Copa-Cogeca has urged the European Commission (EC) to take rapid action to deal with the growing risk of imbalance in the EU protein plant market and its biofuel supply chains.
In a letter sent to the EC on 22 April, the EU farmers organisation expressed concerns about the potential consequences of the COVID-19 pandemic on the vegetable oil, biodiesel, ethanol and protein by-products sectors.
Faced with falling production and social distancing measures in the EU and worldwide, Copa and Cogeca said that the protein-rich plant by-product market – which included oilseed meals and distillers dried grains with solubles (DDGS) - risked entering a phase of increased instability as a result of lower demand in the biofuel sector and lower EU production of protein crops. Oilseed meals are by-products of vegetable oil/biodiesel production and DDGS is a by-product of ethanol.
With the planted area of protein-rich crops around 30% below its highest level reached in 2018/2019, possible disruptions of supply from the main producers - the USA, South America and India - were feared as the COVID-19 could accelerate in those regions, Copa-Cogeca said.
“The best way to increase our production in the short term is that the EC accepts temporarily lifting some restrictions on the use of plant protection products (PPPs) for nitrogen fixing crops in ecological focus areas,” said Pedro Gallardo, chairman of Copa-Cogeca’s oilseeds and protein crops working party.
“This approach would increase our domestic production of soyabeans, peas, beans and lupines on land beyond the areas receiving voluntary coupled support.”
The EU’s supply in protein-rich products of non-GMO origin could be impacted by the drop in biofuel production from EU-grown rapeseed and sunflower. This could be further aggravated in the near future if demand for vegetable oils and biofuels fell due to social distancing and movement curbs, leading to accumulation of stocks.
“A saturation of storage capacity for vegetable oils would have an impact on the European crushing industry, which would affect the supply of meals in the EU,” Copa-Cogeca said.
Due to containment measures, fuel consumption and crude oil price had collapsed, and demand in biofuels was following the same trend. Without action, huge volumes of US and Brazilian ethanol would flood the EU internal market, which would jeopardise not only the European ethanol sector, but also the EU non-GMO sector, which was supplied with protein-rich plant by-products like DDGS.
Alexander Bachler, chairman of Copa-Cogeca’s bioenergy working party, said it was essential that the EC acted swiftly to support its domestic biofuel production.
“We must immediately establish efficient safeguard measures against ethanol imports from Brazil and the USA.
“We must refuse requests for a temporary suspension of tariffs on ethanol. We must maintain the anti-dumping and anti-subsidy measures that currently apply to biodiesel (B99) imports from the USA.
“Finally, we should not give in to pressure to reduce incorporation of certified sustainable biofuel produced from EU arable crops and immediately implement the EU delegated act to reduce biofuels with a high indirect land use change (ILUC) risk.”