Why is rapeseed oil banned in Europe?

Almost two thirds of the EU biodiesel imports from Argentina

Argentina covers almost two thirds of the EU's biodiesel imports - Indonesia's largest palm oil exporter to the EU. (c) Georgi Roshkov - fotolia.com

Due to the import duties that the EU has lowered since September 2017, deliveries of Argentine SME (soy methyl ester) are steadily increasing. They totaled 915,983 t by the end of March 2018, which corresponds to a share of 62% of all EU biodiesel imports.

For four years no more biodiesel had come from there due to the anti-dumping duties. The EU imported 203,002 t of PME (palm oil methyl ester) from Malaysia, 160,200 t from China, and only 26,700 t from Indonesia. The Argentine biodiesel deliveries were mainly shipped to the Netherlands and Spain.

The deliveries of Argentine soybean oil amounted to a negligible 155 t during the same period. This underlines the success of the Argentine government's export promotion policy in favor of the domestic biodiesel industry, states the Union for the Promotion of Oil and Protein Plants (UFOP).

The UFOP had repeatedly pointed out the market-distorting subsidies of the Argentine government. She sees the fears confirmed that, in the short term, extraordinarily large quantities of biodiesel from Argentina will flow into the EU and put pressure on vegetable oil prices. This is the result of the oversupply on the global vegetable oil markets.

Nevertheless, this will also be carried out on the backs of the Argentine soy producers, criticizes the UFOP. The association therefore emphatically welcomes the fact that since the end of May the import volumes have been registered alongside the anti-subsidy proceedings against Argentina. In the event of a positive outcome of the proceedings, these quantities would then have to be cleared through customs.

The Argentine government has recognized the income opportunities in this sector and has increased the export tax from 8% to 15% from July 1, 2018 in order to relieve the state budget. It remains to be seen, however, whether the increase in the export tax and the registration of the import volumes will have a relieving effect on the market.

In any case, the EU-28 did not import much soybean oil from third countries (134,000 t), but palm oil: In the period mentioned it was 2.8 million t, mainly from Indonesia (1.93 million t) and Malaysia (0.9 million t) ). The main recipient countries were the Netherlands, Spain and Italy.

At around 67%, most of the Indonesian palm oil imports were used for technical purposes and thus for fuel use. UFOP fears that imports could grow to 3 to 5 million t, analogous to 2012 - before the import tariffs on biodiesel from Argentina and Indonesia come into force. That is why the EU Commission must now act in the same way as with the Argentine biodiesel imports and act against a further increase in palm oil imports.

It is almost paradoxical that the EU Commission is sticking to the "iLUC policy" in the context of the new version of the Renewable Energy Directive and also wants to exclude rapeseed oil produced in the EU, but at the same time rejecting the ban on palm oil demanded by the European Parliament.