PARIS (Reuters) - The European biodiesel industry could be severely hit if the recent rally in oilseed oil prices is prolonged because it would lead to a surge in cheap imports, the head of the European Biodiesel Board (EBB) said on Monday.
By Sybille de La Hamaide
PARIS (Reuters) - The European biodiesel industry could be severely hit if the recent rally in oilseed oil prices is prolonged because it would lead to a surge in cheap imports, the head of the European Biodiesel Board (EBB) said on Monday.
However, Bernard Nicol, who is also the head of French biodiesel maker Diester Industrie, said that the impact would vary from one European country to another because some had import quotas protecting their markets.
Global agriculture commodities prices have surged over the last year, partly because of higher demand for biofuels but also due to bigger food needs in developing countries, a bad harvest in big producing countries and historically low stocks.
!ADVERTISEMENT!Prices for soybean oil, palm oil and rapeseed oil followed the trend, putting many companies at risk.
"If vegetable oils markets continue to rise, the (biodiesel) industry will be threatened," Nicol told the Reuters Global Agriculture and Biofuel Summit.
France, which has an import quota system in place, would be less threatened than other free trade markets such as Germany or Britain, he said.
"Countries with quotas are more protected because they just have to deal with higher feedstock prices but not with imports."
Countries without quotas, such as Britain, Germany, Italy, Austria and Spain, would inevitably suffer more from lasting high prices that would make it hard for EU biodiesel to compete with cheaper U.S. or South American biodiesel imports.
Nicol said that in Spain, the biodiesel industry was on the verge of collapsing, with 80 to 90 percent of biodiesel capacity closed, because of insufficient tax advantages, no mandatory output levels and big imports.
"That's one of the most affected markets but the same goes for the UK market," he said, adding that German industry was also in deep crisis because of a sharp cut in subsidies and unfair competition.
SURVIVAL SEEN IN FRANCE
Nicol said Diester Industrie, France's top biodiesel maker, was not at risk unless it had to face a mixture of lasting surging prices and problems selling by-products of biodiesel, such as glycerin.
"So far we run normally and we don not plan to close any plant. To the contrary. We open up new plants," he said.
"It's not bright but we can survive, thank you."
Diester Industrie has expanded its activities outside France in recent years and now aims to produce more than three million tons of biodiesel by mid-2009, Nicol said.
In France alone, Diester Industrie currently has capacity of around two million tons of biodiesel per year.
Through its subsidiary Diester Industrie International, controlled at 60 percent by Diester Industrie and the rest by Bunge Ltd, the world's largest oilseed processor, the company also has plants in Germany, Austria, Italy and Portugal.
The company's total output is currently 2.7 million tons, making it by far the leading biodiesel maker in Europe, and the rise is due to continue over the coming months.
Diester Industrie, which is 34 percent owned by French oilseed growers, mainly uses rapeseed to produce biodiesel and has yearly supply contracts with producers, reducing its exposure to strong price movements. (Editing by Peter Blackburn)
