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

PALM OIL: QUALITY AND

IDENTITY CHARACTERISTICS

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

Cis & Trans Fatty Acid Isomers

C C C C C C C C

H H H

H

H

H H

HH

H H

Cis Trans

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

PALM OIL TRADE -STANDARDS-SPECIFICATIONS

CPO before mid 1970s Refined palm oil after 1980s

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 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

MPOB’s Codes of Practice

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