17/2/07 (CattleNetwork.com) EU-25: The EU has a target that 5.75 percent of total transportation fuel use should come from biofuels by 2010. EU policies provide for an area subsidy for biofuel crops, but the EU relies on individual member states to offer tax credits on biofuels. The EU Commission has promised to present a more forceful directive that will lead to greater production and use of biofuels in the future. The projections assume that about two-thirds of the mandate is met by 2010 and that, with increasing total fuel use, the mandate is still not quite reached by 2016. The projections further assume that biodiesel accounts for two-thirds of total biofuels and the other third is ethanol.

Rapeseed oil is the feedstock for nearly all EU biodiesel production. In the EU, the area planted to rapeseed and the crushing capacity both increase sharply, in part because of EU enlargement. In addition, the EU increases rapeseed oil imports from Russia and Ukraine. It also imports more palm oil from Southeast Asia, as well as some biodiesel from palm oil processed in Southeast Asia.

Brazil: Sugarcane is the feedstock for most of Brazil’s ethanol production. In southern Brazil, some land has already been shifted from grain and oilseeds production to sugarcane. The projections assume this trend continues, but at a slower pace. Biodiesel production is assumed to increase from about 52 million gallons currently to more than 92 million in 2016. Much of the new capacity will be in the soybean production areas in the Central-West region of the country which will reduce regular diesel fuel imports that have to be trucked to the interior.

Canada: Canada has mandated that 5 percent of all motor vehicle fuel be biofuel by 2010, but funds for initiatives to encourage biofuel production are limited. Some provinces have production goals and reportedly provide some production incentives. Ethanol production capacity is assumed to rise from 11 million gallons in 2006/07 to about 211 million gallons by 2010. Feedstocks include corn for ethanol plants in Ontario and wheat for a plant in Manitoba. Biodiesel plants are being built in western Canada that will use rapeseed oil as a feedstock. In the projections, land is shifted to rapeseed from wheat, barley, and some summer fallow. In eastern Canada, at least one biodiesel plant is being expanded that uses soybean oil as a feedstock. Canadian biodiesel production is projected to rise from 13 million gallons in 2007/08 to 58 million in 2010.

Argentina: The production of biodiesel is assumed to rise from 7 million gallons in 2005/06 to about 59 million over the next several years. Argentina has a system of differential export taxes that has lower tax rates for biofuels exports than the tax rate on exports of feedstocks such as corn or soybean oil. In turn, the export tax on soybean oil is lower than the tax on soybean exports. For biodiesel, this provides an incentive for further investments in Argentina’s already large crushing industry. Argentina is projected to import some soybeans from other South American countries to keep its crushing facilities running at near full capacity.

Other Europe and the former Soviet Union: Although no explicit assumptions were made about increases in biofuels production in the former Soviet Union or the other countries of non-Europe, the projections reflect an increase in rapeseed production generated by higher rapeseed prices. Much of the production gains are destined for export to the EU.

China: In 2005/06, approximately 3 million tons of corn were used to produce fuel ethanol. This is assumed to grow to 9 million tons by 2016. Because of its food security policy, China is assumed to eliminate a government subsidy for producing fuel ethanol from corn and will attempt to focus on ethanol production using nongrain feedstocks such as sweet potatoes and cassava.

Malaysia and Indonesia: Although explicit assumptions were not made about increased production of palm oil or its use for biodiesel, higher world prices for palm oil stimulate expansion of the area planted to palm oil. Malaysia expects to not only export more palm oil, but also to produce biodiesel for the export market.

Africa: Although some countries are reported to be making initial investments in biofuels production capacity, the projections do not account for any uses of agricultural commodities beyond those embodied in rising trends in industrial use.