Total EU-28 oilseeds production for marketing year (MY) 2015/16 is expected to decline by about 9 percent to 32 million metric tons (MMT). Following record yields in MY 2014/15 this is a result of lower and more average yields expectations and partially of reduced acreage. Rapeseed production is forecast to be more than 11 percent lower than in MY 2014/15 and may reach 21.3 MMT. Sunflower production is anticipated to be down by 5 percent at 8.5 MMT. Still at a relatively low level but increasing production through increased acreage is expected for soybeans. Forecast for soybean production in MY 2015/16 is at 1.7 MMT. Ample global soybean supplies in combination with growing European poultry and livestock sectors are expected to boost the use of soybean meal in animal feed.

Production

Total European Union (EU) oilseeds area in MY 2015/16 is forecast to decline by about 1.6 percent to 11.8 million hectares (ha). The decrease is explained by declining acreage of rapeseed, sunflower and cottonseed which is partially offset by increased soybean area. The lower acreage in combination with more average yields expectations compared to the record yields in MY 2014/15 lead to a forecast of 9 percent lower year-on-year production at 32 MMT. With an average share of almost 70 percent, rapeseed production remains the most important oilseed crop produced in the EU. Expectations of weaker demand from the biofuels sector, an EU subsidy policy towards diversification of crops and the neonicotinoid ban are the drivers for an estimated 3 percent reduced rapeseed area. Production of rapeseed in MY 2015/16 is forecast to be more than 11 percent down compared to the bumper crop from the previous harvest and to total at 21.3 MMT. Sunflower production is anticipated to be down by 5 percent at 8.5 MMT due to lower acreage and back to normal yields. Increasing demand for value-added types of sunflower seeds such as high oleic and confectionary types is expected to drive new developments in the sunflower sector. Still at a relatively low level but increasing production through increased acreage is expected for soybeans. The drivers for the growth in European soybean production are EU incentives for protein crop production and the growing demand for non-biotech feed. Forecast for soybean production in MY 2015/16 is at 1.7 MMT on an area of 600,000 ha. Following the trend of lower production total EU-28 oilseeds crush is estimated to be down by 1.7 percent at 44.7 MMT. Expectations are for reduced rapeseed and sunflower crush but slightly increased soybean crush.

Consumption and Trade

The EU-28 is highly dependent on imports of oilseeds and oilseeds products (protein meals and vegetable oils) to meet demand for food, feed and industrial uses, including biofuel production. This is especially true for oilseeds with no or limited domestic production, such as soybeans, soybean products and palm oil. Some 65 percent of soybean meal and about 50 percent of sunflower meal must be imported. Only the production of rapeseed meal is on an average somewhat higher than demand. Total EU-28 oilseeds meal consumption in MY 2015/16 is estimated to be up by 1.4 percent year-on-year reaching 52.8 MMT. The growing EU poultry and livestock sectors are driving higher demand for protein feed. Ample world supplies of soybeans and soybean meal, leading to competitive prices, are expected to favor the use of soybean products in MY 2015/16. Use of sunflower meal is expected to also increase slightly due to imports from the Black Sea region. Lower production of rapeseeds meal is anticipated to lead to somewhat lower domestic use. Total use of vegetable oils is forecast to slightly increase by about 1.6 percent to 25.2 MMT which is mainly due to increased food use. The production of biodiesel, the second largest use of vegetable oils after food, is expected to be stagnant. Most EU-28 biodiesel production uses rapeseed oil as the main feedstock. However, palm oil, because of its price competitiveness, has been increasingly used in biofuels production, particularly in The Netherlands. Lately, the use of palm oil in biofuels production is expected to be more and more replaced by waste fats and oils and thus decline.

Policy

In the new CAP (Common Agricultural Policy), the Commission gives MS (member states) the opportunity to support the production of protein crops with two percent of their national envelopes. Should any MS decide to use this possibility, the Commission has to be notified in advance. MS will be able to grant a greater proportion (mostly 8 percent, but up to 13 percent in some MS) of their direct payment envelopes in the form of coupled support to farmers in sectors or regions which face particular difficulties and where farming activity is important for economic, environmental and/or social reasons. This aid should be granted only to the extent necessary to maintain current levels of production in the region concerned.

Abbreviations used in this report Benelux

= Belgium, the Netherlands, and Luxembourg

CAP

= EU common agricultural policy

CY

= Calendar year

e

= Estimate (of a value/number for the current, not yet completed, marketing year)

EU-28

EFSA

= European Union of 27 member states (Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, France, Finland, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom)

= European Food Safety Authority

f

= Forecast (of a value/number for the next, not yet started, marketing year)

FSW

= Feed, Seed, Waste

Ha

= Hectares

GE

= Genetically engineered / Genetically engineered organisms

GHG

= Greenhouse gas

MT

= Metric ton (1000 kg)

MMT

= Million metric tons

MS

= EU Member State(s)

MY

= Marketing year

NUTS2

= Nomenclature of Units for Territorial Statistics level 2 = code for regions within a country

RED

= Renewable Energy Directive

RSPO

= Round Table on Sustainable Palm Oil

SME

= Soybean meal equivalent

U.K.

= United Kingdom

U.A.E.

= United Arabic Emirates

U.S.

= The United States of America

The marketing years used in this report are:

January - December

Copra complex

Palm Kernel complex

Palm Oil

Fish Meal

July-June

Rapeseed complex

October -September

Soybean complex

Sunflower complex

Cottonseed complex

Peanut complex

November - October

Olive Oil

Commodity: Total Oilseeds

Marketing Year

MY 2013/14

MY 2014/15

MY 2015/16

USDA Official

Post New

USDA Official

Post New

USDA Official

Post New

Area

12,039

12,112

11,942

11,951

11,765

Beginning Stocks

3,666

3,666

3,030

3,107

3,697

Production

31,691

31,733

35,323

35,269

31,973

Extra EU27 imports

17,604

17,656

16,740

16,110

16,346

TOTAL SUPPLY

52,961

53,055

55,093

54,486

52,016

Extra EU27 exports

1,140

1,143

1,371

1,430

1,036

Crush

45,491

45,090

46,142

45,464

44,698

Food Use

1,139

1,321

1,151

1,364

1,374

Feed, Seed, Waste

2,161

2,394

2,455

2,531

2,491

TOTAL DOMESTIC USE

48,791

48,805

49,748

49,359

48,563

Ending Stocks

3,030

3,107

3,974

3,697

2,417

TOTAL DISTRIBUTION

52,961

53,055

55,093

54,486

52,016

1000 HA, 1000 MT

Note: Total oilseeds include different marketing years with different beginning and ending months.

EU-28 Total Oilseeds Area

MY 2015/16

Total EU-28 oilseeds area in MY 2015/16 is forecast to decrease by about 1.6 percent compared to the previous year and is expected to reach 11.8 million ha. The decrease is explained by declining acreage of rapeseed, sunflower and cottonseed which is partially offset by increased soybean area.

MY 2014/15

In MY 2014/15, total EU-28 oilseeds area is down by 1.3 percent, mainly due to a lower sunflower area.

EU-28 Total Oilseeds Production

MY 2015/16

Expectations for total EU-28 oilseeds production in MY 2015/16 are for a 9.4 percent decrease to 32 MMT. This is the result of more average yields for rapeseed and sunflower compared to the bumper crop in the previous season and a slightly lower acreage.

MY 2014/15

Despite slightly reduced acreage but exceptionally high yields of rapeseed and soybean EU-28 oilseeds production reaches a record level of 35.3 MMT in MY 2014/15. This compares to a year- on-year increase of 11.1 percent.

EU-28 Total Oilseeds Crush

MY 2015/16

Following the trend of lower production total EU-28 oilseeds crush is expected to decline by 1.7 percent to 44.7 MMT which is a result of decreased rapeseed, sunflower seed and cottonseed crush but slightly increased soybean crush.

MY 2014/15

Despite a very high production total EU-28 oilseeds crush is estimated to increase by only 0.8 percent and reach 45.5 MMT.

Total Oilseed – Meals

Commodity: Total Meals

Marketing Year

MY 2013/14

MY 2014/15

MY 2015/16

USDA Official

Post New

USDA Official

Post New

USDA Official

Post New

Crush

45,493

45,090

46,142

45,464

44,698

Beginning Stocks

321

321

662

598

866

Production

29,236

28,547

29,592

28,720

28,277

Extra EU27 imports

24,668

24,658

25,893

24,919

25,874

TOTAL SUPPLY

54,225

53,529

56,147

54,240

55,020

Extra EU27 exports

1,084

1,073

1,167

1,278

1,099

Industrial

528

510

560

510

510

Food Use

32

32

32

32

32

Feed, Seed, Waste

51,919

51,313

53,465

51,551

52,252

TOTAL DOMESTIC USE

52,479

51,855

54,057

52,093

52,794

Ending Stocks

662

598

923

866

1,124

TOTAL DISTRIBUTION

54,225

53,529

56,147

54,240

55,020

1000 MT

MY 2015/16

In line with the somewhat lower crush in MY 2015/16, EU-28 total oilseeds meal production is expected to decline by 1.5 percent to 28.3 MMT. Total supply of oilseed meals is forecast to be 1.4 percent higher due to bigger beginning stocks and increased imports. A growing animal production sector and high availability of soybean meal leads to expectations of increased total feed use of oilseeds meals totaling at 52.3 MMT.

MY 2014/15

Due to high availability of feed grains in MY 2014/15 oilseeds meal use in animal feed is only expected to grow by 0.5 percent although feed demand from the animal production sector is growing.

Total Oilseeds – Oils

Commodity: Total Oils

Marketing Year

MY 2013/14

MY 2014/15

MY 2015/16

USDA Official

Post New

USDA Official

Post New

USDA Official

Post New

Crush

45,493

45,090

45,464

45,464

0

44,698

Beginning Stocks

1,167

1,167

1,859

1,566

0

1,379

Production

18,240

18,138

17,615

17,290

0

17,652

Extra EU27 imports

9,889

9,732

9,814

9,713

0

9,660

TOTAL SUPPLY

29,296

29,037

29,288

28,569

0

28,691

Extra EU27 exports

2,301

2,233

2,192

2,073

0

2,125

Industrial

12,081

2,750

12,415

2,670

0

2,520

Biofuels

0

8,710

0

8,610

0

8,620

Food Use

12,669

13,343

12,706

13,386

0

13,595

Feed, Seed, Waste

386

435

403

435

0

435

TOTAL DOMESTIC USE

25,136

25,238

25,524

24,817

0

25,150

Ending Stocks

1,859

1,566

1,572

1,379

0

1,416

TOTAL DISTRIBUTION

29,296

29,037

29,288

28,569

0

28,691

1000 MT, PERCENT

MY 2015/16

In line with the lower domestic production of oilseeds and the somewhat lower crush, EU-28 oilseeds oil production in MY 2015/16 is expected to be down by about 2 percent and should reach 17.7 MMT. With slightly increased food use and almost stable use in the biofuels industry total domestic use of oils is expected to rebound to 25.2 MMT.

The Common Agricultural Policy

The new Common Agricultural Policy (CAP) entered into force in January 2014, with the exception of the new direct payments structure, including "green" payments, and additional support for young farmers, which applies from 2015.

One important change is the "greening component" in Pillar 1, where the Commission suggests there should be three elements of greening that all farmers would have to comply with to receive direct payments. These three components are:

  • Crop Diversification - Farmers must produce at least three different crops, each one accounting for a maximum of 70 percent and a minimum of five percent of each farm.
  • Conservation of permanent grassland – Farmers must not convert permanent grassland into another crop. The EU defines permanent grassland as grass that has been there for five years.
  • Ecological focus areas (EFA) – Farmers must reserve at least five percent of arable area for ecological use, i.e. field margins, hedges, trees, fallow land, landscape features, biotopes, buffer strips, afforested area. This area increases to seven percent after 2017. One option for EFAs is to have nitrogen-fixing crops, e.g. protein crops. It is up to each Member State (MS) to decide whether to use this option or not. However, reportedly all MS, apart from Denmark who has not yet made a decision, have decided to allow protein crops on the EFA's.

Aid System for Oilseeds

With the Agenda 2008 CAP reform, support for EU oilseeds farmers became decoupled, which means that since 2012 farmers no longer receive specific payment for growing oilseeds. This decoupling continues in the new CAP. The impact of the elimination of production-linked subsidies on the EU oilseeds market is marginal compared to the impact of the growing biofuels market.

The high demand for rapeseed for the production of biofuels due to the introduction of the Renewable Energy Directive in 2009 led to increased prices which were enough of an incentive for farmers to increase rapeseed production over the last few years.

With the exception of the olive sector, there is no intervention buying, export subsidy or other market support programs available for oilseeds in the EU. The Commission can provide private storage aid (PSA) if there are serious disturbances to the olive oil market in a certain region or the average price for one or more of the following products is recorded on the market during a two weeks period:

  • €1,779/ton for extra virgin olive oil
  • €1,710/ton for virgin olive oil
  • € 1,524/ton for lampante olive oil

Protein Deficiency

EU protein crop production provides only about 30 percent of the protein consumed as animal feed in the EU. The remaining 70 percent of the protein crops are imported, mainly as soy proteins. Imports are estimated to represent the equivalent of 20 million hectares cultivated outside the EU, or more than 10 percent of EU arable land. Only around three percent of EU arable land is currently cultivated with protein crops. However, there are some initiatives to increase the production of protein crops.

In the new CAP, the Commission gives MS the opportunity to support the production of protein crops with two percent of their national envelopes. Should any MS decide to use this possibility, the Commission has to be notified in advance. MS must notify the Commission by August 2014 to benefit from this option from January 1, 2015. Similarly, if the MS wants to use the coupled option from January 1, 2016, the Commission must be notified by August 2015.

MS will be able to grant a greater proportion (mostly 8 percent but up to 13 percent in some MS) of their direct payment envelopes in the form of coupled support to farmers in sectors or regions which face particular difficulties and where farming activity is important for economic, environmental and/or social reasons. This aid should be granted only to the extent necessary to maintain current levels of production in the region concerned. Ireland has for example decided to pay € 250 per hectare for peas, beans and sweet lupines up to a ceiling of € 3 million.

There is also an ongoing project on increasing the soy production in the Danube area. The Danube Soya Declaration project has attracted a lot of interest, but so far there has not been a lot of action.

Blair House Agreement

The 1992 Blair House Memorandum of Understanding on Oilseeds (or Blair House Agreement (BHA)) between the United States and the EU was included in the EU WTO schedule of commitments and resolved a GATT dispute over EU domestic support programs that impaired U.S. access to the EU oilseeds market.

The BHA limited the EU oilseed planting area of mainly rapeseed, sunflower seed, and soybeans, for food and feed purposes to an adjusted maximum guaranteed area for those producers benefiting from crop specific oilseed payments. This resulted in a reduction of the EU oilseed production area and penalized production in excess of the maximum.

The BHA also limited the production of oilseeds not intended for human or animal consumption planted on set-aside land. Output of these oilseeds was limited to 1 MMT of byproducts expressed in soybean meal equivalent annually. However, the EU asserts that, after changes to the CAP in 2008, which eliminated specific crop payments, there is no limit on EU production of oilseeds, although the BHA remains in force. This is still the case with the CAP reform package.

Sustainability

As in the United States, the interest for sustainability, sustainable production, and environmental issues are growing among EU consumers, industry and policymakers, impacting policy in several areas. The theme of sustainability is well established in the EU marketplace and major food retailers in EU are increasingly using it as a competitive tool. It is a formal part of retailer business and marketing plans and it is being reinforced by significant investment throughout the production chain, including the growing use of private certification bodies.

Within the European Commission, DG Agriculture and DG Environment are focusing on resource issues such as carbon, water, and biodiversity. Sustainable production is defined as an agricultural sector which is able to maintain viable production throughout the territory of the EU, and which at the same time contributes to the EU's key environmental goals, including the protection of natural and cultural resources and the achievement of successful climate change mitigation and adaptation.

The Commission co-chairs the European Food Sustainable Consumption and Production Round Table, which began as an industry initiative. The objective of this roundtable is to help consumers and other stakeholders to make informed choices by providing them with accurate and understandable information on relevant product characteristics, including environmental performance. This is done by the development of a common framework facilitating environmental assessments.

EU Climate and Energy Package

The EU Energy and Climate Change Package (CCP) was adopted by the European Council on April 6, 2009. The Renewable Energy Directive (RED), which is part of this package, entered into force on June 25, 2009, and had to be transposed into national legislation in the Member States (MS) by December 5, 2010. MS were also required to submit National Renewable Energy Action Plans (NREAP) by June 30, 2010. The adoption and requirement for the implementation of the Directive did not give enough time for either the MS or the Commission to prepare for the implementation.

The EU Energy and Climate Change Package include the "20/20/20" goals for 2020:

  • A 20 percent reduction in greenhouse gas (GHG) emissions compared to 1990.
  • A 20 percent improvement in energy efficiency compared to forecasts for 2020.
  • A 20 percent share for renewable energy in the EU total energy mix. Part of this 20 percent share is a 10 percent minimum target for renewable energy consumed in transport to be achieved by all MS.

The goal for 20 percent renewable energy in total energy consumption is an overall EU goal. The RED then sets different targets for different MS within this overall target, based on each MS' capacity. Therefore, some MS will have to reach much higher targets than the 20 percent, whereas other MS will have much lower targets. Sweden, for example, will have to reach 49 percent, while the target for Malta is only 10 percent. The targets for the four largest economies of Europe: Germany, France, UK, and Italy, are 18, 23, 15, and 17 percent respectively. These targets were set by the European Commission depending on the current situation and potential for growth in different MS. In June 2014, former Commissioner for Climate Action, Connie Hedegaard, reported that the EU is on track to reduce its GHG emission with 24 percent by 2020, more than the targeted 20 percent.

In contrast to the 20 percent overall EU target, the 10 percent target for renewable energy in transport is obligatory for all MS. The Commission thought that a 10 percent target in transport for all MS would alleviate concerns referred to in the European Climate Change Program (CCP) that the transport sector is projected to account for most of the growth in energy consumption and thus requires more discipline.

One area that was not included in the RED was the effect that the production of biofuel feedstock has on land use, commonly referred to as indirect land use change (ILUC). ILUC implies that when biofuels are produced on existing agricultural land, the demand for food and feed crops remains, and may lead to someone producing more food and feed somewhere else. A proposal on how to deal with ILUC was published in October 2012. This issue has been intensively debated since the publication, but no agreement has been made between the EU institutions yet. The Parliament had its second reading in the Committee for Environment, Public Health and Food Safety (ENVI) on February 24, 2015. The ENVI Committee adopted the draft and gave the rapporteur, Nils Torvalds from the Alliance of Liberals and Democrats for Europe (ALDE), the mandate to start trilogue negotiations between the Commission, Council and the Parliament. Trilogues are expected to start in March 2015, and the in plenary is expected last week of April

On January 22, 2014, the Commission published a Communication on the 2030 Framework on Climate Change and Energy Policies. The proposal suggests a 40 percent GHG reduction, 27 percent renewable energy use, and improved energy efficiency. One of the most controversial parts in the current proposal is that there is no target set for biofuels after 2020. If this remains the case this would have a huge impact on the oilseed sector in the EU. Around 70 percent of the rapeseed oil is for the biofuels market and essentially all growth in the EU oilseeds sector the last few years has been triggered by this sector.

The Fuel Quality Directive (FQD) complements the RED and mirrors some of the RED's content such as the sustainability criteria. A key requirement of the FQD is that all fuel suppliers (oil companies) must meet a 6 percent cut in GHG emissions by 2020 across all fuel categories supplied to the market. This is designed to be consistent with the 10 percent use of biofuels and would tend to move demand towards biofuels with higher GHG savings. In addition, the FQD limits ethanol blends to 10 percent or less when ethanol is used as an oxygenate. This creates a blend wall in some MS that potentially risks future growth in ethanol consumption. Fuel specifications for biodiesel place limits on the palm oil and soy oil content of biodiesel.

Biotech

Asynchronous Rate of Approvals on Soybeans

The EU livestock industry relies on imports of genetically engineered (GE) feed with soy products being the single largest agriculture import into the European Union (EU). However, the EU's slow approval of GE events restricts U.S. exports. As of January 1, 2015, there is a backlog of 66 applications (for approval of import, renewal, and cultivation) pending EU authorization and the number of applications continues to exceed the number of approvals. This includes 13 GE events that received positive assessments by the European Food Safety Authority (EFSA), while the Commission has refused to put them to a vote at the College of Commissioners. The delay in approvals creates risks for the trade. For example, U.S. farmers are pressuring GE producers to place high-oleic soybean varieties on the market for commercial planting, which have not been approved in the EU after several years.

Commission Implementing Regulation (EU) No 503/2013 established requirements for applications for GE approvals, such as 90-day feeding trials. U.S. exporters are facing additional burdens. In addition, the risk assessment process is not only based on scientific rationale, but also on compliance with the law as the requirements are legally binding. Even more important is the fact that major problems with the implementation of current EU regulations on GM products are not addressed, specifically the unpredictable and non-transparent nature of the political decision-making process that follows the safety recommendations provided by the European Food Safety Authority (EFSA).

Low Level Presence

The EU does not have a commercially-viable low level presence policy (LLP). In the fall of 2009, shipments of around 180,000 metric tons of U.S. soy were denied entry into the EU because of the detection of dust from GE corn not yet approved in the EU. As a result of the situation, the EU quickly approved several GE corn products that were stuck in the EU approval process, so that soybean trade could resume.

In response to this incident, the EU announced a "technical solution" in 2011 in an attempt to minimize trade disruptions due to LLP of unapproved GE events in feed imports. Commission Regulation (EU) No 619/2011, which entered into force on July 20, 2011, permits the inadvertent presence in feed shipments of up to 0.1 percent of a GE product unapproved in the EU, if the product is approved in the country of export and it has been three months since EFSA concluded its completeness check.

In effect with this "technical solution", the EU chose not to introduce a commercially-viable policy to address the issue of LLP, but to maintain its zero tolerance position. Although the adoption of the "technical solution" demonstrates that the Commission is aware of the problems caused by asynchronous approvals, the fact that the measure is limited to 0.1 percent renders it commercially non-viable.

Pesticides

Commission Implementing Regulation (EU) No 485/2013 restricts the use of three neonicotinoids (clothianidin, imidacloprid and thiametoxam) since December 1, 2013 for a period of two years on crops attractive to honeybees such as rapeseed, sunflowers, and soybeans. The Commission's action is a response to EFSA's report which identified "high acute risks" for bees by the use of these pesticides. The restrictions apply to seed treatment, soil application (granules) and foliar treatment on bee attractive plants and cereals. The Commission will review the conditions of approval of the three neonicotinoids before the end of 2015.