Palm Oil Production Chain

The Palm Oil (Elaeis guineensis) produces 2 types of oils: Palm oil from the fibrous mesocarp (flesh) Lauric oil from the palm kernel

After harvesting the fresh fruit bunch FFB must be processed as soon as possible to prevent a rapid built up of a fatty acids that could adversely affect the quality of the oil. In the conventional milling process, the bunches are sterilized and stripped of the fruitlets, which then are digested and pressed to extract the crude palm oil (CPO). The oil palm nuts are separated from the fibres in the press cake and cracked to obtain palm kernels. These are then crushed in another plant to obtain crude palm kernel oil (CPKO) and a by-product, palm kernel cake (PKC), which is used as animal feed. Physical splitting or fractionation of CPO and CPKO in the refinery produces the liquid olein fraction and solid stearin component. Palm oil and palm kernel oil have a wide range of applications. About 80 percent is used for food applications while the rest is feedstock for a number of non-food applications. Among the food uses, refi ned, bleached and deodorized (RBD) olein is used mainly for cooking and frying oils, shortening and margarine while RBD stearin is used for the production of shortening and margarine. RBD palm oil (i.e. unfractionated palm oil) is used for producing margarine, shortening, vegetable ghee, frying fats and ice cream. Several blends have been developed to produce solid fats with a zero content of trans-fatty acids. In the production of ice cream, milk fats are replaced by a combination of palm oil and palm kernel oil. A blend of palm oil, palm kernel oil and other fats replaces milk fat for the production of non-dairy creamers or whiteners. Palm oil and palm kernel oil are also ingredients for the production of specialty fats, which include cocoa butter equivalents (CBE) and cocoa butter substitutes (CBS) and general purpose coating fats. CBE and CBS have physical properties that are similar to cocoa butter and are widely used for production of chocolate confectionery. Non-food uses of palm oil and palm kernel oil are produced either directly or through the oleochemical route, which produces various types of chemical ingredients for the soap, detergent and cosmetic industries. Some of these chemicals are also used in the chemical industry for plasticizers, coatings, etc. A recent trend is the usage of by-products of the oleochemical industry as well as crude palm oil as energy sources for electricity plants and increasingly as biofuel and biodiesel. Bioenergy companies are playing an increasingly significant role in the palm oil sector.

Sustainability in the palm oil sector

For more information on sustainability in the palm oil sector, see panda.org/palmoilfi nancing Global production of palm oil has doubled over the last decade to a current level of over 36 million metric tonnes per year with Malaysia and Indonesia accounting for about 87 %. Worldwide demand for palm oil is expected to double by 2020 and new plantations are being developed or existing ones expanded in Indonesia, Malaysia and other Asian countries, as well as in Africa and Latin America. Palm oil production is a major source of income for producer countries, and serves as an important source of nutrition for people in many developed and developing countries. Numerous oil palm plantations have shown that sustainable production methods are feasible, available and compatible with a profi table bottom line. However, bad practices in parts of the industry have caused serious impacts. The major impacts are listed below. Social. Where the rights and interests of local communities are ignored, new plantations can create social confl icts. In some cases, failure to follow the proper land acquisition procedures, or the clearing of community land without having properly informed and consulted with local communities, has not only caused negative external impacts but has also rebounded to impact the companies involved. Such poor practices have generated disputes and land rights conflicts that have hampered the ability of the companies to expand as planned. Ecological. In many locations, plantation developers have cleared large areas of natural forests and other ecosystems with high conservation values, to create space for plantations. Such practices result in the destruction of habitats containing rare and endangered species and an increase in human wildlife confl ict as populations of large animals such as tigers, elephants and orangutans, are squeezed into increasingly isolated fragments of natural habitat. Princeton University and the Swiss Federal Institute of Technology estimate that between 1990 and 2005, 55-60% of oil palm expansion in Malaysia and Indonesia occurred at the expense of forests. Climate. Forest conversion by plantation companies contributes to climate change, with deforestation causing around 20 per cent of all human induced greenhouse gas (GHG) emissions. The practice of draining and converting tropical peatland forests is especially damaging to climate mitigation efforts, as these "carbon sinks" store more carbon per unit area than any other ecosystem in the world. In addition, the burning of forests to clear land for plantations has been a major source of haze in Southeast Asia, posing serious health problems. In Indonesia, government authorities have commenced legal proceedings against several palm oil companies for illegal use of fire to clear land for plantation development. Burning can also have negative consequences for palm oil production, as the haze produced by the burning can reduce the productivity of oil palm trees by hindering photosynthesis, reducing the activity of pollinating weevils, and affecting the health and vision of the plantation workers, thereby restricting their ability to harvest the fruit. Freshwater. Indiscriminate use of fertilizers and insecticides by some producers is polluting surface and groundwater sources. The primary processing of palm oil in CPO mills presents a separate set of issues, the principal one being the potential for water pollution from the direct release of mill effluent, and the effects of this pollution on downstream biodiversity and people.

Table 1 summarizes some of the sustainability issues associated with the production of palm oil.

Table 1: Key sustainability impacts of palm oil production

Impact Forest conversion Clearance techniques Bad Practice Uncotrolled causing Lowland tropical deforestation Use of fire causing smoke haze and CO2 emissions Planting on marginal and fragile soils causing erosion and hydrology problems Heavy harvest offtake reduces fertility Overuse Causing water pollution No consideration of biodiversity impacts in plantation planning and management Drainage of deep peat soils and unsustainable use of irrigation Disputes with previous land-owners/users Violence, inappropriate use of police/military Best Practice Commitment to protect forest with High Conservation Values Use of zero-burning techniques Site selection based on assessments of soils and topography Recycling of organic materials and considered use of fertilizers Integrated Pest Management to reduce pesticide use and cultural techniques to reduce herbicide use Plantation planning and management seeks to maintain wildlife habitats and protect endangered species No conversion of peat lands and sustainable water use and recycling of waste water Focus on negotiation and confl ict resolution Recognition of local peoples use rights and the need to secure their free, prior and informed consent to developments that affect those rights; fair and transparent grievance procedures Compliance with or beyond legal requirements

Environmental Social

Choice of Site

Soil fertility Use of pesticides and herbicides Biodiversity

Water management Competing land claims Social justice

Workers rights

Lack of regard for legal rights re. collective bargaining, health and safety etc

In contrast with the bad practices described above, palm oil produced by responsible growers needs fewer inputs and results in less pollution and soil degradation. If best practices are applied in selecting and acquiring land for new plantations, palm oil can be produced without further destruction of natural forests and associated GHG emissions or disregard for the rights and livelihoods of forest dependent peoples. Sustainable palm oil production can help to meet the worlds growing demand for edible oils and generate income and employment for local rural economies in tropical regions.

For the energy and biofuel sector, there are a limited number of fuel and energy companies operating in the UK. Global trading houses such as ADM, Bunge, Cargill, Dreyfus and Wilmar control much of the worlds commodity flows.

Type of palm Applications

Palm Kernel Expeller (PKE) Crude Palm Oil (CPO) Palm stearin Palm fatty acid distillate (PFAD) Palm shells Palm fibers Empty Fruit Bunches (EFB) Used for energy generation and co-firing with coal. Crude Palm Oil is being used for energy generation. Palm Stearin can be used for energy generation (high melting point). PFAD is the cheapest vegetable oil per GJ. High acidity causing corrosion. Potential for co-firing. Normally used for local energy generation at the mill. In some cases shells are being traded. Used for local energy generation (at the mill) Normally not used. Potential for local energy generation (subject to connection to the grid)

Trade aspects
Imported mainly for animal feed. Traded in commodity markets. Less expensive than CPO. CIF and FOB markets. Import Duties Less expensive than CPO. Available in the commodity market. By-product. Available in the commodity market. By-product. Not available in the commodity market. Waste product available at the mills.

Transport of FFB trucks or trailers -> first weighed over a weighbridge-> FFB loading ramp, where emptied : most trucks have tipping containers and the trucks can be unloaded fast, but in many remote areas the trucks are manually unloaded, and this takes time ->arrived FFB must be checked for quality: ripe FFB yields more than under ripe FFB. Major factors that will determine the quantity of oil (Oil Extraction Ration - OER) is the ripeness of FFB FFB Grading The purpose of FFB grading is to determine the quality of FFB received. This helps to determine the purchase price. If the FFB is from company plantation the grading provides feed back to the plantation on the FFB quality. A ripe fruit bunch is a bunch that has fruit that are reddish orange in colour and has some fruit that have been detached. When the fruits are ripe they fall off the bunch. Ripe fruit contain the maximum amount of oil. Definition of Bunches 1. Ripe Bunch 10 loose fruits 2. Over ripe bunch A bunch with more than 10 loose fruits 3. Very over ripe A bunch with more than between 10 to 50 fruits detached. 4. Empty bunch- A bunch more than 90 % fruits detached 5. Spoilt bunch- A bunch 30% fruits damaged by rats. 6. Un-fresh bunch- A bunch that was harvested more than 48 hours, can be determined by stalk condition 7. Under ripe bunch A bunch with less than 10 loose fruit 8. Hard bunch A bunch with no loose fruit 9. Diseased bunch a deformed bunch 10. Dirty bunch a bunch that has earth and other dirt A rating system determines the penalty for each factor Pricing of FFB The pricing of FFB depends on the given oil extraction ratio (OER), current price of crude palm oil (CPO), price of palm kernels(PK), the processing cost(PC), the transport cost of CPO(TCPO), the transport cost of kernels(TPK) and any other cost Other (i.e incentives, discounts etc) All the above factors can be incorporated into a formula that can be solved with a computer or manually. Price of FFB per Tonne = OER x Pcpo+KER x Ppk - Pcost- OER x (Tcpo) KER x (Tpk) Other cost. For example the price of FFB for the following CPO price is $ 2000 per Ton CPO------------------------Pcpo Palm Kernel Price is $ 1000 per Ton palm kernels-----Ppk Processing Cost = $ 35 per ton FFB---------------------- Pcost CPO transport cost = $ 50 per ton CPO------------------Tcpo Kernel transport cost $ 50 per ton Palm Kernels--------Tpk Other costs = $ 50 per ton FFB--------------------------- Other Cost Assume OER = 20 % Assume KER = 5 % Then the price of FFB per tonne will be = 0.2 x 2000 + 0.05 x 1000 35 0.2 x 50 0.05x 50 50= $ 352.5

The profitably of processing FFB will depend on the Actual oil and kernel extraction ratios obtained in the mill and the ratios used to calculate the price of FFB purchased. If the FFB is bought at 20.00 % extraction ratio and if the mill obtains 21.8 % extraction ratio then the difference of 1.8% oil will be profit. If the extraction ratio obtained by the mill is lower than that paid for the purchase, then the mill may loose money. The profit margin will be very low if a mill that buys FFB and solely depends on processing cost margin to make a profit. Operating Procedure loading Ramp. For the operation of the loading ramp the operators must follow the policy of First in First out. This way the retention time of FFB in the loading ramp will be minimised. The Free Fatty Acid (FFA) increases with time, even one day will cause the FFA to rise significantly. If the FFA in the crude palm oil is more than 5% then generally a lower price is obtained when the oil is sold. Management of Palm Oil Mill Introduction This is what to and a how to article for palm oil mill existing and aspiring palm oil mill management staff. This is a brief article and in future there will be other articles on specific topics for mill management. This article is written because many managing staff have not been taught management and have been promoted to management positions due to experience. This article is also for Palm oil mill owners and company senior management staff so that they understand what can be expected of a palm oil mill. For detail explanation of the technical aspects the readers should refer to other sources of information or other articles. A major characteristic of a palm oil mill is the very high rate of wear and tear of mill machinery. This is due to the nature of the fruits processed. The fruit fibres contain silicone and these causes wear. The fruits that arrive in the mill for processing also contain sand and dirt and these also contribute to the high wear rate. What is a well operated mill? A mill that can process fresh fruit bunches at the rated capacity and achieves a high extraction efficiency, with a below average industry production cost. To achieve this following are required A trained and experienced mill manager Trained workers, workers who can take immediate actions if some machine is not performing as designed and adjust machines if the product loss is high. A well designed mill A system to monitor product loss and product quality A system to communicate information to all in the mill, with regards to quality and efficiency A system to maintenance the mill machinery

Production procedures. Production records The manager responsible for the operations of the palm oil mill must first understand his major objectives. This will enable him to make his decisions and manage his time for the maximum profitability of the mill. Suggested Objectives are To process the crop at the rated capacity of the mill. To achieve a high processing effiency ( More than 90%) This is not always easy. Most of the mills are unable to process at the design capacity because of design defects. For example 60 tons per hour mill cannot process at 60 tons per hours for 20 hours per day if the maximun capacity of the mill is 60 tons/hr. The equipment wears out and the efficiency is not at its peak for all its operation life. Every day when the mill starts in the morning it cannot immediately operate at its rated capacity. It normally takes about 30 minutes to 60 minutes for the mill to achieve its rated capacity. When the mill is shut down this process is reversed and all the conveyors, elevators and other equipment have to be emptied before all equipment is stopped. The average throughput for the day will be less than 60 tons per hour and normally is about 90 % of the rated capacity i.e. 54 tons per hour. Therefore 60 tons per hour mill should be able to process 54x 20 = 1080 tons per day or 27,000 tons per month, assume 25 operation days per month. A well organised and maintained 60 ton/hr mill should be able to process 300,000 tons of FFB per year. Many owners demand more that this from a mill. This will result in a mill to be run for longer hours and also on Sundays. This normally results in the mill breaking down more often and the end result is a less efficient mill. The above capacities are based on the mill stopping for a period of two weeks every year for major maintenance work, like the internal cleaning and inspection of the boilers and inspection of the steam turbines. In normal off peak month operations the mill also stops one day a week for maintenance and cleaning. The palm oil mill process consists of a series of machines processing the palm fruit components. There are more than 25 machines in series. If each machine is 99 % efficient the total process efficiency will be 99 To Power of 25. The total line efficiency will be 77 percent. Example: 0.99 x 0.99 x0.99 x 0.99 = 0.0.77. To achieve the design throughput the individual machines in the mill should be designed to have a throughput of 120 % of the desired throughput. Many mills are not designed to do achieve this capacity. As an example the steriliser station must have a capacity of 120%, so that the last machine can achieve a capacity of 100 %. How to achieve throughput? To achieve throughput if the mill is design correctly, the mill management can take a few actions. These include the following Maintenance. The mill equipment has to be looked after well so that it does not break down. The machines must be cleaned on a regular basis and any parts that have worn to limits of their use must be

replaced. It is advised to have a planned schedule to carry out work. Most mills stop one day a week to carry out maintenance. Failure to do this will result in an unreliable mill. Processing Procedures. Procedures to start up and shut down the mill need to be documented and workers trained to carry these out. The best way to operate the mill correctly is to employ experienced mill management staff who can guide the workers to take the correct actions when a problem arises. Train staff in their jobs. The mill supervisors cannot be everywhere in the mill at all times. To achieve the best through it is advisable to train the workers to work efficiently. This should be a continuous process and carried out by the mill manager or outside staff if required. To Achieve High efficiency By this we mean to extract the maximum amount of oil and kernel from the fruits delivered to the mill. The mill cannot increase the quantity of oil and kernel that is in the fruits, this is the job of the plantation. Oil Extraction The mill can reduce the oil loss in the process. The major oil loss in the palm oil process occurs in the Fibre, Sludge and Steriliser condensate. ((90 % of all oil losses) Oil Loss in press fibre. This is minimised by operating the screw press at the correct pressure with the screws in good condition. The fruits must also be pre-treated well in the digesters. The pre-treating or mashing of fruits in the digester depends on how well the fruits are sterilised. Therefore oil loss in the press fibre depends on, correct sterilisation, correct digestion and correct pressing. All these processes must be monitored to achieve a low oil loss in the press fibre. Oil Loss in Sludge. Oil loss is the result of poor separation process in the clarification station. To achieve a good separation the clarification tank must be operated correctly. This is achieved by setting the skimmer in the clarification at the correct height (100mm to 150 mm) and by maintaining an oil water ratio of 30 % to 38 %. The dilution should be monitored at the crude oil tank by the use of a hand centrifuge on an hourly basis by the operators themselves. Experienced workers can adjust the water by monitoring the number of turns of the water valve to achieve correct dilution, depending on the number of presses in operation. The correct number of sludge centrifuges must be in operation. The nozzles must not be worn above the allowed limits. To achieve a good efficiency the sludge centrifuges must be maintained well. The most common way to loose oil in sludge is to discharge un treated sludge into the drain. This normally happens when there is insufficient sludge centrifuge capacity. The oil loss occurs due to a longer than necessary steriliser cycle or due to over ripe fruit. When the fruit is over ripe, the mill should shorten the steriliser cycle. Kernel Loss occurs in the pneumatic kernel separators and the hydro cyclone. And press fibre. For a mill to have low kernel loss the following must be attended to Low nut breakage in the press; - Do not press at a very high pressure

Kernel loss in press fibre- Due kernel breakage in the screw press because of too high a press pressure. A high cracking efficiency ensures lower kernel loss as there are less un-cracked nuts. Monitoring of mill efficiency. The function of process control is to help management to achieve a high efficiency. This is achieved by taking the required samples and analysing them and reporting the results to management for action. The following samples should be taken and analysed: FFB Ripeness Un-stripped bunches Oil loss in condensate Oil loss in press-cake Oil loss in sludge Oil loss in final effluent Oil Loss in steriliser condensate. Percentage cracked nuts in press-cake fibre Cracking efficiency Kernel loss in press fibre Kernel loss in pneumatic separators Kernel Loss in Hydro cyclone Proper separation of oil in sludge the sludge centrifuges. To monitor oil quality, the following samples are required. Free Fatty acid content of production oil Dirt content in production oil Moisture content in production oil To monitor kernel quality, the following samples are required. Moisture content of production kernel Dirt content of production kernel. Staff Requirements for a palm oil mill - Mill Manager - Asst Manger - Process Assistant - Maintenance assistant - Mechanical Foreman - Electrical Charge man - Accountant - Administration staff - Laboratory Assistant - Store Keeper - Chief Security - Mechanical Fitters - Electricians - Process workers The total number of workers in a modern 60 tons per hour palm oil mill should be about 130 workers for three shift operations. The end of this brief article By the POMILL team

Glossary
Oleochemicals Chemicals derived from oils are called oleochemicals. There are five basic oleochemicals: fatty acids, fatty alcohols, fatty methyl ester, fatty nitrogen compounds and glycerine. These palm-based oleochemicals appear in products such as candles, cleaning products, rubber, and in skin care products including lotions, shampoos and body oils.

Palm Mid Fractions Another product of the double-fractionating process, palm mid fraction commonly appears in the manufacture of margarine and snack foods. Palm Olein At the first stage of fractionating, palm oil is split into two products: liquid palm olein and solid palm stearin. The fluid part of pure palm oil, liquid palm olein is naturally liquid at room temperature in warm climates. Widely used for frying foods, it blends well with other vegetable oils and is valued for its resistance to oxidation and the long shelf life it lends to foods fried in it. Solid palm stearin is the solid part left after liquid palm olein is removed during the splitting process. As its name implies, the solid consistency of palm stearin makes it useful in the production of margarine and shortening,and in baked goods requiring the use of hard fats. Palm o il derivatives can be further split a second time to produce doublefractionated palm olein. Also called superolein, this derivative cooking oil provides clarity and pourability in temperate climates and blends well with various seed oils. Fresh Fruit Bunches Palm Kernel Meal (also called Palm Kernel Expeller, or PKE) Palm Kernel Oil Crude Palm Oil Refined, Bleached, Deoderised Roundtable on Sustainable Palm Oil

Palm Stearin

Superolein

FFB PKM PKO CPO RBD RSPO