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Palm Oil Quality Standardsfor Trading

Tan Yew Ai

MPOB

PORAM Course on

Operational and Commercial Aspects of Palm Oil Trade

27 & 28 May 2013

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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 containspalm oil

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Presentation outline

Palm oil quality and characteristics

Palm oil trade

Specifications Standards

Ethical trading

Conclusion

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PALM OIL: QUALITY AND

IDENTITY CHARACTERISTICS

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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

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Oil Palm/Palm oil supply chain

Consumers

Contract Buyers

Refineries

Mills

Plantations

Dealers

Smallholders

Export

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Chemical & physicalcharacteristics

To assess:

Purity or authenticity of the product; Quality and stability, and

Foreign substances and impurities

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Palm Oil Characteristics

Identity Characteristics QualityCharacteristics

Chemical PhysicalFAC

TAG

IV

Carotene

Chlorophyll

Tocols

Sap. ValueUnsap. Matter

SMP

SFC

Apparent Density

Viscosity

Refractive Index

PV

E233 & E269

AnV

DOBI

Fe, Cu, P

FFA

OSIM & I

Contaminants

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Components in Palm Oil

Triacylglycerols

Monoacylglycerols

Diacylglycerols

Free fatty acids

Phospholipids

Sterols

Pigments

Tocols Minerals

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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)

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Fatty Acids

TAGs 3 fatty acids

DAGs 2 fatty acids

MAGs 1 fatty acid

Glycerol

Fatty

acid

1

Fatty

acid

2

Fatty

acid

3

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Saturatedfatty acids

stable fattyacids withsingle bonds

Unsaturatedfatty acids

atty acids withone or moredouble bonds

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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

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Cis & Trans Fatty AcidIsomers

C C C C C C C C

HH H

H

H

H H

HH

H H

Cis Trans

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Free Fatty Acids (FFAs)

Fatty acids which are not attached to aglycerol molecule

FFAs are obtained when glycerol is split

from the TAG in a reaction termed ashydrolysis

True metabolites of TAGs and thus canoccur naturally in trace amounts

Also result from the breakage of the boundfatty acids from MAGs, DAGs or TAGs

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FFA Content

Presence of large quantities indicative of

lipolytic activity in damaged fruits

Average quality crude palm contains lessthan 5%

Refined palm oil contains less than 0.1%

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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 forcalculation 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

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Non-glyceride Components

Make up less than 5% of crude

vegetable oils

Most are largely removed or brokendown during refining of vegetable oils

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Pigments - Carotenoids

Orange-red colour of CPO due to 500-700mg/kg carotenoids

- and - carotene are important pro-vitamin A compounds

Partially removed from CPO by earthbleaching, while deodorization breaksthem down into colourless or light colouredcomponents

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Pigments - Chlorophylls

Impart greenish colour to crude rapeseed

and olive oil

They are photosensitizers which activatephotooxidation in oils

Their presence adversely affects oxidative

deterioration, hydrogenation andbleachability

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Tocopherols & Tocotrienols

These are natural antioxidants known as

Vitamin E

The 3 important forms are -,

- and g-tocopherols and tocotrienols

600-1000 mg/kg in CPO

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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

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PALM OIL TRADE

-STANDARDS-SPECIFICATIONS

CPO before mid 1970s Refined palm oil after 1980s

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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) theaverage quality of agricultural produce

based on samples taken from bulk

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Quality specifications

Guarantee of parameters such as

FFA

Moisture & Impurities

IV

Colour

SFC

Others aspects of quality

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Quality monitoring of palm oil

traded using:

Standards

Specifications

Regulations/Legislation

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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 onceidentifiable as a quality product

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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 theproduct

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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

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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

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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,

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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 palmkernel oil, crude and refined palm olein and palmstearin

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Trade association contracts

Aim to protect quality by stipulating

Quality on shipment

Standards of transportation

Storage

Handling

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Contracts, standards andquality

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 ofpractice, guidelines, recommended

measures

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Codex Standard for namedvegetable 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

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Contract specifications CPO

futures

Moisture & impurities

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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

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Analyses for quality control

MPOB Test Methods

MS Methods

ISO Methods

BSI Methods

AOCS Recommended Methods

IUPAC Methods

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Ideal Quality Targets

Parameter CPO, max RPO, maxFFA, % 3.5 0.05

M & I, % 0.25 0.02

Colour, 5 inchLovibond

- 2.5 R

PV, meq/kg 1.0 0

Carotene, mg/kg 500 -800 -DOBI 2.5* -

Anisidine value 5 2

* Minimum

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MS CHARACTERISTICS

Identity Quality

Apparent density (50C) FFA

Refractive index (50C) Moisture & Impurities

Saponification value Peroxide valueUnsaponifiable matter Anisidine value

Fatty acid composition Colour

Iodine value DOBI

Slip melting point

Total carotenoids

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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 inch

Lovibond, max)

3 Red 3 Red

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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 inch

Lovibond, max)

3 Red

CHINA AQSIQ CIRCULARS ON EDIBLE

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CHINA AQSIQ CIRCULARS ON EDIBLEIMPORT

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

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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 inch Lovibond) 3 R 30Y

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Settling commercial disputes

Litigation before courts

Arbitration

Conciliation

Mediations

Commercial settlements

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Reasons for arbitration

Failure to deliver cargo

Dispute over price

Payment Quality

Letter of credit

Cargo readiness Dispute over contract

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Additional analysis for quality

Contaminants and environmental

pollutants (3-MCPD, afflatoxin,

benzopyrene, hydrocarbons, dioxin)

Additives (Antioxidants, anti-foaming

agents)

Pesticide residues

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ETHICAL TRADING

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Ethical Trading

Ethical sourcing

Workplace conditions

Workers welfare

Sustainable agriculture

More than 50 regulations/legislation in

place to ensure sustainable practices inthe oil palm sector

R dt bl S t i bl

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Roundtable on SustainablePalm 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

M l i S t i bl P l Oil

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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

Th MSPO d ft i t f 4 t

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The MSPO draft consists of 4 parts

MSPO 1: General Principles for

Malaysian Sustainable Palm Oil

MSPO 2: General Principles forIndependent Smallholders

MSPO 3: General Principles for Oil Palm

Plantations and Organized Smallholders

MSPO 4: General Principles for Palm Oil

Mills

MPOBs Codes of Practice

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MPOBs Codes of Practice

Conclusion

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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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