4/5/2006 (Nutraingredients.com) - A plan to increase biofuel production could lead to an increase in prices for agricultural ingredients, in particular rapeseed, the bloc's food industry association warns in a position paper.

The concern is expressed in a position paper published by the Confederation of the food and drink industries of the European Union (CIAA), which is calling for a careful monitoring of the effects of the plan on agricultural supplies and prices. The organisation also calls for biofuel production to be based on a diversified supply of agricultural products rather than just on one or two commodities.

In strategy plan adopted in February 2006, the European Commission set out measures to further increase the supply of biofuels. The strategy includes a plan to assess the impact of increasing the amount of biofuel that can be blended in petrol and diesel, an an examination of the use of certificates to ensure that the raw materials are cultivated in a sustainable way.

Biofuel is any fuel that derives from organic materials, including corn, soybeans, flaxseed and rapeseed. The food and drink industry is competing for some of the same raw materials, such as rapeseed, either for food production or for feedstock.

In its position paper the CIAA says the increase in demand for agricultural products for biofuels could decrease supply and raise prices for the food and feed sectors.

"Given the link between the different users of biomass -- food, feed, energy, and other non-food products--  the monitoring proposed by the Commission of the impact of the biofuels strategy on markets and on availability of agricultural raw materials is clearly essential for the food industry," the CIAA stated.

The Commission must also be willing to act in case of serious market imbalance through market measures. The EU should also use the measures to increase the possible feedstock supply for all markets without disrupting the food sector, the CIAA recommends.

The organisation noted that its members are already facing price increases for rapeseed oil. According to Oil World, rapeseed oil prices recently were up to 45 per cent above the five-year average to 2000. Demand for rapeseed oil within the EU is forecast to increase by 26 per cent.

"This trend can be explained by different factors, notably the development of the biodiesel industry and the total shift of food demand from soy oil into rapeseed oil because of the GMO (genetically modified organisms) issue," the CIAA stated.

Meanwhile cereals prices are forecast to increase by up to 11 per cent by the year 2010 and oilseed prices by between five to 15 per cent, the document stated.

The CIAA also called on the Commission to promote a more balanced development of biodiesel and bioethanol production. The CIAA believes that a diversification of sources for the production of biofuels will lessen the pressure on a single raw material supply.

CIAA advised the Commission to promote diversification by reviewing the biodiesel standard, as it would allow the better use of oils other than rapeseed. Sunflower oil, palm oil or soybean oil could also be promoted as the raw ingredient for biofuel production.

The CIAA urged the Commission to review of the current legal framework regarding animal fats and by-products so as to promote the use of such ingredients for biofuels production.

More authorisations of new GM rapeseed varieties for import and processing in the EU would also help reduce the supply pressure on non-GM European rapeseed used for foods.

The CIAA also stressed the need for the Commission to ensure that the byproducts derived from biofuel production comply with EU food safety standards, as these are likely to end up in the feed and food chain.

In a strategy plan published in February the Commission plans to promote increasing the use of biofuels to eight per cent of the bloc's energy requirements by 2015.