lw

lw lw

from 2014-2016, Asia had the lowest costs, ranging from just under US$1,300/tonne SE Asia FOB to nearly US$1,400 tonne. The EU and USA are at the top of curve. Who will close next? The last decade has seen massive expansion, which has outpaced the growth in demand, with the result that there is now considerable over-capacity in both acids and alcohols. Most of China and Indonesia suffer from a cost disadvantage. China’s problems stem from its lack of import tariff protection on oleochemicals, combined with the need to import raw materials.

Stearic acids plants in Europe and the USA are based on tallow and are often profitable, as using tallow is cheaper than importing stearin, and the plants are old and fully depreciated. However, their long-term viability is questionable, given the potential for tallow to be used for biodiesel, particularly in the USA. l Caroline Midgley is the director of oleochemicals and biofuels research at LMC International, UK. This feature is based on her presentation made at the International Palm Oil Congress and Exhibition (PIPOC) on 14-16 November 2017

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OLIVE OIL

as an icon of Mediterranean cuisine and as being healthy. Its consumption has therefore increased in non-producing countries all over the world, according to the September 2017 report ‘The EU olive and olive oil sector: Main features, challenges and prospects’ by the European Parliamentary Research Service. The EU is the world’s main exporter of olives and olive oil, as well as being the main consumer market. Nevertheless, the sector is facing challenges that need to be addressed if it is to avoid disruptive effects on its future development.

European olive farms

Mediterranean icon L EU olive producers already dominate the European and global olive oil and table olive markets and their slice of the pie is only poised to grow in the coming years

arge, intensive olive plantations and small traditional olive orchards together with ancient olive groves and even monumental olive trees – some of which are 2,500 or 3,000 years old – are emblematic of the Mediterranean basin’s landscape, cultural heritage and culinary traditions. Grown in the area for thousands of years, olive groves have shaped the rural landscape of many EU regions. Beyond their productive value, they can also constitute a rural tourist attraction with the presence of ancient olive trees or outstanding olive plantation landscapes. Their main product, olive oil, is widely recognised

Olive tree plantations are found in nine EU member states – Croatia, Cyprus, France, Greece, Italy, Malta, Portugal, Slovenia and Spain (see Figure 2, page 26). In total, these countries have a planted area of slightly under 5M ha dedicated to olive plantations. More than half of the planted area is in Spain, where most hectares are devoted to growing olives for oil production. Only in Greece do table olives account for more than 10% of olive groves. Among producing countries, Greece, Italy Portugal and Spain account for the vast majority in terms of both hectares and farms with olive groves. Spanish farms have the largest average plantation size, reaching 5.8ha/farm in 2013 according to Eurostat’s farm structure survey, followed by Portugal with 2.8ha. All other countries have average plantation sizes smaller than 2ha/farm. “These averages obviously result from widely varying plantation sizes,” the EU report says. “A closer look at the data shows that in Spain and Portugal, more than 40% of all olive-producing farms have more than 20ha of olive plantations, while those countries’ olive plantations are of an average size of 52ha and 67ha, respectively. In the rest of the producing countries, however, more than 90% of farms have fewer than 5 ha of olive plantations.” The EU olive sector has on average smaller farms than other agricultural activities. The difference between overall average farm size and average olive plantation size in 2013 totalled 57ha in France, 18ha in Spain and about 10ha in Croatia, Italy and Portugal. Many small-size traditional olive orchards cohabit with a few large and modern olive plantations that use irrigation, machinery such as shakers, new plant varieties or intensive production methods to produce more at lower cost. A report by the European Commission on olive oil specialist farm income in the three main producing member states – Greece, Italy and Spain – reveals wide income discrepancies among these farms. These are mostly linked to the size of their olive groves and the productivity levels that they can reach, labour being a major cost item. As a result, many farms in lower income classes make less than €5,000 (US$5,920)/year/family work unit (and possibly carry out other gainful activities on the farm related to tourism, landscape or direct sales). However, a few olive oil producers in higher income groups can produce more than €30,000 (US$35,500)/year/family work unit, with productivity in terms of quantity produced per farm and per work unit much higher than in smaller farms and considerably lower production costs per tonne.

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The industry in numbers

FIGURE 1: WORLD OLIVE OIL PRODUCTION TRENDS, 1990-2018 (‘000 TONNES)

Olives and olive oil account for a major share of producing countries’ agricultural output. In Greece and Spain, olives represented more than 10% of agricultural output and more than 15% of crop output in 2016, as compared with cereals that represented 9% and 13% respectively. With slightly less significant shares, the output value of olives and olive oil is also important in Croatia, Cyprus, Italy and Portugal. Average annual olive yield is 2,000-2,500 tonnes/ ha. This variation is the result of factors affecting harvested production, such as the alternation of good and poor harvests or climate conditions, in addition to different cultivation systems. Italy and Spain have higher yields than the other producing countries. A trend analysis shows increased yields in Spain and Portugal and decreased yields in Italy and other producing countries (see Figure 3, page 26). According to Eurostat data, EU olive production reached 10.9M tonnes and an output value of €2.255M (US$2.671M) in 2016. The quantity of produced olive oil in the 2016/17 marketing year – as per member states’ declarations to the European Commission (EC) – adds up to more than 1.74M tonnes, of which 74% was produced in Spain and 22% divided almost equally between Greece and Italy. “The value of olive oil production has reached almost €5bn (US$5.9bn) in recent years, about 80% of which was recorded in Spain and Italy,” says the EU parliament. “Lower production values were measured in 2013 in Greece and Spain and in both 2013 and 2014 in Italy.” This level of production is lower than in the previous year, above all in Italy which registered a decrease of more than 60%, but appears in line with the cyclical production levels registered in the EU in recent years. “However, the likelihood of maintaining or even increasing average production levels is strongly dependent on weather conditions as extreme events, such as continuing drought conditions and heat waves throughout southern Europe, are threatening the productive potential of the next harvest,” the report says. In addition to the supply-demand balance, the quality of olives and olive oil, the organisation of the value chain, consumer preferences and production organisation affect selling prices. According to Eurostat’s price statistics for olives

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SOURCE: INTERNATIONAL OLIVE COUNCIL

OLIVE OIL

and olive oil, selling prices for table olives have increased over the years, ranging from less than €60 (US$71)/100kg in Portugal and Malta to more than €200 (US$236) in Greece in 2016. Olive oil prices have also increased and vary a lot depending on the oil category, with extra virgin oil having the highest prices, ranging from more than €300 (US$355)/100l in Greece, Portugal and Spain, to more than €500 (US$592) in Italy in 2015. The minor producing countries of Croatia and Slovenia register up to double the price of the main producing countries. The most recent world figures, published by the International Olive Council (IOC), indicate that the EU’s producing countries account for 70-75% of world olive oil production and more than one-third of table olives. These countries are also the main consumers, exceeding half of world consumption of olive oil and one quarter for table olives, with Greece ranking first in per-capita consumption of olive oil and Spain for table olives. Although olive oil production levels ensure EU self-sufficiency, this does not preclude trade with non-EU countries and a leading role for the EU on the international market. On average, the EU exports 541,000 tonnes of olive oil annually, equaling two-thirds of total world exports, and imports 121,000 tonnes – or 15% of global imports. Meanwhile, the EU’s share of table olives stands at 44% for exports and 16% for imports.

Monitoring quality All over the Mediterranean region, olive trees offer olives that vary in size, colour, oil content, taste and texture. Depending on local habits, climate conditions and the final destination of the production, the olive harvest occurs at different stages of ripening and by means of more traditional picking methods or mechanical harvest. These factors influence the quality of the product, be it olive oil or cured olives for table consumption. Acidity is one of the parameters that determine the quality of olive oil, with a lower acidity level indicating higher quality “As olive oil is recognised as a quality product and an important element of a healthy diet, maintaining high quality standards is a key factor in increasing consumer confidence in both the EU and third countries. In this respect, EU quality labels showing protected designation of origin (PDO) and protected geographical indication (PGI) have already been registered for roughly 120 different types of olive oil, more than 40 of which are produced in Italy, about 30 each in Spain and Greece, and the remainder in France, Portugal, Slovenia and Croatia,” the EU parliament says. Organic production is usually associated with high quality products. Although the share of organic over conventional farming is still low, olive groves represented more than one-third of all organic permanent crops in 2015. They mostly produced u

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SOURCE: EUROSTAT

OLIVE OIL

FIGURE 2: DISTRIBUTION OF OLIVE PLANTATIONS IN 2013

The EU has also been requested to implement a compensation programme to refund farmers for loss of revenue due to the eradication measures.

Challenges

FIGURE 3: AVERAGE ANNUAL OLIVE YIELDS IN THE EU (TONNES/HA)

The primary challenge for the EU olive sector is the pace of farm structural development into a more efficient and modern production system. This is often linked to the idea of increasing farm size and introducing mechanisation in the production processes, such as in Spain and Portugal. In general, production systems remain very traditional and cohabitation between large and modern and small, traditional productive units is typical. “Transforming traditional olive orchards into more intensive olive plantations is not a one-size fits all solution. This is why the sustainability of olive production should not rely on production intensification in bigger farms only, but on innovative harvesting solutions, new cultivars or better pest management, in order to grow olive orchards that are more profitable and less exposed to market volatility,” says the EU report. The olive oil market can fluctuate for several reasons, such as alternation of good and poor harvests or the time span before new plantations become fully productive. Other factors are less predictable and potentially more disruptive, such as extreme weather conditions or a plant disease outbreak. These elements create a highly volatile market, which means that producers are confronted with unstable prices and revenues. Another area of concern relates to marketing standards and trade. To prevent loss of consumer trust in the image of olive oil as a high quality product, a continuous effort is needed at EU and national level to set and implement appropriate measures against food fraud. Olive oils are subject to regular monitoring and control to prevent fraud, especially in the category of extra virgin olive oils.

Prospects u olives for olive oil production. The number of hectares dedicated to organic olives has increased in recent years, especially in Spain and Italy. One quality-guarantee system in olive production involves the adoption of integrated production protocols to maintain healthy production over time by managing resources in an economically, environmentally and socially sustainable way, taking into account experience and knowledge of the specific farming activity. In the olive sector, these systems are also implemented through producers’ cooperatives, whose members sign contracts that penalise non-compliance with certified agronomists’ instructions

EU support policies In June 2012, the EC presented an action plan for the EU olive oil sector with the objective of strengthening its competitiveness, taking advantage of olive oil’s widely recognised image as a quality product. The action plan indicated six areas of action, which are now mostly covered by various instruments under the Common Agricultural Policy (CAP) 2014- 2020. The six identified activity areas include quality and control, restructuring the sector, improving industry structure with the aim to reinforce

producers’ organisations, promoting olive oil in nonEU markets, supporting the IOC and competing with producers located outside the EU. Olive producers are also eligible for direct payments from the EU, which are a form of income support granted to EU farmers on a per-hectare basis, independently of the production of a specific product. Member states may also grant voluntary support linked to production in the olive oil sector that may be undergoing difficulties, but so far only Italy has opted for this voluntary scheme. Member states can include thematic subprogrammes in rural development programmes to address the needs of areas of particular importance, or of sectors that have a strong impact on the development of rural areas, including olive oil. The EU also provides olive farmers with a basis for protecting EU plant health from the introduction or spread of harmful organisms within EU territory. These measures were used following the 2013 outbreak of the Xylella fastidiosa in Puglia, Italy. The emergency measures include action to combat the disease in demarcated areas by removing infected plants or containing the bacterium by other means when removal is impossible. Furthermore, member states were requested to set up contingency action plans in the event of confirmed or suspected presence of the bacterium.

According to the EC’s latest medium-term agricultural outlook, the economic forecasts for the olive sector up to 2026 point to considerably increased production in Spain by about 10%, and a less dynamic trend in Greece (+2%) and Italy (-1%). In these three main producing countries, consumption trends should experience a certain stabilisation or minor decrease, largely offset by increased consumption in non-producing countries inside and outside the EU, following a trend established in the past few years. In international trade, the outlook for 2026 is a considerable reinforcement of the EU’s leading role in exports, growing 45% over the period, and a possible increase in imports from non-EU Mediterranean countries. “These predictions could be proved correct, especially if producers satisfy EU and world demand by offering the high quality expected from their products. In this respect, the EU is financing research and innovation work into new techniques to achieve more efficient and sustainable growing systems and better treatment of diseases and pests,” the parliament report says. l This article is based on a European Parliamentary Research Service report titled ‘The EU olive and olive oil sector: Main features, challenges and prospects’, authored by Rachele Rossi

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OLIVE OIL

Snapshot of Turkey As the world’s second largest producer of olive oil, Turkey has made impressive advances in cultivation and production, according to the International Olive Council

he olive has been a symbol of Mediterranean civilisation throughout history and has long been established in Turkey. Southeast Anatolia is thought to be the cradle and gene centre of the olive, a claim corroborated by sub-species of olive, found in a line stretching from Hatay to Kahramanmaraş and Mardin. From southeast Anatolia, the olive tree spread to west Anatolia, subsequently fanning out to Greece, Italy, and Spain via the Aegean Islands. Anatolia has been home to the olive tree for 6,000 years. Archaeological remains discovered at Urla, the site of the ancient city of Klazomenai in the Aegean region, testify to olive oil extraction as far back as the 6th century BC and recent discoveries have provided more evidence of early olive trading and exports in the city. Further proof of the olive’s long history in Turkey is the 1,300-year-old tree growing in Mut or the olive oil stores found in Izmir. Globally, olive cultivation can be found primarily in the countries bordering the shores of the Mediterranean. Turkey is among these countries and is ranked as the world’s second largest producer, after the EU (see Figure 2, following page). Olives and olive oil are very important

agricultural products for Turkey’s economy, with a high export potential. Every year, Turkey exports around 60,000 tonnes of olive oil and 70,000 tonnes of table olives. The export volume varies, depending on the olive harvest and the level of production in other producer countries. Olives are grown in five regions in Turkey – the Aegean, Marmara, Mediterranean, southeastern Anatolia and the Black Sea, each with its own distinctive characteristics. In the Aegean region, 80% of the olives produced are processed into olive oil and 20% are reserved for table olive production. In the Marmara region, wedged in between the Mediterranean and the Black Sea, the shares are the other way around: 90% of production goes into table olives and 10% into oil. Olive cultivation in the Mediterranean region is located between the coast and the Taurus Mountains up to an altitude of 850m. Some 68% of the olives grown in this region are channelled into oil extraction and 32% into table olive processing. Hatay (Antakya), İçel, Adana and Antalya are the top producing areas in this region. Orchards planted with the Ayvalık variety (a cold-resistant cultivar with high chilling requirements) are spreading to

FIGURE 1: TURKEY – OLIVE OIL BALANCES, 1 OCTOBER-30 SEPTEMBER CROP YEAR (TONNES) Year

Production

Imports Consumption

Exports

2015/16 final balance

150,000

116,000

15,000

2016/17 provisional balance

177,000

155,000

45,000

2017/18 estimated balance

287,000

170,000

90,000

Source: Data adopted at the 106th session of the international Olive Council, 21-24 November 2017

villages at higher altitudes as an attractive source of extra income. In southeastern Anatolia, where 86% of olive production goes into oil and 14% into table olives, olive growing is concentrated in Gaziantep, Kilis, Şanlıurfa, Kahramanmaraş and Mardin where the climate is Mediterranean. Recent improvement measures include the distribution to growers of Ayvalık and Gemlik varieties from regional nurseries. Lastly, in the Black Sea region, table olives are usually grown for self-consumption along a small coastal strip and in secluded river valleys (Artvin) where there is a Mediterranean microclimate and the areas are protected from the northerly winds. All in all, 84 olive varieties are produced in Turkey. Generally speaking, Edremit (Ayvalık) is the predominant variety in the north of Turkey’s olive growing area and Memecik in the south. The Ayvalik cultivar is hardy and adapted to relatively arid areas. The second most important variety in Turkey, it is found along the entire Aegean coast where it accounts for about 25% of olive acreage. Its productivity is high and the fruit has a high oil content (24%). Owing to the quality of the oil, which is aromatic and has distinctive chemical characteristics, it is considered to be the most promising of Turkey’s oil cultivars. Its erect growth habit makes it particularly suited for mechanical harvesting. It is also used for producing split green olives and black olives. It has a flesh to stone ratio of 5.6 and is tolerant of olive fly. The Gemlik variety is largely produced and consumed as black table olives. Other Turkish varieties include Büyük Topak, u

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Growing and harvesting There are some 180M olive trees in Turkey, found on 700,000ha of olive orchards. The olive is a long-lived evergreen tree that is densely branched and has a broad canopy that can grow up to 10m high. With age, its smooth grey trunk gradually starts to crack and become gnarled, and the canopy increases in width as the tree increases in height. It is a perennial tree and can live for approximately 2,000 years. The canopy is open and symmetrical when grown on fertile land, but denser and rounded when cultivated on infertile land. Its shoots are grey and almost triangular in shape. The olive tree blossoms in the spring. Stone hardening and fruit ripening begin in the summer months. The fruits start to change colour in November, first turning from green to violet and then to black as they ripen. This stage is known as véraison. The ripe olives are harvested from November to March. Olive harvesting methods have barely changed for thousands of years and hand picking or beating with poles continue to be used. Another method is to collect the olive fruits that drop from the trees onto the ground. The quality of the olive oil produced is heavily dependent on how the olives are picked. The best olive oil is obtained when the olives are picked from the branches one by one. Other methods are to leave the olives to drop to the ground and then pick them there or to use suction machines. Olives should be processed as soon as possible after harvesting as quality deteriorates if the fruit is left to lie. If they are for olive oil extraction, any leaves are first removed and the fruit is washed in automated machines. The olives are then crushed in presses to extract the oil from the plant tissues. It takes approximately 10kg of olives to extract 1kg of early-harvest olive oil. With other methods, between 3-8 kg of olives are sufficient to extract 1kg of oil. Unlike other fruits, olives cannot be eaten straight from the tree. Various processes have evolved over time to remove their sharp bitter taste. At first, the olives were placed in water. Later, they were sweetened by dipping them in ash, vinegar or limewater. To preserve them, they were pickled in brine flavoured with lemon, fennel, mastic, thyme, peppermint and other herbs to make them taste more pleasant. Alternatives to brining were storing the olives in wine or even honeyed water.

Extraction method There are estimated to be between 1,000 and 1,100 processing facilities in rural areas in Turkey, where some one million tonnes of olives are processed every season. The oil extraction method is another tradition that has not changed in millennia. The original method was to crush the olives underfoot and then extract the oil from the mash with hot water.

Turkey: Facts & figures 180M olive trees 700,000ha olive orchards 500,000 tonnes table olives/year 300,000 tonnes olive oil/year 500,000 households employed in olive and olive oil production n > 500 continuous-process olive oil mills n 70,000 tonnes table olives exports/year n 60,000 tonnes olive oil exports/ year

n n n n n

Nowadays, olives are crushed into a mash to which pressure is applied to extract the oil without any chemical processes. The oil is then separated from the fruit vegetable water. Technological developments in the early 19th century saw the advent of hydraulic presses, which are used nowadays alongside centrifugal systems, the most widespread of which is known as the continuous system. In the continuous or fully automated system, the olives are first sorted by variety, stripped of any leaves and crushed in a machine that finely grinds the olive stones at 3000 rpm. Water is added to the crushed olive pulp and the resultant mash is beaten. Next, the olive pomace is separated from the oily juice. The olive oil is then separated from the vegetable water and transferred to a filter tank.

These kinds of olive oils are virgin or extra virgin grade, depending on their acidity, and can be consumed straight away as if they were a fruit juice. The last sediment is removed and the olive oil is left in the settling tank. Virgin and extra virgin olive oil is then packed in drums, cans or bottles. The olive pomace left over from the extraction process is re-crushed and used to make soap, while the spent pomace is used to make fuel pellets.

An international player Over the past 10 years, Turkey has made major progress in olive cultivation. It has established processing plants with the technology and capacity to produce large volumes of top quality table olives for the world market. It has also made impressive advances in olive oil production. A number of firms active in the extraction, refining and packaging of olive oil to world standards have taken up their rightful place in the industry and continue to pursue success. In the years ahead, Turkey intends to push forward with development and increase its share of global trade. Turkey’s Ministry of Food, Agriculture and Livestock has fixed a target of 450,000 tonnes for olive oil production. The increase in olive planting and the growing interest in olive cultivation, coupled with investment in modern orchard, production and storage facilities, all show that the sector believes this target can be achieved. If it does so in the short term, olive oil will gain in prominence at the domestic level and Turkey will consolidate its position as an international player in the olive world. l This feature is based on the article, ‘A snapshot of the Turkish olive oil sector’, in Issue 123 of Olivae, the official journal of the International Olive Council

FIGURE 2: GLOBAL OLIVE OIL PRODUCTION (‘000 TONNES) Country Albania Algeria Argentina Australia Chile China Egypt Iran Israel Jordan Lebanon Libya Morocco Palestine Saudi Arabia Syria Tunisia Turkey USA EU Others Total

2013/14 10.5 44.0 30.0 13.5 15.0 20.0 5.0 15.0 19.0 16.5 18.0 130.0 17.5 3.0 180.0 70.0 135.0 12.0 2,482.5 14.5 3,252.0

2014/15 11.0 69.5 30.0 19.5 18.5 2.5 17.0 4.5 18.5 23.0 21.0 15.5 120.0 24.5 3.0 105.0 340.0 160.0 5.0 1,434.5 14.5 2,458.0

2015/16 10.0 82.0 24.0 20.0 17.5 5.0 16.5 5.0 18.0 29.5 23.0 18.0 130.0 21.0 3.0 110.0 140.0 150.0 14.0 2,324.0 15.0 3,176.5

2016/17 11.5 63.0 21.5 21.0 19.0 5.0 20.0 3.5 15.0 20.0 25.0 16.0 110.0 19.5 3.0 110.0 100.0 177.0 15.0 1,747.5 15.5 2,539.0

2017/18 11.0 80.0 37.5 21.0 16.5 6.0 25.0 9.0 16.0 25.0 23.0 18.0 140.0 19.0 3.0 100.0 220.0 287.0 15.0 1,805.0 15.5 2,894.0

Source: International Olive Council, November 2017

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

PHOTO: NICOLÁS BOJACÁ /UNIMEDIOS

Plant and equipment round-up New Colombian biodiesel process saves costs, improves productivity A

IN BRIEF THAILAND: Thai fuel firm Bangchak Petroleum is planning to spin off its biofuels business BBGI during 2018, according to Biofuels Digest on 1 February. The company was looking to expand production both in Thailand and overseas by 2022 as a part of a US$3.5bn investment drive. Bangchak currently produced 1.7bn l/day of ethanol and biodiesel, which together accounted for almost 5% of the firm’s overall revenue. The company was planning to open a new biorefinery within Thailand’s Eastern Economic Corridor, consisting of business centres along the country’s eastern coast. CANADA: On 27 November 2017, Innoltek, a Quebec-based biodiesel and biodegradable industrial products manufacturer, acquired the assets of fellow Canadian biodiesel firm QFI Biodiesel. QFI’s 19M litre capacity plant in StJean-sure-Richelieu, producing biodiesel from used cooking oil, had never reached full production capacity due to market challenges, Innoltek said in a statement. Innoltek was planning to invest an amount announced “at a later date” to improve the facility’s operating costs and logistics capabilities. The firm also intended to keep operating its Thetford Mines facility, which had the capacity to produce 5M l/year of biodiesel, in addition to biodegradable industrial products, such as the Form-Tek branded release agent. Innoltek CEO Simon Doray said the acquisition was an important step in the company’s development plan.

research team at the National University of Colombia has developed and patented a novel biodiesel production process that could significantly improve productivity while cutting space requirements and cost. The process, called “countercurrent operation”, was designed by the research group in chemical and biochemical processes at the university’s Department of Chemical and Environmental Engineering, led by professor Paulo César Narváez Rincón (pictured above), the university said on 28 December. The patented system consisted of an upright tube-shaped reactor with a special configuration that allowed oils or fats to come into contact with alcohol and produce biodiesel without mixing, which improved the exchange of components between the reactants and the separation of final products, all the while cutting back on process time. The feedstock oil – such as palm, soyabean or jatropha oil – was fed into the system from the bottom while the alcohol mixed with a catalyst entered from the top, with the two liquids swapping places through the process due to differences in density. “When the process begins inside the reactor, oil and alcohol come into contact without mixing, thanks to the design of the

Haarslev to increase investment in US facilities

aarslev, a Danish equipment manufacturer for the biodiesel, food and animal byproducts and waste and sewage processing industries, is investing in product development as a result of the firm’s highest order intake ever. In 2017, the company continued its record sales of 2016 by registering more orders than ever in its history and, by the beginning of 2018, Haarslev had already reached more than 50% of its sales targets for the year, the firm said on 26 January,

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reactor. Its construction created a large contact area where two films are formed, one corresponding with the oil phase and another with the alcohol phase,” explained Narváez. The produced biodiesel and glycerol are discharged from opposite ends of the process column, which the research team said provided clear cost and time benefits over conventional production methods that required mixing the oil and alcohol in two or three agitated tanks and finally separating the end products in a decanting tank. As a result, the process required less and smaller equipment and made it possible to produce the same amount of product in a smaller plant, with a three-fold increase in productivity, the researchers said. The product had been granted three patents in Colombia and one in the USA, the latter of which was chosen to house the patent due to higher marketing and commercialisation possibilities over other countries. “In addition to considerations related to the biodiesel industry, the USA is a country in which patents not only give greater value to companies, but also make the possibility of negotiating with industries on the acquisition of our technology much more viable,” Narváez said.

As a result, the company said it was investing in product development and production, in addition to streamlining and expanding operations, particularly in the USA. “Demand for Haarslev products and services in the USA is on the rise. We have acquired an additional four acres of land next to our existing facility near the Kansas City airport to expand our manufacturing and service capability over the next one to two years,” Henrik Nissen, president of Haaslev USA, said in a statement.

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P LAN T & TEC H N OLOGY

HyGear provides hydrogenation to Lipico plant

Enerkem to build 100 biofuel plants in China

n-site gas generation specialist HyGear Asia has signed a contract with engineering firm Lipico Technologies to provide a hydrogen generator for a Bangladeshi edible oil processing plant. The plant, being built in Gazipur by Lipico, needed a generator for the hydrogenation unit at the facility as hydrogen supplies in the country were limited, with large distances between suppliers and end users causing further difficulties, HyGear said in a 15 January statement. The company’s Hy.Gen technology was tailored to provide the Lipico plant with a hydrogen output of 100 normal cubic meters (Nm3)/hour, based on steam methane

hinese bioindustry group Sinobioway has entered into an agreement to invest CAN$125M (US$100.27M) in Enerkem, a Canadian company producing biofuels and renewable chemicals from waste materials. The companies were to form a joint venture that would open the Chinese market to Enerkem’s waste-to-biofuel technology through the construction of 100 new biofuel facilities in China by 2035, Clean Technology Business Review wrote on 22 January. The collaboration was expected to help reduce air pollution in China – which was particularly bad in major cities – through the production of renewable fuel from nonrecyclable waste. “Our breakthrough clean technology produces much needed low-carbon transportation fuel and sustainable waste management solutions to help China achieve its climate change objectives,” Enerkem president and CEO Vincent Chornet told Clean Technology Business Review. Enerkem, founded in 2000 and headquartered in Montreal, produces ethanol and methanol from solid municipal waste.

reforming technology that converted natural gas and water into hydrogen. Having the generator on-site provided great advantages over traditional supply options, including a high degree of modulation, which meant the system could be idled in case of low demand, said HyGear. “This is an important development for HyGear Asia in Singapore, as well as putting the next foot forward into the food industry,” said Joanna Kwan, HyGear Asia business development manager. “We aim to deploy more systems into the field where they will greatly help the end users realise their target of cost efficiency and environmental impact reduction.” u

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Canola biodiesel firm closes Canadian plant

anadian off-quality canola producer Milligan Biofuels (Biotech) has shut down its operations permanently due to a challenging market environment for biofuels in Canada. Located in Foam Lake, Saskatchewan, Milligan was one of the last resort buyers for local farmers, purchasing heated, green and otherwise damaged canola and turning it into biodiesel, wrote The Western Producer on 2 February. The company had a capacity to produce more than 20M l/year of biodiesel, using more than 50,000 tonnes of canola. It was one of the oldest processors of its kind in the region, having been founded in 2001 by local farmers with help from Agriculture Canada and the University of Saskatchewan. Zenneth Faye, a local farmer and one of Milligan’s founders, said the biofuel business in Saskatchewan was currently challenging. “Both ethanol and biodiesel have been feeling the pinch along with the petroleum industry with the drop in the price of oil,” the former Milligan executive manager said. The company had directed the producers and creditors with whom it had existing business to contact bankruptcy and consumer proposal experts Hardie and Kelly. 33 OFI – MARCH/APRIL 2018

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P LAN T & TEC H N OLOGY

Two Brazilian companies invest in corn ethanol production facilities

Biodiesel could help in cleaning an Indian lake

n Indian renewable fuels company is examining the opportunities of turning the waste oils and fats leaking from the broken sewage systems of the city of Bengaluru into biodiesel. The Bangalore Water Supply & Sewerage Board (BWSSB) has authorised Eco Green Fuels (EGF), a private firm producing biofuels from used cooking oil and lubricant waste, to launch a pilot project that seeks to process fat waste in the city’s sewage into biodiesel feedstock, India’s The Economic Times reported on 17 January. BWSSB said its sewage treatment plants were unable to remove the oils and fats entering the sewage system, which accumulated in treated water and finally ended up in Bellandur Lake (pictured), where it could take up to 70 years to degrade. “Because there is a lot of unmanageable waste – about 100,00kg of fat is discharged into the sewage system every day – we thought why not convert this waste into high-value green energy,” Julesh Bantia, founder of EGF, told The Economic Times. Bantia said EGF had now collected the first sewage samples from Bellandur Lake and, in consultation with scientists backing the project, was in the process of extracting pure fat from them for conversion into biodiesel feedstock. Issues with the availability of used cooking oil for biodiesel production had led the company to explore this more unconventional feedstock source. “The idea behind this is that any substance in fat form is a potential feedstock for biodiesel manufacture. The biggest challenge in the process has been to identify the resource and pre-treat it,” said Bantia. The pilot project had the backing of both BWSSB and the Karnataka State Biofuel Development Board, although both organisations also identified possible stumbling blocks. N Satish, BWSSB chief engineer, said the board was keen to back initiatives to reduce waste inflows to sewage treatment plants, but he was unsure how much fat could be extracted from the sewage. “The fat may not be available in a large quantity,” he said. “A sewer line flowing close to a milk and dairy unit may have a high fat content, but this may not be the same at all places.”

wo Brazilian biofuel companies are planning to build facilities producing ethanol from corn in order to make use of large corn surpluses in Brazil’s centre-west regions. The Brazilian ethanol industry is the world’s second largest after the USA and it has traditionally been based on sugarcane, but a rising demand for ethanol and recent successive bumper crops could make corn an attractive option, Reuters said on 30 January. The two companies – Cerradinho Bioenergia and FS Bioenergia – were both already active in the biofuel industry, but both were looking to expand their activites. Cerradinho planned to construct a 230M l/year corn-based ethanol plant in Goiás state in central Brazil, where it already operated a sugar and ethanol mill. The company planned to invest 280M reais (US$87.91M) in the Goiás corn ethanol facility, Reuters said. FS Bioenergia opened a large-scale corn ethanol plant in 2017 in Lucas do Rio Verde in Mato Grosso state, east of Goiás, and it was now planning on investing 350M reais (US$108.3M) in order to double current production capacity to 530M l/year. Ethanol sales were growing in Brazil as consumers were switching to biofuels due to rising petrol prices, according to Reuters. In November 2017, sales of hydrous ethanol, the type of ethanol used as a petrol substitute in flex fuel cars, grew 33% when compared to the same period in 2016, said Brazil’s oil and fuel regulator ANP. Earlier in January, Brazil enacted a national biofuels policy – titled RenovaBio – which included provisions to set mandates for fuel distributors to market increasing volumes of ethanol and biodiesel in order to comply with Brazil’s climate targets under the Paris climate agreement. The bill proposed the implementation of national biofuel blending mandates, certification, monetary incentives and “actions in accordance with the Paris agreement”.

RDA could begin construction of Australian ethanol plant in months

enewable Developments Australia (RDA) could break ground on its proposed sugarcane and sorghum ethanol plant within the next three to six months, Biofuels Digest wrote on 13 February. The AU$546M (US$431.2M) plant, to be located in the state of North Queensland, would grow the feedstock crops on more than 19,000ha of land and produce up to 190M l/year of ethanol, in addition to 16MW of cogenerated electricity, the company said. A second phase at the facility would produce up to 150M l/year of ethanol from bagasse. RDA is a bioenergy investment development company active in, among others, seed and yeast genomics, farm operations, engineering design management, engineering procurement and contract management, plant and mill operation and environmental science.

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UPM looks at building renewable fuel plant fed by carinata oilseed

innish forestry and paper company UPM is looking to build a new renewable fuels plant in Finland that could use feedstocks such as the brassica carinata oilseed, sawdust or forestry residues. The 500,000 tonnes/year plant would be located in the city of Kotka in southern Finland, Reuters reported on 5 February. UPM started sequential cropping tests on carinata, also known as Ethiopian rape or Ethiopian mustard, in South America in mid-2017. In January, it received a sustainability certificate for the crop in Uruguay. Carinata is a relative of the rapeseed plant and a non-edible oilseed designed specifically for sustainable biofuel production. Should the Kotka plant be realised, it would be significantly larger than UPM’s existing 100,000 tonnes/year facility in Lappenranta, Finland, which produces biofuels from crude tall oil, a residue of wood pulp production. Petri Kukkonen, vice president at UPM Biofuels Development, told Reuters he would not comment on a possible price tag, but said that the Lappenranta plant cost €150M (US$185.1M) and that the Kotka project would obviously be much larger. UPM had only started an environmental impact assessment and had no projections of when the facility could begin production, he added. In 2017, the firm also started to evaluate the possibility of constructing a smaller biorefinery in Germany to turn wood into materials for textile, bottling, composite and plastic applications. UPM – the world’s largest newsprint and magazine paper producer – was looking to diversify its operations in the face of falling paper demand due to growing popularity of digital publishing, the Reuters report said.

New Novozymes yeast strain lowers fermentation time, boosts efficiency

lobal enzyme developer Novozymes launched its first yeast product on 5 February, aimed at the corn ethanol industry with the goal to reduce costs and production time. The new yeast, marketed under the name Innova Drive, could reduce fermentation time by up to two hour and tolerate higher than normal temperatures up to 37°C and organic acid concentrations up to 0.6%, said Novozymes in a statement. “Yeast is a major bottleneck that requires constant care and attention. Innova Drive is a response to the needs of the ethanol industry,” said Novozymes vice president of biofuels commercial Brian Brazeau. According to Novozymes, more than half of all ethanol plants faced operational issues, many of them related to high heat, infections, organic acid and throughput limitations that affected the performance of yeasts. Together, these issues could require plant personnel to increase the use of antibiotics, reduce inputs of corn solids or add more yeast, which resulted in increased process complexity and costs. David Hogsett, director of biofuels yeast strain engineering at Novozymes, told Ethanol Producer that the Innova Drive platform was developed through natural breeding and evolution, collecting existing traits to maximise the product. Genetic engineering was also used to prompt the yeast to produce a high-performing glucoamylase enzyme during fermentation, which Novozymes said was twice as effective as those produced by comparable yeasts. Combined with a proprietary Novozymes fermentation enzyme, producers could maximise ethanol and starch conversion efficiencies. “The enzymes expressed by the yeast, in combination with carefully tailored companion enzyme products, give a cocktail of enzyme activities that will feed the yeast in an optimal manner throughout fermentation,” said Brazeau. “This means increased efficiency in starch conversion, lower residual starch and, at the end of the day, more ethanol,” he added. 35 OFI – MARCH/APRIL 2018

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STATISTIC S

EU EXTRA VIRGIN OLIVE OIL PRICES, 2015-18 (€/KG)

STATISTICAL NEWS FROM MINTEC

SOYABEAN AND SOYA OIL PRICES, 2015-18 (US$/TONNE)

Olive oil Olive oil production for the 2017/18 season is expected to increase, up 9% y-o-y. With consumption forecast to remain stable at 2.6M tonnes – 5% below production – prices are likely not to see the peaks reached in 2017. Production continues to come from the main European growing regions of Greece, Italy, Portugal and Spain, with European production estimated up 3% y-o-y. The 2016/17 crop suffered badly from disease and saw higher than average prices. As such, the increase in production is only a slight recovery from previous years. February prices from Greece, Italy and Spain have all increased when compared to the overall 2017 average price, up 16%, 30% and 5% respectively. Soyabeans and soyabean oil Soyabean oil CBOT prices are down 3% from the start of the year. However, prices from Brazil have remained relatively unchanged overall. Global production is forecast up 4% y-o-y in 2017/18, with Brazil seeing a 3% increase in total production. Despite Brazil seeing heavy rains in the main growing regions, the amount planted increased significantly and is likely to outweigh the loss from the abundant rainfall. Sunflower oil Sunflower oil prices continue to fall, following a decline in prices for competitor oils, soyabean and rapeseed. Sunflower oil production for 2017/18 has been estimated 2% down y-o-y, following a decrease in production in Russia and Ukraine, down 1% and 12% respectively. The decline was slightly offset by an increase in European production, up 5% in the same period.

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

PRICES OF SELECTED OILS (US$/TONNE) 2017

Oct 17

Soyabean

829.0

830.2

868.3

842.4

836.1

822.9

Crude Palm

690.0

704.0

718.8

680.5

690.5

691.8

Palm Olein Coconut Rapeseed Sunflower

Nov 17

Dec 17

Jan 18

Feb 18

661.0

669.5

680.0

644.5

660.3

672.6

1,537.0

1,381.0

1,536.3

1,448.1

1,393.3

1,245.0

855.0

880.0

894.5

862.7

841.1

821.9

800.0

804.5

800.7

785.6

805.0

799.5

1,250.0

1,296.0

1,401.1

1,282.4

1,250.0

1,142.9

Average price

946.0

938.0

986.0

935.0

925.0

885.0

Index

224.0

222.0

234.0

222.0

219.0

210.0

Palm Kernel

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