November 12, 2007

 

French biodiesel production to increase

 

 

France's grapeseed acreage in 2008 is seen to decline by 10 percent, yet biodiesel production capacity and crushing capacity continue to expand, according to a US Department of Agriculture attache report posted Friday (November 9) on the Foreign Agricultural Services Web site.

 

The decline in acreage is causing some uncertainty as to what extent domestically-produced products can meet demand. More of the biodiesel produced in France is expected to be processed from imported products, especially rapeseed, rapeseed oil, soyoil and palm oil.

 

Despite this deficit, French biodiesel production capacity and crushing capacity continue to expand, resulting in increasing availability of rapeseed meal for animal feed and displacement of soy meal in feed rations.

 

For the first time in 2007, industrial rapeseed acreage (870,000 hectares) has surpassed food/feed rapeseed acreage (700,000 hectares), boosted by the growing demand for biodiesel processing. The French production quota for biodiesel set by the GOF increased from 677,500 million tonnes in 2006 to 1,342,500 million tonnes in 2007 and 2,285,500 million tonnes in 2008. This production quota, set annually by the GOF, is the maximum quantity of biodiesel than can be marketed in France with a reduced tax compared to diesel. This reduction amounted to 25 euros per hectolitre in 2007.

 

In 2007, rapeseed yields were abnormally low (2.81 tonnes/hectare, the lowest since 2001), due to adverse weather conditions. The unusually wet summer resulted in fungi development (mainly sclerotinia). Total French rapeseed production is estimated at 4.39 million MT in 2007, only 1 percent higher than in 2006, while acreage had increased by 11 percent.

 

Roughly, 870,000 hectares of industrial rapeseed produced 2.5 million tonnes of rapeseed, which have the potential to produce 1 million tonnes of rapeseed methyl ester, i.e., less than half of the 2008 quota set by the GOF for biodiesel.

 

Estimates of rapeseed plantings to be harvested in 2008 are down 10 percent from 2007. Several factors are putting downward pressure on industrial rapeseed acreage, including the fact that wheat is currently more profitable, the reduction of compulsory set-aside rate from 10 percent to zero percent by the EU Commission, and the questioning of the energy crop program (under which farmers get a 45 euro per hectare subsidy), under the CAP Health Check discussions. In 2007, 61 percent of industrial rapeseed grown in France benefited from the energy crop subsidy, while 39 percent was grown on industrial set-aside land.

 

As a result of the shortage of domestically-grown oilseeds to process biodiesel, France is expected to increase its imports of seeds and oils in 2007/08. The French grains and oilseeds board (ONIGC) expects French imports of rapeseed from extra-EU origin, mainly Argentina, will increase from 20,000 MT in 2006/07 to 160,000 MT in 2007/08. On the other hand, French imports of sunflower seeds are not expected to increase due to the low availability of sunflower seeds in the EU, Russia and Ukraine.

 

In France, biodiesel mainly consists of rapeseed methyl ester (60-70 percent), followed by sunflower seed methyl ester (20-30 percent), soy oil (5 percent) and palm oil (5 percent). In 2007/08, with lower domestic supply of rapeseed oil and sunflower seed oil, and higher production quotas for biodiesel, French imports of oils are expected to increase more sharply than in 2006/07.

 

In addition, France is expected to start producing biodiesel from animal fats in 2008, with the first production quotas authorized to be marketed in France with tax incentives by the GOF in 2008.

 

In 2007/08, French crush is expected to increase significantly, as a result of the significant increase in the crushing capacity, and the higher supply of rapeseed (from both production and imports) relative to 2006/07. France's crushing capacity is expected to increase from currently 3.4 million tonnes to 5.4 million tonnes in 2008/09. This increase will result from both the opening of a new crushing plant and the expansion of existing plants.

 

In 2007/08, as a result of this increased availability of rapeseed meals on the French market, the partial replacement of soy meal and corn gluten feed with rapeseed meal in animal feed rations is expected to continue. In 2006/07, France's meal consumption for animal feed totalled 6.8 million tonnes and included mainly soy meal (64 percent), rapeseed meal (23 percent) and sunflower seed meal (10 percent). With soy meal remaining France's largest consumed meal, France's needs to import soy and soy meal are expected to continue to decline as long as rapeseed meal availability increases.

 

The French oilseeds industry estimates than in 2010, three million tonnes of rapeseed meal will be produced in France (up from 1.6 million in 05/06), provided that all domestically-grown rapeseed is crushed (6 million tonnes), and none exported. According to this scenario, rapeseed meal would represent roughly 45 percent of the meal consumed by the feed industry.