TAMPA, Fla. – Europe’s new biofuel requirements are creating a marketing opportunity for Canadian canola at the expense of U.S. soybeans.
The European Union’s Renewable Energy Directive disqualifies soy-b eans as an ingredient in EU biodiesel.
The directive, which EU countries were to implement by Dec. 25, requires that biofuel feedstocks reduce greenhouse gas emissions by at least 35 percent compared to petroleum diesel.
The EU has determined that soybeans have a 31 percent reduction.
“Since virtually all of the soybean oil processed from U.S. soybeans in the EU is used in biodiesel production, this jeopardizes a $1 billion market for soybeans,” said Steve Wellman, first vice-president of the American Soybean Association.
Read Also
Interest in biological crop inputs continues to grow
It was only a few years ago that interest in alternative methods such as biologicals to boost a crop’s nutrient…
Canadian canola has been assigned the same value as European rapeseed, which is a 38 percent reduction in emissions. That means canola should be able to fill some of the soybean void.
“It will be an opportunity for us but I can’t estimate how big,” said Canola Council of Canada president JoAnne Buth.
Germany is the first EU country to implement the directive. Crushers in that country are importing U.S. soybeans for the meal but are forced to export the oil instead of turning it into biodiesel.
Buth said Europe’s feed industry desperately needs soybean meal, which presents a similar conundrum for crushers in other European countries.
“They might be exporting soy oil and then importing canola,” she said.
However, the European directive is still causing challenges for Canadian canola.
The EU requires a proof of sustainability certificate that ensures biofuel feedstock wasn’t produced on farms converted from high carbon density land such as rain forests.
Buth said EU countries have proposed seven certification schemes, but none have been approved.
Canada is deciding whether it wants to adopt one of the seven proposed schemes or devise one of its own.
Wellman, who spoke to reporters during a news conference at the 2011 Commodity Classic conference in Tampa, said the U.S. soybean industry doesn’t have the same traceability system as the EU.
The American Soybean Association is pushing for a bilateral agreement recognizing that difference and providing a sustainability certificate on an aggregate basis for the entire industry.
The association was part of a U.S. delegation that travelled to Brussels in February to voice its concerns about the directive.
It pointed out that the EU’s Joint Research Center used Brazilian production, processing and transportation data to determine the soybean number, ignoring the advantages of America’s “highly efficient agriculture industry.”
It provided the Europeans with an alternative study funded by the U.S. soybean checkoff showing greenhouse gas reductions of up to 52 percent for soybean biodiesel.
Wellman said U.S. soybean growers don’t like being told by the Europeans how they should produce, process and transport their crops.
The delegation told the Europeans that they want to continue servicing that market, but U.S. soybean growers will redirect shipments to the 36 other countries that buy their product if they continue to face trade barriers.
“While we appreciate their business and would like to continue to have their business, we do have other options,” said Wellman.
