Palm Oil Quality Standards for Trading

Transcription

1 Palm Oil Quality Standards for Trading Tan Yew Ai MPOB PORAM Course on Operational and Commercial Aspects of Palm Oil Trade 27 & 28 May 2013

2 Global importance of palm oil Most heavily consumed oil in the world Average world demand has grown by 3% yearly in the past 30 years Used in almost half of all processed foods and cosmetics One in ten supermarket products contains palm oil

3 Presentation outline Palm oil quality and characteristics Palm oil trade Specifications Standards Ethical trading Conclusion

4 PALM OIL: QUALITY AND IDENTITY CHARACTERISTICS

5 Definition of Quality Conventional ability to satisfy stated or implied needs Current implications on security, safety, human health, accountability, environment, etc. e.g. Sustainable production of palm oil

6 Oil Palm/Palm oil supply chain Smallholders Dealers Plantations Mills Refineries Export Contract Buyers Consumers

7 Chemical & physical characteristics To assess: Purity or authenticity of the product; Quality and stability, and Foreign substances and impurities

8 Palm Oil Characteristics Identity Characteristics Chemical Physical FAC SMP TAG SFC IV Apparent Density Carotene Viscosity Chlorophyll Refractive Index Tocols Sap. Value Unsap. Matter Quality Characteristics PV E 233 & E 269 AnV DOBI Fe, Cu, P FFA OSI M & I Contaminants

9 Components in Palm Oil Triacylglycerols Monoacylglycerols Diacylglycerols Free fatty acids Phospholipids Sterols Pigments Tocols Minerals

10 Glyceride Composition Triacylglycerols (TAGs) make up about 90 % of the components in oils and fats CPO contains about 4.7% diacylglycerols (DAGs) and % Monoacylglycerols (MAGs)

11 Fatty acid 1 Fatty acid 2 Fatty acid 3 Fatty Acids TAGs 3 fatty acids DAGs 2 fatty acids MAGs 1 fatty acid Glycerol

12 Saturated fatty acids stable fatty acids with single bonds Unsaturated fatty acids Fatty acids with one or more double bonds

13 Fatty Acid Isomers Isomers are defined as compounds with the same molecular formula but different molecular structure Most common isomers are the cis and trans isomers

14 Cis & Trans Fatty Acid Isomers Cis Trans H H H H H H C C C C C C C C H H H H H

15 Free Fatty Acids (FFAs) Fatty acids which are not attached to a glycerol molecule FFAs are obtained when glycerol is split from the TAG in a reaction termed as hydrolysis True metabolites of TAGs and thus can occur naturally in trace amounts Also result from the breakage of the bound fatty acids from MAGs, DAGs or TAGs

16 FFA Content Presence of large quantities indicative of lipolytic activity in damaged fruits Average quality crude palm contains less than 5% Refined palm oil contains less than 0.1%

17 FFA versus AV The acidity of the oil is expressed as FFA content or acid value (AV) In instances where a blend of oils is involved, uncertainty as to which acid to use for calculation arises and the acid value is used to define the acidity of the sample To convert %FFA as oleic acid, lauric or palmitic acid to AV, multiply the %FFA by 1.99, 2.81 or 2.19 respectively

18 Non-glyceride Components Make up less than 5% of crude vegetable oils Most are largely removed or broken down during refining of vegetable oils

19 Pigments - Carotenoids Orange-red colour of CPO due to mg/kg carotenoids a - and b - carotene are important provitamin A compounds Partially removed from CPO by earth bleaching, while deodorization breaks them down into colourless or light coloured components

20 Pigments - Chlorophylls Impart greenish colour to crude rapeseed and olive oil They are photosensitizers which activate photooxidation in oils Their presence adversely affects oxidative deterioration, hydrogenation and bleachability

21 Tocopherols & Tocotrienols These are natural antioxidants known as Vitamin E The 3 important forms are a-, b- and g- tocopherols and tocotrienols mg/kg in CPO

22 Minerals Present only at trace levels in oils Phosphorus from residual phosphatides Sodium soaps left from alkali refining Iron & copper Trace nickel in hydrogenated fats

23 PALM OIL TRADE -STANDARDS -SPECIFICATIONS CPO before mid 1970s Refined palm oil after 1980s

24 General trading terms Good Merchantable Quality (GMQ) conformation to a minimum standard, suitable for the purpose for which it was bought Fair Average Quality (FAQ) the average quality of agricultural produce based on samples taken from bulk

25 Quality specifications Guarantee of parameters such as FFA Moisture & Impurities IV Colour SFC Others aspects of quality

26 Quality monitoring of palm oil traded using: Standards Specifications Regulations/Legislation

27 Standards Set criteria expected in a particular product MS, CODEX, ISO Unless incorporated into legislation or regulations, they have no legal validity A product meeting a standard is at once identifiable as a quality product

28 Specifications Stipulate criteria demanded by the buyer of a particular product or consignment May be above or below those in a standard or may be concerned with criteria not covered in a standard Variations from a standard are usually the subject of price negotiations for the product

29 Regulations/Legislation Define minimum legal requirements governing the sale of a product May incorporate a standard Standards and specifications will conform to regulations which must be met before the product may be legally sold

30 Standards and specifications in trade Define uniform and accepted descriptive terms to facilitate palm oil trade Provide tools for the market to create incentives to improve overall oil quality

31 Palm specifications MS 814 Scope both crude and refined oil Definition crude, neutralised, neutralised and bleached, etc. Identity and quality characteristics Hygiene, packaging, certification Sample preparation and testing,

32 Palm oil trading contracts PORAM 1 Domestic Contract for CPO PORAM 2 FOB Contract for processed palm oil and palm kernel oil products PORAM 7 FOB Contract for CPO and CPKO FOSFA 81 CNF/CIF Contract for palm and palm kernel oil products FOSFA 80 CNF/CIF Contract for crude palm kernel oil, crude and refined palm olein and palm stearin

33 Trade association contracts Aim to protect quality by stipulating Quality on shipment Standards of transportation Storage Handling

34 Contracts, standards and quality FOSFA and NIOP contracts previous ship cargo must not be from banned list of substances Efforts to continuously upgrade quality through improvement of standards Codex Alimentarius executes food safety programme standards, codes of practice, guidelines, recommended measures

35 Codex Standard for named vegetable oils CX-STAN 210 Essential composition and quality factors FAC, slip point Food additives antioxidants, flavours, Contaminants pesticide residues, Pb & As (0.1 mg/kg) Hygiene Labelling Methods of analysis

36 Contract specifications CPO futures Moisture & impurities <2.5% FFA: Into Port Tank installation <4% From Port Tank installation 5% DOBI Into Port Tank installation 2.5 minimum From Port Tank installation 2.31 minimum

37 Other quality requirements Free from solid particles, adulterants, sediments, foreign matter, added colouring or flavouring substance Free from mineral oils, toxic matter, other oil of vegetable or animal origin Odourless and bland in taste

38 Analyses for quality control MPOB Test Methods MS Methods ISO Methods BSI Methods AOCS Recommended Methods IUPAC Methods

39 Ideal Quality Targets Parameter CPO, max RPO, max FFA, % M & I, % Colour, 5 ¼ inch Lovibond R PV, meq/kg Carotene, mg/kg DOBI 2.5* - Anisidine value 5 2 * Minimum

40 MS CHARACTERISTICS Identity Quality Apparent density (50ºC) FFA Refractive index (50ºC) Moisture & Impurities Saponification value Peroxide value Unsaponifiable matter Anisidine value Fatty acid composition Colour Iodine value DOBI Slip melting point Total carotenoids

41 PORAM Specifications Parameters FFA (as % palmitic acid, max) Moisture & Impurities (%, max) Refined palm oil Refined palm olein Melting point ( C) Iodine value (min) Colour (5 ¼ inch Lovibond, max) 3 Red 3 Red

42 STC specifications Grading factors FFA (as % palmitic acid, max) Moisture & Impurities (%, max) Melting point ( C, max) CPO (Edible grade) Refined Palm olein Iodine value (min) 56 Colour (5 ¼ inch Lovibond, max) 3 Red

43 CHINA AQSIQ CIRCULARS ON EDIBLE IMPORT CHINA ENHANCING FOOD SAFETY IN THE COUNTRY TWO CIRCULARS WERE ISSUED BY THE CHINA AQSIQ ON EDIBLE OIL ( July 2012) AQSIQ CIRCULAR NO. 229: Requirement to Further Strengthen the Import of Edible Vegetable Oil Inspection and Supervision AQSIQ CIRCULAR NO. 80: Requirement for the Imports of Vegetable Oil in Bulk to China

44 Grading factors China: GB Crude Palm Oil Refined Palm Oil Acid value (mg KOH/kg, max) Moisture & volatile matter (%, max) Insoluble impurities (%, max) Melting point ( C, max) Fe (mg/kg, max) 5 Cu (mg/kg, max) 0.4 Peroxide value (meq/kg) 10 Colour (5 ¼ inch Lovibond) 3 R 30Y

45 Settling commercial disputes Litigation before courts Arbitration Conciliation Mediations Commercial settlements

46 Reasons for arbitration Failure to deliver cargo Dispute over price Payment Quality Letter of credit Cargo readiness Dispute over contract

47 Additional analysis for quality Contaminants and environmental pollutants (3-MCPD, afflatoxin, benzopyrene, hydrocarbons, dioxin) Additives (Antioxidants, anti-foaming agents) Pesticide residues

48 ETHICAL TRADING

49 Ethical Trading Ethical sourcing Workplace conditions Workers welfare Sustainable agriculture More than 50 regulations/legislation in place to ensure sustainable practices in the oil palm sector

50 Roundtable on Sustainable Palm Oil (RSPO) Independent global initiative Promote sustainable palm through cooperation within the supply chain Established principles and criteria for certification of sustainable palm oil

51 Malaysian Sustainable Palm Oil (MSPO) National interpretation of RSPO MSPO covers smallholders, plantations and mills. Why do we need MSPO? No Malaysian Standard for Sustainable Palm Oil Production As an alternative to RSPO which is costly As a tool to brand Malaysian palm oil

52 The MSPO draft consists of 4 parts MSPO 1: General Principles for Malaysian Sustainable Palm Oil MSPO 2: General Principles for Independent Smallholders MSPO 3: General Principles for Oil Palm Plantations and Organized Smallholders MSPO 4: General Principles for Palm Oil Mills

53 MPOB s Codes of Practice

54 Conclusion Challenges - the industry needs to overcome issues related to changing regulations, new trade obligations Competitiveness Mistaken notion on nutritional aspects Development on peatlands (GHG emission) Sustainability - environment, economy, social aspects Invisible trade barriers

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