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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
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
Presentation outline
• Palm oil quality and characteristics
• Palm oil trade
– Specifications
– Standards
• Ethical trading
• Conclusion
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
Oil Palm/Palm oil supply chain
Consumers
Contract Buyers
Refineries
Mills
Plantations
Dealers
Smallholders
Export
Chemical & physical characteristics
To assess:
Purity or authenticity of the product;
Quality and stability, and
Foreign substances and impurities
Palm Oil Characteristics
Identity Characteristics Quality
CharacteristicsChemical 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
Triacylglycerols
Monoacylglycerols
Diacylglycerols
Free fatty acids
Phospholipids
Sterols
Pigments
Tocols
Minerals
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
TAGs – 3 fatty acids
DAGs – 2 fatty acids
MAGs – 1 fatty acid
Glycerol
Fatt
y a
cid
1
Fa
tty a
cid
2
Fa
tty a
cid
3
Saturated
fatty acids
stable fatty acids with single bonds
Unsaturated
fatty acids
Fatty acids with one or more double bonds
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
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%
Refined palm oil contains less than 0.1%
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
a - and b - 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
bleachability
Tocopherols & Tocotrienols
These are natural antioxidants known as
Vitamin E
The 3 important forms are a-, b- and g-
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
Trace nickel in hydrogenated fats
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
Quality specifications
• Guarantee of parameters such as
– FFA
– Moisture & Impurities
– IV
– Colour
– SFC
• Others aspects of quality
Quality monitoring of palm oil
traded using:
• Standards
• Specifications
• Regulations/Legislation
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
product
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
• Sample preparation and testing,
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
Handling
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
• Methods of analysis
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
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
Analyses for quality control
MPOB Test Methods
MS Methods
ISO Methods
BSI Methods
AOCS Recommended Methods
IUPAC 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)
3 Red 3 Red
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)
– 3 Red
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
Commercial settlements
Reasons for arbitration
• Failure to deliver cargo
• Dispute over price
• Payment
• Quality
• Letter of credit
• Cargo readiness
• Dispute over contract
Additional analysis for quality
• Contaminants and environmental
pollutants (3-MCPD, afflatoxin,
benzopyrene, hydrocarbons, dioxin)
• Additives (Antioxidants, anti-foaming
agents)
• Pesticide residues
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
• As a tool to brand Malaysian palm oil
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
Invisible trade barriers
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