BRUSSELS, Belgium – If there is one thing European farmers and the growing biodiesel manufacturing sector agree on, it is that farmers need more government financial incentives to grow the rapeseed that feeds the industry.
At present, farmers in the 25 member countries of the European Union grow about two million acres of rapeseed each year, much of which is crushed so the oil can be the feedstock for the biodiesel industry. Some of it is eligible for a special European energy crops credit of $26 Cdn per acre of eligible production.
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But with the biodiesel industry increasing production by more than 30 percent annually since 2002, feedstock supply is becoming an issue. Last year biodiesel manufacturers bought almost six million tonnes of rapeseed oil.
Industry leaders predict the crop base will have to double if the EU is to meet its target of 5.75 percent biofuel in transportation fuel by 2010.
“We will have to import some, but the EU potential for rapeseed production should not be underrated,” said European Biodiesel Board secretary-general Raffaello Garofalo. “There is set-aside land available and lots of land in the new EU 10 (eastern European countries that joined last year) but there has to be an incentive.”
Marie-Christine Ribera, an oilseeds and grains specialist with the EU farm union COPA, said her group has made the same point to the European Commission, now in the middle of a review of biofuel policy.
“We have suggested there be a significant increase in the energy crop premium and the acreage to which it applies,” she said. “We have always said there is not enough incentive in the current rules.”
The commission is not expected to respond officially until late this year but at least one EC official involved in the review said increased subsidies will have critics inside the bureaucracy.
“There is not much stomach for increased agricultural subsidies in the present context of trade talks and budgets,” he said. “Better that farmers benefit from increased prices that surely will flow from increased demand.”
In 2003, when the European Union reduced price supports for European farmers, it created a variety of programs that get money to farmers in ways that are not seen as production distorting.
But one program, the energy crops credit, pays for production of crops from rapeseed and wheat to sugar beets that can be used to produce biomass energy products.
The subsidy is limited to 3.7 acres of land and the potential annual cost is $96 million. Last year, only half of the potential eligible cropland was used for the subsidy.
Ribera said it is because the subsidy is too low. COPA has suggested it be at least doubled and perhaps increased to $57 per acre and the applicable area be expanded to 5.4 million acres.
The EU has 12 million acres planted to rapeseed and the biodiesel industry says that should almost double over the next five years to meet industry demands.
The biodiesel lobby has told the EC that when it makes its decision on changes as early as this autumn, it should double the energy crop credit and expand the eligible land base.
“Until the late 1990s I think biofuels was largely a farmer story but now I think it is a much broader story,” said Garofalo, the industry lobbyist.
“Still, it makes sense to get as much of our feedstock as possible from farmers here because it is also a rural development and energy security policy and if we don’t want to be importing our fuel, it doesn’t make any sense to be importing our biodiesel feedstock any more than we have to.”
