Palm oil

Palm Oil Quality Standards

Palm Oil Quality Standards

for Trading

for Trading

PORAM Course Course onon

“Operational and Commercial Aspects of Palm

“Operational and Commercial Aspects of Palm Oil Trade”Oil Trade” 27 & 28 May 2013

Global importance of palm oil

Global importance of palm oil

•• Most heavily consumed oil in the worldMost heavily consumed oil in the world

••  Average world  Average world demand hdemand has grown as grown by 3%by 3% yearly in the past 30 years

yearly in the past 30 years

•• Used in almost half of all processed foodsUsed in almost half of all processed foods and cosmetics

and cosmetics

•• One in ten supermarket products containsOne in ten supermarket products contains palm oil

Global importance of palm oil

Global importance of palm oil

•• Most heavily consumed oil in the worldMost heavily consumed oil in the world

••  Average world  Average world demand hdemand has grown as grown by 3%by 3% yearly in the past 30 years

yearly in the past 30 years

•• Used in almost half of all processed foodsUsed in almost half of all processed foods and cosmetics

and cosmetics

•• One in ten supermarket products containsOne in ten supermarket products contains palm oil

Presentation outline

Presentation outline

•• Palm oil quality and characteristicsPalm oil quality and characteristics

•• Palm oil tradePalm oil trade

 –

 – SpecificationsSpecifications

 –

 – StandardsStandards

•• Ethical tradingEthical trading

P

PALM

ALM OIL:

OIL: QUALITY

QUALITY AND

AND

IDENTITY CHARACTERISTICS

IDENTITY CHARACTERISTICS

Definition of Quality

Definition of Quality

•• ConventionalConventional  – – ability to satisfy statedability to satisfy stated or implied needs

or implied needs

•• CurrentCurrent – – implications implications on securon securityity,, safety

safety, , human human health, health, accountabilitaccountabilityy,, environment,

environment, etc etc _..

e

Oil Palm/Palm oil supply chain

Chemical & physical

characteristics

To assess:

 Purity or authenticity of the product;

 Quality and stability, and

Palm Oil Characteristics

Identity Characteristics Quality

Characteristics Chemical Physical FAC TAG IV Carotene Chlorophyll Tocols Sap. Value Unsap. Matter  SMP SFC Apparent Density Viscosity Refractive Index PV E₂₃₃ & E₂₆₉ AnV DOBI Fe, Cu, P FFA OSI M & I Contaminants

Components in Palm Oil

 Monoacylglycerols

 Diacylglycerols

 Free fatty acids

 Phospholipids

 Sterols

 Pigments

 Tocols

Glyceride Composition

 Triacylglycerols (TAGs) make up about 90 % of the components in oils and fats

 CPO contains about 4.7%

diacylglycerols (DAGs) and 0.1 – 0.3% Monoacylglycerols (MAGs)

Fatty Acids

 DAGs – 2 fatty acids

 MAGs – 1 fatty acid

Glycerol    F  a    t    t  y   a   c    i    d    1    F  a    t    t  y   a   c    i    d    2    F  a    t    t  y   a   c    i    d    3

Saturated

 fatty acids

Unsaturated

 fatty acids

atty acids with one or more

Fatty Acid Isomers

 Isomers are defined as compounds with

the same molecular formula _but different molecular structure

 Most common isomers are the cis _and

Cis & Trans Fatty Acid

Isomers

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

FFA Content

 Presence of large quantities indicative of lipolytic activity in damaged fruits

 Average quality crude palm contains less than 5%

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

Non-glyceride Components

 Make up less than 5% of crude vegetable oils

 Most are largely removed or broken down during refining of vegetable oils

Pigments - Carotenoids

 Orange-red colour of CPO due to 500-700

mg/kg carotenoids

 - and - carotene are important pro-vitamin A compounds

 Partially removed from CPO by earth bleaching, while deodorization breaks

them down into colourless or light coloured components

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

Tocopherols & Tocotrienols

Vitamin E

 The 3 important forms are -, - and

tocopherols and tocotrienols

 600-1000 mg/kg in CPO

-Minerals

 Present only at trace levels in oils

 Phosphorus from residual phosphatides

 Sodium soaps left from alkali refining

 Iron & copper 

PALM OIL TRADE

-STANDARDS

-SPECIFICATIONS

 CPO before mid 1970s

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)

Quality specifications

• Guarantee of parameters such as

 – FFA

 – Moisture & Impurities

 – IV

 – Colour 

 – SFC

Quality monitoring of palm oil

traded using:

•

Standards

•

Specifications

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

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

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

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

Palm specifications

 –

_{MS 814}

• Scope – both crude and refined oil

• Definition – crude, neutralised, neutralised and bleached, etc _.

• Identity and quality characteristics

• Hygiene, packaging, certification

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

Trade association contracts

•  Aim to protect quality by stipulating

 – Quality on shipment

 – Standards of 

 transportation

Storage

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

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

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

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

Analyses for quality control

 MPOB Test Methods

 MS Methods

 ISO Methods

 BSI Methods

 AOCS Recommended Methods

Ideal Quality Targets

Parameter CPO, max RPO, max

FFA, % 3.5 0.05 M & I, % 0.25 0.02 Colour, 5 ¼ inch Lovibond - 2.5 R PV, meq/kg 1.0 0 Carotene, mg/kg 500 -800 -DOBI 2.5* - Anisidine value 5 2 * Minimum

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

PORAM Specifications

Parameters Refined palm oil

Refined palm olein

FFA (as % palmitic acid, max)

0.1 0.1

Moisture & Impurities (% , max)

0.1 0.1

Melting point (。C) 33 - 39 24

Iodine value (min) 50 - 55 56

Colour (5 ¼ inch Lovibond, max)

STC specifications

Grading factors CPO (Edible grade)

Refined Palm olein

FFA (as % palmitic acid, max)

5.0 0.1

Moisture & Impurities (% , max) 0.5 0.1 Melting point (。 C, max) 37 24

Iodine value (min) – 56

Colour (5 ¼ inch Lovibond, max)

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

China: GB 15680-2009

Grading factors Crude Palm Oil

Refined Palm Oil  Acid value (mg KOH/kg, max) 10 0.2

Moisture & volatile matter (% , max)

0.2 0.05

Insoluble impurities (%, max) 0.05 0.05

Melting point (。

C, max) 33 - 39 33 - 39

Fe (mg/kg, max) 5 _̶

Cu (mg/kg, max) 0.4 _̶

Peroxide value (meq/kg) _̶ 10 Colour (5 ¼ inch Lovibond) _̶ 3 R 30Y

Settling commercial disputes

Litigation before courts

• Arbitration

• Conciliation

• Mediations

Reasons for arbitration

• Failure to deliver cargo

• Dispute over price

• Payment

• Quality

• Letter of credit

• Cargo readiness

Additional analysis for quality

• Contaminants and environmental

pollutants (3-MCPD, afflatoxin,

benzopyrene, hydrocarbons, dioxin)

•  Additives (Antioxidants, anti-foaming agents)

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

Roundtable on Sustainable

Palm Oil (RSPO)

• Independent global initiative

• Promote sustainable palm through co-operation within the supply chain

• Established principles and criteria for certification of sustainable palm oil

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

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

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