“Huge risk” for the European bioethanol market
According to the director general of the National Chamber of Biofuels (KIB), Adam Stępień agreement between the European Union and the Mercosur countries, i.e. Argentina, Brazil, Paraguay and Uruguayis a “huge risk” for the European and Polish bioethanol market.
“The risks associated with the agreement are shared by all agri-food processing sectors in Europe, while the ethanol market is drawing particular attention in the context of trade liberalization with South America. Brazil is the world’s second largest producer of fuel ethanol or ethyl alcohol of agricultural origin,” Stępień pointed out. “You can say that it puts a cap on European production, which is five or even six times smaller than in Brazil,” he said.
Corn producers may be afraid
In his opinion, if this agreement came into force, and this is the intention European Commission, will be important primarily for corn producers, because in Europe, and especially in Poland, ethanol plays an increasingly important role in corn management. “Therefore, if there is a problem with storing corn, its natural consequence will be a decline in corn prices,” Stępień said.
Europeans have higher production costs
He drew attention to the production standards of biocomponents in Mercosur countries, which are different from those in the EU. “The costs associated with production in South America and Europe are incomparable, at least due to the burdens on European companies resulting from the ETS (emission allowance trading) system, which our Brazilian colleagues do not have,” the director of KIB also pointed out.
Stępień also referred to the European industry’s problems with the import of ethyl alcohol from Pakistan, which resulted in a significant drop in prices in 2023. “This absolutely destabilizes and destroys the competitiveness of the European alcohol market, so if we add imports from Brazil to this, the future may really look bleak.” ” – said Stępień.
Expert: It is better not to sign the contract at this stage
In his opinion, the solution is not to sign the agreement with Mercosur. He admitted that the EC stipulated that there are a number of different mechanisms aimed at limiting the negative effects of the agreement. “In practice, the Commission does not like to use them at all, which shows the problem of importing ethanol to Europe from Pakistan,” Stępień said. He recalled that in this case, the EC has been defending itself against triggering the protection clauses for two years.
Will there be a minority blocking the signing of the contract?
Stępień added that it could be rejected Mercosur Agreement a blocking minority is needed. “I assume that Poland will be among the initiators of establishing a coalition of EU countries that have the good of agriculture at heart, and that such a coalition is possible,” said the director of KIB.
He emphasized that the situation on the ethanol market in Poland has been improved by the introduction of E10 gasoline (with 10% ethanol content) from January 1, 2024. “Therefore, the demand for fuel ethanol increased by approximately 150,000 cubic meters, in line with our estimates.” – he informed. He admitted, however, that Polish producers had not avoided problems in recent months related to excessive imports of ethanol to Europe from Pakistan in the form of large fluctuations in production profitability.
Bioethanol market in Poland
According to KOWR data, 12 companies produce bioethanol in Poland. The largest producers are Bioagra, BGW, Grupa AWW, Ima Polska, Distillacje Polskie, Podlaskie Distillery Surwin. They produce approximately 450,000. cubic meters of this product annually.
EU-Mercosur Agreement
December 6 this year The EU and the Marcosur countries have concluded negotiations on the agreement. To enter into force, it must be ratified by the EU. The European Commission will decide on the path of its adoption by the Community. There are two possible paths: either the agreement will require ratification by all national parliaments, or it will have to be voted on by the European Parliament and member states in the EU Council.
Ministry of Agriculture and Rural Development informed that it had serious reservations about the results of the negotiations between the European Commission and the Mercosur countries. As it indicated, the proposed agreement may bring “certain benefits” for the industrial sector, maritime transport and some services, at the expense of most segments of agri-food production, especially in the area of the meat industry (poultry and beef), sugar, ethanol and others. The ministry emphasized that the adoption of the agreement in its current form will lead to the displacement of Polish and European producers from the EU market in favor of suppliers from Mercosur countries. (PAP)
