28 April 2020

Copa and Cogeca call on the Commission to take rapid action to deal with the growing risk of imbalance in the European protein plant market and its biofuel supply chains

European farmers and cooperatives organisations are calling for a set of rapid actions that could limit major disruptions

In a letter sent today to the European Commission, Copa and Cogeca express their concerns about the potential consequences of the Covid-19 crisis on the vegetable oils, biodiesel, protein-rich by-products like rapeseed and sunflower meals and DDGS, and ethanol sectors. Faced with falling European production and social distancing measures in the EU and worldwide due to the pandemic, protein-rich plant by product markets risk entering into a phase of greater instability, as a result of lower demand in the biofuel sector and lower EU production of protein crops. In this context, the European farmers and cooperatives organisations are calling for a set of rapid actions that could limit major disruptions.

The planted area with protein-rich crops is around 30% below its highest level reached in 2018/2019. In this context, possible disruptions of supply from the main producing countries being the United States, South America and India, are feared as the COVID-19 pandemic might well accelerate in those regions.

Against this backdrop, Pedro Gallardo, Copa-Cogeca’s Oilseeds and Protein crops Working Party Chairman, considered that “the best way to increase our production in the short term, is that the European Commission accept temporarily lifting some restrictions on the use of plant protection products (PPPs) for nitrogen fixing crops in ecological focus areas. This approach would increase our domestic production of soya, peas, beans and lupines on land beyond the areas receiving support in the form of voluntary coupled support”.

The EU’s supply in protein-rich co-products of non-GMO origin could be impacted by the drop in biofuel production from EU origin raw materials such as rapeseed and sunflower. This could be further aggravated in the coming months if vegetable oils accumulate due to containment and social distancing measures such as the closure of the HoReCa sector and knock-on effect on biofuel consumption due to limitation of transport. A saturation of storage capacity for vegetable oils would have an impact on the European crushing industry, and hence on the supply of meals in the EU.

Due to the containment, fuel consumption and crude oil price have collapsed, and demand in biofuels is following suit. If no measures are taken, huge volumes of American and Brazilian ethanol will flood the EU internal market, which will jeopardize not only the European ethanol sector, but also the EU non-GM feed sector which is supplied with protein-rich plant by-products like DDGS.

For Alexander Bachler, Copa and Cogeca’s Bioenergy Working Party Chairman “it is essential that the Commission act swiftly to support its biofuel domestic production. In this regard, we consider immediate actions as essential. We must immediately establish efficient safeguard measures against ethanol imports from the United States or Brazil. 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 into pressure to reduce incorporation of certified sustainable biofuel produced from EU arable crops and immediately implement in the Member States the delegated act to reduce biofuels with a high ILUC risk.

Source: Copa and Cogeca, press release, 2020-04-22.

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