CIMB survey, WWF soy report

CIMB recently issued a report on its survey of 3,000 or so of its staff on their cooking oil preferences. The main finding was on health nutrition perception. Do check it out: "Plantations (N) - Opting for healthier cooking oils" noting that "We were slightly surprised that only 43% of respondents in our recent survey picked palm oil as their preferred cooking oil. This could be due to the rising affluence of Malaysian consumers as well as a lack of awareness of the health benefits of palm oil as cooking oil producers may have shifted their marketing activities to other edible oils over the years given that palm-olein-based cooking oil is regulated. The survey reveals that more work may be needed to educate consumers of the health benefits of palm oil. Maintain Neutral on the sector with First Resources as our top pick."

I've downloaded and will be reading with interest WWF's "Soy Report Card - Assessing the use of responsible soy for animal feed in Europe," The broad finding on 88 European retailers, food service companies, CGMs and dairy, meat, egg and feed companies sourcing of soy for animal feed or animal products: "The picture is disappointing. Some frontrunner companies have made strong
commitments to stop sourcing irresponsible soy from recently cleared forests, savannahs and grasslands. They have also started buying “better soy” from producers who adhere to robust responsible production guidelines.... The majority, however, are lagging behind in commitments – and even more in concrete actions such as buying responsible soy. This leaves producers with little incentive to certify their soy as responsible and risks the integrity of some of the world’s most valuable ecosystems, like the Amazon, Cerrado and Chaco."

 

source: WWF Soy Report Card 2014

WWF says: "It’s not only about forests — grasslands and savannahs can also be negatively impacted by irresponsible soy production." It talks about "responsible substitution" or the substitution of imported soy to "build high quality European protein supplies customized for the requirements of the European market and, in some cases, to address the demand from some European consumers for GM-free soybeans and soy protein feed. Examples of such initiatives include Danube Soya...."

Algal vs palm oil. Coming soon?

The use of algal oil to partially replace palm oil in home and personal care (HPC) is being planned by some companies. The first major brand which stated such a plan is Unilever. Ironically, the company is a key leader in the RSPO which says it promotes the use of sustainable palm oil (but a few RSPO members have taken this to be insufficient and instead pledge no palm oil usage; and much to the consternation of other RSPO members).

Ecover recently reports plans to produce algal oil in Brazil and then in its own factory in Belgium, for a new laundry liquid for launch in Europe in a few months time. Thus, we have a company in HPC pledging "no palm oil" eventually, starting with 7% replacement [1]. Francophone Europe has faced heavy negative palm oil campaigns and various food producers feature products with "no palm oil." Algal oil technology is still evolving and costing needs to be improved [2], but things can shift with many researchers working on this. An update on costing is needed. So far, it sounds like an early higher cost partial substitute for premium HPC products. Thus, we see Unilever still planning a new production facility in Sumatra for the use of palm kernel oil for oleochemicals in its HPC products. At the same time, in a separate and yet related trend, another key HPC brand, P&G is facing pressure from Greenpeace.

[1] News item: Ecover adopting algae-based laundry liquid to cut palm oil use, The Guardian, Wednesday 2 April 2014, http://www.theguardian.com/environment/2014/apr/02/ecover-algae-laundry-liquid-palm-oil; Ecover, the green cleaning company, will launch the algae-based laundry liquid in Europe later in 2014, as part of its pledge to ultimately replace all palm oil.... “Through our research into palm oil replacements, we discovered that algae are capable of producing one of the purest and cleanest oils available,” said Dirk Develter, Ecover’s Head of Research and Development. “Algal oils have a much smaller ecological footprint than most tropical oils, such as palm oil, making them ideal for home products, where tropical oils are widely used.”... At the start, 7% of the oil ingredients in the laundry liquid will come from algae, Ecover said, with the intention of raising that proportion as more is learned about its use. The first algal oil will be produced in Brazil from sugarcane, which is an efficient feedstock with a relatively low carbon and water footprint..... Ecover said it would be producing algal oils close to its Belgian factory in three years and was examining different feedstocks, including agricultural and forest waste, to identify which was the most sustainable feedstock of those locally available.... Ecover is also researching the use of bacteria to convert organic material into useful chemicals and, in 2013, the company committed to using plastic waste retrieved from the sea to create sustainable and recyclable plastic bottles.... Algae, and seaweed, are being developed as biofuel sources by numerous companies and the US Navy has tested algal fuel in its ships.

[2] Khor Reports at 2012 conference on algal biofuels; I am in Singapore... at the "Biofuel 2012 - alternative aviation fuel in Asia conference and Asean algae biofuel initiative conference."... How does this touch on palm oil? First, a positive. There's a potential use for POME in the cultivation process. Second, a competitive concern: the likes of global giant Unilever says it hopes to replace palm oil in its Dove soap and some other skin care products with algal oils, with a target date 2017... How about the economics of production? ..... Read more here: /khorreports-palmoil/2012/02/conference-algal-biofuels.html 


Algal oil researchers:

SGI, founded by J.Craig Venter; newslink below on his R&D on algae for biofuels:
http://www.forbes.com/sites/christopherhelman/2012/06/24/milking-oil-from-algae-craig-venter-makes-progress-in-exxon-backed-venture/ (thanks to a reader for this link!)

"Ice cream" treats & Magnum

Ice cream is a big business for Unilever. “With almost USD13 billion in sales across brands such as (Magnum), Cornetto, Breyers, Klondike, and Ben & Jerry’s, ice cream is Unilever’s single biggest category, accounting for about 15% of total revenue, according to researcher Euromonitor. London and Rotterdam-based Unilever is also the world’s biggest maker of ice cream, with about 20% of the USD85 billion market, ahead of Vevey, Switzerland-based Nestle... Magnum’s sales, which have doubled since 2006, top EUR 1 billion (USD1.24 billion) worldwide this year, making ice cream a standout in Unilever’s sluggish food unit. Sold in 50 countries, Magnum is Europe’s top ice cream brand” (Bloomberg.com, 5 Aug 2012).
 
The key markets differ. Parthenon research says that “The USD12 billion US ice cream market is unique because more than half of total sales come from packaged tubs sold in supermarkets and eaten at home… In Europe, more consumption takes place outside the home in single-serve, more-profitable portions… (not surprisingly) major players.. “are increasingly shifting their focus to so-called frozen novelties -- single-serve treats on sticks or in cones… (which) command 21.2% of the US market” How is Magnum positioned in Asian emerging markets? “Magnum costs about three times as much as locally produced ice cream bars, lending it cachet among the emerging middle class, a group projected to increase from 500 million people to more than 3 billion across Asia by 2030” (Bloomberg.com, 5 Aug 2012).

 
In India, the biggest dairy producer is losing ground in the booming frozen treats market. Gujarat Co-Operative Milk Marketing Federation Ltd advertises that real ice cream contains milk, in a campaign seeking to highlight the lack of the ingredient in most of its global rival’s Indian products: cream, or any other dairy fat… “One reason producers have developed recipes without cream is that milk fat is about five times as expensive as fats derived from palm oil and coconut oil… Another advantage is that dairy-based frozen desserts tend to melt faster than those made from plant oils, according to Doug Goff, food scientist at the University of Guelph. That’s important in a country as hot as India…. (its) consumers have decided they’re happy with frozen desserts using cheaper fats such as palm oil. In the five years to 2012, Gujarat Co-operative’s share of the market for frozen treats fell to 31% from 35% while Unilever’s rose to 21% from 17%, according to researcher Euromonitor…. Indians eat an average of 200 milliliters of ice cream each year, versus 14 liters in the US and 2.2 liters in China” (bloomberg.com, 26 Sep 2013). In 2010, world consumption was 2.4 liters/head (data includes both dairy- and non-dairy-fat based products).
 
Khor Reports Blog only supplementary info: Doug Goff, reports “on the use of non-dairy fats in frozen desserts. A blend of 75% of either fractionated palm kernel oil or coconut oil and 25% of an unsaturated oil, like high oleic sunflower oil, was shown to produce optimal levels of fat destabilization, meltdown and flavour, although coconut oil may take longer to crystallize during aging. Blends of 50% milkfat, 37.5% fractionated palm kernel or coconut oil, and 12.5% high oleic sunflower oil were also shown to be very acceptable” (uoguelph.ca, accessed 1 Dec 2013)

Look out for Khor Reports' Oil Palm Newsletter #6 Jan/Feb 2014!

EU due to vote 10 July to limit food crops in biofuels

"EU continues to debate a plan cap the percentage of biofuels made from food crops, with a final vote due to occur on 10 July...Most of the environmental impacts cited in the EEA report are a result of deforestation, draining of peatlands and other land clearance for biofuels, together known as indirect land use change (ILUC)."

News articles include:
Biofuel crop mix 'not favourable for environment'.  A report by the European Environment Agency found benefits vary significantly depending on the source of crops
http://www.guardian.co.uk/environment/2013/jul/03/biofuel-crop-mix-environment

EU votes on crucial cap on biofuels made from food crops. Campaigners fear lobbying by industry and farmers' unions will weaken plans to limit role of food crops in biofuels production
http://www.guardian.co.uk/global-development/2013/jun/19/eu-votes-biofuels-food-crops

Sustainable palm oil: how successful is RSPO certification? The industry's certification body champions the multi-stakeholder approach, but it needs to move faster. Oliver Balch interviews the organisation's secretary general
http://www.guardian.co.uk/sustainable-business/sustainable-palm-oil-successful-rspo-certification

Sime explores 300,000ha landbank in Cameroon, France processing plant

Sime Darby lately announced a few proposed ventures overseas, including exploring a potential 300,000ha plantation landbank in Cameroon.

In its 18th March 2011 research note entitled "Sime Darby – Malaysia, Too early to add more overseas ventures," UOB Kay Hian research notes that, "Notwithstanding the risks associated with investments in Africa, this venture could divert the new management’s focus from re-examining and streamlining its current business divisions........ Sime is planning to build a processing plant in France which would receive palm oil feedstock from its Liberia estates. This move faces the challenges of meeting Europe’s high oil quality requirements as well as strong resistance from the environmental movement in Europe against palm oil...." (On left, UOBKH graphic with data from Sime Darby, showing the earnings by division of the Malaysian conglomerate)


Khor Reports comment:

a) Sime currently operates in Liberia with under 10,000ha, but has potential to increase this to 220,000 ha. With perhaps another 300,000 ha from Cameroon, this could ramp up Sime's already large landbank reserves substantially.

b) Old-style plantation expansion in Malaysia did not require corporate growers to set-aside land for smallholder development (Felda was the land agency that focussed on smallholder efforts). Indonesia requires corporate land concession holders to set aside some 20% for smallholder development. Sime's planned new project in Sarawak will give substantially more allocation to indigenous land owners and a state land agency under an improved 'native customary rights' program. Thus, there is an increasing trend toward higher allocations for smallholders. Oil palm growing in Africa is characterized by significant smallholder interests and it is likely that corporates will be required to give larger allocations for these.

c) The proposed processing plant in France is a move toward creating a segregated supply chain (perhaps of sustainable smallholder palm oil??) direct to the end market in Europe. Such a supply chain is the goal of global giants Cargill and Wilmar, and large Malaysian planters such as KL Kepong and IOI Corp. Mid-sized, Europe-oriented players, United Plantations (affiliated with Aarhus) and New Britain Palm Oil have also made a similar moves, with the latter even building a dedicated supply for confectionary maker, Ferrero Rocher.