OFI November/December 2016 by Quartz

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Science behind Technology

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THE B USI NE SS MAG AZ IN E FOR TH E OILS AN D FATS IN D UST RY

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CONTENTS VOL. 32 NO. 8 NOV/DEC 2016 EDITORIAL: Editor: Serena Lim Tel: +44 (0)1737 855066 E-mail: serenalim@quartzltd.com Editorial Assistant: Rose Hales Tel: +44 (0)1737 855157 E-mail: rosehales@quartzltd.com

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Biofuel potential for global shipping

OILSEEDS

PRODUCTION: Production Editor: Carol Baird E-mail: carolbaird@quartzltd.com

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Sustainable soya Thailand aims for fuel self-reliance

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News

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Setting a standard

Greenpeace targets IOI Group with new report and blockade Chemoil to pay US$27M fine for renewable fuel violations

Biotech News

EC sets new date to complete probe of Dow-DuPont merger 10

Comment

Deal or no deal?

OFI India 2017 comes to Mumbai

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NEWS & EVENTS

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BRAZIL HAS BEEN ACCUSED IN THE PAST OF ALLOWING SOYABEAN PRODUCTION TO LEAD TO THE DEFORESTATION OF THE AMAZON RAINFOREST, BUT VARIOUS LAWS, PROGRAMMES AND PARTNERSHIPS HAVE BEEN INTRODUCED, WHICH ARE MAKING SOYA MORE SUSTAINABLE P20

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Inspection and testing round-up

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Contents.indd 1

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NEWS

COMMENT

Deal or no deal? I

t’s been about two months since German chemicals giant Bayer announced its US$66bn purchase of Monsanto on 14 September in the world’s biggest cash acquisition on record (see Biotech News, OFI September/October 2016). Since then, a range of consumer and farmer groups have weighed in with opinions on the deal, which would create the world’s largest agro-industrial company, commanding more than a quarter of the global market for seeds and pesticides. In terms of winning public approval, it is difficult to say which company has the worst PR image. Bayer was part of IG Farben during World War II, which collaborated with Nazis in scientific experiments, used slave labour from concentration camps, and held a large investment in a company which produced Zyclon B to gas prisoners during the Holocaust. Monsanto – the company everyone loves to hate – used to produce toxic chemicals such as now-banned polychlorinated biphenyls (PCBs) and the Agent Orange herbicide used in Vietnam, and sells GM seeds which consumers have linked with ‘Frankenstein foods’. Reputations aside, it is the wider food and agriculture picture that is the main issue the merger throws up. Six companies currently control the global marketplace for pesticides and crop biotechnology – BASF, Bayer, Dow Chemical Company, DuPont, Monsanto and Syngenta. The Big 6 could become the Big 3 if all three recent merger proposals are approved – the BASFMonsanto deal; the US$130bn Dow and DuPont merger; and China National Chemical Corp’s US$43bn purchase of Syngenta. Bayer and Monsanto say their merger would increase the scale of R&D needed to feed the world. Less choice and higher prices? Opponents say the mergers would reduce competition and R&D in seeds and herbicides, lessen biodiversity and lead to higher prices. US law firm, the Konkurrenz Group, says a Bayer-Monsanto company will control nearly 70% of the cotton hectarage in the USA, with Monsanto already possessing a 97% share for soyabean traits, a 75% share for corn traits and a 95% share for cotton traits. The American Antitrust Institute of Food & Water Watch and the US National Farmers Union have echoed this view, recently writing that further consolidation of the global agricultural biotech market would greatly diminish the ability of smaller biotech firms to compete, leading to rising seed and pesticide prices, fewer choices for farmers and consumers and more GM foods on supermarket shelves. “Our global agriculture system could end up depending on just a few companies to meet a high percentage of the world’s agricultural needs.” Robert Lawrence, a founding director of the Centre for a Liveable Future, says the USA has gone from having some 30-40 varieties of soyabeans to one, accounting for nearly all of US soya production. Should a new disease emerge, there is “a very real risk” it could wipe out a large part of the US crop, he says. And does the world want to be increasingly dependent on a few large corporations focused on a agricultural system which bundles together seed and pesticide/herbicide use? There are those who believe that the GM crop boom is over, with farmers turning their backs on more expensive GM seeds; evidence of falling yields; and rising herbicide use due to weed resistance (see Comment, OFI May 2016). Diversity and choice are important and anti-trust regulators in the USA, EU and elsewhere will be deciding exactly how much choice and diversity the agricultural biotech market needs. With three proposed mergers on the table, the deals are not yet done.

Greenpeace targets IOI Group with new report and blockade

alaysia’s IOI Group issued a sustainability progress update on 30 September following Greenpeace’s blockade of its palm oil refinery in Rotterdam harbour three days earlier, which marked the launch of a damning report produced by the environmental group on IOI. The Greenpeace report, ‘A deadly trade-off’, accused IOI of failing to adhere to its own sustainability policies, or ensuring that its third-party suppliers had stopped clearing rainforests and peatlands. “In 2015, IOI traded and/or processed 1,527,696 tonnes of palm oil and palm oil-derived products but only 38% of IOI Loders Croklaan’s volumes came from IOI’s own mills in Indonesia and Malaysia,” the Greenpeace report said. “The company states that the majority of the 800 mills in the supply base of IOI Loders Croklaan are indirectly sourced, meaning they are supplied by third parties sourced through other palm oil traders (including Golden Agri-Resources, Musim Mas and Wilmar International).” Greenpeace said its analysis showed that the IOI Group continued to buy palm oil from third-party suppliers linked to serious environmental destruction and human rights abuses and there remained a systematic failure to identify and exclude noncompliant suppliers. IOI said that it planned to publish a detailed response to the points raised by Greenpeace shortly. In its update, it said it was making the four planks

of its existing policy – zero deforestation, zero planting on peat, zero burning and a focus on socio-economic well-being – more robust and detailed. “We also require all our suppliers to adhere to our policies.” It said it planned to achieve full traceability for 100% of its palm oil supplies to its mills by the end of this year. In an earlier statement on the day of the blockade, IOI said that monitoring third party suppliers and using the threat of commercial sanction could only be done if there “is an industrywide approach to tackling these complex issues”. “We therefore today call for all our fellow industry players to come together and reach agreement on solutions that will lead to a truly sustainable supply of one of the world’s most commonly used commodities.” In the blockade on 27 September, Greenpeace moored its ship to the dock of the IOI Loders Croklaan refinery, preventing the unloading of palm oil from incoming tankers, while activists blocked the path to IOI’s premises with logs. IOI was suspended by the Roundtable on Sustainable Palm Oil in April following a complaint made by Aidenvironment against three IOI subsidiaries but the suspension was lifted on 8 August (see News, OFI September/October 2016). IOI has some 152,000ha of oil palm plantations in Malaysia, and 83,000ha in Indonesia.

Palm oil ambassador proposed

alaysia and Indonesia – the world’s two largest palm oil producers – plan to appoint an ‘Ambassador of Palm Oil’ to promote the product in the international market, Malaysian news agency Bernama reported on 31 August. Minister of Plantation Industries and Commodities, Datuk Seri Mah Siew Keong, said palm oil producers were now facing non-tariff barriers in major importing countries. “These include food products with ‘No Palm Oil’ labels and proposals to impose high import taxes on palm oil products. This is a form of discrimination to us,” he said. Mah spoke after co-chairing the ministerial meeting of the Council of Palm Oil Producing Countries (CPOPC). The two countries agreed to contribute US$5M each initially to operate the CPOPC secretariat.

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NEWS

Committee backs EU-wide limit on industrial trans fats A n EU-wide limit for industrially-produced trans fats in processed foods has been backed by the European Parliament’s Environment, Public Health and Food Safety Committee. The committee adopted a resolution on 29 September backing the limit, saying that lack of awareness among consumers regarding the adverse health impact of trans fatty acids (TFAs) made mandatory TFA labelling an ineffective tool to reduce intake among European citizens. “We call on the European Commission (EC) to propose as soon as possible mandatory limits on industrial TFAs in order to reduce their intake among all population groups,” the resolution said. The resolution was due to

be considered for adoption by the European Parliament at a plenary session later in October, FoodNavigator said. Natural trans fatty acids (TFAs) can be found in the meat and milk products of ruminant animals (cattle, sheep and goat). Industrial or artificial TFAs can be found in baked, fried and snack foods and are formed when fats and oils are partially hydrogenated to improve their taste, texture and shelf-life. Industrial TFAs increase our risk of heart disease by increasing the ‘bad’ low density cholesterol in our blood, while also lowering the ‘good’ high density cholesterol. In June 2015, the US Food and Drug Administration said partially hydrogenated oils – the main source of industrial trans fats

in processed foods – were no longer ‘generally recognised as safe’ (GRAS) and gave food manufacturers three years to remove all artificial trans fats from their products (see News, OFI July/August 2015). And last October, major food producers Mars, Kellogg’s, Nestlé and Mondel z signed an open letter to the EC calling for the amount of industrial TFAs to be limited to 2g per 100g of fat across the EU. In Europe, several countries including Austria, Denmark, Iceland, Hungary and Norway have set limits of 2g per 100g of fat or oil. But artificial trans fat remain common in Eastern Europe with a 2012 study showing that Eastern Europeans could be consuming as much as 30g per day, FoodNavigator said.

RSPO certifies Olam plantation and mill in Gabon lam International’s Awala oil palm plantation and mill in Gabon are the first in Africa to be certified by the Roundtable on Sustainable Palm Oil (RSPO), the company reported on 4 October. The leading Singaporeheadquartered agribusiness first ventured into upstream oil palm plantations in Gabon in 2011 with a 60/40 respective joint venture with the Republic of Gabon “The Awala plantation of 6,700ha has single-handedly boosted Africa’s RSPO-certified production hectares by 30% from 21,666 ha,” Olam said. The other major development for the Olam Palm Gabon (OPG) joint venture is the Mouila plantation which lies to the south of Awala. “In Mouila, OPG has already planted 31,000ha in full compliance with RSPO guidelines and is progressing towards

PHOTO: RSPO

certification of that area in 2017 as planned.” Upon reaching full production capacity by 2023, the two plantations would deliver up to 22 tonnes of fresh fruit bunches and 5.2 tonnes of oil per hectare, the company said. Ranveer Chauhan, managing director and CEO of palm oil and natural rubber at Olam

International, said: “Currently, about 17% of the world’s supply of palm oil is certified as sustainable. However, customer demand for sustainable palm oil is rapidly increasing and the RSPO is targeting 100% uptake of certified oil in Europe alone by 2020. “Africa is the home of oil palm and many think it does not have the infrastructure or governance to support high international standards. This certification shows what can be achieved for any new or old palm plantation development on the continent.” Olam said the land for the plantation ventures in Gabon was acquired on leasehold from the government and it had set aside a total of 61,000ha for biodiversity, as well as supplying infrastructure and amenities to surrounding communities such as roads, lighting, water pumps and schools.

Bunge partnering Oleo-Fats Inc in the Philippines

lobal agribusiness giant Bunge has entered a distribution agreement with Oleo-Fats Inc, which will become Bunge’s exclusive commercial partner to import, market, sell and distribute packaged softseed oils into the Philippines, Bunge announced on 30 September. Bunge Agribusiness Singapore will become OleoFat’s exclusive commercial partner to export, market, sell and distribute coconut oil under its Farm Origin brand into countries in the Asia-Pacific region. “We’re delighted to have Oleo-Fats as our distribution partner,” said Aaron Buettner, Bunge’s global head of oils. “By leveraging Oleo-Fat’s capabilities in the Philippines and its relationships with customers, including quick service restaurant chains, snack food manufacturers, biscuit and confectionery manufacturers, industrial bakeries, and

hotels, restaurants and caterers, Bunge will be able to fully participate in a growing destination market. “We also look forward to being able to provide coconut oil supplied by Oleo-Fats as part of our Farm Origin portfolio. This is a premium oil that fits well with our other offerings for retail and food service in the Asia-Pacific region.” Oleo-Fats is a wholly-owned subsidiary of D&L Industries, a Filipino company which manufactures customised food ingredients, speciality raw materials for plastics and oleochemicals for personal and home care use. “Partnering with Bunge gives us an even broader range of products to serve customers in the Philippines,” said Vincent Lao, managing director of Oleo-Fats. “We’re also seeking to grow by adding coconut oil to Bunge’s Farm Origin brand.”

IN BRIEF EUROPE: Archer Daniels Midland (ADM) and Wilmar International said on 23 September that they had received all competition approvals for Olenex – their partnership set up in 2012 to market oils and fats in Europe – to become a full joint venture. Under their plan announced on 10 December, ADM will transfer two sites – a speciality oils and fats facility and an oil palm refining plant in Hamburg, Germany, to the new venture. Wilmar will transfer over its tropical oils processing plants in Brake, Germany and Rotterdam, the Netherlands (see News, OFI January 2016). The joint venture will integrate raw materials sourcing, processing, trading and sales and marketing operations. Refined oils and fats from ADM’s other plants in the Czech Republic, Germany, the Netherlands, Poland and the UK will be marketed by Olenex. WORLD: Cargill has launched the Lyveum brand of vegetable oil, developed in Brazil by Cargill Industrial Specialities, to target the personal care market on a global scale. The brand is part of Cargill’s new ingredient category called Ultra Oils, in which it has invested US$300,000 in product development, testing, initial production and minor changes to existing plant equipment in Mairinque, São Paulo. Initial output would be 150 tonnes/month with a goal of producing 1,000 tonnes/ month to earn US$18M/year in revenues, Cargill said.

3 OFI – NOVEMBER/DECEMBER 2016 www.ofimagazine.com

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NEWS

Korean corporation accused of deforesation K

orean-Indonesian corporation Korindo has been accused of clearing more than 50,000ha of tropical lowland forests in Indonesia’s Papua and North Maluku provinces to grow palm oil and of using fire to clear land, contributing to the country’s haze problems. A new report by Aidenvironment released in August said major palm oil producers, Wilmar and Musim Mas, had already stopped procuring from Korindo, which has operations in logging, pulpwood and oil palm in Indonesia. Aidenvironment said Korindo had eight concessions totalling 160,000ha, seven of them covering 149,000ha in Papua province, where Korindo was the largest palm oil company. It also helped Korean company Daewoo with its 30,000ha plantation in Papua.

IN BRIEF WORLD: In September, PepsiCo released an update on its Palm Oil Action Plan launched last October, reporting that about 91% of its direct suppliers are members of the Roundtable on Sustainable Palm Oil (RSPO), accounting for some 96% of its forecasted direct palm oil volume. PepsiCo also said it increased its use of mass balance physically certified palm oil in 2015 to 8% of its volume, as compared to 5% in 2014. “We are developing a plan to significantly ramp up the physically certified volume to achieve our goal of 100% by 2020,” it said in its report. PepsiCo said that as of July 2016, about 72% of the palm oil it is forecasted to use for the year had been traced to the mill. “Over the rest of 2016 and beyond, we will be working to achieve 100% traceability.” MENA: The United Nations Food and Agriculture Organisation has launched a technical cooperation programme aimed to prevent the spread of Xylella fastidiosa (Xf) in North Africa and the Middle East, Olive Oil Times reported on 15 September. The project aimed to facilitate early detection, diagnosis and monitoring of Xf, and began in response to requests from countries including Algeria, Egypt, Lebanon, Libya, Morocco, Palestine and Tunisia, the report said. It would work to improve the technical capacity of local institutions and farmers and raise awareness on preventing

The NGO said Korindo began aggressive clearing of tropical lowland forests for oil palm plantations in 2013, clearing 30,000ha of forests in the two provinces – 12,000ha of which were primary forests – since that year. In total, it had cleared 50,000ha of tropical lowland forests in Papua and North Maluku. Aidenvironment said Korindo had also contributed significantly to Indonesia’s haze disaster in 2015 and was the largest haze contributor in Papua, with satellite imagery, hotspot data and aerial photographs pointing to the systematic use of fire during its land clearing processes. “As of June 2016, 75,000ha of valuable forests remained in Korindo’s oil palm concessions.”

Koh Gyeong Min, Korindo’s head of sustainability, has denied that the firm has been responsible for any illegal forest burning. “We followed all of the Indonesian regulations and acquired all the proper licences from the government for all areas of operation,” he said in the Guardian newspaper. The report’s allegations came as southeast Asia’s 2016 burning season was just beginning, according to the Guardian. Indonesia’s meteorology, climatology and geophysics agency warned on 30 August that fires in the western part of Riau province on Sumatra island could blow towards Malaysia and Singapore. Riau was one of several provinces which had declared a state of emergency over forest fires.

China agrees to canola imports

hina has agreed to import Canadian canola through to 2020 while both countries conduct research to find a “science-based and stable solution” to the presence of foreign material (dockage) in the imports. China had planned to lower the amount of dockage allowed in Canadian canola imports from 2.5% to 1% as it was concerned that black-leg disease might be spread from Canadian canola shipments to Chinese canola. The tougher standards – due to be imposed on 1 April but postponed until 1 September – raised concerns that the 1% limit would be physically impossible to achieve and extremely costly. The new agreement was announced on 22 September during a four-day Chinese visit to Canada. CBC News said. Canada was the world’s largest canola exporter and over 40% of this trade was exported to China, worth some US$1.95bn in 2015.

Delays to soya export tax cuts

A Trade would continue under current terms while additional research was conducted to determine whether there was a legitimate link between the level of dockage – stems, leaves or chaff that might be found in a grain shipment – and the risk of disease transmission, the report said. “If we hadn’t been able to come to an agreement, other exporters would have gotten into that market and we would have lost significant share,” said Patti Miller, president of the Canola Council of Canada. The two sides had been grappling over the issue since 2009, CBC News said.

rgentina’s president Mauricio Macri has announced that the country will not reduce export taxes on soya this year or in 2017, as previously stated, Reuters reported on 3 October. Instead, it would reduce the tax by 0.5%/month from January 2018 to December 2019. Macri took office in December last year and cut the export tax on the country’s main cash crop, soya, from 35% to 30% with further cuts planned for this year. According to the report, the tax would be reduced gradually month by month to prevent “speculation”, as there were concerns that farmers would hold off planting and harvesting until the tax was reduced. Argentina is the world’s third-largest soya producer and exporter after the USA and Brazil. It is forecast to produce 57M tonnes of soya in the 2016/17 crop year starting in October, 10.7M tonnes for export.

Agrium acquisitions in USA and Canada approved

anada’s Agrium Inc has received regulatory approval to buy 18 Cargill AgHorizons retail locations across the northern US corn belt and 16 Andrukow Group Solutions sites across Western Canada, the company announced on 6 September. Agrium is North America’s largest retail seller of crop inputs such as seeds, fertilisers and pesticides. The purchase of the 18 Cargill AgHorizons outlets in the US states of Nebraska, South Dakota, Minnesota, Wisconsin, Michigan, and Indiana – with annual revenues of over US$150M – was announced in July (see OFI News, July/August 2016). The agreement to buy the 16 Andrukow retail sites was announced on 6 September. “The locations will increase our retail presence

close to our manufacturing facilities in Western Canada, where we can optimise freight and handling; and in the US corn belt, where we are underrepresented in a key growing region,” said Agrium’s president and CEO, Chuck Magro. However, Oilseed & Grain News said Canada’s Competition Bureau had instructed Agrium to sell its own sites at Marwayne and St Paul, Alberta; and Andrukow locations at Wainwright and Sedgewick, Alberta, as it saw the deal as lessening competition in the sale of nitrogen fertilisers in certain markets in Alberta and Saskatchewan. Agrium is merging with Potash Corporation of Saskatchwan to create an agribusiness giant valued at more than US$23bn.

4 OFI – NOVEMBER/DECEMBER 2016 www.ofimagazine.com

Comment and News.indd 3

01/11/2016 12:14

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26/10/2016 14:49

BIOFUELS NEWS

IN BRIEF EUROPE: European renewable ethanol association ePURE released its annual statistics report in September. The report found that direct greenhouse gas (GHG) savings associated with European ethanol use increased 8.5% in 2015 from 2014, Ethanol Producer Magazine reported. Ethanol in Europe led to a 64% GHG saving compared to fossil fuels. MEXICO: Monarca biojet fuel project was planning to add 33,000ha of jatropha to its plantations so that it could supply US biofuel refineries with low-cost seed oil as well as produce biojet fuel for Mexican aviation, it announced in October. It hoped to ship more than 50M gallons of seed oil to the US for biofuel production. FINLAND: Prime Minister Juha Sipila has proposed that Nordic countries should set a joint biofuel target to increase the proportion of bio-based raw materials in fuel, Reuters reported on 27 September. Finland had a target of 20% of transport fuel to be derived from renewable sources by 2020, rising to 40% by 2030. Other Nordic countries had similar goals but no legal requirements. EU/ARGENTINA: The World Trade Organization has made the same decision as the European Court and ruled in favour of Argentina in the country’s dispute with the EU over biodiesel anti-dumping duties, Biofuels Digest reported on 10 October. The decision was made following an appeal from the EU. NIGERIA: The country’s only ethanol producer, Allied Atlantic Distilleries Limited (AAD), has said it will increase ethanol production in the country from the current 9M litres/year to 75M litres/year by 2020, News Agency of Nigeria (NAN) reported on 15 September. Managing diretor Rajavelu Rajasekar said Nigeria was currently importing around 260M litres/year of ethanol. AAD produces ethanol from locally-produced cassava. It planned to set up ethanol mills in Oyo, Osun and Kwara by 2020, to add to its current site in Ogun State, NAN said.

Chemoil to pay US$27M fine for renewable fuel violations

he bunker fuel unit of AngloSwiss commodity trading and mining giant Glencore Plc has agreed to pay a US$27M penalty and retire over 65M renewable fuel credits to resolve alleged violations of the US biofuels programme. The settlement was announced by the US Department of Justice (DoJ) and Environmental Protection Agency (EPA) on 29 September, which alleged that Chemoil Corp had exported at least 48.5M gallons of biodiesel from the USA from 2011 to 2013 but failed to retire more than 72M Renewable Identification Number (RIN)s that were generated for the exported fuel. The DoJ said the fine was the largest in the history of the EPA’s fuel programme and the current market value of the credits – along with an additional 7.7M RINS already retired by Chemoil

in the lead-up to the settlement – was more than US$71M. RINs are credits created when a company produces or imports renewable fuel. They can be traded or sold to refiners and fuel importers or exporters to help them comply with the US Renewable Fuel Standard (RFS) programme. “The RFS programme requires exporters to retire RINs for renewable fuel like biodiesel, because the fuel exported is no longer available for blending into the USA’s fossil fuel supply and, for that reason, cannot be used to meet the renewable fuel volume mandate established by Congress,” the DoJ said. “If exporters fail to retire the appropriate number and type of RINs associated with the exported fuel, it artificially inflates the volume of renewable fuel available

for blending in this country and the number of RINs available to meet the renewable fuel volume mandate. Ensuring exporters comply with the regulations for RIN retirement is critical to the proper functioning and integrity of the RFS programme.” Reuters said the removal of RINS from the market was likely to stoke mounting worries over tightening inventories of the credits. It said the RIN market had been rife with fraud in previous years and the US government had settled a number of cases of past fraud in recent months. In August, the US Renewable Fuels Association also urged the Commodity Futures Trading Commission to investigate possible manipulation of the US market for RINs (see Biofuels News, OFI September/October 2016).

Petrobras to exit biofuels in bid to reduce debt

razil’s state-run oil company Petrobras said on 21 October that is in talks to sell its stake in sugar and ethanol producer Guarani SA to French sugar group Tereos Internacional, reports the Wall Street Journal (WSJ). Petrobras had previously announced on 20 September that it was exiting the biofuels sector to reduce its debts. It has a 45.9% stake in Guarani and WSJ said it had hired Banco Itaú BBA to advise on the sale process. Guarani owns seven sugar mills with a combined production capacity of 1.7M tonnes of sugar and 900M litres/year of ethanol. Petrobras has a significant portfolio in biofuels in Brazil. As well as its stake in Guarani, it also owns 49% of Boa Vista mill in Goiás state, a joint

venture with Brazilian sugar and ethanol company São Martinho; and a 40% stake in the Bambui mill in São Paulo state, according to Reuters. It also owned three biodiesel plants in Minas Gerais, Bahia and Ceará states and had a 50% stake in local biodiesel producer BSBIOS, which managed two large plants in the states of Paraná and Rio Grande do Sul, Reuters added. According to a Biofuels Digest report on 10 October, Petrobras is closing its biodiesel plant in Quixadá, Ceará in November. The remaining two plants in Montes Claros, Minas Gerais; and Candeias, Bahia, are continuing operations. Petrobras is planning to sell US$15.1bn of assets by the end of this year, and US$19.5bn of assets in 2017-18.

RSB reaccredited after EU court calls the system unreliable

he EU’s Renewable Energy Directive sustainability programme – the Roundtable on Sustainable Biomaterials (RSB) – was reaccredited by the European Commission (EC) in September for demonstrating compliance with sustainability criteria, Biodiesel Magazine reports. The RSB’s previous recognition was expiring and, in August, the European Court of Auditors published a special report that found “weaknesses in the Commission’s recognition procedure and in the subsequent

supervision of voluntary schemes”. It concluded that the certification scheme was therefore “not fully reliable”. RBS’s director of marketing and communications Helena Tavares Kennedy commented on the report, saying, “There are some EU-approved certification systems that require bare minimum criteria and therefore do not guarantee truly sustainable practices, so we can see why they say there are weaknesses”. Biodiesel Magazine said that in particular, the report stated that

the EC did not require schemes to verify if biofuel production carried risks such as conflict over land ownership, forced or child labour, poor working conditions for farmers or danger to health and safety. In response, Tavares Kennedy told Biodiesel Magazine “the RBS standard provides assurance on all these important elements”. She also said the RSB scheme was the only one to provide dedicated principles on food security and water, as well as a concept for dealing with low ILUC.

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BIOFUELS NEWS

United Nations sets global airline emissions limits he United Nations (UN) agency, the International Civil Aviation Organization (ICAO), approved a landmark agreement to slow the growth of emissions from commercial flights on 6 October, Reuters reports. The global carbon offsetting system would be voluntary between 2021 to 2026 and mandatory from 2027, and applies to states with larger aviation industries. Under the system, airlines would have to buy carbon credits from particular environmental projects to offset any growth in emissions. It would apply to international passenger and cargo flights and business jets generating more than 10,000 tonnes of emissions per year.

Shell offers US$26M for Abengoa’s ethanol plant

he US arm of Royal Dutch Shell has offered more than US$26M to buy the Kansas cellulosic ethanol plant of troubled Spanish renewable energy and ethanol producer Abengoa SA, according to documents filed on 12 October in the Kansas District US Bankruptcy Court. “This move is in line with Shell’s strategy to develop biofuels” that use sustainable feedstocks, Shell spokeswoman Natalie Mazey said in an e-mailed statement. Abegona – which began insolvency proceedings in November 2015 – is selling its non-core assets including all its firstgeneration biofuel plants in to avoid becoming Spain’s largest ever bankruptcy. It has already agreed to sell five US ethanol plants for US$355.5M, put up for auction on 22 August. Reuters said Shell’s “stalking horse” bid served as an initial base offer in the auction process. If Abengoa received competing bids, an auction would be held on 21 November for the 25M gallons/year plant in Hugoton.

A small number of countries have objected to the agreement, but the president of the ICAO’s governing council said they would not derail the plan. Sixty-five countries accounting for more than 80% of aviation activities had agreed to participate in the first voluntary phase, which surpassed the ICAO’s expectations, Reuters reported. Russia and India said they would not participate in the voluntary phase, arguing it was unfair for emerging countries. China said it would join and Brazil voiced support although it did not commit to joining in 2021. Reuters said that according to ICAO figures,

the deal was estimated to cost airlines between US$1.5bn and US$6.2bn in 2025, and no more than 1.8% of industry revenues by 2035. The International Air Transport Association vice president Paul Steele acknowledged that this was a cost for the industry but said “we believe it’s a manageable cost”. Talks were continuing on the technical details, the report said, including the types of offset credits the agreement would accept. Some environmentalists said the agreement would not meet its own goals and would only require airlines to offset 75% of growth after 2021, or one-quarter of total international traffic.

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Russia plans to lift tax

he Russian Minister of Agriculture, Alexander Tkachev, has indicated that the government plans to lift its current excise tax on fuel ethanol by the end of the year, Ethanol Producer Magazine reported on 15 September. The existing tax is 102 rubles (US$1.62)/ litre, around 90% of the final cost of production, the report said. This made local ethanol production unprofitable, which resulted in low investment attractiveness – a major obstacle for the Russian ethanol industry Ethanol Producer Magazine said the government had feared lifting the tax would result in the production of vodka under the guise of bioethanol. In addition, development of the ethanol industry had been prevented by lobbying from domestic petroleum producers. The government projects lifting the tax would increase ethanol production to 670M gallons/year. Planning and construction of up to 19 new facilities has been supported by the government and private investment.

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7 OFI – NOVEMBER/DECEMBER 2016 www.ofimagazine.com 3381_FM_Tonsil_128x185_en.indd 1

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BIOTECH NEWS

IN BRIEF WORLD: Monsanto has obtained a license from the Broad Institute of Harvard University and the Massachusetts Institute of Technology to use their CRISPR gene-editing technology for agricultural applications, the Scientist reported on 27 September. However, it would not be able to use the technology to develop sterile or ‘terminator’ seeds or to modify tobacco for commercialisation. DuPont Pioneer and Calyxt currently used CRISPR geneediting techniques in agriculture, while Bayer had the licence for biomedical use, the report said. USA: Monsanto and Dow AgroSciences, a subsidiary of Dow Chemical Company announced on 3 October that they had reached an agreement to use Dow’s Exzact genome editing technology to research and develop new crop varieties with improved traits across Monsanto’s product portfolio. GERMANY: Chemical giant Bayer AG is investing approximately €16M in new capacity to research, develop and produce biological crop protection products at its site in Wismar. Biological control uses organisms to control pests and plant diseases. Bayer CropScience Biologics managing director Daniel Karsch said the company had created ideal conditions in Wismar to ensure its scientists could work successfully in the fermentation and production of natural fungi to produce biological products for integrated crop protection.

EC sets new date to complete probe of Dow-DuPont merger T

he European Commission (EC) has set a new date of 6 February to complete its investigation into the proposed US$130bn merger of US chemical giants Dow Chemical Co and DuPont Co, reported Reuters on 3 October. The probe was announced on 11 August to look into whether the merger would reduce competition in crop protection, seeds and certain chemicals (see Biotech News, OFI September/October 2016) but was halted a month later due to missing information. EC spokesman Ricardo Cardoso confirmed in an email that the companies had now submitted important information requested by the EU competition enforcer, Reuters said. Dow Chemical and DuPont said they remained confident of securing EU approval. “We remain focused on working with the EC toward closing the transaction by year-end 2016. In the event that the Commission utilises the full allotted time, closing would be expected to occur in the early part of 2017, subject to satisfaction of customary closing conditions, including receipt of all regulatory approvals,” the companies said in a statement. The merger to create DowDuPont Inc was first

Jail for conspirator stealing corn seed secrets

Chinese national was sentenced to three years in prison for conspiring to steal trade secrets from DuPont Pioneer and Monsanto, the US Department of Justice (DoJ) reported on 5 October. Mo Hailong, a Chinese national who became a lawful US permanent resident, was employed as the director of international business at the Beijing Dabeinong Technology Group Company (DBN), a Chinese conglomerate with a corn seed subsidiary called Kings Nower Seed. According to a plea agreement entered on 27 January, Hailong admitted to participating in a longterm conspiracy to steal trade secrets from the two biotech companies. The DoJ said Hailong took part in the theft of parent corn seeds from fields in Iowa and

Syngenta completes expansions

wiss pesticide and seeds giant Syngenta AG announced the completion of capacity expansion projects at key sites in Brazil and Switzerland on 4 October. It said it had invested a total of US$240M in a new fungicide plant in Paulínia, São Paulo, and an expanded corn seed factory in Formosa, Goiás, as well as expanding its herbicide manufacturing facility in Kaisten, Switzerland. The plant in Paulínia produced Syngenta’s Elatus fungicide, sales of which exceeded US$400M in 2015 in Latin America, the

announced on 11 December and would eventually see the new entity split into three by the end of 2018, creating separate companies focused on agriculture, specialty products and materials science. Both companies supply GM seeds and crop protection products to the oils and fats industry. DuPont Pioneer is a subsidiary of DuPont Co and a major producer of hybrid seeds for agriculture including GM crops with insect and herbicide resistance. Dow AgroSciences is a wholly-owned subsidiary of Dow Chemical Co supplying seeds, biotech solutions and agricultural pesticides. The merger is one of three currently under review. China National Chemical Corp announced a US$43bn takeover of Swiss seed and pesticide giant Syngenta AG on 3 February, while German chemicals leader Bayer AG announced its US$66bn purchase of the seeds giant Monsanto on 14 September. Syngenta said on 25 October that its acquisition was expected to be finalised in the first quarter of next year, having already received regulatory clearance from the Committee on Foreign Investment in the US (CFIUS) in August and 11 anti-trust approvals.

company said. Elatus was used against soyabean rust. “In Formosa, the installations at Syngenta’s corn seed plant have been quadrupled and the site will raise its production capacity from 400,000 to 1.6M bags/year of corn.” In Kaisten, investment had enabled production capacity expansion for S-Metolachlor, a herbicide used in many brands to control weeds in several crops, notably corn and soyabean. “These projects will ensure the achievement of industry-leading efficiency,” Syngenta said.

elsewhere in order to transport the seeds to DBN in China. An investigation was launched by the FBI when DuPont Pioneer security staff detected suspicious activity. “Theft of trade secrets is a serious federal crime, as it harms victim companies that have invested millions of dollars and years of work toward the development of propriety technology,” said US Attorney Kevin VanderSchel. As well as his prison sentence, Hailong was ordered to serve three years of supervised release following imprisonment and ordered to pay restitution in an amount to be determined at a later date. He was also ordered to forfeit two farms in Iowa and Illinois that were bought and utilised during the course of the conspiracy.

Chinese push for GM soyabeans

hina will push to commercialise GM soyabeans over the next five years as it seeks to raise the efficiency of its agriculture sector, according to a Reuters report. In its latest five-year plan for science and technology to 2020, China outlined specific GM crops including “pushing forward the commercialisation of new pest-resistant cotton, pest-resistant corn and herbicide-resistant soyabeans”. Reuters said China already allowed the growing of GM cotton but not the cultivation of any biotech food crops, fearing strong resistance from consumers and a local industry that sold GMO-free soyabeans at a premium to imported beans. “Domestic soyabeans are extremely desired and trusted by consumers for food,” the report quoted Chinese Soybean Industry Association vice president Liu Denggao as saying. The Reuters report said China was expected to produce 12.5M tonnes of soyabeans in 2016/17 but would import a record 86M tonnes. It allowed the import of GM soyabeans for use in animal feed. Corn was used mostly for animal feed and industrial products like starch.

8 OFI – NOVEMBER/DECEMBER 2016 www.ofimagazine.com

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TRANSPORT & LOGISTICS NEWS

IN BRIEF THE NETHERLANDS: Marine biofuels supplier GoodFuels Marine announced on 8 September that it had successfully tested a sustainable wood-based drop-in biofuel on a Dutch dredger. GoodFuels Marine said the fuel supplied by Finnish UPM Biofuels was the first ever biofuel derived from wood residues used in a marine fleet. It said testing of the fuel marked another landmark development in the marine biofuels consortium that was announced last October between itself, dredging expert Borskalis and global engine supplier Wärtsilä. CANADA: Grain and oilseeds marketer and handler Viterra announced on 15 September that it is building a new highthroughput terminal at Wadena, Saskatchewan which will have 34,000 tonnes of storage capacity and a loop track for loading up to 156 railcars. It is slated for completion in 2018. Viterra is part of the agricultural business segment of Anglo-Swiss commodity trading and mining giant, Glencore, which bought it in 2012. USA: TruHorizons, a joint venture created last year between Cargill and Trupointe Cooperative, has officially opened its new US$30M grain elevator outside of Milford, Indiana, reported Oilseed & Grain News on 20 September. The elevator includes eight concrete silos and two steel bins with a storage capacity of 4.33M bushels of corn, soyabeans and wheat. The facility has rail access and equipment to unload and load trucks and railcars.

Expansion at Santos port berth L

ouis Dreyfus Commodities (LDC) and Cargill expect to have capacity to handle more than 4.1M tonnes of oilseeds and grains within three years at a solid bulk terminal in Brazil’s Santos Port after winning an auction to operate the berth for the next 25 years. LDC Brasil BSL, the consortium that will operate the grain terminal, is 60% owned by Louis Dreyfus and 40% operated by Cargill. The two companies won the auction in December 2015, offering US$80M and beating another proposal from Brazil’s Agrovia SA, Reuters reported. The terminal was part of three port areas on offer as the first of 93 nationwide the government hoped to auction under a 2012 law in order to increase investment and upgrade port infrastructure. As part of winning the concession, the LDC Brasil BSL consortium must move 3.9M tonnes by its third year of operation and 4.1M tonnes by the fifth year. It would also need to upgrade infrastructure, including shiploaders, at the STS04 terminal in the Ponta da Praia area of Santos, Reuters said. Clythio van Buggenhout, Cargill’s port director in Brazil, said the company had decided to bid with Louis Dreyfus because they had already cooperated on a terminal on the other side of the port, in

Guaruja, since 2009. The consortium’s investment would occur over three years, LDC said when reporting its 2016 first half results on 29 September. “In three years’ time, the new terminal should have the capacity to handle more than 4.1M tonnes of grain annually, which will reinforce LDC’s presence and position in the Brazilian grains and oilseeds market,” LDC said. “Concurrently, both the grains and oilseeds platforms continued to build and develop a barge fleet in Brazil as part of the North Corridor export project [to move soyabeans from Mato Grosso state via the Amazon river to Barcarena port for export]. In Argentina, the Bahía Blanca port terminal was opened. In LDC’s first half 2016 results ending 30 June, net income was US$136M, up 6.3% from the same period last year. Net sales fell to US$23.52bn, down from US$26.39bn. LDC CEO Gonzalo Ramirez Martiarena said the external environment remained challenging with growth slowing in China, the USA recovery failing to spread to other major economies and instances of political instability and geopolitical tensions.

Cargill joins alliance targeting sulphur emissions

gribusiness giant Cargill has joined the Trident Alliance, a coalition of ship owners and operators founded in 2014 to improve enforcement of sulphur limits in Emission Control Areas (ECA) around the world. “More than one year and eight months after the introduction of the 0.1% sulphur limit in the North America and European ECA zones in January 2015, the implementation and enforcement of the regulations remain patchy and more ship owners and operators are joining in the work for more robust enforcement of sulphur regulations,” Cargill said (see ‘New regulations fuel concern’, OFI January 2015). Cargill charters and operates a global fleet of 500 dry bulk

vessels and some 60 tankers. “As part of the Trident Alliance, we are pleased to charter vessels that comply with maritime sulphur regulations to reduce our environmental impact and increase efficiency,” said Jan Dieleman, president of Cargill’s Ocean Transportation. Trident chair Anna Larsson said while the shipping industry had seen an increased level of enforcement activity in several countries in northern Europe, the legal framework in some countries did not appear robust enough to bring them to justice. “Even more concerning is the sea of question marks that remain around the introduction of the global sulphur cap. A decision on the date of

implementation is expected to take place this October and it is imperative that the members of the International Maritime Organization consider how to ensure effective and robust enforcement on the high seas.” (see ‘Biofuel Potential for Global Shipping’, p16-19) On 22 August, Transport Canada began monitoring all ships operating within the Canadian jurisdiction of the North American ECA to ensure they are using fuel containing not more than 0.1% sulphur by mass, reported Hellenic Shipping News. Inspectors may request samples of fuel during routine inspections and use portable fuel analysers to measure samples, the report said.

GrainCorp upgrades receival sites for record harvest in Australia

eading Australian agribusiness GrainCorp is investing A$21M to upgrade receival sites in preparation for record grain harvests this season, ABC Rural reported on 29 September. Australia’s canola harvest is expected to hit 3.39M tonnes, according to the Australian Oilseeds Federation, a rise of nearly 300,000 tonnes year-on-year, Agrimoney.com said on 7 October. GrainCorp has the largest grain storage and logistics network in eastern Australia, spanning regional storage facilities, rail/road and bulk grain ports.

“Through our integrated supply chain, we market grain to local and global markets, and we are a large buyer of grain for our malt, edible oils and flour processing business.” GrainCorp acting general manager said the A$21M investment had gone into mobile equipment to load grain at a faster rate, improving traffic flow and digitising data. But he said the company would not be reactivating any sites previously shut down as part of a recent restructuring (see News, OFI June 2016). In total, GrainCorp has receival sites with

over 20M tonnes of storage capacity in Australia; more than 4M tonnes of rail freight capacity; and operates seven bulk grain ports on the eastern seaboard. It also operates 14 bulk liquid terminals in Australia, New Zealand and China Agrimoney said Australia’s canola exports were pegged at a three-year high of 2.7M tonnes. The strong Australian harvest was coming amid diminished expectations for harvests in other major producers, including top exporter Canada and the EU.

10 OFI – NOVEMBER/DECEMBER 2016 www.ofimagazine.com

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

Louis Dreyfus opens new glycerine refinery

ouis Dreyfus Company LLC opened its new glycerine refinery on 28 September at its soyabean crushing and biodiesel plant in Claypool, Indiana, USA. The refinery is the second largest in the USA producing USP-grade kosher refined glycerine, with a capacity of 36,000 tonnes/year, according to World-Grain. Louis Dreyfus had been marketing crude glycerine, a co-product of biodiesel processing, at Claypool since the plant began operations in 2007, the report said. The new refinery would allow the facility to process all its crude glycerine production into kosher and halal

IN BRIEF FRANCE: Green chemistry firm CARBIOS, Limagrain Céréales Ingrédients and BpiFrance have launched a joint venture to produce a new generation of plastics with enzymes embedded in them to catalyse biodegration in the environment after use, CARBIOS announced on 1 September. The joint venture, CARBIOLICE, has the licence to incorporate enzymated pellets into plastic materials. After use, the enzymes degrade the plastic into base-molecules that can be assimilated by the microorganisms of the environment. “Biodegradation is complete within a few months (compared to 200 to 400 years for an ordinary plastic,” CARBIO said. CARBIOLICE would target the markets of flexible films (such as mulch films, bags and sacks) and rigid plastics (in the field of agriculture and for disposable tableware). USA: US renewable fuels and chemicals firm Virent announced on 15 September that it had set up a consortium with US petroleum refiner Tesoro, Japan’s Toray Industries, catalysts supplier Johnson Matthey and The Coca-Cola Company to scale up its BioForming technology to produce bio-based fuels and bioparaxylene, a raw material for the production of bio-polyester. The consortium aims to build a commercial facility to produce these products. Johnson Matthey and Virent will carry out catalyst and process development, as well as marketing and licensing the resulting technology platform.

certified United States Pharmacopeia (USP)food grade glycerine. “Our plant produces the highest-quality refined glycerine, meeting the increasing needs of our customers and a glycerine market that is on the rise, as new applications for refined glycerine continue to be discovered across a variety of industries including personal care, pharmaceuticals, food manufacturing, health care, automotive, chemical and textiles,” said Sean Doyle, regional head of oilseeds for North America at Louis Dreyfus. The Claypool facility was on the Norfolk Southern railroad and had the capability to

load refined glycerine into trucks as well as tanker railcars, World-Grain said. Louis Dreyfus also had leased specialised, lined tank cars to ship refined glycerine to customers, and built additional onsite storage capacity to support refinery operations. Louis Dreyfus is one of the ‘ABCD’ quartet of companies – alongside Archer Daniels Midland, Bunge and Cargill – that dominates world agricultural commodity trading. The French global conglomerate – headquartered in Amsterdam – is involved in agriculture, oil, energy and commodities, as well as international shipping.

Acme Hardesty expands focus to bio-based esters

eading US oleochemical distributor Acme Hardesty is teaming up with Green Biologics Inc to supply bio-based esters to its customers. The companies announced a joint development agreement on 7 September in which Green Biologics – the US subsidiary of UK renewable chemicals company Green Biologics Ltd – will supply bio-based n-butanol and isopropyl alcohol, produced from renewable acetone at its plant in Little Falls, Minnesota. Acme Hardesty – a division of Jacob Stern & Sons Inc – will source the acids and oils needed to produce the esters, including isopropyl myristate, isopropyl palmitate, butyl myristate, butyl palmitate, butyl stearate, butyl oleate, and dibutylsebacate. The companies plan to initially focus on the personal care market but will also jointly target other industrial sectors including lubricants, plastics and speciality solvent markets. Green Biologics is in the early start-up stages of its first commercial production facility for renewable n-butanol and acetone in Little Falls, Minnesota,with the aim of beginning shipments to customers by the fourth quarter of this year. Its platform

combines fermentation with Clostridium microbial biocatalysts and synthetic chemistry to produce green chemicals. Acme Hardesty is a leading distributor of castor oils and derivatives, palm derivatives and surfactants. From a manufacturer of tallow-based glycerine, it now distributes a full range of renewable palmbased glycerine, fatty acids, and fatty alcohols. It is further expanding to focus on renewable, bio-based chemicals. Green Biologics Inc recently announced a distribution agreement with Caldic BV, a global distributor headquartered in Rotterdam, the Netherlands, Ethanol Producer Magazine reported on 4 October. Caldic will distribute Green Biologics’ bio-based chemicals including n-butanol, acetone and other associated products to customers in Europe, Africa and the Middle East for a variety of key markets including coatings, adhesives, sealants and elastomers; household, industrial and institutional cleaners; personal care intermediates; food ingredients; and energy chemicals.

BASF and Avantium form FDCA and PEF venture

erman chemical giant BASF and Dutch renewable chemistry company Avantium announced a new joint venture on 7 October to produce and market plant-based furandicarboxylic acid (FDCA) and FDCA-based polyethylenefuranoate (PEF). The Synvina venture aims to invest a medium three-digit million euro figure to build a 50,000 tonnes/year plant at BASF’s Verbund site in Antwerp, Belgium, and to license its technology for industrial-scale production. Synvina will use Avantium’s process to manufacture FDCA, used to produce PEF, a polyester suitable for food and beverage packaging. Avantium said PEF offered better characteristics compared with conventional plastics,

including improved barrier properties for gases like carbon dioxide and oxygen, leading to a longer shelf life for packaged products. It also offered a higher mechanical strength, allowing for thinner packaging. “Alongside PEF, FDCA can be processed into polyamides for engineering plastics and fibres, to polyurethanes for foams, coatings and adhesives; and to esters for personal care products and lubricants.” Avantium said the new joint venture would continue its partnering activities, including one with Japan’s Toyobo Co Ltd announced on 1 September, on PEF polymerisation and films for food packaging, in electronics applications such as displays or solar panels, and in industrial and

medical packages. “The market development of PEF films in Asia will be performed in collaboration with Mitsui & Co Ltd, with which Avantium announced a partnership in December 2015. With Mitsui, Synvina will work on developing PEF thin films and PEF bottles in Japan. The parties expect to offer samples for packaging tests from 2017 onwards,” Avantium said. Toyobo and Avantium are also planning to scale up production at Toyobo’s existing commercial polymerisation lines in Iwakuni to produce PEF resin at commercial scale from MEG (ethylene glycol). “Furthermore, Synvina aims to continue development partnerships with The Coca-Cola Company, Danone, ALPLA and other companies for PEF bottles.”

12 OFI – NOVEMBER/DECEMBER 2016 www.ofimagazine.com

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D IARY OF EVEN TS

8-9 NOVEMBER 2016 6th ICIS Asian Surfactants Conference VENUE: Marina Bay Sands, SIngpaore CONTACT: Georgina Shillito, Conference Producer, ICIS, UK Tel: +44 (0) 20 8652 3641 E-mail: georgina.shillito@rbi.co.uk Website: www.icisconference.com/ asiansurfactants

10 NOVEMBER 2016 FOSFA Annual Dinner VENUE: Battersea Evolution, London, UK CONTACT: Gemma Hale, FOSFA, UK Tel: +44 20 7283 5511 E-mail: contact@fosfa.org Website: www.fosfa.org

14-16 NOVEMBER 2016 Oilseed and Grain Trade Summit/Organic & Non-GMO Forum VENUE: Hyatt Regency Hotel, Minneapolis, USA CONTACT: Sule Basa, HighQuest Partners, USA E-mail: sule.basa@gmail.com Website: www.oilseedandgraintrade.com or www.ongforum.org

23-25 NOVEMBER 2016 12th Indonesian Palm Oil Conference (IPOC) and 2017 Price Outlook VENUE: BICC, The Westin Resort Nusa Dua, Bali, Indonesia CONTACT: IPOC Secretariat, GAPKI, Indonesia Tel: +62 21 57943852 E-mail: info@gapkiconference.org Website: www.gapkiconference.org

1-3 DECEMBER 2016 7th FOI 2016, Fats & Oils Istanbul/FGI 2016, Feeds & Grains Istanbul VENUE: Ceylan InterContinental, Istanbul, Turkey CONTACT: Agripro, Turkey. Tel: +90 212 236 0345 E-mail: info@fatsandoilsistanbul.com.tr Website: www.fatsandoilsistanbul.com.tr

29-30 DECEMBER 2016

Lignofuels 2017 VENUE: Helsinki, Finland CONTACT: Dimitri Pavlyk, ACI (Europe), UK Tel: + 44 20 7981 2503 E-mail: dpavlyk@acieu.net Website: www.wplgroup.com/aci/event/ lignocellulosic-fuel-conference-europe

12-13 FEBRUARY 2017

ICBB 2016: 18th International Conference on Biofuels and Bioenergy VENUE: Paris, France CONTACT: World Academy of Science, Engineering and Technology (WASET) Website: www.waset.org/ conference/2016/12/paris/ICBB

Global Castor Conference 2017 VENUE: Hotel Courtyard by Marriott, Ahmedabad, Gujarat, India CONTACT: Solvent Extractors Association of India (SEA); Tel: +91 22 22021475/22822979; E-mail: solvent@mtnl. net.in or seaofindia1963@gmail.com Website: www.seaofindia.com

11-12 JANUARY 2017

6-8 MARCH 2017

5th ICIS Asian Oleochemicals Conference VENUE: Kuala Lumpur, Malaysia CONTACT: Merinda Bradshaw, Registration Team, ICIS, UK. Tel: +44 20 8652 3887 E-mail: events.registration@icis.com Website: www.icisconference.com/ asianoleo17

23-24 JANUARY 2017 Fuels of the Future 2017 VENUE: CityCube, Berlin, Germany CONTACT: Markus Hartmann, German Bioenergy Association (BBE) Tel: +49 228/81002-22 E-mail: info@bioenergie.de Website: www.fuels-of-the-future.com

POC2017 on 6-8 March in Kuala Lumpur

he 28th Annual Palm and Lauric Oils Conference & Exhibition: Price Outlook 2017/2018 (POC2017) will be held at the Shangri-La Hotel, Kuala Lumpur, Malaysia on 6-8 March 2017.

“Join us as a sponsor and maximise this platform to further elevate your corporate visibility and promote your respective products and services to the delegates at POC2017,” Bursa Malaysia says.

The 28th Annual Palm & Lauric Oils Conference & Exhibition: Price Outlook 2017/2018 (POC2017)

For sponsorship enquiries and other information, please contact:

“Join us and be part of the global congregation of the palm and edible oils industry professionals,” says POC 2017 organiser, Bursa Malaysia. “This event has upheld its core intention of providing valuable interaction opportunities for delegates to discuss trade possibilities, market trends and keep abreast of the latest price forecasts that will impact their respective businesses. “Thought-provoking inputs from speakers and their comments are key takeaways that will continue as discussion and analysis continue even after the event is over.

1-2 FEBRUARY 2017

POC2017 poc@bursamalaysia.com www.pocmalaysia.com Conference rates for POC2017 are: EARLY BIRD OFFER: RM 2,600 / US$710 – Bursa member rate RM 2,800 / US$760 – Non-member rate NORMAL RATE: RM 3,000 / US$820 – Bursa member rate RM 3,200 / US$870 – Non-member rate WALK-IN RATE: RM 3,800 / US$1,030

28th Annual Palm and Laurice Oils Conference & Exhibition: Price Outlook Conference 2017/2018 (POC 2017) VENUE: Shangri-La Hotel, Kuala Lumpur, Malaysia CONTACT: POC2017 Secretariat, Malaysia Email: poc@bursamalaysia.com Website: www.pocmalaysia.com

27-30 MARCH 2017 12th Annual World Bio Markets VENUE: The NH Hotel Krasnapolsky, Amsterdam, the Netherlands CONTACT: Green Power Conferences, UK Tel: +44 20 7099 0600 Website: www.worldbiomarkets.com

7-8 APRIL 2017 OFI India 2017 VENUE: Bombay Convention and Exhibition Centre (BCEC), Mumbai, India. CONTACT: Mark Winthrop-Wallace, Sales Manager, OFI, UK Tel: +44 (0) 1737 855 114 E-mail: markww@quartzltd.com Website: www.ofievents.com/india

27-28 APRIL 2017 3rd Annual Congress on Biofuels and Bioenergy VENUE: Dubai International Convention and Exhibition Centre, Dubai, UAE CONTACT: ConferenceSeries LLC E-mail: biofuelsconference@ insightconferences.com Website: www.biofuels-bioenergy. conferenceseries.com/middleeast

For a full listing of oils and fats industry events, go to: www.ofimagazine.com

14 OFI – NOVEMBER/DECEMBER 2016 www.ofimagazine.com

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DI ARY O F E V E NT S

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OFI India 2017 – new dates and venue announced 7-8 April 2017, Mumbai

FI India 2017 will be held on 7-8 April 2017 at the Bombay Convention and Exhibition Centre in Mumbai and features:

An international exhibition of suppliers, producers and processors The OFI India 2017 Business Congress & SOPA Soya Conference: ‘New Strategies, New Approaches’ A Smart Short Course technical programme: ‘Advanced Extraction, Processing and Use of Sunflower, Cottonseed, Canola and Palm Oil’ Turn to p28 to find out more

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Biofuel potential T for global shipping PHOTO: ADOBE STOCK/KARA

he maritime industry is responsible for the transportation of 90% of world trade and, according to World Shipping, it is the world’s most carbon efficient form of transporting goods over long distances. However, despite this fact, the European Commission (EC) says the global shipping industry currently emits 1,000M (1bn?) tonnes of CO2/ year, meaning it is responsible for 2.5% of global greenhouse gas (GHG) emissions. It is predicted that these emissions will increase between 50% and 250% by 2050, which is not compatible with internationally agreed requirements that emissions be at least halved from 1990 levels by 2050. It is agreed that CO2 emissions across all industries need to be lowered, but what can the shipping sector do to play its part? One way that the industry can attempt to lower its emissions is through the use of biofuels. Biofuels still emit CO2 but they are considered carbon neutral due to the production process. According to Dirk Kronemeijer, CEO of GoodFuels Marine, in an article in Ship & Bunker in January, “Sustainable marine biofuels are not at an experimental stage – they are providing a commercially viable solution today”. Biofuels are already used in shipping, but what types of biofuels are currently available, what is propelling their use forward and what does the future hold for the industry?

Targets for maritime emissions

lthough the shipping industr is a er carbon efficient for of transportation it still e its illions of tonnes of 2 every year. Rose Hales investigates whether biofuels are a realistic option to reduce global greenhouse gas e issions in this sector

The IMO set up the International Convention for the Prevention of Pollution from Ships (MARPOL) in November 1973. It has been updated by amendments through the years and seeks to prevent pollution of the marine environment by ships from either operational or accidental causes. In particular the MARPOL agreement aims to reduce sulphur oxide (SOx), nitrogen oxide (NOx) and particulate emissions from ships. Annex VI added an amendment on the prevention of air pollution from ships in 2005. The annex set limits on SOx and NOx emissions and prohibits deliberate emissions of ozone-depleting substances. In 2011, this was further updated to cover mandatory technical and operational energy efficiency measures to reduce GHG emissions. This set a legally-binding global agreement to reduce CO2 emissions in the shipping sector, which came into force in January 2013. In January 2015, sulphur limits were capped in emission control areas and require ships to use fuel on board with a sulphur content of no more than 0.10%, against a previous limit of 1.00%. The emission control areas for SOx are the Baltic Sea area; the North Sea area; the North American area (covering designated coastal areas off the United States and Canada); and the United States Caribbean Sea area (around Puerto Rico and the United States Virgin Islands). Outside the emission control areas, the current limit for sulphur content of fuel oil is 3.50%, but will fall to 0.5% after 1 January 2020. The IMO will meet on 24-28 October in London to make a decision on whether to cap SOx emissions globally from either 2020 or 2025. The cap would require sulphur emissions to fall from the current maximum level of 3.5% of fuel content to 0.5%. Sulphur emissions have already been capped in the EU from 2020, a 0.5% requirement will apply

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when any ship is within 200 nautical miles (370km) of EU member states’ coasts. China has also introduced tighter controls on sulphur levels. Ships calling at Shenzhen port are required to have a fuel sulphur content of no more than 0.5%. To hit the sulphur targets, ships can no longer be run on 100% traditional bunker fuels, so alternatives must be found. According to a Reuters article in October, in order to comply with the new rules, it is suggested that ship owners switch away from “sludgy bunker fuels” to diesel or liquefied natural gas (LNG).

Biofuel potential in shipping Ecofys, a renewable energy consultancy, published a report on behalf of the European Maritime Safety Agency (EMSA) in January 2012 on ‘The Potential of Biofuels for Shipping in the EU’, in order to evaluate if and how biofuels could be used in the shipping sector as an alternative fuel. The report looks at the marine fuel market, including requirements for marine fuel in current ships and engines and options in marine biofuels. The fuelling of a ship is known as bunkering, and is a process in which multiple tanks of fuel are loaded onto ships, usually providing enough fuel for 70 days. Marine fuels come in two types, either residual (heavy) or higher quality distillate fuels. Fuel accounts for up to 50% of a ship’s total operational costs and limiting these costs is of major importance to the industry. Renewable marine biofuels are not currently as cost-effective

‘Fuel accounts for up to 50% of a ship’s total operational costs and limiting these costs is of major importance to the industry’ as petroleum derived fuels, although this could change. According to Kronemeijer, also in Ship & Bunker in January, the answer to a low emission future for the shipping industry is scaling up sustainable marine biofuel. Kronemeijer points out the “absence of specific requirements from shipping in the recent Paris [Climate] Agreement” but urges the industry to “continue to take responsibility for playing our part”. “Driven by both regulatory and market factors,” Kronemeijer says, “biofuels could make up 5-10% of

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

the total global marine fuel mix by 2030”. Kronemeijer reiterates that the drop-in nature of the fuel is critical “as it ensures that current logistical and operational systems can remain in place and all parties can remain in ‘business-asusual’ mode”. In terms of what the sustainable fuel would be, it is noted that a long-term solution for shipping is blendable HFO (heavy fuel oil), but “assured availability” is the most crucial element of a sustainable marine biofuel. Kronemeijer predicts that the first volumes of biofuel will initially concentrate around the areas that have incentives in place. The useage hotspots are predicted to be Western Europe, the Nordics and west coast North America. Ports such as Rotterdam and Amsterdam have incentivised the used of lower carbon fuel, with others expected to follow, Kronemeijer says.

Suitability of marine biofuels The Ecofys report comments upon the suitability of biofuels to replace marine diesel, analysing the option on four criteria: the availability of the fuel, production costs, maturity of the technology, and technical compatibility with current engines. Marine alternative fuels can be implemented in two main types, mono-fuel or dualfuel. Mono-fuels require that the engine type be changed from diesel to otto, which is a major adjustment that requires parts of the engine to be rebuilt. Switching an engine from diesel to otto

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

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(CNG) results in a combined emission reduction of 10-15% CO2. Dual-fuel implementation is where gas and diesel are combusted simultaneously in a diesel engine. The CO2 savings are based on energy content. The preferred option for alternative fuel is always 100% drop-in, renewable biofuel, i.e. fuel that can be substituted fully, does not require blending, and with no changes to original engines or infrastructure needed, the report says. Ecofys identifies six biofuel types that it reviews and analyses further. 1. Biodiesel to replace marine diesel oil (MDO)/marine gas oil (MGO) in low to medium speed engines 2. Dimethyl ether (DME) used to replace MDO/MGO in all engines types 3. Straight vegetable oil (SVO) to replace intermediate fuel oil (IFO) or heavy fuel oil in low speed engines 4. Bio-LNG or bio-methane in gas engines using LNG 5. Bio-ethanol used in high speed main or auxiliary engines 6. Pyrolysis bio-oil in low speed engines

Methanol and LNG Methanol and LNG are petroleum-based, lowsulphur fuels, which generate lower GHG emissions. But, most importantly, they can be utilised as a transition fuel to switch to biomethanol and bio-LNG, which are chemically identical to their petroleum counterparts but are produced from renewable sources. By using methanol, large ocean-going vessels can reduce SOx emissions by 99%, Hellenic Shipping News reported in July. In addition it would reduce nitrogen oxide emissions by 60% and particulate matter by 95%. According to Greg Dolan, CEO of Methanol Institute, the low cost simplicity of converting methanol to marine fuel is its greatest attribute. The fuel is still petroleum-based, so is not a long-term solution; but biomethanol is. Biomethanol can be produced from glycerine, as is currently being done by Netherlandsbased BioMCN, which is the first company to

PHOTO: ADOBE STOCK/R.BABAKIN

Ecofys compared the most important characteristics of the selected biofuels with the characteristics of marine fuels (as quoted in the ISO 8217 technical standard for marine fuels). Based on the general specifications, the report concludes that biodiesel and SVO are closest to marine fuel, in terms of compliance with the ISO standard. In a report published this year by the European Commission Joint Research Centre (JRC) titled ‘Alternative Fuels for Marine and Inland Waterways’, Kamaljit Moirangthem notes that “for marine vessel operations, from a technical integration perspective, biodiesel blends (up to 20%) have been reported as the most promising bio-based alternative fuel”. However, Moirangthem does draw upon some concerns and challenges, including long-term storage issues,

affinity to water and a risk of microbial growth and fatty acid methyl ester (FAME) material deposition on exposed surfaces. The “main problem” for FAME, however, is sustainability concerns, due to the reliance on palm oil production, Moirangthem says. In addition, the report states, “considering that the land required for production of 300M tonnes of oil equivalent biodiesel based on today’s (first and second generation biofuels) technology is slightly larger than 5% of the current agricultural land in the world, securing the necessary production volume is a challenge”. Although biodiesel offers the best alternative in terms of its use as a ‘drop-in’ fuel with no technical engine change required, it is not currently a sustainable long-term solution. Two alternatives to biodiesel and bunker fuel are methanol and LNG, which various reports conclude are some of the most promising solutions to the industry’s emissions and sulphur problem.

produce, market and sell industrial quantities of biomethanol. The fuel can also be made from the black liquor produced in pulp and paper mills, also called tall oil. Methanol-fuelled ships have already been trialled, including a Stena Line ferry in 2015. The ferry’s fuel system and engines were adapted to use methanol by Stena Line and Wärtsilä, at a cost of €22M. Under the TEN-T Priority Project 21: Motorways of the Seas, pilot tests involving methanol as a marine fuel for the future are being carried out, with considered potential for biomethanol. Methane (or LNG) is similar to methanol in that it can help achieve GHG emission reductions. BioLNG can benefit from growing LNG infrastructure, the JRC report says. Bio-LNG can be produced by upgrading biogas or by thermo-chemical conversion of lignocellulosic biomass. To make the switch from petroleum-sourced LNG and bio-LNG, “technical development is needed to produce the required amount of biogas”, the report says. The current low availability would limit the introduction of the fuel, specifically in Europe, it notes. Although the potential for bio-LNG and biomethanol is the most promising of alternative fuels for reducing shipping emissions, this does still rely on the industry’s ability to upscale and sustainably source feedstock, as well as develop production technology which is cost effective.

What’s holding the industry back? Cost is the main factor holding back the shipping industry from using biofuels. Until biofuels can be produced and sold cheaper or on a par with petroleum marine diesel, it will be difficult to convince the industry to adopt them. New trends in shipping are also threatening the marine biofuel industry. According to Ecofys, a new trend in the industry is the reduction of staff on ships in order to reduce costs. However, both physical staff numbers as well as knowledge would be needed to introduce biofuels. Switching from bunker fuel to low-sulphur fuel on VLCCs, for example, was estimated by shipping broker Clarkson to boost fuel costs by around 44% (from US$212/tonne to US$379/tonne), Reuters reported in October. Although this cost is significant, once sulphur levels from ships are capped globally by the IMO, ship owners will have little choice. In 2015, the Financial Times quoted DuPont suggesting that agricultural waste biofuels could not be competitive against traditional fuels unless the price of petroleum rises to US$70-80/barrel. However, agricultural waste is not the only source of marine biofuels, and product cost is not the only factor being considered.

No interest in the long-term

TRADITIONALLY, BUNKER FUEL IS LOADED ONTO SHIPS IN MULTIPLE TANKS, USUALLY PROVIDING ENOUGH FUEL FOR 70 DAYS

Even if costs alone are the only thing driving the use of biofuels in shipping, this is a big factor. In an article in the Guardian in August entitled, ‘Why aren’t ships using wind-power to cut their climate footprint?’, the lack of interest in longterm investment, in particular in physical changes to the ships themselves, is investigated. Henning Kuehl, head of business development at SkySails (a German-based company which equips ships with

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automated kites to help propel them and cut fuel consumption) told the newspaper that, “Many ship owners struggle to survive and there’s not much money for investing in solutions improving longterm profitability”. An additional problem with non-biofuel solutions is that “ship owners (who have to make the investment) often don’t pay for the fuel – that’s the charterer’s duty. The charterer on the other side doesn’t charter the ship for long enough a period to make low-carbon technologies pay back.”

Current experiments in bio-ship fuel In October 2015, a consortium was announced between dredging and marine expert Boskalis, and global engine supplier Wärtsilä, which will collaborate with GoodFuels Marine, the first marine biofuels company focused on the global commercial fleet. The aim of the consortium is to develop sustainable drop-in marine biofuels. Through a two-year pilot programme, the companies hope to accelerate the development of sustainable, scalable and affordable biofuels for use in the shipping industry. In particular it will focus on sustainable feedstock, securing industry certification and preparing for large scale production, the companies said in a statement. The focus is on tangible opportunities for marine biofuel supply. In September, nearly a year into the collaboration, the companies announced the successful live tests of a sustainable wood-based biofuel in a marine fleet. The biofuel is called UPM BioVerno and was used in a 1696 deadweight tonne cutter suction dredger in various blends up to 50%. Over the operating period, the companies say the ship saved 600 tonnes of CO2. According to the companies, marine biofuels could reduce CO2 emissions from vessels by 80-90%, and also eliminate SOx emissions, cut NOx emissions by up to 10% and reduce particulate matter (PM) expelled in the exhaust plume by 50%. On 20 September, Ship & Bunker reported that GoodFuels Marine was to work with the Port of Amsterdam on a marine biofuel pilot project which aims to reduce the carbon footprint of the port’s fleet by 14%. The project will run for four months and the fleet will use hydrogenated marine biofuels. Doryan Daamen, commercial director marine at GoodFuels says, “For the immediate future, we will continue to produce our fuels mostly from waste streams such as used cooking oil. But we are currently working – also actively with the port involved – to develop new marine biofuel streams that can be scaled up significantly.” ARA Alternative Fuels announced in August that a sea trial with the US Navy using 100% drop-in renewable diesel fuel as a replacement for traditional marine diesel had been successfully completed in California. The trial lasted 12 hours and used 18,000 gallons of ReadiDiesel, which has the same molecular composition, boiling range distribution, and physical and energy density as petroleum fuels. The fuel is 100% renewable, produced lower emissions and reduces greenhouse gas emission by 80% compared to petroleum-sourced fuels, ARA says. The trial had two aims, to show that ReadiDiesel could be used as a drop-in replacement for traditional marine diesel, and would require no blending with petroleum fuels, and no equipment

modifications or operational modifications. Secondly, ARA wanted to show that the fuel would perform equal to or better than petroleum-sourced marine fuels. It was reported that, “the ship successfully completed multiple engine starts and speed changes. There were no mechanical, operational or qualitative differences when operating on ReadiDiesel”. ARA said the results will be fully analysed and a final report issued at a later date. The US Navy is pursuing drop-in biofuel for its ships in order to “increase operational flexibility and energy security”, it says.

Not if, but when Biofuel use in the shipping industry is no longer a case of if, it is a case of when.

Emissions targets are creeping up on the sector, as well as limits to sulphur levels in fuel, both of which are contributing to a need for alternatives to traditional bunker fuels. Although biodiesel/FAME is the simplest option, as a drop-in fuel that requires no technical changes to ships or engines, its sustainability and availability have been brought into question. Alternatively, research suggests that a strategic move from bunker fuel to methanol and LNG – initially petroleum-based, but transitioning to biomethanol and bio LNG – would offer the greatest emissions savings in the short and long-term. It is sustainable and, with investment in technology and feedstock sourcing, could become available and ideally cost effective. Rose Hales is OFI’s editorial assistant

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Sustainable soya IMAGE: ULISSE_01/ ADOBE STOCK

Brazil has been accused in the past of allowing soyabean production to lead to the deforestation of the Amazon rainforest, but various laws, programmes and partnerships have been introduced, which are making soya more sustainable. Rose Hales writes

agricultural uses. Originally in 1965, the legal reserve requirement was 50%. The legislation alone is nothing without a clever monitoring system, to enforce the law and examine the results. In order to make this a reality, the federal government has developed a system through which property owners can register their own properties and land, called the Rural Environment Registry (CAR). CAR is part of the National Environmental Information System (SINIMA), and is managed by the Ministry of Environment. The aim of the system is to register all the estimated 5.5M properties in Brazil, covering around 400Mha of land. The system is accessed through a website. Owners map or draw out their property, marking out firstly their production areas, followed by native vegetation and the placement of other physical characteristics such as rivers. The online system then calculates whether the landowner is in compliance with the legislation and, if not, the percentage of land that needs to be recovered. The software uses high-resolution images of the areas that are purchased yearly by the government. The updated images are used for registry, as well as to monitor compliance annually. Francisco J. B. de Oliveira Filho, director of the Department of Policies to Reduce Deforestation of Brazil’s Ministry of Environment, told OFI magazine that the Brazilian government understands that this cannot be done instantly. If the property owner needs to recover land, they will agree with the government what will be done and in what time frame. The government will then monitor the progress and check that the recovery is taking place as agreed. If it is observed that a landowner is not carrying out the land recovery as agreed, another discussion will take place. Through monitoring the images on CAR, Oliveira-Filho says the government can see who is registered by region and state. As of November 2015, 60% of landowners were registered in the system.

A challenging situation

BRAZIL HAS INTRODUCED NEW POLICIES AND PARTNERSHIPS TO COMBAT DEFORESTATION IN THE AMAZON

razil is the world’s second biggest producer of soyabeans and home to the world’s largest tropical rainforest – the Amazon. The country’s expansion of soya growing areas has led to deforestation in the Amazon but various authorities and groups have been working to make Brazilian soya more productive and sustainable.

The Forest Code Brazil’s government has been attempting to

encourage the protection of the Amazon from agricultural expansion since 1965, when legislation in the form of a Forest Code was first passed. Following years of failed implementation and controversy, a new Forest Code was passed in May 2012, with stricter rules and a new monitoring system, which the government hopes will mean greater success. The Forest Code requires landowners in the Amazon to set aside 80% of their property as a legal reserve to conserve natural vegetation. The other 20% can be used to grow soya or for any other

OFI magazine spoke to Oliveira-Filho about the challenges arising from the Forest Code and the Rural Environment Registry. “The first challenge is to get everyone on board and in the system,” Oliveira-Filho says. “As soon as we know what are the areas and the needs that we have in terms of recovery, we can think about the strategy to do the recovery.” Once everyone is in the system, the next challenge is, of course, compliance. For agricultural landowners, compliance is simpler; in order to set aside an area, the farmer only needs to refrain from planting in that area – fences are not needed and the cost is estimated to be very low. Recovery can occur very naturally. On the other hand, for landowners or farmers who raise animals, the situation is more complicated. In order to recover specific areas, fences will need to be erected to keep animals out, and investment will be needed to support farmers in this position. According to a WWF report in February 2016, the main issue is that including the final 40% of farmers in the Forest Code is likely to be considerably more challenging than the first 60%, as these are the more resistant producers.

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A necessary partnership

TABLE 1: THE SIZE OF A LEGAL RESERVE DEPENDING ON PROPERTY LOCATION

There is no doubt that Brazil’s Forest Code is ambitious and challenging, and will be difficult to achieve. Oliveira-Filho told OFI that the key for the government is partnership with the agricultural sector. Without that partnership and shared interest, the 60% could not have been agreed, and without their continued support the remaining 40% will not be registered. In Mato Grosso (Brazil’s leading soyabean growing state) 75% of the properties have been registered. This 75% includes between 80-90% of soya producers in the state. Ricardo Arioli Silva, an agronomy engineer at the Mato Grosso Soybean and Corn Growers Association (APROSOJA) and the president of the environmental commission of Brazil’s state federation spoke on behalf of farmers in Brazil’s leading soyabean growing region. Arioli Silva said “farmers are now much more convinced that this programme and new law will help us a lot”. There used to be resistance, but they no longer see this. It comes down to the simple fact that, “if you are not doing anything wrong, then what are you afraid of?”, Arioli Silva says. Farmers in Mato Grosso want the government to act faster on illegal deforestation, as Arioli Silva says most farmers are complying with the law with just a handful responsible for reports on the increase in deforestation, which is hurting the reputation of everyone. Help is also coming from the banks, OliveiraFilho says. After 2017, farmers will be unable to obtain a loan from a bank if they do not have CAR, due to issues of insurance and guarantees. Making compliance with the legislation a requirement for credit serves as its own enforcement mechanism.

Controversy There is some controversy in the new Forest Code, in the form of an extended deforestation amnesty. The new code grants amnesty to thousands of “small” properties that deforested illegally before July 2008 and would have previously had to restore the land at their own expense. Properties that have now been granted amnesty range in size between 20ha to 440ha, and include 90% of Brazil’s rural properties. According to a report in Science in April 2014, the amnesty is particularly worrying because it “could lead to the perception that illegal deforesters are unlikely to be prosecuted and may even be exonerated in future law reforms”.

Land Use

Legal Amazon Forest

Cerrado

Rest of Brazil

Grasslands

Legal Reserve

80%

35%

20%

Productive Use

20%

65%

80%

health and safety in the rural workplace – all free of charge”. According to a Soja Plus report released by the organisers, since 2011 in Mato Grosso, the programme has held 29 workshops and field days for 4,630 rural producers. More than 36,000 informative signs were distributed at farms, detailing the correct procedures for safety and environmental protection. In addition, technical pamphlets, educational videos and index cards were distributed. According to Arioli Silva, the Soja Plus Program is about “continuous improvement”. It helps farmers to be in better compliance with legislation, which may make it easier for them to be certified – if they choose that route. As of November 2015, 17% of soya producers were enrolled in the Soja Plus Program, meaning it still has a long way to go to get up to 100%. However, according to Carlo Lovatelli, president of ABIOVE, it is not a lack of interest that is holding the programme back from signing up 100% of soya farmers, but that too many are trying to sign up at once. Lovatelli explains that farmers communicate between themselves very rapidly if something is good. As the programme helps them match the EU standard for products, which is the benchmark standard for Brazil, so “they line up to apply to the programme…they know it is good and it is for free”. The question is whether the programme has the capacity if 100% of farmers want to sign up. Arioli

Silva admitted that the organisers would need help to make this happen. In order to secure help with the programme, Arioli Silva tells OFI about the agreement which was due to be signed with the European Feed Manufacturers’ Federation (FEFAC). Instead of simply telling farmers that they are not in compliance, FEFAC and the federal government can help the farmers become compliant. The system that hopes to help farmers become compliant with health & safety requirements has a helpful connection with CAR. As well as ensuring compliance with The Forest Code, CAR is also a way of documenting how many farms are certified in different areas. According to Arioli Silva, there is a checklist of more than 150 items that each farm needs to resolve in order to be certified. Fabio Trigueirinho, secretary general of ABIOVE, reiterated that it is the complexity of Brazilian law that makes it so difficult for farmers to comply; there are more than 250 requirements for farmers. When asked specifically what was causing the most difficulty for farmers, Arioli Silva immediately brought up the labour law. Arioli Silva says the government adapted the city law for the labour law in Brazil. “They want us to have the same labour law for the farmers”. However, he says while city workers can work designated hours and times, it is impractical to for farm workers to work the same way.

FIGURE 1: AREAS OF PERMANENT PROTECTION REQUIRED BY THE FOREST CODE Natural reservoir strip Area requirements Urban natural reservoir strip Maintain strip 30m Natural reservoir area <20ha Maintain strip 50m

Spring Riparian radius 50m

River width <10m Riparian strip 30m

River width 10-50m Riparian strip 50m

Natural reservoir area >20ha Maintain strip 100m

Soja Plus Program The Soja Plus Program is a partnership that has been running since 2011 between industries and producers, formed to develop a common sustainable agenda. The main players working closely to support the programme are the Brazilian Vegetable Oil Industries Association (ABIOVE), APROSOJA and the Mato Grosso State National Service for Rural Learning (SENAR/MT). The aim of the programme is to train and educate rural workers and businesses in order to help them better comply with legislation. According to the programme’s organisers, a further objective is “to reinforce the idea that it is possible to reconcile agricultural resources with conservation of natural resources and to improve

Legal Reserve: set aside area that ensures sustainable economic use of natural resources, and promotes conservation of native fauna and flora

River width >600m Riparian strip 500m River width 200-600m Riparian strip 200m

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At the time of speaking to Arioli Silva in November 2015, Rosana Verza at the Embassy of Brazil said that the Minister of Agriculture Kátia Abreu came to London previously and also commented on the country’s labour law. It was hoped that the government would look into adapting the law for rural areas rather than transferring it directly from the cities. However, it looks as though this could also fall victim to President Rousseff’s impeachment on 12 May 2016. Alongside Rousseff, the president’s cabinet was also replaced by stand-in President Michel Temer, including the Minister of Agriculture. Kátia Abreu was replaced by Blairo Maggi on 12 May. According to a report in the Guardian in May, the new finance minister Henrique Meirelles has already said that reform on the country’s labour laws is needed, although it was unclear what type of reform he has in mind.

Soy Moratorium Brazil’s final weapon in the drive towards making soya more sustainable is called the Soy Moratorium. The moratorium was formed in 2006 after Greenpeace published the report ‘Eating up the Amazon’, in which it claimed soya was becoming a major driver in the deforestation of the Amazon. According to Carlo Lovatelli, the industry had to respond to the report, so it organised a meeting on 24 July 2006 where it was decided that from that day on, Brazil’s major soya trading companies would no longer purchase soyabeans from areas of the Amazon biome that had been deforested. Lovatelli says that the reaction the idea received was slightly surprising; it was a huge hit and created significantly more noise than they expected. After the moratorium had been signed, the group went on to set up a working group on soyabean, which included the NGOs that it had previously fought with furiously. The group, known as The Soya Working Group, is co-chaired by Greenpeace from the NGO side, and Lovatelli from ABIOVE’s side. Carlo says that instead of fighting the NGOs through the press, which had never previously been successful, they all sat around the table together and started to talk, negotiate and work through the process. In 2008, the moratorium was renewed for the first time. According to Lovatelli, it was clear to the Ministry of the Environment that the moratorium was an extremely positive and constructive device that was achieving results in Brazil’s soya industry. Therefore, at the renewal in 2008, the Brazilian government added its signature, which Greenpeace reported showed its commitment to the development of a long-term solution. Through the support of the government also came support from the Brazilian Space Agency (INPE), which would help with monitoring, and Banco do Brasil (the federal bank), which provides the majority of the financing to the industry. The moratorium was originally only intended to last a few years. When OFI met Lovatelli in November 2015, he said that the moratorium was due to expire in May 2016, at the point that the Forest Code took over. However, in June 2016 it was announced that the Soy Moratorium would be extended indefinitely, or until it was deemed no longer necessary. The announcement was met with a very positive response.

Proof that the moratorium works Lovatelli told OFI that since the moratorium was signed, less than 1% of deforestation in the Amazon biome was due to soya. “This gave us assurance that soyabean is not a driver for deforestation in the Amazon”. According to Greenpeace, “the moratorium is widely credited as a major factor in the reduction of deforestation in the Brazilian Amazon in recent years”. In addition, Mongabay reported in January 2015, citing a study published in Science journal, that the moratorium has been more effective in cutting forest destruction than the government’s land use policy. Before the moratorium, 30% of soya expansion in the Amazon occurred through deforestation. This figure now stands at about 1%. The study compares the effectiveness of the moratorium with that of the government’s Forest Code. The paper was led by Holly Gibbs of the University of Wisconsin-Madison. Gibbs told Mongabay, “Only 115 people out of several thousand soya farmers have violated the Soy Moratorium since 2006, but over 600 of them have violated the Forest Code. So, this same group of farmers is five times more likely to violate the government policy than they are to violate the private sector agreement.”

Not all the problems have been solved Despite the praise that the Soy Moratorium has received, environmental groups are saying that its power needs to be extended to the Cerrado. They argue that the Cerrado is still experiencing a high conversion rate for soya, with an estimated 20% of new soya planting taking place within the Cerrado area, Science reports. A study also published in the Science journal on 1 April 2016 reveals the true extent of the destruction of the Cerrado. Deforestation that was previously prevalent in the Amazon has shifted to the neighbouring Cerrado savannah, the study found, with crop planting rapidly clearing native vegetation. Gillian Galford of the University of Vermont

said the study is the first “to show how intense the deforestation and agricultural expansion in the Cerrado has been in the past decade”, adding that it is “clearly a new hotspot for tropical deforestation”. When asked by OFI in November 2015 about whether they thought that deforestation within the Cerrado is a growing problem, Lovatelli dismissed the idea by commenting that “there is no forest in the Cerrado”, which arguably misses the point. Arioli Silva commented: “there are some states that are developing their soyabean areas [in the Cerrado] legally. So until it is illegal, then why not?” He added, “money must come from somewhere”. The results of the study showed that agricultural land on a 45M ha study area in the Cerrado has doubled between 2003 and 2013, from 1.3M ha to 2.5M ha. The loss of native vegetation is not the only concern, as the study assessed the risk the loss of this vegetation has on rainfall across Brazil. It found that during the dry season, 60% less water is recycled by cropland than the native vegetation. Researchers say that continued agricultural growth could reduce rainfall or delay the onset of rainy seasons. Late rainfall could have dramatic implications on what can be grown, not only in the Cerrado but also in the Amazon. The study describes one ‘silver lining’ that was found, that ‘double cropping’ – the planting of two crops in the same field in a single growing season – can help to alleviate the decrease in water recycling.

Improving productivity The key element in making soyabean more sustainable and protecting Brazil’s important biomes is productivity. Protection and production need to be combined by increasing the productivity of land, representatives from the industry told OFI. Now that the Soy Moratorium has been renewed indefinitely, it is hoped that it can be extended, and similar monitoring and intervention measures can be established in the Cerrado. Alongside this, if the Forest Code and Soja Plus can sign up the remaining landowners, Brazil will be able to say that soya is no longer responsible for deforestation. Rose Hales is OFI’s editorial assistant IMAGE: DIEGOPONTES7170/ ADOBE STOCK

ENVIRONMENTAL GROUPS SAY THAT THE POWER OF THE SOY MORATORIUM MUST BE EXTENDED TO THE CERRADO SAVANNAH REGION, WHICH ALSO FACES THE THREAT OF NATURAL VEGETATION BEING CLEARED FOR SOYA PLANTING

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Thailand aims for fuel self-reliance

The Thai Cabinet revised its Alternative Energy Development Plan in 2015, aiming to promote the higher use of ethanol and biodiesel up to the year 2036 while remaining reliant on domestic feedstocks

n October 2015, the Thai Cabinet approved Thailand’s revised national energy plan, consisting of three plans: Alternative Energy Development Plan: AEDP 2015-2036, Oil Plan 2015-2036, and Gas Plan 2015-2036. The plan revision is intended to align with the 11th National Economic and Social Development Plan. The bottom line of the revised AEDP is to promote higher use of biofuels while remaining self-reliant in feedstock and biofuels with minimum trade in both. The plan also aims to increase mandatory biodiesel blending from the current B7 level to B10 in 2018. The government plans to subsidise the use of B20 in large trucks on a voluntary

basis, beginning in 2016. However, achieving higher blends under this mandatory requirement plan may be difficult to reach or sustain given the volatile weather-driven production of palm oil, which is the only domestic biodiesel feedstock allowed. Thailand’s campaign to utilise used cooking oil (UCO) for biodiesel production exists among one or two biodiesel companies as a Corporate Social Responsibility (CRS) campaign but the use is limited to 5-6M litres of UCO/year. With regards to ethanol, the government is still promoting its use through price incentives and excise tax reduction for cars compatible with E20 and E85 gasohol. In 2017, fuel ethanol production and consumption should continue to increase to 1.4bn litres, supported equally through price incentives to the State Oil Fund and market incentives to retailers. The price subsidies, which are paid by the State Oil Fund, make gasohol (ethanol-blended gasoline) 20-40% cheaper than regular gasoline. Although the government’s policy is to maintain its B7 mandates in 2016 and 2017, it may reduce mandates at any time. For example, the government lowered B7 mandates to B5, effective on 25 July 2016 because palm oil supplies appeared to be

lower than earlier estimates and the mandate would have negatively affected cooking palm oil supplies. The significant decline in diesel prices in 2015 not only encouraged diesel vehicle users (mainly trucks or trailers) to switch to diesel from CNG, but it also stimulated increased use of diesel among smaller vehicles (ie pick-up trucks). As a result, biodiesel consumption rose by 4% to 1.23bn litres in 2015, as compared to 1.18bn litres in 2014. Prevailing low prices for diesel are expected to drive biodiesel consumption growth by 6% in 2016 and 8% in 2017.

Policy and programme The 10-year Alternative Energy Development Plan (2012-2021) was approved by the Thai Cabinet and valid until it was replaced by Thailand’s 20-year National Energy Plan (2015-2036) in October 2015 in order to align it with the 11th National Economic and Social Development Plan. Like the 2012-2021 plan, the new plan includes the Alternative Energy Development Plan (AEDP) and the Oil Plan and Gas Plan. Under the AEDP, the share of renewable and alternative energy from biofuel is projected to increase from 7% of total fuel energy use in 2015 to 25% in 2036. In order to accomplish this goal, the Thai government is aiming to increase ethanol consumption from 1.17bn litres in 2015 to 4.1bn litres by 2036, and to increase biodiesel consumption from 1.23bn litres in 2015 to 5.1bn litres by 2036. The revised AEDP aims to promote the higher use of biofuels while remaining self-reliant, with restrictions on trade in feedstocks and biofuels. On ethanol, the government is still promoting the use of gasohol through price incentives and excise tax reduction for cars compatible with E20 and E85 gasohol. As for biodiesel policy, on the demand side, the government continues to impose the mandatory blending of biodiesel in diesel markets, which covers on-road, agriculture and industry. To meet the demand, the government has targeted an oil palm acreage of 10.20M rai (1.63M ha) by 2036 with the plan that only domestic palm oil will be used as a feedstock and other feedstocks like animal fats and UCO, will be used in small quantities. ETHANOL The Thai government aims to increase ethanol consumption from 1.2bn litres in 2015 to 3.3bn litres by 2021 and up to 4.1bn litres by 2036. The government continues to promote the use of gasohol through price incentives. The price subsidies, which are paid by the State Oil Fund, make gasohol 20-40% cheaper than regular gasoline. The price subsidy rises as the blend level increases with the effect of lowering retail prices at the pump of higher blend levels. In addition, the government also increased the marketing subsidies to gasoline stations, at around 5 baht/litre (US$0.54/gallon), to entice them to expand sales of E85 gasohol (a mixture of 85% ethanol and 15% gasoline). The government also supports the manufacturing of vehicles that are compatible with E20 and E85 gasohol. The excise tax rate for Eco-cars (less than 1,300 cc engines with fuel consumption rate of no more than five litres per 100km.) is 17% compared to 30% for E10 vehicles. Moreover, the government will give an additional 3% reduction in the excise tax rate for the manufacturing of Eco-cars, which use E85 gasohol.

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Under this same plan, the government expects molasses-based ethanol, which accounts for around 70% of total ethanol production in 2015, to dominate Thailand’s overall ethanol production through 2026 with molasses-based ethanol production reaching 1.8bn litres. This is based on the Ministry of Agriculture and Cooperatives’ estimate that Thai sugarcane production will reach the highest potential at 182M tonnes with molasses production of 8.56M tonnes in 2026. Meanwhile, the Ministry of Agriculture and Cooperatives foresees the increase in demand for ethanol from 2026 onward will be filled by cassava as molasses-based ethanol facilities will not be able to expand any further due to limited sugarcane acreage. Cassava-based ethanol production is expected to increase to 2.4bn litres by 2036 as cassava production is expected to increase to 17M tonnes in 2036, compared to 10M tonnes in 2015. This will account for around 60% of total ethanol consumption of 4.1bn litres in 2036. Meanwhile, molasses-based ethanol will account for around 40% of total ethanol production by 2036. BIODIESEL The Thai government has set a biodiesel consumption target of 5.1bn litres by 2036. The plan focuses on both supply and demand. On the demand side, the government continues to impose mandatory blending of biodiesel in diesel for any purpose. The plan also aims to increase the mandatory blend rate from B7 to B10 and B20. The government plans to subsidise the use of B20 in large trucks on a voluntary basis, beginning in 2016, and to commence the B10 mandatory requirement in 2018. However, hitting the mandatory biodiesel

for cassava is not viable as rice prices are far above cassava prices. The sole sugarcane-based ethanol plant is expected to operate at full capacity of around 76M litres/year using around 1M tonnes of sugarcane. The production of non-fuel ethanol is controlled by the government. The Liquor Distillery Organization, which is under the authority of the Excise Department of the Ministry of Finance, has a monopoly on the production of industrial grade ethanol in Thailand with a production capacity of 20M litres/year. Meanwhile, domestic demand for industrial grade ethanol, particularly for medical, pharmacy, paints and cosmetics uses, is around 18M litres/year. The primary feedstock for industrial ethanol production is molasses and cassava. Presently, fuel ethanol production capacity is at 81% of full capacity. Production capacity is expected to reach 96% by 2017. Ethanol producers reportedly have received approval from the government to expand their production capacities. However, their investment has been delayed due to the concerns over economic instability.

requirement plan may be difficult given the weather-driven volatility of palm oil production, the only feedstock used for biodiesel in Thailand. On the supply side, the government has targeted an oil palm acreage of 10.20M rai (1.63M ha) by 2036. Production of palm fresh fruit bunches (FFB) is expected to reach 29.4M tonnes. Out of this FFB production, 4.24M tonnes of FFB would be processed as biodiesel in 2036.

Ethanol PRODUCTION In 2017, fuel ethanol production is forecast to increase to 1.4bn litres, up around 7% from 2016. Molasses-based ethanol still dominates Thailand’s overall ethanol production, accounting for around 70% of fuel ethanol. The demand for molasses is expected to increase to 3.8M tonnes, up 8% from 2016. Presently, there are 21 fuel ethanol plants with a production capacity of 1.5bn litres/year. The production capacity of molasses-based ethanol is currently around 0.9bn litres/year. Cassava and sugarcane production capacities are 0.5 and 0.1bn litres, respectively. In 2016, fuel ethanol production is expected to increase to around 1.3bn litres, up 11% from the 2015’s level. The increase is driven by growing domestic consumption of gasohol. Molasses is the primary feedstock for the increased ethanol production. The demand for molasses is expected to increase to 3.6M tonnes, up around 13% from 3.2M tonnes in 2015. Demand for cassava increases to an estimated 2.4M tonnes, up 8% from the previous year. The government’s plan to use its own rice stocks for ethanol production to substitute

CONSUMPTION In 2017, ethanol consumption is forecast to increase to 1.4bn litres, up around 8% from 1.3bn litres used in 2016. This is mainly due to growing demand for E20 and E85. The demand for E20 and E85 will be driven by price subsidies and the expansion of E20 gasohol stations. Total gasohol (gasoline with ethanol blends of all levels) consumption is forecast to increase to around 11bn litres in 2017, up around 7% from an estimated 10.3bn litres in 2016. The average ethanol blending rate is expected to increase from 12.1% in 2015 to 12.6% in 2017. During January-May 2016, ethanol consumption

TABLE 1: BIODIESEL PRODUCTION AND USE IN THAILAND Biodiesel (million litres) Calendar Year

2008

Beginning Stocks Production

2009

2010

2011

2012

2013

2014

2015

2016

2017

448

610

660

630

910

1,080

1,170

1,230

1,330

1,420

Imports

Exports

Consumption

447

609

646

640

890

1,050

1,180

1,230

1,300

1,410

Ending Stocks

Balance Check

Nameplate Capacity

920

2,170

1,600

2,060

Capacity Use (%)

48.7

28.1

30.4

29.0

56.9

67.5

73.1

59.7

64.6

68.9 945

Production Capacity Number of Biorefineries

Feedstock Use for Fuel (1,000 tonnes) REDPO/CPO

300

400

445

390

630

775

825

845

885

Stearin

125

170

180

190

200

210

235

245

280

300

105

265

366

389

380

540

650

707

763

780

850

10,580

11,080

11,100

11,150

12,340

12,500

12,640

13,153

13,680

13,950

FFA of Palm Oil Market Penetration (M litres) Biodiesel, on-road use Diesel, on-road use Blend rate (%) Diesel, total use

2.5

3.3

3.5

3.4

4.4

5.2

5.6

5.8

5.7

6.1

17,634

18,465

18,480

19,192

20,565

20,892

21,071

21,921

22,800

23,250

SOURCE: DEPARTMENT OF ENERGY BUSINESS, DEPARTMENT OF ALTERNATIVE ENERGY DEVELOPMENT AND EFFICIENCY DEPARTMENT OF CUSTOMERS, AND FAS/BANGKOK’S ESTIMATES

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totalled 568M litres, up around 8% from the same period last year. This is due to an increase in gasohol consumption to 4,142M litres, up 13% from the same period last year. Consumption of gasohol accounted for 95% of total gasoline consumption. E20 gasohol consumption also continued to increase, accounting for 17% of total gasohol consumption due to the government price subsidies. Presently, E10 and E20 retail prices are 25-30% cheaper than regular gasoline. E20 retail prices are also approximately 10% cheaper than E10 gasohol. The number of gasohol stations continued to increase nationwide to 3,105 stations for E20 and 867 stations for E85, compared to 2,836 and 678 stations in May 2015, respectively. TRADE According to the Thai Department of Customs, fuel ethanol is a controlled import/export product (HS22072011 and HS22072019). Traders must have import/export permits, which will be considered by the Ministry of Industry (MOI). To date, the MOI has never approved any imports of fuel ethanol into Thailand as there are sufficient domestic supplies. Also, sources report that ethanol producers normally export only ethanol for industrial uses as their facilities were originally designed to produce fuel ethanol for the domestic market and they do not have the storage facilities to cover fuel exports. Non-fuel, industrial ethanol exports are likely to be minimal to zero in 2016 and 2017 due mainly to growing domestic demand for ethanol. In 2015 there were no exports of fuel ethanol. Also, exports of industrial-grade ethanol were marginal at around 0.1M litres. Meanwhile, non-fuel, industrial ethanol imports were steady at around 11M litres, mainly for use in pharmaceutical and cosmetic industries.

This accounted for less than 1% of total ethanol production. The Thai government imposes a 2.5baht/litre duty on ethanol imports (US$0.27/ gallon). STOCKS Ethanol stocks are expected to decline to around 20M litres in 2017 in anticipation of growing demand for gasohol consumption. Most fuel ethanol producers mainly supply their ethanol to domestic refineries for gasohol production. Consequently, their total storage capacities are limited to only around one month of domestic use.

Biodiesel PRODUCTION (see Table 1, previous page) B100 or biodiesel in Thailand is currently produced from palm oil-derived feedstock such as crude palm oil (CPO), refined bleached deodorised (RBD) palm oil, palm stearin, and free fatty acids of palm oil (FFA). Thailand’s campaign to utilise used cooking oil for biodiesel production exists among one or two biodiesel companies as a Corporate Social Responsibility (CRS) campaign but the use is limited to 5-6M litres of UCO per annum. Biodiesel production is solely driven by government mandates, mainly aimed to help oil palm farmers. All palm oil feedstocks used for biodiesel are domestic since the government strictly controls the imports of palm oil. Meanwhile, the blending of biodiesel among petroleum refineries is strictly controlled and monitored to comply with the mandatory requirements. The mandatory blending of biodiesel in diesel markets covers all purposes including on-road, agriculture and industry. Biodiesel production is forecast to grow 7% to

TABLE 2: THAILAND’S PRODUCTION, SUPPLY AND DEMAND FOR CPO (1,000 TREES/HA/TONNES) Oil Palm 2014/2015 2015/2-16 2016/2017 Market begin year Thailand Area Planted Area Harvested Trees Beginning Stocks Production MY Imports MY Imp. from US MY Imp. from EU

January 2015

January 2016

January 2017

USDA Official New Post USDA Official New Post USDA Official New Post 0

690

710

735

750

228

1,800

2,070

2,200

2,100

2,300

Total Supply

1,953

2,223

2,272

2,358

1,548

MY Exports

150

120

160

MY Exp. to EU

Industrial Dom. Cons.

1,280

1,350

1,450

Food Use Dom. Cons.

500

550

570

580

600

Feed Waste Dom. Cons.

100

Total Dom. Cons.

1,850

1,900

1,990

2,010

2,150

Ending Stocks Total Distribution

228

132

228

238

1,953

2,223

2,272

2,358

2,548

1.42bn litres in 2017 in line with an increase in diesel consumption and an estimated increase in the blending rates of biodiesel in diesel total use. It is estimated that about 70% of B100 is derived from RBD PO or CPO, 22% from palm stearin, and 8% from FFA. Given the very limited role of trade, biodiesel production in 2016 is forecast to grow by 12% from the previous year to 1.38bn litres due to a sharp increase in diesel demand driven by continued prevailing low petroleum prices against compressed natural gas (CNG). Crude palm oil supply available for domestic food, feed and industrial use plus exports is forecast to be 2.3M tonnes in MY 2016/17. CPO production is estimated to marginally grow to 2.1M tonnes in 2015/16 from 2.07M tonnes in 2014/15 due mainly to lower yields caused by dry weather conditions in 2014 and 2015 (see Table 2, below). The Thai government has recently promoted the use of lower-cost H-FAME biodiesel in advance of B10 and above mandates. H-FAME is a process, developed by a Japanese research team, to upgrade the quality of conventional biodiesel or fatty acid methyl ester (FAME) through partial hydrogenation. Trade sources reported that Global Green Chemical, a large biodiesel producer in Thailand, may construct an H-FAME processing plant and launch it commercially once the B10 mandate is imposed. Due to fierce competition between Thailand’s biodiesel processors, newcomers have been reluctant to enter the market since 2010. Two establishments that suspended their biodiesel production during 2012-2014, revived their operations in 2015. As a result, all 12 producers as listed by Department of Energy Business, are currently operating with an estimated total production capacity of 2.06bn litres/year (see Table 3, next page). In 2015, three of the largest B100 processors in Thailand – the Global Green Chemical Company (previously named Thai Oleochemicals), New Biodiesel Company – and the Bangchak Biofuel Company increased their production capacities by (46M litres/year). CONSUMPTION Mandates are applied to all types of diesel use as fuel and the blending of biodiesel among petroleum refineries is strictly controlled and monitored. In general, the main markets for diesel use in Thailand are on-road, accounting for about 60% of total diesel consumption, followed by agriculture at 20%, industry 17%, and others 3%, respectively. However, due to weather irregularities leading to inadequate palm oil feedstocks and with controls on imports, the government is forced to reduce mandatory blending rates from time to time. For example, reduced CPO supplies and skyrocketing prices in early 2015 prompted decision-makers to temporarily lower the mandatory vegetable oil content requirement in biodiesel by 50% to B3.5 from B7 in January 2015, and then reinstated B7 mandates in April 2015. Due to this development, the actual blending rates of biodiesel in diesel total use was 5.8%. Although the government’s policy is to maintain its B7 mandates in 2016 and 2017, in addition to its plan to subsidise the use of B20 in large trucks on a voluntary basis, beginning in 2016, the blending rates of biodiesel in diesel are estimated at around 5.7% in 2016 and 6.14% in 2017, given possible step-downs in biodiesel mandates at any time following weather-vulnerable palm oil supplies. The

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TABLE 3: LIST OF OPERATING B100 PRODUCERS IN THAILAND Company Capacity (M litres/annum) Bangchak Petroleum

Feedstock type

16 CPO, RBDPO

Pure Energy

264 Palm Stearin, CPO

Patum Vegetable Oil

462 CPO, RBDPO, Stearin

B. Grimm Green Power

66 CPO, RBDPO, Stearin

A.I. Energy

165 Palm Stearin

Veera Suwan

66 Palm Stearin, RBDPO

Global Green Chemical *

CPO, RBDPO

New Biodiesel

330 CPO, RBDPO, Stearin, FFA

Absolute Power P

99 CPO, RBDPO, Stearin

Bangchak Biofuel

264 CPO, Stearin

Total

2,062

* originally called Thai Oleochemicals Co. government lowered B7 mandates to B5, effective on 25 July 2016 because palm oil supplies appeared to be lower than earlier estimates. A sharp reduction in global petroleum prices also generated changes in consumer demand for products such as diesel and gasoline versus the highly subsidised products like liquid petroleum gas (LPG) and compressed natural gas (CNG). Not only did low diesel prices encourage diesel vehicle users (mainly trucks or trailers) to switch to diesel from CNG, but it also stimulated increased use of diesel among smaller vehicles (i.e. pick-up trucks). Lower prices for diesel (which contains

biodiesel) also led diesel use for other sectors (agriculture, construction and manufacturing industries) to increase in 2015. Total diesel sales were officially reported as increasing by 4% in 2015 to 21.9bn litres. Prevailing low prices are expected to drive biodiesel consumption up 4% in 2016 and 2% in 2017. Based on this diesel market development and the fact that the mandate of biodiesel blending in diesel is applied to all types of diesel use, biodiesel consumption rose to 1.230bn litres in 2015, and should continue to grow to 1.3 bn litres in 2016 and 1.42bn litres 2017, respectively.

TRADE & ENDING STOCKS The Thai government restricts the import of biodiesel to protect domestic palm growers. Thailand’s biodiesel imports and exports are minimal and mostly belong to petroleum oils containing up to 30% biodiesel (HTS Chapter 27). Exports of biodiesel (B100 equivalent) were 3.12M litres in 2015, as compared to 3.86M litres in 2014. Imports of biodiesel products (B100 equivalent) totalled 2.13M lites, as compared to 11.57M litres in 2014. Biodiesel production is driven solely by contracts between palm oil growers and refineries. As a result, the country’s B100 stocks, held by either biodiesel producers or petroleum oil refineries, are quite low – somewhere around 20-50M litres or about 10-15 days of utilisation. ADVANCED BIOFUELS There has been no progress in promoting advanced biofuels, and the potential for progress is further limited due to sharply weaker global prices for petroleum products. A molasses-based ethanol plant using cane bagasse for cellulosic ethanol has stalled due to a lack of commercial feasibility. The production of hydrogenated vegetable oil (HVO), a type of renewable drop-in diesel, is no longer commercialised due to its high production cost without additional subsidu from the government. This feature is extracted from a United States Department of Agriculture (USDA) Global Agricultural Information Network (GAIN) report published on 22 July 2016, titled ‘Thailand Biofuels Annual 2016’

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Present a paper OFI India 2017 Business Conference To present a paper, contact: Serena Lim, Editor, Oils & Fats International (OFI) E-mail: serenalim@quartzltd.com

www.ofievents.com/india

OFI India returns to the world’s largest edible oil market for the second time on 7-8 April 2017 in Mumbai, with an international exhibition of suppliers to the industry, and business and technical conferences featuring global and regional experts in their fields

ith the success of the first OFI India event in Hyderabad this April, the show’s organisers are delighted to return to India by hosting OFI 2017 at the Bombay Convention and Exhibition Centre (BCEC) in Mumbai on 7-8 April 2017. OFI India 2016 attracted over 600 attendees and OFI India 2017 promises to be bigger and better, bringing together business, science and technology all under one roof. It will feature: An international exhibition of suppliers, producers and processors The OFI India 2017 Business Congress & SOPA Soya Conference: ‘New Strategies, New Approaches’ A Smart Short Course technical programme: ‘Advanced Extraction, Processing and Use of Sunflower, Cottonseed, Canola and Palm Oil’

Learn from the experts The two-day OFI India 2017 Business Congress & SOPA Soya Conference will offer delegates the chance to learn from leaders in their fields. Four

modules will cover ‘World Supply and Demand – 2017/18 Price Forecast and Outlook’; ‘The Indian Market – Challenges and Opportunties’; ‘SOPA Soya Conference’; and ‘Feedstocks and Applications’. Key issues such as world supply and demand factors; India’s burgoening edible oil imports; biotechnology, oilseed productivity and global and domestic feedstocks such as castor and rice bran oil will all be addressed. A parallel two-day Smart Short Course technical programme will be held for marketing, technical and plant personnel, entitled ‘Advanced Extraction, Processing and Use of Sunflower, Cottonseed, Soyabean, Canola and Palm Oil’.

The Indian market India is the world’s largest edible oil importer and the second most populous nation in the world, with over 1.2bn people. It imports some 15M tonnes/ year of edible oil – some 70% of the country’s requirements – against domestic production of 7-8M tonnes (see Table 1, following page). With the country projected to need some 30M

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tonnes of edible oils in 10 years’ time and increases in population and lifestyle changes driving a rise in edible oil consumption, interest is strong in this growing market. Palm oil remains the most widely consumed oil in India due to its blending versatility with other oils and competitive price (see Table 2, right). Palm oil’s food use consumption in India was expected to rise to 9.2M tonnes in 2014/15, against 3.2M tonnes for soyabean oil and 2.6M tonnes for rapeseed oil. With its widespread area and population, regional preferences exist for edible oil within India. Coconut, peanut and sunflower oils are popular in south India; peanut and cottonseed oil in Gujarat and Maharashtra; rapeseed oil in the northeast and northwest; soyabean oil in central India; and rice bran oil in eastern India. Vegetable oil imports enter India via eight important ports – Mumbai and Kandla in the western region; Mangalore and Cochin in the southwest; Chennai, Kakinada and Vizag in the southeast; and Calcutta in the eastern region.

TABLE 1: INDIA EDIBLE OIL SUPPLY/DEMAND 2015/16 AND PROJECTION 2016/17 (M TONNES) Oil

2015/16

2016/17 +/- in 2016/17 against 2015/16

Opening stock

2.370

1.960

- 0.410

Domestic production

5.820

6.960

1.140

Total

8.190

8.920

0.730

Consumption (-)

20.620

22.150

1.340

Deficit

12.620

13.230

0.610

1.960

2.250

0.290

14.580

15.480

0.900

Closing stock (+) Import required – edible oils

Non-edible oil import may be about 0.2M tonnes TABLE 2: INDIA’S IMPORT BREAK-UP FOR 2015/16 AND 2016/17 (M TONNES) 2015/16 Oil

Oct-Sept

2016/17

Nov-Oct

Oct-Sept

Nov-Oct

Palm (edible)

8.765

8.474

9.175

9.235

Soyabean oil

4.381

4.190

4.185

4.200

Mumbai – India’s commercial centre

Sunflowerseed oil

1.555

1.548

1.710

1.740

The Bombay Convention & Exhibition Centre (BCEC) is the largest permanent exhibition centre in the private sector in India. The centre is ideally situated along the Western Express Highway in Goregaon, within 10 minutes from Mumbai’s airports, walking distance to train stations and a 20 minute drive from the heart of the city. There are numerous hotels, entertainment activities, retail shopping and sightseeing spots in close proximity. Mumbai is situated on the west coast of the Indian peninsula and its superb natural harbor provided a focal point for sea routes crossing the Arabian Sea, and Mumbai soon became the main western gateway to Britain’s expanding Indian empire. The city emerged as a centre of manufacturing and industry during the eighteenth century. Today, Mumbai is India’s commercial and financial capital. Mumbai has a variety of major attractions including the rock-cut temples of Elephanta Island in Mumbai Harbour; the Gateway of India arch; Crawford Market, the bazaars of Kalbadevi and Bhuleshwar; the Parsi Towers of Silence; and Haji Ali’s Mosque.

Rapeseed oil

Industry support

Module 3: Soybean Processors Association of India (SOPA) Soya Conference

OFI India 2017 is also supported by the main edible oils and fats associations in India including the Solvent Extractors’ Association of India (SEA); Soybean Processors Association of India (SOPA); Oil Technlogists’ Association of India (OTAI); CSIRIndian Institute of Chemical Technology (IICT) and also the Federation of Oils, Seeds and Fats Associations Ltd (FOSFA).

Dr Davish Jain, Chairman, Soybean Processors Association of India (SOPA); President and Managing Director, Prestige Group of Industries, India

Supported by:

TABLES: GGN INTERNATIONAL

SH OW PREVIEW

Total

0.356

0.375

0.310

0.300

15.057

14.587

15.380

15.475

OFI India 2017 Business Congress & SOPA Soya Conference ‘New Strategies – New Approaches’ DAY ONE: FRIDAY 7 April 2017 Module 1: World Supply and Demand – 2017/18 Price Forecast and Outlook James Fry, Chairman, LMC International, UK G Chandrashekhar, Economic Advisor, Indian Merchants’ Chamber Sumit Gupta, Business Manager, McDonald & Pelz Global Commodities Module 2: The Indian Market – Challenges and Opportunities Presentations on Indian production, exports, supply & demand trends, logistics, biofuel policies, castor oil, rice bran oil

DAY TWO: SATURDAY 8 APRIL 2017

D N Pathak, Executive Director, Soybean Processors Association of India (SOPA) Module 4: Feedstocks and Applications Sergey Feofilov, General Director, UkrAgroConsult, Ukraine Presentations on palm, sunflower and other oilseeds and oils

Smart Short Course: ‘Advanced Extraction, Processing and Use of Sunflower, Cottonseed, Soyabean, Canola and Palm Oil’ 7-8 APRIL 2017 More details to be announced shortly If you require more information, please contact Ignace Debruyne on info@smartshortcourses. com or Sefa Koseoglu on sefa.koseoglu@membraneworld.com 30 OFI – NOVEMBER/DECEMBER www.ofimagazine.com

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OFI INDIA 2017 Provides the platform to network with purchasers in the fastest growing global edible oil market

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I N SPEC TION & TESTIN G

The international oils and fats sector is receiving increasingly integrated guidance from standards bodies such as the International Organization for Standardization (ISO). Keith Nuthall writes

he oils and fats industry has always been international, with its commodities and the products made from them, being traded worldwide. As a result, the companies involved have always had to pay attention not just to the regulations of the country where they manufacture or source, but those of importing and transit countries. Sometimes, these mesh and sometimes they conflict – but a successful oils and fats business will always be aware of what industrial, health, customs, packaging, pollution and design rules and guidance it must follow. Fortunately, the world’s industrial standards development systems are increasingly integrated, with global and regional standards being created with the clear goal of creating a unified set of technical rules and best practice that international traders can follow with confidence. There are of course a wide range of sources and authorities for these – some rules are mandatory, some optional. Some standards are framed to help companies comply with rules and international good practice at the same time. Take the standards of the International Organization for Standardization (ISO). It has produced a wide range of standards for the oils and fats industry that seek to have global application. These are voluntary, but they are detailed. Often standards released by ISO are adopted, sometimes in amended form, by regional and national standards bodies, so they can be very influential.

Role of the ISO subcommittee The key work in ISO is undertaken by technical committees (TCs), who have ongoing work programmes. For the oils and fats sector, the most important is a subcommittee – ISO/TC 34/ SC 11 on animal and vegetable fats and oils. It has developed and released 84 standards that can guide the industry in good practice. These cover such diverse subjects as determining refractive indexes, measuring polycyclic aromatic hydrocarbons, examining aliphatic hydrocarbons in vegetable oils, assessing water content in oils and fats and determining cocoa butter equivalents in milk chocolate. The sub-committee is in the process of creating new standards – such as on the preparation of methyl esters of fatty acids and determination of insoluble impurities content. It is also updating some existing standards, such as on refractive indexes and water content. Another key ISO sub-committee for the oils and fats sector is ISO/TC 34/SC 2 on oleaginous seeds and fruits and oilseed meals. It has released 24 standards, on subjects ranging from sampling, to determining oil content, oil acidity, impurities, moisture and volatile content, as well as preparing test samples, measuring total hexane residues and glucosinolates content. It is preparing a new

Setting a standard

standard on manual or automatic discontinuous sampling and updating standards on ash content, moisture and volatile materials. One technical committee with importance for a segment of the industry is ISO/TC 54 on essential oils whose standards include issues such as determining ester values and miscibility in ethanol, as well as manufacturing specific types of essential oils including those made from juniper berries, caraway, oranges and lemons. And another is ISO/TC 122 on packaging, including standards on RFID tags (radio frequency identification), recycled plastics and freight containers.

National standards bodies National standards bodies often adopt or use ISO standards to develop their own local standards because technical committees are staffed by national standards representatives. This can be good news, if their governments use local standards as the basis of local legislation on how a product should be made, sold and packaged. Of course, the larger the economy and market, the more important and influential is the local national

standard. The USA and Japan, especially, have wellestablished standards-setting bodies with a track record of going their own way. The American National Standards Institute (ANSI) takes a relatively hands-off approach – it has accredited 200 standards developers representing approximately 200 organisations in the private and public sectors. ANSI runs a liaison and appeals system enabling these developers to negotiate US standards. Some ANSI standards are based on ISO work, but others are not. For example, ASME (American Society of Mechanical Engineers) has developed an ANSI-approved standard on fats, oils, and greases disposal systems; and the American Oil Chemists’ Society (AOCS) has developed a standard on the flavour chemistry of fats and oils. By contrast, the Pennsylvania-based ASTM develops its own standards for American and global use, which are also of use to the oils and fats sector – for instance ASTM E1690 - 08(2016) on a test method for determination of ethanol extractives in biomass and ASTM E3050 – 16 on denatured ethanol for use as cooking and appliance fuel. The Japanese Standards Association (JSA) is another well-financed and proactive national

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I N SPE CTI O N & T E STI NG

Clean and efficient vacuum systems for refining and deodorising

ICE Ice condensation ACL Alkaline Closed Loop

IMAGE: ARGUS/ADOBE STOCK

standards body that the oils and fats sector needs to take account of, especially if companies want to work or trade in Japan. Examples include standard JIS K 3331:2009 on hardened oils and fatty acids for industrial use and JIS K 6503:2001 on animal glues and gelatins. BSI, the British Standards Institute, is another prolific national standard setter, also releasing plenty of relevant oils and fats sector standards – for instance BS EN 14105:2003 on determining free and total glycerol and mono-, di-, triglyceride contents in fat and oil derivatives. In addition, each of Britain’s (for the time being) European Union partner member states have their own national standard setting organisations with influence over how industry operates in their countries, such as Association Française de Normalisation (AFNOR) in France, and Germany’s Deutsches Institut für Normung (DIN). These European standards organisations also pay heed to ISO work and base many of their standards on these texts, but they also work with and are influenced by the CEN, the European standards body (Comité Européen de Normalisation) that develops standards for its 33 member states. This includes all 28 EU member countries, along with Macedonia, Turkey, Iceland, Norway and Switzerland. Its goal is to ensure standards are harmonised within Europe, promoting trade. Whilst the way it operates is controlled by an EU law (regulation (EU) No 1025/2012), EU and CEN membership are not co-terminus – so a Brexited Britain could remain a member. Therefore, CEN standards (with the CE mark) could retain their current influence, having been approved and developed by representatives of its national standards organisation members. This extends to the oils and fats sector – for instance CEN has 83 standards with direct and specific relevance to fats. All but two of these have reference to related ISO standards, however, and this reflects the ISO-CEN Vienna Agreement, where the bodies agreed to work together to ensure their standards were complementary. This accepted the key tenet that while complex industries such as the oils and fats sector can draw on many good practice solutions, it helps international trade if this practical guidance does not offer overly conflicting advice. Keith Nuthall is a freelance writer 33 OFI – www.ofimagazine.com

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I NSPE CTION , TESTIN G & C ER TIFIC ATION

Inspection and testing round-up IN BRIEF JAPAN: Toyota Motor Corporation has developed a new deoxyribonucleic acid (DNA) analysis technology called Genotyping by Random Amplicon Sequencing (GRAS), which is capable of improving the efficiency of identifying and selecting useful genetic information for agricultural plant improvement, the company announced in September. According to Toyota, the technology should lead to time and cost savings in the agricultural plant improvement process. Proprietary sample preparation technology was paired with a nextgeneration sequencer to develop the technology. GRAS could analyse DNA at one-tenth of the time needed and at one-third of the cost of conventional techniques. The technology had the potential to boost sugarcane production and increase biofuel crop yields, and could also help increase disease resistance in food crops, Toyota said. USA: Shimadzu Scientific Instruments released a new compact bioethanol analyser, an advanced tool for real-time monitoring of the fermentation process in bioethanol production, it announced in September. The analyser monitors in real-time, which allows controllers in charge of the process to take quick action in the event of an issue arising. In addition, the analyser can be remotely monitored via the I-Series Web interface or LabSolutions Direct to view instrument status and chromatogram information.

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

Oils & Fats International reports on some of the latest news and de elop ents surrounding inspection testing and certification around the world

OmegaVeritas test for omega-3 authenticity

orwegian omega-3 traceability and testing company OmegaVeritas outlined its work to authenticate both the species and geographical source of oils containing omega-3 fatty acids at the Global Organisation for EPA and DHA Omega-3s (GOED) Exchange event in February, Lipid Technology reported. OmegaVeritas had almost completed its work, which uses Specific Natural Isotape Fractionation Nuclear Magnetic Resonance spectroscopy (SNIF-NMR) in its authentication process. SNIF-NMR is usually used to analyse wine, fruit juice, maple syrup and vanillin. The relative amounts and distributions of isotopes of carbon, hydrogen, phosphorous and other elements can act as a “fingerprint” to pinpoint the biochemical pathway and geographical source, the report said. OmegaVeritas uses hydrogen and carbon isotope ratios for fish oil verification and also phosphorous ratios to test krill oil. It is hoped that the technique will give greater traceability and could also be used to confirm claims of sustainable fishing practices.

Grain testing facility opened in Ontario

private testing facility for cereal grains has opened in Guelph, Ontario, thanks to an investment partnership between the Grain Farmers of Ontario and SGS Canada, CBC News said in July. Nicole Mackellar, manager of market development for the Grain Farmers of Ontario said the organisation had been working on the project for the past year and a half “and we are very happy to say that it is fully operational”. “Being able to have these test done, to have that quality information that we can then show to the industry to show that we are producing high quality products, will let Ontario become a leader in both global and domestic markets”, Mackellar added. The lab in Guelph is the first privately

operated facility in the area, and would save farmers sending their samples across the country to be tested. Being able to test in Ontario would speed up the process of receiving results. Mackellar told CBC that the fee for using the facilities would be comparable with others in the country.

Analyse this!

TLR is your one stop shop for all services in food/feed safety control! For more information: www.tlr-international.com T +31 10 282 32 92 E info@tlr.nl

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UPM Biofuels acquires ISCC PLUS certification

PM Biofuels announced in April that it has extended its sustainability certification to cover all its output streams at the Lappeenranta biorefinery in Finland. The certification is under the International Sustainability and Carbon Certification Scheme ISCC PLUS. The biorefinery mainly produces UPM’s woodbased renewable diesel BioVerno, as well as a smaller share of naphtha – used as a biocomponent in petrol. Previously, the biorefinery was covered by sustainability certifications to use the renewable fuels in transport, but the new ISCC PLUS certification allows them to be used as feedstocks for producing other products such as bioplastics. In addition to BioVerno and naphtha, the Lappeenranta biorefinery has output streams of turpentine, pitch and sodium bisulphite, biofuel

residues that have applications in the chemical industry. For example, renewable turpentine can be used to produce bio-based aroma chemicals for the fragrance industry. ISCC PLUS is a sustainability certification scheme for bio-based applications and covers sustainability and traceability criteria – similar to the biofuel specific ISCC-EU scheme. Sari Mannonen, sales and marketing director at UPM Biofuels said: “The new ISCC PLUS certification complements UPM’s existing biofuel specific sustainability portfolio to cover new potential bio-based market segments and their requirements. There is a growing need for certified renewable fuels and chemicals, for example in the biochemical and bioplastics industries which are seeking replacements for fossil usage in their processes and end use”.

SGS expands crop quality map service (GOHM)

GS’s Grain and Oilseeds Harvest Mapping (GOHM) has been launched in Germany, the company announced in June. The service gives everyone in the agri-supply chain an overview of the quality of harvested crops and provides an indicator, which could impact the market. The maps contain data either provided by farming operators or collected by SGS inspectors and project teams. In particular it can be used to monitor the harvest of wheat, barley and rapeseed. From this information, interactive maps can be created showing the quality and development of crops across Germany. This would allow traders and brokers to plan their purchases much earlier, SGS said.

SGS Indonesia accredited to conduct RSPO certification

new standard has been developed by SGS, the No GE Ingredient Supply Chain Process Verification Standard (US Version), to help support companies claiming to be using no genetically modified organisms in their food products. SGS announced the new standard in June, and said consumers in the USA are increasingly aware of issues impacting their food, and want to know more. This included the use of GMOs and genetically engineered (GE) ingredients. The standard was developed with guidance from the Food and Drug Administration and the US Department of Agriculture, and it also considered federal and state guidance, and proposed and passed laws. The standard was available to operators in the USA and their suppliers for the US market. Outside the USA, SGS’s Non GMO Supply Chain Standard is used in the EU and is based on the EU’s Directive and legal framework, SGS said.

Easy oil, water & solid fat analysis

using the MQC benchtop analyser

ccreditation Services International (ASI) has confirmed SGS Indonesia’s accreditation to conduct Round Table on Sustainable Palm Oil (RSPO) certification. SGS Indonesia completed the full verification process, which included desktop reviews, office and on-site assessments, it said. SGS Indonesia’s RSPO accreditation covers both Supply Chain Certification Systems (SCCS) and Principles & Criteria (P&C) certification worldwide. Aryo Gustomo, SGS RSPO Accreditation Manager said, “We’ll strive to exceed the expectations of all stakeholders, RSPO, ASI and our certification holders through good technical governance and efficient management of the scheme.” SGS manages RSPO audits to verify that production processes comply with the RSPO P&C for sustainable palm oil production, as well as supply chain audits to prevent overselling and the mixing of sustainable and non-sustainable palm oil.

Breeding: optimise oil content in seeds

DNA research revolution for palm

Refining/Quality Control: measure melting profiles of oils, fats & blends to international standards

Crop Value: measure oil & moisture using ISO 10565 method

Crushing/Extraction: maximise efficiency by measuring oil & moisture content of residue

merican biotech company Orion Genomics has produced a test for oil palms that will determine what the eventual shell thickness of the fruit will be, Cosmetics Design reported in August. The test could revolutionise the productivity of the palm oil industry it said. To conduct the test, farmers would use a plastic punch to take a small sample from the leaf of a young potted tree. These samples would be sent to Orion and each plant’s DNA tested. The company then reports back to the growers on which plants will produce thick, thin or no shell fruits. Growers would use the data to plant out only those high-yielding plants. President and CEO of Orion Genomics Nate Lakey told BBC News in May, “Millions and millions of subsistence farmers depend on oil from cultivation for their economic livelihood and by increasing production in their farms we increase their economic opportunities”.

Standard supports ‘No GE’ in USA

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U S SU PPLIERS

All American taste US food manufacturers have until to re o e artificial trans fats from their products. This is likely to increase the use of palm oil in food products, according to Manik Mehta, who gives an overview of the US oils and fats sector and the increasing popularity of olive oil among American consumers

alm oil is likely to benefit from the US Food and Drug Administration (FDA)’s ruling in June 2015 to ban the use of partially hydrogenated vegetable oil – the main source of artificial trans fats – in processed foods. Food manufacturers have three years to comply with the ruling and remove all artificial trans fats from their products. Companies have already turned to palm oil following mandatory trans fat labelling in 2006 as, unlike most vegetable oils, it is a solid at room temperature.

Palm oil imports into the USA have grown dramatically since the early 2000s, when many companies began to restrict use of trans fats and thus partially hydrogenated vegetable oils. In 2012, the USA imported around seven times as much palm oil as it had in 1999. According to Bloomberg, the size of the US palmoil market is about 2.6bn lbs (1,179M tonnes) and is expected to increase by 500M lbs (226,796 tonnes) a year. However, palm oil does suffer from an image problem, with its association with deforestation in Southeast Asia, and its high degree of saturated fat, which has implications for health. US-based interest groups say that there is growing demand for healthier oils in the US market, such as olive oil and sunflower oil, with consumers showing a preference for healthier categories of olive oil, particularly extra virgin olive oil. America is, after the Asia Pacific region, the world’s second largest market for oil and fats, with the vegetable oil segment increasing its market share, including a steady increase in olive oil consumption. The world’s vegetable oil suppliers are eyeing the US market. This was also evident at the recent New York Fancy Food Show (NYFFS) 2016, which had a massive turnout of suppliers of all kinds of vegetable oils, particularly olive, canola and coconut oils.

Italians, Spaniards, Turks, Greeks, Moroccans and Tunisians occupied rows of exhibition booths. Italian olive suppliers have been monitoring the changing food habits of Americans as the latter try out other competing oils as part of their cuisine. Sunflower’s popularity has also risen, with the American Heart Association nutritionists categorising sunflower oil – rich in unsaturated fats, particularly oleic and linoleic acids, minerals and vitamin E – as an excellent antioxidant.

Olive oil popularity continues Nevertheless, olive oil continues to be popular among American consumers, as many Italian exhibitors at the NYFFS said. “Although shoppers are still cautious today, they have become increasingly selective and seek more information. A growth opportunity for the olive oil market could come from educating American consumers to use olive oil in different dishes,” says Carlo Peruzzi, who operates an export company outside Rome specialising in olive oil. However, Italian suppliers have also suffered because a “few bad apples” in the industry engaged in fraud in the olive oil sector, according to US television shows, including the highly-rated “60 Minutes”. But most Italian suppliers say that committing fraud with the consumers was “highly unlikely to happen again” and that this may have happened in the past because the smaller unscrupulous producers who offer unbranded products, had little or no controls. Established brands, as a rule, have too much to lose to become reckless and destroy their business. Volpicelli, a medium-sized company producing

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U S SU PPLIERS

extra virgin olive oil, is based in Segni near Rome. The owner, Pietro Volpicelli (pictured below), says that his company has its own cultivation, crushing, processing and bottling operations. “The USA is an interesting market. Italian olive oil is different from products from other regions,” Volpicelli says in an interview with Oils & Fats International at the NYFFS while emphasising that Italian olive oil was known for its quality. Acknowledging that he faces competition from low-end suppliers, he claims that buyers appreciate his quality oil and have given him orders at the show.

Turkish exhibitors at the NYFFS expressed keen interest to increase their exports to the US market, forced by the “new normal” facing Turkey, which has lost a number of markets such as Syria, Iraq and Russia because of political issues. Cem Demirci, foreign trade manager of Poyrazcan Gida Tarim Turz in Izmir, which produces the Poyraz brand of extra virgin, virgin and pure olive oil, describes the US market as “very attractive”. “Every year, US olive oil consumption has been growing. The USA, one of the world’s biggest importers of olive oil, is a very important market for Turkish olive oil suppliers”, Demirci says in an interview in New York. He says that this is also the reason why his company – as also many other Turkish suppliers – regularly attends the NYFFS, which attracts many North American importers of olive oil. Indeed, he adds, the NYFFS’s attractiveness as a meeting ground for buyers and sellers of olive oil has increased for Turkish suppliers. The Mediterranean region, including Turkey, supplies some 95% of the world’s olive oil, Demirci says, adding that Mediterranean olive oil has less acidity and a different aroma, which appeals to the American consumer. Although olive oil exports account for only 1% of Turkey’s total exports, they are important, in value terms, for Turkey’s economy. The country’s olive oil production exceeded the actual domestic consumption and, hence, the over-capacity had to be exported. Another Turkish company, Mehmet Hakan Kaleli

of Bursa, which produces the Beyzade brand of extra virgin, organic virgin and low-acidity olive oil, claims that it uses olives picked in the early stage of the harvest. “Sometimes, we buy the olive fruit and, sometimes, we buy oils already crushed and further process and bottle them. We buy both olives and olive oil,” Mehmet Kaleli, the company’s general manager, explains. The company exports about 85% of its production, mainly to China but also to the Middle East and Asia. “We have just begun exporting to the USA,” Kaleli says, adding that the USA is a large consuming market, which absorbs some 80% of the company’s extra virgin olive oil exports. Kaleli says that while Italian products are wellknown in the USA, American buyers are now also sourcing from Turkey. “The consumers’ growing health consciousness and olive oil’s health benefits have increased demand for the oil,” he explains. Davut Er, chairman of the Izmir-based Aegean Olive and Olive Oil Exporters’ Association (AOOOEA), says that his association member companies account for some 170M olive producing trees, the second largest olive tree population. AOOOEA’s production target for 2020 is 400,000 tonnes of olive oil and one million tonnes of olives, depending on climate. “This is the estimate provided by the Turkish Agricultural Ministry. The current production level is between 150,000 and 200,000 tonnes. Climate conditions have reduced our production from 300,000 tonnes in 2007”, Er says. “High-income consumers in the USA are buying olive oil … these consumers are health-conscious. Olive oil’s nutritional values are appreciated in the USA. Turkish olive oil exports have also increased with the Turkish Lira’s depreciation”, Er says. Kevin Haight, an ‘oil artisan’ at the Hudson Valley Cold Press Oils of Poughkeepsie, New York, which manufactures sunflower oil noted for its high oleic content, told OFI that demand for oils in the USA is huge. “However, unless oils are cold pressed, they are not considered to be healthy. Our main buyers are restaurants and grocery stores. The American consumers have become discriminating in their choice of oil, preferring high-quality oil. Restaurants are required to list nutritional facts about the food they serve, with some even naming

LOUISE KRAMER, COMMUNICATIONS DIRECTOR OF THE US SPECIALTY FOOD ASSOCIATION

PIETRO VOLPICELLI, OWNER OF ITALIAN OLIVE OIL PRODUCER VOLPICELLI

Turkish olive oil

suppliers or producers of oils used, for example, in salads”, Haight says. Louise Kramer, communications director of the US Specialty Food Association (pictured below), agrees that olive oil reigns supreme. “People are increasingly aware about the properties of olive oil, but this also applies to coconut oil, canola and rapeseed oil. Because of past controversy about olive oil’s purity, buyers are now more cautious about the purity of any oil. However, olive oil still remains very popular,” she tells OFI. Manik Mehta is a freelance writer based in New York

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STATISTIC S

SOYABEAN OIL PRICES ROTTERDAM (EU€/TONNE)

STATISTICAL NEWS FROM MINTEC Soyabean oil Soyabean oil prices in the EU have generally been on an uptrend in 2016 supported by production concerns of alternative vegetable oils, namely palm oil and rapeseed oil. Global production of soyabean oil in 2016/17 is forecast to reach a record 53.8M tonnes, up 3% year-onyear. Consumption is forecast to be up by 3% year-on-year to 53.2M tonnes and ending stocks are to fall by 3% yearon-year to 3.6M tonnes.

Rapeseed oil Prices in the EU increased due to lower annual production of rapeseed, although increases were limited in the first half of 2016 by lower biofuel demand offsetting the increase in food consumption and Canada’s continued high production and exports. Global production of rapeseed oil in 2016/17 is forecast at 26.8M tonnes, down 3% year-on-year. Consumption is forecast to exceed production at 27.7M tonnes, down 1% year-on-year. Consequently ending stocks are estimated to fall 18% year-on-year to 4.2M tonnes.

RAPESEED OIL PRICES ROTTERDAM (EU€/TONNE)

Sunflower and maize oil

SUNFLOWER AND CORN OIL PRICES EUROPE (US$/TONNE)

PRICES OF SELECTED OILS (US$/TONNE)

Soyabean Crude Palm Palm Olein Coconut Rapeseed Sunflower Palm Kernel Average price INDEX

2014

2015

July 16

Aug 16

Sept 16

Oct 16

897 825 762 1,276 906 905 1,120

765 676 650 1,358 787 853 1,116

772 628 595 1,441 763 790 1,214

809 688 660 1,500 811 811 1,329

827 712 678 1,514 840 818 1,375

830 688 653 1,412 860 811 1,242

956 226

887 210

886 210

944 224

966 229

928 220

Prices for both sunflower and maize oil have been under pressure compared to other vegetable oils, as production for both sunflowerseed and maize are expected to reach record highs. Sunflower oil production in 2016/17 is forecast at 16.7M tonnes, up 10% year-on-year. Maize oil production in 2015/16 is estimated at 3.4M tonnes, up 7% year-on-year.

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

40 OFI – NOVEMBER/DECEMBER 2016 www.ofimagazine.com

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