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News

Bunge acquires 70% stake in IOI Loders Croklaan Biofuels News

Duty cut on Argentina sparks backlash 8

Biotech News

BASF purchases Bayer seeds and herbicides in strategy shift 9

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Soya/grain terminal in São Francisco do Sul BIOFUELS

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Spanish biodiesel: From there to where?

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THE ELECTION OF DONALD TRUMP AS THE PRESIDENT OF THE USA HAS OVERHAULED SOME OF THE COUNTRY’S LONG-STANDING POLICIES. BUT WHAT DOES IT MEAN FOR AGRICULTURE, TRADE AND OILSEEDS? P18

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NEWS

COMMENT

Investing in value addition W

ith all the ongoing mergers, sales, purchases and deals that make up the oils and fats world, Bunge’s acquisition of a 70% stake in IOI Loders Croklaan is big news. For IOI, it is a chance to reduce its debts and invest in its core business areas, with IOI CEO Datuk Lee Yeow Chor telling StarBizWeek that it will use 50% of the sales proceeds to repay borrowings and 30% for working capital and future investments, which may include buying more plantation land in Malaysia or Indonesia. For Bunge, the deal is one further step in its efforts to expand its value-added operations as the world’s largest oilseed and grain traders face low commodity prices and bumper crops as they trade bulk commodities. Although rejecting an informal takeover offer in May by commodity trader Glencore, Bunge CEO Soren Schroeder said at the time that the grains industry would see a wave of consolidation as “it is very clear that there are too many trying to do the same thing with a small margin”. In July, Bunge identified growth in edible oils as a priority when it announced a US$450M cost-cutting and competitiveness programme. Edible oil blends tend to have higher and steadier profit margins and with Loders handling 1.6M tonnes of oil volume against Bunge’s 7M tonnes, the deal could double Bunge’s oil earnings. “The transaction delivers on our stated objective to expand our value-added business by accelerating our growth in B2B semispeciality and speciality oils,” says Bunge CEO Soren Schroder.

Higher margin products

According to Robert Moskow, a research analyst with Credit Suisse, Bunge’s food ingredients division had always looked like a hodgepodge of assets in disparate regions producing disparate products (tortillas in Mexico, milled corn for Kellogg;s in USA, vegetable oil in Brazil, bottled oil in Ukraine and the Walter Rau firm in Germany. “Combining Bunge’s expertise in seed oils with Loders’ tropical oils puts the focus clearly on what Bunge does best (global vegetable oil) and creates a comprehensive portfolio with stickier, higher margin speciality products,” he wrote in a 12 September report. The Loders deal follows on from Bunge’s purchase of leading Turkish olive and vegetable oil producer Ana Gida, announced in December 2016, and its acquisition of Argentinian edible oil producer Aceitera Martínex SA’s assets, announced in April. According to Asian brokerage firm UOB Kay Hian, Bunge and IOI are emulating the synergies created between the other ABCD giant, ADM, and leading Asian agribusiness group Wilmar International. ADM’s and Wilmar’s partnership, set up in 2012 to market oils and fats products in Europe, became a full joint venture last September, integrating raw materials sourcing, processing, trading and sales. UOB Kay Hian says that Loders will now be able to tap into Bunge’s presence in regions such as South America and India, where it does not currently have a footprint. As for Bunge, its presence will be diversified, particularly in Southeast Asia, where it expects its oils earnings to nearly quadruple. The deal looks like a win-win for both corporate giants. w

Bunge acquires 70% stake in IOI Loders Croklaan

S-based global agribusiness and food company Bunge Limited announced on 12 September that it is buying a 70% stake in specialty oil firm IOI Loders Croklaan in a US$946M deal that will expand Bunge’s portfolio in tropical oils. Loders, which IOI bought from Unilever in November 2002 for some US$192M, is an established player in the US$33bn semi-speciality and speciality B2B oil market with a full range of palm and tropical oilderived products and a focus on confectionery, bakery and infant nutrition applications. It posted US$1.6bn in revenue in 2016 and processes 1.6M tonnes of raw material in seven locations in North America, Europe and Malaysia, serving customers in more than 100 countries, according to The Star. Two facilities in China and Ghana are also nearing completion. Bunge said the deal would combine its upstream capabilities and existing seed oils portfolio with Loders’ high-end products from tropical oils, including palm, coconut and shea. It would also give Bunge access to Loders’ intellectual property portfolio of more than 300 patents and technical centres in Malaysia, the Netherlands and the USA, in addition to diversifying Bunge’s presence particularly in Southeast Asia, where it expected to quadruple its revenues following the acquisition. “It is expected that Loders will generate US$105M of EBITDA in 2018 on a stand-alone basis

and result in US$15M in cost synergies in year one,” Bunge said. In year three, cost synergies were expected to total US$45M through shared infrastructure and supply-chain optimisation, and revenue synergies were expected to be US$35M, for a total of US$80M annually. Schroder said in The Star report that Loders’ standalone EBITDA was projected to grow at low double digits per year over the next three years and, when integrated with Bunge, would nearly double the earnings of the company’s oils franchise. Bunge and Loders expect to close the deal within the next 12 months, subject to customary closing conditions and regulatory approvals. As part of deal, Bunge will have the right to buy the remaining interest in Loders from IOI for five years after closing. IOI Loders Croklaan is part of Malaysian conglomerate IOI Corp Bhd, which has operations in oil palm plantations, refineries and oleochemicals. It has about 207,000ha of plantation land in Malaysia and Indonesia and about 9,000ha of unplanted area. It also holds a 31.7% stake in an associate company Bumitama Agri Ltd, which has a planted area of about 120,000ha in Indonesia. IOI Corp executive director and CEO Datuk Lee Yeow Chor said IOI would remain a major supplier of sustainably produced palm oil and palm products to Loders. Loders has contributed 10% to 15% to the IOI Group’s profits in the past five years, said The Star.

Unilever buys palm oil from IOI again

lobal consumer goods giant Unilever reported on 30 August that it had resumed buying palm oil from Malaysia’s IOI Group. IOI was suspended by the the Roundtable on Sustainable Palm Oil (RSPO) in April 2016 following a year-long investigation into allegations that it had failed to protect forests and peat areas. The suspension was lifted in August 2016. “We are pleased to see the progress IOI has made so far, in particular, on third party suppliers, independent verifications and increased transparency,” Unilever said, adding that it would continue to closely monitor progress to ensure improvements continued.

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NEWS

Unilever sells South African spreads unit to Remgro A

nglo-Dutch consumer goods firm Unilever will sell its South African spreads business to South Africa-based investment holding company Remgro in exchange for acquiring Remgro’s 25.75% share in Unilever South Africa Holdings. In addition to swapping businesses, Unilever agreed to pay Remgro ZAR4.9bn (US$369M) in cash, bringing the total transaction value to ZAR11.9bn (US$896M), Unilever said in a 22 September statement. The transaction valued the spreads business at ZAR7.0bn (US$527M), which represented a 13.4 multiple of its 2016 EBITDA. Luc-Olivier Marque, executive vice president at Unilever South Africa Holding, called the company a great business that was positioned for sustainable long-term growth.

“By giving us full ownership of the business, this transaction means we are better placed to accelerate that growth while the spreads business moves on to Remgro, where it augments their current portfolio and can be sure of a great future,” said Marquet. Remgro CEO Jannie Durand believed Unilever’s spreads division – which includes the Rama, Stork, Flora and Rondo brands – was an attractive business opportunity. “This transaction is a vote of confidence in the future of South Africa, Botswana, Lesotho, Namibia and Swaziland,” Durand said. Unilever announced its plan to sell of its spreads unit in April as part of its business plan reshuffle. Meanwhile, Unilever’s Greek subsidiary Elais Unilever Hellas is planning to sell its olive oil

unit in Greece, including brands such as Elanthi, Altis and Solon, alongside an olive oil plant in the city of Piraeus, reported FoodBev Media on 29 September. Unilever was also looking to sell its Greece margarine business with the Vitam, Altis Soft and Becel brands, which are produced at its Rendi plant. “It would be ideal if both the olive oil and the margarine brands ended up in the same company,” an Elais Unilever Hellas spokesperson told the media outlet. “Greece remains a priority for Unilever and this product portfolio restructuring is expected to help improve the local company’s growth prospects while boosting focus on strategic categories and investing in new products in the local market,” the company added.

IN BRIEF

Arla expanding butter sales with Ghana subsidiary

anish food giant Arla Foods is expanding to sub-Saharan Africa with the establishment of a new subsidiary in Ghana, including a dairy products sales unit and a packaging facility. The subsidiary, based in the capital city of Accra, would supply products from Arla’s Dano range, which was also distributed in Nigeria and included products such as Arla- and Lurpak-branded butters and cheeses and powdered milk, wrote just-food on 30 August. The products were in high demand amongst Ghana’s growing urban middle class, the news website reported. “Ghana is a well-developed food market in west Africa, where Arla has a lot to offer consumers,” said Steen Hadsbjerg, Arla’s vice president of the sub-Saharan business region. “More families in the growing middle class are increasingly demanding safe and affordable nutrition. West Africa currently faces a milk deficit, which gives us an opportunity to provide dairy products that meet consumers’ needs,” he added. The new Ghanaian subsidiary, to be called Arla Foods Ltd, would manage a repackaging facility in the Tema Industrial Park, which was currently under

PHOTO: ARLA

ARLA’S GHANA SUBSIDIARY WILL SUPPLY PRODUCTS SUCH AS LURPAK BUTTER

construction and expected to become operational during September. According to Arla, the move was in line with the company’s business growth strategy, which aimed to expand its products into new markets outside the EU to improve the milk price for its 11,200 farmer-owners. Included in the growth plan was the goal of trebling Arla’s revenues from sub-Saharan Africa by 2020.

Continental buys interest in RiceBran Technologies

S food and agribusiness Continental Grain Company acquired a 16% interest in American rice bran product manufacturer RiceBran Technologies (RBT) on 14 September. The two companies had entered into a US$2.9M agreement that would see RBT sell 2.7M of its shares to Continental, RBT said in a statement. RBT president and CEO Robert Smith said he was pleased to have one of the oldest food and agri firms in the world make a significant investment in his company.

RBT produces a variety of value-added food, animal nutrition and speciality ingredient products derived from rice bran – including rice bran oil – for food and nutrition supplement manufacturers and retailers. “The RBT team has made substantial progress in the past year towards its strategic objectives, from focusing on its rice bran business to significantly strengthening its financial condition and lowering operating costs,” said Ari Gendason, senior vice president of corporate investments at Continental and a member of RBT’s board of

directors. “RBT’s stabilised rice bran and proprietary ingredient products provide better-for-you ingredients that consumers are increasingly demanding from food companies and Continental has a long history of seeking out expansion opportunities in this space, making this a good strategic fit for both companies,” he added. Continental Grain Company, now headquartered in New York, was established in Belgium in 1813 as a grain trading firm and it has since grown into one of the largest privately held companies in the world.

WORLD: Rising vegetable oil prices, alongside dairy, drove global food prices up in September, offsetting declining staple cereal grain, according to the latest Food and Agriculture Organization of the United Nations (FAO) report. The FAO Food Price Index, which is used to measure the monthly changes in international prices of a basket of food commodities, averaged at 178.4 points in September, up 0.8% from August and 4.3% year-onyear, the organisation said in a 5 October statement. The vegetable oil index was up 4.6%, due mainly to rising palm oil prices, although soya, rape and sunflower oil prices also rose, the FAO said. CANADA: Cargill is launching a grain marketing contract for canola as the first ever contract of its kind for the oilseed in Canada, the company said on 14 September. In the ProPricing programme, farmers place a percentage of their production into a contract, after which Cargill’s traders gather information from the global marketplace to analyse global prices and develop a marketing plan for the crop. The farmers receive a weekly performance update on their contracts and payments on set delivery dates. In addition to canola, soyabeans were also included on the ProPricing platform in Western Canada, alongside an expansion on the existing spring wheat contract.

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NEWS

IN BRIEF WORLD: Global speciality chemicals producer Clariant is planning to expand production capacity for its Tonsil bleaching earth at its Le Tréport site in the Normandy region of France in the fourth quarter 2017. The Le Tréport expansion was the latest in Clariant’s multimillion dollar investment programme to increase its global capacity and technical services, which recently saw the company finish an extension at its Moosburg, Germany, plant. In addition, in the second quarter of 2017, the firm brought online a state-of-the-art laboratory in Turkey, alongside a new production site in Indonesia, the company said. Clariant has also introduced five new Tonsil products, specifically targeting the reduction of the carcinogenic 3-MCPD compounds in palm and seed oils. WORLD: Belgium’s Desmet Ballestra and US R&D firm CTi have sold 38 contracts utilising CTi’s nano neutralising process, 11 of those in just the past year. “The major key accounts in the vegetable oil world have reacted positively to this new innovation, with many repeat orders, based on the benefits in the drastic reduction of chemical use and an increase in refined oil yield,” Desmet said. Desmet is the exclusive seller of the CTi nano neutralisation process following a strategic partnership between the two firms in 2010. The technology is an addon process to an existing oil refinery neutralisation system and its unique feature comprises 29 cavitation steps, which can improve oil yield and save on silica or wash water, phosphoric acid, caustic usage and steam, according to Desmet. USA: Grain handling firm Perdue AgriBusiness has opened a US$60M soyabean processing plant in Bainbridge, Pennsylvania, the state’s first large-scale commercial facility of its kind. The plant – with 1.5M bushels of storage capacity – would receive, dry, store, ship and process soyabeans from the local region, reported World Grain on 26 September.

Canada takes final step to ban trans fats in food supply

anada’s health authority Health Canada has taken the final step to ban partially hydrogenated oils (PHOs) from all foods sold and served in the country by late 2018. The ban was finalised on 15 September, when PHOs, which are the primary source of industrially produced trans fats, were added to Canada’s List of Contaminants and Other Adulterating Substances, Health Canada said in a statement on the day. The ban included both domestically produced and imported food and products, in addition to those served in restaurants and food service establishments. Canada’s Minister of Health Ginette Petitpas Taylor said the move made it easier for Canadians to choose healthier foods. “Eliminating the main source of industrially produced trans fat from the food supply is a major

accomplishment and a strong new measure that will help to protect the health of Canadians,” said Petitpas Taylor. The ban was set to come into effect on 15 September 2018 in order to give the food industry sufficient time to find suitable alternatives for PHO use. The move followed a proposal for the ban submitted by Health Canada in April, which in turn was part of the Healthy Eating Strategy launched in October 2016 by then-health minister Jane Philpott. According to Health Canada, trans fats raised ‘bad’ low density lipoprotein (LDL) cholesterol, which it said has been connected to a higher chance to develop cardiovascular ailments. Heart disease is one of the leading causes of death in Canada, claiming approximately 50,000 lives in 2012, the health authority said.

Ruchi Soya to sell full range of Patanjali Ayurved oils

eading edible oil producer and processor Ruchi Soya Industries has entered into a memorandum of understanding with edible oil producer Patanjali Ayurved to exclusively sell and distribute the full range of Patanjali’s oils in large packs. Ruchi would have exclusive rights to both the current and future ranges of Patanjali edible oils, the Hindu Business Line wrote on 28 September. The deal follows a refining and packaging deal between the two companies, which was signed in February and gave Ruchi the right to process and pack Patanjali crude edible oils as per its specifications. The February deal covered

the processing and packing of soya, sunflower and mustard oils at Ruchi’s plant in Baran, Rajasthan. Ruchi has the largest edible oil refining capacity in India, with 3.3M tonnes spread across 13 facilities, according to the Economic Times. Its leading brands include Nutrela (pictured above), Mahakosh, Sunrich,

Ruchi Star and Ruchi Gold.  Ruchi is looking at de-merging or subsidiarising its business units into separate entities as part of an internal corporate restructuring exercise to cut its spending in the face of drastically falling profits, Business Standard reported on 6 September. The spun-off businesses would operate in edible oil refining and brands, palm plantation, oilseed crushing and renewable energy. In the first quarter of 2017, Ruchi registered a net loss of 2.86bn rupees (US$44.7M), a dramatic drop from the same period in 2016, when it reported 10.3M rupees (USD$160,900) in profits. Net sales also declined by 31.14%.

Corbion acquires algae-based TerraVia for US$20M

orbion NV announced on 29 September that it had completed its acquisition of all the assets of TerraVia Holdings for approximately US$20M. “TerraVia brings us a versatile microalgae-based platform which will enable us to expand into the field of producing speciality lipids and proteins, structured fats and tailored oils,” said Corbion CEO Tjerk de Ruiter. TerraVia voluntarily filed for bankruptcy on 2 August and its operations are currently loss making. “Corbion’s more than 80 years of economically running industrial-scale fermentation plants will help us turn the TerraVia assets into profitable businesses in the coming years,” de Ruiter said. TerraVia, formerly known as Solazyme, has proprietary algae-based sugar-to-oil technology targeting food, nutrition and speciality ingredients, as well as personal care and industrial applications.

It owns the AlgaPur range of personal care oils and the AlgaWise and Thrive algae oils and butters. It also produces an algae-based docosahexaenoic (DHA) ingredient that can replace fish oil in aqua feed, which it launched in partnership with Bunge in May 2016. TerraVia operates an R&D centre and pilot facility in San Francisco, a demonstration plant in Peoria, Illinois, and an industrial scale plant in Brazil in its joint venture with Bunge. Amsterdam-based Corbion is a global market leader in lactic acid and lactic acid derivatives, and a leading company in emulsifiers, functional enzyme blends, minerals and vitamins for applications in food, home and personal care, pharmaceuticals, medical devices and bioplastics. In 2016, Corbion generated annual sales of €911.3M.

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BIOFUELS NEWS

Duty cut on Argentina sparks backlash

he EU sharply cut its import duties on Argentine biodiesel at the end of September after a World Trade Organization (WTO) ruling in Argentina’s favour last autumn. The tariffs, previously set at between 22% and 25.7%, were lowered to between 4.5% and 8.1% on 28 September, Reuters wrote. Argentina filed a complaint with the WTO after the EU set anti-dumping taxes against the country in November 2013. The EU claimed Argentine biodiesel producers were dumping fuel in Europe at unfairly low prices. The WTO ruled in Argentina’s favour in October 2016, upholding its claims that the EU measures were “protectionist” and had caused Argentina annual losses of US$1.6bn in sales. “This is what we’ve been hoping for after a four-year negotiation. Now we have high hopes that we will be able to sell biodiesel to Europe again,” Luis Zubizarreta, president of Argentina biodiesel trade group Carbio, told Reuters. Meanwhile, the EU’s 8.8-20.5% import duty on Indonesian palm oil-based biodiesel remains in place but the Southeast Asian country has a complaint pending with the WTO. European oilseed and biofuel trade

IN BRIEF EUROPE: New EU greenhouse gas (GHG) calculation methodology for biodiesel has sent producers scrambling to update their emissions data and caused uncertainty in the marketplace. According to the new rules, which came into force on 1 September, all biodiesel that contains methanol in its supply chain must carry with it calculations of the GHG saving associated with the fuel, Platts reported. The new rules would have a significant impact in countries such as Germany, where biofuel mandates were calculated based on GHG savings instead of blending volumes. SPAIN: Spanish energy company Cepsa Bioenergia has resumed production at the former Abengoa biodiesel plant in San Roque, Spain. After purchasing the plant last February for €8M (US$9.5M), Cepsa had been working on upgrading the plant to bring it back up to production capacity, El Estrecho Digital wrote on 29 August. The San Roque plant was originally established by Abengoa, but production ceased in 2015 due to the company’s financial issues.

associations have criticised the EU’s decision. The French Union of Oilseeds and Proteins Crops Producers (FOP) and the German Association for the Promotion of Oil and Protein Plants (UFOP) said on 15 September that the duties on Argentina were imposed due to unfair export practices, which gave Argentine producers a competitive advantage. “Even if the legal dispute says that EU duties were not well calculated, the trade distortive practices are still there and will lead to a slight increase of Argentine biodiesel imports in EU,” they said. FOP and UFOP also criticised the European Commission (EC)’s lack of coherent policies. “The EC cannot propose a reduction of EU production of biofuels from cultivating biomass with the motive of environmental issues at the same time as widely opening its markets to external biofuels and also to genetically modified protein meal imports.” Olivier Prost, a lawyer representing the European Biodiesel Board, said the board was preparing to launch a new challenge against Argentina by asking the EC to consider the Argentine subsidies illegal, as the WTO did not

dispute that a trade distortion existed. Elsewhere in Europe, French and German rapeseed oil producers announced a boycott on Argentine biodiesel as a protest against the country’s subsidies on biofuel exports. The move prompted Argentine president Mauricio Marci to suspend a planned purchase of four ocean patrol vessels from France. French oilseed processor Saipol, part of the Avril Group, plans to drastically reduce its biodiesel production and seed crushing starting in February 2018. The cut would affect all the company’s five esterification plants in France, in addition to crushing activities at the same sites, Saipol said in a 6 October statement. Rapeseed biodiesel production would be cut by 60% with output falling from 1.3M tonnes in 2017 to a projected 700,000 tonnes in 2018, while crushing volumes were set to fall 30% from 3.5M tonnes in 2017 to 2.5M tonnes. The company’s biodiesel sales had – in combination with production overcapacity and under-activity of its biodiesel production and crushing units – already declined significantly since the end of August.

China to mandate 10% ethanol biofuel blends by 2020

hina intends to introduce a 10% mandate for ethanol use in petrol by 2020 in an attempt to cut down its massive corn stockpiles and reduce pollution. Although mandates requiring biofuel to be blended already existed at a provincial level, this was the first time China was pushing for a targeted timeline of a national ethanol rollout, Reuters wrote on 13 September. Currently, China’s estimated corn reserve was around 200M tonnes – much of which was rapidly ageing in silos – as a result of a now discontinued stockpiling effort aimed at supporting domestic farmers.

“Experts have proposed expanding production and consumption of ethanol to balance grain supply and demand and efficiently dispose of surplus grains,” an unnamed National Energy Administration official was quoted as saying by Reuters. At the end of last year, the Chinese government said that by 2020, it wanted to double its ethanol output from the current 2.1M tonnes/year, which would make it the world’s third largest ethanol producer, although still far behind Brazil and the USA. According to Chinese state media, the government wanted to

BA, Velocys to turn waste to jet fuel

fter its previous venture fell through, British Airways (BA) is re-trying its luck with renewable aviation fuels and has partnered with Texas-headquartered renewable fuels firm Velocys to use fuel made from household waste. Under the partnership, BA would help Velocys design a series of plants that would divert hundreds of thousands of tonnes of household waste from UK landfills to produce renewable fuel, Air Transport World reported on 18 September.

The renewable fuel would reduce emissions by 60% when compared to traditional fossil aviation fuels and save 60,000 tonnes of CO2/year, contributing to BA’s goal of cutting its net emissions by 50% by 2050. The latest venture was similar to the GreenSky project BA launched with Washington-based Solena Fuels in 2010 but which never materialised. This time, however, BA said it was more likely to succeed, as Velocys was already producing waste-based biofuels in the USA.

build an ethanol production base in the country’s corn-producing northeast region. China’s current consumption of renewable fuels was reported at 3M tonnes in 2016, which translated to less than 1% of its total fuel use and placed it far behind most other developed countries, according to Reuters. The news agency reported that the government also wanted to establish large-scale domestic cellulosic biofuel production by 2025. It had also begun a probe into the possible banning of the production and sale of cars using traditional fuels in the future.

Cargill converting plant to biodiesel

argill plans to build a US$90M biodiesel plant with an annual production capacity of 272.8M litres on the plot currently occupied by its Wichita, Kansas edible oil refinery, which would transfer production elsewhere Construction on the location – adjacent to Cargill’s oilseed processing plant – was scheduled to begin in December 2017 with production projected to start in January 2019, Cargill said in a statement on 21 September.

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Biofools News.indd 1

18/10/2017 10:02

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BIOTECH NEWS

IN BRIEF CANADA: Canadian agri supply chain developer Pipeline Foods has launched its global operations, with a goal to build sustainable supply chains for non-GM and organic grains, oilseeds and food/feed ingredients. The company intended to provide professional expertise to farmers and food companies through consulting services and was looking for partners, according to World Grains on 6 September. Pipeline Foods intended to invest US$300M-US$500M in the sector over the next three to five years. USA: Researchers from American Purdue University, with Dow Agrosciences, have discovered a soyabean gene that could provide resistance to a costly fungal disease. The team found the Rps11 gene that made soya resistant against Phytohphthora sojae, a soil-borne pathogen that costs US farmers about US$250M losses each year, the university said in a 13 September statement. KOREA: Monsanto and ToolGen, a biotech firm specialising in genome editing, signed on 16 August a global licensing agreement for the use of ToolGen’s CRISPR platform to develop agri products. The license provided Monsanto with access to ToolGen’s suite of CRISPR intellectual property for use in plants to develop modified crops, Monsanto said in a statement. Monsanto and ToolGen said gene-editing technologies, such as CRISPR, offered agri researchers “significant” advantages over existing plant breeding and biotech methods. USA: Food product distributer Performance Food Group (PFG) released on 23 August a new high-performance soyabean oil that uses plant genetics developer DuPont Pioneer’s Plenish brand high-oleic soya oil as a primary ingredient. According to DuPont Pioneer, the Plenish oil was 20% lower in saturated fats than commodity oil, contained roughly 75% monounsaturated fat and had zero trans fats per serving.

BASF purchases Bayer seeds and herbicides in strategy shift G

erman chemicals business BASF has agreed to buy its compatriot Bayer’s seed and herbicide assets for €5.9bn (US$7bn) ahead of Bayer’s merger with Monsanto, for which the company is attempting to secure regulatory clearance. The asset package, which included Bayer’s LibertyLink seeds and Liberty herbicides, sold at a price more than two times higher than the original value of US$2.5bn given to them by Bayer, Reuters reported on 13 October. “With this investment, we are seizing the opportunity to acquire highly attractive assets in key row crops and markets. It will be a strategic complement to BASF’s well-established and successful crop protection business as well as to our own activities in biotechnology,” BASF chair of the board Kurt Bock said in a statement on the same day. The LibertyLink seeds, used in soya, canola and cotton farming, alongside the Liberty herbicides, had to be sold before the Bayer-Monsanto merger to satisfy regulators as they compete with Monsanto’s

Roundup Ready seeds and Roundup weed killer. The spread of Roundup-resistant weeds had become an issue in North America and as Liberty herbicides were one of the few alternatives to Monsanto’s products, regulators had stated they wanted the assets divested, Reuters said. The BASF acquisition is conditional on Bayer’s purchase of Monsanto going through, a process that is experiencing some hurdles due to the EU launching an in-depth investigation into the deal in August as it felt the divestments offered by Bayer were not sufficient. According to Reuters, BASF could also be looking at other assets, including vegetable seeds, that Bayer may be forced to divest before the merger. The purchase marked a late-stage strategy shift for BASF, which had traditionally shown little interest in the seeds business, but such an approach had made them the only major agri products firm that could not offer a full range of crop protection and seeds services, Bloomberg reported ahead of the deal on 13 September.

Canadian canola farmers concerned over pesticide ban

anadian canola producers are worried about a proposed ban of the synthetic insecticide lambda-cyhalothrin, also known as Matador. The registration of the pesticide – which is used to combat a wide range of canola pests – was re-evaluated by Health Canada’s Pest Management Regulatory Agency (PMRA) in June. Health Canada is the Canadian government’s health authority. The re-evaluation, part of the mandate to inspect all pesticides used in Canada on a cyclical basis, found that there were “potential risks of concern from dietary exposure” and proposed revoking all food and feed uses of Matador. Brian Innes, vice president of

government relations with the Canola Council of Canada (CCC), hoped PMRA would reconsider the decision. “This product in particular is quite valuable for growers in that it controls quite a wide variety of pests that attack canola. Losing it would be a serious concern for canola growers and for the industry as a whole,” Innes told Lacombe Online on 5 September. Health Canada said lambda-

cyhalothrin had “one of the broadest registered use patterns” of all insecticides of its kind in Canada. But the agency also determined that the residual amounts of lambda-cyhalothrin in food and feed were above modern limits and caused a significant enough health risk. As the ban would encompass all food uses, including imports, PMRA noted that it could cause trade conflicts between Canada and other countries In June, the agency opened a consultation period set to expire on 21 September and Innes said the CCC would be submitting its opinion for the PMRA’s consideration.

US grocery association backs labelling GM oils in food

he US Grocery Manufacturers Association (GMA) is supporting the inclusion of highly refined ingredients (HRI) – such as oils and sugars – derived from bioengineered crops in the mandatory labelling standard for genetically modified foods. The US Department of Agriculture (USDA)’s Argicultural Marketing Service (AMS) opened a public comment period in June – which ended on 25 August – on how to implement the new GMO labelling legislation introduced by ex-president Barack Obama in July 2016. In its response to the call for comments, the GMA supported the inclusion of HRI-containing products and ingredients in the disclosure standard, noting that it would improve transparency

and build consumer trust in GM crops. The inclusion would have a significant impact on the number of products that would be disclosed under the law as 90% of US corn, soyabean and beet sugar crops were bioengineered. The GMA argued that HRIs were required to be included in the rules under the law, as it called for “any bioengineered food and any food that may be bioengineered” to be labelled. Additionally, a determination that HRI were considered to be bioengineered foods would, in the association’s view, be consistent with “reasonable consumer expectations”. GMA also sought simplified compliance with the standard based on traceability instead of testing.

8 OFI – NOVEMBER/DECEMBER 2017 www.ofimagazine.com

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TRANSPORT & LOGISTICS NEWS

Soya/grain terminal in São Francisco do Sul

hina Communications Construction Co Ltd (CCCC) – China’s largest port construction and dredging company – is expected to sign a deal on 31 December to build a grain handling terminal in the southern Brazilian state of Santa Catarina, the China Daily reported on 5 September. The Terminal Graneleiro da Babitonga is located at São Francisco do Sul port, at the entrance to Babitonga Bay. The project was developed by CCCC’s unit in South America and Brazil’s Anessa fund, the port’s current controlling shareholder, the China

Record shipping

anadian grain handler Viterra has shipped 7M tonnes in bulk grain exports from South Australia during the 2016-17 season, the largest shipped total in five years. The company shipped most of the grain – 2.3M tonnes – through the Port of Lincoln, with the Outer Harbor following at second place with 1.8M tonnes, wrote World Grain on 26 September. Viterra stores and handles wheat, barley, canola and pulses in Australia with a total storage capacity of over 10M tonnes. It is part of global agribusiness trader Glencore Agriculture.

Daily said. CCCC would take charge of the port’s operations. Located in the populous southeastern area of Brazil, the Santa Catarina coast serves the major soya production states of Paraná and Rio Grande do Sul. According to a state website, there are three maritime ports along the Santa Catarina coast: Itajaí, São Francisco do Sul and Imbituba. Combined, the ports handle some 14M tonnes/ year of cargo and there are regular shipping lines between Santa Catarina and major world ports.

The port of São Francisco do Sul is Santa Catarina’s main grain handling port and mostly handles exports, including soyabeans, soya meal, grains, furniture, motor compressors and electric motors. It is located on the northern tip of Santa Catarina state, near the border with the Paraná state, 215km north of the Santa Catarina capital of Florianópolis and 580km south of São Paulo. São Francisco do Sul handles approximately 8M tonnes/year of cargo and the port can receive vessels of up to 12m draft.

AP Moller sells Maersk Tankers AS

IN BRIEF

anish business conglomerate AP Moller Holding-Maersk AS announced on 20 September that it agreed to sell Maersk Tankers to APMH Invest AS, a subsidiary of AP Moller Holding AS, for US$1.171bn. The transaction includes a market upside provision regulating total payment should the product tanker market significantly improve with a rebound in vessel values before the end of 2019. The sale’s proceeds will be used to reduce debt. Maersk Tankers owns and operates one of the largest product tanker fleets in the world, with vessels in the long-range, mediumrange, intermediate, Handy and Aframax segments of the markets. Its Handy fleet covers clean and dirty petroleum products as well as chemicals and vegetable oils. AP Moller Holding is the investment arm of the AP Moller Foundation. It said it would set up a separate ownership consortium for the Maersk Tankers fleet with leading Japanese trading company Mitsui & Co and other potential parnters.

USA: Lansing Trade Group’s purchase of all the grain and feed ingredient trading units and associated assets of Interstate Commodities Inc is expected to close in the third quarter of this year. The deal was first announced on 20 June. Lansing trades grains across North and South America, Asia, Europe and North Africa by truck, rail, barge, container and bulk shipments including corn, wheat and soyabeans. It trades food and feed-grade soyabeans and non-GM soyabeans in the USA, Canada and Asia. Interstate also trades in corn and soyabeans.

GrainsConnect Canada building fourth terminal

rainsConnect Canada is planning to build its fourth independent, high throughput grain terminal in Huxley, 120km northeast of Calgary, Alberta. The 35,000 tonnes terminal – with an expected completion date of 2019 – will be able to load 134 rail cars in under 14 hours. Canadian National Railway will serve the terminal, bringing grain across GrainsConnect’s network to export gateways.

All analyses are performed using state-of-the-art instruments and technology to ensure the lowest detection limits.

The Huxley terminal is the company’s second site announcement this year. In February, it announced it was building its third terminal in Vegreville, Alberta, due to become operational in 2018. It also has terminals in Maymont, Saskatchewan, due to open later this year 2017; and Reford, Saskatchewan, due to come on line in mid 2018. GrainsConnect Canada is a

joint venture between Australia’s GrainCorp and Zen-Noh Grain Corp, the US subsidiary of Japanese agricultural cooperative Zen-Noh. Zen-Noh Grain Corp exports US corn and soyabeans to Japan and other markets. GrainCorp is an international agribusiness with operations in Australia, China, Europe, the UK and USA. It handles, markets and processes grains, oilseeds and edible oils in Australia.

THE NETHERLANDS: Robert Guijs, Edwin Dominicus and Sidney Snijders will be the new commercial team of Koole Terminals following the recent retirement of Rob Valkenburg. Valkenburg saw the company grow from some 400,000m3 storage capacity in Pernis and Nijmegen to a company offering over 2.5Mm3 today handling bulk liquid products when Koole acquired the two terminals in 1999 from Royal Pakhoed.

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

IN BRIEF THE NETHERLANDS: Akzo Nobel’s Specialty Chemicals business and Itaconix Plc signed an agreement on 5 September to develop bio-based chelates for use in consumer and industrial detergents and cleaners. The move is the second partnership stemming from an agreement signed by the firms earlier this year to develop and commercialise sustainable products made from renewable feedstocks using Itaconix technology. “Bio-based chelates are replacements for phosphates, which are being phased out due to environmental concerns,” said Peter Kuijpers, general manager of chelates and micronutrients at AkzoNobel. Itaconix produces specialty polymers from itaconic acid for the industrial, home care and personal care markets. Its polymers can also be used to encapsulate sensitive ingredients that are used in everyday products including bleach actives and fragrances. SLOVAKIA: Slovakia’s largest bioethanol producer Enviral has signed a license agreement to use Clariant’s Sunliquid cellulosic ethanol technology to realise full-scale commercial production of cellulosic ethanol from agricultural residues, Ethanol Producer magazine reported on 18 September. The new plant will be integrated into the existing facilities of Enviral’s Leopoldov site with a production capacity of 50,000 tonnes/year. It will use the Sunliquid technology and starter cultures from Clariant’s enzyme and yeast platforms. The speciality chemical firm said this was its first license deal for Sunliquid and as a further step in commercialisation, it was also setting up a new biofuels business line, as part of its catalysis business area. Sunliquid offers chemicalfree pre-treatment of feedstock, a small percentage of which is used for enzyme production, which takes place on-site at an ethanol plant. A bespoke enzyme mixture hydrolyses cellulose and hemicellulose chains to form sugar monomers and the one-pot system simultaneously converts C5 and C6 sugars to ethanol.

Sinar Mas Cepsa starts up production of fatty alcohols

inar Mas Cepsa started operations on 14 September at its first oleochemicals plant in Indonesia, which will produce fatty alcohols and fatty acids from sustainably sourced palm kernel oil (PKO). The wholly-owned joint venture between Spain’s Cepsa and Indonesia’s Golden Agri-Resources (GAR) invested €300M (US$350M) over two years in the plant. Cepsa is a multinational oil and gas company and a leader in the production of linear alkylbenzene (LAB) used to make biodegradable detergents. GAR is part of Indonesian consortium Sinar Mas and is the world’s second largest vertically-integrated palm oil company. The Dumai, Sumatra, plant (pictured above) has a production capacity of 160,000 tonnes/year of fatty alcohol. GAR’s Lubuck Gaung refinery, which is certified by the Roundtable on Sustainable Palm Oil and located nearby, will supply the plant with sustainable, traceable PKO. “Vegetable-based alcohols, rather than conventional petroleum derivatives, are increasingly in demand as a raw material for personal care products and liquid detergents,” Cepsa said. The plant would primarily focus on markets in Asia and service demand from Sinar Mas Cepsa’s

surfactant plant in Germany, which supplies markets in eastern and western Europe. “The global market for fatty alcohols is predicted to expand to 4.1M tonnes by 2025, up from 3.1M tonnes in 2016, demonstrating a five-year compound annual growth rate (CAGR) of 3.5%,” Cepsa said. “Of this, a bulk of the revenue generated will come from Asia, which currently commands over 40% of overall demand.” GAR chairman and CEO Franky Widjaja said the joint venture was created with a mutual vision to develop a global leading position in fatty alcohols and its derivatives. “The launch of the Dumai plant is a critical step in achieving this vision.” Sinar Mas Cepsa CEO Kung Chee Whan said the Dumai launch marked the second plant of the joint venture’s partnership. “Having already secured a foothold in Europe through the acquisition of our surfactant plant in Germany in 2015, we will definitely look into further downstream projects or expansion capacity in this part of the world.” Cepsa CEO Pedro Miró said Cepsa’s chemicals business was a key part of the company’s growth strategy. The energy firm had developed a chemicals division closely integrated with its refining business that produced the raw materials for high value-added products, principally used to make next generation plastics and biodegradable detergents. GAR has a planted area of more than 480,000ha (including smallholders) in Indonesia. It grows and harvests oil palm trees; processes fresh fruit bunches into crude palm oil (CPO) and palm kernel oil; and merchandises and refines CPO into valueadded products such as cooking oil, margarine and shortening. It also has operations in China and India including a deep sea port, oilseed crushing plants, production facilities for refined edible oil products as well as other food products such as noodles.

Canola oil polymer used to tackle mercury pollution

cientists at Australia’s Flinders University have devised a polymer made from canola oil and sulphur to remove mercury from soil, water and air. The researchers have shown that the new polymer can trap the most dangerous and common types of mercury pollution – mercury metal, mercury vapour and highly toxic organo-mercury compounds – according to the university website. “With the Minamata Convention on Mercury coming into force on 16 August, this discovery is an important advance in protecting the environment and human health,” said Justin Chalker, senior lecturer in synthetic chemistry at Flinders University.

The researchers combined used cooking oil and sulphur – a common, low-cost byproduct from petroleum production – to produce the new polymer. After absorbing mercury pollution, the rubber-like polymer changes colour from brown to black to indicate the job is done. Dr Chalker said the material was being tested at mining sites and areas where mercury-based fungicides were used. “Mercury is encountered in several industrial activities including oil and gas refining and coal combustion,” he says. “Alarmingly, mercury and mercury-containing materials are still used intentionally at many chloralkali plants and in artisanal gold mining. Additionally, mercury-

based fungicides are still used in certain agricultural sectors. “Because our mercurycapturing material is made from waste, our goal is to provide a cost-effective and technically simple material for cleaning up mercury pollution.” The mercury-binding polymer is licensed for sale to Kerafast, a US-based reagent company. The Flinders University team is also raising funds to develop a pilot reactor and production plant in South Australia. “There are other materials you can buy now, such as activated carbon, but we think that our material will be far cheaper, safer and can be produced on the same scale as these materials,” Chalker told Food Navigator.

10 OFI – NOVEMBER/DECEMBER 2017 www.ofimagazine.com

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DIARY OF EVEN TS

1-3 NOVEMBER 2017

30 OCTOBER 2017 9 International Symposium on Deep-Fat Frying VENUE: Crowne Plaza Shanghai Pudong Shanghai, China CONTACT: Chinese Cereals and Oils Association; Tel: +86 106 835 7511 E-mail: wcf@ccoaonline.com Website: www.eurofedlipid.org/meetings/ shanghai2017 th

13 Indonesian Palm Oil Conference (IPOC) and 2018 Price Outlook VENUE: Bali Nusa Dua Convention Center, Indonesia CONTACT: IPOC Secretatiat, Indonesia Tel: +62 21 57943852 E-mail: info@gapkiconference.org Website: www.gapkiconference.org th

14-16 NOVEMBER 2017 MPOB International Palm Oil Congress and Exhibition (PIPOC 2017) VENUE: Kuala Lumpur Convention Centre, Malaysia CONTACT: Malaysian Palm Oil Board Tel: + 603 8769 4570 E-mail: pipoc2017@mpob.gov.my Website: www.pipoc.mpob.gov.my

8-9 NOVEMBER 2017

31 OCTOBER 2017 FOSFA Annual Dinner VENUE: Hilton Antwerp Old Town, Belgium CONTACT: FOSFA International, UK Tel: +44 207 374 2346 E-mail: gemma.hale@fosfa.org Website: www.fosfa.org

31 OCT - 1 NOV 2017 Bulk Terminals 2017 VENUE: London, UK CONTACT: Association of Bulk Terminal Operators Tel: +33 321 477219 E-mail: events@bulkterminals.org Website: www.bulkterminals.org/events.html

Sustainable Cleaning Products Summit VENUE: Paris, France CONTACT: Ecovia Intelligence, UK Tel: +44 208 567 0788 E-mail: services@ecoviaint.com Website: www.sustainablecleaningsummit.com

9-10 NOVEMBER 2017 7th ICIS Asian Surfactants Conference VENUE: Parkroyal on Pickering, Singapore CONTACT: ICIS, UK Tel: +44 20 8652 4659 E-mail: events.registration@icis.com Website: www.icisconference.com/ asiansurfactants17

PIPOC 2017 celebrates 100 years of palm oil production in Malaysia T he world’s largest palm oil gathering this year -- the MPOB International Palm Oil Congress and Exhibition (PIPOC) 2017 -- will be held on 14-16 November at the Kuala Lumpur Convention Centre, Malaysia. PIPOC 2017, a biennial global scientific and trade gathering organised by the Malaysian Palm Oil Board (MPOB), is set to attract more than 8,000 participants. Trade visitors from more than 50 countries include business decision makers, top executives, policy makers, as well as researchers, planters, economists and traders in oils and fats. A trade exhibition with more than 340 booths will be part of PIPOC 2017 to enable delegates to network and update themselves on the latest products, technological innovations and services related to the palm oil as well as the global oils and fats industries. “The Malaysian oil palm industry celebrates its 100th year anniversary this year, and we have tailored PIPOC 2017 to reminisce on the industry’s achievements as well as to chart its future direction. “To commemorate achievements in the one century of oil palm cultivation in Malaysia, the MPOB will organise a special evening forum on the first day of PIPOC 2017,” says MPOB director-general Ahmad Kushairi Din. The theme for PIPOC 2017, ‘Treasuring

the Past, Charting the Future’, is timely and reflects an emphasis on the vital aspects of oil palm research and development, crucial in the 21st century, he adds. PIPOC 2017 will have five concurrent conferences to provide a strategic platform on the many facets of the palm oil industry. These include upstream, midstream, downstream, economics and marketing, as well as future trends. The conferences will unveil the latest data and developments related to oil palm science, health and nutrition and economic outlook for the crop with the aim of improving the sector as well as discuss new strategies. There will be several technical tours to selected destinations for interested delegates. The visits will be held one day before the event on 13 November, at locations including a palm oil plantation, a biogas plant and the MPOB research station in Pahang.

15 NOVEMBER 2017 12 China International Oil and Oilseeds Conference VENUE: Shangri-La Hotel, Guangzhou, China CONTACT: Dalian Commodity Exchange (DCE) China Tel: +86 411 848 086 98 E-mail: cydh@dce.com.cn Website: www.dce.com/cn/cioc th

17-18 NOVEMBER 2017 PORAM Annual Forum, Dinner, Golf Challenge VENUE: One World Hotel, Kuala Lumpur Malaysia CONTACT: The Palm Oil Refiners Association of Malaysia (PORAM) Tel: +603 7492 0006 E-mail: info@poram.org.my Website: www.poram.org.my/p/

23 NOVEMBER 2017 European Palm Oil Conference (EPOC) 2017 VENUE: Solvay Library, Brussels, Belgium CONTACT: Jolanda van Roon, European Palm Oil Alliance E-mail: roon@palmoilalliance.eu Website: www.palmoilandfood.eu/en/event/ european-palm-oil-conference-2017

27-30 NOVEMBER 2017 15th Annual Roundtable Meeting on Sustainable Palm Oil VENUE: Grand Hyatt Bali, Indonesia CONTACT: Roundtable on Sustainable Palm Oil, Indonesia Tel: +603 7727 8458 E-mail: rt@rspo.org Website: www.rt.rspo.org

7-8 DECEMBER 2017 Fats & Oils Istanbul/Feeds & Grains Istanbul 2017 VENUE: InterContinental Istanbul Hotel, Turkey CONTACT: Agripro, Turkey Tel: +90 212 236 0345 E-mail: info@fatsandoilsistanbul.com.tr Website: www.fatsandoilsistanbul.com.tr

12 OFI – NOVEMBER/DECEMBER 2017 www.ofimagazine.com

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DI ARY O F E V E NT S

www.dsengineers.com

7-9 DECEMBER 2017 XX Lipid Meeting Leipzig VENUE: Salles de Pologne, Leipzig, Germany CONTACT: event lab GmbH, Germany Tel: +49 341 240 596 94; E-mail: tgrosser@eventlab.org Website: www.lipidmeeting.de

10-12 DECEMBER 2017 ISDC International Conference on Soaps, Detergents & Cosmetics 2017 VENUE: Hotel Marriott, Goa, India CONTACT: Conference Secretariat IHPCIA, India Tel: +91 22 2877 1857; E-mail: ihpcia@ihpcia.org Website: www.isdcconference.org

11-12 DECEMBER 2017 3 International Conference on Lipid Science & Technology VENUE: Holiday Inn Rome Aurelia, Rome, Italy CONTACT: ConferenceSeries, USA E-mail: lipids@biochemconferences.org Website: www.lipids.conferenceseries.com rd

16-17 JANUARY 2018 6th ICIS Asian Oleochemicals Conference VENUE: Kuala Lumpur, Malaysia CONTACT: ICIS, UK Tel: +44 20 8652 3887; E-mail: Events.Registration@icis.com Website: www.icisconference.com/asianoleo18

22-23 JANUARY 2018 Fuels of the Future 2018 VENUE: CityCube Berlin, Germany CONTACT: Markus Hartmann, German Bioenergy Association (BBE) Tel: +49 228 81002-22 E-mail: hartmann@bioenergie.de Website: www.fuels-of-the-future.com

25-26 JANUARY 2018 Lipids & Cosmetics VENUE: Bordeaux, France CONTACT: Soline Godet, Cosmetic Valley France E-mail: sgodet@cosmetic-valley.com Website: www.lipidscosmetics.sciencesconf.org

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

2 FEBRUARY 2018 IPPE International Rendering Symposium VENUE: Georgia World Congress Center, Atlanta, USA CONTACT: National Renderers Assocation, USA Tel: +1 703 683 0155; E-mail: renderers@nationalrenderers.com Website: www.ippe18.mapyourshow.com/7_0/sessions/session-details. cfm?ScheduleID=18

5-6 FEBRUARY 2018 International Symposium on Sunflower and Climate Change VENUE: Hôtel-Dieu Saint-Jacques, Toulouse, France CONTACT: INRA Toulouse, France E-mail: sunflower-symposium2018@inra.fr Website: www.symposium.inra.fr/sunflower-2018 13 OFI – www.ofimagazine.com

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Blazing the rail through Brazil

THE NEW FERROGRÃO RAILWAY WOULD EXPAND ON BRAZIL’S RAIL INFRASTRUCTURE

Brazilian soyabean farmers are expected to harvest a recordbreaking 103M tonne crop this year, but they face the problem of transporting their beans both cost-efﬁciently and in an environmentally friendly way to ravenous buyers in China and elsewhere. A consortium led by a Brazilian logistics infrastructure company aims to alleviate the issue with the construction of a new railway connecting the country’s two largest soya producing states with the Amazon river. Ile Kauppila writes

razil is currently the world’s second largest producer of soyabeans, but it is fast catching up to the USA, the current champion. The South American agri giant’s 2016/2017 harvest is expected to yield a record 103M tonnes of soyabeans, which is just narrowly behind the projected US harvest of 103.4M tonnes. If the upwards production trend continues, Brazil may overtake the USA as the top soya grower. However, with the immense amounts of beans being grown comes the question of what to do with them. It is doubtful the farmers themselves have the facilities needed to store such a massive crop. Luckily for them, China is eyeing Brazil with increasing interest. It is already China’s largest grain supplier and China is intent on increasing its investments in the country. Additionally, China has been on such a largescale soyabean import spree that some of its ports have run out of storage space. Still, additional difficulties exist, namely with getting the beans to shipping terminals to make the overseas trip to Chinese buyers. The country’s largest producer of soyabeans, Mato Grosso, is landlocked in west Brazil, yet the state’s soya output is equal to a third of Brazil’s entire production, according to data from Brazilian supply company CONAD.

One of the ports to which soya from Mato Grosso currently finds its way to is the Port of Miritituba, located north of Mato Grosso in the state of Pará. Sitting on the Tapajós River, Miritituba provides access to the Atlantic through the Amazon. Soyabean and corn are already being moved to the port by truck along the BR-163 highway, but this transportation method brings its own issues. To begin with, the BR-163 was called by Reuters a “troublesome” road. Long stretches of the highway remain unpaved and, during rainy seasons, they may become nearly impassable with mud. Additionally, road transport is expensive and the Chinese government, among others, is pushing the companies active in Brazil to come up with more efficient and cheaper logistics.

The railway plan One solution to the problem of the troublesome road began forming in early 2014 when Brazilian logistics infrastructure company Estação de Liz Participações (EDLP) submitted a request to the Brazilian federal government to carry out feasibility studies to build a new freight railroad to connect Mato Grosso and Pará. The Ferrogrão railway is poised to run along the BR-163 for approximately 1,000km from the city of Lucas do Rio Verde in Mato Grosso to the Port of v

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T RAN SPOR T & LOGISTIC S

v Miritituba in Pará. The Investment Partnership Program (PPI) of the Brazilian government estimates that railway cargo demand on Ferrogrão would reach 25M tonnes by 2020, eventually reaching a maximum capacity of 42.3M tonnes in 2050. The estimated time frame for the possible concession is 65 years. Constructing the railway would be a large-scale undertaking as it will have to be built from scratch, which is set bring up the cost of the project to BRL12.6bn (nearly US$4bn), which includes – according to the PPI – earthmoving, waterway structures and drainage, railway superstructure, complementary construction, environmental compensation and much more. However, the final budget has not been drafted yet, and the BRL12.6bn price tag is based on 2015 estimates. All in all, the project is expected to generate 6,720 direct jobs. The Ministry of Transport, Ports and Civil Aviation carried out an expression of interest procedure (PMI) on the railway project between 2014 and 2015, determining that it would be of “undisputable strategic value” for the Brazilian economy. According to the PPI, it would address the expansion of Brazil’s agricultural frontier and the demand for an integrated infrastructure for cargo transport, producing great socio-economic benefits for the two states. In addition to the federal approval, the railway project has local political support. The Soybean and Corn Advisor reported in August 2016 that Pedro Taques, governor of Mato Grosso met with government officials, including the Brazilian Minister of Transportation, to press for funding for three railroad projects, including the Ferrogrão. The Ferrogrão would, according to Taques, have the largest economic impact of the projects, as it would reduce transportation costs by including barging the transported crops at Miritituba. At the moment, Ferrogrão is undergoing an environmental evaluation, which business intelligence firm BNamericas projects will be completed by the end of the year. The planned route for the railway would run through the Jamanxim National Forest in Pará. However, according to the PPI, the area had already been impacted by the BR-163 and therefore the agency does not expect there to be a challenge for the railway. “Even so, the area strictly reached by the railroad was decharacterised in order to avoid the risk of questions as to the locational viability of the venture,” PPI says in its overview of the Ferrogrão project.

Big benefits Ferrogrão is poised to bring several benefits to the Mato Grosso-Pará region. Among the most obvious is the intended reduction in road traffic. According to estimates by EDLP, Ferrogrão will cut highway freight transport by 50%. The PPI said Ferrogrão will “ease traffic conditions on [BR-163], reducing the flow of heavy trucks transporting grain and lowering the costs of preservation and maintenance for the existing highway infrastructure”. While no precise estimates about the associated transport cost and emissions cuts were available, there should be clear savings in both, in addition to faster delivery times.

FIGURE 1: SUGGESTED ROUTE OF THE FERROGRÃO RAILWAY

The railway would also open a new export route for soyabeans and corn in Brazil. According to PPI data, more than 70% of crops from Mato Grosso are exported either through the Port of Santos in the state of São Paulo or Paranaguá Port in the state of Paraná, both in southern Brazil and more than 2,000km from the origin. Ferrogrão could cut this distance by more than a half. Farmland investment company Veritas Agro said Ferrogrão would bring added value to both the cities in Mato Grosso along the railroad and the surrounding farmlands. The liquidity of the farmland is projected to increase and the railroad would bring with it additional infrastructure investment. “In a period of five to six years, the average valorisation of the farmlands is 150% and in one decade about 300%,” says Veritas Agro. Additionally, the firm projects that Ferrogrão will see degraded pasture lands in Mato Grosso converted into productive farms. “The construction of Ferrogrão railway will provide to agri investors the highest rentability ever seen on short-term conditions. In addition, at the beginning of its construction in 2019, the demand

for farmlands near the railway will be gigantic. We are convinced this is an opportunity to triple or even quadruple investor capital by 2023,” Veritas Agro says. PPI also notes that several investments were already being carried out in transhipment cargo terminal on waterways and port terminals, with some equipment already operating. The agency estimates that by the end of the decade, investment in building transfer stations, warehouses, terminals and vessels could reach more than BRL3bn (US$950M). It also expects soyabean oil, fertilisers, sugar, ethanol and petroleum derivatives to eventually benefit from the railway.

The Pirarara consortium The Brazilian government is expected to open bidding on Ferrogrão in the second half of 2017 (at the time of writing bidding was not yet open). According to Brazilian financial and strategy advisory BFCapital, the top contender for the project is EDLP – which filed the original 2014 feasibility study request – and its Pirirara consortium, named after a species of catfish commonly found in the

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Amazon river. In addition to EDLP, the consortium includes agribusiness giants Amaggi, Bunge, Cargill and Louis Dreyfus Commodities. In May, BFCapital reported on an unnamed American fund that was interested in joining the consortium and to invest up to 12% of the total costs of Ferrogrão, although further reports on the negotiations are not available. Valor Econônomico also reported at the end of June that USA-based multinational General Electric was in talks to join the consortium with an offer of paying up to 8% of the project costs. However, the Pirarara group at the time denied the negotiations. The consortium is looking for additional partners, as it would – according to Valor – provide no more than 40% of the required BRL12.6bn. “It is a good business,” EDLP president Guilherme Quintella told BFCapital, “but the trading companies’ capital is for regular operations, not for capital expenditures.” Ideally, the Pirarara group wants to attract a partner familiar with rail engineering to handle the construction. “No one in Brazil knows how to build railways. Some understand the operation of parts, not the whole,” Quintella says.

International interest It therefore seems the Ferrogrão project is set to become an international one out of necessity. This is reflected in the other possible bidders. The Pirarara consortium is by no means alone, and other interested parties have emerged worldwide.

“Ferrogrão will provide to investors the highest rentability ever seen on short-term condition” China – as mentioned – is one of the countries that wants a slice of the figurative Ferrogrão pie. The China Railway Construction Company, one of the largest railroad construction firms in the world, had in August 2016 completed a preliminary feasibility study on Ferrogrão. Chinese conglomerate Shanghai Pengxin Group also announced in October 2016 that it was interested in participating in the tender for Ferrogrão. Shanghai Pengxin chair Jhing Zhaobai told the Planalto website that the company was planning increased investment in Brazil and that new economic conditions in the country made those investments in agriculture, logistics and grain export infrastructure possible.

tankstorage, maritime shipping, blending, multimodal shift, inland shipping, overland transport

Zhaobai is also the president of China’s Industrial Confederation, which, according to Brazilian Minister of Agriculture, Livestock and Supply Blairo Maggi, could attract even more Chinese businesses to the project. In addition, RailwayPro reported in April that “major operators” in Russia and Spain had also expressed their interest in the upcoming Brazilian railways.

Open doors All in all, there seems to be little standing in the way of Ferrogrão. The Amazon area is relatively well protected environmentally, but the existence of BR163 in Jamanxim could indicate that the national forest will not end up being a problem. More clarification on the matter will come by the end of the year as the environmental evaluation concludes. Instead, the admittedly enormous funding requirements are more likely to become an obstacle. The Brazilian Development Bank (BNDES) has, according to Veritas Agro, agreed to finance 70% of Ferrogrão, but with projects this size, small setbacks can cause large waves. However, there appears to be a well-established international interest in the project. The Brazilian government is expected to open a public hearing on the project at the end of September, which should shed more light on the upcoming bidding competition. For the time being, the question about Ferrogrão seems to be not whether the project goes ahead, but who will be building it. w Ile Kauppila is the assistant editor at Oils & Fats International

food, biodiesel, base oil, oleochemicals, mineral specialties, non-hazardous chemicals fuel oil, gasoline, gasoline components, ethanol, methanol, gasoil, gasoil components

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USA

The land of fr The election of Donald Trump has changed the US political landscape both domestically and globally. As the country adopts new policies in trade and with the ongoing NAFTA talks, its farmers are finding themselves in a potentially precarious position. Ile Kauppila writes

uch has changed in the USA in the last 12 months. Looking back just to 2016, the USA was a reliable trade partner for many countries in the world. It had just signed the Paris climate agreement and the Trans-Pacific Partnership (TPP) deal with a multitude of Asian countries. Now, the country is out of both agreements and has become an unpredictable – some would say even unstable – player in world politics. The instigator behind this extraordinary shift in the world’s political balance is one man, who does not need naming. While reality is not this straightforward, it is undeniable that the surprise election of Donald Trump as the president of the USA on 8 November 2016 has taken the country down paths few could have foreseen. A lot has been written about his first eight months in office and a lot will keep being written as Trump has proven himself to be perhaps the most controversial US president in history. However, the oils and fats industry is undoubtedly more interested in how this new regime will affect its business, rather than the ongoing controversies. Trump promised on the campaign trail in 2016 to

make America great again and he has begun to pursue his vision with gusto. But what place do oils and fats – and more generally, agriculture – hold in Trump’s brave new America?

opportunity for biodiesel, which reduces costs, provides economic benefits and results in lower prices at the pump,” said National Biodiesel Board’s vice president of federal affairs Anne Steckel.

Starting with biofuels

Bye bye, Pacific

Trump’s agri agenda began on 19 January with the nomination of former Georgia governor Sonny Perdue as the head of the US Department of Agriculture (USDA). During his Senate hearings, Purdue vowed to make “farmers and Americans living in rural America” his priority and to pursue bi-partisan solutions to agricultural issues, reported the Washington Post in March. The US agri industry for the most part said they were looking forward to working with Perdue, although there were some voices in the biofuels business who were uneasy about there being no clearly pro-Renewable Fuel Standard (RFS) nominations in Trump’s cabinet. Trump did speak positively about biofuels, particularly ethanol, on several occasions during his presidential campaign, and his administration voiced its support for the ethanol industry in February. However, no specifics on what exactly the government was planning to do were released. On 5 July, the Environmental Protection Agency (EPA) released its proposals for 2018 renewable volume obligations (RVO) under the RFS. The proposal ended up lowering the total amount of renewable fuels to be blended into the US fuel supply. Reaction from the biofuels industry was mixed. Ethanol producers were happy that their blending targets were maintained, while the biodiesel industry felt the proposal was a “missed opportunity”. “This proposal continues to underestimate the ability of the biomass-based diesel industry to meet the volumes of the RFS programme. This is a missed

One can hardly blame (at least parts of) the biofuels industry for staying on their toes. After all, China – almost as a welcome present to the then newly sworn in president – slapped increased tariffs on US ethanol and dried distillers grain (DDG) imports. The East Asian juggernaut’s Ministry of Commerce raised an anti-dumping tax on DDG imports to between 42.2% and 53.7% and an anti-subsidy tax up to 12%. China is the world’s largest importer of DDGs to fuel its massive need for animal feed and, together, the increased taxes “effectively closed” the Chinese animal feed market to US producers, Marquis Energy said in a January statement. “These tariffs are the poster child of bad trade deals,” says Mark Marquis, the company’s CEO. “It is our opinion that the Chinese calculations are not in line with World Trade Organization (WTO) trade rules.” On the subject of bad trade deals – one of Trump’s favourite topics – a bigger bomb dropped in January as well. After only a few days in the office, Trump on 23 January signed an executive order that pulled the USA out of the TPP, brokered by his predecessor Barack Obama. Trump railed against the deal on several occasions during his campaign and abandoning it was widely seen as the first sign of his ‘America First’ policy. According to Trump, wrote the New York Times, leaving the agreement would protect American workers against competition in low-wage countries such as Malaysia and Vietnam. “We’re going to stop the ridiculous trade deals that have taken everybody out of our country and

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f free trade? taken companies out of our country, and it’s going to be reversed,” Trump said upon signing the order. He added that the USA would, from now on, only sign bilateral trade deals with individual countries. “I think you’re going to have a lot of companies come back to our country,” he said. US farmers, however, were much less enthusiastic about scrapping TPP. The agreement’s signatory countries – including Australia, Canada, Japan, Mexico, New Zealand and Vietnam, among others – purchase more than 40% of US agriculture exports, valued at US$63bn according to the US Department of Agriculture (USDA). Data cited by MarketWatch suggested that some farmer groups estimated the TPP would have brought an addition US$4.4bn to the US agriculture market. “It is critical that the new administration begins work immediately to do all it can to develop new markets for US agricultural goods,” said Zippy Duvall, president of the American Farm Bureau Federation.

Big trouble in China Now, left with no trade agreement, some of the East Asian countries that depended on US exports could start looking elsewhere for their trade. Options are scarce in the region and experts are now concerned that the move could drive agri business away from the USA and into China. Not only would such moves make China a much more powerful player in Asia, it could also cause issues for US trade with the country. While China is not part of the TPP, the trade relationship between the two global giants is not exactly on steady ground. Trump has made no secret of his distaste for China, which he has blamed for a slew of things, ranging from manipulating currencies and stealing US jobs to his famous claim of the country coming up with the “hoax” that is global warming.

Trump has talked tough on China, threatening the country with punitive tariffs, and there has even been talk of a full-blown trade war erupting between the two countries. China bought US$20.2bn worth of US agricultural imports in 2015, so such an event would have devastating effects on the USA’s agri sector. Two-thirds of that total was soyabeans, says the USDA. China is the world’s largest soyabean importer – it alone accounts for 60% of global trade, according to Rabobank data. The country imports approximately 86M tonnes of soyabeans annually, out of which 39.5% or 34M tonnes come from the US, second only to Brazil’s 52.M tonnes. Should China suddenly say ‘no’ to US beans, American soyabean prices would initially fall as the farmers lose their number-one customer, projects Rabobank. In the long term, US soyabean acreage could fall. As a silver lining to the cloud, however, Rabobank says the prices of US soya oil and soya meal could rise due to a global shortage. There is a catch, however – the market researcher does not believe that the USA has the sufficient crushing capacity to support this new market. The boycott would also impact several shipping companies, Genco Shipping & Trading and Safe Bulkers among them, which make more than half of their profits through trade between the USA and China.

Crisis averted? Luckily, no such trade war has yet surfaced and – for the time being – it seems unlikely. One factor in Trump holding off on trade action on China could, in fact, be agriculture. According to an August report by the CNBC, the US farm lobby had been pushing the administration, particularly Perdue and US trade representative Robert Lighthizer, to refrain from imposing trade penalties. “We have been having meetings with the Secretary

of Agriculture, with the US trade representative, and talking to them about the importance of trade and how important it is to agriculture – and letting them know what kind of impact sanctions would have on agriculture,” said Jim Miller, chair of the US Soybean Export Council. Indeed, the soyabean trade does not show signs of faltering. In July, a Chinese delegation purchased 460M bushels of US soyabeans for US$5bn. “The deal that was put together is the secondlargest deal for importing US soyabeans into China. We really preach free trade and hopefully keep those avenues open,” says Austin Rincker, director of the Illinois Soybean Association. Trade continues strong in other agri sectors as well, including beef and rice, wrote CNBC. Nonetheless, farmers should stay wary. The Trump administration has proven itself to be unpredictable at best and should the president suddenly decide he wants to hit Chinese trade, damage could be done, even through his characteristic personal outbursts. If soyabean trade with the USA did grind to a halt, China would most likely turn to South America to secure its beans. The country may, in fact, be gearing up for the possibility, as Chinese companies have reportedly been encouraged to invest in the planned Ferrogrão railway (see page XX), connecting the Brazilian state of Mato Grosso to the Amazon River to move corn and soyabeans. With the massive harvest of both agri commodities this season in Brazil (its soyabean crop is projected to reach 103M tonnes), it does not look likely any possible Chinese buyers would be left wanting.

Eyes on the south China is not the only country looking south, either. The USA’s southern neighbour, Mexico, has threatened to ban imports of US corn and soya and start sourcing what it needs from Brazil and others v

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US FARMERS FEAR THEIR INDUSTRY COULD END UP AS A BARGAINING CHIP IN THE NAFTA TALKS

v south of the border. The threat was a counter to Trump’s infamous plan to build a wall on the USA-Mexico border. While the Senate has repeatedly argued that there is no money in the national budget to pay for the construction, Trump insists that the money would come from Mexico through increased import tariffs. The president has not backed down on his plan and the latest confirmation of the wall still being on the table came during his late August rally in Phoenix, Arizona, where he told a cheering crowd of supporters he would – as per their chanting – “build the wall”. However, Bunge CEO Soren Schroeder does not believe Mexico would go south for its corn. “We don’t really see any change in trade flows. North America, both in terms of corn and soyabeans, is obviously more than well supplied, with mounting surpluses, so that will remain the cheapest origin for most of the flows of corn, beans and also wheat, assuming that the flows are normal. So, at this point, I wouldn’t see any dramatic change,” Schroeder told KTIC Radio in February. Mexico had, according to Agriculture.com, already begun negotiations for South American crops in 2016, but no concrete plans had yet been announced. Additionally, Mexico cannot at the moment legally put a cork on US corn flows due to the North American Free Trade Agreement (NAFTA), negotiated during George HW Bush’s tenure in the White House and signed by Bill Clinton. However, if Trump did not like TPP, he really does not like NAFTA. “[NAFTA] has been the worst trade deal in the history of trade deals, maybe ever,” Trump famously said during a 2016 presidential debate with his opponent Hillary Clinton. Trump opposes NAFTA as he blames it for the loss of American manufacturing jobs to Mexico, the dismal state of the US automotive industry and the Canadian protective tariffs on dairy and eggs. The USA also runs a trade deficit on both Mexico and Canada, which Trump sees as stemming from NAFTA.

Negotiating NAFTA During his campaign, Trump promised to renegotiate the trade deal, and renegotiated it shall be. The president informed Canada and Mexico of his intention to reopen NAFTA talks soon

after taking office, and the first round began in Washington, DC, on 16 August and concluded five days later on the 20th. However, the lead-up to the negotiation was marked on both sides by the taunts and tweets that seem to have become a defining feature of the Trump era. In addition to Mexico’s sabre rattling, Canada said two days before the negotiations began that it would walk away from the conference table if the USA pushed to remove the Chapter 19 dispute settlement mechanism, Reuters reported. NAFTA’s Chapter 19 sets out bi-national panels able to make binding decisions on illegal subsidies and dumping. The USA is not a fan of the panels, as it has been on the losing end of several of their decisions. The USA, on its end, has said that it would be happy to simply exit the NAFTA if the result of the negotiations does not please its administration. Additional pressure is being added by the upcoming 2018 presidential election in Mexico – which could see vehemently anti-American Andrés Manual Lopéz Obrador elected – and the US election to replace the members of the House of Representatives and parts of the Senate in the same year. While the big issues for the USA are the trade deficit and auto and dairy industries, the agricultural sector could become collateral damage or even a blackmail tool. While NAFTA did drive some of the US’ most labour-intensive agriculture – such as vegetables, fruit and other speciality crops – south to Mexico, in the north it led to the establishment of energy intensive cash crop farming, including soyabeans. Some of NAFTA’s most staunch supporters can be found among the farmers of the northern states. The agreement made it possible for them to export their crops more easily and caused significant growth in trade. Soyabeans are the USA’s number two agri export to Mexico after corn. Together, the two crops account for a lion’s share of farmers’ income and it is not surprising they are anxious about how the talks will turn out. “We hope that whatever negotiations are conducted, that agriculture doesn’t end up being caught up as a retaliatory target,” Floyd Gaibler, director of trade policy and biotechnology at the US Grains Council, told the House of Representatives Agricultural Committee ahead of the talks. The National Oilseed Processors Association’s president Thomas Hammer agreed with Gaibler,

saying that he feared US negotiators could make concessions on agriculture to get better terms on manufactured goods. “The current NAFTA duty-free tariff terms for soyabeans should be preserved in the renegotiation as Mexico is the top US export market for soya meal and oil,” Hammer told the DTN news outlet. The first round of the NAFTA talks did not yet yield concrete results, although that was never its purpose. The three countries gathered to lay out what they want from the new deal and the practicalities will be (hopefully) smoothed out later in further talks, scheduled for 1-5 September in Mexico and later in the month in Canada, eventually returning to the USA in October. Six further rounds of talks have been planned before the end of the year, according to Toronto Star. Whether or not any results have been achieved by then is difficult to forecast. The USA and Mexico certainly would like to see rapid progress and Canada has voiced no objections to proceeding quickly. However, there are several topics that could become stumbling blocks or even bring the talks screeching to a halt, among them the dispute settlement mechanism and the inclusion of language on climate change. So far, according to the Canadians, there has been nothing irreconcilable said on the US end. Unfortunately, the current US administration has a track record of quickly changing its position. The oils and fats and the agriculture sectors can only hope some outburst does not manage to upset the negotiating partners.

Conclusion The big trade deals are the hottest talking points, but that does not mean other things are not happening as well. Trade representative Lighthizer gave an ultimatum in June to US foreign trade partners that the country would attack their regulations through the World Trade Organization (WTO) if they did not bring down the barriers holding back the export of US GM products. Lighthizer made the comments at the first meeting of the newly formed taskforce to revitalise rural America. According to agri secretary Perdue, the president was “very expectant of action”. How these threats, or any of the countless others, will eventually play out is anyone’s guess. Until we start seeing final results from court cases and negotiations, forecasting any outcome is difficult due to the newly established volatility in US policies. If one thing can be said, it is that the USA – and particularly Trump – wants a good result out of the NAFTA talks. The Trump administration still does not have a single major legislative or policy victory in its name. The US Senate shot down Trump’s healthcare reform and the president’s divisive commentary has split even his own party, casting doubts on whether the tax reform platform on which he campaigned can be pushed through. Being able to claim a victory on NAFTA would be a great boost to the president, who has already begun campaigning for 2020 re-election. What a ‘good result’ out of the NAFTA negotiations means for the oils and fats sector remains an enigma for the time being. The best it can do for now is rely on the unreliability of the future and expect the unexpected. w Ile Kauppila is the assistant editor of Oils & Fats International

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Getting the best out of your seeds is our ambition.

Process design

for your needs.

AN TIOX IDAN TS

Keeping deep frying oil alive With the popularity of deep fried products remaining high even in the face of increasingly healthconscious consumers, food manufacturers need to be aware of what they can do to prolong the life of their frying oil while keeping it safe

FIGURE 1: CORRELATION OF DIFFERENT PARAMETERS WITH OXIDATIVE DETERIORATION IN OIL

FIGURE 2: NIR RESULTS OF TPC IN RAPESEED OIL DURING A DISCONTINUOUS FRYING PROCESS

espite the trend towards low-fat foods, the popularity of fried products remains high. On the other hand, consumers are better educated and want healthy and environmentally friendly ingredients. Retailers are, therefore, partnering with their suppliers to make sure they can meet the requirements of their customers. Liquid oils are more sensitive to oxidation and can be hydrogenated to enhance stability for the catering industry and the fast food sector. However, considerable amounts of unhealthy trans fatty acids are formed during hydrogenation, which are undesirable from a nutritional and health perspective. Since consumers are also well informed about the health risks of trans fats, there is a clear trend towards healthier frying oils and to protect these more sensitive oils from oxidation.

The deep frying process

FIGURES COURTESY OF KEMIN

Deep frying has been known since ancient history and brings about an attractive change in flavour, texture and colour in food. However, deep frying also leads to undesirable chemical and physical changes that affect both the quality of the deep frying medium and the fried food. Frying is a complicated, multi-factor process where the frying oil undergoes a complex series of oxidation reactions. This complexity increases further when food is introduced into the hot oil. In fact, fats and oils are mixtures of triglycerides. These nonpolar components can be strongly affected by oxygen, heat and water. Total polar compounds (TPC) are the major decomposition products of triglycerides present in frying oil. Various chemical reactions – including oxidation, hydrolysis and polymerisation – result in the formation of polar compounds, such as free fatty acids, aldehydes, mono- and diglycerides and polymerised triglycerides.

Darkening of frying oil Darkening of the oil is caused by Maillard reaction products of amino acids and unsaturated carbonyl compounds. This reaction results in the formation of a variety of heterocyclic compounds, which contribute to the flavour of the fried food. The colour of frying oil will become more intense

and darker and is highly affected by the type of food being fried. Quite counter-intuitively, there is no direct correlation between the colour change and the deterioration of the oil (see Figure 1, above). Oil can turn dark quickly, while still having a good oxidative status. On the other hand, chemical parameters, such as polar compounds and anisidine value, will increase when frying oil becomes rancid.

Natural protection of frying oil Synthetic antioxidants, such as tertiary butylhydroquinone (TBHQ), can be used to extend the shelf life of frying oils, but are less effective at deep frying conditions. Furthermore, there is a clear trend towards natural solutions. With this trend in mind, Kemin – a Des Moines, Iowa-headquartered functional ingredient company – developed FORTI-FRY Liquid, a natural antioxidant consisting of tocopherol-rich extract, speciality oils and an innovative emulsifier system to protect the frying life of oil. In order to prolong the frying life of rapeseed oil, FORTI-FRY Liquid was added at a dosage of 0.25% and 0.5% to the vegetable oil and compared with untreated oil. In addition, 0.03% of mixed tocopherols and 0.02% (maximum legal limit) of the synthetic

antioxidant TBHQ were included as a positive control. The frying trial consisted of two frying cycles of four hours/day. Eight batches of raw French fries were fried for two minutes each. Every frying cycle consisted of three hours of preheating at 140°C and one hour of frying at 180°C. At the end of each cycle, oil samples were taken for analysis with near-infrared (NIR) spectroscopy. Parameters being measured to determine deterioration of the frying oil were dimerised and polymerised triglycerides (DPTG) and total polar compounds (TPC).

Test results NIR analysis showed that TPC in oil treated with 0.5% FORTI-FRY were significantly (p<0.05) lower when compared with untreated oil or oil treated with single antioxidants, says Kemin (see Figure 2, above). Oil treated with 0.25% FORTI-FRY showed an overall improvement compared with the untreated oil and single antioxidant treatments, although the difference was not always significant. Both treatments with mixed tocopherols or TBHQ were ineffective and never showed a significant improvement in TPC compared with the untreated oil. Based on the legal limits for TPC in frying oil

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(between 24-27% depending on the country), the untreated oil had to be discarded after 59 frying batches. With the addition of 0.25% FORTI-FRY, the frying life could be extended to 69 batches, corresponding to a 17% increase, according to Kemin. The NIR analysis also showed that formation of DPTG was significantly lower in the FORTIFRY treatments compared with untreated oil. Furthermore, the 0.5% treatment significantly (p<0.05) outperformed the single antioxidant treatments (see Figure 3, right). “The treatment with 0.25% FORTI-FRY was overall numerically lower compared with the single antioxidant treatments and significantly lower compared with the untreated oil,” says Kemin. Based on the legal limits for DPTG in frying oil (between 10-16% depending on the country), untreated oil had to be discarded after 42 frying batches. With the addition of 0.25% FORTI-FRY, the frying life of the oil could be extended to 53 batches, corresponding to a 25% increase in shelf life. The addition of 0.5% FORTI-FRY, on its part, could extend the frying life of the oil up to to 58 batches, signifying a 38% increase. Both tocopherols or TBHQ alone were not effective in delaying the formation of DPTG and could only give a numerical improvement compared with the untreated oil. Based on the legal limits, both single antioxidant treatments extended the frying life with three additional batches, Kemin says, corresponding to an increase of only 7%.

FIGURE 3: NIR RESULTS OF DPTG IN RAPESEED OIL DURING A DISCONTINUOUS FRYING PROCESS

Increased shelf life When food is deep fried, a complex process of heat and mass transfer takes place between the oil and the fried food product, in which both the food structure and the medium’s properties change. Furthermore, a number of chemical and physical reactions occur. The choice of the deep fried medium determines the stability of the frying oil. Natural antioxidants help maintain a good quality of the deep frying medium and the fried food by delaying degradation.

Kemin’s FORTI-FRY Liquid, a combination of mixed tocopherols, specialty oils and an emulsifier system, was effective in stabilising frying oil during a discontinuous frying process in the company’s tests. Depending on the used quality parameter, the frying life of rapeseed oil could be increased by 2537%. Single antioxidants, such as mixed tocopherols and TBHQ, were ineffective in stabilising the frying oil during a discontinuous frying process. w This article was supplied by Kemin Food Technologies EMEA

FORTI-FRY ™

Natural antioxidant

• Prevention of foaming • Improved heat transfer • Delayed formation of polar compounds

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Kemin answers your burning frying questions

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OILSEED S

to drought, is easily cultivated through several different methods and is practically immune to any diseases in its growing range. Surely such a miracle plant sounds too good to be true? Yet it actually exists and has already been used for all the above purposes and more. The plant is Moringa oleifera, known also by a a variety of nicknames, including moringa, the drumstick tree, the ben oil tree, the wonder tree, and the tree of life. Some of these names are less than humble, but moringa deserves them. Native to the southern foothills of the Himalayas in northwest India, moringa is today cultivated all over the tropical and subtropical areas of the world. India remains the largest moringa producer with a total annual production of 1.1-1.3M tonnes of moringa seedpods in 2011 from a planted area of 38,200ha. However, moringa is also grown in several areas elsewhere in Asia, including the Philippines and Indonesia, along with Africa and the Caribbean. Test plantings in Hawaii were performed in 2010. Moringa is grown primarily for food. Its leaves, fruit, seedpods, seeds, flowers and oil can all be eaten, with the leaves being the most commonly consumed part of the plant. Moringa is highly nutritious. It contains vitamins A, B, C and K, is high in protein and also contains minerals, fibre and other essential nutrients. In addition to its high nutritional value, moringa is not particularly picky about where it grows. Within the tropical/subtropical zone, moringa can grow in elevations ranging from sea level to 2km. It tolerates a wide range of soil conditions and thrives in both arid and humid areas. According to Alberto Leone et al in their 2015 study ‘Cultivation, Genetics, Ethnopharmacology, Phytochemisty and Pharmacology of Moringa oleifera leaves’, moringa is also an exceptionally fast-growing tree, capable of reaching a height of 3m in just three months and its average full height of 12m in just a few years. All of these facts have translated to moringa’s use in alleviating malnutrition, particularly among infants and nursing mothers. Its leaves’ high protein, mineral, beta-carotene and antioxidant compounds provide nutrition often lacking in underdeveloped or developing countries, according to Leone, and the easy cultivation of the plant means that it can provide a reliable source of food around the year.

The tree of life Not only can its leaves and fruit help us overcome world hunger, the tropical moringa tree has something to offer for everyone. Ile Kauppila explores the many uses of the moringa, from cosmetics to biofuels

magine, if you will, a plant whose seeds provide a high yield of oil for potential biodiesel use. Not only that, but the same oil also possesses several properties that make it promising for cosmetics and pharmaceutical applications. Imagine if practically all parts of the plant can be used as well, for purposes such as water purification, medicine and pesticide production. And that the plant is edible as well, and, in fact, so nutritious that it could eradicate malnutrition in hungerstricken countries. And that it is highly resistant

The moringa oil While the leaves, fruit and seedpods provide a valuable source of food, moringa still has more to offer. Its seeds can be eaten like peas or nuts, but they also provide a potentially lucrative financial opportunity. The seeds have a relatively high oil content, ranging from 28% to 44%. According to a 2008 study ‘Moringa oleifera oil: A possible source of biodiesel’ by Rashid et al, the oil is high in oleic acid with a concentration of more than 70% (see Table 1, page 27). Moringa oil, also called ben oil, has a high behenic acid content, which makes it resistant to oxidative degradation. In other words, it is slow to go rancid. Yields of the oil vary greatly due to moringa’s tolerance of wildly different environments. On the low end of the scale, in dry conditions, the tree produces approximately 3.03 tonnes/ha of seeds, while in irrigated or naturally humid areas the yield doubles to 6.6 tonnes/ha. A 2011 study by v

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MORINGA LEAVES, SEEDS AND PODS ARE HIGLY NUTRITIOUS AND USED FOR A WIDE RANGE OF APPLICATIONS

v Ted Radovich found that moringa can produce an oil yield of 250l/ha, assuming a relatively low oil content of 20% in the seeds. Moringa oil has been known and used for centuries. Ancient Indians used it in Ayurvedic medicine and it continues to be used as a base for perfumes. More recent studies have discovered that the leftovers of the crushed seeds can be utilised to replace expensive and potentially dangerous chemicals in water purification. Another application where moringa oil is used is in the enflaurage process through which fragrances and essential oils are extracted from plant materials. The oil can be eaten as well, and it has been compared to olive oil in taste and cooking characteristics. Radovich says small family farms could sell it to high-end venues as a local alternative to olive oil, thus increasing rural incomes.

For beauty… A more international and lucrative revenue stream for moringa oil can be found in cosmetics. Moringa has a long history in beauty applications, Leone notes. Ancient Egyptians realised its cosmetic properties and rubbed it on their skin to revitalise it and protect themselves from the sun. A 2014 study by Atif Ali et al on moringa’s effect on human skin confirmed that the Egyptians were on to something. Using an active cream containing 3% of concentrated moringa leaf extract, the study discovered that the plant’s active ingredients were beneficial for skin health. “The results achieved in this investigation suggest that topical formulation of moringa extract is capable revitalising the skin and reducing signs of skin aging,” Ali says. Moringa oil is catching on elsewhere in the beauty and cosmetics industry as well. Debra Jaliman, an assistant professor of dermatology at the Icahn School of Medicine at Mount Sinai in New York, and Jeanette Graf, assistant clinical professor of dermatology at the Mount Sinai Medical Center, told Stylecaster in an interview that one of moringa oil’s greatest strengths in cosmetics was its antioxidant content. “Moringa oil is packed with vitamins. It stacks up against other popular oils since it has many therapeutic properties. It’s a good exfoliant as well

as an emollient,” Jaliman says. She recommends using moringa oil particularly for those with acneic skin, as although oils generally do not go together well with an already greasy skin, moringa’s antiseptic properties mean it can hydrate skin without clogging pores. Susie Wang, a cosmetic chemist and founder of the 100% Pure line of skincare and cosmetics products, says moringa oil benefits from being combined with vitamin E, which makes it more potent and stable in skincare applications. “With serum and cream formulas, there’s usually heating involved, which alters the nutritional phytochemicals found in moringa oil. Because of the sensitivity of moringa, it’s best if the oil is not heat processed,” Wang advises. In addition to skincare, moringa oil could be used in haircare. Both Jaliman and Graf say the oil is a good hydrator for hair and it is used in all kinds of conditioners, including sprays, leave-in treatments and masks to help boost hair health. “The oleic acid in moringa oil can help strengthen the hair and retain moisture,” says Jaliman. “Its antibacterial properties can help keep dandruff and/or dry scalp away as well.”

…and biodiesel Moringa oil has also been widely researched as a potential biodiesel feedstock and several studies show that it may hold great potential for the biofuels industry. Rashid notes that moringa oil has an acid value of 2.9, which necessitates acid pre-treatment before transesterification. Moringa’s oleic acid content at 70% is higher than other common vegetable oils used in biodiesel production, including rapeseed (61.6%), palm (39%), sunflower (24.9%) and soya (23.4%). “Also significant is the disproportionately high content (7.1%) of behenic acid in moringa oil compared to other more conventional oilseed crops,” says Rashid. The behenic acid is what makes moringa oil resistant to oxidation, which in theory indicates that moringa biodiesel would have a longer shelf life than other comparable biodiesels. However, Rashid notes that the oxidative stability of moringa biodiesel is significantly reduced from the pure oil. “Possible explanations are that the antioxidants

naturally present in moringa oil are either deactivated through the transesterification process and/or removed by the subsequent purification or separation procedures,” Rashid says. The biodiesel has still met all necessary standards in Rashid’s tests. Drumstick Biodiesel, a Rwandan biofuel venture, notes that moringa oil’s oxidative stability gives it an edge over conventional vegetable oils as resistance to rancidity translates into longer possible storage times. Both Drumstick Biodiesel and Rashid also mention moringa oil’s high cetane rating. “Cetane rating is a universal measure of the quality of a fuel leading to improved fuel efficiency, reduction of harmful emissions and less wear and tear on both car starters and batteries,” says Drumstick. Methyl esters prepared from moringa oil have one of the highest cetane numbers (67.07) ever recorded in biodiesel fuels. Moringa biodiesel could also have a price advantage over conventional feedstocks. As the moringa tree is easy and cheap to cultivate on land that is too arid for farming food products, requires few nutrients from the ground and is low maintenance, the production costs of moringa oil are lower than, for example, rapeseed’s or soya’s.

Social benefits The miracle tree’s ability to thrive in low-moisture environments means, in addition to cheaper biodiesel, that it has two significant social and environmental advantages over conventional oilseeds. First, moringa is already being planted in areas suffering from malnutrition to offer a cheap and reliable food source. As the most popular food items from moringa are the leaves, fruits and seedpods, farmers could sell the seeds either directly to local processors or retailers, who then sell the seeds to foreign companies. This additional income has not been lost to the countries cultivating moringa. Nigeria’s The Sun newspaper reported in October 2016 that moringa had opened a window for farmer’s to boost their earnings by selling the seeds to American, Chinese and European buyers. According to the newspaper, in the city of Lagos, a bag of moringa seeds can fetch a price between 150,000 naira (US$416) and 170,000 naira (US$470) depending on weight, and in the state of Kano, Chinese buyers were paying farmers in advance far ahead of harvest periods. In northwestern Zamfara state, a moringa seed trader could earn 6M naira (US$16,581) annually, with moringa seeds fetching prices of 1,800-2,000 naira (US$5-5.5)/kg. Ojiefoh Enahoro Martins, deputy managing director of Lagos-headquartered international seed company Peniel Gerar International, calls moringa “one of the world’s most useful plants”. “Moringa seeds have both international and local market values,” Martins says. “Since the introduction of moringa, the price has seen a 50% increase annually because of new research and development. Between 2015 and 2016, the price jumped from 50 naira (US$0.13)/kg – which is 500,000 naira (US$1,386)/tonne – to 200 naira (US$0.55)/kg, which is 2M naira (US$5,547)/ tonne. Our company has sold tonnes worth millions.”

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TABLE 1: FATTY ACID COMPOSITION OF MORINGA OIL

Type of fatty acid

Percentage (%)

Palmitic acid (C16:0)

5.5

Stearic acid (18:0)

5.7

Oleic acid (C18:1)

73.2

Linoleic acid (C18:2)

1.0

Arachidic acid (C20:0)

3.9

Behenic acid (C22:0)

6.8

Eicosenoic acid (C20:1)

2.6

SOURCE: TRAKARNPRUK, CHUAYPLOD, 2012

Moringa’s other advantage concerns the food vs. fuel debate when it is used as a biodiesel feedstock. The tree is positioned somewhat outside the foodfuel controversy as it produces both food and fuel. In fact, the tree was for the longest time considered a source of food instead of an oil plant, says K. Shane Tyson, a strategic planning, biodiesel technology evaluation and market development consultant at Rocky Mountain Biofuel Consulting. “Everybody in India knows moringa as the drumstick tree. They don’t see it as an oilseed crop,” he told Biodiesel Magazine in 2008. Drumstick Biodiesel agrees, saying that moringa has no direct competition with food crops due it being an edible source of fuel. Furthermore, it does not compete directly with existing farmland, as moringa can be grown on land not suitable for traditional farming. Even if actual potential farmland were used, moringa would still cater to food production, possibly more than to oilseed production due to the larger number of edible parts in the plant.

More to come Providing food, oil and being an extremely easily cultivated plant is still not enough for moringa. It seems new applications and benefits are constantly being discovered every time a researcher decides to take a look at the plant. To mention just a few, moringa seed cake works as a coagulant in water treatment with the same efficiency as conventional aluminium sulphate, its leaf extracts show biopesticide activity and experimental evidence suggests its antioxidant properties could possibly protect cells and organisms from cancer and other degenerative diseases. With all the value-adding properties and benefits of moringa, the question becomes why the plant is not more widely used if it provides everything from food and fuel to medicine and cosmetics. There are of course limits to moringa cultivation. Drumstick lists cold weather, the need to extract and store the oil rapidly to maintain quality and fluctuating biofuel prices as the main challenges for a more widespread introduction of moringa. Another factor is that moringa’s value for purposes other than food is a relatively new discovery. However, research is advancing rapidly and new propagation techniques have begun to be developed. For example, the Indian Biodiesel Business Academy of the Advanced Biofuel Center (ABC) announced in January 2016 that it had developed a microcutting mass propagation method for moringa through the use of its MOMax3 seed product line and tested and proven best cultivation practices. “The ABC’s goal is to triple moringa yields within 10 years and increase the oil content to 48%. In combination with other crops, the target oil yield is 1,500 gallons/ha,” the research centre says. While moringa has not yet reached its full potential, work has begun to make the plant the best it can be. As if addressing malnutrition, providing a multipurpose oil and possibly improving our chances of battling cancer weren’t enough. Truly, moringa has earned the moniker of the wonder tree. w Ile Kauppila is the assistant editor at Oils & Fats International 27 OFI – NOVEMBER/DECEMBER 2017 www.ofimagazine.com

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Spanish biodiesel:

From there to where? Spain’s biodiesel industry has had a rough few years with plummeting production, dwindling demand and Abengoa’s high-profile bankruptcy. Luckily, the future is starting to look a bit brighter

pain is among the top three EU member states in terms of biodiesel production capacity and consumption. It is also one of the largest hydrogenated vegetable oil (HVO) – or ‘renewable diesel’ – producers and consumers in the EU. As in the large majority of EU countries, diesel is the main transport fuel in Spain. Spanish biofuel producers have faced competition from imports, which has dramatically reduced production capacity use throughout the years. The somewhat healthier domestic biodiesel sector – due to the enforcement of countervailing duties against Argentina and Indonesia in 2013 that have since been lowered – along with the enforcement of the national production quota system in 2014 and 2015 has allowed for a production recovery. With all other incentives phased out, biofuel

consumption in Spain is solely mandate-driven. Other governing regulations affecting the biofuel sector include sustainability requirements implemented in 2016, although full enforcement is not scheduled until 2018. A double-counting provision has been transposed to national law, but it has not been fully enforced yet. Consumption mandates followed a steady upward trend until 2013, when the downward revision of mandates introduced by a royal decree reduced Spain’s biofuel market size (see Figure 1 on page 30). Until 2016, the overall mandate could be fulfilled by either ethanol or biodiesel. Given the diesel consumption recovery and the lower volume of petrol used, and considering their respective blending limits, the excess over the bioethanol/ biodiesel-specific mandates was normally fulfilled with biodiesel. Another decree in 2015 eliminated the biodiesel and bioethanol-specific targets from 2016 onwards and slightly increased the consumption targets for the 2016-2020 period. Interestingly, only the consumption target proposed for 2019 will be higher than the mandate established back in 2012, prior to the downward revision of targets carried out in 2013. The EU Fuel Quality Directive enabled fuel operators to market B7 biodiesel (including 7% biodiesel) and E10 ethanol (including 10% ethanol) fuels. This piece of regulation was transposed into

national regulation by a 2010 royal decree, which increased the biodiesel content allowed from 5% to 7% and the bioethanol content permitted from 5% to 10%.

Biofuel target compliance Biofuel target and sustainability compliance in Spain are managed through a Biofuel Entitlement System (BES). The Spanish National Market and Competition Commission (CNMC) was appointed in 2008 as the authority responsible for monitoring and controlling the amount of biofuels marketed or consumed through a certificate system. Biofuel producers and blenders are required to report the amount of biofuel produced, imported and sold to other companies to the CNMC. Blenders must report on the quantity of regular fuel and biofuel marketed. The CNMC then issues Biofuel Entitlements to the different industry players. CNMC provisional data shows consumption surpassed the mandate in 2011 and 2012 and fell below it in 2013 to 2016. The US Department of Agriculture (USDA) estimates that the excess registered in 2012 may partially make up for the lower compliance in the following years through certificate transfer in 2013-2016. Also, 2013-2016 targets would be achieved once provisionally denied certificates are accounted for. Obliged parties may trade biofuel certificates

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FAS MADRID BASED ON MINISTERIAL ORDER ICT/2877/2008

BIOFU ELS

FIGURE 1: SPAIN BIOFUEL CONSUMPTION MANDATES (PERCENTAGE IN TERMS OF ENERGY)

with grape marcs and wine lees mentioned specifically. Fuel suppliers are obligated to submit to member states, on a yearly basis, the provisional mean values of the estimated ILUC emissions from traded biofuels. Additionally, the directive increases the minimum reduction threshold of GHG emissions for biofuels and bioliquids produced in new facilities. The new GHG emission savings from the use of biofuels are at least 60% for biofuels produced in facilities starting operation after 5 October 2015, at least 35% until 31 December 2017, and at least 50% from 1 January 2018 for biofuels produced in facilities starting operation before 5 October 2015, which is the case for all Spanish bioethanol plants

Capacity

as long as the CNMC is informed. The certificate trading period runs from April to March. Since 2013, when the hydrocarbon tax exemption for biofuels – which amounted to €0.401 (US$0.48)/ litre applicable to the share of bioethanol contained in the blend – was phased out, the mandate breach fine was revised up from €0.276 (US$0.33)/litre to €0.602 (US$0.72)/litre in the case of bioethanol. Under the Spanish quota system, only producers with an allocated quota were eligible for mandate compliance. The effects of quota enforcement were only fully noticed in 2015 as, in 2014, consumption mandates could be fulfilled with out-of-quota biodiesel during the first half of the year. The quota system has not been applicable since 2016, which opens up the door to increased EU imports competition.

RED and sustainability A 2011 royal decree transposed sustainability criteria and provisions related to double counting to national law. Sustainability was projected to be required as of January 2013. However, in early 2013, the Spanish government established a delay sine die in the implementation. Since early 2013, during the so-called interim period, obliged parties were only requested to provide the CNMC with information regarding the type of biofuel and its origin, and type of feedstock and origin. Reporting levels of greenhouse gas (GHG) reduction and land use were optional. On 26 March 2015, Spain was formally asked by the European Commission to correctly apply the RED for biofuels. A resolution by the Secretary of Energy in April 2015 mandated that sustainability requirements be fully enforced in Spain from 1 January 2016 onwards. On this date, the transitory period to allow for the progressive adaptation of the verification system began. During this period, no verification is being carried out under the national scheme and only sustainable biofuels are eligible for national mandate compliance. Hence, the large majority of obliged parties have opted for private scheme certifications to keep their options to sell their product in other member states open. Blenders can still accredit sustainability through private schemes or a responsible declaration. According to a draft legislature made available for public consultation, the date for full implementation of the RED would be 1 January

2018. Obliged parties will then need to accredit sustainability compliance with either private schemes or responsible declarations, which will ultimately be verified under the national scheme by the CNMC. The USDA projects that the full enforcement of sustainability as of January 2018 would take a toll on oilseed crushers’ margins when crushing non-sustainable beans. On 16 April 2014, the government of Spain published a list of raw materials eligible for double counting against biofuels consumption mandates. This list includes used oils of animal or vegetable origin and animal fats. In the case of blends or different raw materials, only the share that is actually produced out of one of the listed products would count double. In order to be granted with the double credit, the origin of the feedstock has to be properly documented. However, the double counting will only enter into force in Spain once more detailed guidelines are issued and, most likely, not until sustainability verification is fully in place. At the moment, the large majority of biofuel produced out of double counting feedstock is exported to other EU member states where double counting is fully in place. The enforcement of the double counting provision, which has not been established yet, would encourage more in-country use of double countingeligible biodiesel and, consequently, reduce the market for biofuels made out of conventional feedstock, the USDA projects.

Cap on first generation fuels On 5 October 2015, the EU introduced a 7% cap (energy basis) on food-based biofuels, thus limiting the consumption of first generation or ‘conventional’ biofuels within the wider 10% target for biofuels in EU transportation fuel by 2020 set by the RED. Additionally, a non-binding 0.5% national target for advanced (non-food) biofuels was included. EU member states had until September 2017 to enact the reformed legislation. While no consumption target for advanced biofuels has been defined for the post-2020 period in Spain, according to a 2015 royal decree the consumption target shall be defined. The draft piece of law made available for public consultation sets the advanced biofuels target in Spain at 0.1%. The Indirect Land Use Change (ILUC) Directive also includes a new annex listing raw materials that count double against the consumption mandates,

A stable price scenario and a different regulatory framework led to a rapid expansion of Spanish biodiesel production capacity until 2009, when poor market conditions and price volatility led to reduced capacity use and a slowdown in the pace of investments. Since 2013, installed capacity has continued to decline. According to industry contacts, fewer than 15 biodiesel plants are operative in Spain at the moment, with the remaining running idle and with limited possibilities to resume production, says the USDA. As per HVO producing capacity, two CEPSAowned refineries started producing HVO (Huelva and Algeciras-San Roque) in 2011. The Tenerife CEPSA refinery started processing vegetable UCO in 2013. REPSOL refineries in La Coruña, Tarragona, Bilbao and Cartagena also co-process HVO from vegetable oils, mostly palm oil, along with fossil fuel.

Production Biodiesel production in Spain is demand-driven. However, production levels have been affected by imports competition throughout the years. In 2009, consumption mandates were enforced, but Spain’s biodiesel production increase rate slowed down due to competition from other countries, says the USDA. The combination of antidumping and countervailing duties against US biodiesel and the consumption obligation allowed for additional growth of production levels in 2010. In 2011 and 2012, domestic production of biodiesel declined as a consequence of stiff competition from imported biodiesel originating mainly in Argentina, which continued up to 2013. In 2013, biodiesel production grew despite the hydrocarbon tax waiver phase-out, which translated into lower blending incentives, and the downward revision of national mandates. The USDA explains the growth with the industry’s hopes for a quota system implementation and tariff protection, which was only granted at the end of the year. The five-year anti-dumping tariffs imposed on Argentine and Indonesian biodiesel effective as of 28 November 2013, along with the developments toward the implementation of a quota system effective for 2014 and 2015, alleviated pressure on producers and domestic production of biodiesel grew for the first time since 2010. Statistical data by the USDA indicates that domestic Spanish biodiesel production in 2014

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BIOFU ELS

amounted to over 1M litres. In the absence of additional incentives, biodiesel production grew in 2015, in line with the increased conventional fuel demand and the somewhat higher mandate. In 2016, in the absence of biodiesel quotas, the elimination of the bioethanol-specific target favoured biodiesel production, as blenders opted for meeting mandates with biodiesel or HVO, which does not count against the 7% blending limit for labelling purposes, but is eligible for mandate compliance at the expense of bioethanol use. The increased mandate in 2017 and the duty protection that prevailed for the large majority of the calendar year would allow for higher production levels, the USDA projected. However, it is still unclear how the September cut to the import duties on Argentina, which reduced them from 2225.7% to 4.5-8%, will impact Spanish production. As per other renewable fuels, there is research on biodiesel produced from algae at the public and private level. Abengoa Bioenergy has a pilot plant in Cartagena and Spain-based petrol companies, such Cepsa and Repsol, also report research activity in this field.

Feedstock Spain’s biodiesel sector relies heavily on imports of raw materials, as domestic oil production (olive and sunflower oil) is destined for the food market. Area planted to rapeseed, while small, continues to grow year after year, driven by compliance with the EU ‘greening’ programme, under which sustainable farming practices are supported by the EU, along with demand for biodiesel production in neighboring countries. Given the increased level of biodiesel selfsufficiency achieved due to a combination of factors that include reduced mandates, countervailing duties imposed to importers and production quota implementation, the USDA assumes that the share of raw materials used to produce biodiesel domestically should not differ much from the share of raw materials of the biodiesel consumed in Spain (see Figure 2, right). Raw materials for biodiesel production in Spain include palm oil, soyabean oil and recycled oils and animal fats (RO&AF). To a lesser extent, sunflower oil and rapeseed oil are also part of the mix, the USDA says. Palm oil is the dominant biodiesel feedstock in Spain, accounting for two-thirds of the total production. Palm oil imports have ramped up throughout the years, driven by the biodiesel and HVO production recovery and its growing share as biodiesel feedstock. Indonesia and Malaysia were the primary origins, representing over 75% of total palm oil imports. To supply its robust compound feed industry, Spain imports soyabeans from Brazil and the USA. Hence, there is a significant amount of soyabean oil available in the market, according to the USDA. Traditionally, this oil has been exported to other EU member states or African countries, as the domestic food demand for this type of oil is limited. The healthier domestic biodiesel sector since 2013 has created additional opportunities for the incountry use of domestically extracted soyabean oil and it contributes to improved soyabean crushing margins. The biodiesel production recovery since 2014 translated in a reduction of soyabean oil exports.

FIGURE 2: FEEDSTOCK USED IN BIODIESEL MARKETED IN SPAIN

In the absence of full implementation of double counting in the Spanish market, the USDA projects that most of the biodiesel produced out of RO&AF is exported to other EU member states, where the double credit is fully enforced. The projected full enforcement of sustainability as of January 2018 may discourage non-sustainable certified oilseed or oils purchases, the USDA says.

Consumption and markets Consumption mandates – together with conventional fuel demand – define the Spanish biofuels market size. Total fossil fuel consumption in Spain declined between 2007 and 2013. Since then, a steady increase in diesel consumption has taken place, while petrol use flattened out. As in the large majority of EU member states, diesel is the main transport fuel in Spain. However, while the EU diesel-gasoline average ratio is 2:1, in Spain it is 3:1, which means that the potential for ethanol and petrol to contribute to meeting the RED 10% goal is smaller than is the case in the EUwide fuel market. According to the USDA, biodiesel is the main biofuel consumed in Spain and represents nearly 65% of the total liquid biofuels consumption in transport, followed by HVO and bioethanol, which account for 20% and 15% respectively. Biodiesel consumption followed an upward trend, driven by the mandates imposed between 2009 and 2011. In 2012, consumption went down due to extensive use of HVO and lower overall diesel consumption. Factors explaining the dramatic decline in 2013, when biodiesel consumption more than halved, include the hydrocarbon tax exemption phase-out and the downward revision of mandates. In 2014, biodiesel consumption remained fairly stable and marginally rebounded in 2015, driven by the regular diesel consumption recovery. In 2016, the small upward revision of consumption mandates and increased regular diesel use, along with the bioethanol-specific target phase-out, resulted in a consumption increase. he USDA anticipated additional growth in biodiesel use for 2017 as a result of the regular diesel consumption recovery and the higher mandate. According to a Platts report on 12 September, this seems to have materialised, as data from

SOURCE: FAS MADRID BASED ON CNMC AND FAS MADRID ESTIMATES

Spain’s strategic oil reserves corporation CORES showed that biodiesel consumption was up 18.5% on the year. Biodiesel sales also outpaced those of regular diesel, which rose 1.8% on the year. Despite installed capacity exceeding domestic demand projected for 2020, since 2008 biodiesel imports have represented a significant share of mandate-driven internal demand. Imports of biodiesel halved in 2013, driven by the reduction of consumption targets enforced in early 2013. Last year brought somewhat increased EU biodiesel exports to Spain, in response to the quota system phase-out and the slightly higher internal target-driven demand. In 2016, Spanish biodiesel exports hit a historical record level, driven by sales in other EU member states.

Future perspectives Most of the covered factors create greater growth potential for biodiesel/HVO than for bioethanol in Spain. The consumption targets established for 2016-2020 set the pace of growth of the biofuel sector in Spain in the coming years. As Spain’s biodiesel production is highly dependent on palm oil, all eyes are at the consequences of the European Parliament vote on April 2017 to call on the EU to phase-out the use of palm oil in biofuels by 2020. The transposal to national law of Directive 1513/2015, among other factors such as competition from imports, will determine biofuels consumption and production dynamics in Spain for 2018. Additionally, the projected full enforcement of sustainability as of January 2018 would discourage non-sustainable certified oilseed and oils purchases and may affect the feedstock mix, the USDA projects. The future of biofuels in the EU is currently under discussion for the 2021-2030 timeframe. The Spanish biofuel industry fears the negative effects on their first generation assets of a switch towards a GHG emission system that further limits cropbased biofuels, as second generation biofuels are not sufficiently developed in Spain. w This article is based on a US Department of Agricultue (USDA) Global Agricultural Information Network (GAIN) report ‘Spain’s Biodiesel and Renewable Diesel Overview’ published on 28 June 2017.

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I NSPE CTION , TESTIN G & C ER TIFIC ATION

Inspection and testing round-up IN BRIEF GERMANY: German Association Quality Management Biodiesel eV (AGQM) is organising two no-harm tests to discover and prevent possible negative interaction between biodiesel antioxidation additives and fossil diesel fuel. According to the EN590 standard, diesel fuel in Europe can be blended with up to 7% fatty acid methyl ester (FAME) biodiesel. The biodiesel has to fulfill the requirements of the EN14214 standard, which demanded an oxidation stability of at least eight hours. To achieve this result, oxidation stabilisers were usually added to biodiesel, but these could in some cases cause undesirable side effects with the fossil diesel. The next round of the tests would be held after 15 October, AGQM said in a 14 September statement. LATIN AMERICA: Certification and inspection services provider SGS is strengthening its presence in the oilseed and grains industry in South America. In its September 2017 market update, SGS said work would soon start on a new peanut-focused analysis laboratory in General Deheza, Cordoba, in the heart of Argentina’s peanut production. In Brazil, the company seed and phytosanitary lab in Piracicaba, São Paulo, was reportedly working towards ISO 17025 accreditation for seeds and grains. SGS provides a range of services including inspection, sampling, testing and analysis, precision farming and certification at the major ports in Argentina and Brazil, in addition to field trials for GMO crops.

Oils & Fats International reports on some of the latest inspection, testing and certification news and developments around the world

EU votes for acrylamide regulations T he EU has backed the European Comission’s (EC) proposal to restrict acrylamide in food and drink with a vote that could see mitigation action and benchmark levels in effect by as soon as spring 2018. The 19 June vote by the Standing Committee on Plants, Animals, Food and Feed aimed to limit the amount acrylamide in foods typically containing high concentrations of the cancer-inducing contaminant, such as bread, biscuits, fried potato products and coffee, reported FoodNavigator.com. Acrylamide is a chemical compound formed naturally when asparagine, an amino acid found in starchy foods, is converted as the food is roasted, baked or fried in temperatures exceeding 120°C. The EU’s mitigation measures spanned the entire food production chain from the farm to the dinner table, including restrictions on the use of certain fertilisers, mandating specific storage conditions and requiring demonstrations of as low cooking temperatures as possible. Benchmark levels would be used to verify the effectiveness of the mitigation measures and would be food group specific, such as 150μg/kg for biscuits and 500μg/kg for readyto-eat French fries. The levels would not be initially legally binding, but the EC has pledged to set minimum levels on certain foods after this first proposal comes into force. Monica Goyens, director general of the European Consumer Organisation BEUC, urged the EC to enact binding levels as soon as

possible. “It has been 15 years since scientists have known about acrylamide in food and warned about its effect on health. Yet, levels of this cancer-causing contaminant in Europeans’ food have remained roughly the same. It is good news the EU is finally obliging the industry to act and reduce acrylamide in their products,” said Goyens. FoodDrinkEurope, a food manufacturers’ trade association, said its member were ready to implement the resolution but nonetheless called the benchmark levels “impractically low”. “The public health objective is to reduce consumer exposure as much as possible. Hence we believe food business operators should be working to reduce levels of acrylamide in their products to the lowest levels reasonably achievable rather than on the basis of a static minimum level,” said Beate Kettlitz, director of food policy, science and R&D at FoodDrinkEurope. However, Goyens argued that if some manufacturers could bring acrylamide levels down, so could the rest. “No one is asking to ban any food. However, we remain convinced binding limits are needed if we are to effectively protect consumers. Without mandatory limits, food makers will still be allowed to sell products which contain high levels of acrylamide,” she said. Goyens added that legal limits would also have to equally apply to imported products, arguing that they would therefore not impose an unfair burden on European manufacturers.

OLEUM project seeks improved methods to protect global olive oil markets

n EU project is seeking new and improved analytical methods to detect fraud and ensure the quality and authenticity of olive oil in the global marketplace. The OLEUM project, set up in September 2016 as part of the EU Horizon 2020 framework programme, was looking to plug the loopholes in global markets that could be exploited by olive oil counterfeiters. According to OLEUM data, Europe was the world’s largest olive oil producer with more than 70% of global production, but increasing competitiveness in non-EU regions, which – combined with the lack of efficient and harmonised analytical methods for fraud detection – was enabling weaknesses that fraudster could make use of. “We have identified four main gap levels

in the sector that need to be addressed through research and development, which include legislative and regulatory aspects, the analytical sphere, the area of harmonisation and coordination, and consumer and market confidence,” Tullia Gallina Toschi, coordinator of OLEUM from the Department of Agricultural and Food Sciences at the University of Bologna told Olive Oil Times on 1 August. The initial objective of the project was to provide regulators and policy makers with a range of potential solutions for improving regulatory standards based on an analysis of areas where lack of methods had led to issues. Existing methods of olive oil quality control and fraud detection would also be revised by identifying drawbacks in, and improving the efficiency of, current methods.

34 OFI – NOVEMBER/DECEMBER 2017

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In addition, the OLEUM group sought to identify novel analytical markers to develop and validate innovative analytical solutions. “This mainly concerns the detection of illegal blends of extra virgin olive oil and soft deodorised olive oils, and of illegal mixtures of olive oils and other vegetable oils,” said Toschi. At the end of the five-year research process, OLEUM would suggest improvements to international regulations and standards – such as the EU and ISO standards – and implement the new analysis methods and procedures. “We will compile an inventory of existing and emerging fraudulent practices, promoting open-access knowledge generation and dissemination by making globally available all the information coming from OLEUM research,” Toschi added.

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I NSPE CTION , TESTIN G & C ER TIFIC ATION

New oil content analyser by Oxford Instruments

K analysis tool manufacturer Oxford Instruments has launched the MQC+ benchtop nuclear magnetic resonance (NMR) analyser for the measurement of oil, water, fluorine and solid fat in the oils and fats and other industries. The MQC+ series of three analysers replaced wet chemical analysis, which used hazardous chemicals and required the use of fume cabinets, Oxford said in a statement. Additionally, the analysers did not destroy the measured sample, unlike wet chemical methods, and it was capable of measuring physical properties such as crystallinity and density of polymers with grinding or other sample preparation rarely needed. The MQC+5 analyser was specifically developed for large samples typical of agriculture products and could be used, for example, to measure the oil and moisture content in oilseeds. The MQC+23 model was intended for smaller samples and high sensitivity applications, while the MQC+F could measure fluorine in products such as toothpaste. The analysers could provide results quickly, taking a few seconds to a few minutes to analyse a sample, and the NMR signals were generated from all sample parts and not just 1 MINCLEAR 87X128-agosto 2017.pdf the surface, even with opaque products.

New method for sterols analysis S

cientists at the University of Campinas (UoC) in Brazil have developed a new faster and less labour-intensive methodology for measuring and fingerprinting the sterols found in edible plant and animal fats and oils. Sterols, or steroid alcohols, occur naturally in plants, animals and fungi and probably the most well-known of them is the animal sterol cholesterol, wrote Gabriel D. Fernandes, researcher at the UoC, in the article ‘A rapid fingerprinting method for sterols in oils and sterol-rich foods’, published in Inform in July. Phytosterols, or plant sterols, have been linked to lower cholesterol levels and the prevention of heart disease. However, in order for oils and fats manufacturers to be able to advertise with these health claims, their products must be proven to contain a certain level of phytosterols. Earlier methods used in phytosterol analysis were either inaccurate or required extensive sample preparation, which was why the UoC team developed the transmission mode-based direct analysis in real time-mass spectrometry (TM-DART-MS) method, Fernandes wrote. The DART 22/8/17 17:11 technology was originally

developed in 2005 but, according to Fernandes, the new improved method allowed for samples to be analysed in open ambient air in only a few seconds, with minimal or no sample preparation. TM-DART-MS produced a profile of the analysed product, characterised by four different categories, one of which contained sterols and their precursor squalene. The method was capable of identifying separate free sterols, and the produced fingerprints could be used as an identity parameter for vegetable oils. “In addition to providing characterisation, TM-DART-MS analysis could serve as a treaceability parameter in identifying and detecting adulteration,” wrote Fernandes. The method could be use to characterise sterols and related compounds in, among others, vegetable oils, commercial blended vegetable oils, sterols-enriched margarines, butter and animal oils.

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35 OFI – NOVEMBER/DECEMBER 2017

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Crop Value: measure oil & moisture using ISO 10565 method

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STATISTIC S

SOYABEAN OIL PRICES, 2014-2018 (US$/MT)

STATISTICAL NEWS FROM MINTEC Soyabean oil Soyabean oil prices in the EU have followed a downward trend in 2017, supported by large stocks following high global production from the 2016/17 season. Prices came under further downward pressure during the second half of 2017 due to forecasts of higher global production during the 2017/18 season, up 4% y-o-y at 56.1M tonnes. Consumption is forecast up 4% y-o-y to 55.7M tonnes and ending stocks are forecast to fall by 1% y-o-y to 3.6M tonnes. Rapeseed oil Rapeseed oil prices rose in the second half of 2017, driven by forecasts of tight global supplies for the 2017/18 season. Although production is expected to rise 2% y-o-y to 28.8M tonnes, consumption is also forecast to increase, outweighing production by 629,000 tonnes. As a result, ending stocks are forecast down 15% y-o-y at 3.7M tonnes.

EU RAPESEED & SUNFLOWER SEED PRICES (€/MT)

Sunflower oil Sunflower oil prices have fallen throughout 2017 as a result of large carryover stocks from record production in 2016/17, alongside forecasts of high production for the 2017/18 season. Sunflower oil production is forecast to rise 2% y-o-y to 18.2M tonnes. Ending stocks are expected to rise 9% y-o-y to 1.5M tonnes.

US CORN OIL PRICES, 2012-2017 (US$/MT)

Corn oil Corn oil prices have fallen during 2017, driven by high global stocks of corn as a result of high production during the 2016/17 season. Further downward pressure was applied to pricing as a result of a general downward trend in the vegetable oils market during the first half of 2017.

PRICES OF SELECTED OILS (US$/TONNE) Aug 17

Sep 17

Soyabean

801.0

2016

796.9

817.0

849.4

872.4

830.2

Crude Palm

692.0

665.4

651.7

677.7

720.1

704.0

Palm Olein Coconut Rapeseed Sunflower

Jun 17

Jul 17

Oct 17

660.0

642.4

628.8

654.2

692.1

669.5

1,446.0

1,564.3

1,518.8

1,519.8

1,501.0

1,381.0

815.0

794.4

844.1

871.8

888.3

880.0

835.0

797.6

802.7

809.8

811.5

804.5

1,252.0

1,077.5

981.0

1,135.9

1,306.7

1,296.0

Average price

929.0

906.0

892.0

931.0

970.0

938.0

Index

220.0

215.0

211.0

221.0

230.0

222.0

Palm Kernel

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

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