EU Commission begins antisubsidy process against Indonesia

By UFOP | December 11, 2018

The Union zur Förderung von Öl- und Proteinpflanzen (UFOP) welcomes the EU Commission’s adoption of the proposal made by the European Biodiesel Board to now also begin an antisubsidy process against Indonesia. UFOP calls for urgent action in the form of the temporary appointment and application of customs duties on imports of palm oil biodiesel. In this context, UFOP refers to the cap on palm oil fuels for 2019 and the gradual subsequent phaseout per the revised version of the Renewable Energy Directive (REDII), which has recently been approved. The EBB warns that import duties to be applied in 2019 will be circumvented by the increased import of palm oil for the production of biodiesel in the European Union. 

UFOP clarified their call for action by referring to the sales development of biodiesel in Germany, especially in reference to raw material composition. This meant that the proportion of palm oil-based biofuels, specifically biodiesel, increased in Germany in 2017 to more than 0.5 million metric tons, according to the Evaluation and Progress Report of the German Federal Office for Agriculture and Food (BLE). In 2015 and 2016, the figures were 0.3 and 0.43 million tons respectively. In the same time period, the proportion of rapeseed oil methyl ester (RME) decreased from 1.3 to 0.8 million tons. As a result, RME and rapeseed oil had to be exported at lower prices. 

The cause of this price pressure is the global increase in the production of plant oil. In the economic year 2018-’19, more than 200 million tons of plant oil were produced worldwide for the first time, of which approximately 72.3 million tons were palm oil (up 4.3 percent). This surplus is the cause of the enduring price pressure. This caused wholesale prices to sink to 465 euros per ton for palm oil and around 765 euros per ton for rapeseed oil. UFOP questions how sustainable production of palm oil, with social criteria being taken into particular consideration, is possible at these prices. The example of palm oil shows that the sustainability certification requires more intense monitoring. The success and reputation of sustainability certification must be recognizable, completely irrespective of the end use, especially in terms of improving income in agriculture. UFOP notes that the food and chemical industries are freeloaders who are benefiting from the current market trends in palm oil, and who are not required to fulfill any statutory requirements in order to enter the market.

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