Commission’s flip-flop on biofuels puts at risk tens of thousands of jobs

If Brexit does bring trade tariffs on EU exports to the UK, Irish beef exports could take a major hit. [Agriland.ie]

There was little to surprise in the launch of the EU Commission “clean energy” proposals on biofuels given they had been widely leaked in advance. For all that, they are profoundly shocking, writes Patrick Kent.

Patrick Kent is the president of the Irish Cattle & Sheep Farmers’ Association.

The key element of this renewable energy plan is that the ceiling for the crop biofuel component of EU transport fuels will be slashed from 7% to 3.8% by 2030. The ultimate objective of the Commission is to remove crop based biofuels from the picture altogether. This is really bad news for EU farmers already under pressure from declining commodity prices  but it is also bad news for the environment and for those who believe that fact and scientific reason should underpin EU decision-making.

Worse still is that this demonstrates an incoherence in decision-making which is anathema to encouraging much needed investment at either farm or industrial level. Ten years ago, the Commission made it very clear that it was strongly supportive of biofuels and investors and farmers reacted accordingly. Now they have performed an astonishing U-turn.

The flip-flop approach to policy-making threatens the livelihoods of farmers and puts at risk tens of thousands of jobs across Europe. It will end investor interest in EU biofuels, with a direct knock-on effect on the efforts to revive the Irish sugar industry and it will make it harder to achieve EU targets to cut greenhouse gas (GHG) emissions from road traffic.

Perhaps the most ludicrous aspect of the direction the Commission is taking the EU is that the problem which it is trying to solve – the upsurge in palm oil imports into Europe – has nothing to do with European farmers and could be resolved if the Commission and the member states applied the sustainability criteria set out in EU law and adopted a more differentiated approach to biofuels than the simplistic approach now being advanced.

Of course, the backdrop to this U-turn in policy is the absurd notion which has been pushed by developmental NGOs that EU biofuel policy has been responsible for third world hunger.

The reality, according to DG Agri’s Short Term Outlook for EU Arable Crops, Dairy and Meat Markets in 2016 and 2017, is one of surplus in terms of global cereals, albeit somewhat weaker in Europe. It states, “Both IGC and USDA expect world cereal production for 2016/2017 to set a new all-time record in quantity with around 2070 million tons produced.” It adds that with good levels of stock already in situ at the beginning of the marketing year, there are record levels of over 2.5 billion tons of cereals.

The corollary is that prices are in free-fall. For instance, “Wheat prices have reached very low levels not seen since the early 2000s.”  The calamity in dairy markets in 2016 hardly needs any further comment and the forecast for EU beef production is a 3.3% production increase in 2016. Irish beef farmers are particularly anxious as slaughtering levels in Ireland are projected to be 200,000 animals more in 2017 than in 2015.

In almost every significant agricultural commodity in Europe, self-sufficiency levels are in excess of 100% and in some cases (butter, whole milk powder for instance) over 200%. The abundance of production is hitting farmers hard across Europe as prices fail to cover production costs and in the longer run this is the stand-out reason why so few young people are taking up careers in farming. (Only 6% of EU farmers were aged under 35 in 2013). Food security is not threatened by biofuels but by lack of profitability at primary producer level.

These facts highlight the bogus nature of the fuel vs. food argument. Europe is producing too much food for its own markets and struggling to find viable markets internationally. Especially when for many years the CAP was regularly castigated for undermining agricultural development in Africa through dumping surplus production with the aid of export subsidies.

Europe phased out export subsidies even in the absence of a WTO Doha agreement and emphasised instead the multifunctional character of EU agriculture. It is now hypocritical to reverse direction and say that much-needed renewable fuels are no longer acceptable and that we should go back to expanding food exports to markets in the least developed countries.

The introduction of the ILUC (indirect land use change) red herring added to the confusion but when examined, far from supporting the attack on crop based biofuels, ILUC turns out to be much more relevant to the importation of palm oil and soya (as a protein source) from outside the EU.

Contrary to the ludicrous notion that forests will be levelled and bogs drained, crop-based biofuels can fill multiple roles from each hectare grown. A hectare used for biofuels still produces top class animal feed as a by-product of the fuel production process.

As an additional bonus, the by-product feed is higher in protein and thus reduces the need for soya imports from South America. In truth, it is the over-dependence on soya imports that is the real cause of forest destruction, albeit in South America.

There is no credible evidence of struggling farmers in Europe making totally uneconomic investments to reclaim forest or bog to produce animal feeds for livestock systems that are barely viable in 2016.

In any event, only about 11.4 million tons of cereals in Europe were utilised for bio-ethanol production out of a total of 382 million tons of available cereals in 2015/16.

ICSA (Irish Cattle & Sheep Farmers’ Association) wants to see crop-based biofuels supported because they offer a real option for hard-pressed farmers to make money rather than being totally reliant on food and feed which are in surplus in Europe. We see desperate attempts to find new markets for food everywhere from China to Africa which reflects the fact that EU farmers are producing more food and feed than we can consume in Europe.

The logic behind the initial drive towards biofuels – to reduce dependency on fossil fuels – has not changed and in fact, now more than ever Europe needs to become more self-sufficient in energy at a time of increased geopolitical instability particularly in the big energy exporting regions.

The only people who will be delighted with this are the fossil fuel oil companies and the palm oil importers, neither of whom are solving the problems of underemployment in rural Europe or the lack of viability for European farmers. Sustainable crop-based biofuels provide a win-win in Europe and it beggars belief that these EU Commission proposals could be supported at EU Council or Parliament level.