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European oilseed producers losers in EU - Argentina biodiesel settlement

European oilseed producers are the losers as a result of the EU Trade Defence Instruments Committee (TDI) approval of anti-subsidy (AS) duties against Argentine biodiesel imports. The Union for the Promotion of Oil and Protein Crops (UFOP) is critical of the Committee's approval of the Argentine Government's proposal for a so-called "price undertaking” agreement. This, UFOP says, will allow Argentina's biodiesel producers to export around 1.2 million tonnes of biodiesel duty-free to the EU.

On January 30, 2019, the Member States of the European Union (EU) in the Trade Defence Instruments Committee (TDI) approved anti-subsidy (AS) duties against “unfair” imports of Argentine biodiesel. A Price Undertaking (PU) agreement between the European Commission and Argentinian producers was also approved.

Rapeseed flower – European rapeseed is a primary feedstock for European biodiesel producers.

According to the Union for the Promotion of Oil and Protein Crops (UFOP), this amount of biodiesel accounts for 10 percent of total biodiesel consumption in the European Union (EU). This market access is coupled with compliance with a minimum import price, which is to be calculated on the basis of monthly average soybean oil prices. The actual, and legally binding, calculation procedure will be announced in the EU Official Journal.

UFOP fears that as a result of the procedure for setting the minimum import price, which is not yet known in detail, market access will be ensured through a price level which will have an overall negative effect on the EU biodiesel price and consequently on oilseed producer prices. Biodiesel quantities that exceed this import quota are subject to company-specific countervailing duties between 25 and 33.4 percent.

In this context, UFOP refers to the pending case against Indonesia. The agreement concluded with Argentina could be construed as a “blueprint for an analogous agreement” with the Indonesian government. This would undermine the political decision of the European Parliament, which had argued in favour of a palm oil ban, and thus the issue of regulating indirect land-use change (ILUC).

Increased import in a shrinking market

Another reason for UFOP’s criticism is the that the recast Renewable Energy Directive (2018/1999/EC) re-authorises member states to lower the capping limit of 7 percent set by EU law below the national capping limit for biofuels from cultivated biomass in the upcoming national implementation.

What the respective national implementation will look like is not yet known. It is clear, however, that in the worst case, the import base of 1.2 million tonnes of biodiesel from Argentina will remain in a shrinking market for this commodity.

UFOP finds that it is “incomprehensible” that the definition of this import volume did not take into account the disappearance of the United Kingdom’s consumption share due to Brexit, along with the share of biodiesel from waste oils and fats. In 2017, the consumption of biodiesel from these waste materials in Germany alone amounted to about 0.84 million tonnes or 38 percent of the total consumption of 2.21 million tonnes of biodiesel.

UFOP notes that politics is currently unable to answer the question of which measures can be used to secure oilseed production in the EU as the most important source of GM-free protein feed for the future. In this sense, Argentina is a double winner because the possibly reduced cultivation of rapeseed in the EU means that more soybean meal needs to be imported.

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