By RICK A. RICHARDS
Indiana Correspondent ST. LOUIS, Mo. — A measure passed by the European Union (EU) parliament in 2009 could have a major impact on U.S. soybean exports to Europe.
The measure, known as the Renewable Energy Directive (RED), took effect Jan. 1, 2011, but so far the only member of the 27 EU countries enforcing it is Germany, according to the American Soybean Assoc. (ASA). The ASA said the directive requires “proof of sustainability” that all biofuel foodstocks have been produced on farms that have “not been converted from high carbon density lands, such as rain forests.”
On the surface, said Steve Wellman, first vice president of ASA and a soybean grower from Sycamore, Neb., that sounds benign for U.S. producers since the major area of the world being deforested and converted into farmland is in Brazil.
But, added Wellman, “The approach does not provide for acceptance of the existing U.S. approach to conservation and environmental sustainability that may well be of higher value than the RED requirements in attaining their objectives.”
Wellman said ASA is worried that RED could create a precedent for other countries in imposing environmental and sustainability requirements on U.S. agriculture.
“Germany’s current implementation of this directive represents a process mandate for systems of production and marketing that act as undue and unjustified trade barriers to imports of U.S. products,” said Wellman.
He explained the measure is not aimed solely at the United States. Also affected are Brazil, where 70 percent of its soybean production is considered biofuel feedstock, and Argentina, where 99 percent of soybeans are classified as biofuel. The figure for the U.S. is 96 percent.
Wellman, who is in his fifth year on the ASA board, has farmed 1,800 acres of corn, soybeans and wheat since 1981. He also maintains a cow/calf herd. He said the ASA has expressed its concern over RED to USDA Secretary Tom Vilsack and U.S. Trade Representative Ambassador Ron Kirk.
In a letter delivered to both, the ASA is asking the U.S. to consider options for responding to any trade barriers resulting from the directive. The ASA emphasized in its letter that a coordinated effort is needed to “identify and respond to the immediate, as well as longer-term, market threats resulting from RED implementation.”
Wellman said the impact of the directive is a potential loss of $1 billion in soybean sales to the EU; that represents 2.5 percent of the U.S. crop. Most soybeans shipped to Europe are ground into feed for livestock. That leaves a lot of soy oil, said Wellman, but there is no market in Europe.
The reason is because U.S. soybeans are not classified as food for human consumption and processing the oil as a product to be used in food production isn’t allowed in the EU. The same restrictions also affect coconut oil produced in Indonesia and other south Asian countries and shipped to the EU. But, said Wellman, the EU has exempted rapeseed oil as a way of protecting rapeseed growers across Europe.
“The situation is getting very interesting,” said Wellman. “That’s why I’m glad I’m involved with the ASA. The organization needs representatives on things like this.”
He said he never imagined that when he got involved with the ASA nine years ago that he would be immersed in international issues like this, but it has been a learning experience.
“I’ve probably been on the road 100 days or close to it over the last three years,” said Wellman. “There’s no way I could be involved in something like this if it wasn’t for the support of my wife, family and friends.”
Taken to its fullest implementation, he said that before any soybeans could be sold in Europe, individual farms would have to be certified by the EU that their production methods meet European standards.
Wellman explained in order for biofuel to qualify for EU tax credits and use mandates, the RED requires that biofuel feedstocks must reduce greenhouse gas emissions by a minimum of 35 percent by 2013 and 50 percent by 2017, when compared to petroleum diesel.
Presently, the EU places the gas savings default value for Brazilian soybeans at 31 percent (the standard by which it measures soybeans from around the world), which is below the mandate. Wellman said since nearly all soybean oil processed from U.S. soybeans in the EU is used in biodiesel production, it is disqualified. European rapeseed oil, meanwhile, has a 38 percent gas savings value.
The United Soybean Board, however, used U.S. production and transportation data to show that soy biodiesel reduces greenhouse gas emissions by up to 52 percent, well above the EU threshold. The study was included with the ASA’s letter to USDA and the U.S. trade representative. In addition, it was submitted to the EU’s Joint Research Centre for its approval.
So far, the EU has not responded to the ASA’s concerns. |
