Corn Commentary

EU Biofuels Perspective

I have been traveling abroad for the past two weeks and getting an international perspective on biofuels which has been very interesting. I have been in Germany, Belgium and Japan and biofuels has been a topic everywhere.

In Brussels I was on a trip sponsored by BASF Ag Products with a group of ag journalists who had the privilege of meeting with the European Commission’s spokesman for agriculture and rural development Michael Mann. “Biofuels is now a major issue, of course,” he said. He discussed the Commission’s plans to have biofuels make up ten percent of transport fuels by the year 2020. “We’ve also set that some of that will have to come from imports and we will also favor in the long term second generation biofuels,” Mann said. “We don’t want too much of our agricultural land to be diverted away from food and feed production. So, its a balance between the importance of biofuels for environmental reasons and to lower our reliance on imported oil, but at the same time not upsetting our food and commodity markets too much.”

According to Mann, the EU has incentives for rural development of biofuels refineries in place, which are actually grants. “Developing biofuels plants is something you can receive a grant for from rural development funding.” In addition, there is a tariff in place for ethanol imports to the EU and there are incentive payments for farmers to produce crops for biofuels production which was introduced in 2003. “If you have a contract with a biofuel producer to produce the raw materials for biofuel, you can get an extra 45 euros per hectare on that land.” Mann says they are reconsidering that incentive, in light of the OECD criticism of biofuels subsidies and also because there is now a market because the target is in place.

The EU is expected to eliminate its current mandatory 10 percent setaside for the next crop year to allow farmers to produce more for the market and Mann says that of the 3.8 million hectares currently set aside, they estimate about half will go back into production, much of it into corn.

So, Europe is facing some of the same issues we are in the US, which is very interesting. Here in Japan, where I am at a congress for international ag journalists, I am actually getting perspective from all over the world. More on that later.

Meanwhile, you can listen to all of Mann’s remarks about biofuels in the EU here:
Michael Mann (6:00 min mp3)