MPOC

Attended MPOC forum (update 1a)

It was very useful to attend the MPOC forum yesterday. Thank you MPOC.
 
Useful highlights include:
 
- Biodiesel call for B20 and view on this implementation by both Malaysia and Indonesia could rebase palm oil price to over RM3,000 per tonne. Assertions on financial viability of biodiesel on its own under Euro 5 standard without subsidy. But on the no subsidy viability point we have heard other views from analysts and others.   
          *Post conference info: Ambank in its 16 February note says "Reuters reported that Malaysian biodiesel producers are seeking new incentives after their Indonesian peers were given subsidies. A source said that Malaysian biodiesel producers are looking for tax incentives. The source added that it is unlikely that Malaysian producers would be receiving the type of subsidies given in Indonesia as Malaysia is moving away from that. Presently, the pricing formula of biodiesel in Malaysia is linked to CPO price." Thus, analysts note the CPO+ price basis has been advantageous to Malaysia biodiesel and added support is sought (which is a contrast to the statements in the paragraph above?)
 
- Labour permits for G2G Bangladesh worker recruitment proceeding (and to look into improvements in the process) but the Ministry observes some slowness in companies finding and bringing in workers once given the permit.
 
- Update on 3 new refinery licenses granted for 1.6 million tonnes of capacity.
 
- Info cited of a real quote on smallholder RSPO certification costing from a service provider. About RM400,000 per site per year; for a site comprising 50 smallholders of 50 hectares each. We did ask, but the name of service provider is not disclosed at this point. We know a handful are active in this sector. The conclusion is that the current premia indicate break-even for such a smallholder (assumes 100 percent of certificates sold under mass balance); which means no incentive to certify unless with the financial support of a large company. Bottom line: companies with processing assets can garner more from RSPO certification; the premia gains are out of reach of smallholders.
 

Conference season (update 6): downstream merchandising for sustainable palm oil

6 December 2014: downstream merchandising issues for sustainable palm oil

On Wednesday morning I had a long 1 hour session to present on "Downstream merchandising of palm oil - adjusting for sustainability" with a Q&A after. Thanks to Trueventus for inviting LMC International. 

I presented on various key statistics for downstream example the oddity of number of trademarks on sustainable palm oil versus number of products being launched with the troubling "palm oil free" label. 

One palm oil merchandiser (some months ago) pointed out to me that certification to use a trademark to highlight the presence of palm oil is not what many manufacturers want to do. They would rather remain silent on the issue. This may explain the above factoid. Because of this apparent shyness, the logic is that a (presumably cheaper) traceability program that is more inclusive of the supply chain is a good alternative as it may be that the need is for a sort of insurance on the supply chain and not marketing publicity. Let's see how the marketing on sustainability / traceability evolves on this.

Downstream players also need to pay attention to their upstream sourcing strategies as traceability both within and outside certification points to a palm oil mill risk rating system.

29 November 2014: checking out Indonesia snack foods and sauces (post GAPKI)

Post conference, I hit the super market next to the conference venue and stocked up on Indonesia snack foods (instant noodles with a wonderful range of local regional tastes; flavoured chips / crisps from tapioca - spicy ones with lime / lime leaves especially caught the eye e.g. keripik singkong balado dengan daun jeruk) and ready mix sauces for Indonesia favourites like soto ayam, sop buntut, opor ayam and more. Indonesia domestic consumption of palm oil is very big, given the country's large population. However, I agree with a friend that the supermarket aisles in Thailand may have an even larger range of domestic processed and ready foods.

Shopping basket of Indonesia processed snacks and sauces
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29 November 2014: Day 2 at GAPKI conference, Bandung

Day 2, I was the first presentation of the day at the morning session in the technology grouping. However, while sustainability may be a technical and/or CSR issue, I focused on the commercial and strategic business issues relating to it.

At technology session

Price outlook speech

This website was pointed out to be for Indonesia palm oil information: http://www.sawit-center.com


28 November 2014: At GAPKI conference, Bandung

Day 1 was busy with meetings. President Jokowi unable to attend after all. It's a huge crowd here. Good to see industry friends and meet more.
 
I was here two years ago (venue was Bali), speaking on sustainability and I'm speaking on the same topic early this morning, with some nice data courtesy of work at LMC International. It's a big crowd here and its one of the must-go events of the palm oil calendar (with the highest production values and effort).

At GAPKI's Bandung conference this afternoon, Dr James Fry of LMC International (yes, where I work) will be talking about the energy sector prices in relation to palm oil prices. Energy sector cost of production indicators will also be referred to. That will be worth checking out.
Oil price news (update 5): OPEC keeps production up and oil prices drop, /khorreports-palmoil/2014/10/oil-price-news-its-fallen-from-105-110.html


at the GAPKI gala dinner


at the GAPKI opening on Day 1

View of Bandung
 
  
26 November 2014: Post RSPO RT 12 and ICIS Asian Surfactants

These were two useful events. Papers not freely downloadable though.

Our summary of RSPO RT12 here:
/khorreports-palmoil/2014/11/rspo-roundtable-rt12-2014-is-around.html and also search "RT12" in this site.


12 November 2014: MPOC POTS KL 2014 download link

Palm Oil Trade Fair and Seminar (POTS) Kuala Lumpur 2014 - Download Presentation
http://mpoc.org.my/Palm_Oil_Trade_Fair_and_Seminar_(POTS)_Kuala_Lumpur_2014_-_Download_Presentation.aspx


5 November 2014: At OFIC KL 2014 conference.

MOSTA is the key organiser.  OFI Congress Programme - organised by MOSTA; http://www.ofievents.com/asia/ofic. Awaiting downloadable presentation.
 
This is AOCS speaker on consumer attitudes and a nice infographic on GMO.
 

US transfats demise

Palm oil sits about mid-point in fatty acid composition; it is semi-solid or half solid and half liquid. 1 in 6 food products it but Dr Kalyana Sundram of the Malaysia Palm Oil Council (PIPOC presentation, 22 Nov 2013) notes a surfeit of emotion in calling palm oil bad for health. Food labelling requirements are on the rise while campaigners “re-invent” the association of palm oil with health issues (several large medical studies find no / no significant association; other studies find palm olein reduces cholesterol as effectively as olive and canola / rapeseed oils). This is sometimes done in combination with sustainability issues; to significant effect in the Francophone world.

Hydrogenation takes a liquid oil, including soybean, to make it solid, creating transfats in the process. Post-World War Two, Unilever incorporated it into margarine. In the 1980s, food industries reformulated to avoid palm oil and the USA and Europe were awash with transfats. Mensink & Katan (New England Journal of Medicine, 1990) showed that margarines were not healthy as transfats increase the risk of heart disease. Harvard Medical School work also challenged hydrogenated oils in the 1990s and the US Food and Drug Administration (FDA) concurred. Manufacturers reformulated to reduce transfats. The FDA sought evidence for the promotion of palm oil on no-transfats grounds. Sundram’s 2001 study showed that it is safer to eat saturated fats than transfats. US palm oil use boomed, exceeding 1.2 million tonnes. The only reliable commodity substitute was (still is) palm oil.

In November 2013, challenged by a legal suit the US FDA removed its “generally regarded as safe” / GRAS status for transfats. In a single serving food manufacturers were allowed 0.49 grams of transfats (serving sizes were cut to comply). Transfats is now regarded as an additive and not a food ingredient. This is expected to boost palm oil demand in the US market by another 150,000 tonnes in 2014. When will others move on transfats?
Look out for Khor Reports' Palm Oil Newsletter #6, Jan/Feb 2014! This article is a sneak preview article from this issue.