Voluntary Report - public distribution

**Date:** 3/7/2005

**GAIN Report Number:** FR5018

FR5018

**France**

**Oilseeds and Products**

**Biodiesel Demand Boosts Rapeseed Production**

**2005**

**Approved by:**

![](media/image1.wmf)Kurt Seifarth

U.S. Embassy

**Prepared by:**

Marie-Cécile Hénard

**Report Highlights:**

Per a recent announcement of the Prime Minister, French biodiesel
production capacity will be increased to almost 500,000 MT in 2005 and
950,000 MT in 2007. At the same time, German biodiesel production also
is growing. Consequently, French rapeseed production is expected to
increase by 5 percent in 2005. The growing European demand for non food
rape oil will reduce the availablility of rape oil for the food
industry. In the next few years, there may be a new export oppotunity
for U.S. soybean oil to Europe for the food industry, provided that the
product meets EU regulations on biotech source and content.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Paris \[FR1\]

\[FR\]

Table of Contents

[Executive Summary 3](#executive-summary)

[Record Rapeseed Crop Expected in 2005
3](#record-rapeseed-crop-expected-in-2005)

[Rapeseed Production Boosted by Growing French Biodiesel Industry
3](#rapeseed-production-boosted-by-growing-french-biodiesel-industry)

[Growing French Exports or Rapeseed and Rape Oil to Germany
4](#growing-french-exports-or-rapeseed-and-rape-oil-to-germany)

[Trade Opportunity for U.S. Vegetable Oil to France and Europe?
4](#trade-opportunity-for-u.s.-vegetable-oil-to-france-and-europe)

# Executive Summary

In 2005, French rapeseed production is expected to increase by 5
percent, to meet the growing domestic and German demand for rape oil for
processing biodiesel. French exports of both seeds and oil to Germany
have significantly increased in the past few years as German biodiesel
production capacity is growing. The GoF recently announced 30,000
additional MT of biodiesel officially approved to be produced in France
in 2005 to almost 500,000 MT, and approved the French biodiesel
production capacity at almost 950,000 MT in 2007. The European margarine
industry expects this growing industrial use of rapeseed oil will
strengthen by 2010, at the expense of food use. There may be an
opportunity for U.S. exports of soybean oil to Europe, but with
restrictive import measures in terms of biotech source and content.

# Record Rapeseed Crop Expected in 2005

According to the French Ministry of Agriculture, French rapeseed acreage
is expected to increase by 5 percent in 2005 from 2004. With a 5 percent
increase, production would reach 4.18 million MT. This would be the
second largest harvest after the 1999 production of 4.45 million MT.

![](media/image2.wmf)

# Rapeseed Production Boosted by Growing French Biodiesel Industry

In February 2005, Prime Minister Raffarin announced that the additional
800,000 MT of biofuel production promised in September 2004 (see Paris
report FR5002, dated January 10, 2005) will include 480,000 MT of
biodiesel and 320,000 MT of bioethanol. These are official
authorizations for biofuel production benefiting from tax cuts by 2007.

French MinAg announced that in 2005, the GoF official authorization will
be for an additional production of 30,000 MT of biodiesel (in addition
to the 467,500 MT approved for 2004) and 100,000 MT of bioethanol
(doubling the 100,000 MT approved in 2004).

French production potential for biofuels will include the following (in
MT):

  ---------------- ----------------- ------------------ ------------------
                   Biodiesel         Bioethanol         Total Biofuels

  2004             467,500           100,000            567,500

  2005             497,500           200,000            697,500

  2007             947,500           420,000            1,367,500
  ---------------- ----------------- ------------------ ------------------

Most French farmer organizations (oilseeds, wheat, corn and sugarbeet
growers) welcomed these measures. The French petrol company TOTAL, which
purchases most of the biofuels produced in France (see Paris report
FR3044, dated August 29, 2003) also welcomed the GoF measures. The
French Union for Petrol Companies (UFIP) believes in biodiesel economic
development, as increased domestic production of biodiesel reduces
French trade deficit for diesel. France's largest supplier of diesel is
Russia. By contrast, France has a trade surplus in gasoline (France's
largest export market is the United States), to which bioethanol is
mixed, and UFIP therefore sees less interest for developing bioethanol
production in France.

# Growing French Exports or Rapeseed and Rape Oil to Germany 

French rapeseed production is also boosted by the growing biodiesel
production capacity in Germany. Exports of rapeseed and rapeseed oil to
Germany have increased significantly in the past few years because of
the growing biodiesel production capacity in Germany (see Berlin report
GM4048, dated November 22, 2004), as indicated in the graph below.

Germany is, by far, France's largest export market for rapeseed, with
almost 66 percent market share in 2004. French exports of rape oil have
grown from almost nil in 1999 to France's fourth export market in 2004,
with 13 percent market share.

![](media/image3.wmf)

# Trade Opportunity for U.S. Vegetable Oil to France and Europe?

The IMACE (International Margarine Association of the Countries of
Europe) recently expressed its fears that their supply in rapeseed oil
(across Europe, not just France) would be negatively affected by the
increased demand from the non-food industry. IMACE estimates that by
2010, the European biodiesel production would use the bulk of the
rapeseed oil produced in the EU, while the rapeseed oil used by the food
and feed industry would have to be imported. IMACE therefore recommends
the ending fiscal incentives for biofuel development, facilitating
imports of rapeseed oil into the EU, and increasing European production
of rapeseed.

In these conditions, there may be an opportunity for U.S. soybean oil
exports to France and other European countries for food use by 2010.
However, the EU is expected to ask for maximum guarantees on the GM
content and source of soybean oil, under the novel Food/Novel Feed and
Traceability and Labeling regulations.