COUNTRY EXTENSION MANUAL OIL INSTITUTE …• Purchasing the raw material either by buying the fresh...

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1 COUNTRY EXTENSION MANUAL HOT OIL IMMERSION DRYING (HOID)TECHNOLOGY FOR PRODUCING COCONUT OIL INSTITUTE FOR RESEARCH AND DEVELOPMENT OF AGRO-BASED INDUSTRY Agency for Industrial and Trade Research and Development Ministry of Industry and Trade Bogor – Indonesia 1997 By: Y.Y. Setiawan G.R. Breag Lukman Junaidi Dadang Supriatna A.S. Tariq

Transcript of COUNTRY EXTENSION MANUAL OIL INSTITUTE …• Purchasing the raw material either by buying the fresh...

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COUNTRY EXTENSION MANUAL HOT OIL IMMERSION DRYING

(HOID)TECHNOLOGY FOR PRODUCING COCONUT OIL

INSTITUTE FOR RESEARCH AND DEVELOPMENT OF AGRO-BASED INDUSTRY

Agency for Industrial and Trade Research and

Development Ministry of Industry and Trade

Bogor – Indonesia

1997

By:

Y.Y. Setiawan G.R. Breag

Lukman Junaidi Dadang Supriatna

A.S. Tariq

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ACKNOWLEDGMENT

This document has been prepared to help disseminate the findings of a Project part-funded by the Common Fund for Commodities of the United Nations in Amsterdam, the Institute for Research and Development of Agro-Based Industry in Bogor, and the Natural Resources Institute’s Crop Harvest Programme funded by the British Government’s Overseas Development Administration. INTRODUCTION

The Hot Oil Immersion Drying (HOID) or “fry-dry” process is a method of coconut oil extraction that involves drying the cut coconut meat by immersing it in hot coconut oil and then expelling the oil from the cooked pieces. It is indigenous to parts of Indonesia (West Sumatra, North Sumatra and North Sulawesi). It is practised all over the country, especially in medium and large scale operations. The immersion of disintegrated or cut coconut meat in hot oil dries the meat and imparts a distinctive smell and flavour to the product. This flavour is preferred by sections of the market in Indonesia.

As the market trend of consumers is shifting towards refined oil, the future of HOID oil would appears to lie in the production of oil for further refining. Refined oil can be produced from either copra or HOID technology, hence the future of this technology will depend on its competitiveness with copra production. The advantages of the technology are several and obviates the disadvantages of poor processing practices of the traditional copra method. The product therefore is of high quality. The oil so produced is low in Free Fatty Acids (FFA) and virtually free of Polycyclic Aromatic Hydrocarbons (PAH) and thus reduces the cost of refining the oil. Oil produced from copra, because of its higher PAH and FFA content is consequently more expensive to refine.

It is important to note that this document is a companion document to another manual which describes a HOID plant with a throughput of 0.5 tonne of fresh coconut meat per day. This document provides details on a HOID plant with a throughput of at least 2 tonnes of fresh meats per day (8 - 10 hours operation).

The initial capital outlay for the equipment is as follows :

Capital cost Cost (Rp)

Disintegrator, hot oil pans, expeller, filter, pumps pipes and related equipment

51,877,000

Building for plant 23,750,000 Land 7,200,000 Working Capital 17,550,000 Total capital outlay 100,377,200

All costs are based on 1996 prices when the exchange rate of one US dollar was

equivalent to Rp 2,376 . The system has been shown to be financially viable with internal rates of return

of around 33% for a throughput of 2 tonnes of fresh meat and 60% for a throughput of

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3.5 tonnes of fresh meat per day; but these will vary with each case as labour, prices of the feedstock and oil vary with the location of the operation. The factors should be considered in selecting the location for the HOID factory mainly are; availability of raw material, market for premium HOID oil, electricity, and supporting of workshop. The use of HOID factory requires a total of 55 KVA, consists of 22.5 kW for running the disintegrator, 30 kW for expeller, 1.5 kW for pump including 0.125 kW pipework and the rest for electricity. To operate the HOID factory for 250 days operation with troughput of 2 tonnes fresh meat per day requires minimally 250 Ha of coconut area. It is expected within or near the factory, small workshop is available for fixing or repairing small problems associated with mechanical or electrical failure.

This document provides information: on the HOID technology; on the operation of an HOID plant and the cost of establishing the process commercially. Details of these aspects are provided herein. Further advice on these, how to manufacture, install and operate the system may be obtained from the Institute for Research and Development of Agro-Based Industry (IRDABI), Bogor, Indonesia.

The details of the improved HOID system provided herein is based on a plant designed, installed, operated and modified at Pontianak, West Kalimantan as part of the CFC Project.

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I. OUTLINE OF OPERATION

HOID technology has been widely practised in Indonesia as a method of coconut oil extraction, either in small or large scale industries. Through this method of extraction, the coconut oil produced can be used directly as cooking oil.

The outline of operation can be described as follow : • Purchasing the raw material either by buying the fresh coconut or buying the

fresh coconut meat • Preparing the coconut meat, where fresh whole coconuts are purchased

includes dehusking the nuts, cutting them in half and manually removing the meat with a specially designed knife

• Disintegrating coconut meat. • Frying or drying the cut meats by immersing them in hot oil prior to scooping

it out from the pan using purpose-built baskets fitted at the end of long wooden handles

• Draining the fried cut coconut meat • Passing the fried meat through a screw expeller • Collecting the extracted oil, settling out solids and moisture, filtering the oil

and chemically refining the oil (if needed) • Storing the clean dry oil in drums and then packaging the oil for the market.

II THE EQUIPMENT REQUIRED

The principal items of the equipment used in small-scale HOID factories are as follow:

• Hammermill or disintegrator

This equipment is used to cut the fresh coconut meats. The size of the cut pieces varies with the type and size of screen aperture used at the exit of the cutter chamber. In some areas of Indonesia, the meat is disintegrated into very fine particles. In other areas larger pieces are preferred. The size of the coconut meat pieces will affect the frying time: the larger the particle the slower the drying rate. However the drying rate depends on a number of parameters such as, initial moisture content of the feed, hot oil temperature, rate of heat generation in the furnace and fresh cut coconut meat to oil ratio. Figure 1 gives a general view of the disintigrator and accessories.

• Frying pans

There are basically two types of hot oil immersion pans used in Indonesia: circular pans which are saucer-shaped and rectangular pans with semi-circular cross-sections. The rectangular pans are more common. These pans are equipped with wooden stirrers and wooden spoons for scooping out the dried meat manually. In Pontianak, West Kalimantan, long rectangular pans equipped with mechanical stirrers are in common use. The plants also employ pumps to fill and empty the tanks with oil. The layout, size and shape

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of the pans as part of the furnace system described below are given in Figure 2.

• Furnace

This heats the pans by burning the wood, coconut shell or husk in the combustion chamber. The design of furnace used is relatively simple. However it is fitted with a furnace door, dampers in the chimney to control the flow of exhaust gases, a grate to promote efficient combustion and control the rate of heat evolved in the interest of operation and thermal efficiency of the system. The layout, size and design of the furnace which sits below the twin oil heating pans are also given in Figure 2.

• Screw press

This is a standard design used to extract the oil from cooked brown coconut meat by passing it through a chamber in which it is subjected to a high pressure. Figure 3 presents a view of a typical screw expeller or press. The pressed cake is ejected at the far end of the expeller chamber whence it is collected, bagged and sold. The oil expelled is collected for settling, drying and clarification.

Figure 1. Disintegrator used in Pontianak factory

Ficture will be inserted here

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Figure 2. Schematic of furnace and pan

Ficture will be inserted here

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Figure 3. Expeller

• Filter press or settling tank. Some factories use filter presses to filter and clean the oil. Smaller

factories often used a gravity settler (basically a tank) to separate the solids and moisture from the product. The settling method is cheaper than use of a filter press; but it requires more time for clarification and a larger storage tank.

. • Drainage tank and associated equipment

A drainage tank can be used for collecting the oil from fried meat. Wooden handles fitted with mesh baskets at the end called “scoopers” are used to transfer the hot fried cut meat from the hot oil pans and empty them into a tray. The tray is placed above a drainage tank in which the oil is collected. Metal or rattan baskets are used for collecting and carrying the drained, disintegrated meat to the screw press(es). All these and the above items are manufactured locally.

The main equipment required for establishing HOID technology for

producing coconut oil and the ancillary equipment to support the operating of HOID factory are described in Table 1 and 2 respectively.

Ficture will be inserted here

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Table 1. The list of main equipment required for HOID factory (capacity 2 tonnes fresh meat/day) installed recommended

No Equipment Cost (Rp.) 1. Disintegrator 500 kg/h, 22.5 kW and accessories 4,539,0002. Furnace 8,258,2003. 2 Pans, r = 0.46 m, L = 2.02 m, mild steel 4 mm 1,800,0004. Expeller, 215 kg/h, 30 kW 8,125,0005. Tanks and storage drums excluding foundations for tanks 3,575,0006. Pumps 1.5 kW and 0.125 kW including pipework 1,615,0007. Electricity wiring and switch gear 300,0008. Equipment for materials handling (scoopers, drain trays, etc.) 690,000

Note : The exchange rate of one US dollar was equivalent to Rp. 2,376

Table 2. Ancillary equipment required for HOID operation

No Item Equipment required

Purpose

1 Mainsheet or Axes 2 cutting wooden fuel 2 Scooper with wooden handle 6 scooped out fried meat 3 Shovel 1 to put the disintegrated fresh meat into

the basket 4 Small shovel 2 loading the disintegrated fresh meat

gradually to the frying pan 5 Balance, capacity of 100 kg 1 to weigh raw material 6 Plastic basket 20 to carry the disintegrated fresh meat 7 Wooden basket 12 to collect and transport the fried meat 8 Boot 6 to protect the workers 9 Monkey wrech 2 to clean/repair the motor, mechinery etc.

III. RAW MATERIAL

The HOID processor can either buy fresh whole nuts, dehusked nuts or fresh meat. • Fresh meat has the advantage of being much less bulky to transport than de-husked

coconuts, so the farmer can realize the highest return from this product. Furthermore, the cost of dehusking, cutting the shell and scooping out the meat is much cheaper in the village than in the town. For the processor, though, the constant supply of feedstock is important, as the fresh meat has a shelf-life of approximately only 3 days; but preferably should be used as soon as possible subsequent to breaking open the coconut shell to reduce spoilage. The processor who purchases fresh meat cannot stock pile fresh meat when nuts are cheap, unless he uses cold storage. The effect of storage time of fresh meat on oil quality was not studied; but is worthy of attention in factory operation. The fact that quality of the oil and meat deteriorates with standing after removal from the shell is irrefutable.

• De-husked nuts are not too bulky for transport to a factory within a reasonable distance from the farm and store relatively well. They can for example be bought when the price is low and stored for approximately 4 to 6

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weeks provided they are covered or kept in the shade. On the other hand, it is difficult to determine the quality of such nuts, and the factory takes a certain , albeit small, degree of risk. The risk does not only apply to this case because even with fresh meats it is essential that quality control is maintained to ensure that old wet and mouldy meats are not purchased. Also the labour costs to cut and scoop the nuts will be higher in the town than in the villages. However, if the factory plans to use the shell for carbonization and sale, there is another technology (available through IRDABI) which employs the waste heat evolved during carbonization whilst virtually eliminating the smoke problem associated with charcoal-making; and advice on this should be sought from IRDABI.

• Whole nuts (with husks) are very bulky to transport. Unless there is a market for the husks, this is not a practicable alternative for the HOID.

The quality of raw material (coconut) is very important and will affect

the profitability of the factory. For oil extraction, only mature nuts are acceptable as they have higher oil yields than immature nuts. The age of nut should be 10 to 12 months after flowering. The young nuts contain less oil than the older nuts and therefore their use will result in lower oil yields and thus adversely affect profitability.

In addition to selecting the nuts by their physical appearances (the old nut has a brown husk), it is important to monitor the oil content of the raw material regularly. The oil content of fresh nut can be as low as 55 % (dry basis). The higher the oil content the better the yield.

IV. LAND/WORKING AREA/BUILDINGS

The total land area required for running the coconut oil factory - using the HOID technology with 2,000 kg fresh meat/day capacity (a day = 8 - 10 working hours) is 240 m2. The area for the building is approximately 190 m2 and includes the area for preparing the raw material, storing the oil and cake, the office, toilets, and fuel (wood or a mixture of wood and shell) storage.

It is important that the roof of factory building is designed for good ventilation to facilitate the escape of steam and heat. The factory building has to have sufficient space to facilitate access by a truck for delivery and unloading as well as sufficient area to enable the product and fuel to be moved easily by box trucks. See Figure 4 for a suggested typical factory layout.

It is assumed that 1 Ha of coconut area per year produces 1 tonne of equivalent copra or 2 tonnes of fresh meat, so to operate the HOID factory for 250 days operation with troughput of 2 tonnes fresh meat per day requires minimally 250 Ha of coconut area. It is expected within or near the factory, small workshop is available for fixing or repairing small problems associated with mechanical or electrical failure.

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V. EQUIPMENT LAYOUT

The plant layout should be arranged in a logical sequence in line with the progress of the raw material through the production process in order that workers do not carry or walk for long distances and across the path of other workers. However, the ideal layout is sometimes difficult to be realized, and will be contingent on constraints relating to size and shape of the available land, as well as location of the factory in relation to access roads.

Figure 4 shows a suggested layout of a HOID factory. The suggested layout of the pipework for a typical HOID factory is given in Figure 5.

4.0 2.0 A 2.0 4.0 4.0 A Q 2.5 B P 4.0 2.4 3.0 C 3.2 3.0 13.0 1.5 1.2 1.7 2.8 2.8 3.0 2.5 J 1.5 2.1 1.0 F 3.0 2.0 1.5 L 2.2 3.5 14.0 Legend :

A : Office J : Fried-drained meat area B : Toilet K : Pump C : De-husking area L : Cake bagging D : Stair M : Expeller/Screw Press E : Disintegrator N : Tank for collecting oil from expeller F : Wooden fuel area O : Tank for collecting drained oil G : Chimney P : Drums and jerry-cans for packing oil H : Pan and furnace Q : Main gate/Sliding door I : Drainage tank Unit in meter

Figure 4. The suggested layout of a HOID factory

E

D

G

I

D

D

H

H

O N

M

K

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Figure 5. The suggested pipework and oil flow in the process

VI. OPERATING PROCEDURE

The process of oil extraction with HOID technology is outlined as follow. The fresh coconut meat is delivered to the factory, where it is inspected, and cut into small pieces in a hammer mill. The disintegrated meat is subsequently fried in pans of hot coconut oil at approximately 120°C for approximately 20-30 minutes depending on the oil temperature and ratio of fresh meat to coconut oil used. The smaller the ratio or the higher the temperature, the shorter frying time required. [The volumes and quantities involved will be specified by IRDABI in the design and equipment selection stages of establishing the factory].

The coconut pieces are stirred occasionally during the frying. The moisture within the cut coconut pieces evaporates producing steam during frying. Care needs to be exercised not to add too much cut meat to the hot oil because the immersion of the cut coconut meat results in a rapid evolution of steam which can cause oil spillage, unless sufficient free volume is provided. Even if sufficient free volume (25%) of the tank is available care needs to be exercised in the operation and this will only be learnt by practice. The drying process is completed when there is no more steam produced, the coconut meat become yellowish to brown in colour, and the temperature of coconut oil in the pans starts to increases.

The fried particles are then scooped out of the oil by means of perforated spoons affixed to the end of a long wooden handle. The meat is dumped in a filter box and the oil is allowed to drain through a meshed plate at above of the tank.

The drained, cooked , brown coconut pieces, rich in coconut oil, are fed to the hopper whence it is fed to the screw press. The expelled oil is passed

Gravity drain, (open

channel from screw press, pipe from drainage tank)

Pump inlet ⊗ ⊗ Pump outlet ⊗ ⊗ ⊗ ⊗ ⊗ ⊗ Pump

Frying pan

Frying pan

Oil storage tank

Tank for oil from screw press

Tank for collecting oil from drainage trays

Screw press

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through a mesh plate and settled in tank before it is pumped or poured into the main settling tank.

The oil is clarified by settling the oil in the tank. Sometimes a filter press is used (and this was discussed earlier). A flow diagram of a typical HOID process used for coconut oil production is given in Figure 6.

Disintegrating

Frying in coconut oil

Scooping out draining above the draining Drained coconut oil tank to be sold

screw pressing oil recycled to the pan

Figure 6. The flow diagram of HOID process

A. Frying and Firing Instruction

a. The frying process Frying plays a very important role in determining the quality of oil

produced. Overcooked disintegrated meat will result in the production of oil with a brown dark in color. On the other hand, undercooking or drying produces a pale yellow oil with moisture. A good quality oil with a pale yellow colour can be produced if the temperature of oil used for frying is below 130 0C, the ratio of oil to disintegrated meat is 2 to 2.5 : 1 and the frying time is kept within 20 to 40 minutes. These will of course depend on

Coconut meat

Disintegrated meat

Fried disintegrated meat

Drained coconut meat

Crude coconut oil Cake

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the feed rate of fuel wood used. The higher the feed rate of fuel wood used, the faster the frying time.

b. Instructions on the firing process

Always use dry fuel wood, coconut shell, coconut husk and /or mixture of them. Dry wooden fuel, using the hot oil pan system, is preferred as it enables the rate of burning to be controlled. Therefore if the furnace is operated correctly smoke generation is minimised. Coconut shell fuel however burns more rapidly and produces more smoke than dry wood. Coconut husk is a poorer fuel than both shell and wood, and generates black smoke polluting the surrounding area. However a combination of the three fuels can be used to provide process heat.

Feed the dry fuel into the furnace. Pour kerosene or another easily combustible fuel to initiate combustion.

At “start-up”, close the sliding flaps on the front furnace door (through which secondary air is provided) and open fully the sliding flaps on the side of the furnace (through which primary air enters the furnace).

After the flame is established, add sufficient fuel just to cover the whole grate surface. Then open fully the sliding flaps on the front end furnace door, and set the sliding flaps on the side at furnace doors to a 10 cm wide aperture.

Feed the fuel regularly into the furnace at a constant rate. The amount of fuel used depends on the rate of frying required. For a throughput of 2 tonnes fresh meat per day (8 hours), the fuel flow rate is approximately 120 kg per hour.

c. The instruction of frying process

Select a frying oil to disintegrated meat ratio of 2 to 2.5 :1. Pour the required amount of oil (approximately 200 kg) into each frying pans. This can be measured using a previously marked level in the pans or a wooden bar to indicate the level of oil in the pans. The pans have to be designed to have a free volume of at least 25% to accommodate the rise of volume due to the addition of disintegrated meat and froth evolved during the frying process.

Start firing the furnace, load 90 kg disintegrated coconut into the loading basket, and when the fire is stable and the oil has reached a temperature of 125 0C, the disintegrated coconut can be added to the hot oil. Do not allow the temperature of oil to reach more than 135 0C. Add the cut meat gradually and not all at once.

Stir the disintegrated coconut meat occasionally during the frying, froth and steam are evolved. The cut meats are removed when no more steam is evolved, the meat becomes yellowish to brown in color and the temperature of the oil disintegrated meat mixture is 125 0C.

Scoop the fried meat into the draining tank, add fresh oil into the pans up to the initial level (during the scooping, it is predicted up to 20 % of oil absorbed by the disintegrated meat) then add into the pan a new batch of 90 kg cut coconut meat. These frying steps are repeated.

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For the last batch of the day 80 to 100 kg fresh disintegrated coconut meat are added to the each pan and no further fuel is fed to the furnace. In this way the furnace is able to cool down without overheating of the remaining oil. This last batch of cut meat will not be fully dried and need to be scooped out the next day for further refrying. This method ensures that the heat within the furnace does not overheat and char both the oil and the cut meat contents left in the pan.

B. Maintenance

1. Daily. a. Check the combustion chamber, ash collector (see Figure 7) and grate.

Remove the ash from there before loading the first wooden fuel into the furnace. In the interest of longevity, cast iron grates should be used, and it could be made locally.

b. Open the disintegrator after using it to check and remove the remaining disintegrated meat that left inside it. Avoid feeding the hard material into disintegrator.

c. Open the screw after using the screw press to check and clean the remaining cake that left in it. Avoid using hot and hard material to be pressed in operating the screw press.

2. Weekly

a. Check the lubricating oil of the pump and other. b. Check and repair the screw if necessary. The screw will be subjected to

the wear out. The rate of wear out depens on the quality of metal used for the screw and the troughput. It is recommended to have a spare part of the screw (the auger).

3. Monthly.

Clean and take out the sludge from the tray of the drainage tank (see Figure 8) using the brush and finally clean water. Drainage tank, tank for collecting the oil from the expeller, and storage tank are also should be cleaned from the sludge as can be seen in the Figure 9. The sludge is collected and mixed with fried disintegrated meat for re-extracted in screw press.

3. Yearly.

Check the condition of the following and replace/repair them as necessary. a. The furnace and chimney. b. The pump and the pipework. c. The tanks d. The disintegrator e. The expeller f. The electrical switchgear.

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Figure 7. Removing the ash from ash collector before starting the process

Figure 8. Removing the sludge and cleaning the tray of the drainage tank

Ficture will be inserted here

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Figure 9. Removing the sludge and cleaning the tanks C. Safety

1. Processing activity

a. Keep the flame in the furnace not too big. Feed the fuel into the furnace in the constant rate to keep the constant fire.

b. Care needs to be exercised not to add too much disintegrated meat at once during the frying, because the immersion of the cut coconut meat results in a rapid evolution of steam which can cause oil spillage, unless sufficient free volume are provided.

c. Care should be exercised to ensure that for the first batch of the day, the fresh meat should not be added to cold oil because as the mixture of meat and oil reaches 105oC, a large quantity of steam is released rapidly causing the oil to boil vigorously and spill out of the pans.

d. For the last batch of the day 80 to 100 kg fresh disintegrated coconut meat are added to the each pan and no further fuel is fed to the furnace. In this way the furnace is able to cool down without overheating of the remaining oil. This last batch of cut meat will not be fully dried and need to be scooped out the next day for further refrying. This method ensures that the heat within the furnace does not overheat and char both the oil and the cut meat contents left in the pan.

e. Avoid to use the hot material to be pressed in operating the screw press. 2. Managing the cake

Care should be exercised to manage the cake. Cake should be packed and stored when it has already cooled. Avoid storing the cake in the moist room and avoid it from dripping of the rain, because this will generate the fire in it.

3. Machinery Guarding

All dangerous parts of the machinery must be securely fenced so as to prevent people from coming into contact with them.

4. Electricity

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Electrical hazards may arise from poor installation, inadequate standards of protection and maintenance, or from misuse and incorrect operation. Only authorized persons must carry out electrical installation and maintenance.

VII. RECORD KEEPING

Records of factory operation are needed to evaluate the financial viability of the factory. As a guide, examples on a record of some of the production information needed to facilitate the operation and management of the process is provided below.

A. Record of Raw Material Consumption

No Date Total of coconut

purchased (nuts)Total of coconut meat (kg meat)

Price/unit (Rp)

Total cost of raw material (Rp)

Remark

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. Total

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B. Record of Fuel, Labour Cost and Maintenance

No Date Total of fuel used

(kg)

Total cost of fuel (Rp)

Total of labour

Total cost of labour

(Rp)

Total cost of maintenance

(Rp)

Remark

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. Total

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C. Record of Production

No Date Coconut meat processed (kg)

Coconut oil produced (kg)

Yield of process (%)

Cake produced (kg)

Remark

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. Total

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D. Record of Marketing No Date Coconut oil Cake Total income Remark

Quantity (kg) Price/kg oil (Rp) Revenue (Rp) Quantity (kg) Price/kg cake (Rp) Revenue (Rp) (Rp) 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. Total

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E. Monthly Report No Month Operating cost (Rp) Total of Income (Rp) Total Profit Remark

Raw material

Fuel and electricity

Labour Maintenance Operating cost (Rp) Coconut oil Cake Others Income (Rp)

(Rp)

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Total

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VIII. PRODUCT RECOVERY

Product recovery is a critical factor in determining the viability of the coconut oil factory as the Internal Rate of Return of the process is sensitive to the yield of oil.

The oil yield is affected by several factor such as: • maturity of coconut (oil content) • efficiency of expeller • the amount of oil spilled during the process

To avoid reductions in oil yield, the factory should use the mature coconut as immature nuts have relatively low oil contents (discussed earlier). Good feedstock are coconut meats with an oil content of 30% (wet basis) at a moisture content of 50%.

Good factory design to facilitate efficient handling of material, oil collection and efficient operation will minimise oil spillage.

The efficiency of the expeller will determine the residual oil in the press cake. The optimal residual oil in the press cake varies from 8 to 12 %. The pressure of the screw is very important to the efficiency of the expeller. The lower the residual oil in the press cake will result in the higher the yield in oil extraction.

Based on the survey and field testing, the coconut oil factories in Indonesia obtain yields of oil which range from 28.5% to 30%. In addition to oil, the HOID process produces pressed cake as a by-product. The yield of the cake usually is about 15% of the weight of fresh meats.

IX. PRODUCT PACKING AND STORAGE

Coconut oil is pumped into the storage tank before packaging. The storage tank is placed at a height so that the oil filling process is carried out using gravity.

The type of container for coconut oil can be a drum, plastic can or bottle. The choice of packaging will vary with the market requirements. For sale to the wholesaler, the coconut oil is usually filled into 200 litre drums or 20 litre cans. If the factory sells the oil direct to the consumer, it is filled in small plastic bottles with a capacity 0.5 to 1 litre.

The factory should avoid storing coconut oil for a long time because it has a limited shelf-life. HOID oil - which often is not fully dried - has been reported to have a life ranging from 2 to 3 months.

The pressed cake is packed in a jute bags or polypropylene woven bags. It is best stored in a cool dry place. The moisture content of the cake should be kept below 14% to prevent mould formation. Pressed cake can be stored for up to six months, if it kept cool and dry.

X. MARKET FOR PRODUCTS

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The coconut oil produced by HOID process (HOID oil) can be used as a

cooking oil without further refining. The HOID oil is sold either for the direct household consumption or to the coconut oil refinery plants.

Markets for and price of HOID oil vary from region to region, depending on consumer preferences and competition from other edible oils - mainly palm olein and refined coconut oil. In the areas where consumers prefer the characteristic taste the price of HOID oil is higher than the refined palm olein and slighty cheaper than refined coconut oil, as shown in Table 3.

Table 3. The comparison of spot oil prices in the time of evaluation in the

market

No. Province HOID oil (Rp/kg)

Refined coconut oil

(Rp/kg)

Refined palm oil (Rp/kg)

Year

1 West Sumatera 1350 1500 1350 1994 2 North Sumatera 1400 1500 1150 1994 3 North Sulawesi 1350 1400 - 1500 1350 1994 4 West Kalimantan 1800 - 1900 2000 - 2100 1700 1995 5 South Sumatera ---- 1900 - 2000 (mixture of

coconut and palm olein) 1995

Note : The exchange rate of one US dollar on 1994 and 1995 was Rp. 2,200 and Rp. 2,300 respectively.

The results of a surveys indicated a decreasing market for HOID oil.

This was due to the following reasons: a. Change in consumer preference - consumers tended to prefer refined coconut

oil to HOID oil and perceive refined coconut oil as being the higher quality oil.

b. The availability of lower priced palm oil - consumers in the rural areas tend to buy palm oil because it is cheaper. On the other hand, consumers in urban areas tend to buy refined coconut oil.

c. The variable quality of HOID oil and short shelf-life were other important factors contributing to change in the purchasing patterns.

XI. EXAMPLE OF FINANCIAL ANALYSIS

A financial analysis has been presented to demonstrate the viability of a typical HOID oil factory. The analysis is based on a throughput of 2 tonnes of fresh meat or 1 tonne of copra equivalent per day. This was the original design capacity of the HOID factory designed by the team for routine commercial operation and evaluation in Pontianak, West Kalimantan. For comparison purposes, an analysis for a plant with a throughput of 3.5 tonnes of fresh meat or 1.75 tonnes of copra equivalent per day is also presented.

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Data were gathered from Pontianak on the cost of raw materials, labour, land and building. The conversion of whole nuts required to make one tonne of copra and the equivalent weights and prices for fresh meat and copra are presented in Table 4.

Table 4. Prices and conversion equivalents

I. Conversion factors :

Whole nuts 5000 nuts yield : 2000 kg of fresh meat; 1000 kg of copra 570 kg of oil

II. Prices

A. Raw material Prices and Equivalence Whole nut Rp 130 /nut Fresh meat Rp 375 /kg The cost of fresh meat above takes into account whole nuts, labour and handling charges for dehusking and scooping out the meat.

B. By-products Husk Rp 10 /nut Shell Rp 25 /kg

C. Fuel Firewood Rp 5000 /500kg Diesel oil Rp 400 /litre

D. Output Prices Premium for HOID oil 1.08 HOID oil Rp 1675 /kg Cake Rp 200 /kg: Prices are average prices for period Sept-Dec 1996 in Pontianak.

The price of coconut at Rp 130 per nut converts to Rp 650 for five

coconuts and is used as the basis for the production of 1 kilogram of copra. The price of fresh coconut meats vary. For example at Pontianak, during

the period from September to December 1996, fresh meat prices ranged from Rp 330 to Rp 400, with a weighted average of Rp 375 equivalent to a price of 1 kg of copra (2 kg of fresh meat = 1 kg of copra).

Table 5 below shows the costs and returns of the HOID oil factory operating different capacity. Detailed costs of these two capacities are given in the Table 6.

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Table 5. Comparison of financial performance of HOID oil factory operating 2 tonnes and 3.5 tonnes of fresh meat per day

Capacity (fresh meat/day) 2 tonnes 3.5 tonnes

INVESTMENT (Rp ‘000) 1. Land 7,200 7,2002. Building 23,750 23,7503. Machinery 51,877 51,8774. Working capital 17,550 17,550 Total Capital Cost 100,377 100,377 OPERATION (Rp ‘000) 1. Raw material 187,500 328,1252. Labour 16,359 28,6283. Fuel 1,382 2,4194. Electricity 11,920 17,9855. Repair & maintenance 3,113 3,113 Total Operating Cost 220,274 380,270 Sales (Rp ‘000) 253,888 444,303Margin (Rp ‘000) 33,614 64,033Financial parameters : 1. Annual operating margin 15.3% 16.8%2. NPV at 10% discount rate (million rupiah) 109.35 2763. IRR 32% 60%4. Payback (years) 3.1 1.7

Note : All costs are based on 1996 prices when the exchange rate of one US dollar was equivalent to Rp 2,376.

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Table 6. Detailed of capital cost for HOID oil factory with capacity 2 tonnes and 3.5 tonnes fresh meat per day

CAPITAL COSTS Unit Quantity Unit Cost Cost Life

time (years)

Land for processing m2 240 30,000 7,200,000 Building cost m2 190 125,000 23,750,000 20

Machinery Disintegrator & accessories 1 4,539,000 4,539,000 10Foundation 1 260,000 260,000 10Furnace 1 8,258,200 8,258,200 10Pans 1 1,800,000 1,800,000 10Expeller 1 8,125,000 8,125,000 10Foundations & stairs for expeller

1 500,000 500,000 10

Expeller no 2 (small), for capacity 3.5 tonnes

1 5,000,000 5,000,000 10

Foundations & stairs for expeller

1 300,000 300,000 10

Filter press (0.5 kW) 1 2,000,000 2,000,000 10Tank and storage drums 1 3,575,000 3,575,000 10Foundations 1 1,250,000 1,250,000 10Pumps and pipework 1 1,615,000 1,615,000 10Electric wiring and switch gear

1 300,000 300,000 10

Misc materials 1 690,000 690,000 10Weighing balance 1 300,000 300,000 10Electrical connection for 55KVA

13,365,000 13,365,000 10

Working capital Coconuts for 10 days kg meat 20,000 375 7,500,000 Oil to start operation litre 6,000 1,675 10,050,000

Total Capital Cost 100,377,200

Note : All costs are based on 1996 prices when the exchange rate of one US dollar was equivalent to Rp 2,376.

The capital cost of the HOID (2 tonnes capacity) is 100.3 million Rupiah,

of which 51.8 million is for equipment and installation. The annual operational cost is about 220 million rupiah per year with the cost of raw material representing 85% of the cost. Labour represents only 7.4% of the total operation cost. The profitability of coconut oil production is therefore more sensitive to the price of coconuts, and less sensitive to labour costs.

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• Sensitivity Analysis Sensitivity analysis conducted to evaluate the effect of capital

investment, fuel cost, labour cost, price of oil, price of fresh meat, and price of cake on financial parameters. The result of sensitivity calculation is shown in Table 7 and Table 8.

Table 7. Effect of capital investment, fuel cost, price of meat, price of oil, labour

cost, and price of cake on NPV

% change from base

Capital investment

Fuel cost Labour cost

Price of oil

Price of meat

Price of cake

value NPV (million rupiah) -50% 154.97 113.21 -40% 145.85 112.44 -30% 136.72 111.66 -20% 127.6 110.89 -15% 123.04 110.51 123.06 -90.65 266.45 96.61-10% 118.47 110.12 118.49 -23.98 214.09 100.86-5% 113.91 109.73 113.92 42.68 161.72 105.10

-2.5% 111.63 109.54 111.63 76.02 135.53 107.23-1.25% 110.49 109.45 118.72 92.68 122.44 108.29

0% 109.35 109.35 109.35 109.35 109.35 109.351.25% 108.21 109.25 108.21 126.02 96.26 110.412.5% 107.07 109.16 107.06 142.68 83.16 111.47

5% 104.79 108.96 104.78 176.01 56.98 113.5910% 100.22 108.58 100.21 242.68 4.61 117.8415% 95.66 108.19 95.64 309.34 -47.76 122.0820% 91.10 107.80 30% 81.97 107.03 40% 72.85 106.26 50% 63.72 105.49

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Table 8. Effect of capital investment, fuel cost, price of meat, price of oil, labour cost, and price of cake on IRR

% change from base

Capital investment

Fuel cost Labour cost

Price of oil

Price of meat

Price of cake

value IRR -50% 66.9% 32.9% -40% 55.5% 32.7% -30% 47.4% 32.6% -20% 41.1% 32.4% -15% 38.5% 32.4% 34.8% -13.3% 61.2% 29.7%-10% 36.2% 32.3% 33.9% 4.6% 51.6% 30.5%-5% 34.1% 32.2% 33.0% 19.0% 42.0% 31.3%

-2.5% 33.1% 32.2% 32.6% 25.7% 37.1% 31.7%-1.25% 32.6% 32.2% 33.9% 28.9% 34.6% 31.9%

0% 32.1% 32.1% 32.1% 32.1% 32.1% 32.1%1.25% 31.7% 32.1% 31.9% 35.3% 29.6% 32.4%2.5% 31.3% 32.1% 31.7% 38.5% 27.1% 32.6%

5% 30.4% 32.1% 31.3% 44.7% 21.9% 33.0%10% 28.8% 32.0% 30.4% 56.9% 11.0% 33.8%15% 27.3% 31.9% 29.5% 68.9% -1.2% 34.6%20% 25.9% 31.9% 30% 23.4% 31.7% 40% 21.2% 31.6% 50% 19.3% 31.4%

Table 9. Effect of oil-yield of process on NPV and IRR

Oil-yield NPV (milion rupiah) IRR 24% -88.44 -12.60% 25% -45.9 -0.80% 26% -3.36 9.30% 27% 41.30 18.70% 28% 87.02 27.80%

28.5% 109.35 32.10% 29% 131.68 36.40% 30% 177.40 44.90% 31% 222.06 53.10% 32% 264.60 60.80%

To facilitate the examination of effect of several cost on financial

parameter the data is convert into graphs below.

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Figure 11. Effect of change of several cost on Internal Rate of Return (IRR)

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

-50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50%

% change from base value

IRR

CapitalInvestment

Fuel Cost

Labour cost

Price of Oil

Price ofmeat

Price ofcake

Figure 10. Effect of change of several cost on Net Present Value (NPV)

-100

-50

0

50

100

150

200

250

300

350

-50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50%

% change from base value

NPV

(mill

ion

rupi

ah) Capital

InvestmentFuel Cost

LabourcostPrice ofOilPrice ofmeatPrice ofcake

Figure 12. Effect of oil-yie ld on Net Present Value (NPV)

150

200

250

300

piah

)

NPV

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From the graph above it can be concluded that the change of price of HOID oil, the price of fresh meat, and the oil-yield of the process will markedly effect the viability of the HOID oil factory. From the data in the Table 8 and 9 it can be seen, that for a decrease in price of 5 % in HOID oil from the base price will reduce the IRR and NPV from 32.1% to 19% and from Rp109.35 million to Rp 42.68 million respectively. On the other hand, an increase of 5% in the price of fresh meat will reduce the IRR and NPV from 32.1% to 21.9% and from Rp 109.35 million to 56.98 million.

For a decrease in oil yield of about 5% from the base value, that is from 28.5% (base value) to 27%, will reduce the IRR and NPV from 32.1% to 18.7% and from Rp109.35 million to 41.30 million rupiah respectively.

The change in capital investment, labour cost, and fuel cost however give a small effect on the viability of HOID oil factory.

FURTHER INFORMATION If further information is required please contact :

Figure 13. Effect of oil yie ld on Internal rate of Return (IRR)

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

24% 25% 26% 27% 28% 29% 30% 31% 32%

Oil yield

IRR

IRR

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1. Institute for Research and Development of Agro-Based Industry (IRDABI), Agency for Industrial and Trade Research and Development, Ministry of Industry and Trade Jl. Ir. H. Juanda No. 11, Bogor 16122, Indonesia Telp. 62 - 251-324068 (three lines) Fax. 62 - 251-323339 E-Mail : [email protected]

2. Natural Resources Institute (NRI)

Central Avenue, Chatham Maritime, Kent ME4 4TB, United Kingdom Telp. National 0634880088, International 44634880088 Fax. 0634880066/77 Telex 263907/8 LDNG Telegrams NRI Chatham

3. Stella Consult International Ltd.

30, Jefferson Drive, Rainham, Kent ME8 0DB, United Kingdom Telp. and Fax (44) (0) 1634262090

REFERENCES 1. Breag, G., YY Setiawan L. Junaidi, D. Supriatna, A.S. Tariq, and P. Oldham

(1997). Final Technical Report on Hot Oil Immersion Drying (HOID) Technology. APCC. Jakarta.

2. Tariq, AS, George R Breag, YY Setiawan, L Junaidi, and D Supriatna (1996). Testing and Performance of An Experimental Energy Efficient Furnace for Hot Oil Immersion Drying Process for Production of Coconut Oil. NRI & IRDABI. (Project Report).