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CONTENTS VOL. 33 NO. 7 SEP/OCT 2017 EDITORIAL: Editor: Serena Lim Tel: +44 (0)1737 855066 E-mail: serenalim@quartzltd.com

FEATURES

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PLANT & TECHNOLOGY

SALES:

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Plant and equipment round-up

ESSENTIAL OILS

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PRODUCTION:

All about the essentials

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Skipping the pills

Biotech News

Dow-DuPont merger reaches completion 13

Transport & Logistics News

ADM acquires Israeli storage and feed business 14

Feeding man’s best friends

INSTRUMENTATION & TESTING

Instrumentation round- up

Renewable Material News

Croda acquires renewable surfactants developer Enza

RENDERING

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Biofuels News

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International Market Review

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NEWS

COMMENT

Skipping the pills F

ish oil has been a topical subject of late, particularly as more companies become concerned about sourcing it sustainably. German chemicals firm Evonik and Dutch health company Royal DSM, for example, announced in June that they would be building a commercial-scale marine algaebased omega 3 plant in the USA to meet some 15% of global salmon aquaculture demand for fish oil. The aquaculture industry consumes around 75% of the 1M tonnes of fish oil produced every year, but there is an expanding market in human nutritional supplements and functional foods. This is because fish oil is a major natural source of omega 3 fatty acids such as DHA and EPA, which are said to benefit brain, heart and eye health. Recently, though, doubt has been cast on whether fish oil supplements are of real benefit for everyone. Millions of people take fish oil supplements. In the USA, about 21% of the population take fish oil dietary supplements, according to a 2015 survey from the Consumer Reports National Research Center. But a recent scientific advisory from the American Heart Association (AHA) found that while omega 3 fish oil supplements can help people who have suffered a heart attack or heart failure in the past, there is not enough evidence to support their use in people without a history of heart trouble.

No benefit for people without heart disease

AHA researchers reviewed 13 randomised clinical trials that looked at omega 3 fish oil supplements and their possible role in the prevention and treatment of cardiovascular events, including strokes and heart attacks. “In people who do not have heart disease, there is no evidence that fish oil supplements show any benefit for preventing heart attack, stroke, or heart failure,” says David Siscovick, senior vice president for research at the New York Academy of Medicine and chair of the writing committee for the advisory. “We cannot make a recommendation to use omega 3 fish oil supplements for primary prevention of cardiovascular disease at this time. “People in the general population who are taking omega 3 fish oil supplements are taking them in the absence of scientific data that shows any benefit of the supplements in preventing heart attacks, stroke, heart failure or death for people who do not have a diagnosis of cardiovascular disease.” However, the evidence does show that for those who have already experienced a heart attack or been diagnosed with heart failure, taking a daily dose of 1g of omega 3 fatty acids from fish oil supplements may reduce the risk of dying from heart disease by 10%, Siscovick says. One thing most heart disease experts do agree on is that the best way to get the protective benefits of omega 3s is to eat fish rather than take fish oil supplements, says Consumer Reports. Salmon, sardines, mackerel, and other fatty fish have the highest amount of omega 3s and are low in mercury. Fish may be protective, says Marvin Lipman, Consumer Reports’ chief medical advisor, not just because of its omega 3 content, but because it is a lean source of protein, low in saturated fat, and rich in other nutrients. The AHA recommends that everyone eat two 100g servings of fish per week, to keep their heart healthy. For people who do not regularly eat fish, supplements may be an option but real food still beats the pills otherwise. w

China’s COFCO in partnership with US cooperative

hina’s state-owned COFCO International Ltd (CIL) and US farm cooperative Growmark Inc have formed a partnership which will give China more direct access to agricultural imports such as soyabeans and corn. “CIL aims to be recognised as a world-class global agribusiness,” said CIL CEO Johnny Chi. “A partnership with the second largest agricultural supply and grain cooperative in the United States links COFCO to the growers of the largest grain exporting region in the country.” The partnership, announced on 18 August, is COFCO’s latest expansion since it assumed full ownership of Noble Group’s agribusiness in December 2015 and a large stake in Dutch grain trader Nidera in 2014. As part of the deal, the companies will jointly own and operate a truck, rail and barge terminal in Cahokia, Illinois, on the Mississippi River, the main pipeline that supplies exporters along the US Gulf Coast with corn and soyabeans. COFCO acquired the terminal near the busy inland port of St Louis as part of its Nidera deal. The facility can receive about 180,000 bushels/hour of grain,

delivered by truck and rail, and can load two river barges simultaneously at a rate of about 60,000 bushels/hour, according to Brent Ericson, Growmark’s senior vice president for member services. The USA is the world’s largest corn exporter and second largest soyabean exporter. “US agriculture exports to China totaled US$21bn in 2016,” said Growmark CEO Jim Spradlin. “China is the world’s largest importer of soyabeans and consistently ranks as our second largest agricultural export market.” “The partnership provides new markets for our members and farmers and opens strategic partnerships around the world,” Ericson added. COFCO operates across 35 countries, sourcing, processing, shipping and trading a wide range of raw materials, including grains and oilseeds, sugar, seeds, coffee and cotton. It delivered more than 100M tonnes of products globally in 2016 with revenues in excess of US$35bn. Growmark is an agricultural cooperative with annual sales of US$7bn.

Smallest recorded crop in Australia

eilongjiang Feng Agricultural, the Australian subsidiary of China’s largest argribusiness Beidahuang Group, has planted its smallest recorded crop in Western Australia at just about 6,000ha. The crop, less than a tenth of the 65,000ha Heilongjiang planted during its first year of operation in 2013, was believed to consist mostly of canola, World Grain reported on 10 August. Most of Heilongjiang’s 85,000ha of purchased farmland was now rumoured to have been leased out, with approximately 10,000ha of land remaining near the firm’s Connemara property near Lake King. A former employee at Lake King told the Countryman that funding issues with chemicals, fuel and feed, in addition to internal politics, made operating the farms difficult after the first two successful years. The company reportedly invested US$200M in Australian farmland when it entered the market, intending to bypass Western Australian grain growers’ cooperative CBH Group’s handling facilities to export grains directly to China. Out of the total investment, Heilongjiang planned to put US$10M into an upgrade of the Albany storage and shiploading facilities leased from Vicstock Grain and US$3M into road trains, with other investment targets including precision seeders and on-farm storage.

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NEWS

Private equity firms bidding for Unilever spreads unit

ain Capital and Clayton Dubilier & Rice, two large-scale global private equity groups, have joined forces to make an offer for AngloDutch food giant Unilever’s spreads division. The investors’ collaboration effort was the first significant bidding group to make an offer for the £6bn (US$7.9bn) division, which included famous brands such as Flora and I Can’t Believe It’s Not Butter, reported Sky News on 25 July. Unilever confirmed its plans to sell the spreads unit in April, two months after the

BRAZIL:So CHINA: On 13 July, Chinese soyabean importers made the second largest purchase of US soyabeans in history, in a deal valued at approximately US$5bn and consisting of 12.5M tonnes of product. “As China’s middle class expands, so does its appetite for protein – and more livestock means more opportunity for US soya as a preferred feed ingredient,” Xiaoping Zhang, US Soybean Export Council (USSEC) country director for China told Feedstuffs on 14 July. In 2016, Chinese buyers purchased a total of 9M tonnes of US soya, worth nearly US$4bn, which had been far surpassed in this marketing year, with China already buying a record 34M tonnes of soyabeans. “This latest purchasing commitment signifies the strength of the soya industry and the integral partnership between the USA and China as the largest global producer and buyer of soya, respectively,” said Jim Miller, USSEC chair.

Two Blackstone executives – former Marks & Spencer and Heineken CEO Marc Bolland and ex-Unilever chief operating officer Harish Manwani – would be involved in the offer for the division, unnamed sources told Sky News on 31 July. The news site also reported that the equity firms had hired a collection of food industry experts to advise them on the bid. According to inside sources, Apollo Management and KKR were also preparing to make bids, Sky News wrote.

Butter prices skyrocket in Europe as milk costs rise

he price of butter has skyrocketed in Europe over the past months due to cold weather and farmers going out of business, which is fuelling concerns among food manufacturers. According to several reports, butter costs have reached record highs over the past year. Bakery and Snacks wrote on 23 May that butter prices had pushed past €400 (US$470)/100kg in October 2016, a level not reached since 2013. Butter prices in the UK had increased by more than 20%, The Guardian reported on 7 July, while the French bakery association Les Federation des Pain Entrepreneurs de la Boulangerie L’Avirnir said general prices had rocketed by as much as 90%. The upturn in prices was caused, according to the Financial Times on 25 June, by many milk producers in the UK – 2.5% of the total – ceasing production because of economic difficulties. Consumers were also switching from vegetable oil

PHOTO: ADOBE STOCK

IN BRIEF

company rejected an unsolicited US$143bn takeover offer from Kraft Heinz. Paul Polman, Unilever CEO, told Sky News that preparations for the auction were proceeding according to plan. The spreads division had been in a longterm decline due to consumers switching from vegetable oil-based spreads to butter. Private equity companies Blackstone and CVC Capital Partners have also requested permission from Unilever to make a joint bid for the spreads division.

BUTTER PRICES HAVE SKYROCKETED DUE TO INCREASED MILK PRICES

spreads to butter, further increasing demand. “The increase in the price of basic raw materials – namely milk – appears as the key factor contributing to the rise in the price of butter. The increase in milk prices is due to the poor growth of dairy cattle stock, on average, worldwide, and the decrease in the number of livestock in the EU,” Sergey Avramenko, head of global market research at IndexBox, told Bakery and Snacks. Butter prices were rising faster than any other grocery

item, wrote Financial Times. The high prices and straight-up lack of butter was impacting food manufacturers who were facing lower profit margins and reduced production. UK dairy company Dairy Crest, for example, experienced a lower than expected profit margin growth despite an increase in sales, due to a larger amount capital used to acquire cream. “Despite the pressure on butter input costs, the strong performance of our cheese business means that our expectations for the year remain unchanged,” Dairy Crest CEO Mark Allen told Food Manufacturer on 19 July. Not all manufacturers might be so lucky, however, and Peder Tuborgh, CEO of the Danish dairy giant Arla, warned The Guardian that the UK, and perhaps all of Europe, could be facing a butter shortage by Christmas. “At Christmas time there will simply not be enough butter and cream around in Europe. We know that as an industry. I know that from our forecasting,” Tuborgh said.

Indian import duty changes forecast to lower refined palm oil imports

ndustry officials expect India’s refined palm oil imports to plunge while crude palm oil (CPO) surges after changes made to the country’s trade tariffs. In a move to protect its domestic farmers, India doubled the import duty on CPO to 15% and raised the tax on refined, bleached and deodorised (RBD) palm olein from 15% to 25%, reported Hellenic Shipping News on 21 August. “We expect a significant shift from imports of RBD palm olein to CPO due to the hike in duty differential. The share of CPO in total palm imports is expected to rise to over 90% from 69% last year,” said Dinesh Shahra, managing director at Ruchi Soya Industries, which is a leading Indian palm oil refiner.

While the move would boost domestic refiners, Indonesia and Malaysia were likely to be hit by the change, as India is the world’s largest palm oil importer. Crude products for domestic refining generally rule India’s oil imports, but Indonesia and Malaysia’s increased taxes on CPO exports to promote their own refining industry made refined oil cheaper for Indian importers. The changes to the tax policy caused refined palm oil to make up 31% of India’s total palm oil imports in 2015/2016 marketing year which ended in October 2016, when the share was only 17.4% in the previous year. Sandeep Bajoria, CEO of vegetable oil importer Sunvin, said that since the duty

change, some Indian importers had begun requesting CPO instead of RBD products. According to Hellenic Shipping News, India had imported 6.74M tonnes of CPO and 2.2M tonnes of refined palm oil in the first nine months of the current marketing year, which began in November 2016. Palm oil’s share in India’s total edible oil imports has been on a steady downward spiral due to competition from soya and sunflower oils, dropping to 58% in 2015/2016 from the 80% it held in 2012/2013. Edible oil importers said the new duty change could increase soya imports further, as the import duty on soya oil was only 17.5%, compared to the 25% on refined palm oil.

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NEWS

WORLD: A new certification scheme has been launched to independently verify products that contain no palm oil. Unveiled to coincide with World Orangutan Day on 19 August, the new labelling scheme is now in operation in Australia and the UK following approval from the Australian Competition and Consumer Commission, IP Australia and IPO UK. A further 14 countries have applications pending to introduce the label in their markets. Dubbed the Palm Oil Free Certification Accreditation Programme (POFCAP), the not-for-profit initiative has been set up by a group of women campaigning to address the environmental issues created by palm oil production. POFCAP said that despite some improvements to tackle palm oil-related deforestation, progress had been “slow and arduous” and only 17% of all palm oil used could be classed as ‘non-conflict’. Australia-based eco cleaning products company Clean Conscience had become the first firm to carry the label, and POFCAP said it was working with other companies on certification. The aim was for POFCAP to sit alongside other trademarks such as Cruelty-Free, Certified Organic, Vegan and Fair Trade. WORLD: Global agribusiness corporation Cargill and Austrian phytogenic feed additive firm Delacon signed a strategic partnership agreement on 6 July to advance the market for natural, plant-based feed additives. The partnership would connect Cargill’s expertise in applied nutrition and global presence with Delacon’s knowledge and market experience in phytogenic additives, Cargill said. Phytogenic additives used natural ingredients, including herbs, spices, other plants and their extracts, such as essential oils, to improve animal health and production. “Phytogenics are one of the most promising groups of feed additives and are turning from a niche market into a mainstream need,” said Delacon CEO Markus Dedl.

FDA approves heart health claims related to soyabean oil

he US Food and Drug Administration (FDA) has allowed food manufacturers and restaurants to make qualified health claims linking soyabean oil to a reduced risk of coronary heart disease. The approval will allow food companies and restaurants to advertise their products – including bottled oils, dressings, dips, snacks and baked goods – as containing ingredients that may reduce heart disease risk and may lower LDL (‘bad’) cholesterol when replacing saturated fats and not increasing calories. The decision came after agribusiness and food company Bunge independently filed a petition with the FDA including a summary of clinical studies on soyabean oil’s effects on heart health, the firm said in a statement on 31 July. In order to make the newly approved claim, a

product must have at least 5g of soyabean oil per serving and meet applicable criteria for saturated and trans fat, cholesterol and sodium content. Additionally, the products must also be a “good source” of one of the FDA’s identified beneficial nutrients, although this condition does not apply to soyabean oil or oil blends, salad dressings and shortening. Soyabean oil is the most popular edible oil in the USA and the most common dietary source of omega 3 fats, said Bunge. According to data from consumer research firm Hartman Group, heart health is the top concern for American consumers when grocery shopping, with 55% trying to avoid or reduce saturated fats and nearly 40% trying to incorporate healthier fats into their diets.

Russia-Ukraine conflict could affect sun oil prices

he ongoing military tension between Russia and Ukraine – the world’s two largest producers of sunflower seed oil – could start rattling global cooking oil markets despite their growing production. Based on data from the Food and Agriculture Organization of the United Nations (FAO), Russia’s sunflower oil production had increased from 827,000 tonnes to more than 4M tonnes between 1992 and 2014, while in Ukraine, production rose from 857,000 tonnes to 4.4M tonnes in the same period, wrote Olive Oil Times on 10 August. In comparison, output by the world’s third largest producer, Argentina, was only 932,000 tonnes. Together, Russia and Ukraine are responsible for more than half of total global sunflower oil production.

PHOTO: ADOBE STOCK

IN BRIEF

However, the ongoing military conflict following Russia’s annexation of Crimea from Ukraine in 2014 is threatening not only the sunflower market but also vegetable oil markets in general, including olive oil, according to Olive Oil Times. The US imposed fresh sanctions on Russia in early August because of its role in the Ukrainian conflict and its alleged interference in the US 2016 presidential election. While the sanctions do not

target Russian sunflower oil exports, the country might impose tariffs on its own exports. The Russian Sunflower Oil and Fats Union sent a letter in June to the country’s Economy and Agriculture Ministries requesting the export tariff on sunflower oil to be raised from 6% to 16.5%, to help bring down domestic sunflower seed prices. The cost of sunflower seeds had risen by 9% in Russia since mid-May due to international demand, wrote Olive Oil Times. This, combined with inflation, was threatening to make sunflower and other oils too expensive for Russians to afford. Ukraine was poised to gain from the dwindling Russian cooking oil supply as Europe was the primary importer of the country’s sunflower seed oil with demand growing in recent years.

ADM converts German crush plant to non-GM soya

merican agribusiness giant Archer Daniels Midland Co (ADM) has started crushing non-GMO soyabeans at its northwestern Germany facility, hoping the move will allow the firm to respond to changing market dynamics. The mill, located in Spyck near the Dutch border, was switched from crushing sunflower and rapeseed to soya as part of ADM’s long-term strategy to expand its European soya processing plant network, reported World Grain on 26 July. The company hoped the expansion would help it to better service is soyabean meal clients and increase soyabean acreage in the area. “The extended soyabean crushing capacity in Spyck will help us meet customer demand as the European non-GMO soyabean market continues to grow,” ADM

general manager for European soyabean crush Jon Turney told World Grain. ADM also crushes non-GMO soyabean at its Straubing facility in southeast Germany, where it had been working with farmers and industry accreditation bodies over the past year to enhance growth and increase soyabeans’ market share. “We are committed to growing the soyabean industry in this region, and we are working hard to help farmers in France and along the River Danube see the value of growing soyabeans within their rotation,” said Rene van der Poel, ADM commercial manager for oilseeds in Germany. John Grossman, ADM president of European crush and origination, said the move to processing non-GMO soyabeans was part of the company’s growth plan.

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NEWS

Bunge reports earnings drop and launches savings plan G lobal agri and food company Bunge Ltd has cut its 2017 profit forecast after reporting a 34% fall in quarterly earnings on 2 August, its second straight weak quarterly result. The news follows on from its announcement in mid-July of a comprehensive savings programme to improve its position, faced with a tough market and grain stockpiling in South America after several years of bumper crops. The company slashed its full-year agribusiness earnings target to US$550-650M, from US$800-925M in the first quarter, and its food and ingredients target to US$210-230M, from US$245-$265M, Reuters said. However, CEO Soren Schroeder said a drop in global stocks and planned cost cuts should help

improve performance. Bunge chief financial officer Thomas Boehlert said the company was now beginning to implement a savings programme that, once fully implemented, would reduce Bunge’s overhead costs by an estimated US$250M by the end of 2019 by adopting a zero-based budgeting process that would target costs in specific budget categories. Some US$100M of the savings were anticipated to materialise in 2018 and an additional US$180M in 2019. Additionally, the firm said it would streamline its processes, consolidate back office functions globally to improve efficiency and scalability and reduce its total 2018 capital expenditure

spending from the previously announced US$750M to US$650M. Schroeder said the programme was a “transformational next step” for the company. He also told Reuters that selling Bunge was not off the table, although it rejected an informal merger offer from Anglo–Swiss commodity trading and mining firm Glencore in May. Swiss financial services company Credit Suisse lowered Bunge’s full-year earnings estimate from US$4.28M to US$4.04M. “We think investors will find this initiative insufficient if it is meant as a defence plan to fend off Glencore’s interest,” wrote Robert Moskow, a research analyst with Credit Suisse.

Louis Dreyfus sells Olive oil market to reach US$11bn global olive oil market is African inputs and Theprojected to earn US$11bn in by 2022, according to fertiliser business revenues a new study by market research

gricultural commodity trader Louis Dreyfus Co (LDC) has sold its Africa-based Fertilizers and Inputs Holding BV to private investment firm Helios Investment Partners on 24 July. The business distributes fertilisers, crop protection products, seeds and industrial chemicals throughout West Africa and generates some US$300M/ year in sales, LDC said. “This transaction is fully in line with our strategy of concentrating on businesses in which we enjoy closer ties to product origination and farmer relationships,” said LDC CEO Gonzalo Ramírez Martiarena. Martiarena also said the sale would help LDC focus on areas outside Africa through its Macrofertil brand of fertilisers, which, according to Martiarena, would help LDC diversify its fertilisers and inputs products elsewhere in the world. The transaction was subject to regulatory approvals and other customary conditions, LDC said.

company Fact.MR. Developed countries continued to be the largest consumers of olive oil globally, although fastgrowing economies in the Asia Pacific excluding Japan (APEJ) were catching up and could change the market balance in coming years, Fact.MR said on 10 August. The global olive oil supply was dependent on the weather conditions in key Mediterranean growing regions and fluctuating weather in Spain and Italy had substantially increased prices over the last few years, Fact.MR said. Continuing high demand in emerging economies – led by China – indicated that the industry might be facing challenging times in the coming years. Europe remained the largest regional contributor, with its market value projected to surpass US$3bn by the end of the forecast period, with the

processed oil segment expected to lead the market. The processed segment dominated the olive oil market globally by product type and its leading position was expected to continue, with Europe providing one third – or US$2.4bn worth – of the global supply. The virgin oil segment remained much smaller, but producers could be looking to target the APEJ region more efficiently, as its market share in this segment was US$700M, nearly on par with Europe. Europe was projected to record the highest CAGR in the food processor segment, which would help it reach a market value of just under US$1bn by the end of 2022.

New high-oleic soya oil offered

ood product distributer Performance Food Group (PFG) launched a new high-performance soyabean oil on 23 August that uses DuPont Pioneer’s Plenish brand high-oleic soya oil as a primary ingredient. The new oil would offer “significant” improvements over commodity soyabean oil, DuPont Pioneer said. Plenish oil was 20% lower in saturated fats, contained roughly 75% monounsaturated fat and had zero trans fats. Scott Barnewolf, vice president of procurement at PFG, said the Plenish oil had a fry life two to three times longer than commodity soyabean oil, reduced polymer build-up on cooking equipment and did not require hydrogenation, a feature DuPont developed in response to the 2002 ruling by the US Food and Drug Administration (FDA) mandating trans fats labelling. In 2018, the FDA plans to introduce legislation eliminating the Generally Regarded As Safe (GRAS) classification for trans fats, thus banning the use of partially hydrogenated oils.

Oilseeds and grains propel Wilmar to $60M profit in second quarter

ingapore-headquartered agribusiness group Wilmar International has finished the second quarter of 2017 with US$60.2M in profits, boosted by the company’s oilseeds and grains segment. Ending the quarter in profit was all the more significant for the company as, during the same period in 2016, it finished with a US$220.1M in losses, World-Grain wrote on 10 August. Revenue for the quarter was US$10.599bn, which marked a 13.2% increase from US$9.367bn in 2016 during the same period.

Wilmar attributed the year-on-year improvement to the recovery of its oilseeds and grains segment from the “one-off losses” in the same 2016 quarter, but the recovery was partially offset by weaker tropical oils and sugar. “We expect tropical oils to perform better in the second half of 2017 on the back of improvements in production yields and better margins from downstream operations,” Wilmar chair and CEO Kuok Khoon Hong said. “Oilseed crush margins are expected to remain positive for the rest of the year and

consumer products will improve as it enters its seasonal peak period.” The oilseeds and grains segment registered a pre-tax profit of US$61.1M, compared to a loss US$343.8M year-on-year, with sales volume increasing 13% to 6.7M tonnes against 5.9M tonnes in 2016. “While the group may face short-term challenges, we remain very optimistic about the tremendous growth prospects of our various businesses and will continue with our expansion plans, especially in China, India and Indonesia,” Hong said.

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BIOFUELS NEWS

EU postpones vote on WTO ruling reply

n the latest turn in the ongoing biodiesel imports row between the European Union and Argentina, the EU has postponed its vote on how it will respond to the World Trade Organization (WTO) ruling in favour of the South American producer. According to sources close to the vote, the European Commission had proposed lowering the biodiesel anti-dumping duties imposed on Argentina and Indonesia, Reuters reported on 27 July. The duties were to be cut by up to 10.6% for Argentine and by up to 6.9% for Indonesian biodiesel, according to MLex Market Insight on 14 July, but EU member countries decided to postpone the vote. The WTO decided in October 2016 to

uphold Argentina’s complaint against the EU’s November 2013 biodiesel anti-dumping duties of 20.5% against Indonesia and 22-25.7% against Argentina, which equalled approximately €178.8 (US$204.8) and €245.6 (US$287.9) per tonne respectively. Before the tariffs were put in place, EU officials increased the assessed dumping levels during the probe to include differential tax rates of the raw materials – such as soyabeans and palm oil – used to produce the biodiesel in Argentina and Indonesia. These materials had high export taxes, which meant they generally stayed in the domestic market, thus creating a surplus and resulting in lower prices, according to MLex. In the complaint, Argentina called the

measures protectionist and claimed they had cost the country nearly US$1.6bn in lost sales annually. The EU backed its decision by arguing that Argentina’s export duty on the biodiesel’s raw material allowed Argentinian producers to dump biodiesel in Europe at unfairly low prices. An EU court annulled the anti-dumping duties earlier this year, but the bloc has appealed the WTO ruling. According to Reuters, the WTO ruling could determine EU’s future trade relations with China as the EU had said it could use international benchmark prices to assess whether Chinese producers were dumping products in Europe.

EBB: Poland’s ‘unfair’ exports harm biodiesel industry

“U

nfair” Polish biodiesel exports are seriously damaging the EU internal renewable fuels markets and no action has been taken to correct the situation, the European Biodiesel Board (EBB) claims. In a 6 July statement, the European biodiesel industry representative said that biodiesel operators had alerted both national and EU authorities, but the export trend had not been stopped and was in fact increasing. Polish fuel market players were “deliberately” exploiting a loophole in the country’s biofuels legislation, the EBB alleged. “In Poland, the accounting of

IN BRIEF TURKEY: The Turkish government has put in place a 0.5% biodiesel blending mandate, set to come into force in early 2018, according to Biofuels Digest on 6 June. The mandate was expected to boost biodiesel consumption in the country by 50%, bringing it up to 115,000 tonnes, in addition to reduced excise tax payments. ROMANIA: Romania was expected to nearly double its ethanol blending mandate, despite falling production, Ethanol Producer reported on 21 July. The country – with only one ethanol plant – would increase its 4.5% mandate to 8% in 2018. It has a target of 10% bioethanol blending by 2022.

a given biodiesel volume towards the national blending mandate is based on a simple invoice of purchase by the fuel distributor,” the association said. “As Polish law does not explicitly require the biodiesel accounted towards the blending mandate to be consumed within its boundaries, some Polish operators have been capitalising on the export of underpriced biodiesel that has already been declared as blended.” The exploitation of the law had led to a large part of Polish biodiesel volumes being counted twice towards the country’s national EU blending mandates, first falsely in Poland

and a second time “at an unfair dumped price” in another EU country, EBB claimed. As a result, a growing number of EU stakeholders along the biodiesel value chain were experiencing financial loss, loss of profitability and jobs and several EU countries’ local energy and protein independence were also being distorted. The affected countries included Belgium, France, Italy, the Netherlands and Romania, among others. The EBB expressed its “strong concern” about the situation and urged Polish authorities to tackle the issue as it was in violation of EU renewable fuel legislation.

California allows biodiesel additive

he California Air Resource Board (CARB) certified on 20 July a new biodiesel additive that reduces the fuel’s emissions, making it the “cleanest” tested diesel fuel in the USA. The additive, branded VESTA 1000, reduced all measurable emissions – including nitrous oxide (NOx) – when blended with California’s unique CARB diesel blend, the National Biodiesel Board (NBB) said in a statement. Designed to comply with CARB’s Alternative Diesel Fuel Regulation – to come into effect on 1 January 2018 – the additive reduced NOx emissions by 1.9% and particulate matter by 18% when compared to plain CARB diesel.

Countervailing duties set for Argentina, Indonesia biodiesel

he US Department of Commerce imposed on 22 August a preliminary countervailing duty determination on Argentine and Indonesian biodiesel imports after finding the countries had subsidised their producers. In addition, the department determined that the imports had caused ‘critical circumstances’ in the USA, which could open the door for retroactive duties going back to May 2017. The ruling will require importers of Argentine and Indonesian biodiesel to pay cash deposits on the imported fuel, ranging from 50.29% to 64.17% on Argentine and 41.06% to 68.28% on Indonesian biodiesel depending on the producer and/or exporter. The cash deposit requirements would be imposed once the preliminary determination was published in the Federal Register. Due to the ‘critical circumstances’ ruling, the deposit rates would apply retroactively 90 days back from the date the decision was filed in the Federal Register. “The Commerce Department has recognised what this industry has known all along – that foreign biodiesel producers have benefited from massive

subsidies that have severely injured US biodiesel producers,” Doug Whitehead, chief operating officer of the US trade association National Biodiesel Board (NBB) said in a statement. In April, the NBB Fair Trade Coalition filed a petition with the Department of Commerce to impose antidumping duties against Argentina and Indonesia, followed by a second petition in July, which claimed that biodiesel imports from the two countries had caused critical circumstances for the US industry. The association claimed that Argentine and Indonesian imports surged by a tremendous 464% between 2014 and 2016 – accounting for 18.3% of the total US market share – with Argentine imports spiking another 144.5% following NBB’s original petition. The Department of Commerce would now audit the foreign producers and governments to confirm the accuracy of their data submissions before making its final decision on the countervailing duties, with a preliminary decision on related antidumping duties expected in October. Final determinations were projected for later this year or early 2018.

10 OFI – SEPTEMBER/OCTOBER 2017 www.ofimagazine.com

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BIOTECH NEWS

Dow-DuPont merger reaches completion

S chemical juggernauts Dow Chemical Company and DuPont successfully completed their US$150bn merger on 1 September, bringing the chemical giants together as one under the name DowDuPont for the time being. Andrew Liveris, the executive chair of the newly formed company, called finalising the merger – announced in December 2015 – a “significant milestone” for both companies. “While our collective heritage and strength are impressive, the true value of this merger lies in the intended creation of three industry powerhouses that will define their markets and drive growth for the benefit of all stakeholders,” said Liveris in a statement. DowDuPont would operate as a single entity with three divisions – Agriculture, Materials Science and Specialty Products – for up to 18 months before spinning off the divisions into separate legal entities once their processes,

IN BRIEF USA: The Trump administration said it would take legal action against countries restricting the import of US GMO crops unless they voluntarily lowered their protections, Agriculture.com reported in June. “We are going to bring cases at the WTO and other venues, we’re going to insist that any barrier be science-based and the USA will increase exports,” said US trade representative Robert Lighthizer. President Donald Trump had set up a task force to promote US agriculture. The USA routinely urges other nations to approve commercial sales of its biotech crops, with China in particular being accused of slowing down approvals. Earlier this decade, China rejected 1M tonnes of US corn as the cargoes included unsanctioned Syngenta GM corn, wrote Agriculture.com INDIA: Indian agrochemical company PI Industries and German chemicals giant BASF have signed a strategic partnership deal to bring crop protection solutions to Indian farmers, the Business Standard wrote on 9 May. The agreement would see PI market BASF’s fungicide technologies for several crops, including rice and vegetables, alongside a new herbicide for maize.

assets and licenses are in place. The Agriculture company would combine the hybrid seed and GM crop producer DuPont Pioneer, DuPont Crop Protection and Dow Agrosciences, with its headquarters located in Wilmington, Delaware, and two global business centres in Johnston, Iowa, and Indianapolis, Indiana. The Material Science company would retain the name Dow and consist of Dow’s Performance Plastics, Performance Materials & Chemicals, and Infrastructure Solutions and Consumer Solutions segments in addition to DuPont Performance Materials, with its intended headquarters located in Midland, Michigan. The Specialty Products company would bring together DuPont Protection Solutions, Sustainable Solutions, Industrial Biosciences, and Nutrition & Health segments, in addition to DuPont Electronics & Communications

and Dow Electronic Materials. The company’s headquarters were set to be located in Wilmington, Delaware. The new board of directors comprises 16 members, eight from both companies’ current boards, with Jeffrey Fettig, previously Dow’s lead independent director, and Alexander Cutler, ex-DuPont lead independent director, as lead directors. Dow’s and DuPont’s shares ceased trading on 31 August and DowDuPont began trading on the New York Stock Exchange the next day. In August, just before the closing date for the merger was announced, DuPont paid nearly US$400M to settle two environmental lawsuits, although DuPont itself said the timing was coincidental, reported Delaware Online on 4 August. DuPont was still facing another US$1.1bn lawsuit for an alleged 45,000 tonne toxic spill from its Chamber Works facility in New Jersey.

EU opens in-depth probe of Bayer-Monsanto merger

he European Commission (EC) will carry out an in-depth investigation of the proposed Bayer-Monsanto merger due to concerns about reduced competition in pesticides, seeds and plant traits. The US$66bn merger, first announced in September 2016, would form the largest integrated company in pesticides and seeds, but it could reduce competition by dragging up prices, lowering product quality and resulting in less choice and innovation in the marketplace, the EC said in a 22 August statement.

Monsanto’s glyphosate pesticide product was the most sold non-selective herbicide in Europe with Bayer’s glusofinate ammonium as one of its few competitors, which EC felt would cut competition in herbicides and pesticides against varroa mites, a parasite affecting bee

colonies in Europe. The EC also noted that both Monsanto and Bayer were active in breeding crop and vegetable seeds, with Monsanto having the highest market share in rapeseeds in Europe and Bayer holding the highest share on the same crop globally. In July, Bayer and Monsanto submitted commitments to address some of the EC’s initial concerns about the deal, but the commission considered them insufficient. The commission has until 8 January 2018 to make its final decision on the merger.

Turkey OKs GM Calyxt goes public with gene editing soya-based feed technology for soyabean and canola

urkey’s Biosecurity Council has allowed genetically modified soyabeans and one type of corn to be used as animal food. The decision came after the Poultry Meat Producers and Breeders Association of Turkey (BESD-BIR) applied for the use of the modified crops, the Hurriyet Daily News wrote on 2 August. The council’s scientific risk evaluation and socioeconomic evaluation committees analysed the MON87708 and MON87705 soyabean strains and MON87460 type corn by Monsanto and BPSCV127-9 soyabean strain by BASF. All four strains were approved for use in animal feed “under certain conditions”.

alyxt, a US-based company developing gene editing technology for crops including soyabeans, went public and began trading on the Nasdaq market on 20 July. The company is focused on developing genetically improved crops over a varying crop type range, according to a 3 August Feedstuffs report. Currently, Calyxt was working on high oleic soyabeans, low saturated fat canola, reduced trans fat soyabean oil, high fibre wheat and herbicide tolerant wheat. Calyxt CEO Federico Tripodi told Feedstuffs that high oleic soyabeans with zero trans fats

and reduced saturated fats were projected to be the company’s first product to reach the market in late 2018. The company’s TALEN technology allowed it to develop modified products which would not need to be labelled as containing GMOs, as instead of injecting foreign DNA into plants, it allowed the developer to simply turn genes on or off. With the technology, Calyxt scientists could develop valuable traits through precise modification of plant genomes in three to six years against the industry average of 13 years and could lower the average cost of US$130M to develop such products.

12 OFI – SEPTEMBER/OCTOBER 2017 www.ofimagazine.com

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TRANSPORT & LOGISTICS NEWS

ADM acquires Israeli storage and feed business

S agribusiness Archer Daniels Midland (ADM) completed its acquisition of a controlling interest in Israeli feed product importer and distributor Industries Centers on 19 July. Industries Centers – which will be renamed ADM Israel – trades corn byproducts and other grain products and operates a 45,000 tonne storage facility at the Port of Ashdod, 40km south of Tel Aviv city, where the company is headquartered. “This is a great opportunity for us to reach new customers with a wide array of

products, from soyabean meal to grains to feed ingredients,” ADM Agriculture Services president Joe Taets had said when the acquisition was first announced in May, as part of a focus on expanding efforts in the region. In a statement on 19 July, Taets said the acquisition was part of ADM’s strategy to expand its global origination and distribution network into new areas. “From our Medsofts joint venture, to our ports on the Black Sea to our new venture in Israel, we are committed to enhancing our global origination and logistics capabilities.”

ADM Israel will specialise in the import and marketing of raw materials for cattle and poultry feed, in the creation of treated poultry litter for the cattle industry, and in the development and manufacture of fertilisers for agriculture, the company’s website said. “Our new logistics center in the new industrial park in the hinterland of the Port of Ashdod expands the variety of services provided to customers and comes along with the company’s existing storage, crushing and pressing services that ADM Israel customers enjoy throughout Israel.”

Ukraine’s Nibulon to build 10 new river terminals

kraine’s largest grain trader, Nibulon, announced on 18 July that it plans to build at least 10 river transshipment terminals for bulk cargo along the Dnipro River, the Southern Buh River and other navigable rivers in the country. The announcement was made at the opening of the company’s new transshipment terminal (pictured) in Hola Prystan town, Kherson region. Nibulon is one of Ukraine’s largest domestic producers and exporters of agricultural products including wheat, barley, corn, rye and sunflower. Its transshipment terminal for grain and oilseed crops in Mykolayiv city handles wheat, barley, corn and rapeseed. It also has elevators in Cherkasy, Kherson, Khmelnyts’kyv, Kyiv, Mykolayiv, Poltava, Zaporizhzhya and Zhytomyr regions. Nibulon general director Oleksiy Vadaturskyy said the newest terminal in Hola Prystan had a capacity

to transship up to 300,000 tonnes/year of grain and would remove almost 20,000 heavy-duty trucks from the highways of Kherson region. During the opening of the Hola Prystan terminal, Nibulon and the European Bank for Reconstruction and Development signed a US$90M loan agreement to help develop water transportation infrastructure and cargo shipbuilding in Ukraine. Nibulon said that having already signed a US$87.6M loan agreement with the European Investment Bank and a US$100M loan agreement with the International Finance Corporation in the last six months, it would be able to invest about US$270M in developing the agricultural sector’s infrastructure and reviving Ukrainian shipbuilding. “We have built about 60 vessels. In the coming years, we will build 40 more vessels using the same money,” Vadaturskyy said.

Bunge focuses Russian grain trade in Azov Sea terminal

lobal agri and food company Bunge has decided to focus its Russian grain trade in its Azov Sea export terminal in southwestern Russia to boost efficiency. Bunge’s decision highlighted the growing competition amongst the deepwater ports in the Russian Black Sea, which exported to countries like Egypt, while the shallow water ports of the Azov Sea usually supplied grain towards

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Turkey, Reuters wrote on 12 July. A grain trader told Reuters that concentrating its operations on a company-owned shallow-water port terminal could give Bunge the advantage of low costs in a “niche business”. “Bunge is refocusing and consolidating its Russian grain origination activities in Rostovon-Don, where we have an export terminal, helping us achieve

greater efficiencies,” Bunge spokeswoman Susan Burns said. Bunge had already closed its offices in Novorossiisk and Yeisk and was planning to close its Stavropol office, while its Voronezh office would begin to exclusively manage seed origination. Bunge – Russia’s 14th largest grain exporter in 2016/17 – owns a sunflower oil plant in Russia and a grain terminal in Ukraine.

IN BRIEF AUSTRALIA: Viterra has sold nearly 4M tonnes/year of shipping capacity until 2021. Nine different exporters had committed to exporting grain over the next four years via long term agreements for the 2019/20 and 2020/21 seasons, said Jonathan Wilson, general manager of logistics and commercial relations, in June. “The bookings should bring confidence to growers knowing they will continue to have a competitive environment to sell their grain, with multiple buyers committed over the long term.” Viterra also set aside a further 2M tonnes of short-term shipping capacity and Wilson said more than 1.5M tonnes was booked for the 2017/18 harvest, meaning about 5.5M tonnes of export capacity had already been secured by exporters for 2017/18. Viterra stores and handles wheat, barley, canola and pulses in Australia with a total storage capacity of over 10M tonnes. It is part of global agribusiness trader and distributer Glencore Agriculture.

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13 OFI – SEPTEMBER/OCTOBER 2017 www.ofimagazine.com

Transport News NEW.indd 1

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

IN BRIEF USA: US industrial bioscience firm Amyris Inc announced on 17 July that it had entered into its first product development and production agreement with Dutch health company Royal DSM to develop a food and nutrition molecule for which DSM is a major market provider. As part of DSM’s US$25M equity investment in Amyris announced in May (see Renewable Materials News, OFI June 2017), the two companies agreed to focus on several short- to medium-term projects in vitamins and other nutritional ingredients. In this first deal, DSM will fund the development of the technology to produce the specific molecule that Amyris will scale and supply long-term. DSM will take the molecule to market. MALAYSIA: On 6 July, Kuala Lumpur-headquartered Emery Oleochemicals announced the launch of a new bio-based ester with high thermal and hydrolytic stability, which can be formulated as a lubricity additive or base fluid in chain oils for applications such as lifting chains for cranes, sluice gates, forklifts, forges, rolling mills and conveyor systems. Other applications include two-stroke engine oils, gear oils and greases. Emery said the ester would be available in commercial quantities in Europe. Emery also announced a new low temperature plasticiser to meet market demand for more readily available azelaic acidderived plasticisers for PVC and synthetic rubber applications. EUROPE: Active ingredients distributor Bonderalia Italia has launched a new emulsifier based on Reverdia’s biosuccinic acid and organic pumpkin seed oil, which can be used in personal care and cosmetic products such as creams, lotions and milks. Its emulsifying properties had been demonstrated across a wide range of fatty phases, Reverdia said on 23 May. “This allows stable creams and lotions to be formulated from 100% vegetable origin oil.” Reverdia, a joint venture between Dutch health firm Royal DSM and global starch company Roquette Frères, produces nonfossil derived succinic acid from industrial grade corn starch.

Croda acquires renewable surfactants developer Enza

K speciality chemicals firm Croda International announced its acquisition of renewable surfactants developer Enza Biotech AB on 21 July. The research enterprise was established in 2012 as a spin-out company from Sweden’s Lund University and is currently focused on the enzymatic production of a novel class of bio-based nonionic surfactants. “The cosmetics and personal care sector are large consumers of nonionic surfactants and, today, there is a clear trend towards more sustainable cosmetics and personal care products,” the company said. “Existing green surfactant technologies fulfil part of the demand but there is a need for new solutions that provide the right functional performance and are green and biodegradable. “The oligomeric alkylglycosides (OLMAG

surfactants) produced by Enza have longer hydrophilic headgroups with between 3-20 glucose units instead of the one to two normally found in commercially available alkylglycosides.” By extending the headgroup, a longer alkyl chain length could be used without running into problems with insolubility. Enza said that since longer alkyl chain lengths were related to less irritation and milder features, they had an advantage in applications that came into contact with the human body, such as cosmetics and personal care products. They also had improved functionalities in the area of wetting and dispersion, and would be interesting to pharmaceutical formulators searching for a more chemically stable alternative to ethoxylated polysorbates.

Corbion may own TerraVia following bankruptcy filing

S algae-based firm TerraVia Holding Inc, formerly known as Solazyme, voluntarily filed for bankruptcy on 2 August and has entered into a “stalking horse” agreement for Corbion NV to buy its stock and assets. Corbion has offered a cash price of US$20M and will assume the ongoing financial obligations of TerraVia and its joint venture ownership. As Solazyme, TerraVia developed proprietary algae-based sugar-to-oil technology targeting food, nutrition and speciality ingredients, as well as biofuels and chemicals. In March 2016, Solazyme rebranded itself as TerraVia and redefined its focus on food, nutrition and personal care. Its brands include the capric, lauric and oleic-based speciality personal care oils under the AlgaPur range. In the foods sector, it has also developed its AlgaWise Omega-9 algae oil, Thrive Culinary Algal Oil and AlgaWise algae butter. TerraVia also produces an algae-based

docosahexaenoic (DHA) ingredient that can replace fish oil in aqua feed – AlgaPrime DHA – which it launched in partnership with Bunge in May 2016. TerraVia owns 50.1% of the joint venture. Corbion said acquiring TerraVia’s microalgae platform would extend its product portfolio in algaebased fatty acids and proteins, while leveraging its fermentation and downstream processing capabilities. The Amsterdam-based company develops biobased ingredients in the food and biochemical markets and is currently involved in several projects, including a joint venture with Total for biobased polylactic acid bioplastic (PLA) and a joint venture with BASF for biobased succinic acid. As a stalking horse agreement, the Corbion offer is subject to the receipt of any higher offers from other potential bidders as part of the auction process under Section 363 of the US Bankruptcy Code. TerraVia said it expected a sale to be completed within 60 to 90 days.

HuntsmanClariant merger on track

S regulators have asked for more information on the proposed merger of chemicals and surfactants producer Huntsman Corporation and Swiss chemicals firm Clariant AG, but the two firms are still expecting a closing date of this December or January 2018. The US Federal Trade Commission made a second request for information on sodium isethionate and a polyetheramine product on 14 August. In a progress report on 27 July, Huntsman and Clariant said they had high confidence in delivering synergies of over US$400M, as well as US$25M in tax savings. The merger to create HuntsmanClariant was first

announced on 22 May. In the edible oils sector, Huntsman supplies the home and personal care industries with surfactants based on renewable oils, while Clariant supplies the edible oil industry with its Tonsil brand bleaching earth. Clariant and Huntsman said they would continue to focus on higher growth and higher margin businesses, and reaping the benefits of complementary product portfolios in performance products, care chemicals and natural resources, which would represent some 35% of their combined sales. HuntsmanClariant would also hold a surfactants portfolio in high-end niche markets globally.

Avantium plant

enewable chemistry firm Avantium announced on 18 July that it is building a new pilot biorefinery plant at Chemie Park Delfzijl, the Netherlands. The pilot plant will be used to test feasibility of Avantium’s Zambezi process, which converts wood chips and non-food biomass into raw materials for the chemical industry. The plant will mainly use forestry residue from the Netherlands and is expected to be operational in second quarter 2018. It is being developed with Avantium’s partners – AkzoNobel, German electricity supplier RWE, Dutch forestry organisation Staatsbosbeheer and Chemport Europe, where Chemie Park Delfzijl is located.

14 OFI – SEPTEMBER/OCTOBER 2017 www.ofimagazine.com

Renewable news.indd 1

07/09/2017 10:16

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D IARY OF EVEN TS

3-5 OCTOBER 2017

23-27 OCTOBER 2017

PALMEX Indonesia VENUE: Santika Premiere Dyandra Hotel & Convention, North Sumatra, Indonesia CONTACT: PT Fireworks Indonesia Tel: +62 21 26051028 or +62 21 26051029 E-mail: info@asiafireworks.com Website: www.palmoilexpo.com

4 OCTOBER 2017

National Renderers Association (NRA) 84th Annual Convention VENUE: Ritz-Carlton, San Juan, Puerto Rico CONTACT: Marty Covert, NRA, USA Tel: +1 703 683 0155 E-mail: co@martycovert.com Website: www.nationalrenderers.org/events/ calendar

24-25 OCTOBER 2017

Global Oils and Fats Forum (GOFF) 2017 VENUE: Washington DC, USA CONTACT: Haznita Husin or Mohd Izham Hassan, Malaysian Palm Oil Council (MPOC) E-mail: haznita@americanpalmoil.com izham@mpoc.org.my Website: www.mpoc.org.my/Palm_Oil_Trade_ Fair_and_Seminar_(POTS)_2017.aspx

11th ICIS World Oleochemicals Conference VENUE: Novotel Barcelona City, Spain CONTACT: ICIS, UK Tel: +44 20 8652 3887 E-mail: events.registration@icis.com Website: www.icisconference.com/ worldoleochemicals17

25-26 OCTOBER 2017

4-5 OCTOBER 2017 Biofuels International Conference & Expo VENUE: Sheraton Grand Hotel & Spa Edinburgh, UK CONTACT: Woodcote Media, UK Tel: +44 20 8687 4138 E-mail: tracy@biofuels-news.com Website: www.biofuels-news.com/conference

8-11 OCTOBER 2017 Lipids & Brain IV, Lipids in Alzheimer Disease VENUE: Nancy, France CONTACT: Laboratory of Biomolecular Engineering (LIBio), France Tel: +33 3 835958 77 E-mail: elmira.arab-tehrany@univ-lorraine.fr Website: www.lipidsandbrain.event. univ-lorraine.fr

12-13 OCTOBER 2017 57th European Commodities Exchange 2017 VENUE: Tour & Taxis, Brussels, Belgium CONTACT: Brussels Commodity Exchange Commission, Belgium Tel: +32 25 121 550 E-mail: info@brusselsehandelsbeurs.be Website: www.ece-brussels2017.com

17-19 OCTOBER 2017 Argus Biofuels Conference 2017 VENUE: Jumeirah Carlton Tower, London, UK CONTACT: Argus Media, UK Tel: +44 20 7780 4341 E-mail: biofconf@argusmedia.com Website: www.argusmedia.com/events/argusevents/europe/argus-euro-biofuels/home

Bulk Liquid Storage 2017 VENUE: Dubrovnik, Croatia CONTACT: Cheryl Williams, Active Communications International, UK Tel: +44 203 141 0623 E-mail: cwilliams@acieu.net Website: www.wplgroup.com/aci/event/ european-bulk-liquid-storage

30-31 OCTOBER 2017 9th International Symposium on Deep-Fat Frying VENUE: Shanghai, China CONTACT: Chinese Cereals and Oils Association (CCOA) Tel: +86 106 835 7511 E-mail: wcf@ccoaonline.com Website: www.eurofedlipid.org/meetings/ shanghai2017

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

1-3 NOVEMBER 2017 13th Indonesian Palm Oil Conference (IPOC) and 2017 Price Outlook VENUE: Bali Nusa Dua Convention Center, Indonesia CONTACT: IPOC Secretatiat, Indonesia Tel: +62 21 57943852 E-mail: info@gapkiconference.org Website: www.gapkiconference.org

For a full listing of oils and fats industry events, visit our website at: www.ofimagazine.com

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

14-16 NOVEMBER 2017 PIPOC 2017 VENUE: Kuala Lumpur Convention Centre Kuala Lumpur, Malaysia CONTACT: Malaysian Palm Oil Board (MPOB) E-mail: pipoc2017@mpob.gov.my Website: www.pipoc.mpob.gov.my

15 NOVEMBER 2017 12th China International Oil and Oilseeds Conference VENUE: Guangzhou Shangri-La Hotel, China CONTACT: Dalian Commodity Exchange, China Tel: + 86 411 84808698 E-mail: cydh@dce.com.cn Website: www.dce.com/cn/cioc

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

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

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

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

16 OFI â&#x20AC;&#x201C; SEPTEMBER/OCTOBER 2017 www.ofimagazine.com

Diary.indd 1

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I NTE RN ATION AL M ARKET REVIEW

Plentiful crops support prices (crude except palm rbd)

2,000 Soya

1,500

Rape Sun

$/tonne

Palm

1,000

500

with China recently making a slew of fairly large purchases and promises of more, traders are now hopeful imports will stay on target. The USA has been particularly hard hit by China’s manoeuvres, with its new crop sales to its main buyer dropping 46% for the season to date, with the total to all destinations running at its lowest since 2006. In combination with the record US crop estimate, this briefly drove down CBOT soyabean futures for nearby contracts close to US$9/bushel, the cheapest since March last year, although it has subsequently rallied back towards US$9.50. World soya oil consumption is expected to grow by about 4.5% compared with the past season’s 2.5%. Again, growth is led by China – up by almost 1M tonnes – but spread across many countries including the USA (up 386,000 tonnes in food use and biodiesel) and India (up 350,000 tonnes in food use). The extra Indian demand is expected to generate 500,000 tonnes more imports to sustain pipeline stocks, although some think the figure is optimistic given that India’s government has recently raised the import tax on soya oil from 12.5% to 17.5%. Soya market attention will soon be turning more to the Latin American countries’ planting intentions. Some analysts have predicted Brazil will continue going for a large crop, benefiting from a devalued real, although its slower than expected export sales have suggested some producer dissatisfaction with returns. The USDA has the next Brazilian crop down 7M tonnes and Argentina’s near last year’s at 57M tonnes. Even if these forecasts pan out, it still leaves world soya supply at record levels.

Growing sunflower crops Rapidly increasing global sunflower crops have brought cheaper, rising supplies of the oil within reach of a wider customer base. World sunflower production has doubled since the middle of the last decade to around 18M tonnes due to booming production in former Soviet countries. Worldwide, better husbandry and new varieties have seen an

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surprisingly generous official forecast for the 2017 US soyabean crop in August arrived amid a still highly bearish forecast for palm oil supply recovery, in addition to larger than expected crops of rapeseed and sunflower seed. In a season of expected moderate global demand growth for oils and fats, another plentiful raw material crop suggests strong price competition will continue for import markets between soft oils and palm. The main question analysts were asking about the US Department of Agriculture (USDA)’s 119M tonne US crop forecast after a month of not-alwaysideal weather was, will it actually come to pass? With crop condition ratings well behind last year’s at this time, even with a record sown acreage, some felt an extra 2M tonnes on last year’s record 117M tonnes might be a stretch to achieve. That said, weather has been favourable since and the USDA’s track record in recent years has been pretty accurate. The widely followed University of Illinois agronomic department notes that since 2011, the USDA yield forecast in August has actually been lower than the final result and, since 2003, never more than one bushel/acre over. Assuming the USDA is near the mark, world soya supplies and surplus stocks will hit record levels. The USA is already expected to start this new season on 1 September with 10M tonnes of carryover stock – twice the previous year’s. Brazil and Argentina are still marketing their larger 2017 crops. Both Latin American countries also go into 2017/18 with record stocks and all three of the top producing countries are currently predicted to end the season with massive carryover supplies. On the demand side, soya crush is seen rising globally by 4.3% or 12M tonnes, versus last year’s 4.7% (13M tonnes). As usual, growth is led by China (up 6M tonnes), with the rest spread over a range of supplier and importer countries – which is to be expected in a season of relatively cheap supplies. The Chinese growth remains similar to that of recent years. After some success with its own crop expansion, China is less dependent on imports, which are seen rising by 3M tonnes compared with last year’s 7.8M tonne gain. This slowdown came into the spotlight in July as excessive supplies built up at Chinese ports, with crushers losing money for the past six months and some resorting to re-selling incoming cargoes. This spread fears of contract defaults and a longer-term fall-off in demand. However, things seem to be sorting themselves out. A period of slower crush has reduced meal surpluses and improved crush margins and,

Vegetable oil prices - monthly averages FIGURE 1: VEGETABLE OIL PRICES, MONTHLY AVERAGES (US$/TONNE)

2,500

CHARTS: JOHN BUCKLEY

With a high forecast for the US soyabean harvest and larger than expected crops of rape and sunﬂower seeds, strong competition is set to continue between soft and palm oils. John Buckley writes

increase in yields, with the global average now thought to be around 1.86 tonnes/ha compared to less than 1.3M tonnes/ha 10 years ago. World’s second largest producer Russia’s acreage this year has exceeded forecasts, currently estimated at around 7.9M ha by the country’s State Statistical Service (RSSS). Yield last year was estimated by the body at 1.45 tonnes/ha and by the USDA at as much as 1.51 tonnes/ha. Even if it only reaches the five-year average of 1.42 tonnes/ha, the crop could exceed last year’s record of 11M tonnes. Russian sunflower oil output has been predicted to grow from 4.17M tonnes in 2016/17 to over 4.3M tonnes in 2017/18, allowing exports to grow further from this season’s 2M tonnes. However, Ukraine is expected to make the biggest contribution, with forecasters currently hoping for a second successive crop of more than 14M tonnes. Ukrainian sunflower oil exports this season have already soared to over 4.9M tonnes for the season at the end of June. Strong sales have been reported to all its main regular customers – China, the EU and India. Europe’s sunflower crop is currently estimated by the USDA to be close to last year’s 8.3M tonnes. Europe’s sunflower oil consumption is expected to increase again in the new season to around 4.56M tonnes, requiring imports of about 1.7M tonnes – over 20% more than two years ago. Sunflower oil has mainly been moving into the food sector, where it has replaced a similar quantity of rapeseed oil. From the start of the 2015/16 season, when crude sunflower oil averaged at about US$883, it fell to US$830 in October 2016 and by the middle of this year was averaging at just US$780/tonne. Over the same period, rapeseed oil increased from an average of just over US$800 in October 2015 to a peak of US$918 by late 2016 and was still significantly more expensive than sunflower at US$813 in mid-2017. The USDA data used to calculate oil price trends is in US dollars, which were rising sharply against most currencies until this year. The fall of 10-12% in the currency in 2017 to date is good for world trade and consumption of vegetable oils, which is expected to increase in 2017/18 by about 3.4%.

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I N T E R NAT I O NAL MAR KE T REVIEW

Palm shrugs off output rise An erratic but broadly firmer palm oil market has reflected a mixed input from fundamentals over the past few months. On the supportive side, China was reported to be re-stocking after the price drop earlier in the summer and expected to import more in the August/September period ahead of its autumn festival season. Additionally, palm oil output had been recovering a bit slower than expected from the El Niño-linked droughts of the previous season. On the bearish side, output seems to be accelerating. Malaysia’s July output was up by almost 21% to a two-year high, putting year-to-date performance 15% ahead of last year’s. With exports in July up by only 1.3%, this enabled stocks to bounce back by almost 17% to their highest level since June 2016. Malaysia has benefitted from the resurgence in Chinese demand, with its shipments to China more than doubling in July to 188,738 tonnes. Top buyer India, on the other hand, slashed its imports from Malaysia to about 157,500 tonnes in July from June’s 238,200 tonnes and has cut intake for the JanuaryJuly period by 21% or some 340,000 tonnes. Things look even less promising for Indian demand after its government doubled taxes on crude palm imports to 15% and refined oil to 25% to encourage its own domestic industry. The third biggest palm import market, the EU, maintained a steady intake from Malaysia in July, just under 1.4M tonnes and has raised year-to-date intake by about 5.5% to about 1.14M tonnes. But support from the modest increase remains overshadowed by doubts about future demand after the European Parliament voted to apply its own certification scheme for sustainable produce and to phase out palm biodiesel imports in three years’ time. Malaysian officials have taken heart from a European Commission spokesperson reportedly admitting some allegations about palm oil have been inaccurate and the two sides were due to meet in September to discuss the issue. Palm oil’s main challenge is from ever-growing supplies of soyabean oil from the Americas, although the discount on palm has widened to restore some advantage. Malaysia is also hoping to gain some extra export business from its weakening ringgit currency, making exports cheaper to many customers. Meanwhile, forecasts from the Malaysian Palm Oil Board suggest this calendar year’s production will increase by 15.5% to 20M tonnes versus earlier estimates of 19-20M tonnes. A recent Reuters analysts’ poll gave an 18.7-19M tonne range. Top palm supplier Indonesia was recently forecast by the US attaché in Jakarta to see its production jump in 2017/18 to a record 36.5M tonnes – 500,000 tonnes more than a recent USDA forecast. Exports were expected to leap to 26.5M tonnes, again about 1M tonnes more than the USDA predicted. In the last two years, Indonesia has overtaken India as the largest palm consumer, now using about 15% of world supplies.

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After the sharp price gyrations of mid-year, rapeseed markets have seen a relatively stable period. Some big ‘unknowns’ are keeping buyers and sellers from pushing hard either way. The key issue is whether this year’s crop in top producer Canada will actually advance by 2M tonnes to 20.5M tonnes as the USDA and others have predicted, or fall short after a summer of droughts, heatwaves and other weather setbacks. The USDA is carrying a 2.15 tonnes/ha yield forecast (against last year’s 2.3 tonnes/ha) with a planted area 18.5% higher at 9.54M ha.. So far, usage is progressing steadily versus last year. Canadian futures have meanwhile been hovering at either side of the C$500 (US$402)/tonne level until the crop issue clarifies, supported by tightening end-season supplies but held in check by the approach of the harvest and poor crush margins. The EU market has also been fairly steady with crop estimates in recent weeks creeping up closer to 22M tonnes than the earlier 20.5-21.5M tonne range. Germany’s farmer cooperation association cut its estimate from 4.8 to 4.3M tonnes, but France is expected to reclaim its top EU producer role from Germany with a 5.3M tonne harvest (up 600,000 tonnes), according to analyst Strategie Grains. Ukraine’s harvest still looks set for a big rebound to 2.1-2.3M tonnes from last year’s poor 1.25M tonnes on a much larger sown area and normal/good yields. Russia’s crop is also seen up at around 1.2M tonnes versus the 1M tonnes of recent years. This should help offset a smaller Australian crop, seen almost 1M tonnes down at 3.2M tonnes as yields reverse from last year’s unusually high levels. Overall, world output should be around 71-73M tonnes, depending mainly on how Canada shapes up. Meanwhile, rapeseed oil prices remain among the more expensive in the edible oil sector, reflecting a relatively tighter supply versus soya, sunflower and palm. However, rapeseed oil’s big price premium may be capped by this season’s slowdown in its consumption growth. w John Buckley is OFI’s market correspondent 19 OFI – SEPTEMBER/OCTOBER 2017 www.ofimagazine.com

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P LAN T & TEC H N OLOGY

Oils & Fats International reports on some of the latest projects, technology and process news and developments around the world IN BRIEF DENMARK: Danish engineering firm Gerstenberg Services has launched a scraped surface heat exchanger (SSHE) for direct CO2 cooling to improve cooling capacity in margarine production. The Polaron brand SSHE, which used CO2 at a higher temperature than ammonia or Freon, could reduce energy costs and power consumption, Bakery and Snacks reported on 5 May. According to Gerstenberg managing director Jesper Andersen, using CO2 instead of other chemicals resulted in a 40% increase in the capacity of the cooling area. The higher temperatures could also result in a higher product quality, especially for puff pastry margarine, Andersen added. The Polaron SSHE also included an in-built scraper system for removing product from the inner surface of the process cylinder, which would need to be replaced after each use in traditional SSHE machines. SWEDEN: Finnish energy company St1 is planning to add hydrogen production capacity to its Gothenburg, Sweden, oil refinery, the company said on 17 July. The investment marks the first phase of St1’s plan to start producing biodiesel at the Gothenburg plant by 2020. The firm said the construction of the new hydrogen unit would begin immediately and it was projected to be completed by late 2018. Total investment in the hydrogen production unit was €40M (~US$47M) and St1 aimed to bring production capacity up to 20M tonnes/year. St1 also produces ethanol at its Kajaani, Finland facility

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Plant and equipment round-up

Montana Specialty Mills to complete US$20M seed crush facility by 2018 M ontana Specialty Mills LLC, a US oilseed and grain processor, has broken ground on a new processing centre for non-GMO products and organic oilseeds. Situated at the Great Falls Montana Development Authority’s (GFMDA) AgriTech Park in Great Falls, Montana, the US$20M facility was projected to be completed by late 2018, wrote Feedstuffs on 25 July. The plant would feature state-of-the-art grain processing equipment dedicated to specialty seeds and grains, according to the report. Montana Specialty Mills had operated an oilseed crushing and mustard processing plant in Great Falls for the past 70 years, but due to the company’s growth, it began negotiations with the GFMDA to find a new location with rail access. According to the company, the new plant would allow it to expand to markets such as non-GMOs, organic vegetable oils and protein meals, in addition to nearly doubling its current

Cepsa brings Abengoa biodiesel plant back online

panish energy company Cepsa Bioenergia has resumed production at the former Abengoa biodiesel plant in San Roque, Spain, after 18 months without activity. After purchasing the plant last February for €8M (US$9.5M), Cepsa had been working on upgrading the plant to bring it back up to production capacity, El Estrecho Digital wrote on 29 August. In June, the facility – with a capacity of 200,000 tonnes of fatty acid methyl esters (FAME) and 25,000 tonnes of glycerine – received its first vegetable oil delivery since its original closure by Abengoa. Carlos Olivares, head of biofuels at Cepsa, praised “the great effort made, both by various areas of the company and by the local auxiliary companies involved in the whole process and,

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workforce of 15. “We chose our location in the AgriTech Park because it has the infrastructure, subdivision and zoning already in place for us,” Montana Specialty Mills president and CEO Steve Chambers told Feedstuffs. “Being able to build immediately and not worry about anything else has saved us a lot of time and money.” Brett Doney, president of the GFMDA, said creating the heavy industrial plant had been the authority’s plan for years. “We see many opportunities not just in agricultual processing but in energy-related manufacturing, distribution and logistics. We are happy to see companies like Montana Specialty Mills realising the potential of the space,” said Doney. Montana Specialty Mills processes canola, sunflower, safflower and flax seeds (pictured) into oils, in addition to handling mustard seeds and grains such as wheat, barley and oats.

fundamentally, by the staff of the plant that has worked intensely in these months to bring the plant back online”. “This has allowed us to achieve the fast integration of this new unit into the production chain of San Roque and its start-up in the shortest possible time,” he added. Restarting production had proceeded on time, as Cepsa estimated back in March that it would have the plant up and running during 2017. The San Roque plant was originally established by Spanish biofuels giant Abengoa, but production was stopped in 2015 due to the company’s financial issues and bankruptcy. The plant was among the last European biofuel assets Abengoa was forced to sell as V part of its bankruptcy settlement.

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P LAN T & TEC H N OLOGY

Chinese investors pull out from Finnish biofuel

Algae for feed from wastewater

everal Finnish biofuel projects were left with a gaping chasm in their budgets as a major Chinese investor pulled out of the projects. In early July, Chinese financing company Shenzhen Capital Group cancelled its planned €200M (US$235M) investment in two biofuels plants in Myllykoski and Savonlinna, the Finnish Helsingin Sanomat newspaper reported on 17 July. According to bioethanol producer Suomen Bioetanoli Oy’s (SBE) CEO Atte Laukkanen, Shenzhen retreated from the investment deal due to difficulties with its own funding and alleged issues with feedstock availability. Ethanol production in Myllykoski and biodiesel production in Savonlinna – both towns located in southeastern Finland – was projected to begin in 2019. The Myllykoski unit had already received a €30M (US$35M) energy grant from the European Union, but whether the company could now keep the money was uncertain. According to Laukkanen, SBE intended to apply for continuation of the EU support, which remained valid until the end of June, but the future of the Myllykoski project remained hanging by a thread. The future of the Savonlinna project, however, looked slightly brighter, the Finnish Minister of Justice and Labor’s special aid Leena Riekkonen, who participated in negotiations with Shenzhen, told Helsingin Sanomat on 19 July. “Myllykoski is the only project for which the decision to pull away has been confirmed,” Riekkonen said, adding that Shenzhen was still considering investing in Savonlinna and another biodiesel unit in Nurmes. According to Riekkonen, Shenzen had become reluctant to support Myllykoski due to the perceived risks in securing and transporting feedstock to the plant, consisting mostly of straw and wood. The Savonlinna and Nurmes plants, however, were designed to use forestry residues as feedstock and would be built adjacent to sawmills, which made raw material acquisition easier. Shenzhen invested mostly in domestic Chinese markets, with only 1% of its projects being outside China, Helsingin Sanomat wrote.

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ontana, USA-based biotechnology firm Clearas Water Recovery is planning to construct a large-scale wastewater purification facility that will also produce algae for the feed, food and fuel markets. First announced in June, Clearas’ first large-scale advanced biological nutrient recovery (ABNR) system would be attached to the South Davis Sewer Distric wastewater plant in Utah, Feed Navigator reported on 14 July. The site was expected to start production within 12 months and process approximately 18.1M litres of water each day, according to Clearas marketing development manager Andrew Gordon. “It is a challenge to scale and the way we have our system set up, there is flexilibility in design and design footprint,” he told Feed Navigator. The facility was expected to produce around 3,600kg/day of dry weight algae biomass and Clearas was exploring different markets for the recovered algae. “It’s a market we’re still learning,” said Clearas bioresources team leader Kyle Marshall. “We’re definitely interested in exploring the animal feed market and putting the relative products forward. “Animal feed strock, human food applications, bioplastics with different components and fuels are on the table. There are a lot of market segments,”

Marshall said. The company was also assessing the value of offering the produced algae whole cell and reduced to components such as proteins or carbohydrates. According to Gordon, the new large-scale systems were designed for varying amounts of water and nutrients, to remove phosphorus and nitrogen from wastewater and they could be added to new or existing plants. Phosphorus and nitrogen had been linked with algal blooms and dead zones in freshwater bodies. In Clearas’ filtering system, wastewater was mixed with CO2 and an algae blend, which were then fed to a photobioreactor. The reactor would use biological activity to consume the CO2, phosphorus, nitrogen and other nutrients, leaving behind the algae content, which would finally be separated from the cleaned water and harvested as a byproduct. A certain amount of the algae would be fed back to refeed the remaining population, which would be processed further. During the filtering process, levels of phosphorus and nitrogen were reduded to “nearly undetectable levels” and clean water could have up to 40% higher oxygen content. “Long story short, we found that we have an amazing platform for growing algae and reducing the nutrient levels in wastewater,” Gordon said.

Plastics manufacturing innovations improve edible oil packaging materials

uxembourg-headquartered caps and closure solutions producer United Caps has introduced a new carbon emission-reducing manufacturing method to produce caps for edible oil products. Used to produce the new DoubleFlow cap, which allowed for better control over pouring, the new manufacturing method could be implemented without modifications to any product lines, said United Caps CE Benoît Henckes in a statement on 8 May. According to Henckes, the resulting DoubleFlow cap – designed specifically for edible oils and vinegars – provided reliable

resealing to protect container contents, while featuring a unique droplet shape for increased pour control and security. Additionally, the cap was lightweight and provided an option for drizzling or pouring the oil or vinegar. Hencke also told Packaging News in a 10 May interview that the firm was exploring the use of biopolymers to produce more environmentally friendly caps and closures. t Sidel, a French manufacturer of stretchblow moulding machinery, has together with Brazilian Algar Agro developed the “world’s lightest” 900ml PET bottle for edible oils,

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reported Plastics Technology on 24 August 2016. The project succeeded in reducing bottle weight from 18g to 14g, meaning a total reduction of 22%. Sidel tested the method on its Matrix stretch-blow machines at the company’s Packaging & Tooling Centre in Guadalajara, Mexico, after which Algar Agro acquired two of them to integrate into both of its factories. Algar Agro believed it was the first Brazilian edible oil producer to integrate PET preform injection and bottle blowing into its 25,000 bottles/hour production lines.

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P LANT & TE CHNOL OGY

www.dsengineers.com

Edible oil vending machine launched

orob India, a subsidiary of Italian dispensing machine manufacturer Corob, is introducing the Accura brand edible oil vending machine in India. The Accura vending machine features microprocessor-based control and self-priming pumps, capable of delivering up to four different products flow rates of three litres/minute. In addition, the machine has push-fit connectors for easier serviceability and a dispenser capable of delivering high accuracy and displaying the price of the product dispensed in preset or custom quantities. With both mechanical of gravity feed models available, Corob said the Accura model provided an alternate route for edible oil producers to reach a wider customer base, particularly the part of the population that bought loose oil from unorganised retailers. According to the company, oil products sold through vending machines provided retailers with the advantages of improved branding and hygiene and a lower product price when compared with packed oil. Corob also said the Accura was tamper proof and environmentally friendly.

Poet to double ethanol production

merican biofuels giant Poet Biorefining broke ground on 15 August on a US$120M expansion project to more than double the production capacity at its Marion, Ohio, bioethanol facility. The plant’s capacity would be increased from 318M litres to 682M litres, which would improve the local grain market, Poet said. The expansion is expected to be completed by late summer or early autumn 2018. The plant’s high protein animal feed production would also concurrently increase from 161,479 tonnes to 326,586 tonnes. “As more drivers choose E15 (a fuel blend of 15% ethanol and 85% petrol) fuel across the USA and biofuels demand increases, growth opportunities such as this and new technologies to lower fuel emissions will follow,” said Poet president Jeff Lautt. “Poet is hopeful that, among other issues, summer limitations on 15% biofuel blends will be lifted so that consumers have greater access to clean, homegrown biofuels.” According to Poet, the increased production at the Marion facility would grow the company’s corn purchases from the surrounding area to 50M bushels annually from the current 24M bushels. The higher corn demand would improve the market for local farmers, who Poet said were struggling with challenging commodity prices, farm incomes and land values. Poet spent more than US$330M on Ohio corn purchases annually, the firm said.

Upgraded drum and container pumps

erman engineering company Lutz Pumpen GmbH has released new upgrades to its B70V series of eccentric screw pumps included in its line of drum and container pumps for – among other applications – vegetable oils and pharmaceuticals. The new Lutz B70V 120.1 series met high performance requirements with generously dimensioned pump geometry and low speed ranges, which allowed for transfering media up to the flowability limit, Lutz said in a statement. The improved rinsing of the mechanical seal avoided debris at the sliding surfaces, which was of great importance when handling adhesive or hardening media. The new hollow type rotor ensured smooth operation at a lower weight and the minimal dead-space design, the orbital welded and polished pump housing with Tri-Clamp connections allowed for easy dismantling and cleaning of the liquid-wetted parts, Lutz said. Lutz has also introduced new three-phase motors, which it said improved speed control in the pumps. The variable speed range allowed for individual adjustment of the pump capacity to different application parameters, eg delivery rate, viscosity and rheological behaviour. The motors could be controlled from a simple-to-use control panel. 23 OFI – www.ofimagazine.com

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All about the es The essential oils market is expected to experience a major upturn due to demand from new applications. Ile Kauppila writes

cents carry significant meanings for us. Foul smells warn us of rotten food, for example, while pleasant scents are used in relaxation, medicine and fragrance. As the saying goes, sometimes it is good to stop and smell the roses in the middle of our hectic schedules. But what happens when one wants to smell the roses but there are none to go around? Many solutions to the issue have been developed, one of them being essential oils. They have been used for millennia for medicinal reasons in various ways, in fragrances and in consumer products. The industry is still strong today and is projected to experience significant growth, driven by growing demand worldwide. By the dictionary definition, essential oils are hydrophobic – or non-water soluble – liquids containing volatile aroma compounds from the plants they have been extracted from. Despite the name, they are not essential as in being indispensable, although the industry would surely argue so. Instead the word “essential” refers to the liquids containing the “essence”, or the characteristic fragrance, of the plant they originate from. Other

names commonly used include volatile oils, ethereal oils or, as they were historically called, essence or oil of the extracted plant, such as the oil of bergamot. Archaeologists have discovered what could be earthenware distillation apparatus used in essential oil production dating back to the third millennium BC. In the fifth century AD, the Greek alchemist Zosimus of Panopolis wrote of the distilling of “divine water and panacea”. Extensive trade of odoriferous substances existed in Asia and the Roman Empire. During the middle ages, floral and aromatic waters were used in perfumes, as digestive tonics and in cooking and trading. In the 12th century, Arab scholar Ibn al-Baitar wrote down the earliest known recorded mentions of how to produce essential oils. With the advent of modern chemistry, the production of essential oils became more refined as scientists and producers began to understand how to separate the actual chemical components that make up the essential oils. This also had an effect on language, as scientific works began to discuss, for example, “methyl salicylate” rather than the “oil of wintergreen”. This better understanding paved the way for modern mass production of essential oils.

Traditional production methods Two key essential oil production methods have been used throughout their history, namely distillation

and expression. These ancient ways have since been joined by more modern practices, such as solvent and carbon dioxide (CO2) extraction. Out of the four, distillation is by far the most common. It is used to produce the most widely traded essential oils, including lavender, peppermint, tea tree and eucalyptus oils. Essential oils can be extracted either through water, steam, water/steam or percolation distillation. All these methods have the advantage, according to the US National Association for Holistic Aromatherapy (NAHA), of extracting the volatile compounds at lower temperatures than the boiling points of the individual constituents. These components can then be easily separated from the condensed water. In the distillation process, the raw plant material – consisting of bark, flowers, leaves, roots and/or seeds – is placed into an alembic, or a still chamber, over water. The still is sealed and as the water is heated, the steam and/or water rises up, slowly breaking through the plant material and vaporising the volatile compounds. The compounds rise up along with the steam and flow through condenser coils. As water and essential oils do not mix, the oils can finally be siphoned off the top or bottom of the collecting dish, depending on the weight of the oil. The remaining water, with some water-soluble constituents and a small amount of the essential oil still mixed in, is called a hydrosol, hydrolat or floral water. The hydrosol can be used in applications similar to essential oils, including fragrances and

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essentials skin care products. Expression, or cold-pressing, is an extraction method similar to olive oil production. It is primarily used to extract citrus oils, such as orange, tangerine, lemon and lime. The modern production method involves placing the rind of the citrus fruit into a container, which incorporates spikes or needles for puncturing the rind. With a prodding action, the constant penetration of the rind releases the essential oil, which is collected in a smaller dish under the container. Traditionally the extracted liquid is allowed to stand to separate it into the oil and water/juice parts, with the oil finally siphoned off. In most commercial facilities today, however, the separation is performed by using centrifuges, making the process faster and less labour intensive. The citrus oils produced through expression are generally cheaper than distilled oils, as citrus peels are often available in abundance from the food industry.

New methods Solvent extraction is mostly used on plant materials that are too delicate or fragile to undergo expression and whose volatile compounds are too easily denatured to withstand distillation. This extraction method uses solvents – such as petroleum ether, ethanol or hexane – to collect the odoriferous lipohilic compounds from the plant. In addition to the essential oils, solvent extraction also draws out the chlorophyll of the plant, resulting in a

very colourful and viscous extract called a concrete. The concrete can be sold as is, but most of the time it will contain large quantities of non-fragrant waxes and resins, which are generally undesirable. Another solvent, such as ethyl alcohol, is added to the concrete, which extracts the fragrant oils from the mixture. The alcohol solution is then chilled to -18°C for more than 48 hours, causing the waxes and other lipids to separate. After filtering and ethanol removal, the final product is called an absolute. The absolute will still be more colourful, viscous and fragrant than pressed or distilled essential oil. Hypercritical CO2 can also be used to extract essential oils. This technology is a relative newcomer in the industry. It relies on the fact that under a high enough pressure, CO2 turns from a gas into a liquid, which can be used as an inert liquid solvent. The liquid CO2 can diffuse through aromatic plant materials, drawing the volatile compounds out with it. As a side effect of CO2 extraction, the solvent also draws out elements not found in essential oils. At their best, these can include beneficial substances, such as in the case of frankincense, which contains anti-inflammatory compounds as a CO2 extract, unlike its pure essential oil. However, this can also be a risk, as any potential pesticides remaining in the plant will be drawn out with the volatile compounds. According to Australian essential oil expert Ron Guba’s book ‘The Modern Alchemy of Carbon Dioxide Extraction’, the pesticide concentration in CO2 extracts can

be seven to 53 times higher than in essential oils. Additionally, this method is often prohibitively expensive to use in large-scale production.

Uses and market situation Having extracted the essential oils, producers naturally need a processor to sell the product to. Essential oils find use in the pharmaceuticals, cosmetics, food and beverage, soaps and home cleaning products industries. In the first two, they are sought for their medicinal and pharmacological effects, while the latter industries use them mostly for their colour, flavour and fragrance. Demand is steadily growing, and Grand View Research projects that the market, which passed the US$6bn mark in 2015, could be worth US$13.94bn by 2024. Some essential oils are produced by plants to act as natural biocides, protecting them against threats such as insects and fungi. These properties contribute to their traditional use in medicine and pesticide production. For example, carvacrol found in oregano oil inhibits the growth of several bacteria – among them E.coli – while thymol from thyme oil reduces bacterial resistance to common drugs, such as penicillin. Eucalyptus oil, on the other hand, has been found to have fungicidal properties, which could make it an effective, natural pesticide. Additional ‘medicinal’ uses for various oils include antidepressant, antiseptic, aphrodisiac and diuretic treatments. However, the largest market segment for v

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Science behind Technology

ESSEN TIAL OILS

v essential oils is food and beverage, which accounted for over 34.6% of the global overall demand of 178,800 tonnes in 2015, according to Grand View Research. Essential oils will continue to be in high demand due to growth in emerging economies and the rising interest in natural products in western markets, the market consultancy said. Another fast growing market is the spa and relaxation sector, which made up 29% of the market share in 2015 and is expected to grow at a CAGR of 8.7%. The rising popularity of aromatherapy and other alternative medicine is increasing consumer demand, as are the relaxing effects of essential oils when applied through a massage. Despite growing demand, however, there is a risk of dwindling supplies of essential oils. Both Ultra International, a Dutch aromatherapy and essential oil product supplier, and US-based Global Essence estimate essential oil prices will be driven higher by limited supply and strong demand. Additional concerns for the industry include environmental concerns caused by essential oil production, climate change that could affect the growing conditions of many aromatic plants and globalisation, which might drive farmers to switch to different crops. However, if production can be boosted, the steadily increasing demand over at least the next five to six years should keep the industry healthy and growing. Actual global production volumes for essential oils are difficult to estimate, as they are highly dependent on the produced plant and the place and methods of production. According to Grand View Research, however, orange oil is the largest product in the marketplace, accounting for 29.4% of global total market volume in 2015. Corn and peppermint, eucalyptus, citronella and tea tree are also among the top five essential oils.

Orange oil The oil of orange is produced from the orange

plant Citrus sinensis and is extracted by coldpressing the rind, a by-product of the orange processing industry. The extraction process yields approximately 0.3-0.5% of orange oil. The oil has a sweet and tangy scent, is yellow to orange in colour and close to water in viscosity. Around 90% of the oil is composed of d-limonene, a hydrocarbon that gives citrus fruits their distinctive aroma. Orange’s essential oil is widely used in the food and beverage industry as a flavouring and colouring agent, for example in fruit juices, jams, bakery products and Curacao-type liqueurs. Its pleasant smell has also led to its popularity in fragrances and cleaning agents. Orange oil has purported antidepressant, anti-inflammatory, antiseptic and aphrodisiac properties, which Grand View Research projects will lead to growing demand in various applications. Additionally, orange oil can be used as a natural green pesticide to kill entire ant colonies and with a lesser effect to control termites. Possible handling hazards with orange oil include skin irritation, as the high limonene content dissolves skin’s natural oils. It can also have a phototoxic effect and should not be used directly on skin, particularly before going out into sunlight for extended periods. Studies have found orange oil to cause cancer in male rats, but no evidence of carcinogenicity in humans exists and the International Agency for Research on Cancer classifies it as safe for humans. Orange oil prices soared to record highs in 2016, according to market data from Ultra International, and neither it nor other companies expect them to come down any time soon. Impacting the market was the lowest orange crop in Brazil in 10 years, Florida ending the season 17% lower

than the previous one (lowest since 1963) and drought conditions in South Africa. “There is no doubt we’re still in for a rough period as prices in January 2017 peaked at record levels and local juice stocks by June 2017 are expected to be at an all time low,” Ultra International said in its spring 2017 market report.

Corn mint and peppermint oil Mentha arvensis – known as corn mint, field mint or wild mint – and Mentha x piperita, or peppermint, are plants in the mint family. Their leaves are generally steam distilled to produce an essential oil containing up to 80% menthol. Most corn mint oil on the market, however, has been fractionated and dementholised, removing a large percentage of the menthol content. Nonetheless, both oils are clear, thin liquids with a strong, bittersweet fragrance. Both mint oils are used in similar applications. They contain a high concentration of natural pesticides, such as pulegon and menthone. Their healthcare uses include digestive system stimulation, soothing headaches, muscle pain, colds and sinuses. They are also used extensively in oral care products due to their cooling effect and ability to kill bacteria. They are popular in fragrance and food production, but in these applications corn mint oil is more common due to its lower price. They can also be used in plumbing to detect leaks through their strong scent. As with many other essential oils, the growing global interest in aromatherapy is expected to drive particularly the peppermint market (as corn mint is less popular in aromatherapy), according to Future Market Insights. The recent outbreak of the Zika virus has also increased the demand for natural mosquito repellents and the record growth rates in the fragrance market are projected to further prop up mint v oils.

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ESSEN TIAL OILS

v North America has a significant share in the production of peppermint oil, while corn mint production is dominated by India. Both sectors, however, struggle with limited available raw material due to poor harvests in 2016, says Ultra International. Producers remain hopeful that better weather in 2017 would bring better harvests to keep prices at a reasonable level.

Eucalyptus oil Eucalyptus oil is an umbrella term for essential oil extracted from several varieties of the eucalyptus plant. Traded eucalyptus oils are generally divided into three categories, namely medicinal, perfumery and industrial varieties. Out of the three, the “regular” cineole-containing oil – a colourless liquid with a strong, woody scent – is the most common, yet all of them are produced through steam distillation. A minimum cineole content of 70% is required for pharmaceutical applications, but many varieties – like Eucalyptus kochii – produce oil with a cineolecontent between 80% and 95%. Low-grade oil can be upgraded to have a higher percentage of cineole. Eucalyptus oil is used medicinally to relieve the symptoms of influenza and cough, in products such as cough drops, lozenges, ointments and inhalants. It has antibacterial and decongesting effects and, as such, inhaled eucalyptus vapour is used to treat bronchitis. Personal hygiene products, including toothpastes and soaps, may also contain eucalyptus. The oil is also used as an insect repellent and biopesticide. A 2016 Chinese study found it to be an effective antifungal agent. Food and beverage industry uses eucalyptus oil in flavouring at low levels and its antimicrobial effects prevent food spoilage. Research and practical tests have also shown that eucalyptus oil is a potential biofuel feedstock that lowers harmful emissions, particularly in the aviation industry. Traditionally led by its native Australia, the global eucalyptus oil market is now dominated by China, which produces nearly 75% of the global supply. However, Ultra International notes that production in China has been falling since 2014 as producers are waiting for higher crude oil prices before they begin distillation. As a result, production is growing in Australia, where more plantations are being set up, and increasing demand – once again partially due to aromatherapy – is also propping up production in Spain and Portugal.

Citronella oil One of the essential oils acquired from lemongrass,

citronella oils is classified into two chemotypes based on the plant variety it is obtained from and the chemical content. The Ceylon type, from the Cymbopogon nardus variety, consists mostly of 1820% geraniol and 5-15% citronellal, while the Java type from the Cymbopogon winterianus variety contains 11-13% geraniol and 32-45% citronellal. The oil – a clear thin liquid, with a lemony, sweet aroma – is extracted through distillation. Citronella finds well-established use as a flavour additive and in fragrances, the latter of which contributes the lion’s share of citronella production’s revenues, according to Transparency Market Research. In addition to food and perfumes, citronella oil is used in detergents, industrial polishes, soaps and cleaning compounds. The oil is also popular as a natural insect repellent, for which is has been registered in the USA since 1948. Elsewhere, however, citronella use in repellents has met resistance. In the EU and the UK, citronella oil may not be sold as insect repellent, and Canada banned it in this application in 2012, although the ban was repealed only three years later. According to the US Food and Drug Administration, citronella oil is safe when used according to recommendations, although some studies have discovered a risk of drug interaction. The Asia Pacific region, including China, India and Indonesia, is the largest citronella oil producing area in the world. However, poor harvests and rising prices in the last few years might be affecting the market, Ultra International and Global Essence project. In Indonesia, prices have risen 15% in 2017, but in China the lack of oversupply has kept prices stable at around US$17.5/kg. Slowing production and dwindling supplies, however, could increase the price by the end of the year.

Tea tree oil Also known as melaleuca oil or ti tree oil, tea tree oil is a yellow-tinged liquid distilled from the leaves of the Melaleuca alternifolia tree. With a woody, herbal aroma, commercially traded tea tree oil is standardised according to the ISO 4730-2004 standard. It determines that the oil must have a 30-48% concentration of terpinen-4-ol, 10-28% concentration of gamma-terpinene and smaller concentrations of six other chemicals. Tea tree oil’s medicinal uses include treatment of acne, nail fungal infections and athletes foot, although no conclusive evidence of its effectiveness for these ailments exists as of yet. It is also popular in haircare products and in low concentrations in cosmetics and skincare products. As with

many other essential oils, the surging interest in aromatherapy is also increasing the sales of tea tree oil. Some antibacterial and antiseptic effects have also been suggested in recent studies. There are, however, some safety concerns regarding tea tree oil. A 2006 review of tea tree oil found it to be toxic when ingested with a long list of possible adverse effects, including nausea, hallucinations and coma. Additionally, tea tree oil used on the skin should be diluted as it is an irritant. Some components of tea tree oil also oxidise easily when in contact with air and the oxidised oil may cause allergic reactions. Tea tree oil production areas include Australia, China, Northern Africa and the Asia Pacific. Heavy rains in early 2017 threaten this year’s harvests in Australia – where the overall crop may be reduced by up to 30%, according to Global Essence – and parts of Asia. The crop loss may leave these areas unable to satisfy demand this year, says Ultra International. This has pushed the price of Australian tea tree oil up to around US$50. However, production in China and South Africa is either stable or growing, with South Africa possibly as much as quadrupling its production over the next few years. This growth is keeping the global demand satisfied and the price in these regions around US$25 and US$45, respectively.

Promising future The future of the essential oils industry seems promising. Their market value is growing steadily, propelled by the industrialising and urbanising emerging economies and new demand avenues in established markets. Additionally, novel applications, such as biofuels, are opening up new possibilities for the utilisation of essential oils that could turn into lucrative future businesses. However, there are risks as well. Climate change is threatening the business, as we have already seen in the fluctuating supply of the past two years when there has been too much or too little rain. Additionally, the plants themselves might be affected, as shown by an Australian National University study that found that a certain variety of the eucalyptus was producing lower levels of oil due to rising ambient CO2 levels. One can only imagine the damage to the industry if all eucalyptus trees began reacting in the same way. All in all, the growth potential for this essential commodity is well documented, provided weather conditions improve.  Ile Kauppila is the assistant editor at Oils & Fats International

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Kuala Lumpur Convention Centre Malaysia

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SUSTAIN ABILITY

Tall oil:

The riddle of residues PAPER MILLS, SUCH AS THE ONE PICTURED, ARE THE PRIMARY SOURCE OF CRUDE SULPHATE SOAP (CSS) THAT BECOMES CRUDE TALL OIL (CTO) WITH FURTHER PROCESSING

Crude tall oil, generated during the pulping process in the forestry industry, can be used for various purposes, such as replacing fossil oils. But is it a truly sustainable alternative?

innish forestry industry giant UPM has been producing renewable diesel and naphtha from crude tall oil (CTO) at its 100,000 tonnes/year biorefinery in Lappeenranta, Finland, since early 2015. Before operations began, however, the company wanted clarity on the status and sustainability of its feedstock. Thus, in, 2013, UPM asked Ecofys Netherlands, a branch of the UK-based environmental consultancy, to assess whether CTO can be regarded as a residue and whether the feedstock would be of low indirect land use change (ILUC) risk, meaning its use for biofuels would not lead to displacement effects on other existing uses. This April, Ecofys released an updated version of the 2013 report, titled ‘Crude tall oil low ILUC risk

assessment: Comparing global supply and demand’. It marks an important update to the original study, since UPM had started biofuel production in Lappeenranta and any effects of CTO usage for biofuels on the CTO market would be visible. The new study aims to answer whether CTO could be defined as a residue based on biofuel legislation and whether it created an additional demand for land, ie was it a high or low ILUC risk feedstock?

What is CTO? CTO is a material generated in the Kraft chemical pulping of trees for paper and other products. Another method of pulping is mechanical pulping where trees are used as a whole and cellulose is not chemically separated from lignin and extractives. The quantity of CTO generated in chemical pulping varies for a number of reasons, explains Ecofys. The most important parameter is the tree species used for pulping. The word ‘tall’ means ‘pine’ in Swedish, which indicates that most CTO comes from extractives in softwood pine trees and only a relatively small share of CTO is produced from extractives in hardwood broadleaved trees. Circulating CTO to hardwood cooking can enhance CTO extraction from hardwood. Often, a

mix of softwood and hardwood is used in pulping, which yields between 1.25-4% of CTO.

CTO production In a Kraft mill, wood chips are treated with a cooking liquor, or white liquor, containing sodium hydroxide and sodium sulphide to dissolve the lignin in order to produce pulp. Extractives in wood – resin acid, fatty acid, neutral and oxidised substances – react with the cooking liquor. After the cooking stage, residual used cooking liquor, now called weak black liquor, is separated from the pulp during a washing step. This weak black liquor contains the valuable pulp cooking chemicals, which are extracted from the liquor in the pulp mill recovery boiler before being re-used in the pulping process. On top the weak black liquor, a floating layer of soap containing solid materials is formed. This layer of soap has strong foaming properties and needs to be removed from the weak black liquor in order to allow the chemicals to be extracted in the recovery boiler. First, weak black liquor is evaporated to achieve a dry solids content of 30% for optimal removal of the soap layer and to allow combustion of the black liquor in the chemicals recovery boiler. This evaporation results in strong black liquor, which is v

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SUSTAIN ABILITY

v fed to the pulp mill recovery boiler. In the evaporation step, the layer of soap is removed and becomes crude sulphate soap (CSS), which is the material from which CTO is produced. CSS quality varies based on differences in chemical composition due to, for example, batch processing. Therefore, before producing CTO from CSS, the residue is cleaned and homogenised to make the material uniform in quality and to ease CTO processing control. Homogenised CSS is subsequently acidulated to CTO, commonly using sulphuric acid. The remaining ‘mother liquor’ contains valuable sodium and is often fed back into the Kraft process. The extraction of CTO from CSS takes place in a CTO facility, which is usually a production line integrated with the pulp mill. Additionally a number of standalone CTO plants exist in North America.

Determining CTO status CTO is a feedstock, which – to a large extent – is modified or distilled into derived products and not a material that the holder discards or intends to discard, according to Ecofys. Therefore, CTO does not meet the definition of a waste product included in the EU waste framework directive 2008/98/EC. The directive defines waste as “any substance or object the holder discards or intends or is required to discard”. Hence, according to Ecofys, the question is whether CTO is a residue, co-product or product. The EU ILUC Directive, (EU) 2015/2013, includes a definition of a processing residue: “A substance that is not the end product(s) that a production process directly seeks to produce, is not a primary aim of the production process, and the process has not been deliberately modified to produce it.” CTO is generated in the process to produce pulp from softwood, where the direct aim is to produce pulp, not CTO, Ecofys says. This is underpinned by the fact that the CTO represents only a small fraction of the total value of the pulp production process. In an individual pulp mill with a mix of softwood and hardwood as feedstock, on average 1.25-4% of CTO per tonne of pulp is generated. The monetary value of CTO compared to pulp value for three UPM pulp mills lies between 2% and 4.4% and the value of CTO compared to the total output of pulp and other (co)products of these mills varies between 2.9% and 5.1%. “We did not update these calculations since 2013

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“CTO demand for biofuels did not cause displacement effects elsewhere, and hence CTO, a non-land using process residue, is a low ILUC risk material” but given that CTO prices have dropped, we can assume that the value of CTO compared to the total value of total pulp mill output will have decreased or at least not significantly increased,” the report reads. Recital 6 of the ILUC Directive clarifies what is meant with the requirement of production processes not being modified to deliberately produce CTO. “With a view to avoiding the incentivisation of the deliberate increase in production of processing residues at the expense of the main product, the definition of processing residue should exclude residues resulting from a production process which has been deliberately modified for that purpose,” the recital states. The EU Renewable Energy Directive (RED) also states that the primary technology choice for a process should not be determining, says Ecofys. Instead the optimisation and management of the existing process should be determining. CTO is produced from CSS, which is a pulping residue. The chemical pulping process is not optimised or modified to produce either CSS or CTO, but to produce pulp in the highest possible quantities. CSS and the derived CTO mainly result

from the pulping of softwood, but as the value of CCS or CTO is so low compared to pulp, the choice of wood type used is unrelated to the yield of CSS and CTO. Additionally, Ecofys says the choice between chemical pulping (which generates CTO) and mechanical pulping (which does not generate CTO) is based on the desired specifications of the pulp, not on whether it is desirable to also generate CTO. Furthermore, CTO production cannot be intentionally increased since wood raw material naturally contains only a low percentage of extractive components.

What about co-products? Ecofys thus concludes in the report that CTO should be classified as a residue. But could CTO also be regarded as a co-product? In literature, the material is sometimes called a co-product or by-product, the consultancy says, but it should not be conceptually possible to produce a co-product (CTO) from a residue (CSS). CTO could in theory, however, be classified as an intermediate product – a final product from a CTO plant or an intermediate product that needs further distilling/refining before turning it into an end product. CTO is produced in a CTO plant. Most CTO plants are on-site at pulp mill production lines and owned by the mill, but in the USA some external CTO plants exist. If a pulp mill does not have a CTO production line, it can sell its excess CSS to these external CTO plants that are then connected to CTO distilleries. “To our understanding, no or almost no standalone CTO plants exist, which indicates that the business case of CTO as a separate end product is not good enough to justify third party investments in standalone CTO plants,” says Ecofys. Trade in CSS is limited and prices are low. This is due to the fact that only few off-site CTO plants exist and because the energy density of CSS is low, which makes economical transportation normally only possible in a limited area around the pulp mill. The question is whether CTO is a residue or an (intermediate) product. The fact that no standalone CTO plants exist already indicates that CTO is not a product, according to Ecofys. CSS is a residue, which pulp mills have to dispose. If pulp mill owners have little sensible options other than to acidulate CSS into CTO, this step could be considered as processing a residue in

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Effects of boilers

TABLE 1: CTO LOW ILUC POTENTIAL ESTIMATE Deducting CTO uses with potential ILUC risk from CTO production level results in low ILUC potential CTO potential supply

2,600,000

Estimated current CTO production

1,750,000

Distilleries use

1,400,000

Petroleum drilling fluid use

80,000

Other uses (phosphate mining, direct energy)

40,000

Biofuel production

230,000

Excess potential that could be made available

850,000

Additional demand if distillers run at full capacity

600,000

Excess potential if distillers run at full capacity

250,000

FIGURE 1: RELATIVE SHARE OF VARIOUS GLOBAL CTO USES

From a technical perspective, all CSS generated in a pulp mill could be burned in the recovery boiler, according to Ecofys. In reality, though, mills often prefer not to burn CSS, as boiler capacity is a limiting factor in the pulp mill pulping capacity. The recovery of pulp production cooking chemicals is important in order to feed them back into the pulping process and keep production going and, as such, all weak black liquor is fed into the boiler. If no spare boiler capacity is left, no CSS will be burned. The quantity of burnable CSS is therefore limited by the capacity of the recovery boiler, Ecofys states. The recovery boiler is the most expensive installation in the pulping process. In older boilers, adding around 10% additional capacity is possible by modifying the air system at a cost of around €10M (US$11.65M), excluding down-time costs. Increasing the boiler capacity of newer boilers has a considerably higher cost. When building a completely new pulp mill, the boiler capacity could be built with the intention of burning all CSS. This would add less than €10M (US$11.65M) to the total investment of €800M (US$932) for a 500,000 tonne pulp mill, says Ecofys. Adding boiler capacity in order to burn the residual CSS could thus be cost-efficient for new mills, but expensive for existing mills not designed to burn all CSS, the report concludes. Burning CSS can also pose a technical challenge for boilers. CSS has a much higher fuel heat value than black liquor and its properties, especially residual black liquor (water) content, can vary. This can present a recovery boiler burn control issue and even a disturbance hazard. Additionally, burning CSS requires a separate input channel into the boiler, because CSS in the evaporator can cause foam formation with detrimental effects to boiler operations. This separate input can lead to fluctuating CSS input into the boiler, which can have a negative impact on the boiler performance. According to the study, more than half of all mills in Finland are running on full recovery boiler capacity completely taken up by black liquor. However, even if there is capacity they are reluctant to burn CSS due to the above-mentioned boiler control reasons.

v CTO quantity in tonnes

SOURCE: ECOFYS

order to dispose it in a responsible manner and the resulting CTO could be considered a residue. The mere fact that acidulation of CSS into CTO is a processing step does not, however, necessarily mean CTO is not a residue. Other wastes and residues also need further processing in order to use or dispose of them. Collected used cooking oil (UCO), for example, needs to be cleaned and filtered before it can be used as a biodiesel feedstock. In order to assess to what extent CTO production from CSS is predetermined, says Ecofys, it is important to consider the use options for CSS. CSS is a chemical pulp mill process residue with two possible uses. It can either be burned in the pulp mill recovery boiler to recover the bound sodium and low energy value of the lipophilic extractives or be used to produce CTO. The purpose of the recovery boiler is to extract used chemicals from black liquor, but CSS can also be burned in the recovery boiler.

SOURCE: ECOFYS

SUSTAIN ABILITY

Dis+lling

13%

Biofuel Oil drilling Direct energy Other uses

80%

“Based on these facts we conclude that CTO should be considered a process residue. The fact that CTO has many existing uses, including distilling into various further products, is unrelated to the question of whether or not CTO is a residue, but related to the question whether this residue is used to produce further products,” Ecofys says.

Market characteristics The Ecofys report states the CTO market is relatively small both in terms of volumes and actors and therefore seemingly quite transparent and easy to assess. Yet, due to its limited relevance, there was never an incentive to collect data, compile statistics or develop price benchmarks on CTO. This makes it difficult to obtain full clarity on supply, demand and prices. “However, even though uncertainties prevent full clarity on market specifics, the general picture is quite clear. Total global supply is dictated by the size of the global chemical softwood pulping sector, for which reliable statistics exist,” the report reads. Total global demand mostly comes from the chemical sector and market floor prices are determined by heavy fuel oil prices in Europe or natural gas prices in the USA, topped with the market value for distilled products. Based on total global figures on chemical pulping

of softwood and CSS-generating hardwood types such as birch, the total CTO production potential can be estimated to roughly 2.6M tonnes. This number can be slightly different in reality due to variations in CTO yield and could increase following a future increase in softwood pulp mill capacity, Ecofys notes. But for today, consensus exists that global CTO potential is about 2.6M tonnes. In reality – although to Ecofys it seems that enough acidulation capacity exists worldwide – not all available CSS is acidulated into CTO. Not all pulp mills have on-site CTO production capacity and many mills, especially older mills in the USA, use part of their CSS as process fuel. Additionally, transporting CSS over long distances to external acidulation capacity is not always economical. As in any other market, supply and demand balance usually form an equilibrium at a certain price, with higher stocks indicating a market with abundant supply. Looking at prices, CTO has a floor price the equivalent of the value of heavy fuel oil plus the EU Emissions Trading Scheme (ETS) price per avoided tonne of carbon in the EU or the value of natural gas in the USA, as CTO can be used to substitute these fossil fuels as pulp mill lime kiln process fuel. On top of this floor price, additional value is added through the demand for distilled CTO v

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SUSTAIN ABILITY

v products, such as tall oil rosin. The latter is impacted by fossil fuel prices since it competes with rosins of hydrocarbon origin. CTO has become a globally traded commodity, Ecofys says, quoting European trade statistics. CTO is traded either via long-term partnership agreements between pulp mills and distillers or sold at contracts with a typical duration of one to three years. The majority of the material is traded at such short-term contracts. It is clear, according to the report, that CTO distillation represents by far the largest end use. The distillation industry currently processes around 1.4M tonnes annually, marking a slight decrease from 1.5M tonnes in 2013 (see table 1, left). This decrease results from lower oil prices, which have dragged down the price of hydrocarbon rosin and put pressure on the demand for CTO-derived rosin. CTO for the production of tall oil fatty acids (TOFA) decreased due to cheaper mixed fatty acids becoming available as substitutes. In addition, the use of oil-based muds for oil drilling has been decreasing to about 80,000 tonnes due to the drop in heavy fuel oil prices and the improvements in fracking techniques, Ecofys says. “This is a drastic reduction compared to 2013 when the CTO use for oil drilling muds was around 150,000 tonnes. The CTO refining industry that produces biofuel uses around 230,000 tonnes of CTO, up from 60,000 tonnes in 2013,” the report reads. Smaller uses of CTO, direct energy use and mineral flotations add up to approximately 40,000 tonnes. All these uses combined lead to a total current estimated CTO demand of 1.75M tonnes.

Avoiding ILUC CTO has four main categories of use (see Figure 1. page 33). It can be used as process fuel in the pulp mill lime kiln, distilled into a variety of products, used as a component of petroleum extraction drilling fluid or for phosphate mining. It can also be used to produce biofuel and, finally, some other small uses also exist. Using CTO as a process fuel in the pulp mill lime kiln is a form of bioenergy.

Steering this CTO towards biofuel production does not increase the risk of ILUC, Ecofys says in the report. The lime kiln would, in this case, switch to using natural gas as process fuel or could resort to other forestry residues if the use of bioenergy has to be maintained. CTO used in biorefineries to produce biofuel is already used for biofuel and this use does not displace other uses and cause ILUC. CTO used in distilleries and as a component in drilling mud, however, cannot be diverted towards biofuel use without potentially risking ILUC and has to be deducted from the total CTO production potential. CTO distilled into various products is used for many purposes and steering CTO away from distilling means that alternatives have to be used. This could possibly lead to ILUC if agricultural crops are used as alternative feedstocks, warns Ecofys. Ecofys estimates current global CTO production to total 1.75M tonnes/year, which matches the total demand of various CTO uses. If this number is compared to the global potential CTO production of 2.6M tonnes, a surplus potential of 850,000 tonnes exist. This large excess potential partly results from the fact that distillers currently do not run at full capacity. If all distillers were to run at full capacity, this would add around 600,000 tonnes of demand. Still, in such scenario, there would be sufficient potential supply (250,000 tonnes) to satisfy demand from all market players, Ecofys projects. The notion that sufficient CTO exists is confirmed by the fact that significant quantities of CTO are currently kept in storage tanks – about 50,000 tonnes in the USA and 25,000 tonnes in Europe – and the fact that market prices are low.

Sustainability confirmed The report concludes that CTO fits into the EU ILUC Directive definition of a processing residue. CTO is generated in the process to produce pulp from softwood and the pulping process directly seeks to produce pulp, not CTO. This is underpinned by the fact that the value CTO represents only a small fraction of a maximum of 5% of the total value of

the pulp production process. The choice between chemical pulping and mechanical pulping is based on the desired specifications of the pulp, not on whether it is desirable to also generate CTO and CSS, the precursor of CTO. CSS is derived as a process residue in relatively fixed quantities. The pulping process cannot be modified to produce more CSS and less pulp. In addition, CTO is available in relatively small volumes globally. Total potential CTO supply based on available CSS is around 2.6M tonnes, Ecofys estimates. Part of the total potential is currently not available since some CSS is burned in pulp mills, but if the market demands, most of the 2.6M tonnes could become available. Current actual CTO supply and demand is about 1.75M tonnes. Of this, distillers use about 1.4M tonnes and a smaller share of about 230,000 tonnes is used to produce biofuel. Supply and demand balance out at the market price and therefore prices are a good indicator of the tightness of the market, as are developments in global CTO storage, states Ecofys. “We observe a steep drop in CTO prices since 2015, resulting from a drop in heavy fuel oil and natural gas prices, as alternative pulp mill process fuels, and sluggish demand for distilled CTO products and for non-distilled CTO as oil drilling fluid. We also see that about 75,000 tonnes of CTO is kept in storage tanks in the USA and Scandinavia,” the report says. These indicators show that currently sufficient supply is available for all users, according to Ecofys. The CTO market is not tight and a potential surplus of about 850,000 tonnes of CTO is available that could be tapped into. Of course, it is possible that demand for distilled products increases again, yet if all distillers globally run on full capacity, sufficient potential supply is available to satisfy all demand. “Based on this we conclude that CTO demand for biofuels did not cause displacement effects elsewhere, and hence CTO, a non-land using process residue, is a low ILUC risk material,” the study concludes. w This article is based on the ‘Crude tall oil low ILUC risk assessment: Comparing global supply and demand’ report by Ecofys Netherlands

SIGNIFICANT QUANTITIES OF CTO ARE BEING HELD IN STORAGE TANKS IN EUROPE AND THE USA

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Feeding man’s best friends Global spending on pet foods totals more than US$70bn, with high pet ownership in Europe and the USA, and fast growing ownership in emerging countries such as Brazil and China. Rendered products can be used safely and sustainably as pet food ingredients but have a negative image in the eyes of some pet owners

he rendering industry plays an important role in the production of commercial pet foods, with about 30% of animal protein meals and 15% of animal fats produced in the USA making their way into such

products. Americans currently have an estimated 170M pet cats and dogs, outnumbering children by a 4-to-1 margin, according to the American Pet Products Association (APPA). The nutrition, health and lifespan of our furry companions are top priorities, as reflected in the steady growth and spending patterns of pet-related products and services. Although American pet ownership numbers have remained relatively stable over the past few decades, annual pet expenditure in the USA has grown from around US$17bn in the mid-1990s to over US$60bn today, the APPA says. The largest industry serving pets is the pet food and treats sector, which is nearing the US$25bn mark in the USA and is more than US$70bn worldwide. Revenue growth in the USA is not due to a

IN THE USA, THERE ARE AN ESTIMATED 170M PET CATS AND DOGS, OUTNUMBERING CHILDREN BY FOUR-TO-ONE (PHOTO: ADOBE STOCK)

greater volume being sold but to a shift toward higher-quality products that are more expensive. Pet food trends are increasingly following that of human food, with terms such as ‘natural’, ‘organic’ and ‘fresh’ being used. In addition, more owners are scrutinising the ingredient and nutrient profiles of pet foods. The terminology used on pet food labels is also important, with many owners preferring ingredients similar to those listed on human food labels. Although domestic dogs are now more omnivorous in nature – they evolved eating highprotein, high-fat diets – cats are still strictly carnivores today. Therefore, protein is the nutrient class that usually attracts the most attention, with diets containing increased amounts and animal-based proteins being more popular. While the pet food industry provides many opportunities for sustained or increased revenue for renderers, several challenges also exist and must be considered. Firstly, on the positive side, consumers continue to demand pet foods containing increased protein

concentrations and are often willing to pay a premium for those of superior quality. Secondly, animal-based ingredients have a high protein quality in comparison to plant-based sources and are highly digestible if processed in the appropriate way. Finally, rendered products can be considered sustainable, in that they do not compete directly with human food. Despite the positives that exist, the rendering industry faces various pressures and challenges from regulatory bodies, animal activists and pet owners. While few take it to the extreme by demanding the use of animals and animal products be eliminated altogether, a considerable portion of the population has developed a negative connotation with the term ‘by-product’ when it comes to pet food. Although the pet food industry is still largely based on the use of secondary products of the human food system, a perception of inferiority is often attributed to animal byproducts. In addition, a few pet food companies have aggressively marketed against the use of these v ingredients.

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v Major players and channels to market The US pet food industry is dominated by five major companies that account for over 65% of the market, the president of Pet Food and Ingredient Technology, Greg Aldrich, writes in his paper, ‘Rendered Products in Pet Food’. These big five are owned by multinational conglomerates that have a primary emphasis in personal care, dry goods, and/or other consumables including Mars (Pedigree, Whiskas, and Royal Canin), Nestle (Purina, Friskies), Proctor & Gamble (Iams, Eukanuba), Colgate-Palmolive (Hills Science Diet, Hills Prescription Diet), and Del Monte (9-Lives, Gravy Train, Kibbles ‘N Bits, Nature’s Recipe, Meow Mix and Milk Bone). The remaining 35% of the US market is made up of pet food-exclusive companies, numerous regional brands and new smaller brands and companies. Grocery stores remain the largest outlet for pet foods, with an estimated market share of 37.4% in 2002, the paper says. Shares in other outlets are mass market (16.4%), pet speciality (17.2%), farm/ feed (5.4%), vet/kennel (5%) and other (18.6%). Pet foods are now more than ever considered packaged goods that are co-mingled with other family food items.

Trends in pet food More people consider their pets as members of the family, as demonstrated by everything from birthday and holiday celebrations, family photos, health insurance, burial plots, and preparation of special meals, according to Aldrich. Pets live in 70% of American homes, with 15% of those homes owning both a cat and dog. Specifically, there were an estimated 81.4M cats in 37.7% of households and 63M dogs in 43.5% of households in the USA in 2005. Other species of speciality pets, such as rodents, reptiles, rabbits, ferrets, exotic birds and fish account for almost 200M more household pets. “There are a number of different factors that motivate consumers to choose certain foods for their pets,” Aldrich writes. “Some are driven by cost, some nutrition, some performance, and still others by their pet’s preference. The choices seem to be almost limitless.” Today there are foods for different life-stages (such as maintenance, gestation/lactation, growth or puppy, kitten, adult, senior), price points, formats (kibbles, soft-moist, wet, raw) and packaging styles (such as can, retortable pouch, stand-up pouch, paper or plastic bag, re-sealable bag and tray). Pet owners are deciding on foods according to their own ingredient biases (eg natural, wheatfree, hypoallergenic), the breed and size of their pet (eg toy breed, large breed, Dalmatian, Persian), nuisance factors (eg hairball) and their pet’s predisposition to disease (eg joint health, senior, struvite, weight loss, renal disease). Pet foods are also also becoming more ‘humanised’ (gourmet, heat and eat, fruits and vegetables) and are tracking human food trends, such as raw, organic, holistic and low-carb. According to Aldrich, while the number of brands and market segments seem almost limitless, there are some general principles by which all are judged. These are palatability, digestive and stool consistency, and the influence of the diet on the pet’s general appearance (skin and coat) and

behavior (vigour). With this much variety, finding raw materials with the right mix of name appeal, nutrition, functional properties, availability and cost can be a big challenge for the pet food manufacturer. In many cases, the ingredient statement is driving the decision-making process. This is probably best exemplified in the promotion by some pet food companies that their foods are made with “humangrade” ingredients. While no definition exists for such a claim, this demonstrates the lengths that manufacturers will go to meet the pet owner’s perception of quality.

Rendered products Today, many pet foods are processed not just for the nutrition of the pet, but for their convenience to the pet owner as well, Aldrich writes. This convenience is the culmination of several factors: t Foods that are nutritionally balanced by experts for pet owners who may or may not have the knowledge of dog/cat nutrition themselves. t Foods in a form and format that is easy to use. t Foods that are virtually waste-free. t Foods that minimise the hassles of storage, spoilage and infestation. The main requirements in the diets of animals are protein, energy and minerals. Rendered animal products are an excellent source of all three, according to the paper ‘Rendered ingredients significantly influence sustainability, quality and safety of pet food’, written by David Meeker and Jessica Meisinger of the National Renderers Association, with members in Canada and USA. Rendered protein meals such as meat meal, meat and bone meal, poultry meal, poultry byproduct meal and fish meal are widely used in pet foods. Nutrient availability and/or dietary utilisation can be hampered by excessive heat treatment, dilution of essential amino acids (AA) with connective tissue, high levels of ash and oxidation. To address these issues, renderers use processing and marketing options to better target appropriate end uses for these materials, the authors write. Rendered fats and oils such as tallow, lard, poultry fat, and fish oil provide a supplementary source of energy, flavour, texture and nutrients in pet foods. Whereas energy is commonly derived from the carbohydrates in grain, animal fats provide a concentrated source of calories and remain more stable and palatable than the more unsaturated vegetable oils. Minerals are important in all animal diets for the formation of bone and cartilage as well as the normal functioning of organs, blood, and muscles. The most important macrominerals, calcium and phosphorus, are essential minerals for dogs and cats and are readily available in rendered products. “The high availability of phosphorus in rendered products is another contribution to sustainability because phosphate rock is non-renewable and is running out worldwide,” Meeker and Meisinger write. “Ingredients such as meat and bone meal with naturally-occurring calcium and phosphorus are superior to meat for some diets, and their use reduces the requirement for additional minerals to obtain the same nutrient profile.” In the USA, a voluntary membership association of state, federal and international regulatory officials

– including the Food and Drug Administration (FDA) and the Association of American Feed Control Officials (AAFCO) – sets guidelines and definitions for animal feed, including pet foods. The AAFCO defines the composition of all legally used feed ingredients, but contracts between renderers and pet food manufacturers often dictate much more specific terms. The primary animal protein byproducts are meat and bone meal, meat meal, blood meal, poultry byproduct meal, poultry meal, feather meal and fish meal. Using meat and bone meal as an example, the AAFCO defines this material as the rendered product from mammalian tissues including bone but exclusive of any added blood, hair, hoof, horn, hide trimmings, manure, stomach and rumen contents, except in such amounts as may occur unavoidably in good processing practices. Meat and bone meal, as defined by the AAFCO, must contain a minimum of 4% phosphorus with a calcium level not to exceed 2.2 times the actual phosphorus level. Ingredients of lower phosphorus content must be labelled meat meal.

Utilisation of rendered ingredients According to Aldrich’s paper, no easily obtainable figures are available to provide specifics on the amount of rendered products used in pet foods. However, it may be possible to determine a reasonable volume through some estimates and assumptions. “If one were to assume the average cost per pound for all pet food sold was US$0.60/lb, then based on total sales of pet food (US$14.5bn in 2005), the total tonnes produced each year would be in the neighborhood of 12M tonnes.” If rendered ingredients were 20% of these 12M tonnes across all products (protein meals, fats, other), then the pet food industry would consume around 2.4M tonnes/year. This represents roughly 25% of the total US production of rendered materials during the same period. “This indicates substantial reliance and connectedness between the pet food and rendering industries. For the pet food industry, the rendering sector is a vital supply of animal-based proteins and fats to meet the demands of their customers. “For the rendering industry, the pet food market is an important outlet for its products with a tremendous value-added upside,” he writes.

Protein meals Pet food companies write very specific purchasing requirements for their ingredients, including rendered products, according to Aldrich’s paper. AAFCO definitions are the starting place for these specifications. Meat and Bone Meal and Meat Meal Meat and bone meal has been a staple protein in pet foods and is still used by many manufacturers today. However, its popularity has declined in recent years. Probably the biggest issue is that meat and bone meal is no longer considered ‘label friendly’ as consumers have been taught to distrust something simply called ‘meat’. A strictly beef or strictly pork meat and bone meal are likely be more acceptable to consumers, but these have not been commonly available until

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v recently. These meals are now often available for a higher price and are widely used in pet food. Adding to the challenges are its association with livestock feed rather than human food, recurring issues with bovine spongiform encephalopathy (BSE) or ‘mad cow’ disease, inspections and record keeping for all ruminant meats, and concerns with disease outbreaks such as foot and mouth disease. These issues continue to place downward pressure on the popularity of meat and bone meal. Nutritionally, meat and bone meal remains a good source of animal-based protein with a fairly consistent protein level of 50%. This is an adequate level for traditional pet food diets with protein levels of between 18-26%. Fat composition ranges from 10% to as high as 25%, depending on the supplier. The fatty acid profile can vary and resembles the composition of the animal from which the meal originates. Beef fatty acids, for example, are proportionally more saturated than pork fatty acids. Due to the more saturated nature of the fatty acids in meat and bone meal, it is inherently more resistant to oxidation than many of the other rendered meat meals. On the whole, the digestibility of meat and bone meal for companion animals is comparable to that of lamb meal and poultry by-product meal. In dog

and cat diets, meat and bone meal has not been reported to negatively affect the intestinal flora, stool consistency, or stool volume. However, beef is often blamed for food hypersensitivities, so meat and bone meal is one of the first ingredients removed in an ‘elimination’ diet regimen. Lamb Meal Lamb meal has been a popular ingredient in dog and cat diets for the better part of the last 15 years. Initially, it was considered a novel ingredient in diets for animals with food-related allergies. Lamb meal and rice diets were some of the fastest growing products offered in the pet food aisle to the point that lamb meal supply was outstripped by the demand. ‘Lamb meal analogs’ made of other protein meals were rumored to have entered the market, but tight controls due to BSE and scrapie issues and new DNA typing technology have all but made this an issue of the past. Much of the lamb meal used in pet foods is derived from the lamb meat industry in Australia and New Zealand. Poultry (Byproduct) Protein Meals Poultry protein meals are a popular, high quality protein source used in pet food. The pet food industry consumes an estimated 23% of the rendered poultry proteins produced each year. However, the ability to make one homogenous statement about this ingredient ends there. Due to some inconsistent rules regarding ingredient nomenclature, an evolving pet food customer base, and pressures within the poultry industry, a series of names and classifications of poultry protein meals has emerged. Rendered poultry proteins are defined by AAFCO differently than meat meals. By definition, poultry byproduct meal differs from poultry meal only by the inclusion of “heads, feet and entrails”. Further, they can be labeled specific to their “kind” and many renderers have accommodated. Thus, there are numerous products available in the market under this umbrella: poultry byproduct meal, chicken byproduct meal, chicken meal, turkey byproduct meal, and turkey meal.

Adding to this confusion, there are several different grades of rendered poultry products available. ‘Feed grade’ poultry byproduct meal is seldom used in pet food because it contains a higher level of ash and lower protein content. Standard pet food grade poultry byproduct meal contains less than 14% ash and low-ash poultry meal and/or poultry byproduct meal contains less than 11% ash. The latter is available in limited quantities at a premium price and typically reserved for lowash cat formulas. In general, poultry protein meals are well utilised by dogs and cats and make up the biggest share of proteins in many of the premium pet foods. The fatty acid profile complements dog and cat nutrient requirements very well. Additionally, they contain an enriched level of the essential linoleic acid. Turkey (Byproduct) Protein Meals Turkey protein meal-containing pet foods are becoming more popular. However, nutritional information on rendered turkey is not easily obtained nor is the ingredient constantly available. Most turkey destined for rendering are lumped in with chicken, then processed and labelled as poultry (byproduct) meal. There are only a few companies that produce or trade turkey protein meals. Turkey protein meals are a slightly darker golden brown color with a richer aroma when compared to chicken protein meals. The nutrient composition of turkey protein meal is usually considered to be somewhat better than meat and bone meal, which has allowed some pet food companies to use turkey protein meal as a modest upgrade to meat and bone meal as a leading protein source. However, the nutrient profile of turkey meal is slightly less favourable than that of pet food grade chicken protein meal. For example, turkey protein meal ranges from 62-65% protein and ash level ranges from 18-25%, whereas pet food grade chicken protein meal typically exceeds 65% protein with less than 17% ash. The amino acid and fatty acid profile of turkey meal is very similar to that of chicken meal. Fish Meal Fish meal is an increasingly common ingredient in pet foods. While there are a few exclusionary diets in which fish meal is the feature protein ingredient, fish meal is generally added only as a secondary protein source. Fish meal, relative to most other protein meals, has a high level of protein with a correspondingly high protein digestibility. Besides being a source of high quality protein, fish meal also contains about 8-12% fat which is rich in omega 3 fatty acids including eicosapentaenoic acid (EPA) and docosahexanoic acid (DHA). Thus, in most diets, its primary purpose is to serve as a vehicle to deliver fatty acids. While the more direct method for the inclusion of these fatty acids would be through fish oils, the use of fish meal serves an additional purpose. Stabilising the more highly unsaturated oils, like fish oil, can be quite difficult, especially when surface-applied to pet foods. However, for reasons not fully understood, the volatile omega 3 fatty acids found in fish meal seem to be easier to stabilise in pet food application than those in the surface-applied oil. V

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V Fats

and oils

In the diet, fat provides a concentrated source of energy, essential fatty acids, a route for fat soluble vitamin absorption, texture, aroma and flavour. Fat, in and of itself, will increase the palatability of a diet up to a certain point in cats, and without limit in dogs, Aldrich writes in his paper. Addition of fat to the diet to meet label guarantees will often reach 10% of the formula. While energy and essential fatty acids are a concern nutritionally, maintaining food stability is a primary issue. Dietary oxidised fat has been associated with lower metabolisable energy values, slower puppy growth, suppressed immunity, and lower dietary and serum linoleic acid concentrations. Choosing the right fat source and method to retain freshness are important. Tallow Tallow was one of the original fats applied to early commercial pet foods and there are several companies that still use it today. Most of the animal fat sold as tallow comes from federally inspected animals and facilities and has regulated quality and composition, something many other fats and oils cannot claim. Although other animal fats can be found in tallow, it is, practically speaking, derived from beef because it is the dominant meat in North America and Europe. Because of the saturated nature of the fatty acids (saturated fats are solid at higher temperatures) in fat from beef animals, it most often meets the definition of tallow – a titer of 40, or a melting point of 40ºC. For many, the ‘harder’ fats like tallow carry a poor nutritional connotation due to the negative association of saturated fats with cholesterol and coronary heart disease. This is really a human nutritional issue as coronary heart disease is not a prevalent health concern for dogs or cats. Dogs and cats are considered to be ‘HDL species’ meaning they have a preponderance of the ‘good’ HDL in their circulation. The fatty acids in beef tallow are about 50% saturated, with a small amount of linoleic acid (3%) and linolenic acid (0.6%) and none of the longer chain omega 3 fatty acids (EPA or DHA). Mutton tallow has a similar level of saturation (47%) but with a slightly higher level of LA (5.5%) and ALA (2.3%). Tallow digestibility is high (apparent fat digestibility of 97% or better) and comparable to other fat sources like chicken fat and lard. Among the different fat sources, beef tallow is well known for being one of the more palatable. Mutton or lamb tallow is not quite as palatable, possibly due to the aroma. Tallow is considered to be more shelf stable than less saturated fats and requires less antioxidant addition to achieve shelf life goals. It also contains a small level of conjugated linoleic acid that is now showing promise as a potent natural element in the fight against cancer. Tallow is a good platform to provide energy and flavour, but a balanced diet may require a complementary oil enriched with linoleic acid and/ or omega 3 fatty acids. Lard/Choice White Grease Lard and choice white grease are also common animal fats used in pet foods. They are derived

“Pet food trends are increasingly following that of human food, with terms such as ‘natural’, ‘organic’ and ‘fresh’ being used” primarily from pork and are most often labelled generically as animal fat. Like tallow, most of the lard used in pet food comes from federally inspected facilities and a portion of the available supply is human edible. Thus, pet food companies may partially compete in the human edible market for this ingredient. Due to its abundance, the cost is not typically beyond that of other fat sources. The proportion of essential fatty acids such as linoleic acid can range between 3-16%. Lard is relatively easy to stabilise due to a preponderance of palmitic and oleic acids. Lard and choice white grease are semi-solid to viscous liquid at room temperature. They can solidify during colder weather so transport and handling can be an issue. Further, they must be coated on foods when they are hot in order to get adequate penetration. Digestibility of lard is high and comparable to other fats. Palatability is good in both cats and dogs. Poultry Fat Poultry and, more specifically, chicken fat has become a very popular fat source in pet foods. Poultry fat use in pet foods is probably more than 10-20% of the 888M pounds (0.4M tonnes) of poultry fat that was produced in 2003 in the USA. There are several different sources from which poultry fat is obtained: rendered, rendered-refined, and low-temperature blanched. They differ in quality, consistency and cost, and may differ ever so slightly in minor nutrients, palatability and stability. Stabilising chicken fat in bulk storage is not a big challenge. However, when added to pet food, stability can become an issue. The potency of preservative application must take into account the food and its handling and packaging. Further, the condition of the fat at the time preservatives are added is critical – the lower the moisture content, peroxide value, free fatty acid level and impurities, the better. The trade-off is cost, availability, flavour, and aroma. Chicken fat is a good source of the essential linoleic acid (19.5%) and about double that of lard. Chicken fat fits very well in dog and cat diets

because it is well accepted by both, having a flavor that is preferred over many other fats. Chicken fat is comparable to other fat sources, such as tallow or pork fat, in digestibility and overall contribution of metabolisable energy to the diet. Fish Oil The majority of omega 3 fatty acid research in dogs has been conducted with the longer chain omega 3s from fish oil, such as EPA and DHA. These oils are derived primarily from pelagic fish like menhaden, anchovy, herring and mackerel. They are known to have a strong oily taste and aroma not appreciated by most people. This does not appear to be a big problem for dogs, although some cats may show a preference for one fish oil over another. Most fish oils are added to the surface of pet food after extrusion and drying. The application of fish oil to meet the desired omega 3 fatty acid level is typically less than 1-2% to of the formula. This small amount can be challenging to accurately meter without properly designed equipment. Surface application can also lead to palatability concerns. The fatty acid profile of the different fish oils can vary substantially. Most of the fish oil used in the pet food industry is cold pressed and/or refined. While the more processed oils add to the cost, the trade-off is improved handling, animal acceptability, and shelf life. Once ingested, the utilisation of fish oil is similar to other fat sources.

Conclusion Meat consumption among humans is increasing as incomes rise and byproducts from meat production are inevitable, Meeker and Meisinger write in their paper. These byproducts can be rendered into safe and nutritious pet food ingredients. Feeding animals offers a greater value use for byproducts than other alternative uses such as energy or fertiliser, therefore improving the sustainability of the industries from which the byproducts are derived. “The AAFCO has come under increased pressure from activists in recent years to ban certain raw materials from pet food for aesthetic and emotional reasons rather than nutritional, environmental or safety concerns,” they say. “If the AAFCO or the FDA chose to ban some or all of the current food animal production byproducts from the approved animal feed ingredient list, an increased amount of food suitable for humans would have to be used in the manufacture of pet food. This, in turn, would raise the price of many pet food products, raise the price of food for people and force more byproducts into less sustainable uses or less environmentally friendly disposal endpoints.” New definitions for preferred ingredients can be developed to accommodate customer preferences, but for the long-term sustainability of pet food manufacturing, decisions to exclude certain byproducts for reasons other than food safety need to be very carefully considered, they conclude. w This article is based on the paper, ‘Rendered ingredients significantly influence sustainability, quality and safety of pet food’ by David Meeker and Jessica Meisinger of the National Renderers Association; and ‘Rendered Products in Pet Food’ by Greg Aldrich, president of Pet Food and Ingredient Technology

43 OFI – SEPTEMBER/OCTOBER 2017 www.ofimagazine.com

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07/09/2017 11:59

I NSTRUM EN TATION & TESTIN G

Instrumentation round-up Oils & Fats International reports on some of the latest instrumentation news and developments around the world IN BRIEF

FRANCE: Bureau Veritas (BV), a Franceheadquartered international certification agency, acquired Dutch inspection and testing company Schutter Group on 13 March. Schutter Group provided inspection, testing, certification and logistical support services for the edible oils and fats, grain, animal feed and biofuel sectors, BV said in a statement. Among its services were laboratory testing, risk management and supply chain auditing and certification. “By diversifying our service portfolio through leveraging Schutter’s proven supply chain expertise and expanding our geographic footprint, we will provide more comprehensive support for new and existing customers,” said BV CEO Didier MichaudDaniel. The Schutter acquisition was BV’s third in food and agri commodities this year.

lobal agri commodity testing and inspection companies Bureau Veritas and Schutter Group have introduced a new aflatoxin pre-shipment inspection and quality control process to mitigate toxin exposure through quick on-site tests. The companies had begun to offer aflatoxin control services during vessel preloading through the implementation of a rapid and minimally disruptive testing process, a Bureau Veritas statement said on 29 June. “We have invested in equipment and test kits to address on-site aflatoxin testing needs in high-demand ports and have five laboratories approved by FOSFA and GAFTA to perform in-house analysing,” said Alan Shirley, Bureau Veritas vice president of marketing and sales. Grains and by-products would be taken as samples during the discharge of inbound delivery trucks, after which product testing would be performed using quantitative strip tests that only took 7-10 minutes. “The service is an essential element of our grain quality control process and fundamental to our inspection service adding value for our

Australian solution is bad news for oil fraudsters

PB Group, an Australian anti-counterfeit technology manufacturer, has developed a novel technology using an invisible tracer that cold help local and international edible oil exporters tackle product fraud. The tracer contained invisible particles that could be mixed in paint, plastic or ink on caps, corks, labels or even the food product itself, the Olive Oil Times reported on 10 July. The inorganic and non-radioactive patented technology, developed in 2015, could be added into almost any substrate used on package or seal a food product and it had been certified by China, Europe and the USA for being safe to come in direct contact with food. “Any product that requires protection or certification of authenticity would benefit from our technology, protecting the brand’s integrity and decreasing the risk from counterfeit,” YPB Group CEO Jens Michel told the Olive Oil Times. The particles would light up under certain light spectrums invisible to the human eye but which could be detected on a special scanner able to read the product’s unique signature and prove an authentication response based on the tracer material. These scanners would be delivered to companies that chose to use the technology and YPB said it could help the brand from endto-end on its product packaging or integrate the solution into the company’s existing processes. YPG would also provide unique and traceable signatures in the supplied particles specific to

44 OFI – SEPTEMBER/OCTOBER 2017

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customers in the global agricultural industry,” Shirley said. Aflatoxin is a naturally occurring mycotoxin produced by the moulds aspergillus flavus and aspergillus parasiticus. Out of the two, A.flavus was more common and widespread, most often found when certain grains were grown under stressful conditions, such as drought or excessive precipitation. If ingested, aflatoxin exposure could cause liver damage and cancer and animals could transfer the toxin into their end products – like eggs, milk products or meat – unless the issue was immediately identified and addressed, the companies said. The latest aflatoxin outbreak happened in 2016 in Brazil, when the country’s corn crops were heavily infected due to drought conditions in Mato Grosso, Mato Grosso do Sul and Minas Gerais, said Bureau Veritas. Brazil was expecting a record corn harvest in 2017, the company said, which highlighted the need for close monitoring and testing to alleviate product contamination, food safety concerns and even global cargo rejection resulting in economic losses.

SOURCE: ADOBE STOCK

UK: UK-based condition monitoring solutions manufacturer Salunda Ltd has developed an advanced handheld sensor technology to determine the biofuel content of diesel blends. The DieselProve technology has been designed to provide fast diagnostics to assess the biofuel content in biodiesel in addition to identifying impurities such as vegetable oil, white spirit and water, the company said in a statement. DieselProve exploited the electromagnetic properties of the fuel to test detect the biofuel levels. The handheld device required less than 50ml of fuel to enable its integral probe to provide an in-field measurement of biodiesel content at an accuracy level comparable to laboratory testing, the company said. Test results were displayed very quickly and could be downloaded to a supporting software application for archiving and reporting. The technology could be used as a first stage screening tool to determine whether mroe detailed analysis of the biofuel was necessary. In addition to industrial biofuel facilities and supply stations, the device could be used in workshops and garages due to the small amount of fuel required for testing.

Aflatoxin control services offered

the given company and time period. The YPG solution was, according to Olive Oil Times, the only invisible tracer technology approved by the China Trade Association for Anti-Counterfeiting (CTAAC). Both China and Australia were highly concerned with the widespread food product fraud in their markets, with olive oil – in addition to alcohol and seafood – being the most commonly counterfeited products in Australia, according to PWC research. The study claimed that there were more than 100 points in the Australian olive oil supply chain from farm to consumer that could provide fraudsters a chance to tamper with the V product.

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25/09/2017 11:22

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21.08.2017 16:57:23

India launches campaign to arm the public with test devices for edible oils

European researchers unlock methods for olive oil testing N

ew research from Italy and Spain could pave the way for more efficient technologies for ensuring olive oil quality and catching fake products sold as olive oil. The first study, by a research group consisting of experts from several Italian universities, accidentally discovered that filtration through bleaching earth affected olive oil’s molecular structure, the Olive Oil Times wrote on 11 November 2016. The group, including Nadia Mulinacci from the University of Florence, was studying lignans – a group of phytochemicals that characterise the minor components of olive oil – when they discovered that in addition to the two typical lignans, their oil sample contained other molecules with the same weight and similar structure. As the team had never encountered these components before, they theorised that they may have been caused by an unknown step in the refining process. Additional tests on three sets of rectified oils confirmed that passage through bleaching earth in the filtration step induced the formation of certain isobars, whose chemical structures were confirmed with chromatographic findings. According to Mulinacci, the discovery could help identify cases where refined olive oil, which would contain the newly identified isobars, had been added to products sold as virgin olive oil. “For years now, our research group has been working to enhance the quality of extra virgin olive oils through the development of appropriate analytical methods, and this work contributes to the analytical equipment needed to combat frauds,” she said. The second development came from Spain, where a combined research team from the University of Córdoba and the Council of Scientific Investigation utilised forensic techniques to track the DNA found in olive oil to determine its authenticity. Measuring DNA in olive oil has traditionally been difficult, as the deoxyribonucleic acid is not soluble in lipids – or oils – that make up most of the product and therefore there are few molecules that can be exploited for DNA analysis, said an Olive Oil Times report on 6 December 2016 However, by using a technique called the droplet digital-PCR (ddPCR), the researchers were able to amplify and quantify the DNA dissolved in miniscule water droplets found in virgin olive oil. The ddPCR method uses a combination of microfluidics and proprietary surfactant chemistries to divide PCR samples into water-in-oil droplets. Following PCR, each droplet is analysed or read in a flow cytometer to determine the fraction of PCR-positive droplets in the original sample. “Surely, considering the fact that virgin olive oil is the juice of a fruit, it contains water drops in microscopic quantity in which DNA dissolves,” said Gabriel Dorado Pérez, a molecular biology and biochemistry professor and the lead researcher of the investigation group. “The goal is to develop a traceability method, which will allow us to determine if monovarietal-branded olive oil bottles contain oils from other varieties, or worse, from other species such as sunflower, peanut or almond,” Dorado Pérez added.

he Indian Ministry of Consumer Affairs, Food and Public Distribution is planning to distribute handheld testing devices to the general public to fight adulteration in edible oils, milk and even water. Spearheaded by the ministry’s Central Consumer Protection Council (CCPC), the government department planned to launch a nationwide campaign against adulteration in edible oil and other consumables to bring India’s food safety standards up to international level, India’s The Tribune reported on 17 April. According to the head of the Food and Safety Standard Authority of India (FSSAI) Ashish Bahuguna, the devices, named Rapid Test Laboratory, had been developed by the ministry. The mobile testers were affordable, easy to use and required no maintenance in order to make them available to the entire public. The largest issue regarding the campaign, said Bahuguna, was establishing the most effective way to market the device and spread awareness among the masses about the risks of adulterated products. The campaign was announced during the 31st meeting of the CCPC, presided over by Indian Minister for Consumer Affairs, Food and Public Distribution Ram Vilas Paswan. The sale of adulterated oils is not uncommon in India. In April, the Criminal Investigation Department (CID) arrested a businessman in Shantipur, West Bengal, for allegedly adulterating edible oil at the Rahul Enterprise oil mill, Zee News reported. Acting on a tip-off, the CID raided the oil mill where police sources said mustard and palm oil were mixed and sold under the Rahul brand or falsely under the name of other brands. The CID seized an oil tanker loaded with 19,659 tonnes of palm oil at the oil mill.

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47 OFI – SEPTEMBER/OCTOBER 2017

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Crop Value: measure oil & moisture using ISO 10565 method

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25/09/2017 11:22

STATISTIC S

GLOBAL SOYABEAN AND PALM OIL PRODUCTION (MT)

STATISTICAL NEWS FROM MINTEC

EU SOYA/PALM OIL PRICES AND SOYA PREMIUMS (US$/MT)

EU USED COOKING OIL (UCOME) BIODIESEL PRICES (€/MT)

PRICES OF SELECTED OILS (US$/TONNE) 2015

Apr 17

May 17

Jun 17

Jul 17

Aug 17

Soyabean

747.0

786.0

797.0

796.9

817.0

848.2

Crude Palm

637.0

635.0

661.0

665.4

651.7

676.2

Palm Olein

602.0

613.0

637.0

642.4

628.8

652.7

1,099.0

1,520.0

1,529.0

1,564.3

1,518.8

1,522.1

Rapeseed

773.0

818.0

796.0

794.4

844.1

871.3

Sunflower

846.0

788.0

801.0

797.6

802.7

810.0

Palm Kernel

901.0

1,014.0

1,044.0

1,077.5

981.0

1130.2

Average price

801.0

882.0

895.0

906.0

892.0

930.0

Index

190.0

209.0

212.0

215.0

211.0

220.0

Coconut

Palm oil Palm oil prices have risen 4% from the beginning of August due to forecasts of lower than expected production from August to December, alongside lower global stocks. Palm oil production is forecast to be lower than expected for the remainder of the year, as 80% of prospective production increases for Malaysia and Indonesia have already taken place. As a result, y-o-y increases in palm oil production between August and December will be small, causing prices to rise. Global palm oil production rose 5% y-o-y in 2016/17 to 62M tonnes. However, high global consumption of the oil, up 4% y-o-y at 63M tonnes, has kept stocks low, down 6% y-o-y at 7.5M tonnes, pushing prices up further. Soyabean oil Soyabean oil prices rose 2% m-o-m in August due to new US legislation, imposing duties on US imports of soyabean oil from Argentina, alongside falling global soyabean production. In March, the National Biodiesel Board (NBB) of America asked the US government to impose duties on imports which were undercutting US soyabean producers. As a result, the US Department of Commerce made the preliminary decision to implement high countervailing duties of between 41% and 68% on Argentinian soyabean oil, driving prices up. Prices came under further upward pressure as a result of reduced forecasts of global soyabean production during 2017/18, down 3% y-o-y at 442M tonnes. There is uncertainty over the condition of the US soyabean crop, which suffered as a result of adverse hot and dry weather during June and July. Additionally, in Argentina, soyabean planted area is forecast to decline and expansion in Brazil is also likely to slow down.

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

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07/09/2017 10:27

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