OFI March-September 2020 Feedstocks Online Edition

OILS & FATS INTERNATIONAL MARCH-SEPTEMBER 2020 WWW.OFIMAGAZINE.COM

CANNABIDIOL OIL

Meeting a high demand

UCO

EU imports grow

Feedstocks Online Edition

CONTENTS

FEEDSTOCKS ONLINE EDITION MARCH-SEPTEMBER 2020 OILS & FATS INTERNATIONAL

FEATURES

EDITORIAL:

Cannabidiol oil

11

Meeting a high demand

Editor: Serena Lim serenalim@quartzltd.com +44 (0)1737 855066 Assistant Editor: Gill Langham gilllangham@quartzltd.com +44 (0)1737 855157

Soyabeans

4

Sales Manager: Mark Winthrop-Wallace markww@quartzltd.com +44 (0)1737 855114 Sales Consultant: Anita Revis anitarevis@quartzltd.com +44 (0)1737 855068

A role for high oleic soya The US soyabean industry has worked to develop new shortenings utilising high oleic soyabean oil

SALES:

Palm oil

6

The benefits of mini mills

Demand for cannabidiol oil and products is growing for medical and skin care applications

PRODUCTION: Production Editor: Carol Baird carolbaird@quartzltd.com

Used cooking oil

CORPORATE:

14

Managing Director: Tony Crinion tony crinion@quartzltd.com +44 (0)1737 855164 SUBSCRIPTIONS: Elizabeth Barford subscriptions@quartzltd.com +44 (0)1737 855028 Subscriptions, Quartz House, 20 Clarendon Road, Redhill, Surrey RH1 1QX, UK

EU imports grow

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

© 2020, Quartz Business Media ISSN 0267-8853 WWW.OFIMAGAZINE.COM

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

Periodicals postage paid at Emigsville, PA. POSTMASTER: Send address changes to Oils & Fats c/o PO Box 437, Emigsville, PA 17318-0437

9

The EU is importing more used cooking oil from China, Indonesia and Malaysia for biodiesel use, raising concerns about its quality, traceability and indirect land use impact

Keeping up with rising demand

Rapeseed

18

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

Rapeseed enjoys a price premium above other oil crops but pest and disease control, along with climate change, are some of the challenges facing producers

Printed by Pensord Press, Gwent, Wales

@oilsandfatsint

Oils & Fats International

Tackling pests and climate change

Indonesian smallholders who make up 90% of the country’s coconut industry are struggling to keep up production despite rising global demand for coconut products

STATISTICS Statistics

22

Statistical data from Mintec

2 – OFI MARCH-SEPTEMBER 2020 ONLINE EDITION ● TO SUBSCRIBE CLICK HERE

SOYABEANS

A role for high oleic soya The US soyabean industry has worked to develop new shortenings utilising high oleic soyabean oil Gabriel Day Food manufacturers have been working to develop healthier alternatives to partially hydrogenated oils (PHOs) since the US Food and Drug Administration (FDA) revoked their “generally recognized as safe” status in June 2015.

The FDA’s long-awaited ban, introduced due to PHOs’ link to heart disease, gave food manufacturers three years to remove the ingredient from their products.

Since then, a great deal of work has gone into trying to find suitable functional substitutes to PHOs, including blends of liquid oils and hard stocks and interesterified oils with fully hydrogenated hardstocks, Qualisoy oil expert Frank Flider told Oils & Fats International.

“Some functionality was achieved, but overall, these products were severely lacking in terms of oxidative stability and melting characteristics – they just weren’t good enough. Much of the functionality of PHO shortenings came from the trans fatty acid, elaidic acid, which is the trans form of oleic acid and has a melting point exactly halfway between oleic acid and stearic acid.”

Undettered, Qualisoy – which represents all sectors of the US soyabean industry – worked to develop applications for high oleic soyabean oil, which it says contains no trans fats, and has a lower saturated fat content and three times the amount of beneficial monounsaturated fatty acids (MUFAs) compared to conventional soyabean oil.

Qualisoy carried out functionality tests, in collaboration with fats and oils supplier Stratas Foods, to show that US-grown, high oleic soya-based shortenings are a good ingredient for frying and baking, thanks to its heat stability and neutral flavour.

Tests on pastries and crusts

Flider said Qualisoy’s first prototypes were made in 2015 and tested on doughnuts.

“Back a number of years ago when they first announced the PHO ban, Time Magazine had a tongue and cheek article with the top five [foods] that would never be the same, and top of the list were

Figure 1: Comparison of puff pastry shortenings doughnuts,” Flider said Tests were also carried out on puff pastries, with soya-based baker’s margarines formulated with high oleic soyabean oil, conventional soyabean oil or combinations of the two.

“We hypothesised that a 50/50 mix of oleic and stearic in a shortening might approach the functionality of PHOs,” said Flider “Also, it was deemed necessary to reduce the polyunsaturates (PUFAs) as much as possible in order to get the oxidative stability normally seen with PHOs. The only real possibility of getting this type of a ratio while achieving low PUFAs was to utilise a high oleic liquid phase such as high oleic soyabean oil.

Our hypothesis turned out to be correct – studies determined that high oleic shortenings came closer to PHO functionality than any other system attempted.”

Qualisoy said that the ideal puff pastry should show an even layer and height, which it maintains after baking. The experiments conducted showed that palm-based baker’s margarine produced the pastry with the least amount of height, resulting in pockets rather than layers. Whereas, butter-based pastries showed the greatest height but toppled over after baking (see Figure 1, above).

However, puff pastries made with high oleic soyabean baker’s margarine produced the ideal height and had the conventionally desired honeycomb layers.

The margarine also maintained better plasticity under both cool and warm temperature conditions compared to alternatives.

Similar to the puff pastry study, pie crust shortenings were also tested at both refrigerated and room temperatures. In the study, high oleic soyabean shortening

produced pie crusts with the most desired characteristics and also proved to be versatile, performing equally as well under hand-rolling and a pie press. Additionally, the ingredient performed as well as, or better than, PHOs. In terms of mouthfeel, Qualisoy wrote that high oleic soyabean shortenings reduced moisture uptake in the pie crusts, preventing them from becoming damp.

Conventional soyabean shortening was comparable to high oleic soyabean shortening in this respect.

Flider described the functionality of high oleic soyabeans compared to high oleic sunflower oil as “100% interchangeable”.

“Both are incredibly great high stability oils with a lot of functionality.

“In terms of availability to the world market, of course, high oleic sunflower oil is much more available than high oleic soya. In the US market, we’re getting pretty close to being able to approach the volume of sunflower production.”

As for the future, Flider says high oleic soyabean oil shortenings are already available from a number of companies and with consumers increasingly demanding cleaner labels and sustainably-grown products, the market should grow.

“The US planted area of sunflower is about 550,000-570,000ha and high oleic soya is only a couple years from that.”

Flider said about 150,000-160,000ha of high oleic soyabeans are currently planted in the USA. “We expect by 2021 to be over 500,000ha and we’re shooting by 2028 to have 6.5Mha planted in the USA, which would make it the fourth largest row crop in the country.”

● Gabriel Day is a former OFI assistant editor

4 – OFI MARCH-SEPTEMBER 2020 ONLINE EDITION ● TO SUBSCRIBE CLICK HERE

PALM OIL

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

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

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

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

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

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

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

Mini mills benefits

Mini mills – with a processing capacity

Photo: Wacapol

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

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

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

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

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

Africa

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

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

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

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

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

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

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

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

6 – OFI MARCH-SEPTEMBER 2020 ONLINE EDITION ● TO SUBSCRIBE CLICK HERE

LEADER IN OIL PRE-TREATMENT PLANTS FOR HVO AND BIODIESEL PRODUCTION.

www.technoilogy.it

EXPERTS IN: EDIBLE OIL EXTRACTION AND REFINING • OLEOCHEMICALS • BIODIESEL PRODUCTION • LUBE OIL RE-REFINING

 patchy as land titling and productivity remains a challenge. It is highly risky to open large mills early in development in uncertain environments and it is in Africa where modular or portable leased mini mills may be most appropriate in the early years.

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

Indonesia

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

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

Figure 1: Indonesia palm oil plantation ownership share and an expanding population.

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

Mini mills have many advantages for smallholders by providing SME development, price transparency, a potential value-adding opportunity, employment, rapid payment, a low Capex cost and a smaller environmental footprint. The wider market can benefit from CPO with a lower free fatty acid (FFA) content from fresher FFBs, from mini mills which are more economic to operate in low crop periods.

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

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

As society changes, so should the structure of the industry in Indonesia as

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

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

Latin America and PNG

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

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

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

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

8 – OFI MARCH-SEPTEMBER 2020 ONLINE EDITION ● TO SUBSCRIBE CLICK HERE

Source: World Resources Institute

PALM OIL

COCONUT OIL

As global demand for coconut products rises, Indonesian smallholders who make more up than 90% of the country’s industry are struggling to keep up with production due to ageing trees and low returns Gabriel Day

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

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

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

However, a large portion of the Sumatran crop is exported for processing overseas and coconut production is declining at a steady rate in Sulawesi,

according to a 2017 USDA Global Agricultural Information Network (GAIN) report. The report attributes this decline to the conservation of land for nonagricultural uses, low grower profits and rising demand for coconut tree wood.

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

Indonesia’s stagnating production in Sulawesi and the rest of the country is occurring at a time when both domestic and global demand are rising.

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

9 – OFI MARCH-SEPTEMBER 2020 ONLINE EDITION ● TO SUBSCRIBE CLICK HERE

COCONUT OIL u estimates of around 372,000 tonnes/year.

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

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

Indonesia, the Philippines and India – which make up three-quarters of global coconut production – cannot keep up with this demand. The countries’ annual production grew by 2%/year from 20002009 but their average production has fallen by 0.1% annually since 2010.

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

Copra production and exports

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

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

The CKC says that with current practices of copra production, one tonne requires approximately 6,000 nuts. Given an average copra price of US$500/tonne at the farm gate, this translates to only US$0.08/nut or as low as US$0.05/nut, depending on the distance of farms and the quality of the copra produced.

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

Smallholders

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

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

Oil extraction is also very crude, with farmers continuing to produce copra by

drying split halves of nuts in crude kilns, a process which takes about six hours, according to the USDA. Moreover, Indonesian coconut smallholders are not organised into viable cooperatives or community-based organisations, and have limited access to credit and capital. These smallholder ventures need marketing assistance to enable them to gain access to both domestic and export markets, the CKC says.

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

The whole nut chain

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

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

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

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

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

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

Replanting crisis

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

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

global coconut estate.

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

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

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

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

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

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

Intercropping can also offer better returns to smallholders.

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

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

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

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

• Gabriel Day is a former OFI assistant editor

10 – OFI MARCH-SEPTEMBER 2020 ONLINE EDITION ● TO SUBSCRIBE CLICK HERE

CANNABIDIOL OIL

Meeting a high demand In recent years, the cannabis plant has begun to shed some of the stigma that has traditionally haunted it.

While cannabis still remains an illegal substance in most parts of the world for recreational use, legislation has begun to relax, especially in North America.

Canada and US states such as California and Colorado have legalised the recreational use of cannabis, hoping that the now taxable drug can bring in some income for state authorities and lower the number of people arrested for minor infractions of drug laws.

But even in places where recreational cannabis remains illegal, the medical opportunities of the plant are being explored. Several countries and states in both the Americas and Europe now allow the cultivation and use of cannabis for medical purposes.

Beyond medical use, cannabis products are also finding their way into skincare products and health foods, with CocaCola even looking to introduce extracts into new “wellness drinks”.

Cannabis vs hemp vs marijuana

So what exactly is the difference between cannabis, hemp and marijuana? Cannabis is a family of plants with two primary classifications – Indica and Sativa. While marijuana can be considered a member of either classification, hemp is a member of the Sativa family (see Figure 1, following page).

Cannabis contains a variety of different

Although cannabis is mostly associated with being a recreational drug, demand for cannabidiol (CBD) oil and products is growing for medical and skin care applications.

What exactly is CBD and what is driving the increasing demand for it? lle Kauppila compounds called cannabinoids, the two most common ones being cannabidiol (CBD) and tetrahydrocannabinol (THC).

THC induces psychoactive effects (a ‘high’) while CBD does not contain any psychoactive properties.

Hemp contains a very low concentration of THC (0.3% or less) while marijuana has 15%-40% THC. Because of this, hemp is mainly grown for industrial purposes while marijuana is grown for recreational and medicinal purposes. However, with the fast-growing popularity of CBD, hemp is also used to produce a wide variety of THC-free CBD products.

These differences explain the distinction between cannabis oil and CBD oil.

Cannabis oil – sometimes called hash oil – is a general label for oleoresins (a mix of oils and resins) extracted from the flowers of the marijuana plant (making it cannabis oil) or all parts of the plant (making it hash oil) using a solvent, such as butane or ethanol.

Demi Pradolin, community manager at Netherlands-based hemp product and CBD oil producer Endoca, explains to Oils & Fats International that the

cannabis oil produced through the above-described extraction process is a thick and molasses-like extract. The most important thing, however, is the high level of tetrahydrocannabinol (THC) in the final product. Although the levels of THC vary wildly between different products, Pradolin says cannabis oil generally has a THC content of anywhere between 4% and 35%.

“CBD oil, on the other hand, does not contain high levels of THC and is therefore not psychotropic, nor does it produce a ‘high’.”

The industrial hemp plant used in CBD production is a strain of Cannabis sativa that has been used for fibre production for more than 10,000 years. The actual THC content found in industrial hemp differs according to regional laws, with the allowable limit in Europe set at 0.2% and the USA at 0.3%.

Despite a distinction in the chemical properties of the two oils, differing regulations between different regions keep muddying the waters. In the USA, for example, even low-THC products are sometimes labelled as “cannabis oil”, u

11 – OFI MARCH-SEPTEMBER 2020 ONLINE EDITION ● TO SUBSCRIBE CLICK HERE

CANNABIDIOL OIL

Figure 1: The cannabis family – hemp compared with marijuana

Source: Endoca

companies joining the space every day, How isQueen the oil produced? and a quantity that is correct today will Royal Seeds. How much is produced globally? most likely be out of date by tomorrow.”

In Europe such labelling practices are The oil can be produced in a wide variety of ways, from tincture form which requires the use of a solvent However, she says that there has been not allowed and, therefore, the low-THC like alcohol or vegetable glycerin to extract the vital plant molecules, to the industry gold standard of product is called hemp oil.we But, C02 extractions which is what do going here at ​Endoca​. a huge increase in the demand for CBD products globally, and production is back to the other side of the Atlantic, constantly According to Pradolin, hemp oil andtheCBD are more less This requires plantoil material to beor put into a chamber where the growing. temperature and pressure of the C02 is set and compressed, turning the C02an into a fine mist material the which CBD ‘washes’ industrythe is plant poised to beand worth interchangeable terms, even though extracts all “CBD the vitaloil” plant compounds. is released, plant material and extracted US$22bn bythe 2020.

American product oftenOnce has the a pressure While global production numbers for higher CBD content than an American CBD oil are vague, the extraction methods “hemp oil” product. are easier to explain. “The oil can be It is no wonder that with such wildly produced in a wide variety of ways,” says fluctuating labelling practices, neither Pradolin, “from tincture form – which regulators, consumers or the industry are requires the use of a solvent-like alcohol quite clear on what exactly all the different or vegetable glycerin to extract the vital kinds of cannabis-derived oils are. And plant molecules – to the industry gold this is all without even mentioning the standard of CO2 extraction, which is what hemp seed oil used in cooking.

As a general rule of thumb, however, Endoca uses.” the distinction suggested by Pradolin will In CO2 extraction, plant material is suffice in most situations: cannabis oil placed into a chamber. CO2 is pumped contains THC while CDB oil is virtually into the chamber, and its temperature and THC-free. pressure are set. The gas is compressed, which turns it into a fine mist that ‘washes’ the plant material and extracts Production and extraction the desired plant compounds.

China is the leading industrial hemp “Once the pressure is released, the producer in the world, being responsible plant material and extracted compounds for some 70% of total world output. remain separated. This is what we refer to Far behind it, France is the second as our ‘first extract’ and it is then used to largest hemp producer, growing roughly formulate various CBD products.”

25% of global output. Together, these two countries dominate global hemp production with a nearly 95% share, Medical applications while 30 more countries produce globally One of the major applications where negligible amounts of hemp. cannabis and CBD oils are gaining traction However, when it comes to global is the field of medicine. Many medical CBD oil production, Pradolin says that benefits have been attributed to the oils, estimating outputs becomes increasingly particularly low-THC CBD oil, but the difficult. “The global amount of CBD or topic remains contentious. even cannabis oil itself is not something “Using CBD oil as medicine is a hotly I can give an answer to. There are new debated topic within both the cannabis

u according to Spanish cannabis seed firm

and medical industries,” says Pradolin.

“Currently scientific research into the benefits of CBD is considered limited, but there are some promising studies and literature that support CBD as a therapeutic alternative to prescription medicine.”

Endoca has carried out reviews of scientific literature surrounding the use of CBD in medicine. The studies suggest that CBD is effective in the areas of pain relief, neurological disorders and autoimmune disorders.

In pain relief, CBD helps to stimulate the body’s endocannabinoid system to produce more of a pain-fighting cannabinoid called anandamide. This natural compound works to regulate pain and high levels of anandamide can reduce pain responses. This could be useful for patients suffering from, among others, arthritis pain, multiple sclerosis, migraines, joint and nerve pain. Medical marijuana is already prescribed as a pain medication in certain parts of the world, so it makes sense that CBD oil would also work in similar roles.

On 25 June 2018, the US Food and Drug Administration (FDA) approved a medicine called Epidiolex for the treatment of seizures associated with two rare and severe forms of epilepsy, namely Lennox-Gastaut syndrome and Dravet syndrome. The effective substance in Epidiolex is CBD, and the drug does not contain THC, according to the FDA. Studies reviewed by Endoca showed that CBD could also help with other neurological conditions including schizophrenia, Alzheimer’s, Parkinson’s and strokes.

In the area of autoimmune disorders, Endoca says CBD works as an antioxidant that can help fight inflammation by stimulating the body’s vanilloid pain receptors. This activity prevents the body from destroying the previously mentioned anandamide by inhibiting a process known as fatty acid amide hydrolase (FAAH). One medical condition where this property might prove beneficial is Crohn’s disease.

An Isreaeli study – the first of its kind – found in October 2018 that a treatment with cannabis oil containing 15% CBD and 4% THC showed a significant reduction in the symptoms of Crohn’s disease. However, the same study said that despite cannabinoids’ “profound anti-inflammatory effects”, the researchers found that the medicine did not impact the gut inflammation associated with Crohn’s disease.

In addition to these fields, Endoca says that CBD could help in regulating anxiety and panic attacks, combating addictions

12 – OFI MARCH-SEPTEMBER 2020 ONLINE EDITION ● TO SUBSCRIBE CLICK HERE

CANNABIDIOL OIL and treating hormonal and digestive issues. However, Pradolin calls for more research to be performed on CBD’s benefits.

“There needs to be more support for double-blind, placebo-controlled studies looking at CBD and its benefits. Without this scientific research behind us, we will continue to see a stigma surrounding the use of CBD as a medicine,” says Pradolin.

Skincare use

Outside the medical field, cannabis and CBD oils have found popular use in the skincare products industry, with Hollywood stars and the public in the USA embracing the ‘cannabis craze’.

In a presentation for the American Academy of Dermatology, Dr Jeanette Jacknin says the skin has an endocannabinoid system that helps regulate the production of various hormones and proteins with research suggesting that cannabinoid receptors in the skin can affect epidermal differentiation and skin development.

Jacknin says several studies have shown that cannabinoids produce lipids that regulate acne and seborrhea. Due to their anti-inflammatory properties, CBD may also help in fighting eczema and atopic dermatitis. Jacknin notes that hemp oil’s “anti-inflammatory and moisturising properties make it wonderful for skin care”. It no surprise, then, that the cosmetics industry is one of the major end-users of cannabis oil products and that the CBD skincare boom is now looking to cross the Atlantic to the EU.

Hazy legal status

However, the big obstacle standing in the way of cannabis and CBD products is that they are extracts of a plant best known for illicit drugs. That means that they will inevitably run into two majors hurdles – regulations and public perception.

Despite recent legalisation and decriminalisation decisions, marijuana remains an illegal substance in most parts of the world for recreational use. With medical marijuana, the regulatory situation is slightly more lenient, with a good number of countries having some kind of prescription system in effect. However, cannabis and CBD oils keep running afoul of cannabis laws, sometimes even in cases where their end uses are purely industrial.

As mentioned earlier, the legal limit for THC content in industrial hemp – from which CBD products are manufactured – is 0.2% in Europe and 0.3% in the USA. According to the Hemp Business Journal, the 2018 US Farm Bill effectively legalised hemp production in the USA but, in

‘The global market value for CBD hemp oil alone will reach US$1.11bn by the end of 2025 with the entire cannabis market poised to grow to US$22bn by 2020’ January 2019, four men were arrested in Oklahoma on suspicion of drug trafficking after law enforcement officials discovered they were transporting nearly eight tonnes of industrial hemp, worth some US$850,000. Police tests discovered undisclosed levels of THC in the hemp batch, which led to the arrests.

The shipment was intended for Panacea Life Sciences, a hemp and wellness company specialising in hemp-based therapeutics. “This is such a grey area,” Panacea Life Sciences president Jamie Baumgartner told Hemp Business Journal.

“We’re trying to work to clarify the situation that this was industrial hemp. We also hope that this is going to be a test case so that there is better clarification in the future for the transportation of what is an important agricultural product.”

One of the issues in the USA is the cannabis field test kit provided to local police officers simply detects the presence of THC and not whether its levels surpass the legal federal limit.

In the EU, the situation is similarly muddled. The bloc’s own CBD legislation is patchy and regulations vary wildly between member states. Germany and Finland, for example, allow medicinal use and cultivation of cannabis while, for instance, Sweden bans it altogether.

However, these restrictions often apply only to smoked cannabis products.

Whether they concern cannabis and CBD oils is questionable, although CBD/ hemp oil produced through cold pressing can currently be sold in the EU without authorisation (within legal THC limits).

However, CBD oil produced through certain extraction and purification techniques – such as the CO2 method – is classified as a novel food product.

To be able to sell CBD products in the EU, the seller must apply for novel food authorisation from the EU. Apart from the legal question, there is also the matter of public perception. For a long time, cannabis has been presented to the public as a drug and parts of the population continue to regard it as such.

In recent years, though, attitudes have begun to change and the demand for hemp and CBD products is skyrocketing.

Market research firm QY Research, in a February 2019 study, forecasts that the global market value for CBD hemp oil alone will reach US$1.11bn by the end of 2025 with the entire cannabis market poised to grow to US$22bn by 2020.

It sees the cosmetics industry, alongside pharmaceuticals and food, to be the market drivers for CBD hemp oil through 2025.

“Technological advancements – such as the rising usage of CBD hemp oil in the form of tincture, spray and vape – is expected to boost demand in the coming years. Rising concerns for various neurological disorders, an increasing number of chronic diseases such as diabetes, and growing awareness of depression and stress among youngsters have led to increasing usage of CBD hemp oil in the healthcare sector. CBD hemp oil also helps in the treatment of skin problems such as acne.”

Pradolin also agrees that the future might hold great promise for cannabis and CBD oil. According to her, more and more people across the globe have come to recognise the therapeutic benefits of CBD and cannabis and it is beginning to become more commonplace.

However, she says the explosion in demand has led to huge levels of production with many companies doing so without the attention to detail or understanding, so regulation and education “are still incredibly important”.

Pradolin says that she can see regulation going one of two ways.

“The first, which is what we are hoping for, is that CBD becomes commonplace in all homes. Whether that be in a trendy food product, or in someone’s medicine cabinet, I think there is space for both and different companies will fill different purposes in the industry. Nonetheless, we do know it’s possible for legislation to go the other direction and for CBD to be a highly regulated and controlled medicine.”

For the time being, the cannabis industry is riding a high of great demand and a promising future. Whether that high turns out to be reality or just a pipe dream depends on the regulators. ● Ile Kauppila is a former OFI assistant editor

13 – OFI MARCH-SEPTEMBER 2020 ONLINE EDITION ● TO SUBSCRIBE CLICK HERE

USED COOKING OIL

The utilisation of used cooking oil (UCO) as a biodiesel feedstock has increased significantly within the EU, which produced around 15,000M litres of biodiesel in 2017.

Between 2011 and 2016, there was a 360% increase in the use of UCO as a biofuel feedstock, rising from 0.68M tonnes to 2.44M tonnes in just five years, driven by renewable fuel policies.

To meet growing UCO demand, imports from outside the EU (predominantly Asia) are the only legitimate options for increasing supply. However, as there are no current globally agreed standards for UCO, suppliers are only required to meet the operator’s specifications, resulting in a wide variety of qualities and chemical compositions.

The net imports of UCO and UCObased FAME biodiesel (UCOME) to the EU have significantly increased since 2014, with a large proportion of this sourced from China, Indonesia and Malaysia. In 2018, these three countries exported more than 500,000 tonnes of UCO to the EU. This reliance is set to continue, with EU imports of Chinese UCO increasing by 5.6% in first quarter 2019, compared with first quarter 2018.

Factors affecting UCO quality

UCO has various names including waste cooking oil, used frying oil and yellow grease. However these all refer to the same commodity; purified oils and fats of plant and animal origin that have been used to cook food.

European UCO is deemed a waste that

EU imports grow Used cooking oil (UCO) is increasingly utilised in the EU to produce biodiesel. To meet rising demand for this feedstock, EU imports of UCO from China, Indonesia and Malaysia are growing, raising concerns about their quality, traceability and indirect land use impact Douglas Phillips is no longer fit for human consumption, prompting its inclusion as an acceptable feedstock for ‘double counting’ towards the renewable fuel targets set out within the EU’s Renewable Energy Directive (RED).

The fatty acid composition of edible oil feedstocks differs – often significantly – impacting their properties and suitability for biodiesel use. This is especially important when considering the properties of UCO; the characteristics of the initial edible oil used for frying will directly influence those of the waste product.

Additionally, the cooking conditions employed will also affect the quality of the UCO feedstock. This includes the number of times the oil has been used, the food types fried within it and the oil’s storage between uses. During frying there are several chemical processes that take place, resulting in the deterioration of the oil. These include oxidation, hydrolysis and polymerisation.

The first major consideration of the

UCO’s properties relates to its saturated fat content. Higher concentrations of saturated fatty acids can result in a fuel that has operational issues at lower temperatures.

Another important consideration of UCO quality is the free fatty acid (FFA) content of the feedstock. FFAs are long carbon chain organic acids that have hydrolysed and become disconnected from the triglyceride backbone. These are therefore classed as impurities and must be removed before the transesterification process. Refined oil tends to have an FFA content below 0.5wt% which is ideal for biodiesel production. However in UCO, this can range between 0.5-15wt%.

Without more sophisticated equipment, UCOs with FFAs above 3wt% can result in increased processing problems, producing soaps which effectively reduce the yield of the target methyl esters.

The FFA content of UCO can be greatly influenced by cooking practices, differing significantly between domestic and

14 – OFI MARCH-SEPTEMBER 2020 ONLINE EDITION ● TO SUBSCRIBE CLICK HERE

industrial sources. Increased frying time has been shown to cause degradation of the oil, increasing the UCO’s FFA content.

However, the deterioration can be exacerbated further by short batch frying processes. Intermittent cooking, involving the heating and reheating of the oil several times, increases the likelihood of oxidation and hydrolysis, impacting the quality when compared to continued frying. This also results in a more viscous and acidic UCO, which again can impact its suitability as a feedstock for biodiesel.

The different sources of UCO – both in the original raw material used and the cooking practices employed – results in a biodiesel feedstock that has the potential to be heterogenous.

Before UCO can be used as a biodiesel feedstock, it must first be cleaned to remove any impurities and solids that exist as a result of the cooking process. This includes sieving to physically remove solids, degumming to remove phospholipids and de-watering. In addition, deacidification is often required, with UCO tending to be more acidic than the original edible oil source. Pre-treatment is particularly important when considering the conversion of UCO into biodiesel; the produced fuel must meet EN14214 standards in the EU and ASTM D6751 in the USA. The concentrations of FFAs in UCO can have a large impact on the transesterification reaction. If FFAs are in excess of 3wt%, then saponification (soap formation) can occur, causing a reduction in biodiesel yield while also increasing the catalyst consumption. In addition, the presence of water within the feedstock can lead to hydrolysis which will also affect the efficiency of the conversion process. Consequently, several different mechanical and chemical methods have been developed to reduce the FFA and water content, while also neutralising the UCO. Once the UCO has been pretreated, the transformation of the waste feedstock into methyl esters is similar to that of virgin oils and fats – resulting in equivalent fuel properties. As with edible oil feedstocks that are high in saturated fats, any issues with crystallisation at low temperatures requires the addition of cold flow improvers to the produced UCOME to ensure its usability.

UCOME in the EU

There is already a well-established European UCOME market, with an estimated 3.5M tonnes of potential UCO capacity available within the EU. Between 2011 and 2016, the utilisation of UCO increased steadily, resulting in a 360% rise in its use, from 680,000 tonnes

Figure 1: Net imports of palm oil, CPO and UCO/UCOME into EU (‘000 tonnes) to 2.44M tonnes. The prominent EU users of UCO are Germany, Italy, the Netherlands, Spain and the UK. Up until 2003, UCO was utilised extensively as a high fat supplement in animal feed. However, the outbreak of mad cow disease (BSE) prompted the banning of UCO as a feed supplement, resulting in its classification as a waste. There are now legal limitations placed on the collection and disposal of UCO that have resulted in it becoming a well-regulated feedstock, attaining certain levels of quality.

In addition to this quality, the traceability and sustainability of the UCO generated in the EU – specifically the oil from where it originates – is well established.

As UCO is deemed no longer fit for human or animal consumption, the EU legally recognises it as a waste and its disposal is carefully regulated.

The default carbon intensity value of biodiesel produced from UCOME is currently defined at 14 gCO₂e/MJ, representing a carbon saving of 83% when used as a replacement to diesel.

In comparison, biodiesel from rapeseed, soya and palm oil have associated carbon intensity factors of 52, 58 and 68 gCO₂e/ MJ, respectively, equating to carbon savings that range from 19-38%. These crop-derived feedstocks for biodiesel do not meet the 50% (latterly 60%) greenhouse (GHG) savings threshold required by the EU’s RED. Therefore, when considering stated carbon intensity values, UCOME is seen as a preferable alternative fuel for reducing emissions.

The benefits of UCO also extend to the

Source: NNFCC

USED COOKING OIL

financial commitments of producing and supplying UCOME fuel. In the amended version of the RED (REDII), the use of waste feedstocks, including UCO, has been actively promoted by the European Commission, specifically their double counting towards renewable energy targets.

UCO and UCOME imports

Although the use of UCO is widely supported within the EU, particularly that produced by member states, there is a growing demand for it as a resource. This has resulted in the establishment of global UCO markets, although there are concerns about the quality, traceability and sustainability of imported UCO. The EU has a well-regulated market for the use of the waste oil produced by member states; reputable companies collect UCO from industrial and commercial food producers, delivering the waste feedstock to biodiesel producers.

As a result, 2016 estimates of the UCO market indicated that there was only a small amount of additional supply remaining within the EU. To meet the growing feedstock demand, global imports from outside the EU are the only legitimate option for increasing UCO supply. Net imports of UCO and UCOME into the EU have increased significantly since 2014 (see Figure 1, above), with a large proportion of the imports originating from China, Indonesia and Malaysia.

In 2018, EU UCO imports totalled more than 500,000 tonnes. Nearly 100,000 tonnes of this was sourced from u

15 – OFI MARCH-SEPTEMBER 2020 ONLINE EDITION ● TO SUBSCRIBE CLICK HERE

Figure 2: Price changes of UCO and CPO, 2017-2018 (US$/tonne) u Malaysia. However, these bulk shipments were blends of both Malaysian and UCO originating from China.

In the UK, the most common feedstock source of the biodiesel supplied in 2018 – between April and December – was Chinese UCO, totalling 93M litres, representing 15% of certified biodiesel and 9% of the total certified renewable fuel.

Furthermore, Malaysian UCO – which partially consists of blended Chinese UCO – accounted for an additional 36M litres of the UK’s supplied biodiesel. Comparatively, during this same period, the UK’s UCO feedstocks were used to produce 76M litres.

In addition to the increased deliveries of UCO, the EU imported nearly 200,000 tonnes of UCOME in 2018 sourced predominantly from Indonesia. Although biodiesel production from UCO is currently in its infancy in China, the country’s hydrotreated vegetable oil (HVO) biodiesel capacity is increasing. For example, the ISCC EU certified Yangzhou Jianyuan HVO plant has a capacity of 100,000 tonnes/year, utilising UCO as its main feedstock. If China establishes a significant supply of EU certified biodiesel – using a double counting feedstock – then EU imports of Chinese HVO may increase significantly.

Trade data indicates that the EU is replacing its consumption of palm oil with global imports of UCO and, to a lesser extent, UCOME. This is due to the associated high indirect land use change (ILUC) impact of palm oil cultivation and the well-publicised issues with biodiversity.

Quality issues

The consumption of edible vegetable oils in China has grown significantly over the last decade. This has coincided with increased demand for fried food, with fast food restaurants – such as McDonald’s and KFC – establishing themselves within the country. Domestic consumption of edible oils in China is met mainly by soyabean, rapeseed and peanut oils.

However in large-scale, commercial food production – frying chips and other snack foods – palm is the preferred cooking oil.

As a result, it is estimated that more than 40% of the palm oil consumed in China is used for food production, particularly in catering frying.

In addition, most of the edible oil consumed in Indonesia and Malaysia is sourced from domestic palm oil, particularly in Indonesia, where the use of palm oil in cooking has continued to increase, currently at a rate of ~5%/year. This equated to more than 2M tonnes of palm oil in 2016 alone.

Palm oil is high in saturated fatty acids, with a pour point of ~23.5°C. Therefore, any UCO originating from palm would have comparable fatty acid contents and chemical properties.

Due to the reliance on palm oil within their food industries, the UCO sourced from China, Indonesia and Malaysia is likely to fundamentally differ to that generated in the EU as a result of the differing original feedstocks. This could have repercussions, impacting the performance of the produced UCOME. Without the addition of cold flow improvers (CFIs), any

Source: NNFCC

USED COOKING OIL biodiesel produced from UCO that originates from palm is likely to gel in colder temperatures, causing engines to fail.

Although routine quality testing is currently undertaken in Europe, this is by no means definitive. High-profile usability issues with biodiesel fuels could severely impact the public’s perception and confidence in them, negatively affecting the broader biofuel sector in general.

An additional quality issue is the rancidification of UCO feedstocks. During the last decade, there have been several food safety scandals in China, with the most prominent relating to the supply and use of illegal cooking oil, often referred to as ‘gutter oil’. The crudely processed waste oil – sourced predominantly from catering and sewage wastes – is sold for human consumption as a cheap alternative cooking oil. As part of a bid to improve food safety, the Chinese State Council has begun to tackle the mass production of illegal cooking oil, resulting in an increased supply of UCO. There are currently no globally agreed quality standards for UCO, with the supplied feedstock merely required to meet the operators’ desired specifications – this is normally <1% contaminants and <4% FFAs. UCO that is composed predominantly of gutter oil will contain much higher concentrations of FFAs and contaminants, causing issues in the production of biodiesel. The resulting higher processing costs and reduced yields associated with Chinese UCO may therefore result in an uneconomic process.

Sustainability issues

The key driver for biodiesel uptake has been its ability to markedly reduce the GHG emissions associated with the transport sector, particularly in helping the transition towards a decarbonised system.

Biofuels that are produced in facilities which began operations after October 2015 are required to comply with a 60% GHG saving threshold, an increase from the previously mandated 50%.

Ensuring the sustainability of UCO feedstocks – correctly quantifying their potential for combatting climate change – is therefore imperative, particularly in relation to the obligations of fuel suppliers to reduce GHG emissions as part of the EU Fuel Quality Directive.

As a waste, UCO is considered a low risk ILUC biofuel feedstock. This differs to those produced from crops grown on arable land, such as palm oil, which is deemed high risk due to its increased ILUC implications. In the case of gutter oil – and other low-grade waste oil sources that are linked to animal by-products

16 – OFI MARCH-SEPTEMBER 2020 ONLINE EDITION ● TO SUBSCRIBE CLICK HERE

USED COOKING OIL – their validity as wastes is undeniable, falling in line with current EU policy and legislation, while their removal from human consumption supply chains will also help improve food safety in China.

However, the inclusion of better quality, filtered oils that are not legally mandated as a waste is a more contentious issue.

In China, UCO has historically been an important component of animal feed, acting as a cheap and high energy additive, improving both the energy density and the binding of feed pellets. It has also been used as a supplement in creep feed, helping to support the increased growth and weight of young livestock. This is particularly important within China’s growing pork industry; the growth demand for meat protein has resulted in increased demand for cheap animal feed sources.

Current Chinese State Council policy forbids the use of UCO – sourced from catering and meat processing facilities – as a supplement for animal feed. Though this policy does not include high-grade used vegetable oils, uncontaminated by meat products, these are also beginning to be included as a UCO source.

Their inclusion will result in a better quality UCO biodiesel feedstock – containing lower levels of contamination and FFAs – but its removal from the animal feed supply chain will need to be replaced.

Since 2015, there has been a sustained increase in the amount of UCO exported from China to the EU. This has coincided with increased imports of edible oils during the same time period. Both soyabean and rapeseed oil imports have shown increases. However these are small when compared to palm oil; between 2016 and 2018, palm imports to China grew by 1M tonnes, representing an increase of more than 20%.

There are complexities relating to Chinese edible oil imports – such as their recent trade dispute with the USA, prompting the need to find alternative sources of soyabeans. However, the available trade data clearly shows China’s increased consumption of palm oil. Although correlation does not constitute causation, this increase should not be ignored; there are clear parallels between increased exports of Chinese UCO and their imports of palm oil, with the growth of both expected to continue throughout 2019.

Consequently, there are concerns over the carbon intensity of UCO sourced from China, Indonesia and Malaysia, due to the potential inclusion of non-wastes within the waste feedstock stream. If their utilisation in EU biofuel production is leading to an increased use of palm oil within animal feed, replacing high grade uncontaminated

‘Between 2011 and 2016, there was a 360% increase in the use of UCO as a biodiesel feedstock in the EU, driven by renewable fuel policies’ used oil, then the subsequent ILUC emissions of palm oil should be included in the UCO assessment – or at least be flagged as a potential high ILUC-risk fuel.

Traceability issues

The final, and perhaps most controversial, issue relates to the traceability of the UCO sourced from China. To access the European market, the supplied UCO must meet EU sustainability standards.

UCO collection points (CPs) – which source the waste directly from the places of origin – are audited on the documentation of the supplied materials. Each point of origin must be certified; however, the audit process requires only signed self-declarations as proof. Additionally, only large waste producers – generating more than 120 tonnes/year – are required to provide samples within the CP auditing framework.

These are relatively soft anti-fraud mechanisms that require a certain level of trust, making them susceptible to exploitation. The motive for this strengthens further when considering the market price of UCO. Figure 2 (p16) demonstrates the prices of UCO and crude palm oil are closely related – likely a result of their suitability as cheap biodiesel feedstocks.

As evidenced, during the last six months of 2018, the value of UCO was greater than CPO, resulting in increased exports of the commodity from China to the EU. This has continued into 2019, with Chinese UCO accounting for US$55.8M worth of imports in the first quarter alone.

The higher value of UCO, and a lack of stringent traceability controls on the collecting points and points of origin in China, could give rise to fraudulent activity.

This potential for fraudulent activities – relating directly to biodiesel production from UCO – has been demonstrated re-

cently within the Netherlands. Significant volumes of biodiesel sold there in 2015 and 2016 were wrongly designated as sustainable, with double-counting credits claimed as a result. Not only do instances like this raise doubt over the sustainability of certain imported feedstocks, they also undermine confidence in the entire biofuel sector, which could have much greater repercussions.

Conclusions

Utilising wastes which, without the existence of a biofuel market, would end up in landfill is seen as a preferable pathway option ahead of fuel crops.

The EU’s well-defined legislative framework for wastes has established UCO as a key biodiesel feedstock. This demand is currently being met by a growing reliance on Chinese UCO imports. However, the feedstock quality, traceability and robustness of the supply chain’s sustainability may not be as comparable to EU-sourced UCO. Unlike the EU, estimations of UCO capacity and availability within China, Indonesia and Malaysia are inherently difficult to validate. Indeed, without a proper understanding of the current volumes of waste oil generated, it is almost impossible to substantiate the GHG savings associated with the feedstock or if additional wastes are being produced as a result of the EU’s policy support for biodiesel production from imported UCO. This is further exacerbated by the inclusion of possible non-wastes within the UCO waste stream – the redirection of high-grade waste vegetable oils, safe for consumption within animal feed, to biofuel production may result in their replacement with cheaper virgin edible oils, such as palm. The available evidence indicates that China’s palm oil imports are increasing, in line with the country’s increased exports of UCO. If these are indeed connected, then the ILUC implications of using imported UCO as a feedstock for biodiesel could be significant and must be investigated. Furthermore, if imported UCO is to continue as a double counting feedstock, then confidence in its supply chain should be paramount. The certification process of UCO – sourced from outside the EU – should be more robust, helping to ensure that the feedstock meets comparable levels of traceability and sustainability.  Dr Douglas Phillips is a consultant for the international consultancy, NNFCC, UK This article is based on his report, ‘Implications of Used Cooking Oil as a Biodiesel Feedstock’, published in May 2019

17 – OFI MARCH-SEPTEMBER 2020 ONLINE EDITION ● TO SUBSCRIBE CLICK HERE

RAPESEED

Tackling pests and climate change Global rapeseed production today stands at some 70M tonnes, with the crop enjoying a price premium above other oil crops. However, pest and disease control and climate change are some of the challenges facing producers Serena Lim

T

he yellow fields of rapeseed across Europe and major global producer Canada are an iconic sight but could genetically modified red rapeseed, smelling of lavender, be seen in the future?

This was a tongue in cheek comment made by Samantha Cook of the UK’s Rothamsted Research at the 15th International Rapeseed Congress (IRC) in Berlin held on 17-19 June.

Cook, who is a behavioural ecologist, was talking about how pollen beetles – one of the major pests attacking rapeseed – were attracted to yellow and fluorescent green and blue colours. If canola was modified to be red, it would attract less pests.

Lavender was also the most repellent smell for pollen beetles. In a trial, canola plants sprayed with its scent attracted far less pests than canola is a control field, although that would be an expensive solution to the pest problem.

Pest and disease control is one of the major issues facing rapeseed producers today, the congress – which attracted 850 delegates from 43 countries, was told.

“Today, oilseed rape/canola is one of the major sources of edible oil in the world,” said Wolfgang Friedt, president of the congress organiser, International Consultative Group of Research on Rapeseed (GCIRC). “The total rapeseed acreage amounts to nearly 34M ha, from which almost 70M tonnes of rapeseed are produced every year.” (see Figure 1, p20) However, rapeseed cultivation was confronted with major challenges worldwide including control of diseases and pests; adverse climate conditions such as dryness and heat; and new breeding techniques which faced political opposition in Europe.

Rapeseed/canola: producers and neonicotinoids Canola and rapeseed belong to the cabbage or mustard family. Canola was registered in 1979 in Canada and refers to a variety of rapeseed bred through traditional plant cross-breeding to remove glucosinolates and erucic acids, considered inedible or toxic in high levels. Canola has less than 30 micromoles of glucosinolates and less than 2% erucic acid.

The leading global producers of rapeseed/canola and their approximate production are: Canada (21M tonnes); the EU (19M tonnes); China (13M tonnes) and India (6.6M tonnes), Australia (3.4M tonnes) and the Ukraine (see Figure 1, p20) In 2013, the EU severely restricted three kinds of neonicotinioid pesticides (clothianidin, thametoxam and imidacloprid) on bee-attractive crops including maize, oilseed rape and sunflower, to protect honeybees. The ban was widened to all outdoor use in May 2018.

Hubertus Paetow, president of the German Agriculture Society, said Germany’s total rapeseed acreage of 880,000ha had reached a historic low and average yields had fallen in the last five years.

“The reasons are complex. A major factor has been density of cultivation, which has encouraged pests and diseases such as clubroot. The EU’s ban of neonicotinoid weedkillers has reduced options to combat insects”.

There was resistance to alternative pyrethroid insecticides and stricter crop protection regulations were likely to come into force in the rest of world.

“New active ingredients must be developed but there are fears that the efforts required to develop new chemicals may become too burdensome for developers.”

Pest and disease

Andreas von Tiedemann of Germany’s University of Göttingen told the congress that pests and diseases were the key constraint on the productivity of rapeseed.

“We have seen declining yield trends in Europe and Australia since 1995 in spite of continuous genetic improvements (see Figure 2, p20). This is partly explained by the diverse prevalence of pests and diseases in the four global cropping regions for rapeseed.”

Chemical control was a key factor in control but compromised in Europe by the neonicotinoid ban and developing resistance to insecticides.

The university conducted a global survey of pests and diseases in the EU, Australia, Canada, China and India and identified 16 diseases and 31 insect pests, plus slugs and nematodes,

18 – OFI MARCH-SEPTEMBER 2020 ONLINE EDITION ● TO SUBSCRIBE CLICK HERE

RAPESEED mountains, with break years, he said.

Cook described how 5% of the UK rapeseed crop was lost when the EU neonicotinioid ban came into force in 2013, and how there had been a 12% reduction in UK oilseed rape since.

She advocated an integrated pest management (IPM) approach.

This included setting an action threshold when an acceptable level of pest and disease was exceeded, and monitoring plants. Prevention methods included using crop rotation, pest resistant cultivars, pheromone repellents and intercropping.

Control methods included biological control such as planting crops to attract pests away from rapeseed, the use of natural enemies such as spiders, and the use of pesticides, when necessary.

Climate challenges

affecting rapeseed.

“This is quite a remarkable list for a relatively young crop.”

Five diseases and nine pests were identified in the seedling stage; 12 diseases and 16 pests were identified in the stem elongation to flowering stage; and three diseases and four pests were identified in the mature stage.

In Europe, the most affected region in terms of pests, 16 insects were identified including the cabbage stem flea beetle, pollen beetle, cabbage seed weevil, cabbage stem weevil, rapeseed stem weevil and brassica pod midge. Major diseases included clubroot, sclerotinia, blackleg, verticillium and light leaf spot.

Chemical control and crop rotation were the main tools used to combat pest and disease. With fungal diseases, there were 16 active chemical ingredients available today, and pathogens were bound to the field, making crop rotation more effective.

“However, we are in a critical situation in terms of insect control.”

Insecticide resistance was growing, particularly in flea beetles, pollen beetles and aphids.

Crop rotation was also a blunt sword against migrating insects, depending on their life cycle and mobility.

Flea and pollen beetles, the rape stem weevil, brassica pod midge and aphids were not field-bound and could move across more than 10km, to a neighbouring farm or in natural habitats.

“The only way to manage migrating insects is to think on a landscape level.”

Crop rotation needed to be synchronised on regional scale, defined by natural boundaries such as forests and

John Kierkegaard from Australia’s Commonwealth and Scientific and Industrial Research Organisation (CSIRO), described the agronomic challenges in adapting canola into the world’s cropping systems.

Rapeseed was a valuable break crop when planted with wheat. It broke soilborne wheat pathogens and helped control weeds, with wheat seeing a 0.8 tonne/ha yield advantage as a result, he said.

Kierkegaard said Australia grew canola on 2.5M ha of land, with a yield of 1.4 tonnes/ha. It produced some 3.4M tonnes of rapeseed, exporting 80% of its crop as the number two global rapeseed exporter.

He said canola was first grown in medium rainfall areas with less heat.

However, Australian farmers were planting canola in dryer areas more dominated by cereal production, with less than 325mm of rain, as a break crop for cereals.

“You have to rethink agronomy when you move to dryer areas,” he said.

In the last five years, Australia had moved to earlier sowing systems because of climate drivers. Autumn sowing rains in May were declining. Frosts in August were more variable and unpredictable. And spring weather when canola flowered was getting hotter.

Kierkegaard said earlier sown crops could cover the ground, reduce evaporation and had deeper roots to access moisture. Experiments were carried out between 2014-2019 and, overall, risks were reduced moving to earlier sowing.

Early sowing was carried out at the start of April, compared with the old system of late April/early May, and had resulted in a yield increase of around 1 tonne/ha, with about half of leading farms in Australia already moving in this direction.

Kierkegaard said strategic tilling was also used in parts of Western Australia.

“Australia is the biggest adopter of no till farming” but faced multiple issues including a water repellent topsoil, herbicide resistant weeds, compact soil and an acid subsurface leading to poor canola establishment.

“Once the soil is disturbed, it can support much better crops,” Kierkegaard said.

In Australia’s wetter areas with rainfall above 550mm and long seasons, famers used European winter canola to provide several months of grazing for sheep and cattle on the farm.

Early sowing increased the number of grazing days, with good grazing management taking animals off the yield at the right time to prevent yield loss.

“Grazed canola is one of most profitable things farmers can do in Australia.”

Moving to other parts of the world, Australia’s phenology suited the growing of rapeseed in the lower latitudes of South America very well, Kierkegaard said.

In Brazil, rapeseed was grown on 348,710ha of land but a potential 10.8M ha was available for cultivation.

Areas in Brazil suitable to grow canola had 1,000-2,000mm of rainfall.

“The agronomic challenges in Brazil are the opposite to Australia, with high rainfall and more disease; frost at higher altitudes; and nitrogen loss due to high rainfall.

Brazil grew soyabean and maize in the summer months. In the cool season, a second maize crop could be grown but it was more sensitive to frost than canola.

In that context, fitting in canola in a short growing window, with a short cycle and blackleg resistance, had potential.

Production costs

Yelto Zimmer of Argi Benchmark compared rapeseed with other oil crops, saying that rapeseed traded at a premium of about US$50/tonne over other oils.

The application of nitrogen fertiliser was a key economic cost in rapeseed production, and was also a relevant factor in terms of greenhouse gas emissions, he said.

Australians applied about 50kg/ha of nitrogen, compared with 230kg/ha among German, Danish, French and UK farmers.

Other major production costs included seeds, other fertilisers and crop care chemicals. This totalled around US$600/ha in the EU, US$200-250 in Australia, with Canada and Ukraine in between the two.

Canola protein

Curtis Rempel, vice president, crop production and innovation, at the Canola Council of Canada, talked about increasing the value of canola meal, describing how a canola seed comprised 43% oil, 22% protein and 30% of substances with no u

19 – OFI MARCH-SEPTEMBER 2020 ONLINE EDITION ● TO SUBSCRIBE CLICK HERE

RAPESEED u value (see Figure 3, below left).

To increase the value of canola, a breeder had to increase its protein content and quality; decrease anti-nutritional compounds such as myrosinase, phytate and glucosinolates; and maintain or increase its oil content.

Literature and discussion with breeders indicated that it was possible to boost oil content to 48-50% seed oil and 27% seed protein without a yield drag, but an increase in nitrogen fertiliser was needed to achieve this.

In terms of protein content, canola meal competed with soyabean meal, selling for about 60% of soya’s price and with 75% of the protein content of soyabean meal.

Rempel said the animal feed protein market was growing at 3.3% CAGR. World poultry demand was increasing, requiring higher protein in feed, and the 2.5M tonnes aquaculture market was valued at Figure 1: International canola/rapeseed production (‘000 tonnes) US$3bn, with fish meal supply declining.

Front-end dehulling could be used to mitigate seasonal and location variability in canola protein content. Using this in combination with a high protein seed could open access to previously unobtainable markets, such as aquaculture.

Dehulled, high protein canola meal could achieve higher protein and lower levels of difficult-to-digest acid detergent fibre (ADF) than soyabean meal, he said (see Figure 4, below).

New product streams such as the use of canola proteins in food and biodegradable biocomposites for food packaging use could also add to canola’s value.

“New commercial product streams translate to $US1,500-$12,000 tonne of product value versus US$340-$500/tonne from current conventional processing.” ● Serena Lim is the editor of OFI The 16th International Rapeseed Congress will be held in Sydney, Australia Figure 2: International canola/rapeseed yield (tonnes/hectare) on 24-27 September 2023and lower ADF ● Dehulled, high protein canola meal can achieve higher protein Source: Canola Council of Canada

Source: Canola Council of Canada

25,000

Results – Comparison to Other Meals

70

● Compositional variation occurs in all meals due to variety, seasonal and location affect on growth and processing differences Crude Protein

60 50

55

ADF

61.01

51.19

48

53.81

41.25

40 30 20 10 0

16.7 10

Low Protein Soybean Meal

6

14.0 4.8

4.6

High Conventional Dehulled High Protein Dehulled High (Dehulled) Canola Conventional Canola Meal Protein Canola Protein Canola Meal Soybean Meal

Figure 4: Canola meal versus soyabean meal

20 – OFI MARCH-SEPTEMBER 2020 ONLINE EDITION ● TO SUBSCRIBE CLICK HERE

Source: Canola Council of Canada

Figure 3: What’s in a canola seed?

Weight Percent on an oil-free, dry basis

30% no value

Source: Canola Council of Canada

than soybean meal

the industryâ&#x20AC;&#x2122;s number 1 choice over 34 years covering oil crops & animal fats OFI WEEKLY NEWSLETTER OFI is the oils and fats industryâ&#x20AC;&#x2122;s trusted information provider.

The OFI Weekly Newsletter is packed full of the latest news and developments affecting the market.

Reaching over 15,000 readers, with an average open rate of over 30%, the OFI Weekly Newsletter offers the latest headlines to keep readers up-to-date on the most important industry issues driving their business.

The weekly newsletter provides banner advertising that will be placed on the screens of all readers.

Sign up today to receive your free weekly update at: www.ofimagazine.com/e-newsletter

Book your advertising with: Mark Winthrop-Wallace E-mail: markww@quartzltd.com Tel: +44 (0) 1737 855 114

Follow us on Twitter @oilsandfatsint

Join our LinkedIn group Oils & Fats International

WWW.OFIMAGAZINE.COM OFI_Newsletter_Half_Page_Print.indd 2

26/09/2018 12:19

STATISTICS STATISTICAL NEWS Palm oil futures prices

CPO settlement prices (Malaysian ringitt)

MPOC/Bursa Malaysia

The palm oil market is hopeful of India resuming purchases after Muhyiddin Yassin was sworn in as the new prime minister on 1 March, Business Recorder writes.

Former prime minister Mahathir Mohamad, whose criticisms about India have soured palm oil trade with the country, unexpectedly resigned on 24 February.

The Malaysian palm oil market has been under pressure over lost sales to India and worries about falling global demand due to the novel coronavirus (COVID-19) spreading outside of China.

The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange rose 57 ringgit, or 2.41% on 4 February, to RM2,377 (US$565.41).

EU oilseed imports

EU rapeseed, soyabean imports (M tonnes)

UFOP, EU Commission

The EU-28 has imported around 8.7M tonnes of soyabeans in the 2019/20 season to date, down some 6% year-on-year, says UFOP. The USA supplied the largest share of imports, at 52%, since the marketing year began on 1 July 2019. This was also the case in the same period in 2017/18 but both the share and total amount were considerably bigger back then, at 79% and 7.1M tonnes respectively. The lower shipments in the current season are probably mainly due to the smaller US harvest (down 20% from the previous year).

Ukraine is the top rapeseed supplier to the EU-28, at around 2.8M tonnes in the current season, becoming significantly more important as a country of origin for EU rapeseed imports.

Canadian oilseed stocks

Canadian oilseed stocks, end of 2019 (M tonnes) UFOP, Statistics Canada

Prices of selected oils (US$/tonne)

Mintec

Sept 19

Oct 19

Nov 19

Dec 19

Jan 20

Feb 20

Soyabean

746.8

753.8

748.5

826.1

857.3

772.8

Crude palm

578.2

615.1

692.2

772.5

801.6

718.7

Palm olein

541.4

573.1

648.8

720.0

728.3

656.7

Coconut

741.0

736.5

838.4

1,038.4

1,015.1

884.0

Rapeseed

881.7

888.4

872.4

918.8

935.3

870.3

Sunflower

751.2

720.3

758.9

803.9

841.4

762.7

Palm kernel

637.3

624.4

775.6

977.1

991.7

830.0

Average

697.0

702.0

762.0

865.0

882.0

785.0

Index

165.0

166.0

181.0

205.0

209.0

186.0

Statistics Canada estimates the country’s total oilseed stocks at the end of 2019 at 18.5M tonnes. This is a 4% drop year-on-year but a 3.2% increase compared to the average over the past five years.

Rapeseed – which accounts for just over three-quarters of Canadian oilseed stocks – showed a similar trend.

Stocks at 14.3M tonnes represent a 2.4% decrease from the previous year, but also a 4.9% rise from the five-year average.

Statistics Canada estimates soyabean stocks at the end of 2019 at 3.9M tonnes, down 9.4% year-on-year, but 2.7% up from the five-year mean.

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

Tel: +44 (0)1628 851313 E-mail: sales@mintecglobal.com Web: www.mintecglobal.com The Union for the Promotion of Oil and Protein Plants represents the interests of companies and associations involved in the production, processing and marketing of oil and protein plants in Germany

22 – OFI MARCH-SEPTEMBER 2020 ONLINE EDITION ● TO SUBSCRIBE CLICK HERE

A smart roller exchange technology.

Boosting equipment availability by smart engineering: Learn how the cracking mill OLCC and its revolutionary roller exchange technology is maximizing uptime and reducing labor cost.

Learn more about your benefits on our website or contact us via e-mail: www.buhlergroup.com/olcc oilseeds@buhlergroup.com

Innovations for a better world.