Ukraine's rapeseed exports are set to decline for a second successive year of decline, and may fall "significantly" more if biofuels regulations in Europe prove as damaging as some critics fear.

Low temperatures, which have set back some winter-sown fields, have already left production on track for a small drop to 1.80m tonnes this years, with exports in 2010-11 expected to fall by 6%, a report by US officials said.

However, the drop in exports, for which Ukraine relies on the European Union buyers for some 80% of trade, could prove substantially more if a Brussels directive aimed at promoting renewable fuels puts some Ukrainian supplies out of bounds.

'Environmental protectionism'

"At least, it may lead to additional paperwork and increased costs for farmers," a briefing from the US Department of Agriculture's Kiev bureau said.

The directive, which requires biofuels groups to prove supplies meet so-called "sustainability standards" to be eligible for tax exemptions, could present a "significant barrier" to exports to the EU.

If so domestic prices are likely to fall, prompting growers to make "some changes in planting decisions" for next year's harvest, the report added.

The bureau said it was still determining the implications of the European measures, which have provoked fierce opposition from some organisations, such as European Centre for International Political Economy think tank, which has termed them "environmental protectionism".

New subsidies

Ukraine's domestic industry for manufacturing biodiesel from rapeseed is in its infancy.

The country's crushers are expected to process only 150,000 tonnes of rapeseed in 2009-10, 8.0% of the nation's crop.

However, the country in January introduced biofuels subsidies which have helped attract many organisations into the sector, including Landkom, the London-listed farm operator, and Richard Spinks, the group's former chief executive, who has started a new venture, Alternativa.

 

 


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